# 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, 2002
|--- | --------------------------------------------------------------------------------------------------------------------------------

# 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 700, 407  2ndStreet SW, Calgary, Alberta, Canada T2P 2Y3
(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 registered
|----------------------- | -----------------------------------------

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. 15,817,701 Common Shares as at October 31,
2002

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 [  ]

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.

---

# 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.

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 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.

---

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

---

# 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

A.
  Offer statistics.

Not applicable.

B.
  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, 2002, 2001, and
2000. 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).

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.

|                        | 
|----------------------- | 
|
|
|                        | 
|Operating Revenue       | 
|Software Set-up         | 
|Software Licensing      | 
|Interest and other      | 
|                        | 
|Total Operating Revenue | 
|                        | 

1

---

|                                    | 
|----------------------------------- | 
|
|
|                                    | 
|                                    | 
|Total Expenses                      | 
|                                   
|Income (Loss) from                  | 
|Continuing Operations               | 
|                                   
|Income (Loss) from Discontinued Oil | 
|& Gas Operations(1)                 | 
|                                   
|Net Income (Loss)                   | 
|Canadian GAAP                       | 
|US GAAP                             | 
|                                   
|Net Loss per Share from Continuing  | 
|Operations                          | 
|Canadian GAAP                       | 
|US GAAP                             | 
|                                    | 
|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 4 of the 1999 Consolidated Financial
Statements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# CURRENCY AND EXCHANGE
RATES

The following table sets out the
exchange rates for one Canadian dollar (Cdn$) expressed in terms of one United
States dollar (US$) in effect at the end of the following periods, and the
average exchange rates (based on the average of the exchange rates on the last day of each
month in such periods) and the range of high and low exchange rates for such periods.

2

---

U.S. Dollars Per Canadian Dollar

|                      
|----------------------
|
|                      
|
|                      
|End of period         
|Average for the period
|High for the period   
|Low for the period    

|                   | U.S. Dollars Per Canadian Dollar
|------------------ | --------------------------------
|                   |                                 
|
|                   |                                 
|Low for the Month  |                                 
|High for the Month |                                 

Exchange rates are based upon the
noon buying rate in New York City for cable transfers in foreign currencies as certified
for customs purposes by the Federal Reserve Bank of New York. The noon rate of exchange on
August 16, 2003 as reported by the United States Federal Reserve Bank of New York for the
conversion of Canadian dollars into United States dollars was US$0.6867 (US$1.00 =
Cdn$1.4568). Unless otherwise indicated, in this registration statement on Form 20-F (the
Registration Statement or Form 20-F) all references herein are to
Canadian Dollars.

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.

B.
  Capitalization and indebtedness.

Not applicable.

C.
  Reasons for the offer and use of proceeds.

Not applicable.

D.
  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:

3

---

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. We are still
in the process of developing our business. We have a limited operating history and
limited experience in developing, commercializing and marketing software applications,
which makes our future success uncertain. As a result of our limited operating history, it
is difficult to accurately forecast our revenues, and we have limited meaningful
historical financial data upon which to base our expectations of commercial success.

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

We have a history of losses. During
the year ended October 31, 2002, we had revenues from our software operations of
$3,737,994. During this same period, we had operating losses of $1,431,282. As of the year
ended October 31, 2002, we had an accumulated deficit of $8,091,022. We expect to
incur costs and expenses related to:

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

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

| |  | commercializing
our software technologies and entering into licensing arrangements;
|- |  | -----------------------------------------------------------------------------------

| |  | financing
activities; o the expansion of our product offerings and the development of new
e-commerce technologies; and
|- |  | ----------------------------------------------------------------------------------------------------------------------

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

Our ability to become commercially
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 are anticipated
to 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;
|- | ---------------------------------------------------------

| | 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.
|- | -----------------------------------------------------------------------------------------------------------------

4

---

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.

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

Our success depends on CGCs
ability to sublicense our products to operators of Internet gaming and other entertainment
related web sites. CGC currently does not intend to enter into long-term sublicensing
agreement related to the Online Games technologies. This strategy is designed to allow CGC
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.

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

The success of our products and the
ability of CGC 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.

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 World Gaming plc, Microgaming, Atlantic
International Entertainment, Ltd., 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 assists 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

5

---

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 adversely
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 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.

6

---

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.

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

7

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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. 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 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.

8

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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 us. We currently do not maintain key man life insurance
on any of our managers.

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. GTI, our U.S. subsidiary, has its office located
in the United States; CGC, our Belize subsidiary has its office in Belize; and our
principal office is located in Canada. 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.

Our shares are considered
penny stocks and are subject to the penny stock rules and there is currently no market
for our shares in the United States.

Our shares are quoted on the TSX
Venture Exchange and the closing price of our shares during the fiscal year ended October
31, 2002 ranged from $0.66 to $2.09 per share. Our common shares are not currently listed
for trading in the United States, and we have no current plans to list our common shares
in the United States. 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

9

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generally includes any non-NASDAQ
equity security that has a market price of less than US$5.00 per share. Our shares will be
deemed penny stock for the purposes of the Exchange Act if a market should develop in the
United States. 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. We cannot assure you that a market will ever develop for
our common shares in the United States.

Our licensees rely on
credit cards for a substantial portion of the deposits by their customers.

We derive most of our revenues from
the revenues of our licensees, which are directly dependent on the amounts of funds
deposited by their customers. A substantial portion of these deposits are made by credit
cards. Many issuing banks of the major credit cards, Visa and MasterCard, like MBNA, Bank
of America and Chase Manhattan Bank and Citibank have announced that they will decline
authorization to Americans who try to use their credit cards for online gaming. Non-U.S.
banks processing the online gaming transactions can become targets of the U.S. criminal
proceedings under the newly enacted Patriot Act. The jurisdiction of the United States now
extends to all non-U.S. banks that have correspondent accounts in the United States.
United States can freeze the non-U.S. banks U.S. correspondent account, if that bank
is processing U.S. gaming transactions or holding operating funds or the profits of an
operator accepting U.S. wagers, because the U.S. Justice Department currently views all
offshore gaming funds as tainted, and all offshore gaming as illegal. This creates a
disincentive to the banks to process online gaming transactions and could adversely impact
the revenues of our licensees.

Additionally, many banks currently
will not process transactions with the industry code for Internet gaming when the credit
card is not physically presented to the merchant, due to the perceived increased risk of
chargebacks. If additional issuing banks also decide not to process such transactions,
this will make it more difficult for customers to deposit funds for betting. This would
likely lead to lower revenues for the licensees and consequently would have a negative
effect on our royalty revenues.

United States civil
liabilities may not be enforceable against us.

Our directors and executive officers,
and certain of the experts named in this annual report, are not residents of the United
States, and virtually all of the assets of these non-U.S. persons, and virtually all of
our assets, are located outside the United States. As a result, it may not be possible for
you to serve summons and complaints within the United States upon these persons.
Similarly, it may not be possible to enforce in U.S. courts, against these persons or
against us, judgments of the U.S. courts based upon civil liability provisions of the U.S.
federal or state securities laws. In addition, it may be difficult for you in original
suits or in suits for the enforcement of judgments of U.S. courts to enforce certain civil
liabilities based upon U.S. federal or state securities laws in Canada against us, our
directors, executive officers, or our experts.

10

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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 407  2nd Street SW, Suite 700,
Calgary, Alberta, Canada, T2P 2Y3.

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.

In February 1999, we sold our entire
interest in the Harmattan Property to 586983 Alberta Ltd., a private Alberta company. The
sale price, $127,750 in cash, was negotiated at arms-length. 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 submitted a filing statement with the Alberta Stock Exchange related to our change in
business in accordance with its policies. The Alberta Stock Exchange accepted our filing
statement on December 7, 1998.

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 in 2000 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.

11

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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. Working capital at October 31, 2002 was $6,009,181.

B.
  Business overview.

# 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, through our subsidiaries,
specialize in developing and licensing Internet and Intranet based computing solutions,
with a focus in the area of Internet based commerce and Internet/Intranet gaming.

We organized Chartwell Games Corp.
(formerly, Game Tech Corporation) as an independent operating subsidiary to license and
manage the wagering version of our Online Games software application. 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 GT.

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

# OUR PROJECTS

Entertainment Software
Products

Our Internet gaming product is our
Java based Online Games software and technologies, which allow users to play casino-type
games in a virtual casino. We have also incorporated Flash technology in our products and
we are incorporating the use of Shockwave in our new development. Our software can run on
the Internet or in an Intranet environment. Our Online Games software can be operated in
two modes: a wagering mode for real money applications or a free mode for fun or
entertainment applications. Online Games is a computerized gaming environment, which is
intended to closely resemble an actual casino in appearance, sound and interaction. The
software has been designed to make the action as fast as real casino games, accompanied by
the sounds and visual effects of a physical game. A running credit/tally is constantly
visible to allow players to cash-out points, credits or dollars at any time.

Our Online Games offer standard
casino games of chance.

|                 
|-----------------
|
|                 
|Casino stud poker
|                 
|Pai Gow poker    
|                 
|                 
|                 
|Three card poker 
|                 
|                 
|                 
|                 
|Blackjack        
|                 
|                 

12

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|          
|----------
|
|          
|          
|Roulette  
|          
|          
|          
|          
|          
|Baccarat  
|          
|          
|Craps     
|          
|          
|          
|Red Dog   
|          
|          
|          
|          
|          
|Casino War
|          
|          
|          
|          
|Bingo     
|          
|          

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

|                        
|------------------------
|
|                        
|Three Reel and Five Reel
|Slots:                  
|                        
|                        
|                        
|                        
|                        
|Video Poker:            
|                        
|                        
|                        
|                        
|                        
|                        
|                        
|                        
|                        
|                        
|                        

13

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Our Online Games software has been
designed to be as easy to use as possible and to include extensive help features to assist
players entering the on-line gaming area. 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;
|- |  | --------------------

| |  | strategy
and tips for each game; and
|- |  | ------------------------------------

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

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

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 our 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;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| |  | requiring
licensees to implement security measures to protect their servers and web sites,
including secure communication lines between the licensee and third-party credit card
processors, using password encryption software and requiring authentication to verify the
identity of the parties sending and receiving data.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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:

14

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

Our CyberBoss is an internal
administrative utility available to licensees who require an administrative utility to
access and classify server and transaction data. Our CyberBoss system features password
encryption features for data transmissions and access by the licensee. We do not
administer the CyberBoss system or store licensee casino operation data on our servers.

Our CyberBanx features a high-level
security system the uses multiple level password encryption software for data
transmissions. Our CyberBanx system is designed to interface with third party credit card
and wire fund transfer processing systems. Our CyberBanx software 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 licensee to
authenticate and verify the identity of the parties sending and receiving data.

We continually upgrade our support
software and technologies to increase the functionality and the capabilities of our
software. Maintaining 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 the software with respect to graphics, sound,
features and speed of play to meet rising user expectations.

# 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, such as Belize. 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

15

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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:

| |  | 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 60 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 and located 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;
|- |  | -----------------------------------------------------------------------------------------------

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

| |  | The
licensee must implement quality control measures, including paying winners, developing
and adhering to confidentiality and security policies, posting gaming rules on their Web
Sites, restricting access to players that meet the licensees gaming license, and
updating their Web Site to use our most current version of the Online Games software.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CGC has implemented the following
procedures to monitor the quality of its licensees operations:

| |  | CGCs
staff monitors third party Web Sites that review Internet gaming Web Sites and register
player complaints about gaming Web Sites to identify potential quality problems related
to its licensees. Web Sites such as I-Gaming News.com maintain a database of black
listed casinos based on complaints received from players;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | CGC
maintains direct contact with each licensee and conducts periodic audits of our licensees Web
Sites and internal systems to verify that licensees are complying with minimum systems
and security requirements;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | CGCs
staff periodically conducts live tests of the licensees games to assess whether they appear to be
conducted in a fair manner; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------

| |  | We
engage third parties to conduct independent evaluations and to provide reports related to
our Online Games products.
|- |  | -----------------------------------------------------------------------------------------------------------------------

16

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As of January 31, 2003, CGC has
licensing agreements with twenty-two (22) 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.

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. A consequence of this policy is a
considerable loss of potential short-term revenue inherent with running a profitable
casino or casinos, but it also 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
software with

17

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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 increased 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, Innoco,
Max Skyweb, OddsOn Inc., Q-Seven Systems, Radiate Software, Random Logic, Realtime Gaming,
Starnet Systems, World Net Gaming, First Multimedia Group, GamblingSoftware.com, Net
Entertainment, Unified Gaming, Dot Com Entertainment, World Gaming PLC, 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. See Risk
Factors.

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 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 large 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.

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. Our Online Games software was developed
in Java and Flash. The cross-platform

18

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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.

Our Online Games software is designed
to run on all popular web browsers including Internet Explorer, Netscape and on AOL. 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

Our strategy is to develop internet
games and gaming software that can be licensed by CGC. CGC has developed strategic
relationships with licensees, which 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 anticipate that CGC may also 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 for our
intranet products 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

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 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
CGCs licensees operate their interactive Casinos from jurisdictions where Internet
gaming is regulated or tolerated. All licensees are required to 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

19

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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.

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. 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, 2000 or 2001. On October 21, 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 receive the necessary
two-thirds vote required for passage. However, it was supported by over sixty percent
(60%) of those voting. Efforts to introduce similar legislation continued in 2002, and are
expected to continue in 2003.

In addition, the Internet Gambling
Funding Prohibition Act (H.R. 4419) was introduced in the House of Representatives in May
2000 in the House of Representatives. In the form introduced, this bill would prohibit 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. Efforts to introduce similar legislation continued in
2002, and are expected to continue in 2003.

It is impossible to predict the
outcome of such legislative efforts. Any federal legislation that would prohibit wagering
over the Internet will likely have a material adverse effect on the business of licensees
of our gaming software and our results of operations. 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. Some states, including Minnesota, Missouri and New
York, have filed criminal complaints against Internet gaming operators.

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.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
United Kingdom is sponsoring a web-site for its national lottery.
|- |  | ---------------------------------------------------------------------

20

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| |  | 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 response to the events of
September 11, 2001 the United States enacted the USA PATRIOT ACT, which is intended
to address worldwide terrorism. However, the USA PATRIOT ACT includes provisions targeted
against Internet gaming. The jurisdiction of the United States now extends to all non-U.S.
banks that have correspondent accounts in the United States. This means that any such
non-U.S. bank processing U.S. gaming transactions will be violating the U.S. law,
regardless of the fact that they are in full compliance with the laws of their own
country. Pursuant to the USA PATRIOT ACT, the United States can now obtain a pretrial
restraining order freezing assets, including bank accounts, of defendants in U.S. civil
actions, once process has been served on the non-U.S. party. This means that the U.S.
merely has to serve papers on a non-U.S. bank, and it can freeze the non-U.S. banks
U.S. correspondent account, if that bank is processing U.S. Gaming transactions or holding
operating funds or the profits of an operator accepting U.S. wagers. Thus, if allegedly
tainted funds are deposited in a non-U.S. bank account of a non-U.S. bank, the United
States can seize and forfeit an equal amount of funds on deposit in the non-U.S.
banks correspondent account.

Currently, the U.S. Justice
Department views all offshore gaming funds as tainted, because it believes that all
offshore gaming is illegal. This creates a disincentive for non-U.S. banks to provide
banking services to Internet gaming operators, thus negatively impacting our market of
potential licensees. MBNA, Bank of America and Chase Manhattan Bank and Citibank have
announced that they will decline authorization to Americans who try to use their credit
cards for online gaming.

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 market our Online Games technologies as entertainment
software solutions for both Internet-based and land-based

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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 anticipate we will position our product in the market
based on the quality of our graphics, sounds, features and speed of our software and
systems. We intend to remain focused on designing technology that achieves efficiency for
licensees and that is innovative, easy to use and appealing to players. We intend to
monitor the expectations of users of our technology and to develop technologies for our
next generation of software and games.

PROVIDE AN INNOVATIVE SOLUTION FOR
LICENSEE SUCCESS. A key to our success will be the success of licensees. We intend to
design software systems for licensees to 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.

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, speed
and pay outs.

To increase the player appeal of
Online Games, we have designed Online Games to be easy to use and to play and to feature
appealing graphics, sound and special effects and speed. We intend to make significant
investments in research and development in designing our next generation of Online Games,
Version 4.0, to feature additional games such as bingo. 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 speed, graphics, sounds and features
into our games to differentiate our Online Games from those of our competitors. We
estimate that we may spend approximately $3.2 million during the fiscal year ending
October 31, 2003 on software maintenance, new game development and intranet
application development.

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 customize the
graphics and sound of our Online Games to feature the themes that allow each sublicensee
to target specific target markets based on their individual marketing strategy. 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:

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|(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
          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 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.
|---- |  | -------------------------------------------------

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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 Casino internet gaming product. 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
Casino software with a product developed in-house by the Company.

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.

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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.
|----- |  | ------------------------------------------------------------------------------------------------------------------------------

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.

25

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# PLAN OF OPERATION

We are in the process of developing
our business and we have limited revenues from our operations and a history of losses.
During the our fiscal year ended October 31, 2002, and the year ended October 31, 2001, we
had revenues from continuing operations of $3,737,994 and 3,232,354, respectively. During
these same periods, we had operating losses from continuing operation of $1,431,282 and
$835,967, respectively. As of October 31, 2002, we had an accumulated deficit of
$8,091,022. We anticipate that we may incur losses in the future. See Note Regarding
Forward Looking Statements. At October 31, 2002, our cash position was $1,704,267,
and we had working capital of approximately $6,009,181. We believe we have sufficient
working capital to fund our operations through our fiscal year ending October 31,
2003. See Item 5.B  Liquidity and Capital Resources.

Our business plan through our fiscal
year ending October 31, 2003 is to focus primarily on the marketing and market development
of our Online Games software and the development of new games or entertainment
applications for the Internet. 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.

# ONLINE GAMES SOFTWARE

Software Maintenance and
Upgrades

During the year ended October 31,
2002, we released Version 4.0 of our Online Games software. Through our fiscal year ending
October 31, 2003, we plan to both maintain and upgrade software that is being used by
our present licensees. We have targeted for development new games including Multi-player
Poker, Scratch Cards and Pull Tabs as well as new versions of our existing games. 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. As of
March 31, 2003, CGC has entered into licensing agreements with 23 licensees for the Online
Games software. CGC is currently negotiating with several potential licensees who have
expressed an interest in using the Online Games software.

26

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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 January 31, 2003, we had
fifty-four (54) employees including subsidiaries. CGC had two (2) full time and one (1)
part time employees. None of the employees of the Company or CGC are covered by a
collective bargaining agreement.

C.
  Organizational structure.

We have two wholly-owned
subsidiaries: Gateway Technology, Inc. (GTI) and Chartwell Games Corp.
(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.

On November 5, 1999, we
organized CGC 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.

D.
  Property, plants and equipment.

Our executive offices are located in
leased premises of approximately 9,378 square feet at Suite 700, 407  2nd
Street SW, Calgary, Alberta, Canada. The lease is for a term of five years commencing May
1, 1999 at a base annual rental rate of approximately $139,000 with operating costs of
approximately $71,000 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
April 1, 2001 at a base annual rental rate of approximately $13,000 with operating costs
of approximately $19,000 annually.

GTI occupies space within
Chartwells offices in Vancouver.

CGCs principal offices are
located in Belize City, Belize.

Item 5.  Operating and
Financial Review and Prospects

A.
  Operating results.

The following discussion and analysis
explains trends in our financial condition and results of operations for the three fiscal
years ended October 31, 2002, 2001 and 2000. This discussion and analysis of the
results of operations and financial condition should be read in conjunction with our
audited financial statements and the related notes, as well as statements made elsewhere
in this Form 20-F. The financial statements have been prepared in accordance with
accounting principles generally accepted in Canada which conform to accounting principles
in the United States, except as described in note 11 to financial statements. Unless
expressly stated otherwise, all references to dollar amounts in this section are in
Canadian dollars (in accordance with Canadian GAAP).

27

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# Overview

In June 1994 (effective November
1993), we acquired the Harmattan Property, a producing oil/gas property. Since that time,
we have received oil/gas revenue from this property, posting operating profits in fiscal
1997, 1998 and 1999.

We pursued a new business venture as
of November 1, 1998 and since that time have divested all of the assets associated with
our former business of oil and gas operations. On April 20, 1999, we entered into a
petroleum, natural gas and related rights purchase agreement with 586983 Alberta Ltd.
Under the agreement we agreed to sell, assign, transfer and convey our interest in the
Harmattan Property to 586983 Alberta Ltd. in consideration for $127,750. Under the terms
of the agreement, 586983 Alberta Ltd. agreed to pay half the purchase price at closing and
the balance of the purchase price within 90 days from the closing date. The purchase price
was paid into escrow pending confirmation and acknowledgement of the transfer. The balance
of the purchase price was released to us from escrow during our fourth quarter ended
October 31, 1999. The new business of software development was initiated through the
acquisition of GTI, an Internet entertainment, e-commerce, and video conferencing software
company. Therefore, a comparative analysis of the results of operations for the year ended
October 31, 2000 or the fiscal year ended October 31, 1999 with any previous period is not
meaningful with respect to our current business, results of operations or our prospects.

After our acquisition of GTI, we sold
our interests in our oil and gas properties. As a result, we will not receive any revenues
in future periods resulting from oil and gas operations. During the year ended October 31,
1999, Corel Corporation announced that it would no longer continue to develop or support
its CorelVIDEO Conferencing systems. As a result, we phased out the video conferencing
systems product during this period and do not anticipate that we will receive any
additional revenues from this product line. We intend to focus our resources on developing
our Online Games product and marketing our Internet gaming software through CGC.

On November 1, 1999, we organized
CGC, a wholly-owned Belize international business corporation (formerly Gaming Tech
Corporation), for the purposes of marketing, licensing and providing customer service for
gaming applications of our software. Under a sale agreement dated November 1, 1999, we and
GTI also transferred our right, title and interest in certain gaming software to CGC and
assigned all existing licensing agreements related to such software. CGC issued demand
promissory notes in the principal amount of $1,775,000 to Chartwell and $225,000 to GTI as
consideration for these transfers.

We have financed our activities
through a combination of revenue from operations and through the issuance of equity
capital. The timing of such equity financings was dependent on our requirements and the
economic climate.

Results of Operations

Year Ended October 31,
2002 Compared to October 31, 2001

The financial results for the year
ended October 31, 2002 and 2001 include the operations of our wholly owned subsidiaries
CGC and GTI.

Total Assets. Total assets
decreased during the year from $7,937,406 to $6,726,183 due mostly to a decrease in cash
related to operating activities.

Revenues.  
          Revenues increased to $3,737,994 for the year ended October 31, 2002, compared
          with $3,232,354 for the year ended October 31, 2001, an increase of 16%.
          Operating revenues consisted of Software set-up fees and Software licensing
          fees. Software licensing fees for the year ended October 31, 2002 were
          $2,646,766 compared to $908,876 in 2001, an increase of 191% due to increased turnover
          at our three largest licensees. Software set-up
          fees for the year ended October 31, 2002 were $789,197 compared to $1,928,696 in
          2001, a decrease of 59%. We anticipate that operating revenues will increase
          during our fiscal year ending October 31, 2003, as we enter

28

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into new software licensing
agreements and as we continue to earn revenues from our installed customer base. Interest
and other revenues for the fiscal year ended October 31, 2002 were $302,031, compared to
$394,782 in 2001.

Expenses.  
          Expenses increased from $4,068,321 during the fiscal year ended October 31,
          2001, to $5,169,276 in 2002. Expenses consisted of software development expenses
          in the amount of $2,651,335 during the fiscal year ended October 31, 2002,
          compared to $2,013,601 for 2001, an increase of 32%, as we increased our
          software development efforts in 2002. General and administrative expenses
          increased $234,147 (11%) from $2,065,710 during the fiscal year ended October
          31, 2001, to $2,299,857 in 2002, due to increased sales and marketing efforts.
          We had a loss of $42,882 from the write-off of long-term securities
          during the fiscal year ended October 31, 2002.

Loss.  
          Net loss from continuing operations increased $595,585 (71%), from $835,697
          during the year ended October 31, 2001 to $1,431,282 for the fiscal year ended
          October 31, 2002. We had a loss per share of $0.06 the year ended October 31,
          2001, compared to $0.11 for the year ended October 31, 2002. The increase
          resulted mainly from our increased operating expenses during 2002. We anticipate
          improved results in the future as the growth of our recurring license fee
          revenues exceeds increases in expenses.

Year Ended October 31,
2001 Compared to October 31, 2000

The financial results for the year
ended October 31, 2001 and 2000 include the operations of our wholly owned subsidiaries
CGC and GTI.

Total Assets.   Total assets
decreased during the year from $9,710,042 (2000) to $7,937,406 (2001) due mostly to a
decrease in cash related to operating activities.

Revenues.  
          Revenues increased to $3,232,354 for the year ended October 31, 2001, compared
          with $1,421,289 for the year ended October 31, 2000, an increase of 127%.
          Operating revenues consisted of Software set-up fees and Software licensing
          fees. Software set-up fees for the year ended October 31, 2001 were $1,928,696,
          compared to $909,902 in 2000, an increase of 112%, primarily from the
          installation of software for 9 new clients. Software licensing fees for the year
          ended October 31, 2001 were $908,876, compared to $172,463 in 2000, an increase
          of 427% due primarily from licensing revenues from our installed software base.
          We anticipate that operating revenues will increase during our fiscal year
          ending October 31, 2002, as we enter into new software licensing agreements and
          as we continue to earn revenues from our installed customer base. Interest and
          other revenues for the fiscal year ended October 31, 2001 were $394,782,
          compared to $338,924 in 2000.

Expenses.  
          Expenses increased from $4,046,595 during the fiscal year ended October 31,
          2000, to $4,068,321 in 2001. Expenses consisted of software development expenses
          in the amount of $2,013,601 during the fiscal year ended October 31, 2001,
          compared to $1,291,899, an increase of 56%, as we increased our software
          development efforts in 2001. General and administrative expenses declined
          $450,978 (18%) from $2,516,688 during the fiscal year ended October 31, 2000, to
          $2,065,710 in 2001, primarily as a result of our efforts to reduce overhead
          costs and consolidation of operations. We had a one-time gain of $242,512 from
          the extinguishment of debt during the fiscal year ended October 31, 2001.

Loss.  
          Net loss from continuing operations decreased $1,789,609 (68%) from $2,625,306
          during the year ended October 31, 2000 to $835,697 for the fiscal year ended
          October 31, 2001. We had a loss per share of $0.05 the year ended October 31,
          2001, compared to $0.20 for the year ended October 31, 2000. The decline
          resulted from our increased operating revenues during 2001 and decreased general
          and administrative expenses, offset by our increased spending in software
          development. We anticipate that such losses may continue into future periods as
          we develop our business and invest in research and development to improve our
          products and marketing.

29

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Currency Translation
 Inflation

Our operations are carried out in
United States and Canadian dollars. We expect to carry out the majority of our financings,
product development and administration through our Canadian operations in Canadian
dollars, our functional currency. Under our licensing agreements, revenues will be
received in U.S. dollars. As a result, the Company will be faced with currency
fluctuations. We do not currently engage in currency hedging.

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. Our obligations to Corel are based
on revenues generated from the licensing our Online Games software. In the event our
operations are impacted by inflation, we anticipate it will increase software licensing
fees.

Critical Accounting
Policies

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 2(f) 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 judgement 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.
At October 31, 2002 and 2001, there were no contracts in progress and accordingly, no
estimate of costs to complete or related losses on contracts were required at those
reporting dates.

New Accounting
Pronouncement

The only new accounting pronouncement
that will have an impact on the Companys 2003 financial statements is the
Canadian accounting standard for accounting for stockbased compensation.

Section 3870 of the Canadian Institute
of Chartered Accountants Handbook, entitled Stockbased compensation and other
stockbased payments, establishes principles for the recognition measurement and
disclosure of stockbased compensation and other stockbased payments made to
employees and nonemployees for goods and services.  The new standard requires a fair
valuebased method of accounting for all awards granted to other than employees and
for certain, but not all, awards granted to employees.  For all other types of awards, the
Company may elect not to apply the fair valuebased method as a matter of policy.  This
standard is effective for fiscal years beginning on or after January 1, 2002 and applies to
awards granted on or after the date of adoption.

The Company adopted the new
Canadian standard for accounting for stockbased compensation on November 1, 2002.
In accordance with the new standard, 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.  The Company will, when such options are granted to employees,
provide pro forma disclosure of the impact of those grants on the results from operations had
the grants been measured at fair value.

For all grants of stock options to
nonemployees and direct awards of stock to employees, if any, the fair value of these
grants will be measured and charged to operations.

B.
  Liquidity and capital resources.

Our primary source of funds since
incorporation has been through the issue of our Common Shares. Revenues from our software
operations have increased each year since we changed our business strategy from oil and
gas to software development: $3,737,994 in 2002, $3,232,354 in 2001, and $1,421,289 in
2000.

During the year ended
October 31, 2002, we issued 189,200 common shares upon exercise of options for
proceeds of $121,088. During the year ended October 31, 2001, we issued 78,000 common
shares upon exercise of options and warrants for proceeds of $92,500. During the year
ended October 31, 2000, we raised $10,075,000 through a private placement of Special
Warrants completed on March 10, 2000. In addition, all of the 1999 Special Warrants and
1999 Warrants we issued 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.

Capital expenditures were $97,248 for
the year ended October 31, 2002 and $97,093 for the year ended October 31, 2001. These
expenditures were made to acquire equipment. We expect approximately the same amount for
capital expenditures for fiscal 2003.

We had working capital of $6,009,181
at October 31, 2002. Our cash and short-term investment position at October 31,
2002 was $4,885,761, of which $1,704,267 was cash and $3,181,494 was short term
investments consisting of low risk, fixed interest, corporate bonds and government bonds.

Cash used in operations was
$1,218,878 during 2002, compared to $2,694,061. We had a net loss of $1,431,282 in 2002 on
revenues of $3,737,994. Substantially all of our revenues are derived from software setup
fees and software license fees of CGC, our Belize subsidiary. To our knowledge there are
no restrictions on the payment of licensing fees by CGC to us. Other than working capital
and cash flows from operations, which have been negative in each of the last three fiscal
years, we have no internal sources of liquidity. We have no external sources of liquidity.

30

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We believe that our current cash
resources are sufficient to continue as a going concern. We believe that 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.

We have no long term debt or material
commitments for capital expenditures.

We expect that our software
development costs will be approximately $3,500,000 in our fiscal year ending October 31,
2003. We also anticipate our general and administrative expenditures, which include
marketing and sales expenses will be approximately $2,200,000 in our fiscal year ending
October 31, 2003.

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.

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 and development expenditures are included as Software
Development in our financial statements and are fully expensed in the periods they
are incurred. For fiscal 2002 these expenditures amounted to $2,651,335, for fiscal 2001
these expenditures amounted to $2,013,601 and for fiscal 2000 expenditures were
$1,291,899. For fiscal 2003 we expect to expend approximately $3,200,000 on research and
development efforts.

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 77% of total software revenue and should continue to increase as a percentage of
the total. We added several new clients since the end of the last fiscal year and existing
clients are being upgraded to the new version. Recurring license fee revenues and total
revenues are expected to increase in 2003 due to an increased number of active licensees
as well as the delivery of new products.

In the United States new legislation
and proposed legislation threatens to hamper growth prospects for the industry as a whole
as well as the Company. However, in Europe the trend appears to be toward regulation
rather than prohibition. Since Europe is the geographic location of our major customers
the Company expects revenue growth for fiscal 2003.

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 12, 2002. Our executive officers are
appointed by and serve at the pleasure of the Board of Directors.

As at April 1, 2003, 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.

31

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|Name and
Municipality of
Residence | Office held with the 
Company | Principal Occupation                                                  
|---------------------------------- | ----------------------------- | ----------------------------------------------------------------------
|                                  
|Darold H. Parken**
Calgary, AB     |                               | President, Chief
Executive Officer and Director since October 26, 1994
|                                  
|Rene G. Carrier*                   |                               | Director since June 27, 1991                                          
|                                  
|Darcy E. Krogh**
Vancouver, BC     |                               | Vice President, Business Development
and Director since June 7, 1999  
|                                  
|Barry H. Foster
Calgary, AB        |                               | Chief Financial Officer since
February 10, 1999                       
|                                  
|Steven W. Latham
Vancouver, BC     |                               | Director since August 25, 1998                                        
|                                  
|Donald C. Harold
Calgary, AB       |                               | Vice President, Operations                                            
|                                  
|David V. Acorn
Calgary, AB         |                               | Vice President,
Software Development                                  
|                                  
|Roderick A. Ferguson*
Calgary, AB  |                               | Director since July 10, 2001.                                         
|                                  
|Andrew Smith
Calgary, AB           |                               | Technical Director                                                    
|                                  

Notes :*     Audit Committee Member
**   Compensation Committee Member

32

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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.

Barry H. Foster, C.G.A, C.D.P.
Chief Financial Officer
Mr.  Foster received his Honors Computer Technology Diploma from the Southern Alberta
Institute of Technology in 1973, became a Certified General Accountant in 1979
and received his certified data processor designation from the Institute of
Certified Computer Professionals in 1980. Mr. Foster has senior management
experience in software integration, information technology, computer technology
and programming, strategic planning, project management and economic
evaluations.

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.

Steven W. Latham
President, GTIMr.  Latham is a pro-active management professional with more than 15 years
experience in providing technology related consulting services in both the
Canadian federal government and private sectors. Mr. Latham is a specialist in
Internet communications and commerce. Prior to joining GTI, Mr. Latham was a
Product Manager at Corel Corporation. He was involved in the development of
CorelVIDEO and the Online Games Internet gaming software. Mr. Latham is
responsible for product performance evaluations and product sales.

Donald C. Harold, B. Comm., M.A.
Vice President, OperationsMr. 
Harold is a senior information technology professional specializing in
e-commerce applications, business and project management. He has recent
experience with Internet-based commodity trading systems and the use of Internet
technologies in business applications. Mr. Harold received his Bachelor of
Commerce degree from the University of Saskatchewan in 1978 and obtained his
Master of Arts degree from the same university in 1980.

David V. Acorn 
Vice President, Software DevelopmentMr. 
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. Prior thereto, Mr. Acorn held a management position
in the oil and gas industry from 1994 to 1995. 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.

33

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Andrew Smith
Technical Director
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.

There are no arrangements or
understandings with any major shareholder, customer, supplier or others in which an above
person was selected as a director or senior manager.

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.

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.

B.
Compensation.

We do not compensate our related directors for
their services as directors. Related directors are directors who are also officers of the Company.
Non-related or independent directors receive an annual fee of $10,000.00 and are paid $500.00 for
each directors' 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. Other than as indicated below, no director received any compensation for his
services as a director, including any committee participation or special assignments during
the fiscal year ended October 31, 2002.

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

34

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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, 2001 (collectively,
the Named Executive Officers).

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

|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 2001 and
$62,000 in fiscal 2002.
|---------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Options Exercised
and Granted During the Fiscal Year Ended October 31, 2001

No options were exercised during the
last completed fiscal year by any of the Named Executive Officers. The following table
sets forth options to purchase Common Shares granted during the most recently completed
fiscal year to the Named Executive Officers.

# Termination of
Employment, Changes in Responsibility and Employment Contracts

Chartwell has no employment
agreements with any of the Named Executive Officers. 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 2002 was $680,750.

35

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No amounts have been set aside or
accrued by us during fiscal 2001 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 and the Compensation Committee.

The Audit Committee of the
Registrants Board of Directors currently consists of Darold H. Parken, Rene Carrier
and Rod Ferguson. 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.

The Compensation Committee of the
Board of Directors currently consists of 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.

D.
Employees.

We had 54 employees as at January 31,
2003 in the following departments:

|  |  |                        
|- |  | -----------------------
| |  | Software Development:  
| |  | Sales:                 
| |  | General Administration:
| |  | Management:            

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

36

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E.
  Share ownership.

Beneficial Ownership of
Directors and Senior Management

The following table lists, as of
January 31, 2003, 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 15,817,701 common shares outstanding.

|Title of Class | Name of Beneficial Owner | Amount of BeneficialOwnership | Percent ofClass
|-------------- | ------------------------ | ----------------------------- | ---------------
|Common         |                          | Darold H. Parken (1)          |                
|Common         |                          | Steven Latham (2)             |                
|Common         |                          | Barry H. Foster (3)           |                
|Common         |                          | Darcy E. Krogh (4)            |                
|Common         |                          | Rene G. Carrier (5)           |                
|Common         |                          | Donald C. Harold (6)          |                
|Common         |                          | David V. Acorn (7)            |                
|Common         |                          | Roderick A. Ferguson (8)      |                
|Common         |                          | Andrew Smith (9)              |                
|Common         |                          | Total Directors/Officers      |                

|(1) |  | Includes options (exercisable within 60 days of March 31, 2003) 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, 2003) to purchase
               86,666 common shares exercisable at a price of $1.00 per share, expiring October
               31, 2003.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Includes options (exercisable within 60 days of March 31, 2003) to purchase
               25,000 common shares exercisable at a price of $1.06 per share, expiring
               February 9, 2004; and 50,000 common shares at a price of $1.06 per share,
               expiring June 6, 2004.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Includes options (exercisable within 60 days of March 31, 2003) to purchase
               100,000 common shares exercisable at a price of $1.06 per share, expiring June
               6, 2004; and 100,000 common shares at a price of $1.06 per share, expiring
               September 17, 2005.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Includes options (exercisable within 60 days of March 31, 2003) to purchase
               50,000 common shares exercisable at a price of $1.06 per share, expiring October
               31, 2004.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | Includes options (exercisable within 60 days of March 31, 2003) to purchase
               66,667 common shares exercisable at a price of $1.06 per share, expiring June 6,
               2005.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Includes options (exercisable within 60 days of March 31, 2003) 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.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

37

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|(8) |  | Includes options (exercisable within 60 days of March 31, 2003) to purchase
               50,000 common shares exercisable at a price of $1.63 per share, expiring April
               18, 2007.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) |  | Includes options (exercisable within 60 days of March 31, 2003) 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.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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. 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, 2003. 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.

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.

|                   
|-------------------
|
|Darold H. Parken   
|Steven Latham      
|Oak Bay Investments
|                   

|(1) | Includes
625,000 options to purchase common shares exercisable within 60 days of March 31, 2003.
|--- | ------------------------------------------------------------------------------------------------

|(2) | Includes
86,666 options to purchase common shares exercisable within 60 days of March 31, 2003.
|--- | -----------------------------------------------------------------------------------------------

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.

38

---

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, 1999, 2000 and 2001, 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.

Steven Latham, a director of
Chartwell, owes the company $29,907 without interest on a demand note. This loan is
payable upon demand. This loan was made prior to July 30, 2002. 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 $132,658 as of January 31, 2003. 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 loan was made prior to July 30, 2002.
This arrangement is not on similar terms as arrangements we would otherwise negotiate with
unrelated third parties.

We also loaned $40,000 without
interest to Prasad Dasika, a former officer of the company, to purchase a personal
residence. Mr. Dasika resigned as an officer and employee of the Company effective May 23,
2000, and this loan was forgiven in full.

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, 2000,
          2001 and 2002, we paid Parken & Company annual legal fees in the amount of
          approximately $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, 2002 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
There is no trading market for our Common Shares in the United States. The following
tables

39

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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, 2003.

|Fiscal Year Ended October 31 | High | Low 
|---------------------------- | ---- | ----
|                             |      |     
|1998                         |      | 1.55
|1999                         |      | 5.10
|2000                         |      | 7.50
|2001                         |      | 2.60
|2002                         |      | 2.05

|Quarter Ended    | High | Low 
|---------------- | ---- | ----
|                 |      |     
|October 31, 2002 |      | 1.15
|July 31, 2002    |      | 1.65
|April 30, 2002   |      | 1.78
|January 31, 2002 |      | 2.09
|October 31, 2001 |      | 2.60
|July 31, 2001    |      | 2.28
|April 30, 2001   |      | 1.22
|January 31, 2001 |      | 1.99

|Month         | High | Low 
|------------- | ---- | ----
|              |      |     
|March 2003    |      | 1.40
|February 2003 |      | 1.20
|January 2003  |      | 1.15
|December 2002 |      | 1.05
|November 2002 |      | 1.10
|October 2002  |      | 0.95

The closing price of our Common
Shares on April 16, 2003 was $1.00 on the TSX.

B.
  Plan of distribution.

Not applicable.

C.
  Markets.

Our common shares are listed on the
TSX. Our common shares currently are not listed for trading in the United States.

D.
Selling shareholders.

Not applicable.

E.
  Dilution.

Not applicable.

40

---

F.
  Expenses of the issue.

Not applicable.

Item 10.  Additional
Information

A.
  Share Capital.

Not applicable.

B.
  Memorandum and articles of association.

Purposes

We are a corporation continued from
British Columbia to Alberta under the Business Corporations Act (Alberta) (the
Act) 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 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.

41

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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.

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.

42

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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 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.

43

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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:

# CGC 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.

Under the terms of the CGC Transfer
Agreement, CGC acquired the 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 131⁄2 Northern Highway, Belize District, Belize.
Mr. Ranjeet Sundher is the President 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.

CGC assumed responsibility for all
the obligations of Chartwell and GTI under the license agreements assigned to it. The CGC
Transfer Agreement was effective November 1, 1999.

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
fun 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

44

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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 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 2003 WTO Review
Threshold is CDN$223,000,000.

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$223,000,000 (in 2003) 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

45

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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.

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 general discussion
of certain possible U.S. federal income tax consequences, under current law, generally
applicable to a U.S. Holder (as hereinafter defined) of common shares of the Company. This
discussion is of a general nature only and does not take into account the particular facts
and circumstances, with respect to U.S. federal income tax issues, of any particular U.S.
Holder. In addition, this discussion does not cover any state, local or foreign tax
consequences. (See TaxationCertain Canadian Federal Income Tax
Consequences above).

The following discussion is based
upon the sections of the Internal Revenue Code of 1986, as amended (the Code),
Treasury Regulations, published Internal Revenue Service (IRS) rulings,
published administrative positions of the IRS and court decisions that are currently
applicable, any or all of which could be materially and adversely changed, possibly on a
retroactive basis, at any time and which are subject to differing interpretations. This
discussion does not consider the potential effects, both adverse

46

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and beneficial, of any proposed
legislation which, if enacted, could be applied, possibly on a retroactive basis, at any
time.

This discussion is for general
information only and it is not intended to be, nor should it be construed to be, legal or
tax advice to any U.S. Holder or prospective U.S. Holder of common shares of the Company,
and no opinion or representation with respect to the U.S. federal income tax consequences
to any such U.S. Holder or prospective U.S. Holder is made. Accordingly, U.S. Holders and
prospective U.S. Holders of common shares of the Company should consult their own
financial advisor, legal counsel or accountant regarding the U.S. federal, state, local
and foreign tax consequences of purchasing, owning and disposing of common shares of the
Company.

# U.S. Holders

As used herein, a U.S.
Holder means a holder of common shares of the Company who is (i) a citizen or
individual resident of the U.S., (ii) a corporation or partnership created or organized in
or under the laws of the U.S. or of any political subdivision thereof, (iii) an estate
whose income is taxable in the U.S. irrespective of source or (iv) a trust subject to the
primary supervision of a court within the U.S. and control of a U.S. fiduciary as
described Section 7701(a)(30) of the Code.

# Persons Not Covered

This summary does not address the
U.S. federal income tax consequences to persons (including persons who are U.S. Holders)
subject to special provisions of U.S. federal income tax law, including (i) tax-exempt
organizations, (ii) qualified retirement plans, (iii) individual retirement accounts and
other tax-deferred accounts, (iv) financial institutions, (v) insurance companies, (vi)
real estate investment trusts, (vii) regulated investment companies, (viii)
broker-dealers, (ix) persons or entities that have a functional currency other
than the U.S. dollar, (x) persons subject to the alternative minimum tax, (xi) persons who
own their common shares of the Company as part of a straddle, hedging, conversion
transaction, constructive sale or other arrangement involving more than one position,
(xii) persons who acquired their common shares of the Company through the exercise of
employee stock options or otherwise as compensation for services, (xiii) persons that own
an interest in an entity that owns common shares of the Company, (xiv) persons who own,
exercise or dispose of any options, warrants or other rights to acquire common shares of
the Company, or (xv) persons who own their common shares of the Company other than as a
capital asset within the meaning of Section 1221 of the Code.

# Distribution on Common
Shares of the Company

U.S.    
          Holders receiving distributions (including constructive distributions) with
          respect to common shares of the Company are required to include in gross income
          for U.S. federal income tax purposes the gross amount of such distributions,
          equal to the U.S. dollar value of such distributions on the date of receipt
          (based on the exchange rate on such date), to the extent that the Company has
          current or accumulated earnings and profits, without reduction for any Canadian
          income tax withheld from such distributions. Such Canadian tax withheld may be
          credited, subject to certain limitations, against the U.S. Holders U.S.
          federal income tax liability or, alternatively, may be deducted in computing the
          U.S. Holders U.S. federal taxable income by those who itemize deductions.
          (See more detailed discussion at Foreign Tax Credit below). To the
          extent that distributions from the Company exceed current or accumulated
          earnings and profits of the Company, such distributions will be treated first as
          a return of capital, to the extent of the U.S. Holders adjusted basis in
          the common shares, and thereafter as gain from the sale or exchange of the
          common shares of the Company. (See more detailed discussion at Disposition
          of Common Shares of the Company below)

In the case of foreign currency
received as a distribution that is not converted by the recipient into U.S. dollars on the
date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its
U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a
subsequent sale or other disposition of the foreign currency, including the exchange for
U.S. dollars, will be ordinary income or loss. However, an individual whose realized gain
does not exceed $200 will not recognize that gain, to the

47

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extent that there are no expenses
associated with the transaction that meet the requirements for deductibility as a trade or
business expense (other than travel expenses in connection with a business trip) or as an
expense for the production of income.

Dividends paid on the common shares
of the Company generally will not be eligible for the dividends received
deduction allowed to corporate shareholders receiving dividends from certain U.S.
corporations. Under certain circumstances, a U.S. Holder that is a corporation and that
owns shares representing at least 10%of the total voting power and the total value of the
Companys outstanding shares may be entitled to a 70% deduction of the U.S.
source portion of dividends received from the Company (unless the Company qualifies
as a Foreign Personal Holding Company or a Passive Foreign Investment
Company as defined below). The availability of the dividends received deduction is
subject to several complex limitations which are beyond the scope of this discussion, and
U.S. Holders of common shares of the Company should consult their own financial advisor,
legal counsel or accountant regarding the dividends received deduction.

Certain information reporting and
backup withholding rules may apply with respect to certain payments related to the
Companys common shares. In particular, a payor or middleman within the U.S., or in
certain cases outside the U.S., will be required to withhold 30% (which rate is scheduled
for periodic adjustment) of any payments to a U.S. Holder of the Companys common
shares of dividends on, or proceeds from the sale of, such common shares within the U.S.,
if a U.S. Holder fails to furnish its correct taxpayer identification number or otherwise
fails to comply with, or establish an exemption from, the backup withholding tax
requirements. Any amounts withheld under the U.S. backup withholding tax rules will be
allowed as a refund or a credit against the U.S. Holders U.S. federal income tax
liability, provided the required information is furnished to the IRS. U.S. Holders
should consult their own financial advisor, legal counsel or accountant regarding the
information reporting and backup withholding rules applicable to the Companys common
shares.

# Foreign Tax Credit

A U.S. Holder who pays (or has
withheld from distributions) Canadian or other foreign income tax with respect to the
ownership of common shares of the Company may be entitled, at the option of the U.S.
Holder, to either receive a deduction or a tax credit for U.S. federal income tax purposes
with respect to such foreign tax paid or withheld. Generally, it will be more advantageous
to claim a credit because a credit reduces U.S. federal income taxes on a
dollar-for-dollar basis, while a deduction merely reduces the taxpayer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 by (or withheld from distributions to) the U.S. Holder
during that year.

There are significant and complex
limitations that apply to the foreign tax credit, among which is the general limitation
that the credit cannot exceed the proportionate share of the U.S. Holders U.S.
income tax liability that the U.S. Holders foreign source income bears
to his or its worldwide taxable income. In applying this limitation, the various items of
income and deduction must be classified as either foreign source or U.S.
source. Complex rules govern this classification process. In addition, this
limitation is calculated separately with respect to specific classes of income such as
passive income, high withholding tax interest, financial
services income, shipping income, and certain other classifications of
income. Dividends distributed by the Company will generally constitute foreign
source income, and will be classified as passive income or, in the case
of certain U.S. Holders, financial services income for these purposes.

In addition, U.S. Holders that are
corporations and that own 10% or more of the voting stock of the Company may be entitled
to an indirect foreign tax credit under Section 902 of the Code with respect
to the payment of dividends by the Company under certain circumstances and subject to
complex rules and limitations.The availability of the foreign tax credit and the
application of the limitations with respect to the foreign tax credit are fact specific,
and each U.S. Holder of common shares of the Company should consult their own financial
advisor, legal counsel or accountant regarding the foreign tax credit rules.

48

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# Disposition of Common
Shares of the Company

A U.S. Holder will recognize gain or
loss upon the sale or other taxable disposition of common shares of the Company equal to
the difference, if any, between (i) the amount of cash plus the fair market value of
any property received, and (ii) the shareholders tax basis in the common shares
of the Company. This gain or loss will be capital gain or loss if the common shares are a
capital asset in the hands of the U.S. Holder, which will be long-term capital gain or
loss if the common shares of the Company are held for more than one year.

Preferential tax rates apply to
long-term capital gains of U.S. Holders that are individuals, estates or trusts. If the
common shares of the Company are held for more than five years, a lower long-term capital
gains tax rate may apply. There are currently no preferential tax rates for long-term
capital gains for a U.S. Holder that is a corporation (other than a corporation subject to
Subchapter S of the Code). Deductions for net capital losses are subject to significant
limitations. For U.S. Holders that are not corporations, any unused portion of such net
loss may be carried over to be used in later tax years until such net capital loss is
thereby exhausted. For U.S. Holders that are corporations (other than corporations subject
to Subchapter S of the Code), an unused net capital loss may be carried back three years
and carried forward five years from the loss year to be offset against capital gains until
such net capital loss is thereby exhausted.

# Other Considerations for
U.S. Holders

In the following circumstances, the
above sections of this discussion may not describe the U.S. federal income tax
consequences to U.S. Holders resulting from the ownership and disposition of common shares
of the Company:

Foreign
Personal Holding Company

If at any time during a taxable year
(i) more than 50% of the total voting power or the total value of the Companys
outstanding shares is owned, directly or indirectly, by five or fewer individuals who are
citizens or residents of the U.S. and (ii) 60% (or 50% in certain cases) or more of the
Companys gross income for such year is foreign personal holding company
income as defined in Section 553 of the Code (e.g., dividends, interest, royalties,
certain gains from the sale of stock and securities, and certain gains from commodities
transactions), the Company may be treated as a Foreign Personal Holding
Company (FPHC) In that event, U.S. Holders of common shares of the
Company would be required to include in gross income for such year their allocable
portions of such foreign personal holding company income to the extent the
Company does not actually distribute such income.

The Company does not believe that it
currently qualifies as a FPHC. However, there can be no assurance that the Company will
not be considered a FPHC for the current or any future taxable year.

Foreign
Investment Company

If (i) 50% or more of the total
voting power or the total value of the Companys outstanding shares is owned,
directly or indirectly, by citizens or residents of the U.S., U.S. partnerships or
corporations, or U.S. estates or trusts (as defined by the Code Section 7701(a)(30)), and
(ii) the Company is found to be engaged primarily in the business of investing,
reinvesting, or trading in securities, commodities, or any interest therein, the Company
may be treated as a Foreign Investment Company (FIC) as defined in
Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder
selling or exchanging common shares of the Company to be treated as ordinary income rather
than capital gain.

The Company does not believe that it
currently qualifies as a FIC. However, there can be no assurance that the Company will not
be considered a FIC for the current or any future taxable year.

49

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Controlled
Foreign Corporation

If more than 50% of the total voting
power or the total value of the Companys outstanding shares is owned, directly or
indirectly, by citizens or residents of the U.S., U.S. partnerships or corporations, or
U.S. estates or trusts (as defined by the Code Section 7701(a)(30)), each of which own,
directly or indirectly, 10% or more of the total voting power of the Companys
outstanding shares (each a 10% Shareholder), the Company could be treated as a
Controlled Foreign Corporation (CFC) under Section 957 of the
Code.

The classification of the Company as
a CFC would effect many complex results, including that 10% Shareholders of the Company
would generally (i) be treated as having received a current distribution of the
Companys Subpart F income and (ii) would also be subject to current
U.S. federal income tax on their pro rata shares of the Companys earnings invested
in U.S. property. The foreign tax credit may reduce the U.S. federal income
tax on these amounts for such 10% Shareholders (See more detailed discussion at
Foreign Tax Credit above). In addition, under Section 1248 of the Code, gain
from the sale or other taxable disposition of common shares of the Company by a U.S.
Holder that is or was a 10% Shareholder at any time during the five-year period ending
with the sale is treated as ordinary income to the extent of earnings and profits of the
Company attributable to the common shares sold or exchanged.

If the Company is classified as both
a Passive Foreign Investment Company as described below and a CFC, the Company generally
will not be treated as a Passive Foreign Investment Company with respect to 10%
Shareholders. This rule generally will be effective for taxable years of 10% Shareholders
beginning after 1997 and for taxable years of the Company ending with or within such
taxable years of 10% Shareholders.

The Company does not believe that it
currently qualifies as a CFC. However, there can be no assurance that the Company will not
be considered a CFC for the current or any future taxable year. The CFC rules are very
complicated, and U.S. Holders should consult their own financial advisor, legal counsel or
accountant regarding the CFC rules and how these rules may impact their U.S. federal
income tax situation.

Passive
Foreign Investment Company

Certain U.S. income tax legislation
contains rules governing Passive Foreign Investment Companies
(PFIC) which can have significant tax effects on U.S. Holders of foreign
corporations. Section 1297 of the Code defines a PFIC as a corporation that is not formed
in the U.S. and, for any taxable year, either (i) 75% or more of its gross income is
passive income or (ii) the average percentage, by fair market value (or, if
the corporation is not publicly traded and either is a controlled foreign corporation or
makes an election, by adjusted tax basis), of its assets that produce or are held for the
production of passive income is 50% or more. 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 resulting from commodities transactions are generally excluded from the
definition of passive income if substantially all of a merchants,
producers or handlers business is as an active merchant, producer or handler
of such commodities.

For purposes of the PFIC income test
and the assets test, if a foreign corporation owns (directly or indirectly) at least 25%
by value of the stock of another corporation, such foreign corporation shall be treated as
if it (a) held a proportionate share of the assets of such other corporation, and (b)
received directly its proportionate share of the income of such other corporation. Also,
for purposes of such PFIC tests, passive income does not include any interest, dividends,
rents or royalties that are received or accrued from a related person to the
extent such amount is properly allocable to the income of such related person which is not
passive income. For these purposes, a person is related with respect to a foreign
corporation if such person controls the foreign corporation or is controlled
by the foreign corporation or by the same persons that control the foreign corporation.
For these purposes, control means ownership, directly or indirectly, of stock
possessing more than 50% of the total voting power of all classes of stock entitled to
vote or of the total value of stock of a corporation.

50

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U.S. Holders
owning common shares of a PFIC are subject to the highest rate of tax on
          ordinary income in effect for the applicable taxable year and to an interest
          charge based on the value of deferral of tax for the period during which the
          common shares of the PFIC are owned with respect to certain excess
          distributions on and dispositions of PFIC stock under Section 1291 of the
          Code. However, if the U.S. Holder makes a timely election to treat a PFIC as a
          qualified electing fund (QEF) with respect to such
          shareholders interest therein, the above-described rules generally will
          not apply. Instead, the electing U.S. Holder would include annually in his
gross           income his pro rata share of the PFICs ordinary earnings and net
capital           gain regardless of whether such income or gain was actually
distributed. A U.S.           Holder of a QEF can, however, elect to defer the payment of
U.S. federal income           tax on such income inclusions. In addition, subject to
certain limitations, U.S.           Holders owning, actually or constructively,
marketable (as specifically defined)           stock in a PFIC will be permitted to elect
to mark that stock to market           annually, rather than be subject to the tax regime
of Section 1291 of Code as           described above. Amounts included in or deducted
from income under this           alternative (and actual gains and losses realized upon
disposition, subject to           certain limitations) will be treated as ordinary gains
or losses.

The Company believes that it was not
a PFIC for its fiscal year ended October 31, 2002 However, there can be no assurance that
the Company will not be considered a PFIC for the current or any future taxable year.
There can be no assurance that the Companys determination concerning its PFIC status
will not be challenged by the IRS, or that it will be able to satisfy record keeping
requirements that will be imposed on QEFs in the event that it qualifies as a PFIC.

The PFIC rules are very
complicated, and U.S. Holders should consult their own financial advisor, legal counsel or
accountant regarding the PFIC rules and how these rules may impact their U.S. federal
income tax situation.

# 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.

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.

51

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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.

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

52

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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.

53

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# 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.

|(a) |  | Within the 90-day period prior to the filing of this report (Date of
                    Evaluation), an evaluation was carried out under the supervision and with
                    the participation of the Companys management, including the Chief
                    Executive Officer (CEO) and Chief Financial Officer
                    (CFO), of the effectiveness of our disclosure controls and
                    procedures.  Based on that evaluation, the CEO and CFO have concluded that
                    the Companys disclosure controls and procedures are effective to ensure
                    that information required to be disclosed by the Company in reports that it
                    files or submits under the Securities Exchange Act of 1934, as amended, is
                    recorded, processed, summarized and reported within the time periods specified
                    in U.S. Securities and Exchange Commission rules and forms.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | There have been no significant changes in our internal controls or other factors
                    which could significantly affect internal controls subsequent to the date of the
                    evaluation. Therefore, no corrective actions were taken.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 16.  [Reserved]

54

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# 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, 2000, 2001 and 2002.
| | ----------------------------------------------------------------------------------------------------------------------------------

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)         |            
|
|3.1(1)         |            
|
|3.2(1)         |            
|
|3.3(1)         |            
|

55

---

|Exhibit
Number | Description
|-------------- | -----------
|               |            
|3.4(1)         |            
|
|3.5(1)         |            
|
|3.6(1)         |            
|
|3.7(1)         |            
|
|3.8(1)         |            
|
|3.9(1)         |            
|
|3.10(1)        |            
|
|3.11(1)        |            
|
|3.12(1)        |            
|
|3.13(1)        |            
|
|3.14(1)        |            
|
|3.15(1)        |            
|
|3.16(2)        |            
|
|3.17(2)        |            
|
|3.18(2)        |            
|
|4.1(3)         |            
|
|4.2(3)         |            
|
|99.1           |            
|
|99.2           |            

_________________

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

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

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

56

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# 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.

|April 23, 2003 | By:  
/s/ Barry Foster
         Barry Foster, Chief Financial Officer
|-------------- | ---------------------------------------------------------------------

57

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# CERTIFICATION

I, Darold H. Parken, Chief Executive
Officer, certify that:

|1. | I have reviewed this annual report on Form 20-F of Chartwell Technology Inc.
          (the Registrant);
|-- | ----------------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this annual report does not contain any untrue statement
          of a material fact or omit to state a material fact necessary to make the
          statements made, in light of the circumstances under which such statements were
          made, not misleading with respect to the period covered by this annual report;
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
          included in this annual report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the Registrant as
          of, and for, the periods presented in this annual report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The Registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed
such disclosure controls and procedures to ensure that material           information
relating to the Registrant, including its consolidated subsidiaries,           is made
known to us by others within those entities, particularly during the           period in
which this annual report is being prepared;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated
the effectiveness of the Registrants disclosure controls and           procedures
as of a date within 90 days prior to the filing date of this annual           report (the
Evaluation Date); and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | presented
in this annual report our conclusions about the effectiveness of the           disclosure
controls and procedures based on our evaluation as of the Evaluation           Date;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The Registrants other certifying officers and I have disclosed, based on
          our most recent evaluation, to the Registrants auditors and the audit
          committee of Registrants board of directors (or persons performing the
          equivalent function):
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all
significant deficiencies in the design or operation of internal controls           which
could adversely affect the Registrants ability to record, process,
          summarize and report financial data and have identified for the
          Registrants auditors any material weaknesses in internal controls; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any
fraud, whether or not material, that involves management or other employees           who
have a significant role in the Registrants internal controls; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The Registrants other certifying officers and I have indicated in this
          annual report whether or not there were significant changes in internal controls
          or in other factors that could significantly affect internal controls subsequent
          to the date of our most recent evaluation, including any corrective actions with
          regard to significant deficiencies and material weaknesses.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: April 23, 2003 | /s/ Darold H. Parken
Darold H. Parken
Chief Executive Officer
|-------------------- | -------------------------------------------------------------

58

---

# CERTIFICATION

I, Barry Foster, Chief Financial
Officer, certify that:

|1. | I have reviewed this annual report on Form 20-F of Chartwell Technology Inc.
          (the Registrant);
|-- | ----------------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this annual report does not contain any untrue statement
          of a material fact or omit to state a material fact necessary to make the
          statements made, in light of the circumstances under which such statements were
          made, not misleading with respect to the period covered by this annual report;
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
          included in this annual report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the Registrant as
          of, and for, the periods presented in this annual report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The Registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed
such disclosure controls and procedures to ensure that material           information
relating to the Registrant, including its consolidated subsidiaries,           is made
known to us by others within those entities, particularly during the           period in
which this annual report is being prepared;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated
the effectiveness of the Registrants disclosure controls and           procedures
as of a date within 90 days prior to the filing date of this annual           report (the
Evaluation Date); and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | presented
in this annual report our conclusions about the effectiveness of the           disclosure
controls and procedures based on our evaluation as of the Evaluation           Date;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The Registrants other certifying officers and I have disclosed, based on
          our most recent evaluation, to the Registrants auditors and the audit
          committee of Registrants board of directors (or persons performing the
          equivalent function):
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all
significant deficiencies in the design or operation of internal controls           which
could adversely affect the Registrants ability to record, process,
          summarize and report financial data and have identified for the
          Registrants auditors any material weaknesses in internal controls; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any
fraud, whether or not material, that involves management or other employees           who
have a significant role in the Registrants internal controls; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The Registrants other certifying officers and I have indicated in this
          annual report whether or not there were significant changes in internal controls
          or in other factors that could significantly affect internal controls subsequent
          to the date of our most recent evaluation, including any corrective actions with
          regard to significant deficiencies and material weaknesses.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: April 23, 2003 | /s/ Barry Foster
Barry Foster
Chief Financial Officer
|-------------------- | -----------------------------------------------------

59

---

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

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

| | As at October 31, 2002 and 2001 and for
each of the years in the three year period
ended October 31, 2002
| | ---------------------------------------------------------------------------------------------------------

---

# AUDITORS REPORT TO
THE SHAREHOLDERS

We have audited the consolidated
balance sheets of Chartwell Technology Inc. as at October 31, 2002 and 2001 and the
consolidated statements of loss and deficit and cash flows for each of the years in the
three year period ended October 31, 2002. These financial statements are the
responsibility of the Company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, 2002 and October 31, 2001 we
conducted our audits in accordance with Canadian generally accepted auditing standards and
United States generally accepted auditing standards. With respect to the consolidated
financial statements for the year ended October 31, 2000, 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 Company and the results of its operations and its cash flows for each of the years in
the three year period ended October 31, 2002 in accordance with Canadian generally
accepted accounting principles.

(Signed)    
          KPMG LLP 

Chartered Accountants 

Calgary, Canada
March 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)                          
|                                                           
|Available for sale long-term securities                    
|                                                           
|Capital assets (note 2)                                    
|                                                           
|Deferred software development costs (note 3)               
|                                                           
|                                                           
|                                                           
|Liabilities and Shareholders' Equity                       
|                                                           
|Current liabilities:                                       
|Accounts payable and accrued liabilities                   
|Current portion of obligations under capital lease (note 4)
|                                                           
|                                                           
|Obligations under capital lease (note 4)                   
|                                                           
|Shareholders' equity:                                      
|Share capital (note 5)                                     
|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 Loss and Deficit 

Years ended October 31 
(stated in Canadian dollars)

|                                         
|-----------------------------------------
|
|                                         
|Revenue:                                 
|Software set-up fees                     
|Software license 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            
|                                         
|                                         
|                                         
|Net loss                                 
|                                         
|Deficit, beginning of year               
|                                         
|Deficit, end of year                     
|                                         
|Net loss per share                       
|                                         

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 loss                                 
|Depreciation and amortization            
|Amortization of deferred software        
|development costs                        
|Deferred revenue                         
|Interest income capitalized              
|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 
|                                         
|                                         
|                                         
|                                         
|Financing:                               
|Issue of shares                          
|Issue of special warrants                
|Share and special warrant issue costs    
|Repayment of lease obligations           
|Long-term debt                           
|                                         
|                                         
|Investing:                               
|Sale (purchase) of short term investments
|Purchase of capital assets               
|                                         
|                                         
|                                         
|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, 2002, 2001 and 2000
(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
Gaming Tech 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) | Research and
deferred software development:
| | --- | -------------------------------------------

| |  | 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
generally accepted accounting principles. The criteria are 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. To
October 31, 2002, the Company has deferred the purchase cost of acquired software, which
is being amortized over its expected useful life of five years. No other software
development costs have been deferred. 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, 2002, 2001 and 2000
(stated in Canadian dollars)

---

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

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

| |  | The Company
uses the temporal method of foreign currency translation to translate the accounts of its
foreign subsidiaries. Monetary items are translated to Canadian dollars at exchange rates
in effect at the balance sheet date and non-monetary items are translated at rates of
exchange in effect when the assets were acquired or obligations incurred. Revenues and
expenses are translated at rates in effect at the time of the transactions. Foreign
exchange 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:
| | --- | ------------------

| |  | Loss per
share has been calculated using the weighted average number of common shares outstanding
during the year, which were 13,485,109 (2001  13,286,063; 2000 10,477,211).
Contingently returnable and issuable shares held in escrow have been excluded from the
calculation. 2001 and 2000 per share amounts have been restated to remove 2,330,400
contingently returnable or issuable shares from the calculation. Diluted per share
amounts, which are calculated using the treasury stock method, have not been shown, as
the results would be anti-dilutive.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g) | 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. Actual results could differ from those estimates.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (h) | 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 any future
income tax assets if it is more likely than not that the asset will not be realized.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

---

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

| | (i) | Stock option plan:
| | --- | ------------------

| |  | The Company
has a stock option plan which is described in note 5(c). No compensation expense is
recognized under the plan when stock options are issued. The consideration paid on
exercise of stock options is credited to share capital.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

---

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

---

|4. | Capital leases:
|-- | ---------------

| |  | The capital
lease obligations were incurred to purchase office equipment. The following is a summary
of the capital lease obligations at October 31, 2002:
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|                        
|------------------------
|Capital lease obligation
|Less current portion    
|                        
|                        
|                        

| |  | The following
is a schedule by years of future minimum lease payments together with the net present
value as at October 31, 2002:
| |  | ---------------------------------------------------------------------------------------------------------------------------------

|                            
|----------------------------
|Fiscal year ending:         
|2003                        
|2004                        
|2005                        
|                            
|Total minimum lease payments
|Less interest amount        
|                            
|                            
|                            

---

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

---

|5. | Share capital:
|-- | --------------

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

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

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

|                                              
|----------------------------------------------
|
|                                              
|Balance, October 31, 1999                     
|Issued for cash on exercise of stock options  
|Issued on conversion of Special Warrants (iii)
|Issued for cash on exercise of Warrants (iii) 
|Issued on conversion of Special Warrants (ii) 
|                                              
|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                     
|                                              

| | (i) | 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 are
held in escrow and are realizable from time to time as to 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 are to be returned to the Company and cancelled.
At October 31, 2002 all these shares remain held in escrow.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company
has agreed to issue an additional 25,000 shares as a finders fee in connection with
the acquisition of GTI. This additional share issue will be subject to regulatory
approval and will be subject to escrow as determined by regulatory authorities. As of
October 31, 2002, these shares have not been issued.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

---

|5. | Share capital (continued):
|-- | --------------------------

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

| | (ii) | On March 10, 2000, the Company received $10,075,000, less $816,416 of related
                    issue costs, through a private placement of 3,100,000 Special Warrants. These
                    Special Warrants entitle the holder to acquire one common share and one half
                    common share purchase warrant. Each whole purchase warrant entitles the holder
                    thereof to acquire one common share of the Company at a price of $3.80 and is
                    exercisable for a period of one year from the date of issue. In conjunction with
                    the issue of Special Warrants, the Company issued to its Agent 310,000 broker
                    warrants and 500,000 warrants to a financial consultant as compensation for
                    financial advisory services. Each warrant entitled the holder to acquire an
                    option to purchase one common share at a price of $3.25 per share, exercisable
                    until March 10, 2001. These warrants have expired.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | On July
14, 2000 the 3,100,000 Special Warrants were converted to 3,100,000 common shares and
1,550,000 purchase warrants. These warrants expired on March 10, 2001.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii) | During
the year ended, October 31, 1999 the Company received $1,000,000 through
                    a private placement of 500,000 Special Warrants. The Special Warrants
originally                     entitled the holder to acquire one common share and one
warrant. Each warrant                     entitled the holder thereof to acquire one
common share of the Company at a                     price of $2.50 until May 26, 2000.
The Company did not complete the prospectus                     filing to clear the
securities by September 24, 1999 and, accordingly, the                     Special
Warrants were convertible or exchangeable for 1.1 common shares and 1.1
                    warrants each. All of the Special Warrants were converted to common
shares, and                     in addition, 550,000 warrants to purchase common shares
were exercised at $2.50                     per common share.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| |  | 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.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

---

|5. | Share capital (continued):
|-- | --------------------------

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

| |  | Changes in
the number of options, with these 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 an original exercise
price ranging from $1.77 to $4.20, to a new exercise price ranging from $1.06 to $1.17.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The following
table summarizes information about the stock options outstanding at October 31,
2002:
| |  | ---------------------------------------------------------------------------------------------------

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

| | In November
2000, 58,000 of the 1998 warrants were converted to common shares and the remaining
192,000 warrants expired.
| | -------------------------------------------------------------------------------------------------------------------------

---

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

---

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

| | For the
year ended October 31, 2002, the Company paid legal fees of $60,000 (2001 $60,000;
2000  $62,000) and consulting fees of $165,000 (2001  $162,000; 2000  $135,000)
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 $162,565 consist of amounts due from Company officers, directors
and employees. Of these amounts, $29,907 is non-interest bearing, unsecured and with no
set terms of repayment. The remaining $132,658 bears 6% interest and is secured by
189,200 common shares of the Company.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In fiscal
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 fiscal 2001 year.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 loss                                   
|                                           
|Combined Canadian federal and provincial   
|statutory rate                             
|Computed recovery                          
|Non-tax-based amortization                 
|Difference in foreign tax rates            
|Foreign accrual property income            
|Benefit of future tax assets not recognized
|Non deductible expenses                    
|                                           
|Actual recovery                            
|                                           

---

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

---

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

| | 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, 2002, no portion of
which has been recorded in these financial statements, are as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                           
|-------------------------------------------
|
|                                           
|Benefit of non-capital/net operating losses
|Capital assets                             
|Benefit of share issue costs               
|Resource deductions                        
|Deferred development costs                 
|                                           
|                                           
|                                           

| | As at
October 31, 2002, the Company has Canadian unrecognized loss carry-forwards for income
tax purposes of approximately $3,418,645 (2001  $4,187,000) available for deduction
against future years taxable income. These losses expire as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|    
|----
|2003
|2004
|2005
|2006
|2007
|2008
|2009
|    
|    
|    

| | In addition,
for income tax purposes GTI has net operating losses carry-forward of $73,008 (2001  $74,243)
available for deduction against future years taxable income in the United States.
These losses expire between 2018 and 2019.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

---

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

|The | Companys
financial instruments consist of cash, short term investments (provincial government
bonds), 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, unless otherwise noted. It is managements
opinion that the Company is not exposed to significant interest and or credit risk. The
Companys short term investments consist of investments in low risk, fixed interest,
corporate bonds. A substantial portion of the Companys revenue is exposed to
currency fluctuations.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| | The Company
operates from leased premises. Future minimum annual payments under the leases are as
follows:
| | ----------------------------------------------------------------------------------------------------------

|    
|----
|2003
|2004
|2005
|    

|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         
|                     

---

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

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|10. | Segmented
information (continued):
|--- | ----------------------------------

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

| | During the
year ended October 31, 2002, three licensees (2001  5; 2000  3), each of
which provided more than 10% of the Companys set-up fees and license revenue,
accounted for 68.5% (2001  54.9%; 2000  42.9%) of the Companys 2002
total set-up fee and license revenue.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 Loss to U.S. GAAP Net Loss:
| | --- | -----------------------------------------------------------

| |  | The effect
on the loss for each of the years in the three year period ended October 31, 2002 of the
differences between Canadian GAAP and US GAAP is summarized as follows:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                           
|-------------------------------------------
|
|                                           
|
|                                           
|Net loss from continuing operations        
|for the period as reported in              
|accordance with Canadian GAAP              
|Repricing of stock options                 
|Stock based compensation expense:          
|APB 25                                     
|FAS 123                                    
|                                           
|Net loss under U.S. GAAP                   
|Deficit, beginning of year, under U.S. GAAP
|                                           
|Deficit, end of year, under U.S. GAAP      
|                                           

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

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

| | (a) | Reconciliation of Canadian GAAP Loss to U.S. GAAP Net Loss (continued):
| | --- | -----------------------------------------------------------------------

|                                     
|-------------------------------------
|
|                                     
|
|                                     
|Net loss per share, basic            
|Weighted average shares for basic EPS
|                                     

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

| |  | The components
of comprehensive income are as follows:
| |  | ------------------------------------------------------

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

| |  | Balance sheet
items which vary in conformity with US GAAP and SEC requirements:
| |  | -------------------------------------------------------------------------------

|                                       
|---------------------------------------
|
|                                       
|Assets:                                
|Available for sale long-term securities
|                                       
|Shareholders' Equity:                  
|Common Stock                           
|Accumulated other comprehensive income 
|Deficit                                
|                                       
|                                       
|                                       

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

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

Years ended October 31, 2002, 2001 and 2000
(stated in Canadian dollars)

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|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. The fair value of the options granted to consultants and other third parties is
estimated on the date of grant using the Black Scholes option pricing model with the
following weighted average assumptions for grants; expected volatility of 72%, risk free
interest rate of 5% and expected option lives of 5 years.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 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 each of the years ended October 31, 2001
and 2000, all options granted to date have been fixed and granted to employees, directors
and officers of the Company. $105,119 (2001  94,870; 2000  nil) has been
charged against income for those options in 2002.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 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                 
|                               

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

Years ended October 31, 2002, 2001 and 2000
(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 options vesting period.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            
|----------------------------
|
|                            
|
|                            
|Net loss under U.S. GAAP    
|As reported                 
|Pro forma                   
|                            
|Basic loss per common share:
|As reported                 
|Pro forma                   
|                            

| | (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, 2002 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
$(85,426) for the year ended October 31, 2002                     (2001  $27,625).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) | The 2,330,400 common shares held in escrow for the year ended October 31, 2002
                    (2001  2,330,400 and 2000  1,627,700), have not been included in the
                    calculation of basic or diluted earnings per share as doing so would be
                    anti-dilutive.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------