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CryptoLogic Inc. RENEWAL ANNUAL INFORMATION FORM For the year ended December 31, 2004 Play the Worldä Dated March 24, 2005




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TABLE OF CONTENTS ITEM 1: INTRODUCTION
    
    
    1ITEM 2: CORPORATE STRUCTURE
    
    
    1Name, Address and Incorporation
    
    
    1Intercorporate Relationships
    
    
    2ITEM 3: GENERAL DEVELOPMENT OF THE BUSINESS
    
    
    3Three Year History
    
    
    3ITEM 4: DESCRIBE THE BUSINESS
    
    
    6Summary
    
    
    6Principal Markets
    
    
    6Distribution Methods
    
    
    8Revenue
    
    
    8Production and Services
    
    
    9Specialized Skill and Knowledge
    
    
    9Competitive Conditions
    
    
    10New Products and Services
    
    
    11Intangible Properties
    
    
    12Cycles
    
    
    13Economic Dependence
    
    
    13Changes to Contracts
    
    
    13Employees
    
    
    13Foreign Operations
    
    
    13Risk Factors
    
    
    14ITEM 5: DIVIDENDS
    
    
    20ITEM 6: DESCRIPTION OF CAPITAL STRUCTURE
    
    
    20ITEM 7: MARKET FOR SECURITIES
    
    
    20ITEM 8: DIRECTORS AND OFFICERS
    
    
    21ITEM 9: LEGAL PROCEEDINGS
    
    
    25ITEM 10: TRANSFER AGENTS AND REGISTRARS
    
    
    26ITEM 11: ADDITIONAL INFORMATION
    
    
    26




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Item 1: INTRODUCTION All dollar amounts in this Annual Information Form are in United States dollars, except where
indicated otherwise. Effective January 1, 1998, the Companys reporting currency is in United
States dollars. Some figures and percentages may not total exactly due to rounding. Certain general information contained in this Annual Information Form concerning the industry in
which the Company operates has been obtained from publicly available information from third party
sources. The Company has not verified the accuracy or completeness of any information contained in
such publicly available information. In addition, the Company has not determined if there has been
any omission by any such third party to disclose any facts, information or events which may have
occurred prior to or subsequent to the date as of which any such information contained in such
publicly available information has been furnished or which may affect the significance or accuracy
of any information contained in any such information and summarized herein. Certain statements contained in this Annual Information Form constitute forward-looking statements
within the meaning of applicable securities laws. Forward-looking statements may include estimates,
plans, expectations, opinions, forecasts, projections, guidance or other statements that are not
statements of fact including, without limitation, statements regarding the growth of the online
gaming industry and future governmental, legislative and legal developments. When used in this
document, the words may, would, could, will, intend, plan, anticipate, believe,
estimate, expect and similar expressions, as they relate to the Company or our management, are
intended to identify forward-looking statements. Such statements reflect the Companys current
views with respect to future events and are subject to certain risks, uncertainties and
assumptions. Many factors could cause the Companys actual results, performance or achievements
that may be expressed or implied by such forward-looking statements to vary from those described
herein. Should one or more of these risks or uncertainties materialize, or should assumptions
underlying forward-looking statements prove incorrect, actual results may vary materially from
those described herein as intended, planned, anticipated, believed, estimated or expected. The
Company does not intend, and does not assume any obligation, to update these forward-looking
statements. Item 2: CORPORATE STRUCTURE Name, Address and Incorporation CryptoLogic Inc. (CryptoLogic or the Company) was formed by articles of amalgamation (the
Amalgamation) under the Business Corporations Act(Ontario) effective March 7, 1996 pursuant to
an amalgamation agreement dated January 19, 1996 between Inter.tain.net Inc., a private
corporation, and Biroco Kirkland Mines Limited. Immediately prior to the Amalgamation, Biroco
Kirkland Mines Limited did not carry on active operations.




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2 The Companys registered office is located at 220 Bay Street, 7th Floor, Toronto,
Ontario, Canada, M5J 2W4. The Companys head office is located at 1867 Yonge Street, 7th
Floor, Toronto, Ontario, Canada, M4S 1Y5. On June 28, 1996, the Company changed its name from Inter.tain.net Inc. to its current name,
CryptoLogic Inc. Intercorporate Relationships The organizational structure of the Company and our operating subsidiaries (collectively, the
Subsidiaries) as of December 31, 2004 is set forth below. For the remainder of this document,
the consolidated operations of the Company and our Subsidiaries will be referred to collectively as
we, our, the Company or CryptoLogic, unless otherwise specifically noted. CryptoLogic is
the software group located in Canada, which provides software development, upgrades and technical
support for WagerLogic Limited (WagerLogic). Located in
Cyprus and the United Kingdom, the WagerLogic group of companies
provides licensing for our Internet gaming software, e-cash management, customer support and other
services to third-party gaming operators or licensees around the world. Our WagerLogic subsidiary
is responsible for the overall licensing of our total gaming software solution and services
including the provision of 24/7 customer support to our licensees global player base. Our ECash
Direct subsidiary provides an integrated e-cash management system that enables licensees players
to deposit and withdraw funds through a wide range of payment options for use with the licensee.
Our Ads Dot Com subsidiary is a marketing and management services agency to licensees. (FLOW CHART) Note: In all cases in the above chart, the parent company owns directly or indirectly, all of the issued
and outstanding shares of the applicable subsidiary.




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3 Item 3: GENERAL DEVELOPMENT OF THE BUSINESS CryptoLogic is a global leading software and services provider to the Internet gaming market.
Today, we are the worlds largest publicly traded online gaming software developer and supplier,
and our leadership in regulatory compliance makes us one of very few companies with gaming software
that is certified to strict standards similar to land-based gaming. As at December 31, 2004,
through our wholly-owned subsidiary, WagerLogic Limited (WagerLogic), we license and support our
Internet-based gaming software package to 11 licensees located around the world, including a number
of strong UK brand name and land-based gaming organizations. Our licensees have government
authority to operate Internet gaming sites in two jurisdictions, Alderney in the British Isles and
the Netherlands Antilles. Since inception, our software solutions have processed over $25 billion in secure online wagers for
more than 2 million players in 240 countries worldwide. Three-Year History The global online gaming industry has grown from $6.0 billion in 2002 to $9.2 billion in revenues
in 2004, and is forecast to rise to $12.0 billion in 2005, according to Global Betting and Gaming
Consultants. We are mindful that while online gaming continues to grow rapidly, we continue to
operate in a challenging business environment faced with regulatory uncertainty including US
efforts aimed at banning online gaming, restrictions by some US credit card processors and certain
US advertisers, and heightened competition. International markets  such as Europe and particularly the United Kingdom  have become a core
focus for CryptoLogic over the past three years. Our international strategy focuses on investing
in and capitalizing on our relationships with leading, international brand name licensees in
foreign (or non-North American) markets that are embracing Internet gaming and represent attractive
growth potential. As the industry becomes increasingly competitive and sophisticated, we emphasize product
diversification to leverage our core competency in online casino gaming and expand into large,
emerging game segments such as poker and bingo that will drive incremental revenue. CryptoLogic has long advocated a regulatory approach to foster a transparent, credible and growing
online gaming industry. We have sought and achieved certification of our software in strictly
regulated jurisdictions. It is through this process that we maintain our reputation as the pioneer
in online gaming and a trusted provider for licensees and their customers.




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4 CryptoLogic has continued to deliver expanded and enhanced products and services to our
customer base in order to remain an industry leader. In order to accomplish this, considerable
time and financial resources have been invested in strategic areas of our product development and
system capabilities over the past three years. In particular starting in the third quarter of 2004, CryptoLogic embarked on a $10 million
investment program, which was above and beyond our normal course expenditures, to significantly
upgrade our casino and poker gaming platform, system infrastructure and scalability and back-office
systems and customer support. Approximately 70% or $7.1 million of the program was invested in
2004. The majority of this program is expected to be completed by the end of the first half of
2005. The following summarizes key milestones the Company has achieved over the past three years that
have been important to maintaining our stature as the leading public software company in the online
gaming industry:  1.
    International growth  CryptoLogic has achieved increasing geographic diversification
as reflected in licensees international revenue growing to over 60% in 2004, up from over
55% in 2003 and 40% in 2002  this reinforced the Companys global strategy and corporate
slogan of Play the Worldä. We work with some of the best international names in
online and land-based gaming including William Hill, Littlewoods Gaming, InterCasino, The
Ritz Club London Online, ukbetting and Betfair. We have developed a strong presence in the
UK, where regulation of online gaming could be legislated as early as 2005. In order to
focus on quality versus quantity of licensees that yield the greatest return on effort,
WagerLogic also rationalized and reduced the number of licensees from a high of 21 in 2003
to 11 in 2004 by our choice, which we expect that number to reduce further. Our geographic
mix represents a well-diversified business that mitigates regulatory uncertainty in any one
jurisdictions, while maximizing opportunities around the world.2.
    Market-oriented solutions  Although CryptoLogic was instrumental in pioneering the
Internet gaming software industry, there has been increasing competition over the past
three years. In order to remain an industry leader, we have invested significantly in
product research and development and service enhancements, including our major investment
program highlighted earlier. In the last few years, we have released new poker and bingo
products, and continued to expand and enhance our core casino software. These product
releases have included new choices and variations of popular slot and casino table games
such as a potential million-dollar progressive slot, an integrated bingo/slot offering,
9-Line slots, and the Internets first Fruit Machines  a tradition in UK pubs. We also
continued to expand the functionality of our poker software to add multi-table and
satellite tournament capabilities and scaled up our system to support 10,000 simultaneous
poker players online to date. We also continued to expand our payment solution including
new e-check/debit methods (ex. Neteller, FirePay, TeleBuy, 900Pay, Citadel, EverywhereMoney),
and enhanced fraud controls (ex. third-party address/credit card verifications, negative
databases, poker fraud tool).




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5  3.
    Regulatory leadership  We are one of the few online gaming providers in the
world to have our software certified in highly regulated jurisdictions comparable to
land-based casino standards. This was achieved in Alderney and the Isle of Man, both in the
British Isles. In order to achieve government approval, we were
subject to extensive probity to ensure the integrity of our Company and key personnel, and our
software was reviewed and certified by government-accredited independent testing organizations
that audited our software to ensure fair and responsible gaming. CryptoLogic is also one of
the few publicly traded online gaming software companies in the world. In September 2003,
CryptoLogic also listed and commenced trading on the Main Market of the London Stock Exchange to
grow our presence in European markets. Our public company transparency, regulatory approval
and experience put us in a competitively favourable position as more jurisdictions such as the
UK, which is targeting new legislation as early as 2005, move to implement high regulatory
standards for online gaming. Trends In order to remain competitive, CryptoLogic has had to devote increasing financial and human
resources to meet the technological and regulatory challenges associated with remaining an industry
leader. As product diversification and player sophistication increases, our need to hire greater
numbers of software and industry specialists have increased. This has contributed to higher
operating costs to accommodate the growth of our business and in order to maintain our competitive
advantage in our priority game areas. In particular, we have heightened investments in Internet
casino and poker, which are experiencing increasing competition and player demands. We are already
experiencing early returns from these investments. Should prohibitions on online gaming legislation be introduced in the United States, industry
participants in this market may increasingly focus their business on our primary market in the UK,
which could place further competitive pressures on our business. Given the trend to regulate online gaming in Europe, the costs associated with carrying on business
may increase as regulatory initiatives may require greater resources to meet changing compliance
standards. While we presently meet the highest standards for compliance and certification in
Alderney and the Isle of Man, changes in regulatory requirements, including regulatory fees and
taxation, could impact on the costs of doing business. Not all changes in the industry are foreseeable, but the growth of the industry, heightened
competition and anticipated legislation will likely accelerate the need to offer comprehensive
player solutions at an increasing rate.




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6 Item 4: DESCRIBE THE BUSINESS Summary CryptoLogic is the largest public online gaming software developer and supplier, and a leader in
the global Internet gaming industry. We trade on the Toronto Stock Exchange (symbol: CRY), NASDAQ
National Market (symbol: CRYP) and the London Stock Exchanges Main Market (symbol: CRP). Our
software development group and head office are located in Canada, which provides software
development, upgrades and technical support for WagerLogic Limited (WagerLogic), a wholly-owned
subsidiary of CryptoLogic. Located in Cyprus and the United Kingdom,
the WagerLogic group of companies provides licensing
for our Internet gaming software, e-cash management, customer support and other services to
third-party gaming operators or licensees around the world. Our integrated e-cash management
system enables licensees players to deposit and withdraw funds through a wide range of payment
options for use with the licensee. Our 24/7 customer call centre support helps our licensees
players with technical questions or assistance with the gaming software and e-cash accounts.
Other licensee services include marketing and management services. As at December 31, 2004, we had 11 licensees located around the world including a number of strong
UK brand name and land-based gaming organizations. Our licensees have government authority to
operate their online gaming operations, principally in the Netherlands Antilles and Alderney, in
the British Isles. Principal Markets CryptoLogic, through WagerLogic, provides a complete, turn-key online gaming solution predominately
focused on the Internet casino and poker segments of the global online gaming industry. We work
with a select group of international brand name licensees and target prospective licensees with a
priority focus in our key geographic markets of the UK and Europe, which we view as the regions
that offer the best near-term growth opportunities. Our total online gaming solution comprises of:  1.
    A broad Internet-based gaming software suite featuring:  
    more than 100 casino table and slot games
    multi-player bingo
    player-to-player poker
    multiple languages (English, Spanish, Japanese, Chinese, French, German, Italian)
    multiple currencies (US dollars, British pound sterling and Euros)
    multiple platforms (download, non-download (Java and Flash), wireless;
    play-for-fun and play-for-cash mode;  2.
    An integrated, proprietary e-cash management system; and3.
    24/7 multi-language customer support.




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7 Our Internet-based gaming and electronic commerce software products are used by licensees to create
virtual casinos, bingo halls or poker rooms. The downloadable software package transfers the
front end information (i.e., playing cards, roulette wheel, dice numbers) between users and
remote servers. The software package utilizes each users computer to generate the graphics of the
virtual casino, bingo hall or poker room, while the licensees gaming servers perform the dealer
function, generating the random numbers of playing cards, roulette numbers and dice numbers, as
applicable. Our most popular casino games are also available on both the Java and Flash platforms,
which provide an entertaining gaming experience without having to wait for a download. Among other things, our software contains proprietary encryption features, which allow secure
transmission of data, and permits our licensees to offer multi-player games, a panoramic virtual
casino floor populated by real players, progressive jackpots, Internet browsing features and
inter-player chatting. As part of our commitment to safe and responsible gaming, our gaming solution provides personal
options and security features including deposit and bet limits, temporary and permanent account
locks, personal identification verification, and online tracking of a players gaming activity and
e-cash transactions in real-time. Our gaming solution is complemented by an integrated e-cash management system. We provide
Internet-based electronic commerce support and technology to our licensee customers and maintain,
through subsidiaries, electronic commerce accounts for both merchants of our electronic commerce
software and their end-users. For the majority of our licensees, we report and remit to our
licensees the net transaction revenues less licensing and support fees payable to the Company (as
outlined in the applicable licensing agreement). Two licensees have responsibility for their own
e-cash systems to enable an integrated account of all their online offerings, which would have our
licensees remit licensing fees to us. Utilizing our electronic commerce software, users can purchase electronic cash through a wide range
of payment options  by credit card, debit card, electronic wallet, electronic check, transfer from
their bank account, wire transfer, or personal check, or have the balance in their account returned
through their credit card account, by check or their electronic wallet. Users of our electronic
commerce software products are charged nominal fees for using this service. We also provide 24/7 customer support in the languages and currencies supported by our software for
enhanced convenience to our licensees global player base, which is available to help players with
technical questions or assistance with the gaming software and e-cash accounts. It is our objective to continue to introduce innovative software products, support tools and
services that appeal to broad segments of gaming audiences worldwide.




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8 Distribution Methods We currently market our technology and services through a select sales and marketing strategy
whereby we identify key potential customers that meet our licensee profile, and then contact such
prospects directly. We also attend industry trade shows around the world to generate new prospects,
and respond to referrals from existing customers and other industry participants. In keeping with
our focus on quality over quantity, we have become increasingly selective and refined our target of
new licensees to only one or two substantial new customers each year that have, what we consider,
the criteria for success  a trusted brand name, an established base of gamers to cross-market new
products, and the financial resources and commitment to market their site in a global and
competitive environment. We do not limit our sales efforts to particular jurisdictions. However, the US market continues to
face challenges, given legislative uncertainty arising from prohibition initiatives. Therefore, we
are leveraging our strong UK licensee base to continue to focus our sales and marketing efforts in
our key markets of the UK and Europe, and explore longer term prospects in Asia. Our strategy for Europe and Asia include multi-language and multi-currency versions  both actively
marketing current languages and currencies and introducing new ones with existing and new
customers, as well as exploring foreign payment options that increase the ability of our customers
to attract a broader, international player base. While Asia offers large market potential, this region represents a longer term opportunity because
of higher barriers to entry due to fragmented legislation and no single popular payment form. We
attend Asian-Pacific trade shows and look to identify local partners that can help us establish
meaningful contacts with governments and major, brand name gaming organizations. We will continue
to pursue opportunities in this market that will generate an appropriate return. Revenue Substantially all of our revenue is of a recurring nature in that WagerLogics licensees pay an
ongoing fee for the licensing and support of our software, calculated as a percentage of each
licensees level of activity. Additional revenues are derived from other sources including the
provision of software customization and advertising services. Historically, we experience
seasonality with slower sales in the second and third quarters, as the use of the Internet is not
as strong in the summer months when players tend to spend less time indoors and at their computers.
Typically, our first and fourth quarters (during the winter and fall seasons) are our strongest
revenue periods. In fiscal 2004, revenue was $63.7 million (2003: $44.2 million), with 96% (2003: 95%) of this
amount represented by recurring software licensing fees. Other revenue sources accounted for 4% of
revenue (2003: 5%).




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9 Fee revenue from our casino and bingo businesses are calculated as a percentage of a licensees
level of activity in its online casino or bingo site. By contrast, fees from online poker are
based on a percentage of the licensees rake per hand in regular or ring games (the rake is
typically 5% of the pot, up to a maximum amount per hand), or fixed fees for entry into poker
tournaments. 75% of our total revenue was derived from our casino business in 2004 (2003: 82%); while
approximately 20% was attributable to online poker (2003: over 10%) and approximately 2% from bingo
(2003: 2%). Production and Services Through its wholly owned subsidiary, WagerLogic, the Companys gaming software, integrated e-cash
management system and 24/7 customer support, are licensed typically as a complete solution to an
international customer base. WagerLogic licensees pay an initial one-time customization fee to
brand the software to the look and feel of that particular customer and then an ongoing fee for the
licensing and support of the software, calculated as described earlier. The Companys research and
development (R&D) activities are predominantly performed in-house by approximately 61% of the
Companys workforce at 2004 year end and who are located in Canada. Certain game variations and
themes may be outsourced to third-party development organizations. In 2004, we began to organize
our Company into dedicated teams to specialize in strategic focus areas: i) casino and poker game
development and enhancements; ii) system infrastructure and scalability; and iii) enhancement of
our customer support and back-office processing. Of the Companys development staff, 51% was in
casino software, 19% in poker software, 14% in product and back-office support and the remaining
16% in global IT and operations support. System infrastructure servers, which include gaming
servers, e-cash servers, database servers and download servers, are required to ensure effective
operations of licensees online gaming sites. The Company maintains the infrastructure servers,
which are located in various jurisdictions around the world in secure facilities. Specialized Skill and Knowledge As at December 31, 2004, our Company, including our subsidiaries, employed 291 people, with 219
employees located in Canada and 72 located internationally. More than 80% of our staff is
dedicated to development, compliance, sales, licensee and customer support. Our ability to attract and retain highly skilled technical and management personnel and a
multi-lingual customer support staff is one of the key factors in our success. As the demand for gaming options and the quality of products increases, additional staffing
requirements will need to be met to remain competitive. In 2004, our employees increased to 291
from 175 in 2003. We anticipate that future growth in numbers of employees will moderate.




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10 Competitive Conditions Although online gaming is a fast-growing industry, it is becoming increasingly competitive and
sophisticated. Global Betting and Gaming Consultants, a consulting firm focused on the land-based
and online interactive gaming industries, suggests that the global market for online gaming, which
comprises casino games, sports betting, bingo, poker and lotteries, will rise to $12.0 billion in
annual gaming revenue in 2005, up from $9.2 billion in 2004. While it is difficult to confirm the
exact number of Internet gaming sites since most companies are private, current estimates are
around 1,200 online gaming properties (source: Casino City), down from more than 1,800 according to
River City Group several years ago  which points to industry consolidation. CryptoLogics primary focus areas are in online casino and poker, which are proven, cash generative
business segments on the Internet. Online casino first developed almost 10 years ago. Therefore,
Internet casino is a more mature and competitive marketplace, although it remains a major pillar at
over 20% of the global online gaming market. Online poker is todays fastest-growing segment in
interactive gaming. While Internet poker has grown 20-fold in recent years and is running at a
current annualized rate of approximately $2 billion (according to PokerPulse), this sector is already
dominated by major operators offering liquidity (that is, a site
which is well populated to ensure a player
will always find a game, anytime and at his stake level), a variety of games and tournaments.
Although it is unreasonable to expect online poker to continue to
grow at the same dramatic pace, industry
experts forecast poker to continue at a healthy rate to exceed 100% growth in 2005 (according to
Global Betting and Gaming Consultants). Licensees of our software compete with existing and more established recreational services and
products, in addition to other forms of entertainment. Our success will depend, in part, upon our
ability to enhance our products and services, expand our system infrastructure and resiliency, to
keep pace with technological developments, respond to evolving customer requirements and achieve
continued market acceptance. We compete with a number of public and private companies, which provide electronic commerce and/or
Internet gaming software. Given the emerging development of the industry and the multitude of
private organizations operating in the industry, information about the nature of our competitors,
their operations and their resources is difficult to compile. In addition to current known
competitors, traditional land-based gaming operators and other entities, many of which have
significant financial resources and name brand recognition, may provide Internet gaming services in
the future, and thus become competitors of CryptoLogic. Increased competition from current and
future competitors and increased expenditures has and will result in the reduction of margins, or
could result in the loss of market share. The global nature of Internet makes most Internet markets, including the online gaming industry,
relatively accessible to a wide number of entities and individuals. We believe the principal
competitive factors in our industry that create certain barriers to entry include reputation,
technology, financial stability and resources, proven track record, regulatory compliance,
independent oversight and transparency of business practices.




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11 New Products and Services In 2004, we enhanced our poker software with the introduction of new multi-table and satellite
tournament capabilities, which enabled licensees to offer major online tournament events and larger
cash prizes  huge marketing draws to players to generate increasing traffic. We also helped our
licensees introduce their first land-based, televised poker tournament held in St. Maarten in the
Caribbean in December 2004. This inaugural poker event attracted 157 online and land-based
professionals and amateurs from around the world to compete for a cash prize pool exceeding
$750,000. As a result, we have seen growth in our online poker fees rise more than 145% over 2003,
and account for approximately 20% of revenue in 2004. This compares with over 10% in 2003. We
also invested significantly to expand the capacity and resiliency of our poker system, which
currently supports 10,000 simultaneous poker players. Today, nine major licensees use our solution
and are benefiting from increased player traffic and revenue growth. We continued to expand our game suite in our core casino business. In 2004, we introduced a
succession of new casino product themes and variations. New games help re-energize players and
drive increased revenue for our licensees. During 2004, we released more than 30 new choices of
popular casino games, particularly in the slot category where we were underdeveloped. New games
included a variety of new video slot themes, more multi-currency progressive jackpots, the
Internets first Fruit Machines  a slot-type game found throughout British pubs  as well as
additional card games such as Casino War, Casino Solitaire and new US and UK variations of
Blackjack. As a result of new game introductions, our online casino revenue rose over 30% in 2004
compared to the previous year  even in a market that is more developed and competitive. We continued to enhance our payment solution and services toward our goal of offering our
customers players the broadest range of payment options for increased choice and convenience and
to help our licensees grow profitable Internet businesses. In 2004, we released a new pre-paid
card system and added a new European payment processor. We also continued to enhance our fraud
control capabilities with a new poker fraud tool and additional third-party customer verification
services.




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12 Intangible Properties As a leading software developer in the Internet gaming industry, our business is based on licensing
our gaming software and related proprietary e-commerce technology and support services through
WagerLogic. Licensing contracts generally extend from 3 to 5 years, although more recently 3 years
in term, and have renewal provisions, which provides us with a long term recurring revenue stream.
We rely on a combination of laws and contractual provisions to establish and protect our rights in
our software and proprietary technology. We believe that much of our competitive position is
dependent upon our ability to protect our proprietary information. We generally enter into
non-disclosure and invention agreements with employees, licensees, consultants and customers, and
historically have restricted access to our software products source codes. Our source codes are
proprietary to us and we protect the source code versions of our products as trade secrets and
unpublished copyrighted works. Despite our precautions and measures implemented to protect against
such attempts, unauthorized parties may have or could in the future copy or otherwise reverse
engineer portions of our product or otherwise obtain and use information that we regard as
proprietary. We do not possess any patent or copyright registrations in Canada, the United States or any other
jurisdiction. However, our Company and subsidiaries have trademark registrations in certain
jurisdictions and are in the process of applying for further trademark registrations and have
submitted various patent applications in the United States, which would provide such protection in
relevant jurisdictions. Certain provisions of our license agreements, including provisions
protecting against unauthorized use, transfer and disclosure, may be unenforceable in certain
jurisdictions. We believe that patent, trademark, copyright and other legal protections are less significant to
our success than other factors such as the knowledge, ability and experience of our personnel, new
product and service developments, frequent product enhancements, customer service and ongoing
product support. We also have a proprietary interest in our name. The names CryptoLogic and WagerLogic have
become well known in the Internet gaming industry. Accordingly, our competitive position could be
affected if our name was misappropriated and our reputation in any way compromised. There can be no assurance that the steps we have taken to protect our proprietary rights will be
adequate to deter misappropriation of our technology or independent development by others of
technologies that are substantially equivalent or superior to our technology. Any misappropriation
of our name, technology or development of competitive technologies could have a material adverse
effect on our business, revenues, operating results and financial condition. We also have licensing agreements with third parties for intellectual property that we use in the
provision of our gaming software and services, which are subject to renewal.




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13 Cycles Historically, we have experienced slower revenues in the second and third quarters, as the use of the
Internet is not as strong in the summer months, when players tend to spend less time indoors and at
their computers. Typically, our first and fourth quarters (during the winter and fall seasons) are
our strongest revenue periods. Economic Dependence In fiscal 2004, our top 7 licensees accounted for approximately 93% of our total revenue, a similar
concentration to 2003, although representing a different mix of licensees. In addition, a large
majority of key licensees operate from one licensing jurisdiction. The loss of one or more of
these key licensees or their license in their respective jurisdiction or a material change in the
terms of the license agreements could have a material adverse effect on our business, revenues,
operating results and financial condition. Changes to Contracts The Companys online gaming software solution and services are licensed to third-party gaming
operators around the world. Licensing contracts generally extend from 3 to 5 years, although more
recently 3 years in term, and have renewal provisions, which provides us with a long term recurring
revenue stream. Contracts are subject to renewal, renegotiation and may be contingent on certain
performance requirements. There can be no assurance that license agreements will be renewed or
that there will not be a material change in the terms of the contract, which could adversely affect
our business, revenues, operating results and financial condition. Employees As at December 31, 2004, our Company, including our subsidiaries, employed 291 people, with 219
employees located in Canada and 72 located internationally. Foreign Operations A significant portion of our revenues is derived from licensing and support fees in non-North
American countries. The Company and our licensees are subject to local laws and regulations in
those jurisdictions in which they operate. While some jurisdictions have introduced regulations
designed to restrict Internet gaming, others have demonstrated acceptance of such activities.
Currently, approximately 85 jurisdictions worldwide regulate or are in the process of legalizing
some form of Internet gaming according to the River City Group. As companies and consumers involved in Internet gaming, including the players of our licensees, are
located around the globe, there is uncertainty regarding exactly which government has jurisdiction
or authority to regulate or legislate with respect to various aspects of the industry. The
uncertainty surrounding the regulation of Internet gaming in the various jurisdictions in which we
operate could have a material adverse effect on our business, revenues, operating results and
financial condition.




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##### 



14 In addition, there are certain difficulties and risks inherent in doing business internationally,
including the burden of complying with multiple and conflicting regulatory requirements, foreign
exchange risks, potential restrictions or tariffs on gaming activities that may be imposed,
potentially adverse tax consequences and tax risks. Changes in the political and economic
stability, regulatory and taxation structures, and the interpretation thereof, of jurisdictions in
which we, our subsidiaries and our licensees operate, and in which our licensees customers are
located could have a material adverse effect on our business, revenues, operating results and
financial condition. Our ability to expand our business in certain countries will require modification of our products,
particularly domestic language and currency support. Once a licensee has posted its gaming site on
the Internet, the site is available to users around the world. However, there can be no assurance that we will be able to sustain or increase revenue derived from
international operations or that we will be able to penetrate linguistic, cultural or other
barriers to new foreign markets. Risk Factors CryptoLogic operates in a rapidly changing environment that involves numerous risks and
uncertainties, many of which are beyond our control and which could have a material adverse effect
on our business, revenues, operating results and financial condition. The following discussion
highlights some of these risks and uncertainties. In addition, readers should carefully review the
risk factors described in the Companys 2004 Managements Discussion and Analysis filed with
various Securities Commissions. Industry Risks Government Regulation The Company and our licensees are subject to applicable laws in the jurisdictions in which they
operate. At the present time, our licensees operate under online gaming licenses issued by
governments in two jurisdictions, Alderney and Netherlands Antilles. Some jurisdictions have
introduced regulations attempting to restrict or prohibit Internet gaming, while other
jurisdictions have taken the position that Internet gaming is legal and/or have adopted or are in
the process of considering legislation to regulate Internet gaming. Currently, the UK intends to establish a regulated market for online gaming. The Isle of Man and
Alderney  both in the British Isles  are already fully regulated environments for Internet
gaming, based on high standards consistent with land-based gaming. The British government has
introduced legislation to create a regulated and licensed jurisdiction for Internet gaming with the
goal to enact the new law as early as 2005. Compliance with the new
law may result in increased costs and could adversely affect our
business, operating results and financial conditions. There is, however, no assurance that the UK Gambling
Bill will be passed into law.




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15 Opposing views are developing in Europe. Some European countries, including Italy, Germany and
Holland where there are state-owned monopolies, are taking action aimed at banning foreign online
gaming operators. Such actions by these member states are in contrast with a recent
favourably-viewed ruling from the European Court of Justice that challenged member state monopolies
and have prompted the European Commission to look at creating new legislation that could harmonize
online gaming within the EU, in line with the ECs goal to encourage a free and open cross-border
market. As companies and consumers involved in Internet gaming, including our licensees and their players,
are located around the globe, there is uncertainty regarding which government has authority to
regulate or legislate the industry. However, legislation and legal action designed to restrict or
prohibit Internet gaming may be adopted in the future in the United States or other jurisdictions. Future decisions may have a material impact on our operations and financial results. Existing
legislation, including US federal and state statutes, have been and could continue to be construed
to prohibit or restrict gaming through the use of the Internet, and there is a risk governmental
authorities may view us or our licensees as having violated such statutes. Therefore, there is a
risk that legal proceedings could be initiated against us, our licensees, Internet service
providers, credit card processors, advertisers and others involved in the Internet gaming industry.
This could involve substantial litigation expense, penalties, fines, injunctions or other remedies
or restrictions being imposed upon us or our licensees or others while diverting the attention of
key executives. Such proceedings could have a material adverse effect on our business, revenues,
operating results and financial condition. Given the legislative uncertainty particularly in the US, we have geographically diversified our
business and customer base in global markets that embrace online gaming. Nevertheless, there can be
no assurances that additional legislation or the burdens associated with complying with them will
not be proposed and passed in the United States or in other potentially relevant jurisdictions to
legislate or regulate various aspects of the Internet or the Internet gaming industry. Payment Processing Starting in December 2001, certain financial institutions in the US ceased to accept online gaming
transactions through their credit cards due to the uncertainty regarding the legislation of
Internet gaming in that country. This event has had a negative impact on the Internet gaming
industry as a whole, on our licensees, and on the Company, as evidenced in lower revenues in 2002.
There can be no assurance that other financial institutions or credit card issuers in the US and/or
other countries will not enact additional restrictions. Such developments would have a material
adverse effect on our business, revenues, operating results and financial condition. However, this
risk has been mitigated with ongoing expansion of our alternate payment solutions and our strategy
to expand in Europe. In addition, the loss of a major payment option could have a material adverse
affect on our business.




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16 There can be no assurance that our systems or measures in place will or can guarantee protection
against fraudulent activities as well as limit access to minors, which could have a material effect
on our business, revenue, operating results and financial conditions. We mitigate these concerns
with systematic controls and a dedicated fraud team. There is an audit trail of every transaction.
As well, we have established relationships with financial institutions that are subject to
stringent banking regulations in their respective jurisdictions. E-commerce Law In addition to regulations pertaining specifically to online gaming, we may become subject to any
number of laws and regulations that may be adopted with respect to the Internet and electronic
commerce. As well, current laws, which predate or are incompatible with Internet commerce, may be
enforced in a manner that restricts the electronic commerce market. However, the application of
such pre-existing Canadian, US and international laws regulating communications or commerce in the
context of the Internet and electronic commerce is uncertain. Moreover, it may take years to determine the extent to which existing laws relating to issues such
as intellectual property ownership and infringement, libel and personal privacy are applicable to
the Internet. New laws and regulations that address issues such as user privacy, pricing, online content
regulation, taxation, advertising, intellectual property, information security, and the
characteristics and quality of online products and services may be enacted. The adoption of new laws or regulations relating to the Internet, or particular applications or
interpretations of existing laws, could decrease the growth in the use of the Internet, decrease
the demand for our products and services, increase our cost of doing business or could otherwise
have a material adverse affect on our business, revenues, operating results and financial
condition. Business Risks E-commerce Adoption The success of our electronic commerce services will depend in large part on the widespread
adoption of the Internet for commercial transactions. The marketplace for electronic commerce
continues to develop, and is subject to frequent and rapid technological changes. It is not
possible to fully predict any trend and therefore any eventual impact on our operations and
financial results. Internet Viability and System Infrastructure and Reliability The growth of Internet usage has caused frequent interruptions and delays in processing and
transmitting data over the Internet. There can be no assurance that the Internet infrastructure or
the Companys own network systems will continue to be able to support the demands placed on us by
the continued growth of the Internet, the overall online gaming industry or that of our customers.




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17 The Internets viability could be affected by delays in the development or adoption of new
standards and protocols to handle increased levels of Internet activity or due to increased
government regulation. If critical issues concerning the commercial use of the Internet are not
favorably resolved (including security, reliability, cost, ease of use, accessibility and quality
of service), if the necessary infrastructure is not sufficient, or if other technologies and
technological devices eclipse the Internet as a viable channel, this may negatively affect Internet
usage, and our business, revenues, financial condition and operating results will be materially
adversely affected, and we may be forced to cease operations. End-users of our software depend on Internet service providers, online service providers, gaming
site operators and our system infrastructure for access to the sites operated by our licensees.
Many of these services have experienced service outages in the past and could experience service
outages, delays and other difficulties due to system failures, stability and interruption. Our
licensees may lose customers as a result of delays or interruption in service, including delays or
interruptions relating to high volumes of traffic or technological problems. As a result, we may
not be able to meet a level of service that we have contracted for, and we may be in breach of our
contractual commitments, which could materially adversely affect our business, revenues, operating
results and financial condition. Also, the increasing presence of viruses and cyber attacks may affect the viability and
infrastructure of the Internet and could materially adversely affect
our business. Market Demand The Internet gaming industry continues to rapidly evolve and are characterized by an increasing
number of market entrants. The demand and acceptance for new products and services are subject to
a high level of uncertainty and growing competition. Substantially all of our revenues to date have been derived from the licensing of our Internet
gaming software and the support of our associated services through our licensing subsidiary. If
the market develops more slowly than expected, or becomes saturated with competitors or competitive
products or if our services do not achieve market acceptance, our business, revenues, operating
results and financial condition could be materially adversely affected. Security Our Internet gaming software and electronic commerce services are reliant on technologies and
network systems to securely handle transactions and user information over the Internet, which may
be vulnerable to system intrusions, unauthorized access or manipulation. As users become
increasingly sophisticated and devise new ways to commit fraud, our security and network systems
may be tested and subject to attack. We have experienced such system attacks in the past and
implemented measures to protect against these intrusions. However, there is no assurance that all
such intrusions/attacks will or can be prevented in the future, and any system intrusion/attack may
cause a delay, interruption or financial loss, which could have a material effect on our business,
revenue, operating results and financial condition.




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##### 



18 Reliance on Other Parties Our electronic commerce product relies on Internet Service Providers (ISPs) to allow our licensees
customers and servers to communicate with each other. If ISPs experienced service interruptions, it
would prevent communication over the Internet and would impair our ability to carry on business. Our ability to process e-commerce transactions depends on bank processing and credit card systems.
In order to prepare for system problems, we are strengthening and enhancing our current facilities
and the redundancy of our system infrastructure and support. Nevertheless, any system failure,
including network, software or hardware failure, which causes a delay or interruption in our
e-commerce services could have a material adverse effect on our business, revenues, operating
results and financial condition. Chargebacks As a result of increasing player deposit levels, we are subject to higher exposure to chargebacks,
which may also result in possible penalties. Chargebacks are any deposit transaction credited to a
users account that is later reversed or repudiated. While the Company has a provision for
chargebacks, this factor could have a material adverse effect on our business, revenues, operating
results and financial conditions and our relationship with credit card providers. Foreign Exchange Our financial results are reported in US currency, which is subject to fluctuations in respect of
the currencies of the countries in which we operate, including US dollars, British pound sterling,
Euros, and Canadian dollars. Accordingly, fluctuations in the exchange rate of world currencies
could have a positive or negative effect on our reported results. We utilize a hedging program to
mitigate a portion of our currency risks, but there can be no assurance that we will not experience
currency losses in the future, which could have a material adverse effect on our business,
revenues, operating results and financial condition. Hiring and Retaining Employees Our future success is dependent on certain key management and technical personnel. The loss of
them or the inability to attract and retain highly qualified staff and advisors could have a
material adverse effect on our business, revenues, operating results and financial condition.




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19 Managing Growth We have a history of growth. The expansion of our business and the increasing complexity of our
product offerings, coupled with the rapid evolution of our markets, and increasing competition that
puts pressure on margins have placed, and are expected to continue to place, a significant strain
on our management and operational resources and to increase demands on our internal systems,
procedures and controls. Our future operating results will depend on managements ability to
develop and manage growth, enhance our products and services to respond to market demand, deal with
competition and evolving customer requirements, manage our system infrastructure and requirements
to meet the growing demands of our business, hire and retain significant numbers of qualified
employees, accurately forecast revenues and control expenses. A decline in the growth rate of our
revenues without a corresponding and timely slowdown in our expenses or our inability to manage or
build future growth efficiently could have a material adverse effect on our business, revenues,
operating results and financial condition. Future Acquisitions and Investments As part of our business strategy, we may make acquisitions of or significant investments in
businesses or technology that offer complementary products, services, and technologies. Any
acquisition or investment will be accompanied by common risks, including the difficulty of
assimilating the operations and personnel of the acquired businesses; the potential disruption of
management from our business; the inability of management to maximize the financial and strategic
position of our company or returns from the investment or acquired businesses; the maintenance of
uniform standards, controls, procedures and policies; and the impairment of relationships with
employees and clients as a result of and integration of the investment, acquisition or new
management personnel. Stock Volatility The market price of our common shares has experienced significant fluctuations and may continue to
fluctuate significantly. The market price of our common shares may be adversely affected by
various factors affecting us and our competitors, such as proposed Internet gaming legislation or
enforcement of existing laws, the announcement of new products or enhancements, innovation and
technological changes, customer decisions, Internet security and system reliability issues,
quarterly variations in revenue and results of operations, changes in earnings estimates by
financial analysts, speculation in the press or analyst community and general market conditions or
market conditions specific to particular industries, including the Internet and gaming. In addition, the stock market has from time to time experienced extreme price and volume
fluctuations. These company-specific or broad market fluctuations may adversely affect the market
price for our common shares. Anti-online gaming legislation could also impact our ability to
remain listed.




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##### 



20 Although our common shares are listed and traded on the Toronto Stock Exchange, the NASDAQ National
Market and the London Stock Exchanges Main Market, this should not imply that there will always be
a liquid market in our common shares and an investment in our common shares may be difficult to
realize. In addition, the availability of three markets in which our shares may trade may cause
liquidity to become fragmented. Item 5: DIVIDENDS On September 10, 2003, CryptoLogics Board of Directors adopted a quarterly dividend policy, the
first ever in our history. The Board declared our inaugural quarterly dividend of $0.03 per common
share (annual rate of $0.12), paid on November 24, 2003. On November 4, 2004, CryptoLogics Board
approved an increase in our quarterly dividend from $0.03 to $0.05 per common share (annual rate of
$0.20), commencing with the quarterly dividend paid on December 15, 2004. Each future quarterly
dividend will be subject to Board approval based on the Companys financial results. Item 6: DESCRIPTION OF CAPITAL STRUCTURE Our authorized capital consists of an unlimited number of common shares. As of December 31, 2004,
there were 13,311,498 common shares issued and outstanding. The common shares entitle holders to
one vote per share at all shareholder meetings. Common shareholders are also entitled to receive
any dividends declared by the Board of Directors. The Company also has 30,000 Series F warrants
outstanding, which entitles the holders to acquire common shares of the Company for Cdn$23.00 per
share. The warrants vest in equal amounts over a four-year period and expire in October 2005. As
at December 31, 2004, no warrants have been exercised. Item 7: MARKET FOR SECURITIES Our common shares have been listed for trading on The Toronto Stock Exchange since September 30,
1998 under the symbol CRY, on the NASDAQ National Market since March 20, 2000 under the symbol
CRYP, and on the Main Market of the London Stock Exchange since September 15, 2003 under the
symbol CRP. The following table provides the monthly trading information of the Companys shares
on the Toronto Stock Exchange for the year ended December 31, 2004*: Trading summery for: CRYDate
    
    
    Open
    
    
    
    High
    
    
    
    Low
    
    
    
    Close
    
    
    
    # of Trades
    
    
    
    Volume Traded
    
    
    
    Value Traded2004/12
    
    
    
    28.500
    
    
    
    
    30.000
    
    
    
    
    24.370
    
    
    
    
    29.970
    
    
    
    
    4,485
    
    
    
    
    1,099,192
    
    
    
    
    30,564,769.3102004/11
    
    
    
    18.650
    
    
    
    
    29.500
    
    
    
    
    18.650
    
    
    
    
    29.390
    
    
    
    
    4,919
    
    
    
    
    1,543,203
    
    
    
    
    37,216,329.4102004/10
    
    
    
    19.640
    
    
    
    
    21.270
    
    
    
    
    17.100
    
    
    
    
    18.660
    
    
    
    
    1,402
    
    
    
    
    505,165
    
    
    
    
    9,654,030.9502004/09
    
    
    
    18.790
    
    
    
    
    20.060
    
    
    
    
    18.280
    
    
    
    
    19.550
    
    
    
    
    1,175
    
    
    
    
    292,753
    
    
    
    
    5,714,131.8402004/08
    
    
    
    18.820
    
    
    
    
    20.730
    
    
    
    
    15.750
    
    
    
    
    18.700
    
    
    
    
    2,403
    
    
    
    
    676,451
    
    
    
    
    12,315,476.8702004/07
    
    
    
    23.890
    
    
    
    
    24.000
    
    
    
    
    18.500
    
    
    
    
    19.280
    
    
    
    
    1,687
    
    
    
    
    379,816
    
    
    
    
    7,680,071.1702004/06
    
    
    
    21.750
    
    
    
    
    24.370
    
    
    
    
    21.650
    
    
    
    
    23.900
    
    
    
    
    1,647
    
    
    
    
    503,575
    
    
    
    
    11,749,909.3502004/05
    
    
    
    24.400
    
    
    
    
    25.460
    
    
    
    
    20.700
    
    
    
    
    22.000
    
    
    
    
    2,089
    
    
    
    
    726,054
    
    
    
    
    16,416,277.2202004/04
    
    
    
    20.000
    
    
    
    
    27.950
    
    
    
    
    19.750
    
    
    
    
    24.220
    
    
    
    
    3,832
    
    
    
    
    2,515,821
    
    
    
    
    61,255,192.7302004/03
    
    
    
    21.850
    
    
    
    
    23.500
    
    
    
    
    18.390
    
    
    
    
    19.840
    
    
    
    
    2,821
    
    
    
    
    965,995
    
    
    
    
    20,518,627.3102004/02
    
    
    
    18.900
    
    
    
    
    23.100
    
    
    
    
    18.250
    
    
    
    
    22.180
    
    
    
    
    2,198
    
    
    
    
    788,825
    
    
    
    
    16,742,732.3102004/01
    
    
    
    15.250
    
    
    
    
    19.500
    
    
    
    
    15.250
    
    
    
    
    18.700
    
    
    
    
    2,036
    
    
    
    
    721,569
    
    
    
    
    12,907,404.220
   *
    
    Trading information is in Canadian dollars, except the number of trades and volume traded.




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##### 



21 Item 8: DIRECTORS AND OFFICERS The names of the directors and senior officers of our Company at March 24, 2005, their
municipalities of residence, their respective positions with our Company and the date upon which
they were first elected as a director or officer of CryptoLogic are set out in the below tables: CommonDate of First
    
    
    Shares HeldName and Municipality
    
    
    
    
    
    
    
    Election as
    
    
    as at Marchof Residence
    
    
    Principal Occupation
    
    
    Director(5)/Officer
    
    
    24, 2005(6)Robert H. Stikeman(2)(4)
Toronto, Ontario
    
    
    
    
    Chairman of the Board and
Director of the Company
    
    
    March 7, 1996
    
    
    
    5,000
    
    Partner, Stikeman, Graham, Keeley
& Spiegel LLP (a law firm)Lorne Abony(1)(2)(4)
    
    
    
    
    Director of the Company
    
    
    May 1, 2003
    
    
    
    36Toronto, Ontario
    
    
    
    
    CEO, FUN Technologies plc (a technology company)Randall Abramson(1)(3)(4)
    
    
    
    
    Director of the Company
    
    
    May 1, 2003
    
    
    
    1,800Toronto, Ontario
    
    
    
    
    Vice President, Strategic Capital
Partners Inc., and CEO of its affiliate, Strategic
Advisors Corp. (portfolio investment firms)Stephen H. Freedhoff, CA,
CFP(1)(3)(4)
    
    
    
    
    Director of the Company
    
    
    May 1, 2003
    
    
    
    4,000Toronto, Ontario
    
    
    
    
    Self-employed consultantEdward L. Greenspan, Q.C.(2)(3)(4)
    
    
    
    
    Director of the Company
    
    
    May 1, 2003
    
    
    NilToronto, Ontario
    
    
    
    
    Senior partner, Greenspan, White

(a law firm)Lewis N. Rose(4)(7)
    
    
    
    
    Director of the Company
    
    
    July 15, 2002
    
    
    
    40,000Toronto, Ontario
    
    
    
    
    President and CEO of the CompanyJenifer Cua(8)
Toronto, Ontario
    
    
    
    
    Interim CFO & Treasurer of the Company
    
    
    May 27, 2004
    
    
    
    3,125Michael Starzynski
Toronto, Ontario
    
    
    
    
    CTO of the Company
    
    
    March 17, 2003
    
    
    
    2,650Serguei Bourenkov(9)
Toronto, Ontario
    
    
    
    
    VP, Research & Systems Architecture
    
    
    January 14, 2003
    
    
    
    12,150Andrew Goetsch
Toronto, Ontario
    
    
    
    
    VP, Poker Software Development
    
    
    December 20, 2004
    
    
    
    NilMarilyn Shabot
Toronto, Ontario
    
    
    
    
    VP, Human Resources
    
    
    January 14, 2003
    
    
    
    869John FitzGerald
Toronto, Ontario
    
    
    
    
    General Counsel
    
    
    May 1, 2003
    
    
    
    50
   Notes:1.
    Member of audit committee.2.
    Member of corporate governance & compliance committee.3.
    Member of compensation committee.4.
    Member of nominating committee.5.
    Each director is elected annually to hold office until the next annual meeting of
shareholders.6.
    Common shares beneficially owned, directly or indirectly, or exercised control or direction
over by director or officer.7.
    Lewis Rose was appointed Interim President and CEO of the Company on July 15, 2002 and
appointed President and CEO on March 7, 2003.8.
    Jenifer Cua was appointed Interim CFO and Treasurer on May 27, 2004. She joined the Company
in 1998, and was most recently the Director, Treasury.9.
    Serguei Bourenkov was Director, Product Development in 2002, having joined CryptoLogic as one
of the founding employees in 1996. He was appointed Vice President, Research & Systems
Architecture on January 14, 2003.




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22   As of March 24, 2005, the directors and officers of the Company, as a group, beneficially
owned, directly or indirectly, or exercised control or direction over, less than 1% of the issued
and outstanding Common Shares of the Company. Descriptions of each of the directors and officers set out in the above table and their respective
positions held for the last five years are noted below. Robert H. Stikemanwas named Chairman of the Board in May 2003, has been a Director since May 2002
and also serves as the Companys Secretary. He has been a partner for the past 19 years in
Stikeman, Graham, Keeley & Spiegel LLP, a law firm he was instrumental in establishing. His firm
acts as outside counsel to the Company. Mr. Stikeman plays a key role in guiding CryptoLogics
legal and compliance strategies, and has since 1996. He is also Chairman of the Companys
Compliance and Nominating Committees. Lorne Abonyis Chief Executive Officer of FUN Technologies plc (formerly CES Software) since July
2002, a public company listed under the symbol FUN on the Toronto Stock Exchange (TSX) and the
London Stock Exchange (LSE AIM). Prior to FUN Technologies, Mr. Abony was a venture partner at
Elucid Technology Ventures, a private equity and venture capital firm based in New York. Before
joining Elucid, he was founder and President of Petopia, an online pet food and supplies company
that raised over $100 million in venture capital and was sold to Petco in November 2000. Mr. Abony
is a member of the Law Society of Upper Canada and formerly practiced corporate and securities law
at a large Toronto law firm. Randall Abramsonis co-founder and Vice President of Strategic Capital Partners Inc. and co-founder
and Chief Executive Officer of its affiliate, Strategic Advisors Corp., both Toronto-based
portfolio management firms for high net worth individuals and institutions. Prior to founding
Strategic Capital and Strategic Advisors, Mr. Abramson was a portfolio manager and analyst at
wealth management firm, Connor Clark & Company Ltd. from 1996 to 1998, and prior thereto, was a
portfolio manager and analyst at institutional money manager, Hodgson Roberton Laing Limited from
1991 to 1996. Stephen H. Freedhoff, CA, CFPhas been a self-employed consultant since July 1999. Previously, he
was a partner of a Canadian national accounting firm for 30 years. Mr. Freedhoff is also Chairman
of the Companys Audit Committee. Edward L. Greenspan, Q.C., L.L.D., D.C.L.,is the senior partner of the Toronto law firm of
Greenspan, White. He has been practicing in Toronto since 1970, and received his Queens Counsel in
1982. Mr. Greenspan taught law at the University of Toronto Law School for approximately 28 years.
He has been involved in some of the most high profile cases in Canada. Mr. Greenspan was a
Director of Alliance Communications Corp. from June 1993 to September 1998. Mr. Greenspan is also
Chairman of the Companys Compensation Committee.




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##### 



23 Lewis N. Rose, CAwas appointed Interim President and Chief Executive Officer on July 15, 2002, and
was appointed President and Chief Executive Officer on March 7, 2003. Mr. Rose was also appointed
to the Board on May 1, 2003. He has two decades of experience in the consumer products,
entertainment and financial services sectors in leadership roles at some of North Americas
best-known companies. From 2000 to 2002, he was CEO of E-TV Interactive Technologies Inc., a
private interactive technology company. From 1998 to 2000, he was President and a Director of
Alliance Atlantis Communications Inc., one of the largest publicly traded television and film
entertainment companies in Canada, and President and a Director of its predecessor, Atlantis
Communications Inc., from 1997 to 1998. Mr. Rose was previously Chief Financial Officer and a
Director of Maple Leaf Foods Inc., the largest publicly traded food-processing company in Canada,
and President of Maple Leafs Grocery Products Division. Before that, Mr. Rose was Assistant Vice
President in the Merger and Acquisition Group of Wood Gundy Inc., now CIBC World Markets. Mr. Rose
obtained his Chartered Accountant designation with Coopers & Lybrand (now PricewaterhouseCoopers). Jenifer Cua, CGAjoined CryptoLogic in May 1998, and has a decade of accounting and controller
experience including expertise in treasury management, budgeting, forecasting and fraud management
functions. She was appointed Interim Chief Financial Officer and Treasurer on May 27, 2004, having
most recently held the position of Director, Treasury at the Company. Ms. Cua is a Certified
Public Accountant and Certified General Accountant. Michael Starzynskiwas appointed Chief Technology Officer on March 17, 2003, and has more than 20
years of global information technology experience in both the telecommunication and financial
services sectors at some of North Americas largest companies as well as leading entrepreneurial
organizations. From 2000 to 2003, he was Chief Technology Officer of Financial Models Company, a
leading provider of investment management systems and services. From 1998 to 2000, he was Chief
Technology Officer of SRG Software Inc., a software and consulting services company. Previous
positions included Chief Technology Architect at CGI Canada and a 13-year career at Bell Canada,
Canadas leading telecommunication service provider. Serguei Bourenkovwas appointed Vice President, Research & Systems Architecture on January 14, 2003
and has more than a decade of software development and technical expertise. He joined CryptoLogic
in 1996 after moving to Canada from Moscow, Russia. His career has spanned development of an
equity fund management system, medical 3D visualization software and computer games as well as a
currency trading system for Russias major bank. He also worked at the Institute of Acoustics in
Russia modeling long-range underwater sound propagation, signal processing and 3D-graphics.




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24 Andrew Goetschjoined CryptoLogic as Vice President, Poker Software Development on December 20,
2004. Mr. Goetschs extensive strategic planning and poker experience will help CryptoLogic
continue the development of its software product plans in the fast-growing online poker market. He
is an experienced poker player who has had several final table appearances, and more than 200 in
the money finishes in tournaments held both online and around the world, including the main event
in the 2004 World Series of Poker. As a senior executive with
over 20 years experience in strategic planning, technology, finance and
mergers and acquisitions, Mr. Goetsch has increased sales and profits for consumer goods and
manufacturing companies. He obtained his Certified Public Accountant
designation with Coopers &
Lybrand (now PricewaterhouseCoopers). Marilyn Shabotwas appointed Vice President, Human Resources on January 14, 2003, having joined
CryptoLogic in March 2002 as Director, Human Resources. Ms. Shabot has more than 15 years in human
resources with extensive experience in recruiting at all levels, department set-up, policy
development, group benefit design, training assessment and implementation, and employee relations.
From 2000 to 2002, she was Manager of Human Resources with Documentum Canada (The Bulldog Group
Inc.), a leading provider of content management solutions. From 1997 to 2000, Ms. Shabot was
Manager of Human Resources with Simcoe Parts Service Inc., an affiliate of Honda Canada
Manufacturing. John FitzGeraldwas appointed General Counsel on May 1 2003. Prior to joining CryptoLogic, Mr.
FitzGerald held the positions of Chief Operating Officer and General Counsel at Ball Brewing
Company Limited from 2001 to 2002. In 1998, he began his legal career with the law firm Fasken
Campbell Godfrey, now Fasken Martineau, focusing primarily on mergers and acquisitions and public
finance. In 1998 while at Fasken Martineau, Mr. FitzGerald was seconded to the Ontario Securities
Commission. Conflicts of Interest Robert Stikeman is Chairman of CryptoLogics Board of Directors and reports to the board, not to
management. Mr. Stikeman is a law partner in a law firm that provides advice to the Company.
While the Company does not believe that there is any material conflict of interest, as in any
situation, there is potential for conflict when outside counsel is also a member of the Board. The
Company does not believe Mr. Stikemans relationship with the Company should reasonably be
perceived to materially interfere with his ability to act in the best interest of the Company,
however, under Toronto Stock Exchange Guidelines, he is considered a related director, as he has
a business relationship with the board as a paid advisor.




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25 Item 9: LEGAL PROCEEDINGS Except as set out below, as at March 24, 2005 (being the latest practicable date prior to the
publication of this document) the Company and its subsidiaries are not involved nor have they been
involved in any legal or arbitration proceedings (including any such proceedings which are pending
or threatened of which the Company or its subsidiaries are aware) which may have or had in the past
12 months a significant effect on our financial position: Websports Technologies Inc. (Websports), a start-up technology company, commenced legal
proceedings in an Ontario court against the Company in November 2002. Websports has claimed
US$153,500,000 for breach of contract and misrepresentation and punitive damages in the amount of
US$15,000,000. Websports also claims US$100,000,000 for conspiracy, collusion, misrepresentation,
deceit, sabotage, inducing breach of contract and intentional interference with contractual
relations and economic interests of Websports and punitive damages in the amount of US$25,000,000.
Websports has alleged that these damages result from, among other things, the Companys failure to
conclude an alleged promised investment in Websports. Based on legal advice received by the
Company, we consider the claims to be without merit and they will be vigorously defended. Even
though the proceedings were initiated in late 2002, we are still in the preliminary stages with
preliminary motions expected to be heard and concluded in the next few months in respect of the
payment of security for our costs of the proceedings, which the plaintiffs may be required to pay
into the court. Given the nature of the business environment in which we operate and the relative strength of our
financial position, other third parties have threatened to issue legal proceedings against the
Company based on alleged infringement of patents, trademark, copyright and/or other intellectual
property rights. None of these threats has as yet resulted in legal proceedings, although there
can be no assurance that the assertion of such claims will not result in litigation nor that the
Company would prevail. An adverse determination in litigation proceedings could subject the
Company to significant liabilities to third parties. Although patent and intellectual property
disputes are often settled through licensing or similar arrangements, the costs associated with
such arrangements may be substantial and could include ongoing royalties. Furthermore, the
necessary licences may not be available to the Company on satisfactory terms, if at all. The Company closely monitors the progress of all threatened litigation and, where the Directors
consider it appropriate, makes the appropriate provisions and reserves in its financial statements.




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26 Item 10: TRANSFER AGENTS AND REGISTRARS The Companys transfer
agents are Equity Transfer Services Inc. (Toronto, Canada) and Continental
Stock Transfer & Trust Company (New York, USA). Item 11: ADDITIONAL INFORMATION Additional information regarding the Company, including directors and officers remuneration and
indebtedness, principal holders of the Companys securities, options to purchase securities and
interests of insiders in material transactions, if applicable, will be contained in the Companys
information circular in respect of the Companys annual and special meeting of shareholders to be
held on May 12, 2005. Additional financial information is provided in the Companys comparative
consolidated financial statements and notes thereto for the fiscal year ended December 31, 2004,
which have been filed with various Securities Commissions and will be provided in the Companys
2004 Annual Report. Copies of the above documents and additional copies of this Annual Information Form may be obtained
upon request by contacting the Companys Investor Relations Department at head office located at
1867 Yonge St., 7th Floor, Toronto, Ontario, Canada, M4S 1Y5, telephone: 416-545-1455,
fax: 416-545-1454, e-mail: investor.relations@cryptologic.com and have been filed and are available
on SEDAR (www.sedar.com).