CRYPTOLOGIC INC.
                      CONSOLIDATED BALANCE SHEETS
                  (In thousands of U.S. Dollars)
                              (Unaudited)
                                           As at                As at
                                  March 31, 2002    December 31, 2001
ASSETS

Current assets:
 Cash and cash equivalents             $  19,815            $  42,822
 Restricted cash                          14,540               16,800
 Reserve with processors                     981                  144
 Accounts receivable                       1,658                  697
 Income taxes recoverable                      -                  408
 Prepaid expenses and other                1,212                  768
                                       ---------            ---------
                                          38,206               61,639

Investments                                8,413                2,480

Capital assets                             3,063                2,949

Intangible assets                            310                  337

Goodwill                                   1,040                1,040

                                       ---------            ---------
                                       $  51,032            $  68,445
                                       ---------            ---------
                                       ---------            ---------

LIABILITIES AND
 SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable                      $   2,038            $   2,704
 Accrued liabilities                       1,119                1,389
 Income taxes payable                         98                    -
 Funds held on deposit                     4,043                3,263
                                       ---------            ---------
                                           7,298                7,356
                                       ---------            ---------

Shareholders' Equity:
 Capital stock                             8,590                8,720
 Retained earnings                        35,144               52,369
                                       ---------            ---------
                                          43,734               61,089
                                       ---------            ---------
                                       $  51,032            $  68,445
                                       ---------            ---------
                                       ---------            ---------


                          CRYPTOLOGIC INC.
                 CONSOLIDATED STATEMENTS OF INCOME
                  (In thousands of U.S. Dollars)
                              (Unaudited)
                                        For the three months ended
                                  -----------------------------------
                                  March 31, 2002       March 31, 2001

Revenue                                $   8,664            $  10,865
                                       ---------            ---------

Expenses
 Software development and support          4,791                4,963
 General and administrative                1,224                  783
 Finance                                     137                   75
 Amortization                                197                   63
                                       ---------            ---------
                                           6,349                5,884
                                       ---------            ---------

Income from operations                     2,315                4,981

Interest income                              175                  790
                                       ---------            ---------

Net income before taxes                    2,490                5,771

Provision for income taxes                   286                  589
                                       ---------            ---------

Net income                             $   2,204            $   5,182
                                       ---------            ---------
                                       ---------            ---------

Earnings per share
 Basic                                 $    0.18            $    0.37
 Diluted                               $    0.16            $    0.34

Weighted Average Number of
 Shares ('000s)
  Basic                                   12,210               14,038
  Diluted                                 13,569               15,252


                           Cryptologic Inc.
      Consolidated Statements of Changes in Shareholders' Equity
                  (In thousands of U.S. Dollars)
                              (Unaudited)
                            Three Months Ended    Three Months Ended
                              March 31, 2002        March 31, 2001
                           ------------------------------------------
                           Number of     Stated  Number of     Stated
                              Shares      Value     Shares      Value
                              ('000s)        ($)    ('000s)        ($)
Common shares:
 Balance, beginning
  of period                   13,137      8,448     14,079      6,455
 Repurchase of shares         (1,170)      (367)      (119)       (40)
 Exercise of stock
  options                         25        237         87        420
                             ------------------    ------------------
                              11,992      8,318     14,047      6,835
                             ------------------    ------------------
Series c warrants:
 Balance, beginning
  of period                        -          -        160         22
                             ------------------    ------------------
 Balance, end of
  period                           -          -        160         22

Series f warrants:
 Balance, beginning
  of period                       30        272          -          -
                             ------------------    ------------------
 Balance, end of
  period                          30        272          -          -
                             ------------------    ------------------

Total capital stock           12,022      8,590     14,207      6,857
                             ------------------    ------------------


Retained earnings,
 beginning of period                     52,369                51,133
Net income                                2,204                 5,182
Excess of purchase price
 of treasury shares
 over stated value                      (19,429)               (1,175)
                                      ---------             ---------
Retained earnings, end
 of period                               35,144                55,140
                                      ---------             ---------

Total shareholders'
 equity                                  43,734                61,997
                                      ---------             ---------
                                      ---------             ---------


                           Cryptologic Inc.
                        Statement of Cash Flows
                  (In thousands of U.S. Dollars)
                              (Unaudited)
                                              Three Months Ended
                                  March 31, 2002       March 31, 2001
                                  -----------------------------------
Cash provided by (used in):

Operating activities:
 Net income                            $   2,204            $   5,182
 Adjustments to reconcile
  income to
 Cash provided by (used in)
  operating activities:
 Amortization                                197                   63
 Changes in operating
  assets and liabilities:
   Restricted cash                         2,260                 (500)
   Reserves with processors                 (837)                (206)
   Accounts receivable                      (961)                 979
   Prepaid expenses and other               (444)                (380)
   Income taxes                              506                  625
   Accounts payable                         (666)                (616)
   Accrued liabilities                      (270)                 207
   Funds held on deposit                     780                  395
                                       ---------            ---------
                                           2,769                5,749
                                       ---------            ---------


Financing activities:
 Issue of capital stock for
  cash                                       237                  420
 Repurchase of common
  shares                                 (19,796)              (1,215)
                                       ---------            ---------
                                         (19,559)                (795)
                                       ---------            ---------


Investing activities:
 Additions to capital
  assets                                    (284)                 (65)
 Investments                              (5,933)                (921)

                                       ---------            ---------
                                          (6,217)                (986)
                                       ---------            ---------

Increase in cash and cash
 equivalents                             (23,007)               3,968

Cash and cash equivalents,
 beginning of period                      42,822               42,696
                                       ---------            ---------

Cash and cash equivalents,
 end of period                         $  19,815            $  46,664
                                       ---------            ---------
                                       ---------            ---------

          NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                         As at March 31, 2002
                              (Unaudited)

These consolidated interim financial statements of Cryptologic Inc. ("the Company") have been prepared in accordance with Canadian generally accepted accounting principles using the same accounting policies as were used for the consolidated financial statements for the year ended December 31, 2001, except as described below in a change in accounting policy (note 1). These consolidated interim financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2001, as set out in the 2001 Annual Report. 

1. Change in Accounting Policy 

Effective January 1, 2002, the Company adopted the new Recommendations of the Canadian Institute of Chartered Accountants with respect to the accounting for stock-based compensation and other stock-based payments. The new Recommendations are applied prospectively to all stock-based payments to non-employees, and to employee awards that are direct awards of stock, call for settlement in cash or other assets, or are stock appreciation rights that call for settlement by the issuance of equity instruments, granted on or after January 1, 2002. Outstanding grants as at January 1, 2002 that call for settlement in cash or other assets or stock appreciation rights that call for settlement in equity instruments are applied retroactively, without restatement. The Company does not have any such grants as at January 1, 2002 and as such will apply the new recommendations prospectively. 

In accordance with the new standard, the Company will continue its existing policy that no compensation cost is recorded on the grant of stock options to employees. Consideration paid by employees on the exercise of stock options is recorded as share capital. However, under the new standard the Company is required to provide additional pro forma disclosures for options granted to employees as if the fair value based accounting method had been used to account for employee stock options. 

The fair value of the options granted were made using the Black-Scholes option pricing model using a dividend yield of 0% and the following weighted assumptions. 

  Risk-free rate                             2.0%
  Expected volatility                      100.0%
  Expected life of options in years          5.0


Had compensation expense been determined based on the fair value of the employee stock option awards granted on or after January 1, 2002, in accordance with the new recommendations, the Company's net income and earnings per share would have been changed to the following amounts: 

                                     As reported            Pro forma
                                           ('000)               ('000)
  Net income                           $   2,204            $   2,134

  Net income per share
    Basic                              $    0.18            $    0.18
    Diluted                            $    0.16            $    0.16


2. Investments 

In February 2002 the company acquired an option to purchase 100% of the shares of SCG Enterprises Limited (SCGE) an Internet gaming operator, for $5,933,000. The exercise price for the shares is 1 Pound Sterling, and the option expires February 2005. 

3. Substantial Issuer Bid 

On January 11, 2002 the Company purchased 1,004,934 CryptoLogic common shares at a price of CDN$28.00 per share for a total cost, including transaction costs, of CDN$28,353,000 (US$17,763,000). 

4. Normal Course Issuer Bid 

In May 2001, the Board of Directors approved the repurchase and cancellation of up to 656,000 of the Company's outstanding common shares for the period commencing May 18, 2001 and ending May 17, 2002. As at March 31, 2002, the Company under this plan has cumulatively repurchased and cancelled 440,500 common shares, of which 165,500 common shares were repurchased and canceled during the period January 1, 2002 to March 31, 2002 at a cost of $2,033,000. 

5. Contingencies 

The Company has been named in several lawsuits incurred in the ordinary course of business. In the opinion of Management, the claims are without merit and no provision has been made in the accounts. 

6. Subsequent Events 

On April 8, 2002, the Company sold 100% of its investment in Dot Com Entertainment Group Inc. (DCEG-OTCBB), representing 1,055,700 common shares for $1,056,000.