6-K

FORM 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of  May 2012

Commission File Number         000-30224

CRYPTOLOGIC LIMITED

Marine House, 3rd Floor

Clanwilliam Place

Dublin 2, Ireland

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F R                                           Form 40-F £

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)  £

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)  £

DOCUMENTS FILED

See the Exhibit Index hereto for a list of the documents filed herewith and forming a part of this Form 6-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

          Date: May 10, 2012 CRYPTOLOGIC LIMITED   /s/ John Loughrey                                                     John Loughrey Vice-President, General Counsel and Company Secretary

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EXHIBIT INDEX

Exhibit	Description
99.1	Press Release dated May 10, 2012
99.2	Interim Condensed Consolidated Financial Statements for the three months ended March 31, 2012
99.3	Management's Discussion and Analysis for the three months ended March 31, 2012
99.4	Certification of Chief Executive Officer
99.5	Certification of Chief Financial Officer

3

EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

Symbol: TSX: CRY & CXY; NASDAQ: CRYP

CryptoLogic reports first quarter 2012 results

May 10th, 2012 (Dublin, IRELAND) – CryptoLogic Limited, a developer of branded online betting games and Internet casino software, announces its financial results for the first quarter ending March 31, 2012.

Q1 2012 summary:

u Total revenue of $5.3 million (Q1 2011: $6.0 million)

u Total expenses of $7.5 million (Q1 2011: $6.5 million)

u Net loss of $2.2 million (Q1 2011: $0.6 million loss)

u Net cash of $16.7 million (Q4 2011: $16.6 million)

u Signed three licensing deals for CryptoLogic games with operators Betdaq, Loto Québec and NeoGames

u Recommended $35.8 million takeover by Amaya Gaming Group Inc (Amaya)

For more information, please contact:

CryptoLogic +1 514 744 3122	Luther Pendragon +44 207 618 9100
David Baazov, CEO Daniel Sebag, CFO	Neil Thapar, Alexis Gore

3rd Floor, Marine House, Clanwilliam Place,

Dublin 2, Ireland

1

Overview

In February 2012 CryptoLogic recommended a $35.8 million cash offer from Amaya, which has received acceptances representing approximately 88.15% of the issued share capital of CryptoLogic as at 2 May 2012.  The Offer has gone unconditional and has been further extended until 3.00 p.m. UK time (10.00 a.m. Toronto time) on 16 May 2012, unless otherwise extended.

Operating and Financial Review

Total revenue in Q1 2012 decreased 11.5% to $5.3 million (Q1 2011: $6.0 million). The decrease in revenue in Q1 2012 partly reflects increased amortization of royalties paid to a major third party brand licensor and also higher amortization charges for new games.  Gross revenue before amortization costs totalled $6.6 million (Q1 2011: $7.1 million).

Hosted casino

Revenue from hosted casino amounted to $5.0 million for the three months ended March 31, 2012 compared with the same period in the prior year (Q1 2011: $5.2 million).  In January 2012, the Company announced that it had acquired the Maltese online gambling licenses for InterCasino from OIGE, the Company’s largest and longest-standing licensee.

Branded Games

Branded Games revenue decreased 4.8% to $1.4 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $1.5 million), primarily due to a lower contribution from a major licencee partially offset by an increase in the number of revenue producing games through an increased number of licensees and games per licensee. During the quarter, the Company’s revenue producing games increased from 212 to 229 games.

Poker and Other

Poker and other revenue amounted to $0.2 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $0.4 million).

Amortization of Royalties

Amortization of royalties increased 24.3% to $1.1 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $0.9 million).  Amortization of royalties represented (19.9%) of total revenue in Q1 2012 (Q1 2011: (14.2%)).  The increase in amortization of royalties is primarily due to an increase in the royalties earned by a major brand licensor.

Balance Sheet and Cash Flow

Cash and cash equivalents as at March 31, 2012 amounted to $16.7 million (December 31, 2011: $16.6 million).  The Company continues to be debt free.

Board Changes

On April 3, 2012, CryptoLogic announced that David Baazov, President, Chief Executive Officer, Secretary, Treasurer and Director of Amaya, assumed the role of Chief Executive Officer of CryptoLogic and Daniel Sebag, Chief Financial Officer and Director of Amaya, assumed the role of Chief Financial Officer of CryptoLogic. David Gavagan stepped down as Chairman and Interim Chief Executive Officer of CryptoLogic and Huw Spiers stepped down as Group Head of Operations and Chief Financial Officer of CryptoLogic.

It was also announced on April 3, 2012, that Simon Creedy Smith and James Wallace had offered their resignations to the board of directors. These were accepted with immediate effect. The remaining two

2

non-executive Directors, Thomas Byrne and David Gavagan, remain as members of the board of directors. Two additional Directors, David Baazov, as an executive director, and Divyesh Gadhia, as a non-executive director, have been named as new Directors of CryptoLogic.

London Stock Exchange de-listing

In connection with the offer, Amaya has announced that, if permitted by applicable law, it intends to procure the making of applications by the Company for the cancelation of the listing of the CryptoLogic Shares from the London Stock Exchange, the Toronto Stock Exchange and Nasdaq, and the filing of the Form 15F with the SEC to request that its reporting obligations under the US Exchange Act are terminated.  On April 2, 2012, the Company announced that it intended to apply for the cancelation of the listing of the CryptoLogic Shares from the London Stock Exchange, and on May 3 2012, the Financial Services Authority announced that the listing of the CryptoLogic Shares on the London Stock Exchange had been canceled.

Litigation

In February 2011, a brand licensor delivered to the Company a notice purporting to terminate the brand license agreement between the two companies, claiming that the Company had breached such agreement. In May 2011, the brand licensor reaffirmed its position that the brand license agreement is terminated. The Company believes there is no breach that warrants termination of the agreement. In June 2011, the Company filed suit against the brand licensor seeking judgment that any breach was cured and the agreement remains in force. In October 2011, the brand licensor answered the complaint, denying any cure and filed a countersuit seeking monetary damages for the alleged breach of the agreement and a declaration that the agreement has been terminated. This litigation is ongoing.

###

About CryptoLogicâ (www.cryptologic.com)

Focused on integrity and innovation, CryptoLogic Limited is a leading developer and supplier of Internet gaming software. With more than 300 games, CryptoLogic has one of the most comprehensive casino suites on the Internet, with award-winning games featuring some of the world’s most famous action and entertainment characters. The Company’s licensees include many top Internet gaming brands. CryptoLogic’s leadership in regulatory compliance makes it one of the few companies with gaming software certified to strict standards similar to land-based gaming. The CryptoLogic Group licenses gaming software and services to blue-chip customers that offer their games to non-U.S. based players around the world.

CryptoLogic’s ordinary shares trade on the Toronto Stock Exchange (CRY, CXY) and the NASDAQ Global Select Market (CRYP).

CRYPTOLOGIC FORWARD LOOKING STATEMENT DISCLAIMER: 

This press release contains forward-looking statements within the meaning of applicable securities laws. Statements in this press release, which are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe", "expect", "anticipate", "estimate", "intend", "may", "will", "would" and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on certain factors and assumptions including expected growth, results of operations, performance, business prospects and opportunities, foreign exchange rates and effective income tax rates. While the Company considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results, performance or achievements of the Company to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Risks related to forward-looking statements include, without limitation, risks associated with the Company's financial condition, prospects and opportunities, legal risks associated with Internet gaming and risks of governmental legislation and regulation, risks associated with market acceptance and technological changes, risks associated with dependence on licensees and key licensees, risks relating to international operations and risks associated with competition. Additional risks and uncertainties can be found in the Company's Form 20-F for the fiscal year ended December 31, 2011 under the heading "Item 3 - Key Information - Risk Factors" and in the Company's other filings with the US Securities and Exchange Commission and Canadian provincial securities commissions. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements are given only as at the date of this release and the Company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

3

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of US dollars)

(Unaudited)

	March 31, 2012			December 31, 2011
ASSETS
Deferred tax assets	$	921		$	961
Property, plant and equipment		1,589			1,759
Intangible assets		1,685			1,759
Total non-current assets		4,195			4,479
Cash and cash equivalents		16,717			16,570
Security deposits		639			619
User funds held on deposit		2,523			2,655
Trade and other receivables		3,701			4,788
Current tax assets		293			364
Prepayments		5,911			6,327
Total current assets		29,784			31,323
Total assets	$	33,979		$	35,802
EQUITY
Share capital	$	35,011		$	34,246
Share-based payment reserve		5,702			5,606
Retained earnings		(18,945	)		(16,821	)
Total equity attributable to shareholders of CryptoLogic		21,768			23,031
Non-controlling interest		668			1,507
Total equity		22,436			24,538
LIABILITIES
Deferred tax liabilities		6			3
Total non-current liabilities		6			3
Trade payables and accrued liabilities		4,857			4,642
Provisions		2,779			3,098
Income taxes payable		1,378			866
User funds held on deposit		2,523			2,655
Total current liabilities		11,537			11,261
Total liabilities		11,543			11,264
Total equity and liabilities	$	33,979		$	35,802

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CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands of US dollars, except per share data)

(Unaudited)

		For the three months ended March 31,
		2012			2011
Total revenue	$	5,323		$	6,016
Expenses
Operating		4,991			4,688
General and administrative		2,237			1,396
Depreciation		189			228
Amortization of intangible assets		118			181
		7,535			6,493
Results from operating activities		(2,212	)		(477	)
Finance income		131			39
Finance costs		(10	)		(10	)
Net finance income/(costs)		121			29
Profit/(loss) before income taxes		(2,091	)		(448	)
Income tax expense/(credit)		118			180
Profit/(loss) and total comprehensive income/(loss) for the period	$	(2,209	)	$	(628	)
Profit/(loss) and total comprehensive income/(loss) attributable to:
Shareholders of CryptoLogic		(2,124	)		(587	)
Non-controlling interests		(85	)		(41	)
Profit/(loss) and total comprehensive income/(loss) for the period	$	(2,209	)	$	(628	)
Earnings/(loss) per share
Basic earnings/(loss) per share	$	(0.16	)	$	(0.05	)
Diluted earnings/(loss) per share	$	(0.16	)	$	(0.05	)

5

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands of US dollars)

(Unaudited)

Attributable to shareholders of CryptoLogic
		Share capital		Share-based payment reserve		Retained earnings			Total			Non- controlling interest			Total equity
Balance, January 1, 2011	$	34,129	$	5,564	$	(22,878	)	$	16,815		$	1,226		$	18,041
Total comprehensive income/(loss) for the period
Profit or loss		–		–		(587	)		(587	)		(41	)		(628	)
Transactions with owners recorded directly in equity
Shares exchanged		6		–		–			6			(6	)		–
Share-based payments		–		32		32			–			32
Balance, March 31, 2011	$	34,135	$	5,596	$	(23,465	)	$	16,266		$	1,179		$	17,445
Balance, December 31, 2011	$	34,246	$	5,606	$	(16,821	)	$	23,031		$	1,507		$	24,538
Total comprehensive income/(loss) for the period
Profit or loss		–		–		(2,124	)		(2,124	)		(85	)		(2,209	)
Transactions with owners recorded directly in equity
Shares exchanged		754		–		–			754			(754	)		–
Share-based payments		–		96		–			96			–			96
Issue of ordinary shares in relation
to exercised employee share options		11		–		–			11			–			11
Balance, March 31, 2012	$	35,011	$	5,702	$	(18,945	)	$	21,768		$	668		$	22,436

6

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US dollars)

(Unaudited)

	For the three months ended March 31,
	2012			2011
Cash flows from/(used in):
Operating activities:
Profit/(loss) for the period	$	(2,209	)	$	(628	)
Adjustments for:
Depreciation		189			228
Amortization of intangible assets		118			181
Deferred tax		43			41
Interest received		(13	)		(8	)
Unrealized foreign exchange difference on cash and cash equivalents		(207	)		(298	)
Share-based payments		96			32
		(1,983	)		(452	)
Change in operating assets and liabilities:
Change in trade and other receivables		1,087			52
Change in prepayments		416			454
Change in trade payables and accrued liabilities		215			(947	)
Change in provisions		(319	)		1,007
Cash from/(used in) operating activities		(584	)		114
Change in income taxes receivable/(payable)		583			3,867
Net cash from/(used in) operating activities		(1	)		3,981
Investing activities:
Acquisition of property, plant and equipment		(19	)		(54	)
Acquisition of intangible assets		(44	)		(9	)
Interest received		13			8
Decrease/(increase) in security deposits		(20	)		(296	)
Net cash from/(used in) investing activities		(70	)		(351	)
Financing activities:
Issuance of shares in relation with
exercised employee share options		11			–
Net cash from/(used in) financing activities		11			–
Net increase/(decrease) in cash and cash equivalents		(60	)		3,630
Cash and cash equivalents, beginning of period		16,570			10,584
Unrealized foreign exchange difference on cash and cash equivalents		207			298
Cash and cash equivalents, end of period	$	16,717		$	14,512

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EX-99.2

EXHIBIT 99.2

CRYPTOLOGIC LIMITED

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTICE OF NON-AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Three months ended March 31, 2012

Pursuant to Canadian National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited interim condensed consolidated financial statements of the Company for the three months ended March 31, 2012, have been prepared in accordance with International Financial Reporting Standards and are the responsibility of the Company’s management.

The Company’s independent auditors have not performed a review of these interim financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.

1

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of US dollars)

(Unaudited)

	March 31, 2012			December 31, 2011
ASSETS
Deferred tax assets	$	921		$	961
Property, plant and equipment (note 5)		1,589			1,759
Intangible assets (note 6)		1,685			1,759
Total non-current assets		4,195			4,479
Cash and cash equivalents (note 7)		16,717			16,570
Security deposits (note 8)		639			619
User funds held on deposit		2,523			2,655
Trade and other receivables (note 9)		3,701			4,788
Current tax assets		293			364
Prepayments		5,911			6,327
Total current assets		29,784			31,323
Total assets	$	33,979		$	35,802
EQUITY
Share capital (note 10)	$	35,011		$	34,246
Share-based payment reserve (note 11)		5,702			5,606
Retained earnings		(18,945	)		(16,821	)
Total equity attributable to shareholders of CryptoLogic		21,768			23,031
Non-controlling interest (note 12)		668			1,507
Total equity		22,436			24,538
LIABILITIES
Deferred tax liabilities		6			3
Total non-current liabilities		6			3
Trade payables and accrued liabilities (note 13)		4,857			4,642
Provisions (note 23)		2,779			3,098
Income taxes payable		1,378			866
User funds held on deposit		2,523			2,655
Total current liabilities		11,537			11,261
Total liabilities		11,543			11,264
Total equity and liabilities	$	33,979		$	35,802

2

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands of US dollars, except per share data)

(Unaudited)

		For the three months ended March 31,
		2012			2011
Total revenue (note 14)	$	5,323		$	6,016
Expenses
Operating		4,991			4,688
General and administrative		2,237			1,396
Depreciation (note 5)		189			228
Amortization of intangible assets (note 6)		118			181
		7,535			6,493
Results from operating activities		(2,212	)		(477	)
Finance income		131			39
Finance costs		(10	)		(10	)
Net finance income/(costs) (note 16)		121			29
Profit/(loss) before income taxes		(2,091	)		(448	)
Income tax expense/(credit)		118			180
Profit/(loss) and total comprehensive income/(loss) for the period	$	(2,209	)	$	(628	)
Profit/(loss) and total comprehensive income/(loss) attributable to:
Shareholders of CryptoLogic		(2,124	)		(587	)
Non-controlling interests		(85	)		(41	)
Profit/(loss) and total comprehensive income/(loss) for the period	$	(2,209	)	$	(628	)
Earnings/(loss) per share (note 17)
Basic earnings/(loss) per share	$	(0.16	)	$	(0.05	)
Diluted earnings/(loss) per share	$	(0.16	)	$	(0.05	)

3

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands of US dollars)

(Unaudited)

Attributable to shareholders of CryptoLogic
		Share capital		Share-based payment reserve		Retained earnings			Total			Non- controlling interest			Total equity
Balance, January 1, 2011	$	34,129	$	5,564	$	(22,878	)	$	16,815		$	1,226		$	18,041
Total comprehensive income/(loss) for the period
Profit or loss		–		–		(587	)		(587	)		(41	)		(628	)
Transactions with owners recorded directly in equity
Shares exchanged		6		–		–			6			(6	)		–
Share-based payments		–		32		32			–			32
Balance, March 31, 2011	$	34,135	$	5,596	$	(23,465	)	$	16,266		$	1,179		$	17,445
Balance, December 31, 2011	$	34,246	$	5,606	$	(16,821	)	$	23,031		$	1,507		$	24,538
Total comprehensive income/(loss) for the period
Profit or loss		–		–		(2,124	)		(2,124	)		(85	)		(2,209	)
Transactions with owners recorded directly in equity
Shares exchanged		754		–		–			754			(754	)		–
Share-based payments		–		96		–			96			–			96
Issue of ordinary shares in relation
to exercised employee share options		11		–		–			11			–			11
Balance, March 31, 2012	$	35,011	$	5,702	$	(18,945	)	$	21,768		$	668		$	22,436

4

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US dollars)

(Unaudited)

	For the three months ended March 31,
	2012			2011
Cash flows from/(used in):
Operating activities:
Profit/(loss) for the period	$	(2,209	)	$	(628	)
Adjustments for:
Depreciation		189			228
Amortization of intangible assets		118			181
Deferred tax		43			41
Interest received		(13	)		(8	)
Unrealized foreign exchange difference on cash and cash equivalents		(207	)		(298	)
Share-based payments		96			32
		(1,983	)		(452	)
Change in operating assets and liabilities:
Change in trade and other receivables		1,087			52
Change in prepayments		416			454
Change in trade payables and accrued liabilities		215			(947	)
Change in provisions		(319	)		1,007
Cash from/(used in) operating activities		(584	)		114
Change in income taxes receivable/(payable)		583			3,867
Net cash from/(used in) operating activities		(1	)		3,981
Investing activities:
Acquisition of property, plant and equipment		(19	)		(54	)
Acquisition of intangible assets		(44	)		(9	)
Interest received		13			8
Decrease/(increase) in security deposits		(20	)		(296	)
Net cash from/(used in) investing activities		(70	)		(351	)
Financing activities:
Issuance of shares in relation with
exercised employee share options		11			–
Net cash from/(used in) financing activities		11			–
Net increase/(decrease) in cash and cash equivalents		(60	)		3,630
Cash and cash equivalents, beginning of period		16,570			10,584
Unrealized foreign exchange difference on cash and cash equivalents		207			298
Cash and cash equivalents, end of period	$	16,717		$	14,512

5

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

1.	Nature of operations
	CryptoLogic Limited (“CryptoLogic”) is a company incorporated under the laws of Guernsey with its place of business in Dublin, Ireland and its registered office at 11 New Street, St. Peter Port, Guernsey, GY1 2PF.  The head office is located at Marine House, Clanwilliam Place, Dublin 2, Ireland.
	In January 2012, the Company announced that it had acquired, for nominal consideration, the Maltese online gambling licenses for InterCasino from OIGE, the Company’s largest and longest-standing licensee, resulting in the Company becoming an online casino owner
	CryptoLogic and its subsidiaries (collectively, the “Company”) is a provider of commerce-enabling technology, permitting secure, reliable, high-speed and private financial transactions over the Internet.  The Company provides a comprehensive solution including software, network operations, administrative and marketing consulting services to licensed gambling operators and also operates the Company’s owns an online casino, (“InterCasino”). The Company’s online casino business (“Hosted Casino”) includes both the revenue from the company’s own online casino business as well revenue earned from third party licensee hosted casinos.  The Company also licenses individual games, generally with branded content, to licensed gambling operators (“Branded Games”).  The Company earns substantially all of its revenue from its online casino and the hosting and service arrangements for the operation of online casino and poker games on behalf of licensed casinos and licensing Branded Games to licensed operators.  Substantially all of the Company’s revenue is earned in US dollars, British pounds and euro from licensees located outside of the United States.  The Company’s functional currency is the US dollar and, consequently, it measures and reports its results in US dollars.

2.	Significant accounting policies
	(a)	Statement of Compliance and Conversion to International Financial Reporting Standards
		These condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
		The accounting policies have been applied consistently by the Company.
	(b)	Basis of consolidation
		(i)	Business combinations
			Acquisitions prior to January 1, 2010
			As part of its transition to IFRS, the Company elected to restate only those business combinations that occurred on or after January 1, 2010.  In respect of acquisitions prior to January 1, 2010, goodwill represents the amount recognized under Canadian GAAP.
		(ii)	Acquisitions of non-controlling interests
			Acquisitions of non-controlling interests are accounted for as transactions with shareholders in their capacity as equity holders.  Therefore no goodwill is recognized as a result of such transactions.  Non-controlling interests, presented as part of equity, represent the portion of the Company’s profit or loss and net assets that are not held by the Company.  The Company attributes total comprehensive income or loss between the shareholders of the parent and the non-controlling interests based on their respective ownership interests.
		(iii)	Subsidiaries
			Subsidiaries are entities controlled by the Company.  The financial statements of subsidiaries are included in the consolidated financial statements from the date

6

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

	that control ceases.  The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Company.
(iv)	Special purpose entities
	A special purpose entity (“SPE”) is consolidated if, based on an evaluation of the substance of its relationship with the Company and the SPE’s risks and rewards, the Company concludes that it controls the SPE.  SPEs are considered to be controlled by the Company where the SPE is established under terms that impose strict limitations on the decision-making powers of the SPE’s management and that result in the Company receiving the majority of the benefits related to the SPE’s operations and net assets, being exposed to the majority of risks incident to the SPE’s activities, and retaining the majority of the residual or ownership risks related to the SPE or its assets.
	The Company has assessed its operations and relationships and concluded that there are no SPEs in respect of which the Company exercises the appropriate level of control.
(v)	Transactions eliminated on consolidation
	Intercompany balances and transactions, and any unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements.
	Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Company’s interest in the investee.  Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

(c)	Foreign currency
	Transactions in foreign currencies are translated into US dollars, the Company’s functional currency, at exchange rates at the dates of the transactions.  Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.  The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the period.  Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.  Foreign currency differences arising on retranslation are recognized in profit or loss.  Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
(d)	Property, plant and equipment
	(i)	Recognition and measurement
		Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.
		Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.
		When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
		Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized net within profit or loss.

7

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

(ii)	Subsequent costs
	The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably.  The carrying amount of the replaced part is derecognized.  The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.
(iii)	Depreciation
	Depreciation is calculated over the depreciable amount, which is the cost of an asset less its residual value.  Depreciation is recognized in profit or loss over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
	Leased assets are depreciated over the shorter of the lease term and their useful lives.
	Depreciation is based on the estimated useful lives of the assets using the following methods and annual rates:

Asset	Basis	Rate
Computer equipment	Diminishing balance	40%
Office furniture and equipment	Diminishing balance	25%
Leasehold improvements	Straight-line	Term of lease

		Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
(e)	Intangible assets
	(i)	Computer software and licenses
		Costs that are directly associated with identifiable and unique computer software products controlled by the Company and that will probably generate economic benefits exceeding costs beyond one year are recognized as intangible assets.  Subsequently, computer software is carried at cost less any accumulated amortization and accumulated impairment losses.
		Expenditure which enhances or extends the performance of computer software programmes beyond their original specifications is recognized as a capital improvement and added to the original cost of the computer software.  Costs associated with the maintenance of computer software programmes are recognized as an expense when incurred.
		The cost related to the development of software is expensed as incurred unless such costs meet the criteria for capitalization under IFRS.  The Company capitalizes certain computer software development costs incurred for products designed for internal use.  Capitalized software development costs are included in intangible assets (see note 6).
		Amortization commences when the computer software is available for use using the following methods and annual rates:

Asset	Basis	Rate
Computer software and licenses	Straight-line	3 - 5 years
Capitalized software development	Straight-line	7 years

8

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

(ii)

Other intangible assets

Other intangible assets consist of brand names, customer lists, domain names and gambling licenses acquired and have finite useful lives.  Other intangible assets are measured at cost less accumulated amortization and accumulated impairment losses.  The carrying value of other intangible assets is reviewed if indications of impairment exist (see note 6).  Other intangible assets are amortized over the useful lives of the respective assets using the following methods and annual rates:

Asset	Basis	Rate
Domain names	Straight-line	12 years
Gambling licenses	Straight-line	Term of license

		Amortization of intangible assets is included in amortization of intangible assets and recognized as an expense in the condensed consolidated statements of comprehensive income/(loss).
(f)	Financial instruments
	(i)	Fair value measurement hierarchy
		IFRS 7 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement (see note 21).  The fair value hierarchy has the following levels:
		(a)	Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
		(b)	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) (Level 2); and
		(c)	Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
		The level in the fair value hierarchy within which the financial asset or financial liability is categorized is determined on the basis of the lowest level input that is significant to the fair value measurement.  Financial assets and financial liabilities are classified in their entirety into only one of the three levels.
	(ii)	Non-derivative financial assets
		The Company initially recognizes loans and receivables and deposits on the date that they are originated.  All other financial assets (including assets designated at fair value through profit or loss) are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.
		The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.  Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability.
		Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
		The Company has the following non-derivative financial assets: financial assets at fair value through profit or loss, loans and receivables, cash and cash equivalents and available-for-sale financial assets:

9

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

	Financial assets at fair value through profit or loss
	A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition.  Financial assets are designated at fair value through profit or loss if the Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Company’s documented risk management or investment strategy.  Upon initial recognition, attributable transaction costs are recognized in profit or loss as incurred.  Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss.
	Loans and receivables
	Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market.  Such assets are recognized initially at fair value plus any directly attributable transaction costs.  Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses.
	Loans and receivables comprise trade and other receivables.
	Cash and cash equivalents
	Cash and cash equivalents comprise cash, restricted cash, security deposits and short-term investments with original maturities of three months or less.
	Available-for-sale financial assets
	Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the previous categories.
	Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 21) and foreign currency differences on available-for-sale equity instruments (see note 21), are recognized in other comprehensive income and presented within equity in the fair value reserve.  When an investment is derecognized, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.
(iii)	Non-derivative financial liabilities
	The Company initially recognizes all financial liabilities (including liabilities designated at fair value through profit or loss) on the trade date at which the Company becomes a party to the contractual provisions of the instrument.
	The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire.  Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
	The Company has the following non-derivative financial liabilities: trade payables and accrued liabilities.
	Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs.  Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.

10

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

	(iv)	Equity
		Share capital represents the consideration received for shares that have been issued, since the shares have no par value.
		Other components of equity include the following:
		(a)	Share-based payment reserve includes all employee share-based payment expense for all current and prior periods.
		(b)	Retained earnings includes all current and prior period retained profits and losses.
(g)	Impairment

(i)	Financial assets (including receivables)
	A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired.  A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
	Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security.  In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.
	The Company considers evidence of impairment for receivables at both a specific asset and collective level.  All individually significant receivables are assessed for specific impairment.  Receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics.
	In assessing collective impairment, the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.
	An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate.  Losses are recognized in profit or loss and reflected in an allowance account against receivables.  Interest on the impaired asset continues to be recognized through the unwinding of the discount.  When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
	Impairment losses on available-for-sale investment securities are recognized by transferring the cumulative loss that has been recognized in other comprehensive income, and presented in the fair value reserve in equity, to profit or loss.  The cumulative loss that is removed from other comprehensive income and recognized in profit or loss is the difference between the acquisition cost, net of any principal repayment and amortization, and the current fair value, less any impairment loss previously recognized in profit or loss.  Changes in impairment provisions attributable to time value are reflected as a component of interest income.

11

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

(ii)	Non-financial assets
	The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment.  If any such indication exists, then the asset’s recoverable amount is estimated.  For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.
	The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.  In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.  For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”).  For the purposes of goodwill impairment testing, goodwill acquired in a business combination is allocated to the group of CGUs that is expected to benefit from the synergies of the combination.  This allocation is subject to an operating segment ceiling test and reflects the lowest level at which that goodwill is monitored for internal reporting purposes.
	An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount.  Impairment losses are recognized in profit or loss.  Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
	An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.  Impairment losses allocated to goodwill are not reversed.

(h)	Leased assets and lease payments
		Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases.  Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments.  Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
		Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.  The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
		Other leases are operating leases and the leased assets are not recognized in the Company’s statement of financial position.
		Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease.  Lease incentives received are recognized as an integral part of the total lease expense over the term of the lease.
		Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

12

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

(i)	Employee benefits
	(i)	Defined contribution plans
		A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.  Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.  Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.  Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.
	(ii)	Termination benefits
		Termination benefits are recognized as an expense when the Company is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan either to terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.  Termination benefits for voluntary redundancies are recognized as an expense if the Company has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.  If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value.
	(iii)	Share-based payments
		The grant date fair value of share-based payment awards granted to employees is recognized as an expense in the condensed consolidated statements of comprehensive income/(loss), with a corresponding increase in share-based payments reserve, over the period that the employees unconditionally become entitled to the awards.  The amount recognized as an expense is adjusted to reflect the number of awards for which the related service is expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that ultimately vest.
		Fair value is determined by the Black-Scholes valuation model.  The share option plan does not have any performance conditions other than continued service.
(j)	Provisions
		A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.  Provisions, which are not expected to be discharged within 12 months of the statement of financial position date, are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.  The unwinding of the discount is recognized as finance cost.
	(i)	Provision for jackpots
		Several of the Company’s licensees participate in progressive jackpot games.  Each time a progressive jackpot game is played, a preset amount is added to a jackpot for that specific game or group of games.  Once a jackpot is won, the progressive jackpot is reset with a predetermined amount.  The Company maintains a provision for the reset for each jackpot and the progressive element added as the jackpot game is played.  The provision for jackpots at the reporting date is included in provisions (see note 23).  The provision is sufficient to cover the full amount of any required payout.

13

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

	(ii)	Restructuring
		A provision for restructuring is recognized when the Company has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly.  Future operating losses are not provided for.
	(iii)	Onerous contracts
		A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract.  The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.  Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.
(k)	Revenue recognition
		The Company earns its revenue primarily from:
		●	hosting and services arrangements related to the design and operation of casino and poker sites on the internet;
		●	licensing individual games, generally with branded content, to licensed operators; and
		●	customizing its software for specific licensees.

		Revenues from Hosted Casino licensees and Branded Games are recognized as the services are performed, on a daily basis, at the time of the gambling transactions, pursuant to the agreements with the licensees in which the Company participates in a pro rata share of the daily gambling profits, net of certain shared expenses (e.g., promotion costs); Revenue from InterCasino are recognized on a daily basis, at the time of the gambling transactions  In addition, the Company generally receives a standard monthly fee for the provision of hosting and related services from Hosted Casino licensees.
		Revenue from the initial customization of the software graphics, sounds and text to the specifications of the licensees, or other services contemplated at the date the contract was executed is recognized on a straight-line basis over the term of the hosting and services agreements.  Revenue from customizations ordered subsequent to and not contemplated at the contract date are generally considered as a separate unit of accounting and recognized as the work is performed.
		Interest income is recognized on an accrual basis.
(l)	Royalties
	The Company licenses various royalty rights from several owners of intellectual property rights.  These rights are used to produce games for use in Hosted Casino and Branded Games.  Generally, the arrangements require material prepayments of minimum guaranteed amounts which have been recorded as prepayments in the consolidated statements of financial position.  These prepaid amounts are amortized over the life of the arrangement as gross revenue is generated or on a straight-line basis if the underlying games are expected to have an effective royalty rate greater than the agreed amount.  The amortization of these amounts is recorded as a reduction in revenue.
	The Company regularly reviews its estimates of future revenues under its license arrangements.
(m)	Finance income and finance costs
	Finance income comprises interest income on funds invested (including available-for-sale financial assets, gains on the disposal of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit or loss).  Interest income is recognized as it accrues in profit or loss, using the effective interest method.

14

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

	Finance costs comprise interest and bank charges and changes in the fair value of financial assets at fair value through profit or loss.
	Foreign currency gains and losses are reported on a net basis.
(n)	Income tax
	Income tax expense comprises current and deferred tax.  Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.
	Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
	Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
	Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.  In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill.  Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
	Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
	A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized.  Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
(o)	Earnings per share
	Shares of CryptoLogic (“Ordinary Shares”) and exchangeable shares of CryptoLogic Exchange Corporation (“CEC”) (“Exchangeable Shares”) are participating securities and, accordingly, earnings per share is calculated using the two-class method.  The two-class method determines earnings per share for Ordinary Shares and Exchangeable Shares according to dividends declared and participation rights in undistributed earnings which, in the case of the Company, are equal.
	The Company uses the treasury stock method in computing diluted earnings per share.  The treasury stock method is a method of recognizing the use of proceeds that could be obtained upon the exercise of share options and warrants in computing diluted earnings per share.  It assumes that any proceeds would be used to purchase Ordinary Shares at the average market price.
(p)	Segment reporting
	An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components.  All operating segments’ operating results are reviewed regularly by

15

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

	the Company’s CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
	Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.  Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), head office expenses, and income tax assets and liabilities.
	Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.
(q)	Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company
	At the date of authorisation of these condensed consolidated financial statements, certain new standards, amendments and interpretations to existing standards have been published by the IASB but are not yet effective, and have not been adopted early by the Company.  Management anticipates that all of the relevant pronouncements will be adopted in the Company’s accounting policies for the first period beginning after the effective date of the pronouncement.  Information on new standards, amendments and interpretations that are expected to be relevant to the Company’s financial statements is provided below.  Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company’s financial statements.
	IFRS 9, Financial Instruments In October 2010, the IASB issued IFRS 9.  IFRS 9, which replaces IAS 39, Financial Instruments: Recognition and Measurement, establishes principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity's future cash flows.  This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2015.  The Company is assessing the impact of this new standard on its consolidated financial statements.
	IFRS 10, Consolidated Financial Statements In May 2011, the IASB issued IFRS 10.  IFRS 10, which replaces the consolidation requirements of SIC-12, Consolidation-Special Purpose Entities and IAS 27, Consolidated and Separate Financial Statements, establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.  This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013.  The Company is assessing the impact of this new standard on its consolidated financial statements.
	IFRS 11, Joint Arrangements In May 2011, the IASB issued IFRS 11.  IFRS 11, which replaces the guidance in IAS 31, Interests in Joint Ventures, provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case).  The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities.  This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013.  The Company is assessing the impact of this new standard on its consolidated financial statements.
	IFRS 12, Disclosure of Interests in Other Entities In May 2011, the IASB issued IFRS 12.  IFRS 12 establishes new and comprehensive disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities.  This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013.  The Company is assessing the impact of this new standard on its consolidated financial statements.

16

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

		IFRS 13, Fair Value Measurement In May 2011, the IASB issued IFRS 13.  IFRS 13 replaces the fair value guidance contained in individual IFRSs with a single source of fair value measurement guidance.  The standard completes the IASB’s project to converge fair value measurement in IFRS and United States generally accepted accounting principles.  This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013.  The Company is assessing the impact of this new standard on its consolidated financial statements.
		IAS 1, Presentation of Financial Statements In June 2011, the IASB amended IAS 1.  This amendment retains the ‘one or two statement’ approach to presenting the statements of income and comprehensive income at the option of the entity and only revises the way other comprehensive income is presented.  This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013.  The Company is assessing the impact of this new standard on its consolidated financial statements.
		IAS 19, Employee Benefits In June 2011, the IASB amended IAS 19.  This amendment eliminated the use of the ‘corridor’ approach and instead mandates all remeasurement impacts be recognized in other comprehensive income.  It also enhances the disclosure requirements, providing better information about characteristics of defined benefit plans and the risks that entities are exposed to through participation in those plans.  This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013.  The Company is assessing the impact of this new standard on its consolidated financial statements.
		IAS 27, Separate Financial Statements In May 2011, the IASB amended IAS 27.  This amendment removes the requirements for consolidated statements from IAS 27, and moves it to IFRS 10, Consolidated Financial Statements.  The amendment mandates that when a company prepares separate financial statements, investments in subsidiaries, associates, and jointly controlled entities are to be accounted for using either the cost method or in accordance with IFRS 9, Financial Instruments.  Finally, this amendment determines the treatment for recognizing dividends, the treatment of certain group reorganizations, and some disclosure requirements.  This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013.  The Company is assessing the impact of this new standard on its consolidated financial statements.
		IAS 28, Investments in Associates and Joint Ventures In May 2011, the IASB amended IAS 28.  This amendment requires non-current assets held for sale and discontinued operations be measured using the equity method for any retained portion of an investment, until the portion is disposed of.  The amendment also disallows remeasurement of the cessation of significant influence and joint ventures when there is a gain to profit or loss.  This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013.  The Company is assessing the impact of this new standard on its consolidated financial statements.
3.	Critical accounting estimates and judgments
	The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses.  The areas requiring estimates and judgments that may potentially have a significant impact on the Company’s earnings and financial position include, but are not limited to, provision for jackpots, the estimate useful lives of property, plant and equipment and intangible assets, share-based payments, income taxes, the fair value of financial instruments, legal proceedings and contingent liabilities.

17

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

Although these estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates.
(a)	Provision for jackpots
	Several of the Company’s licensees participate in progressive jackpot games.  Each time a progressive jackpot game is played, a preset amount is added to a jackpot for that specific game or group of games.  Once a jackpot is won, the progressive jackpot is reset with a predetermined amount.  The Company maintains a provision for the reset for each jackpot and the progressive element added as the jackpot game is played.  The provision for jackpots at the reporting date is included in provisions (see note 23).  The provision is sufficient to cover the full amount of any required payout.
(b)	Useful life of property, plant and equipment and intangible assets
	Property, plant and equipment and intangible assets are depreciated or amortized over their useful lives.  Useful lives are based on management’s estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness.
	Changes to estimates can result in significant variations in the amounts charged to the consolidated statement of comprehensive income/(loss) in specific periods.
(c)	Share-based payments
	The Company has a share-based payment scheme for employees.  The fair value of share options is estimated by using the Black-Scholes model on the date of grant incorporating assumptions regarding risk-free interest rate, dividend yield, volatility factor of the expected market price of Ordinary Shares and the expected life of the options. All of the outstanding share options vested during the three months ended March 31, 2012 as a result of the offer for the Company from Amaya Gaming Group Inc.
(d)	Income taxes
	The Company is subject to tax in multiple jurisdictions and judgment is required in determining the provision for income taxes.  The Company uses the asset and liability method of accounting for income taxes.  Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry-forwards.  Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable profit in the periods in which those temporary differences are expected to be recovered or settled.  The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in profit or loss in the period that includes the enactment or substantive enactment date.
(e)	Fair value of financial instruments
	The Company determines the fair value of financial instruments that are not quoted using valuation techniques.  Those techniques are significantly affected by the assumptions used, including discount rates and estimates for future cash flows.  In that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realized immediately (see note 21).
(f)	Legal proceedings and contingent liabilities
	The Company is involved in certain claims and litigation arising in the ordinary course and conduct of business, including intellectual property matters.  Management assesses such claims and, if considered likely to result in material exposure and, where it is probable that there will be an outflow of economic benefit, provisions for loss are made based on management’s assessment of the likely outcome.

18

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

		Management does not provide for claims that are considered unlikely to result in a significant loss, claims for which the outcome is not determinable or claims where the amount of the loss cannot be reasonably estimated.  Any settlements or awards under such claims are provided for when reasonably determinable.  Adjustments will be made to the accrual for such amounts as new information is obtained or the claim settled.
4.	Changes in accounting estimates
	(a)	Royalties
		The Company licenses various royalty rights from several owners of intellectual property rights.  These rights are used to produce games for use in Hosted Casino and Branded Games.  Generally, the arrangements require material prepayments of minimum guaranteed amounts which have been recorded as prepayments in the consolidated statements of financial position.  These prepaid amounts are amortized over the life of the arrangement as gross revenue is generated or on a straight-line basis if the underlying games are expected to have an effective royalty rate greater than the agreed amount.  The amortization of these amounts is recorded as a reduction in revenue.
		For the period ended March 31, 2012, amortization of $1,060 (2011: $853) was recorded as a reduction of revenue in the condensed consolidated statements of comprehensive income/(loss).
		During the period ended March 31, 2012, the Company paid net royalties of $429 (2011: $1,059).  The Company is committed to make further royalty payments of $150 (see note 19).
	(b)	Provision for jackpots
		Several of the Company’s licensees participate in progressive jackpot games.  Each time a progressive jackpot game is played, a preset amount is added to a jackpot for that specific game or group of games.  Once a jackpot is won, the progressive jackpot is reset with a predetermined amount.  The Company maintains a provision for the reset for each jackpot and the progressive element added as the jackpot game is played.  The provision for jackpots at the reporting date is included in provisions (see note 23).  The provision is sufficient to cover the full amount of any required payout.

19

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

5. Property, plant and equipment

	Computer equipment			Office furniture and equipment			Leasehold improvements			Total
Cost:
Balance, January 1, 2011	$	5,710		$	1,126		$	2,876		$	9,712
Additions		42			22			10			74
Disposals		–			(4	)		–			(4	)
Balance, December 31, 2011		5,752			1,144			2,886			9,782
Additions		14			–			5			19
Disposals		–			–			–			–
Balance, March 31, 2012	$	5,766		$	1,144		$	2,891		$	9,801
Depreciation:
Balance, January 1, 2011	$	(4,892	)	$	(754	)	$	(1,481	)	$	(7,127	)
Charge for the period		(325	)		(100	)		(472	)		(897	)
Disposals		–			1			–			1
Balance, December 31, 2011		(5,217	)		(853	)		(1,953	)		(8,023	)
Charge for the period		(50	)		(22	)		(117	)		(189	)
Depreciation on disposals		–			–			–			–
Balance, March 31, 2012	$	(5,267	)	$	(875	)	$	(2,070	)	$	(8,212	)
Net book value:
Balance, March 31, 2012	$	499		$	269		$	821		$	1,589
Balance, December 31, 2011	$	535		$	291		$	933		$	1,759
Balance, January 1, 2011	$	818		$	372		$	1,395		$	2,585

During the three months ended March 31, 2012, there were no changes in the estimated useful lives of property, plant and equipment.

20

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

6. Intangible assets

	Computer software and licenses			Capitalized software development			Casino.co.uk			Gambling licenses			Total intangible assets
Cost:
Balance, January 1, 2011	$	10,562		$	1,900		$	87		$	–		$	12,549
Additions		36			–			–			110			146
Balance, December 31, 2011		10,598			1,900			87			110			12,695
Additions		9			–			–			35			44
Reallocation		(26	)								26			0
Balance, March 31, 2012	$	10,581		$	1,900		$	87		$	171		$	12,739
Amortization:
Balance, January 1, 2011	$	(10,153	)	$	(181	)	$	(5	)	$	–		$	(10,339	)
Charge for the period		(239	)		(346	)		(12	)		–			(597	)
Balance, December 31, 2011		(10,392	)		(527	)		(17	)		–			(10,936	)
Charge for the period		(22	)		(86	)		(3	)		(7	)		(118	)
Balance, March 31, 2012	$	(10,414	)	$	(613	)	$	(20	)	$	(7	)	$	(11,054	)
Net book value:
Balance, March 31, 2012	$	167		$	1,287		$	67		$	164		$	1,685
Balance, December 31, 2011	$	206		$	1,373		$	70		$	110		$	1,759
Balance, January 1, 2011	$	409		$	1,719		$	82		$	–		$	2,210

	All intangible assets are considered to have finite lives.
7.	Cash and cash equivalents
	For the purposes of the statement of cash flows, cash and cash equivalents include the following:

	March 31, 2012		December 31, 2011
Cash at bank	$	4,417	$	5,770
Deposits		12,300		10,800
	$	16,717	$	16,570

8.	Security deposits
	Security deposits are amounts held by the Company’s banks as collateral provided to payment processors that process deposits and credit card transactions.  During the three months ended March 31, 2012, the Company increased its security deposits with one of its banks to provide additional cover for credit card and foreign exchange transactions.
9.	Trade and other receivables

	March 31, 2012		December 31, 2011
Trade receivables	$	1,706	$	2,453
Refundable VAT and other taxes		826		1,098
Other receivables		1,169		1,237
	$	3,701	$	4,788

21

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

All amounts are short-term.  The net carrying value of trade and other receivables is considered a reasonable approximation of fair value.  All of the Company’s trade and other receivables have been reviewed for indicators of impairment and no indicators of impairment were found to exist at the statement of financial position date.

10.	Share capital
	(a)	Shares authorized
		Unlimited Ordinary Shares of no par value.
	(b)	Shares issued and fully paid

	Number of Ordinary Shares		Share capital (1)
Balance, January 1, 2011		12,879	$	34,129
Exchangeable Shares exchanged (2)		92		117
Balance, December 31, 2011		12,971	$	34,246
Exchangeable Shares exchanged (2)		437		754
Issue of ordinary shares in relation to exercised employee stock options		8		11
Balance, March 31, 2012		13,415	$	35,011

(1)	Share capital represents the consideration received for shares that have been issued, since the shares have no par value.
(2)	CryptoLogic acquired control over all of the issued and outstanding common shares of CryptoLogic Inc., an Ontario company, which, through the Arrangement, as defined below, became an indirect wholly-owned subsidiary of CryptoLogic.  As consideration for the acquisition, CryptoLogic issued either an equivalent amount of Ordinary Shares or, in the case of taxable Canadian residents, Exchangeable Shares of CEC, an indirect subsidiary of CryptoLogic.  All of the remaining exchangeable shares were exchanged for ordinary shares as of April 10, 2012.
	As a result of the reorganization, a total of 12.6 million Ordinary Shares and 1.3 million Exchangeable Shares were issued.  Since June 1, 2007, 920,896 Exchangeable Shares have been exchanged, with the remaining Exchangeable Shares being reflected as non-controlling interest as at March 31, 2012.  All of the remaining exchangeable shares were exchanged for ordinary shares as of April 10, 2012.

11.	Employee remuneration and share option plan
	(a)	Employee benefits expense
		Expenses recognized for employee benefits are as follows:

	For the three months ended March 31,
	2012		2011
Salaries and bonuses	$	2,180	$	2,283
Social security costs		219		189
Share-based payments		96		32
Pensions – defined contribution plans		29		28
	$	2,524	$	2,532

22

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

(b)	Share option plan
	Under the share option plan, the Company may grant options to directors, officers and other key employees to purchase Ordinary Shares.  All outstanding options of CryptoLogic Inc. as of the date of the Arrangement, as defined below, were fully assumed by CryptoLogic under the same terms and conditions as originally granted by CryptoLogic Inc.  Under the plan, a maximum of 3,900,000 Ordinary Shares may be issued.  The exercise price of the options may not be less than the market value of the underlying Ordinary Shares on the date of grant.  The Company generally grants share options with an exercise price at the closing price on the date of grant.  There were 1,120,962 Ordinary Shares available to be issued under the share option plan as at March 31, 2012 (2011: 981,462).  Options typically vest over a period of three or four years, as determined at the date of grant, and the term of the options may not exceed five years.
	Historically, the Company granted options with an exercise price at the closing price on the Toronto Stock Exchange on the date of grant.  Since the Ordinary Shares are now more actively traded on NASDAQ, the Company now grants options with an exercise price at the closing price on NASDAQ on the date of grant.
	Details of share option transactions are as follows:

	Three months ended March 31, 2012							Year ended December 31, 2011
	Number of options			Weighted average exercise price of otpions		Weighted average exercise price of options		Number of options			Weighted average exercise price of options		Weighted average exercise price of options
				Cdn$		US$					Cdn$		US$
Options outstanding, beginning of period		39,250		$	16.45				153,500		$	20.63
Options outstanding, beginning of period		320,000				$	1.48		70,000				$	1.61
Granted		–					–		310,000					1.45
Expired		–			–				(46,500	)		25.69
Forfeited		(13,250	)		26.68				(67,750	)		19.58
Forfeited		–					–		(60.000	)				1.45
Exercised(2)		(295,000	)				1.40		–					–
Options outstanding, end of period		26,000		$	9.71				39,250		$	16.45
Options outstanding, end of period		25,000				$	2.48		320,000				$	1.48
		51,000							359,250
Options exercisable, end of period		26,000		$	9.71				25,250		$	22.12
Options exercisable, end of period		25,000				$	2.48		17,500				$	1.61
		51,000							42,750

		Three months ended March 31, 2012							Year ended December 31, 2011
		Options outstanding							Options exercisable(1)
Range of exercise price		Number outstanding		Weighted average remaining life (years)		Weighted average exercise price			Number exercisable		Weighted average exercise price
Cdn$						Cdn$					Cdn$
$	0.01 - $5.00		15,000		2.85		$	3.23		15,000		$	3.23
$	5.01 - $20.00		11,000		0.62			18.56		11,000			18.56
			26,000		1.91		$	9.71		26,000		$	9.71

23

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

		Three months ended March 31, 2012							Year ended December 31, 2011
		Options outstanding							Options exercisable(1)
Range of exercise price		Number outstanding		Weighted average remaining life (years)		Weighted average exercise price			Number exercisable		Weighted average exercise price
US$						US$					US$
$	0.01 - $5.00		25,000		3.14		$	2.48		25,000		$	2.48
			25,000		3.14		$	2.48		25,000		$	2.48

(1) As a result of the recommended cash offer from Amaya Gaming Group Inc. for the entire issued and to be issued share capital of CryptoLogic, as described more fully in note 24, all outstanding share options became exercisable with effect from February 2012.

(2) Of the 295,000 options exercised in the three months ended March 31, 2012, 287,500 of the options did not result in shares being issued as the options were sold to Amaya as part of the sale of Cryptologic.

The Company expenses the cost of all share option grants, determined using the fair value method.  The estimated fair value of the options is recorded over the periods that the options vest.  The fair value of options granted was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2011			2010
Dividend yield		0.0	%		0.0	%
Risk-free interest rate		0.3	%		0.3	%
Expected volatility		76	%		76	%
Expected life of options in years		3			3

The weighted average fair value of options granted during the three months ended March 31, 2012 was $nil (2011: $0.72).

Included in operating costs for the three months ended March 31, 2010 is the cost of share-based payments in the amount of $96 (2011: $32).

12.	Non-controlling interest
	Pursuant to a business reorganization implemented by way of an Ontario Superior Court of Justice court approved plan of arrangement (the “Arrangement”) and approved by the shareholders on May 24, 2007, CryptoLogic acquired control over all of the issued and outstanding common shares of CryptoLogic Inc., an Ontario company, which, through the Arrangement, became an indirect subsidiary of CryptoLogic.  As part of the Arrangement, CryptoLogic issued either an equivalent amount of Ordinary Shares or, in the case of taxable Canadian residents, Exchangeable Shares of CEC, an indirect subsidiary of CryptoLogic.  The Exchangeable Shares were, as nearly as practicable, the economic equivalent of Ordinary Shares.  These Exchangeable Shares participated equally in voting and dividends with the shareholders of CryptoLogic.  All of the remaining exchangeable shares were exchanged for ordinary shares as of April 10, 2012.
	As part of its transition to IFRS, the Company elected to restate only those business combinations that occurred on or after January 1, 2010; accordingly, the Arrangement has been accounted for using the continuity of interest method under Canadian GAAP, which recognizes CryptoLogic as the successor entity to CryptoLogic Inc.
	These condensed consolidated financial statements reflect the financial position, results of operations and cash flows as if the Company has always carried on the business formerly carried on by CryptoLogic Inc. and its

24

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

	subsidiaries, with all assets and liabilities recorded at the carrying values of CryptoLogic Inc.  The interest held by Exchangeable Shareholders has been presented as non-controlling interest in these consolidated financial statements, as required under IFRS.  As a result of the Arrangement, a total of 12.6 million Ordinary Shares and 1.3 million Exchangeable Shares were issued.
	The Exchangeable Shares are considered a non-controlling interest of the Company for accounting purposes and, consequently, a proportionate amount of the Company’s shareholders’ equity is recorded separately as non-controlling interest on the consolidated statement of financial position and a similar proportionate share of the profit or loss associated with subsidiaries directly or indirectly owned by CEC is included in the condensed consolidated statements of comprehensive income/(loss) as non-controlling interest. In addition, dividends paid to Exchangeable Shareholders reduce non-controlling interest on the consolidated statement of financial position.  For accounting purposes, when Exchangeable Shares are exchanged, the proportionate share of the non-controlling interest recorded on the consolidated statement of financial position is reduced and share capital increased based on the pro-rata number of shares exchanged to the total number of Exchangeable Shares outstanding.  As at March 31, 2012, a total of 920,896 Exchangeable Shares have been exchanged for Ordinary Shares.  All of the remaining exchangeable shares were exchanged for ordinary shares as of April 10, 2012.
13.	Trade payables and accrued liabilities

	March 31, 2012		December 31, 2011
Trade payables	$	1,132	$	533
Accrued liabilities		3,725		4,109
	$	4,857	$	4,642

	The average credit period on purchases is one month.  The fair values of trade payables and accrued liabilities due within one year approximate to their carrying amounts as presented above.
14.	Segment reporting
	The Company provides a comprehensive solution including software, network operations, administrative and marketing consulting services to licensed gambling operators that allows licensees to provide online casino and poker games as well as licensees of Branded Games and considers these to be one operating and reporting segment.
	The Company reviews performance by reference to group-wide reporting measures and the revenues derived from the following products:
	●	Hosted Casino
	●	Branded Games
	●	Poker
	●	Other
	The Company licenses various royalty rights from several owners of intellectual property rights.  These rights are used to produce games for use in Hosted Casino and Branded Games.  Generally, the arrangements require material prepayments of minimum guaranteed amounts which have been recorded as prepayments in the consolidated statements of financial position.  These prepaid amounts are amortized over the life of the arrangement as gross revenue is generated or on a straight-line basis if the underlying games are expected to have an effective royalty rate greater than the agreed amount.  The amortization of these amounts is recorded as a reduction in revenue.
	The Company does not allocate operating expenses, general and administrative expenses, profit measures, assets and liabilities to individual product groupings.  Accordingly the disclosures below are provided on a group-wide basis:

25

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

Revenue by product:

For the three months ended March 31,	2012			2011
Hosted Casino	$	4,986		$	5,219
Branded Games		1,417			1,489
Poker		175			253
Other		34			103
Revenue before amortization		6,612			7,064
Amortization of royalties		(1,060	)		(853	)
Amortization of games		(239	)		(195	)
	$	5,323		$	6,016

For the three months ended March 31, 2012, InterCasino constituted $4,903 of revenue before amortization (Q1 2011: $4,997).

Geographical analysis of revenue before amortization is made according to the jurisdiction of the gambling license of the licensee.  This may not reflect the region of the end users of the Company’s licensees.

Geographical analysis of revenue before amortization:

	For the three months ended March 31,
	2012		2011
Malta	$	5,526	$	5,493
Gibraltar		780		1,153
Alderney		267		363
Rest of the World		39		55
	$	6,612	$	7,064

Geographical analysis of capital assets:

Net book value	March 31, 2011		December 31, 2011
Ireland	$	869	$	999
Malta		499		523
Canada		166		178
United Kingdom		55		59
	$	1,589	$	1,759

15.	Security deposits
	During the three months ended March 31, 2012, the Company made total reorganization payments of $nil (2011: $54), consisting of $nil (2011: $54) of employee severance.

26

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

16. Finance income and costs

	For the three months ended March 31,
	2012			2011
Interest income	$	13		$	8
Net foreign exchange transaction gains		118			31
Finance income		131			39
Finance charges		(10	)		(10	)
Net foreign exchange transaction losses		–			–
Finance costs		(10	)		(10	)
Net finance income/(costs)	$	121		$	29

	Included in net foreign exchange transaction gains above is a gain from foreign exchange differences on  loans and receivables of $73 (Q1 2011: $182).
17.	Earnings/(loss) per share
	Earnings/(loss) per share is calculated using the two-class method, whereby Ordinary Shares and the fully-participating Exchangeable Shares are used to determine the weighted average number of shares outstanding for both basic and diluted earnings/(loss) per share.
	The earnings/(loss) attributable to the shares in calculating the basic and diluted earnings/(loss) per share is as follows:

	For the three months ended March 31,
	2012			2011
Earnings/(loss) attributable to Ordinary Shares	$	(2,124	)	$	(587	)
Earnings/(loss) attributable to Exchangeable Shares		(85	)		(41	)
Earnings/(loss) before non-controlling interest	$	(2,209	)	$	(628	)

The denominator used in calculating basic and diluted earnings/(loss) per share is calculated as follows:

	For the three months ended March 31,
All share amounts below are in thousands of shares	2012		2011
Weighted average number of Ordinary Shares outstanding – basic		13,032		12,844
Add weighted average impact of Exchangeable Shares		791		936
Total weighted average number of shares outstanding – basic		13,823		13,820
Add dilutive share options		–		–
Total weighted average number of shares outstanding – diluted		13,823		13,820

Basic and diluted earnings/(loss) per share is as follows:

	For the three months ended March 31,
	2012			2011
Earnings/(loss) per share:
Basic	$	(0.16	)	$	(0.05	)
Diluted	$	(0.16	)	$	(0.05	)

27

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

	For the three month period ended March 31, 2012 and March 31, 2011, basic and diluted net loss per share has been computed by dividing the net loss by the weighted-average number of shares of ordinary stock outstanding during the period.  Potentially dilutive securities for the three months ended March 31, 2012 and March 31, 2011 have been excluded, as they would be anti-dilutive due to the recorded loss.
18.	Capital risk management
	The Company defines capital as its shareholders’ equity and has a policy to maintain a strong capital base so as to maintain investor and market confidence and to sustain future development of the business.  CryptoLogic is listed on three major exchanges, the Toronto Stock Exchange, NASDAQ and the London Stock Exchange.  The Company monitors both the demographic spread of shareholders, as well as the return on equity.
	At March 31, 2012, the Company had total equity of $22,436 (December 31, 2011: $24,538).
	The Company offers share options to key employees and directors.  At March 31, 2012, employees and directors held options to purchase 51,000 Ordinary Shares.
	CryptoLogic has not declared a dividend in the year.  CryptoLogic does not expect to declare any dividends for the foreseeable future.
	There were no changes in the Company’s policy for managing capital during the three months ended March 31, 2012.  Neither CryptoLogic, nor any of its subsidiaries, is subject to externally imposed capital requirements.
19.	Commitments
	The Company has operating lease agreements for premises expiring at various periods up to May 2020.  The future minimum annual rentals on the operating leases are as follows:

Nine months ending 31 December, 2012	$	867
2013		849
2014		532
2015		365
2016		128
Thereafter		436
	$	3,177

Lease expense during the three months ending 31 March, 2012 amounted to $377 (Q1 2011: $328).  The following table sets forth the Company’s principal leased properties:

Location	Principal use	Area sq. ft		Remaining lease term
Msida, Malta	Marketing and customer support		7,500	8 years 2 months
Toronto, Canada	Research and development		10,225	3 years 4 months
Dublin, Ireland	Head office		5,400	1 year
Dublin, Ireland	Head office		1,440	1 year
London, England	Marketing support		4,880	1 year 6 months

The Company has guaranteed minimum payments and purchase commitments for certain royalty rights up to 2013 as follows:

Nine months ending 31 December, 2012	$	50
2013		100
	$	150

28

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

20.	Related party transactions
	Transactions with key management personnel
	There were no related party transaction in the three months ended March 31, 2012 and 2011 other than those with key management personnel which are detailed as follows.
	Key management personnel compensation includes the following expenses:

	For the three months ended March 31,
	2012		2011
Short-term employee benefits:
Salaries and bonuses	$	200	$	196
Independent directors’ fees		44		31
Share-based payments		30		9
Social security costs		23		22
Car allowances		6		6
		303		264
Post-employment benefits:
Pensions - defined contribution plans		14		13
		317		277

21.	Financial instruments
	The fair values of the Company’s financial assets and liabilities approximate their carrying amounts at the reporting date.
	The nominal value less any estimated credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.  The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate available to the Company for similar financial instruments.
	Financial assets at fair value through profit or loss
	A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition.  Financial assets are designated at fair value through profit or loss if the Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Company’s documented risk management or investment strategy.  Upon initial recognition, attributable transaction costs are recognized in profit or loss as incurred.  Financial assets at fair value through profit or loss are measured at fair value and changes therein are recognized in profit or loss.
	Loans and receivables
	Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market.  Such assets are recognized initially at fair value plus any directly attributable transaction costs.  Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses.
	Loans and receivables comprise trade and other receivables.
	Cash and cash equivalents
	Cash and cash equivalents comprise cash, restricted cash and short-term investments with original maturities of three months or less.

29

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the previous categories.

Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale equity instruments, are recognized in other comprehensive income and presented within equity in the fair value reserve.  When an investment is derecognized, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.

Trade payables and accrued liabilities

Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs.  Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method.

22.	Financial risk management
	(a)	Risk analysis
		Expenses recognized for employee benefits are as follows:
		The Company is exposed to risk through interest rate risk, credit risk, liquidity risk, and currency risk arising from the financial instruments held.
		The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
		Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.
	(b)	Interest rate risk
		Interest rate risk, a market risk, is the risk that the value of financial instruments will fluctuate due to changes in market interest rates.  The Company is exposed to interest rate risk principally on its cash and cash equivalents which generally have maturity dates of less than 90 days.  The Company has no interest-bearing debt.  The Company’s management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
		At the reporting date, the interest rate profile of interest-bearing financial instruments was:

	March 31, 2012		December 31, 2011
Variable rate instruments:
Financial assets	$	19,879	$	19,844

	The weighted average effective interest rate on its variable rate instruments as at March 31, 2012 was 0.19% (December 31, 2011: 0.17%).
	Sensitivity analysis
	For the three months ended March 31, 2012, an increase of 100 basis points in interest rates would have increased profit by $50 (Q1 2011: $33).  This analysis assumes that all other variables, in particular foreign exchange rates, remain constant.  For an equivalent decrease, there would be an equal and opposite impact on the profit/(loss) and total comprehensive income/(loss).
(c)	Credit risk
	Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date.  The Company has no significant

30

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

	concentration of credit risk.  The Company has policies in place to ensure that sales are made to customers with an appropriate credit history and monitors on a continuous basis the ageing profile of its receivables.  Cash balances are held with high credit quality financial institutions and the Company has policies to limit the amount of credit exposure to any financial institution.
	Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date.  The Company has no significant concentration of credit risk.  The Company has policies in place to ensure that sales are made to customers with an appropriate credit history and monitors on a continuous basis the ageing profile of its receivables.  Cash balances are held with high credit quality financial institutions and the Company has policies to limit the amount of credit exposure to any financial institution.
	The Company does not have any material accounts receivable balances greater than 90 days outstanding.  As a result, the Company believes that its accounts receivable represent a low credit risk and has never recorded a material expense associated with a credit risk exposure.
	The Company holds investments, according to Company investment policy, only in banks carrying an S&P rating of BBB+/A-3+ and higher or government guaranteed banks with a similar rating.
(d)	Liquidity risk
	Liquidity risk is the risk that arises when the maturity of assets and liabilities do not match.  An unmatched position potentially can increase the risk of losses.  The Company has procedures with the object of minimizing such losses such as maintaining sufficient cash and other highly liquid current assets.

31

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

The following tables detail the Company’s remaining contractual maturity for its financial assets and liabilities.  The tables have been drawn up based on the undiscounted cash flows of financial assets and liabilities based on the earliest date on which the Company expects payment or can be required to pay.  The table includes both interest and principal cash flows.

	Carrying amounts			Contractual cash flows			Receivable /(payable) less than 6 months			Receivable /(payable) 6-12 months		Receivable /(payable) 1-2 years		Receivable /(payable) 2-5 years		Receivable /(payable) more than 5 years
Assets, March 31, 2012
Cash and cash equivalents	$	16,717		$	16,717		$	16,717		$	–	$	–	$	–	$	–
User funds held on deposit		2,523			2,523			2,523			–		–		–		–
Trade and other receivables		3,701			3,701			3,701			–		–		–		–
	$	22,941		$	22,941		$	22,941		$	–	$	–	$	–	$	–
Liabilities, March 31, 2012
Trade payables and accrued liabilities	$	(4,857	)	$	(4,857	)	$	(4,857	)	$	–	$	–	$	–	$	–
Provisions		(2,779	)		(2,779	)		(2,779	)		–		–		–		–
Income taxes payable		(1,378	)		(1,378	)		(1,378	)		–		–		–		–
User funds held on deposit		(2,523	)		(2,523	)		(2,523	)		–		–		–		–
	$	(11,537	)	$	(11,537	)	$	(11,537	)	$	–	$	–	$	–	$	–
Net liquidity risk	$	11,404		$	11,404		$	11,404		$	–	$	–	$	–	$	–
Assets, December 31, 2011
Cash and cash equivalents	$	16,570		$	16,570		$	16,570		$	–	$	–	$	–	$	–
User funds held on deposit		2,655			2,655			2,655			–		–		–		–
Trade and other receivables		4,788			4,788			4,788			–		–		–		–
	$	24,013		$	24,013		$	24,013		$	–	$	–	$	–	$	–
Liabilities, December 31, 2011
Trade payables and accrued liabilities	$	(4,642	)	$	(4,642	)	$	(4,642	)	$	–	$	–	$	–	$	–
Provisions		(3,098	)		(3,098	)		(3,098	)		–		–		–		–
Income taxes payable		(866	)		(866	)		(866	)		–		–		–		–
User funds held on deposit		(2,655	)		(2,655	)		(2,655	)		–		–		–		–
	$	(11,261	)	$	(11,261	)	$	(11,261	)	$	–	$	–	$	–	$	–
Net liquidity risk	$	12,752		$	12,752		$	12,752		$	–	$	–	$	–	$	–

(e)

Currency risk

Currency risk, a market risk, is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.  Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the functional currency of the Company.  The Company is exposed to currency risk arising from various currency exposures primarily with respect to the British pound, euro and Canadian dollar.  The Company’s management monitors the foreign exchange rate fluctuations on a continuous basis and acts accordingly.

32

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

At March 31, 2012, the Company’s net financial position exposure to currency risk was substantially as follows:

	USD			EUR			GBP			Others			Total
Cash and cash equivalents, security deposits and user funds held on deposit	$	14,576		$	1,523		$	3,351		$	420		$	19,879
Trade and other receivables		1,223			1,388			778			312			3,701
Trade payables and accrued liabilities		(3,015	)		(875	)		(58	)		(909	)		(4,857	)
Provisions		–			–			(2,779	)		–			(2,779	)
Income taxes receivable and payable		–			(48	)		(26	)		(1,011	)		(1,085	)
User funds held on deposit		(1,059	)		(1,099	)		(365	)		–			(2,523	)
Net financial position exposure	$	11,725		$	898		$	901		$	(1,188	)	$	12,336

The Company’s revenue and expense exposure for revenue before amortization of royalties and games and expenses including amortization of royalties and games denominated in foreign currencies was substantially as follows:

	USD		EUR		GBP		CAD		Others		Total
Revenue:
Three months ended March 31, 2012	$	2,568	$	2,020	$	2,012	$	12	$	–	$	6,612
Three months ended March 31, 2011	$	1,659	$	2,734	$	2,653	$	–	$	18	$	7,064
Expenses:
Three months ended March 31, 2012	$	2,406	$	3,117	$	1,550	$	1,751	$	–	$	8,824
Three months ended March 31, 2011	$	1,413	$	3,056	$	1,664	$	1,344	$	64	$	7,541

Sensitivity analysis

Net financial position exposure:

A 10% strengthening of the US dollar against other currencies at March 31, 2012 would have decreased profit by approximately $61 (Q1 2011: decreased loss by $342).  This analysis assumes that all other variables remain constant and represents the Company’s gross financial position exposure at March 31, 2012.  A 10% weakening of the US dollar against the same would have had an equal but opposite effect.

Net revenue exposure:

A 10% strengthening on average of the US dollar against other currencies for the three months ended March 31, 2012 would have decreased revenue, and correspondingly decreased profit, by approximately $404 (Q1 2011: $541).  This analysis assumes that all other variables, in particular interest rates, remained constant during the quarter, and represents the exposure of the Company’s revenues denominated in foreign currencies to the relative strength of its functional currency.  A 10% weakening of the US dollar against the same would have had an equal but opposite effect.

Expense exposure:

A 10% strengthening of the US dollar against other currencies for the three months ended March 31, 2012 would have decreased expenses, and correspondingly increased profit, by approximately $642 (2010: $613).  This analysis assumes that all other variables, in particular interest rates, remained constant during the quarter, and represents the exposure of the Company’s expenses denominated in foreign currencies to

33

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

		the relative strength of its functional currency.  A 10% weakening of the US dollar against the same would have had an equal but opposite effect.
		Foreign exchange:
		For the three months ended March 31, 2012, the Company recognized a total foreign exchange gain of $118 (Q1 2011: $31).  Foreign exchange gains and losses recognized in the period are recorded in net finance costs in profit or loss.
23.	Provisions
	The provision in the statement of financial position is for the provision for jackpots.  The carrying amounts and the movements in the provision are as follows:

		Provision for jackpots
Balance, January 1, 2012	$	3,098
Additional provisions		223
Amounts utilized		(542)
Balance, March 31, 2012		2,779

	Several of the Company’s licensees participate in progressive jackpot games.  Each time a progressive jackpot game is played, a preset amount is added to a cumulative jackpot for that specific game or group of games.  Once a jackpot is won, the progressive jackpot is reset with a predetermined amount.  The Company maintains a provision for the reset for each jackpot and the progressive element added as the jackpot game is played.  The provision for jackpots at the reporting date is included in provisions.  The provision is sufficient to cover the full amount of any required payout.
	The fair value of provisions potentially due within one year approximates to their carrying amounts as presented above.
24.	Subsequent events
	In February 2011, CryptoLogic appointed Deloitte Corporate Finance to act as its independent financial adviser to assist it with a strategic review encompassing a range of options available to the Company from continuing as an independent entity through to the sale of part or all of its business, as well as to provide advice with respect to any potential transaction.  On 2 February, 2012, the boards of Amaya Gaming Group Inc. ("Amaya") and CryptoLogic announced the terms of a recommended cash offer (the "Offer") to be made by Amaya to acquire the entire issued and to be issued ordinary share capital of CryptoLogic ("CryptoLogic Shares") at a price of $2.535 per Ordinary Share, a premium of approximately 110% to the closing price of $1.21 per Ordinary Share on NASDAQ on March 24, 2011, the day prior to the announcement of the strategic review.
	On March 29, 2012, Amaya announced that the Offer had become wholly unconditional. On May 2, 2012, Amaya announced that it received acceptances giving Amaya control over 12,188,883 CryptoLogic Shares, representing approximately 88.15% of the issued share capital of CryptoLogic and that the Offer was further extended until 3.00 p.m. London time (10.00 a.m. Ontario time) on 16 May 2012, unless otherwise extended.
	On April 3, 2012, CryptoLogic announced that Simon Creedy Smith and James Wallace had offered their resignations to the board of directors. These were accepted with immediate effect. The remaining two non-executive Directors, Thomas Byrne and David Gavagan, remain as members of the board of directors. Two additional Directors, David Baazov, as an executive director, and Divyesh Gadhia, as a non-executive director, have been named as new Directors of CryptoLogic.

34

CRYPTOLOGIC LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of US dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2012

Also on April 3, 2012, David Gavagan stepped down as Chairman and Interim Chief Executive Officer of CryptoLogic and Huw Spiers stepped down as Group Head of Operations and Chief Financial Officer of CryptoLogic.  David Baazov, currently President, Chief Executive Officer, Secretary, Treasurer and Director of Amaya, assumed the role of Chief Executive Officer of CryptoLogic and Daniel Sebag, currently Chief Financial Officer and Director of Amaya, assumed the role of Chief Financial Officer of CryptoLogic.

In connection with the offer, Amaya has announced that, if permitted by applicable law, it intends to procure the making of applications by the Company for the cancelation of the listing of the CryptoLogic Shares from the London Stock Exchange, the Toronto Stock Exchange and Nasdaq, and the filing of the Form 15F with the SEC to request that its reporting obligations under the US Exchange Act are terminated.  On April 2, 2012, the Company announced that it intended to apply for the cancelation of the listing of the CryptoLogic Shares from the London Stock Exchange, and on May 3 2012, the Financial Services Authority announced that the listing of the CryptoLogic Shares on the London Stock Exchange had been canceled.

Amaya has also announced that if permitted by applicable law, and at the appropriate time, it will acquire all CryptoLogic Shares for which it has not received acceptances, pursuant to a compulsory acquisition procedure.

35

EX-99.3

EXHIBIT 99.3

CRYPTOLOGIC LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

INTRODUCTION

The following report contains management’s discussion and analysis (“MD&A”) of CryptoLogic Limited’s consolidated results of operations and financial condition for the three months ended March 31, 2012 and should be read in conjunction with the unaudited interim condensed consolidated financial statements and accompanying notes for the three months ended March 31, 2012 and the audited consolidated financial statements and accompanying notes and MD&A for the year ended December 31, 2011, which are available on SEDAR at www.sedar.com and EDGAR at www.sec.gov.  All currency amounts are in US dollars, unless otherwise indicated.  This MD&A is dated May 9, 2012.

CryptoLogic Limited (“CryptoLogic”) and our subsidiaries are referred to collectively as “the Company”, “we”, “us”, and “our” throughout this MD&A, unless otherwise specified.

Certain of the statements contained in this MD&A may contain forward-looking statements and forward-looking information within the meaning of applicable law, including the Securities Act (Ontario).  Statements regarding the Company’s objectives, goals, strategies, beliefs, intentions, plans, estimates and outlook, future operations, future financial position, future revenues and projected costs are forward-looking statements or contain forward-looking information.  Words such as “anticipates”, “believes”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “intends”, “may”, “might”, “plans”, “projects”, “schedule”, “should”, “will”, “would” and similar expressions are used to identify forward-looking statements or information.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties.  Should one or more of these risks materialize, or should assumptions underlying the forward-looking statements or information prove incorrect, actual results may vary significantly from what management currently foresees.  Accordingly, investors should exercise caution when considering any forward-looking statements or information herein and undue reliance should not be placed on such statements or information.  Certain material factors or assumptions are applied in making forward-looking statements, including, but not limited to, factors and assumptions regarding government regulation, Internet viability and system infrastructure and reliability, market demand, Internet security, reliance on Internet service providers, competition, dependence on top licensees, chargebacks, risks inherent in doing business internationally, foreign exchange fluctuations, litigation, the Company’s ability to protect its proprietary technology, reliance on key employees, management’s ability to develop and manage growth, ability to integrate acquired businesses, share volatility and liquidity. Investors are cautioned that the foregoing list of important factors that may affect future results is not exhaustive.  When relying on forward-looking statements or information to make decisions with respect to the Company, investors should carefully consider the foregoing factors and other uncertainties and potential events.  The Company undertakes no obligation to update or revise any forward-looking statement or information, except as required by applicable law.

Additional information regarding the Company, including the Company’s annual report on Form 20-F for the year ended December 31, 2011 is available at www.sedar.com and www.sec.gov.  Some figures and percentages may not total exactly due to rounding.

1

BUSINESS OVERVIEW

CryptoLogic is a publicly traded online gambling software developer and supplier servicing the Internet gambling market.  CryptoLogic, through its wholly-owned subsidiaries, provides software licensing, e-cash management and customer support services for our Internet gambling software to an international client base (“licensees” or “customers”) around the world, who operate under government authority where their Internet businesses are licensed.

In February 2011, CryptoLogic appointed Deloitte Corporate Finance to act as its independent financial adviser to assist it with a strategic review encompassing a range of options available to the Company from continuing as an independent entity through to the sale of part or all of its business, as well as to provide advice with respect to any potential transaction.  On 2 February, 2012, the boards of Amaya Gaming Group Inc. ("Amaya") and CryptoLogic announced the terms of a recommended cash offer (the "Offer") to be made by Amaya to acquire the entire issued and to be issued ordinary share capital of CryptoLogic ("CryptoLogic Shares") at a price of $2.535 per Ordinary Share, a premium of approximately 110% to the closing price of $1.21 per Ordinary Share on NASDAQ on March 24, 2011, the day prior to the announcement of the strategic review.

On March 29, 2012, Amaya announced that the Offer had become wholly unconditional. On May 2, 2012, Amaya announced that it received acceptances giving Amaya control over 12,188,883 CryptoLogic Shares, representing approximately 88.15% of the issued share capital of CryptoLogic and that the Offer was further extended until 3.00 p.m. London time (10.00 a.m. Ontario time) on 16 May 2012, unless otherwise extended.

On April 3, 2012, CryptoLogic announced that Simon Creedy Smith and James Wallace had offered their resignations to the board of directors. These were accepted with immediate effect. The remaining two non-executive Directors, Thomas Byrne and David Gavagan, remain as members of the board of directors. Two additional Directors, David Baazov, as an executive director, and Divyesh Gadhia, as a non-executive director, have been named as new Directors of CryptoLogic.

Also on April 3, 2012, David Gavagan stepped down as Chairman and Interim Chief Executive Officer of CryptoLogic and Huw Spiers stepped down as Group Head of Operations and Chief Financial Officer of CryptoLogic.  David Baazov, currently President, Chief Executive Officer, Secretary, Treasurer and Director of Amaya, assumed the role of Chief Executive Officer of CryptoLogic and Daniel Sebag, currently Chief Financial Officer and Director of Amaya, assumed the role of Chief Financial Officer of CryptoLogic.

In connection with the offer, Amaya has announced that, if permitted by applicable law, it intends to procure the making of applications by the Company for the cancelation of the listing of the CryptoLogic Shares from the London Stock Exchange, the Toronto Stock Exchange and Nasdaq, and the filing of the Form 15F with the SEC to request that its reporting obligations under the US Exchange Act are terminated.  On April 2, 2012, the Company announced that it intended to apply for the cancelation of the listing of the CryptoLogic Shares from the London Stock Exchange, and on May 3 2012, the Financial Services Authority announced that the listing of the CryptoLogic Shares on the London Stock Exchange had been canceled.

Amaya has also announced that if permitted by applicable law, and at the appropriate time, it will acquire all CryptoLogic Shares for which it has not received acceptances, pursuant to a compulsory acquisition procedure.

In January 2012, the Company announced that it had acquired, the Maltese online gambling licenses for InterCasino from OIGE, the Company’s largest and longest-standing Hosted Casino licensee.

On April 30, 2012, the Company received a NASDAQ Staff Deficiency Letter that, as a result of the resignations of Messrs. Creedy Smith and Wallace, the Company no longer complies with NASDAQ's audit committee requirements as set forth in NASDAQ Listing Rule 5605(c)(2), which requires that the audit committee be composed of at least three independent directors.  The Company has 45 calendar days to submit a plan to regain compliance.  If the plan is accepted, NASDAQ can grant an extension of up to 180 days from the date of the NASDAQ Staff Deficiency Letter for the Company to demonstrate compliance.  On May 8, 2012, Divyesh Gadhia was appointed to the Company’s audit committee, which now consists of Divyesh Gadhia and Thomas Byrne. 

The NASDAQ Staff Deficiency Letter has no immediate impact on the Company’s listing on NASDAQ.  The Company is reviewing its options with respect to regaining compliance. 

Additionally, as a result of the resignations and appointments referred to above, the Company’s board of directors consists of two independent directors and two non-independent directors, and the Company would no longer, therefore, comply with the requirements of NASDAQ Listing Rule 5605(b)(1), which requires a majority of the board of directors must be comprised of independent directors.  The Company is, however, relying on the foreign private issuer exemption for a majority independent board under Listing Rule 5615(a)(3).

2

directors and two non-independent directors, and the Company would no longer, therefore, comply with the requirements of NASDAQ Listing Rule 5605(b)(1), which requires a majority of the board of directors must be comprised of independent directors.  The Company is, however, relying on the foreign private issuer exemption for a majority independent board under Listing Rule 5615(a)(3).

RESULTS OF OPERATIONS – FIRST QUARTER 2012

		2012 Q1			2011 Q4			Q3			Q2			Q1			2010 Q4			Q3			Q2
(In thousands of US dollars, except per share data)
Hosted Casino	$	4,986		$	5,962		$	6,535		$	5,698		$	5,219		$	4,905		$	5,552		$	5,765
Branded Games		1,417			1,859			1,410			2,100			1,489			1,363			1,353			1,525
Poker	$	175			189			227			195			253			239			357			440
Other		34			116			87			40			103			147			59			207
Revenue before amortization		6,612			8,126			8,259			8,033			7,064			6,654			7,321			7,937
Amortization of royalties		(1,060	)		(871	)		(853	)		(853	)		(853	)		(898	)		(945	)		(940	)
Amortization of games		(229	)		(215	)		(187	)		(202	)		(195	)		(243	)		(281	)		(258	)
Revenue	$	5,323		$	7,040		$	7,219		$	6,978		$	6,016		$	5,513		$	6,095		$	6,739
Expenses
Operating		4,991			4,264			4,090			4,528			4,688			4,851			7,265			9,435
General and administrative		2,237			1,264			1,451			1,628			1,396			1,091			1,655			2,637
Depreciation and amortization		307			332			362			391			409			415			478			739
Impairment of goodwill and intangible assets		–			–			–			–			–			(295	)		–			5,624
Reorganization		–			–			–			–			–			27			209			1,670
		7,535			5,860			5,903			6,547			6,493			6,089			9,607			20,105
Results from operating activities		(2,212	)		1,180			1,316			431			(477	)		(576	)		(3,512	)		(13,366	)
Net finance income/(costs)		121			2			(7	)		25			29			(204	)		(92	)		97
Profit on derecognition of available-for-sale assets		–			1,250			–			–			–			185			–			–
Profit/(loss) before income taxes		(2,091	)		2,432			1,309			456			(448	)		(595	)		(3,604	)		(13,269	)
Income tax expense/(credit)		118			(3,358	)		259			213			180			277			115			142
Profit/(loss) and total comprehensive income/(loss) for the period	$	(2,209	)	$	5,790		$	1,050		$	243		$	(628	)	$	(872	)	$	(3,719	)	$	(13,411	)
Profit/(loss) and total comprehensive income/(loss) attributable to:
Shareholders of CryptoLogic		(2,124	)		5,431			988			225			(587	)		(815	)		(3,439	)		(12,480	)
Non-controlling interests		(85	)		359			62			18			(41	)		(57	)		(280	)		(931	)
Profit/(loss) and total comprehensive income/(loss) for the period	$	(2,209	)	$	5,790		$	1,050		$	243		$	(628	)	$	(872	)	$	(3,719	)	$	(13,411	)
Earnings/(loss) per share
Basic	$	(0.16	)	$	0.42		$	0.08		$	0.02		$	(0.05	)	$	(0.06	)	$	(0.27	)	$	(0.97	)
Diluted	$	(0.16	)	$	0.42		$	0.08		$	0.02		$	(0.05	)	$	(0.06	)	$	(0.27	)	$	(0.97	)
Weighted average number of shares (000’s)
Basic		13,823			13,820			13,820			13,820			13,820			13,820			13,820			13,820
Diluted		13,823			13,841			13,827			13,866			13,820			13,820			13,820			13,820

Revenue

Revenue decreased 11.5% to $5.3 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $6.0 million).

Revenues from Hosted Casino licensees and Branded Games are recognized as the services are performed, on a daily basis, at the time of the gambling transactions, pursuant to the agreements with the licensees in which the Company participates in a pro rata share of the daily gambling profits, net of certain shared expenses (e.g., promotion costs); Revenues from the Company’s Hosted Casino are recognized on a daily basis, at the time of the

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gambling transactions  The revenue is affected by the number of active players in an online casino and their related gambling activity.  In addition, these results are influenced by a number of factors such as the entertainment value of the games developed by CryptoLogic, the frequency and success of new game offerings and the effectiveness of the marketing programs.  Hosted Casino and Branded Games revenue are also impacted by the relative value of the U.S. dollar to both the euro and the British pound as the casinos operate in these currencies for which we earn revenue that is translated into U.S. dollars, our functional currency.

Hosted Casino

Hosted Casino revenue decreased 4.5% to $5.0 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $5.2 million).  Hosted Casino revenue represented 93.7% of total revenue in Q1 2012 (Q1 2011: 86.8%).

The decrease in revenue in Q1 2012 is primarily due to decreased revenues of $0.1 million from third party hosted casinos as well as decreased revenues of $0.1 million from InterCasino.  The relative value of the US dollar negatively impacted Hosted Casino revenue by $0.1 million when compared with the same period in the prior year.

Branded Games

Branded Games revenue decreased 4.8% to $1.4 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $1.5 million).  Branded Games revenue represented 26.6% of total revenue in Q1 2012 (Q1 2011: 24.8%).  During the quarter, the Company’s revenue producing games increased from 212 to 229 games.

The decrease in Branded Games revenue is primarily due to a lower contribution from a major licensee, partially offset by an increase in the number of revenue producing games through an increased number of licensees and games per licensee.  The relative value of the US dollar did not have a material impact on Branded Games revenue when compared with the same period in the prior year.

Poker

The Company offers a virtual poker room for its licensees using software and technology provided on GTECH Corporation’s International Poker Network, the Company also has its own licensed online poker offering, (“InterPoker”) operated on this network.  Fees from online poker are based on a percentage of the 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 entry fees for entry into poker tournaments.

Poker revenue decreased 30.8% to $0.2 million in the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $0.3 million).  Poker revenue represented 3.3% of total revenue in Q1 2012 (Q1 2011: 4.2%).  The relative value of the US dollar did not have a material impact on Poker revenue when compared with the same period in the prior year.

Other Revenue

Other revenue includes fees for software customization, and advertising and marketing services generated from our portal business.

Other revenue decreased 67.0% to $0.0 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $0.1 million).  Other revenue represented 0.6% of total revenue in Q1 2012 (Q1 2011: 1.7%).  The relative value of the US dollar did not have a material impact on Other revenue when compared with the same period in the prior year.

Amortization of Royalties

The Company licenses various royalty rights from several owners of intellectual property rights.  These rights are used to produce games for use in Hosted Casino and Branded Games.  Generally, the arrangements require material prepayments of minimum guaranteed amounts which have been recorded as prepayments.  These prepaid amounts are amortized over the life of the arrangement as gross revenue is generated or on a straight-line basis if the underlying games are expected to have an effective royalty rate greater than the agreed amount.  The amortization of these amounts is recorded as a reduction in revenue.

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Amortization of royalties increased 24.3% to $1.1 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $0.9 million).  Amortization of royalties represented (19.9%) of total revenue in Q1 2012 (Q1 2011: (14.2%)).  The increase in amortization of royalties is primarily due to an increase in the royalties earned by a major brand licensor.

Player Restrictions

No revenue is derived from US-based players.

Expenses

Operating Expense

The Company’s operating expense comprises development and support expense, which includes all personnel costs, equity compensation costs for employee share-based payments, marketing, e-cash systems and support costs, customer service expense and expenses related to regulatory compliance.

Operating expense increased 6.5% to $5.0 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $4.7 million).  Operating expense represented 93.8% of revenue in Q1 2012 (Q1 2011: 77.9%).  The increase in operating expense was primarily due to an increase in InterCasino marketing costs, partially offset by decreases in consulting, office, and headcount-related costs.  The relative value of the US dollar positively impacted operating expense by $0.1 million when compared with the same period in the prior year.

General and Administrative Expense

General and administrative (G&A) expense includes overhead and administrative expense, travel expense and professional fees relating to our business development, infrastructure and public company listings.

G&A expense increased 60.2% to $2.2 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $1.4 million).  G&A expense represented 42.0% of total revenue in Q1 2012 (Q1 2011: 23.2%).  The increase in G&A expense was primarily due to a significant increase of $0.9 million in one-off legal and professional fees relating to the sale of CryptoLogic to Amaya, partially offset by a reduction in telecommunications and travel costs.  The relative value of the US dollar positively impacted G&A expense by $0.1 million when compared with the same period in the prior year.

Depreciation and Amortization

Depreciation and amortization expense is based on estimated useful lives and includes the depreciation and amortization of our investments in computer equipment, office furniture and equipment, leasehold improvements, goodwill, computer software and licenses, capitalized software development, brand names, customer lists, domain names and gambling licenses.

Depreciation and amortization decreased 24.9% to $0.3 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $0.4 million).  Depreciation and amortization represented 5.8% of total revenue in Q1 2012 (Q1 2011: 6.8%).  The decrease in depreciation and amortization was primarily due to less amortization on infrastructure and software assets as they become fully depreciated.  The relative value of the US dollar did not have a material impact on depreciation and amortization when compared with the same period in the prior year.

Income Taxes

Income tax expense decreased 34.4% to $0.1 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $0.2 million).  The Company is subject to tax in many jurisdictions.  This results in a tax charge on transfer pricing of costs between group companies even in periods of overall losses.  The Company is actively working to reduce the number of its subsidiaries, which should reduce the overall tax burden.  The consolidated profit/(loss) comprises losses in some companies and profits in others, which results in a consolidated income tax expense.

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Non-Controlling Interest

Pursuant to a business reorganization implemented by way of an Ontario Superior Court of Justice court approved plan of arrangement (the “Arrangement”) and approved by the shareholders on May 24, 2007, CryptoLogic acquired control over all of the issued and outstanding common shares of CryptoLogic Inc., an Ontario company, which through the Arrangement became an indirect subsidiary of CryptoLogic.  As part of the Arrangement, the Company issued either an equivalent amount of Ordinary Shares or, in the case of taxable Canadian residents, Exchangeable Shares of CEC, an indirect subsidiary of CryptoLogic.  The Exchangeable Shares were, as nearly as practicable, the economic equivalent of Ordinary Shares.  These Exchangeable Shares participated equally in voting and dividends with the shareholders of CryptoLogic.  No additional Exchangeable Shares have been or will be issued.  For more information, see the Management Information Circular dated April 23, 2007 available on www.sedar.com.

For accounting purposes, the Arrangement has been accounted for using the continuity of interest method, which recognizes the Company as the successor entity to CryptoLogic Inc.  Accordingly, financial information presented in the MD&A reflects the financial position, results of operations and cash flows as if the Company has always carried on the business formerly carried on by CryptoLogic Inc., with all assets and liabilities recorded at the carrying values of CryptoLogic Inc.  The interest held by Exchangeable Shareholders has been presented as a non-controlling interest in the consolidated financial statements, as required under IFRS.

Immediately following the Arrangement, a total of 12.6 million Ordinary Shares and 1.3 million Exchangeable Shares were outstanding.  Since then, a total of 920,896 Exchangeable Shares have been exchanged, with the remaining Exchangeable Shares being reflected as non-controlling interest as at March 31, 2012.  All of the remaining exchangeable shares were exchanged for ordinary shares as of April 10, 2012.

Total Comprehensive Income/(Loss)

Total comprehensive loss was $2.2 million or $0.16 per diluted share for the three months ended March 31, 2012 (Q1 2011: total comprehensive loss $0.6 million or $0.05 per diluted share).  The increase in the losses was as a result of decreased Hosted Casino, Branded Games, Poker, and Other revenue, and increased operating expense, G&A expense and amortization of royalties costs, partially offsetting these movements was an increase net finance income, and a decrease in depreciation and amortization expense.

LIQUIDITY AND CAPITAL RESOURCES

The consolidated financial statements were prepared on a going concern basis.  The going concern basis assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The Company incurred significant operating losses of $21.3 million, $37.8 million and $38.1 million and negative cash flows from operations of $11.8 million, $17.8 million and $18.6 million for the three years ended December 31, 2010, 2009 and 2008, respectively, which resulted in a decrease in cash and cash equivalents to $10.6 million, $23.4 million and $36.3 million as of December 31, 2010, 2009 and 2008, respectively.  A continuation of such operating losses, negative cash flows from operations and decreases in cash and cash equivalents may have cast doubt upon the Company’s ability to continue as a going concern.

However, following the significant restructuring in 2010, the Company achieved an operating profit of $2.5 million and positive cash flows from operations of $5.2 million for the year ended December 31, 2011, which resulted in an increase in cash and cash equivalents to $16.7 million as of March 31, 2012.  Management believes that the results of this restructuring have substantially removed any doubts regarding the Company’s ability to continue as a going concern.

Management has considered expectations for future revenues and reduced operating and general and administrative expense and, on that basis, believes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business and, accordingly, it is appropriate to prepare the consolidated financial statements on a going concern basis.

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Furthermore, having regard to expectations for future revenues, reduced operating and general and administrative expense and lower levels of future purchase commitments, management expects cash needs to be funded through existing cash resources and operating cash flow.

Net Cash Position

The Company remained debt-free in 2012.  Cash and cash equivalents at March 31, 2012 were $16.7 million (December 31, 2011: $16.6 million).

The increase in net cash during the three months ended March 31, 2012 of $0.1 million is primarily due to a decrease in trade and other receivables of $1.1 million, an increase in income tax payable of $0.6 million, a decrease in prepayments of $0.4 million, and an increase in trade payables and accrued liabilities of $0.2 million, partially offset by cash used in operations before changes in non-cash operating items of $2.0 million, which is calculated by removing the effect of all non-cash items from net income, and a decrease in provisions of $0.3 million.

Operating Activities

Cash flow used in operating activities was $0.0 million for the three months ended March 31, 2012 (Q1 2011: $4.0 million).  The cash flow used in operating activities is primarily due to a decrease in trade and other receivables of $1.1 million, an increase in income tax payable of $0.6 million, a decrease in prepayments of $0.4 million, and an increase in trade payables and accrued liabilities of $0.2 million, partially offset by cash used in operations before changes in non-cash operating items of $2.0 million, which is calculated by removing the effect of all non-cash items from net income, and a decrease in provision for jackpots of $0.3 million.

Investing Activities

Cash flow used in investing activities was $0.1 million for the three months ended March 31, 2012 (Q1 2011: $0.4 million).

Working Capital

Working capital at March 31, 2012 was $18.2 million (December 31, 2011: $20.1 million).

User Funds Held on Deposit

User funds held on deposit at March 31, 2012 was $2.5 million (December 31, 2011: $2.7 million).

Capitalization

Since inception, the Company has had neither debt nor unutilized credit facilities.  At March 31, 2012, CryptoLogic had 13,414,879 Ordinary Shares outstanding (December 31, 2011: 12,970,540) and 51,000 share options outstanding (December 31, 2011: 359,250).  The 13,414,879 outstanding Ordinary Shares excludes 411,672 (December 31, 2011: 848,511) Exchangeable Shares which are entitled to be exchanged on a one-for-one basis for Ordinary Shares.  Including the Exchangeable Shares, the outstanding Ordinary Shares would be 13,826,551 (December 31, 2011: 13,819,051).  As part of the process of the sale of CryptoLogic to Amaya all of the remaining exchangeable shares were exchanged for ordinary shares as of April 10, 2012, as a result of this as of May 8, 2012, there were 13,826.551 Ordinary Shares and no Exchangeable Shares outstanding.

As part of the Arrangement, Canadian residents received Exchangeable Shares.  The Exchangeable Shares were, as nearly as practicable, the economic equivalent of Ordinary Shares.  For accounting purposes, the acquisition is accounted for using the continuity of interest method, which recognizes CryptoLogic as the successor entity to CryptoLogic Inc.  The Exchangeable Shares were exchangeable for an equivalent amount of Ordinary Shares at any time and are accounted for as a non-controlling interest.  CryptoLogic has issued a special voting share to a third party trustee, the purpose of which was to provide holders of Exchangeable Shares with the right to vote on matters to be voted on by CryptoLogic shareholders.  All outstanding options of CryptoLogic Inc. as of the date of the Arrangement were fully assumed by CryptoLogic under the same terms and conditions as originally granted by CryptoLogic Inc.  The Exchangeable Shares provided those shareholders with the same voting and dividend rights as the Ordinary Shares.  No additional Exchangeable Shares have been or will be issued and all exercises of share options will give rise to the issue of additional Ordinary Shares. All of the remaining exchangeable shares were exchanged for ordinary shares as of April 10, 2012.

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Cash Commitments and Contractual Obligations

Total cash commitments at March 31, 2012 were $3.3 million (December 31, 2010: $4.1 million).

The Company has operating lease agreements for premises expiring at various periods up to May 2020.  The future minimum annual rentals on the operating leases are as follows:

Nine months ended December 31, 2012	$	867
2013		849
2014		532
2015		365
2016		128
Thereafter		436
	$	3,177

The Company has guaranteed minimum payments and purchase commitments for certain royalty rights up to 2013 as follows:

Nine months ended December 31, 2012	$	50
2013		100
	$	150

RESEARCH AND DEVELOPMENT

The Company makes significant investments in research and development to remain competitive with technology advancements and product evolution in the global online gambling market.  Research and development personnel comprised 19% of our workforce at March 31, 2012 (December 31, 2011: 19%).

CRITICAL ACCOUNTING ESTIMATES

CryptoLogic’s accounting policies are specified in the notes to our annual consolidated financial statements, in particular note 2.  The accounting estimates discussed below are considered particularly important, as they require judgments by management.  Management has instituted policies that are intended to ensure these judgments are well controlled and consistently applied from period to period.

The Company licenses various royalty rights from several owners of intellectual property rights.  These rights are used to produce games for use in Hosted Casino and Branded Games.  Generally, the arrangements require material prepayments of minimum guaranteed amounts which have been recorded as prepayments.  These prepaid amounts are amortized over the life of the arrangement as gross revenue is generated or on a straight-line basis if the underlying games are expected to have an effective royalty rate greater than the agreed amount.  The amortization of these amounts is recorded as a reduction in revenue.

For the three months ended March 31, 2012 amortization of $1.1 million (Q1 2011: $0.9 million) was recorded as a reduction of revenue.

Several of the Company’s licensees participate in progressive jackpot games.  Each time a progressive jackpot game is played, a preset amount is added to a cumulative jackpot for that specific game or group of games.  Once a jackpot is won, the progressive jackpot is reset with a predetermined amount.  The Company maintains a provision for the reset for each jackpot and the progressive element added as the jackpot game is played.  The provision is sufficient to cover the full amount of any required payout.

At March 31, 2012, provisions included $2.8 million in provision for jackpots (December 31, 2011: $3.1 million).

The Company is involved in certain claims and litigation arising in the ordinary course and conduct of business, including intellectual property matters.  Management assesses such claims and, if considered likely to result in material exposure and, where it is probable that there will be an outflow of economic benefit, provisions for loss are made based on management’s assessment of the likely outcome.  Management does not provide for claims that are

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considered unlikely to result in a significant loss, claims for which the outcome is not determinable or claims where the amount of the loss cannot be reasonably estimated.  Any settlements or awards under such claims are provided for when reasonably determinable.  Adjustments will be made to the accrual for such amounts as new information is obtained or the claim settled.

The Company regularly reviews its long-term assets, comprising property, plant and equipment, intangible assets and long-term investments for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.  Determination of recoverability generally requires the Company to estimate the fair value of the long-term asset, which requires the Company to make assumptions and judgments on several items including, but not limited to, the future cash flows that will be generated by these assets and the appropriate discount rate to apply to those cash flows.  Measurement of any impairment loss for long-lived assets is based on the amount by which the carrying value exceeds the fair value of the asset.

Accounting for both current and future tax requires the Company to make assumptions, judgments and estimates about current tax laws, which require certain interpretations of tax laws in several jurisdictions around the world as well as possible outcomes of current and future audits conducted by the respective tax authorities.  The Company has established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities.  Although the Company believes our assumptions, judgments and estimates are reasonable, changes in tax laws or our interpretation of tax laws and the resolution of current and any future tax audits could significantly impact the amounts provided for income taxes in its consolidated financial statements.

The Company’s assumptions, judgments and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category of future taxable income, such as income from operations or capital gains income.  Actual operating results and the underlying amount and category of income in future years could render our current assumptions, judgments and estimates of recoverable net deferred taxes inaccurate.  Any of the assumptions, judgments and estimates mentioned above could cause the Company’s actual income tax obligations to differ from its estimates, thus materially impacting its financial position and results of operations.

The Company has a share-based payment scheme for employees.  The fair value of share options is estimated by using the Black-Scholes model on the date of grant incorporating assumptions regarding risk risk-free interest rate, dividend yield, volatility factor of the expected market price of the Company’s shares and the expected life of the options.  Calculations for this scheme with the necessary assumptions inherently mean judgments are required by management.

CHANGE IN ACCOUNTING POLICIES

Recently Issued and Adopted Accounting Pronouncements

These items are substantially unchanged as discussed in the Company’s MD&A for the year ended December 31, 2011 as filed on SEDAR at www.sedar.com or EDGAR at www.sec.gov.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The Company classifies all cash, cash equivalents, short-term investments and user funds on deposit as held-for-trading assets, which are measured at fair value and the changes in fair value are recognized in profit or loss.  Transaction costs related to financial assets and financial liabilities that are designated as held-for-trading are expensed as incurred.

Trade and other receivables are classified as loans and receivables and are recorded at amortized cost.  The Company has determined that the carrying value represents fair value as at March 31, 2012 and December 31, 2011.

All trade payables, accrued liabilities and liabilities for user funds held on deposit are recorded at amortized cost.  The Company has determined that the carrying value represents fair value as at March 31, 2012 and December 31, 2011.

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Long-term investments are classified as available-for-sale assets which are measured at fair value.  Temporary changes in fair value of long-term investments are recognized in other comprehensive income.  Changes in fair value of long-term investments deemed to be other than temporary are recorded in the consolidated statements of comprehensive income/(loss).  Transaction costs related to available-for-sale assets are included in the carrying value of the asset.

The Company has exposure to credit risk and market risk from its use of financial instruments.

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its obligations.  The carrying amount of the Company’s financial assets represents its maximum credit exposure.

The Company manages its credit risk associated with accounts receivable by maintaining reserves for potential credit losses.  Historically the Company has not experienced any significant credit losses associated with its Hosted Casino, Branded Games and Poker businesses and does not have any material trade receivable balances greater than 90 days outstanding.  As a result, the Company believes that its trade receivables represent a low credit risk and has never recorded a material expense associated with a credit risk exposure.

The Company manages its credit risk associated with cash and cash equivalents by holding investments, according to Company investment policy, only in banks carrying an S&P rating of BBB+/A-3+ and higher or government guaranteed banks with a similar rating.

Market risk is the risk that changes in the market prices such as fluctuations in foreign exchange rates and interest rates, will affect the Company’s income or the value of its financial instruments.

The Company operates internationally, giving rise to exposure to changes in foreign exchange rates.  The currency risk is derived from revenues denominated in currencies other than the US dollar, its functional currency, primarily the British pound and the euro, and expenses associated with its multinational operations, primarily the Canadian dollar, the British pound and the euro, as well as the respective receivable and payable balances.  The Company believes that it is, to a degree, naturally hedged.  The Company is also exposed to currency risk on cash and cash equivalents and other current assets denominated in foreign currencies.  As at March 31, 2012, approximately 67% of the Company’s financial assets were denominated in its functional currency (December 31, 2011: 59%).

The Company is exposed to interest rate risk principally on its cash deposits and short-term money market investments of generally less than 90 days.  The Company is exposed to both an overall decrease in interest rates as well as the interest rates associated with the currency or location it invests in.

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RELATED PARTY TRANSACTIONS

Related party transactions

There were no related party transaction in 2012 and 2011 other than those with key management personnel which are detailed as follows.

Transactions with key management personnel

Key management personnel compensation includes the following expenses:

	For the three months ended March 31,
	2012		2011
Short-term employee benefits:
Salaries and bonuses	$	200	$	196
Independent directors’ fees		44		31
Share-based payments		30		9
Social security costs		23		22
Car allowances		6		6
		303		264
Post-employment benefits:
Pensions - defined contribution plans		14		13
	$	317	$	277

DISCLOSURE CONTROLS AND PROCEDURES

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Management’s Discussion and Analysis was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of March 31, 2012, our disclosure controls and procedures, as defined by National Instrument 52-109 - Certification of Disclosures in Issuers’ Annual and Interim Filings are effective to ensure that information required to be disclosed in reports that we file or submit under Canadian securities legislation is summarized and reported within the time periods specified therein.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Chief Financial Officer and effected by the Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards.  It includes those policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Company, provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, that receipts and expenditures are made only in accordance with authorization of management and the Board of Directors, and that prevention or timely detection of the unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the annual or interim financial statements of the Company, is assured.

Management assessed the effectiveness of internal control over financial reporting as at March 31, 2012.  Management based its assessment on criteria established in “Internal Control – Integrated Framework” issued by the

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Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and concludes that, as of March 31, 2012, internal control over financial reporting is effective.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2012 that have materially affected or are reasonable likely to materially affect our internal control over financial reporting.

RISKS AND UNCERTAINTIES

Other than as set out below, the primary risks and uncertainties that affect and may affect us and our business, financial condition and results of operations are substantially unchanged from the Company’s MD&A for the year ended December 31, 2011 as contained in our 2011 Audited Financial Statements filed on SEDAR at www.sedar.com or available on EDGAR at www.sec.gov.

The majority shareholder of the Company has announced that it intends to seek the cancelation of the listings of the CryptoLogic Shares from the various exchanges on which those shares are listed.  Such cancelations will significantly reduce the liquidity and marketability of any CryptoLogic Shares that have not been acquired by the majority shareholder and their value may be affected as a consequence and the cancelations could also result in adverse tax consequences to shareholders.

The majority shareholder of the Company has announced that it intends to seek the cancelation of the listings of the CryptoLogic Shares from the various exchanges on which those shares are listed.  Such cancelations will significantly reduce the liquidity and marketability of any CryptoLogic Shares that have not been acquired by the majority shareholder and their value may be affected as a consequence and the cancelations could also result in adverse tax consequences to shareholders.

As of May 2, 2012, Amaya had acquired control over in excess of 88% of the share capital of the Company.  Amaya has announced that, if permitted by applicable law, it intends to procure the making of applications by the Company for the cancelation of the listing of the CryptoLogic Shares from the London Stock Exchange, the Toronto Stock Exchange and Nasdaq, and the filing of the Form 15F with the SEC to request that its reporting obligations under the US Exchange Act are terminated.  On April 2, 2012, the Company announced that it intended to apply for the cancelation of the listing of the CryptoLogic Shares from the London Stock Exchange, and on May 3, 2012, the Financial Services Authority announced that the listing of the CryptoLogic Shares on the London Stock Exchange had been canceled.

Amaya has also announced that if permitted by applicable law, and at the appropriate time, it will acquire all CryptoLogic Shares for which it has not received acceptances, pursuant to a compulsory acquisition procedure.

Any remaining CryptoLogic Shareholders would become minority shareholders in a majority controlled unlisted company and may be unable to sell their CryptoLogic Shares and there can be no certainty that any dividends or other distributions would be made by CryptoLogic or that CryptoLogic Shareholders would again be offered an opportunity of selling their shares on terms which are equivalent to or no less advantageous than those available under the Offer.

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EX-99.4

EXHIBIT 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, David Baazov, Chief Executive Officer, CryptoLogic Limited, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of CryptoLogic Limited (the “issuer”) for the interim period ended March 31, 2012.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings..

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

a. designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

i. material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

ii. information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

b. designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 N/A

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2012 and ended on March 31, 2012 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 10, 2012

/s/ David Baazov

David Baazov
Chief Executive Officer

EX-99.5

EXHIBIT 99.5

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Daniel Sebag, Chief Financial Officer, CryptoLogic Limited, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of CryptoLogic Limited (the “issuer”) for the interim period ended March 31, 2012.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings..

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

a. designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

i. material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

ii. information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

b. designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 N/A

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2012 and ended on March 31, 2012 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 10, 2012

/s/ Daniel Sebag

Daniel Sebag

Chief Financial Officer