<PAGE>   1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB


  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                                      1934

               For the quarterly period ended September 30, 2000.


                              CityXpress.com Corp.
                          ----------------------------
                                Name of business

       Florida                                             98-0232838
----------------------                          -------------------------------
State of incorporation                          IRS Employer Identification No.




            Suite 200 1727 West Broadway Vancouver, BC Canada V6J 4W
            --------------------------------------------------------


                Phone Number 604-638-3811 Fax Number 604-638-3808


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


                                  Yes [X]   No [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: November 9, 2000 23,008,098 common
shares.

    Transitional Small Business Disclosure Format (check one) Yes [X] No [ ].


--------------------------------------------------------------------------------



<PAGE>   2


                                TABLE OF CONTENTS

<TABLE>
<S>                                                                              <C>
PART I.......................................................................     4

     ITEM   1.  FIRST QUARTER F/S ENDING SEPTEMBER 30, 2000..................     4
     ITEM   2   MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION......    18

PART II......................................................................    21

     ITEM   1.  LEGAL PROCEEDINGS............................................    21

     ITEM   2.  CHANGES IN SECURITIES........................................    21

     ITEM   3.  DEFAULTS UPON SENIOR SECURITIES..............................    21

     ITEM   4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........    21

     ITEM   5.  OTHER INFORMATION............................................    21

     ITEM   6.  EXHIBITS AND REPORTS.........................................    21
</TABLE>


                                       2
<PAGE>   3


NOTE REGARDING FORWARD LOOKING STATEMENTS

Except for statements of historical fact, certain information contained in this
report constitutes "forward-looking statements," including without limitation
statements containing the words "believes," "anticipates," "intends," "expects"
and words of similar import, as well as all projections of future results. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results or achievements of the Company
to be materially different from any future results or achievements of the
Company expressed or implied by such forward-looking statements. Such factors
include, but are not limited to the following: the Company's limited operating
history; under capitalization; risks involving new product development;
unpredictability of future revenues; competition; management of business growth;
risks of technological change; the Company's dependence on key personnel;
ability to develop marketing relationships with strategic partners; dependence
on continued growth in use of the Internet; the Company's ability to protect its
intellectual property rights and uncertainty regarding infringing intellectual
property rights of others; government regulations; and the other risks and
uncertainties described in this report.


                                       3
<PAGE>   4

                          PART I-FINANCIAL INFORMATION

ITEM 1. FIRST QUARTER FINANCIAL STATEMENTS ENDING SEPTEMBER 30, 2000

         Consolidated unaudited financial statements of the Company for the
three months ended September 30, 2000 and September 30, 1999. All figures are
presented in U.S. Currency, unless otherwise stated.


                                       4
<PAGE>   5

CITYXPRESS.COM CORP.


                           CONSOLIDATED BALANCE SHEETS
          [See Nature of Operations and Basis of Presentation - Note 1]

<TABLE>
<CAPTION>
As at September 30                                                   (Expressed in U.S. dollars)

                                                                    SEPTEMBER 30         JUNE 30
                                                                            2000            2000
                                                                               $               $
-------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>

ASSETS [note 4]
CURRENT
Cash and cash equivalents                                                   --             38,963
Accounts receivable, net of allowance for doubtful accounts
   of nil in 2000                                                       34,666             28,903
Other receivables                                                        8,064             26,220
Prepaid expenses and other                                             129,277            159,557
-------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                   172,007            253,643
Property and equipment, net                                             59,629             67,348
eCommerce technology, net of amortization of $787,000
   at September 30, 2000 and $668,950 at June 30, 2000                 629,484            747,534
-------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                           861,120          1,068,525
=================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Bank indebtedness                                                       22,952                 --
Accounts payable and accrued liabilities                               300,688            361,921
Demand instalment loan [note 4]                                        166,087            167,213
Shareholders' loans [note 5 (a)]                                       249,973            252,900
Loan payable [note 7]                                                  290,000                 --
Deferred revenue                                                           808              1,206
-------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                            1,030,508            783,240
Deferred tax liability                                                 213,100            253,100
-------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                    1,243,608          1,036,340
Commitments

STOCKHOLDERS' EQUITY (DEFICIT)
Share capital [note 6]
   Common stock - $0.001 par value
     Authorized shares: 50,000,000
     Issued and outstanding: 23,008,098 at September 30, 2000
      and June 30, 2000                                                 14,497             14,497
   Additional paid in capital                                        5,719,581          5,687,761
Other comprehensive income                                              19,625             19,625
Deficit                                                             (6,136,191)        (5,689,698)
-------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                  (382,488)            32,185
-------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             861,120          1,068,525
=================================================================================================
</TABLE>

See accompanying notes

On behalf of the Board:

                                    Director                      Director


                                       5
<PAGE>   6

CITYXPRESS.COM CORP.


                     CONSOLIDATED STATEMENTS OF OPERATIONS
         [See Nature of Operations and Basis of Presentation - Note 1]


<TABLE>
<CAPTION>
Three months ended September 30                                       (Expressed in U.S. dollars)

                                                                       2000               1999
                                                                         $                  $
-------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>
REVENUE
Development fees                                                         8,862                 --
Hosting fees                                                            11,989              2,296
Training fees                                                            7,439                 --
Banner Advertising fees                                                 31,065                 --
Premier Listings fees                                                    8,667                 --
Coupons fees                                                             3,265                 --
E-commerce fees                                                          4,429                 --
License fees                                                                --              2,019
-------------------------------------------------------------------------------------------------
TOTAL REVENUES                                                          75,716              4,315
Cost of sales                                                           70,169                 19
-------------------------------------------------------------------------------------------------
GROSS PROFIT (LOSS)                                                      5,547              4,296

OPERATING EXPENSES
Sales and marketing                                                     81,018             58,648
Product development and technology                                     103,991            221,994
Finance and administration                                             176,935            177,309
Amortization of eCommerce technology                                   118,050            118,050
-------------------------------------------------------------------------------------------------
                                                                       479,994            576,001
-------------------------------------------------------------------------------------------------
Operating loss                                                        (474,447)          (571,705)
OTHER INCOME (EXPENSE)
   Interest expense                                                    (14,909)            (1,806)
   Interest and miscellaneous income                                       152                171
   Foreign exchange gain                                                 2,711                 --
-------------------------------------------------------------------------------------------------
Total other expense                                                    (12,046)            (1,635)
-------------------------------------------------------------------------------------------------
Loss before income taxes                                              (486,493)          (573,340)
Deferred income tax recovery                                            40,000             40,000
-------------------------------------------------------------------------------------------------
NET LOSS FOR THE PERIOD                                               (446,493)          (533,340)
=================================================================================================
COMPREHENSIVE LOSS
Net loss for the period                                               (446,493)          (533,340)
Foreign currency translation                                                --                754
-------------------------------------------------------------------------------------------------
COMPREHENSIVE LOSS FOR THE PERIOD                                     (446,493)          (532,586)
=================================================================================================
NET LOSS PER COMMON SHARE [NOTE 6(D)]
   Basic and diluted                                                     (0.02)             (0.03)
=================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES [NOTE 6(D)]
   Basic                                                            23,008,098         20,558,910
=================================================================================================
</TABLE>

See accompanying notes


                                       6
<PAGE>   7


CITYXPRESS.COM CORP.


            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
          [See Nature of Operations and Basis of Presentation - Note 1]

                                                    (Expressed in U.S. dollars)


<TABLE>
<CAPTION>
                                                                                                         COMMON
                                                                                          COMMON       STOCK TO BE
                                                                                           STOCK          ISSUED
                                                                                             #              #
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>             <C>
Deemed outstanding as of June 30, 1998 [note 1]                                                800       1,756,380
Deemed common shares issued for cash received in the prior year [note 12(a)]               160,000        (160,000)
Deemed common shares issued for services rendered in the prior year [note 12(a)]           160,000        (160,000)
Deemed common shares issued for investment in the prior year [note 12(a)]                   40,000         (40,000)
Deemed common shares issued for services rendered in the prior year [note 12(a)]         4,499,200              --
Deemed common shares issued for services rendered in the current year [note 12(a)]       1,337,248              --
Deemed common shares issued for cash [note 12(a)]                                          237,667              --
Deemed common shares issued to charitable organizations [note 12(a)]                        80,000              --
Prior year's subscription shares issued in the current year,  net of share
   issue costs of $10,187 [note 12(a)]                                                   1,396,380      (1,396,380)
Deemed common shares issued pursuant to private placement, net of
   issue costs of  $32,487 [note 12(a)]                                                    598,705              --
------------------------------------------------------------------------------------------------------------------
DEEMED OUTSTANDING AS OF JANUARY 7, 1999                                                 8,510,000              --
==================================================================================================================
Acquisition of CityXpress.com by WelcomeTo [note 2]                                      5,100,000              --
Acquisition of Xceedx [note 4]                                                           6,250,000              --
Shares to be issued for services rendered [note 12(a)]                                          --         450,000
Finders fees acquisition costs [note 2]                                                         --              --
Shares issued pursuant to private placement [note 12(a)]                                    33,333              --
Shares to be issued [note 12(a)]                                                                --         177,860
Net loss for the period                                                                         --              --
Foreign currency translation                                                                    --              --
------------------------------------------------------------------------------------------------------------------
OUTSTANDING AS OF JUNE 30, 1999                                                         19,893,333         627,860
==================================================================================================================
Shares issued pursuant to share subscriptions [note 12(a)]                                 177,860        (177,860)
Shares issued for services [note 12(a)]                                                    450,000        (450,000)
Shares issued pursuant to private placement, net of share
   issue costs of $16,667 [note 12(a)]                                                   2,234,438              --
Shares issued for services rendered or to be rendered [note 12(a)]                         252,467              --
Stock based compensation [notes 10(b) and 12(b)]                                                --              --
Beneficial conversion feature of warrants [note 12(a)]                                          --              --
Net loss for the period                                                                         --              --
------------------------------------------------------------------------------------------------------------------
OUTSTANDING AS OF JUNE 30, 2000                                                         23,008,098              --
==================================================================================================================
Stock based compensation [note 12(b)]                                                           --              --
Net loss for the period                                                                         --              --
------------------------------------------------------------------------------------------------------------------
OUTSTANDING AS OF SEPTEMBER  30, 2000                                                   23,008,098              --
==================================================================================================================

<CAPTION>

                                                                                       COMMON          COMMON          ADDITIONAL
                                                                                   STOCK ISSUED      STOCK TO BE         PAID IN
                                                                                   AND OUTSTANDING     ISSUED            CAPITAL
                                                                                          $                $                 $
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>               <C>               <C>
Deemed outstanding as of June 30, 1998 [note 1]                                             --          276,903                5
Deemed common shares issued for cash received in the prior year [note 12(a)]                --          (17,033)          17,033
Deemed common shares issued for services rendered in the prior year [note 12(a)]            --          (30,521)          30,521
Deemed common shares issued for investment in the prior year [note 12(a)]                   --           (3,406)           3,406
Deemed common shares issued for services rendered in the prior year [note 12(a)]            --               --          863,718
Deemed common shares issued for services rendered in the current year [note 12(a)]          --               --          253,936
Deemed common shares issued for cash [note 12(a)]                                           --               --           40,337
Deemed common shares issued to charitable organizations [note 12(a)]                        --               --           15,207
Prior year's subscription shares issued in the current year,  net of share
   issue costs of $10,187 [note 12(a)]                                                      --         (225,943)         225,943
Deemed common shares issued pursuant to private placement, net of
   issue costs of  $32,487 [note 12(a)]                                                     --               --          143,318
--------------------------------------------------------------------------------------------------------------------------------
DEEMED OUTSTANDING AS OF JANUARY 7, 1999                                                    --               --        1,593,424
================================================================================================================================
Acquisition of CityXpress.com by WelcomeTo [note 2]                                      5,100               --          719,889
Acquisition of Xceedx [note 4]                                                           6,250               --          868,750
Shares to be issued for services rendered [note 12(a)]                                      --               --          225,000
Finders fees acquisition costs [note 2]                                                     --               --         (225,000)
Shares issued pursuant to private placement [note 12(a)]                                    33               --           99,966
Shares to be issued [note 12(a)]                                                            --          266,790               --
Net loss for the period                                                                     --               --               --
Foreign currency translation                                                                --               --               --
--------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING AS OF JUNE 30, 1999                                                         11,383          266,790        3,282,029
================================================================================================================================
Shares issued pursuant to share subscriptions [note 12(a)]                                 178         (266,790)         266,612
Shares issued for services [note 12(a)]                                                    450               --             (450)
Shares issued pursuant to private placement, net of share
   issue costs of $16,667 [note 12(a)]                                                   2,234               --        1,007,268
Shares issued for services rendered or to be rendered [note 12(a)]                         252               --          290,518
Stock based compensation [notes 10(b) and 12(b)]                                            --               --          277,668
Beneficial conversion feature of warrants [note 12(a)]                                      --               --          564,116
Net loss for the period                                                                     --               --               --
--------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING AS OF JUNE 30, 2000                                                         14,497               --        5,687,761
================================================================================================================================
Stock based compensation [note 12(b)]                                                       --               --           31,820
Net loss for the period                                                                     --               --               --
--------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING AS OF SEPTEMBER  30, 2000                                                   14,497               --        5,719,581
================================================================================================================================

<CAPTION>

                                                                                        OTHER                           TOTAL
                                                                                    COMPREHENSIVE                    STOCKHOLDERS'
                                                                                       INCOME          DEFICIT      EQUITY (DEFICIT)
                                                                                          $                $               $
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>              <C>            <C>
Deemed outstanding as of June 30, 1998 [note 1]                                          25,519       (1,096,067)        (793,640)
Deemed common shares issued for cash received in the prior year [note 12(a)]                 --               --               --
Deemed common shares issued for services rendered in the prior year [note 12(a)]             --               --               --
Deemed common shares issued for investment in the prior year [note 12(a)]                    --               --               --
Deemed common shares issued for services rendered in the prior year [note 12(a)]             --               --          863,718
Deemed common shares issued for services rendered in the current year [note 12(a)]           --               --          253,936
Deemed common shares issued for cash [note 12(a)]                                            --               --           40,337
Deemed common shares issued to charitable organizations [note 12(a)]                         --               --           15,207
Prior year's subscription shares issued in the current year,  net of share
   issue costs of $10,187 [note 12(a)]                                                       --               --               --
Deemed common shares issued pursuant to private placement, net of
   issue costs of  $32,487 [note 12(a)]                                                      --               --          143,318
---------------------------------------------------------------------------------------------------------------------------------
DEEMED OUTSTANDING AS OF JANUARY 7, 1999                                                 25,519       (1,096,067)         522,876
=================================================================================================================================
Acquisition of CityXpress.com by WelcomeTo [note 2]                                          --               --          724,989
Acquisition of Xceedx [note 4]                                                               --               --          875,000
Shares to be issued for services rendered [note 12(a)]                                       --               --          225,000
Finders fees acquisition costs [note 2]                                                      --               --         (225,000)
Shares issued pursuant to private placement [note 12(a)]                                     --               --           99,999
Shares to be issued [note 12(a)]                                                             --               --          266,790
Net loss for the period                                                                      --       (1,642,078)      (1,642,078)
Foreign currency translation                                                             (5,894)              --           (5,894)
---------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING AS OF JUNE 30, 1999                                                          19,625       (2,738,145)         841,682
=================================================================================================================================
Shares issued pursuant to share subscriptions [note 12(a)]                                   --               --               --
Shares issued for services [note 12(a)]                                                      --               --               --
Shares issued pursuant to private placement, net of share
   issue costs of $16,667 [note 12(a)]                                                       --               --        1,009,502
Shares issued for services rendered or to be rendered [note 12(a)]                           --               --          290,770
Stock based compensation [notes 10(b) and 12(b)]                                             --               --          277,668
Beneficial conversion feature of warrants [note 12(a)]                                       --         (564,116)              --
Net loss for the period                                                                      --       (2,387,437)      (2,387,437)
---------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING AS OF JUNE 30, 2000                                                          19,625       (5,689,698)          32,185
=================================================================================================================================
Stock based compensation [note 12(b)]                                                        --               --           31,820
Net loss for the period                                                                      --         (446,493)        (446,493)
---------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING AS OF SEPTEMBER  30, 2000                                                    19,625       (6,136,191)        (382,488)
=================================================================================================================================
</TABLE>


See accompanying notes


                                       7
<PAGE>   8


CITYXPRESS.COM CORP.


                     CONSOLIDATED STATEMENTS OF CASH FLOWS
          [See Nature of Operations and Basis of Presentation - Note 1]

<TABLE>
<CAPTION>
Three months ended September 30                                      (Expressed in U.S. dollars)

                                                                        2000              1999
                                                                         $                  $
--------------------------------------------------------------------------------------------------
<S>                                                                   <C>                <C>
OPERATING ACTIVITIES
Net loss for the period                                               (446,493)          (533,340)
Adjustments to reconcile net loss to net cash
   used in operating activities:
   Amortization                                                        118,050            118,050
   Depreciation                                                         11,257             11,114
   Deferred income tax recovery                                        (40,000)           (40,000)
   Stock based compensation                                             31,820                 --
   Foreign exchange gain                                                (2,711)                --
Changes in operating assets and liabilities:
   Accounts receivable                                                  (6,267)               941
   Other receivables                                                    18,176              9,538
   Prepaid expenses and other                                           30,301           (127,596)
   Accounts payable and accrued liabilities                            (58,772)           (93,080)
   Deferred revenue                                                       (389)            (1,899)
-------------------------------------------------------------------------------------------------
NET CASH (USED IN) OPERATING ACTIVITIES                               (345,028)          (656,272)
-------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Purchase of property and equipment                                      (3,213)           (10,965)
Cash acquired on acquisition of subsidiaries [notes 1]                      --                 --
-------------------------------------------------------------------------------------------------
NET CASH (USED) IN INVESTING ACTIVITIES                                 (3,213)           (10,965)
-------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Borrowings under bank indebtedness                                          --             (1,129)
Proceeds from loan payable                                             290,000                 --
Repayments of demand loans                                              (1,126)            (1,521)
Repayments of shareholders' loans                                          (44)                --
Proceeds from stock issued and to be issued, net of share issue costs       --            450,790
-------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                              288,830            448,140
-------------------------------------------------------------------------------------------------
Effect of foreign exchange rate changes on cash                         (2,504)             7,774

NET (DECREASE) IN CASH AND CASH EQUIVALENTS DURING THE PERIOD          (61,915)          (211,323)
Cash and cash equivalents, beginning of period                          38,963            234,214
-------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                               (22,952)            22,891
=================================================================================================

SUPPLEMENTAL DISCLOSURE
Interest paid                                                           14,909              1,806
=================================================================================================
</TABLE>


See accompanying notes


                                       8
<PAGE>   9

CITYXPRESS.COM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)

                              NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                                     (expressed in U.S. dollars)

Information as at September 30, 2000 and for the three months ended September
30, 2000 and 1999 is unaudited.

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

These consolidated financial statements are the continuing financial statements
of WelcomeTo Search Engine ("WelcomeTo"), a British Columbia corporation which
was incorporated on October 27, 1997. On January 7, 1999, WelcomeTo acquired
100% of the common shares of CityXpress.com Corp. ("CityXpress.com"); a United
States non-operating company traded on the NASDAQ OTC Bulletin Board. After the
acquisition on January 7, 1999, the accounting entity continued under the name
of CityXpress.com.

CityXpress.com Corp. ("Company") is a software developer and Internet publisher.

The Company's consolidated financial statements for the three months ended
September 30, 2000 have been prepared on a going concern basis which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. The Company incurred a net loss of
$446,493 for the three months ended September 30, 2000 and has a working capital
deficiency of $858,501 and deficit in stockholder's equity of $6,136,191 at
September 30, 2000. The ability of the Company to continue as a going concern is
dependent upon its ability to achieve profitable operations and to obtain
additional capital. Management expects to raise additional capital through
private placements and other types of venture funding. The outcome of these
matters cannot be predicted at this time. No assurances can be given that the
Company will be successful in raising sufficient additional capital. Further,
there can be no assurance, assuming the Company successfully raises additional
funds, that the Company will achieve positive cash flow. If the Company is
unable to obtain adequate additional financing, management will be required to
curtail the Company's operating expenses. These consolidated financial
statements do not include any adjustments to the specific amounts and
classifications of assets and liabilities, which might be necessary should the
Company be unable to continue in business.

These financial statements have been prepared by management in accordance with
generally accepted accounting principles in the United States and in the opinion
of management reflect all adjustments, which consist only of normal and
recurring adjustments necessary to present fairly the financial position and
results of operations and cash flows.

These financial statements should be read in conjunction with the audited
financial statements and notes thereto for the year ended June 30, 2000.


                                       9
<PAGE>   10

CITYXPRESS.COM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)

                              NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                                     (expressed in U.S. dollars)

Information as at September 30, 2000 and for the three months ended September
30, 2000 and 1999 is unaudited.

2. ECOMMERCE TECHNOLOGY

eCommerce technology arose as part of the acquisition of Xceedx Technologies
Inc. and is being amortized on a straight-line basis over its useful life, which
is 36 months.

3. CREDIT RISK

Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist principally of cash and cash equivalents and accounts
receivable. The Company performs ongoing credit evaluations of its customers and
maintains allowances for potential credit losses which, when realized, have been
within range of management's expectations.

For the three months ended September 30, 2000, approximately 99% of the
Company's total revenues were generated through sales to one customer [1999 -
nil]. At September 30, 2000, approximately 97% of the Company's accounts
receivable balance were due from this customer [1999 - nil].

4. DEMAND INSTALMENT LOAN

In January 2000, the Company restructured its credit facility with the bank. In
addition, the existing loan was refinanced into a demand instalment of $169,687
(Cdn $250,000). The loan bears interest at the bank prime rate plus 1% and is
repayable in equal monthly principal and interest instalments of $1,563 for the
period March 15, 2000 to February 15, 2015. At September 30, 2000 the balance
outstanding is $166,087.


                                       10
<PAGE>   11

CITYXPRESS.COM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)

                              NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                                     (expressed in U.S. dollars)

Information as at September 30, 2000 and for the three months ended September
30, 2000 and 1999 is unaudited.

5.  RELATED PARTY TRANSACTIONS

[A]   SHAREHOLDERS' LOANS

During the year ended June 30, 2000, the Company entered into unsecured
shareholder loan agreements with the Company's chief executive officer and chief
financial officer. The demand loans outstanding at September 30, all of which
are without stated terms of repayment unless otherwise stated, are summarized
below:

<TABLE>
<CAPTION>
                                                                 ANNUAL
                                                                INTEREST         BALANCE OUTSTANDING
                                                                 RATE AT           AT SEPTEMBER 30,
                                                           SEPTEMBER 30, 2000     2000         1999
                                                                    %               $            $
----------------------------------------------------------------------------------------------------

<S>                                                        <C>                   <C>           <C>
Loans payable bearing interest at 10% and repayable
in equal monthly principal and interest instalments
 of $1,510                                                        10.00          166,633        --
Loan payable bearing interest at the CIBC Visa
 monthly interest rate                                            19.50           16,668        --
Loan payable bearing interest at the Scotia McLeod
monthly interest rate                                              9.50           16,668        --
Loan payable bearing interest at 4.5% per annum                    4.50           33,336        --
Loan payable bearing interest at Toronto Dominion Bank
monthly TD Select Line rate                                       10.25           16,668        --
----------------------------------------------------------------------------------------------------
                                                                                 249,973        --
====================================================================================================
</TABLE>

Interest incurred on the loans amounted to $6,475 for the three months ended
September 30, 2000.

[B] OTHER

On June 13, 2000, the Company granted 541,600 warrants to two of the Company's
officers, as consideration for their guarantee of the demand instalment loan
[note 4] and as consideration for the shareholder loans [note 5(a)]. Each
warrant is exercisable for one common share of the Company at a price of $.25
per share through June 13, 2002. The estimated fair value of these warrants at
the date of issuance of $48,744 was recorded as an expense in the consolidated
statement of operations for the year ended June 30, 2000. The Black Scholes
option-pricing model was used to value the warrants with the following
assumptions: no dividend yield; risk-free interest rate of 6.0%; expected
volatility of 1.09; and an expected life of 1.5 years.


                                       11
<PAGE>   12

CITYXPRESS.COM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)

                              NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                                     (expressed in U.S. dollars)

Information as at September 30, 2000 and for the three months ended September
30, 2000 and 1999 is unaudited.

6. SHARE CAPITAL

[A] COMMON STOCK

On June 10, 1998, the Company agreed to reacquire and cancel 110 common shares
of the Company from certain shareholders. In exchange for these shares, in
November 1998, the Company issued 360,000 common shares upon amendment of the
authorized capital of the Company. The cost to reacquire these shares and
commitment to issue new shares was recorded as a reduction in common stock and
corresponding increase in stock subscriptions. This transaction was recorded
using the carrying values of the common stock reacquired of $50,960.

In November 1998, Company issued 1,396,380 common shares at $0.17 (Cdn. $0.25)
per share for total cash proceeds of $236,130 less issue costs of $10,187.

In November 1998, the Company issued 4,499,200 common shares to certain
officers, directors and employees of the Company in exchange for services
provided in the period ended June 30, 1998. In addition, the Company issued
1,337,248 common shares to certain officers, directors and employees of the
Company in exchange for services provided in July and August 1998. These common
shares were issued at the fair value of the common stock of approximately $0.19
(Cdn. $0.28) per share, which was based on third party stock subscriptions. The
Company recorded compensation expense of $253,936 during the year ended June 30,
1999.

In November 1998, the Company issued 237,667 common shares at $0.17 (Cdn. $0.25)
per share for total cash proceeds of $40,337.

In November 1998, the Company issued 80,000 shares to two charitable
organizations for services rendered in July and August 1998. These shares were
recorded at the fair value of the common stock of approximately $0.19 per share
(Cdn $0.28), which was based on third party stock subscription agreements.

In November 1998, the Company issued 274,900 common shares at $0.17 (Cdn. $0.25)
per share, 210,471 common shares at $0.34 (Cdn. $0.50) per share, and 113,334
common shares at $0.51 (Cdn. $0.75) per share pursuant to third party stock
subscription agreements. The Company received total cash proceeds of $175,805
less issue costs of $32,487.

In January 1999, the Company incurred one-time finders fee costs of $225,000
related to the reverse acquisition of the Company. These costs were paid by the
issuance of 450,000 common shares at $0.50 (Cdn. $0.74) per share, after the
year ended June 30, 1999.

On March 15, 1999, the Company issued 33,333 common shares pursuant to stock
subscription agreements at a price of $3.00 per share for cash of $99,999.


                                       12
<PAGE>   13

CITYXPRESS.COM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)

                              NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                                     (expressed in U.S. dollars)

Information as at September 30, 2000 and for the three months ended September
30, 2000 and 1999 is unaudited.

6. SHARE CAPITAL (CONT'D.)

[A] COMMON STOCK (CONT'D.)

In August 1999, the Company issued 177,860 common shares at $1.50 per share, for
$266,790, net of financing commissions payable. The net cash proceeds were
received prior to June 30, 1999. Each common share issued has an attached
warrant which entitles the holder to acquire one common share for $1.50 each for
a one-year period and $2.00 each after one year. The warrants expire on June 10,
2001.

On August 15, 1999, the Company issued 100,000 units to a vendor for marketing
and advertising services. Each unit comprised one common share and one warrant
entitling the vendor to acquire one common share for $1.50 each for a one-year
period and $2.00 each after one year [note 12(c)]. On May 18, 2000, the Company
issued an additional 140,000 units to this vendor for marketing and advertising
services. Each unit comprised one common share and one warrant entitling the
vendor to acquire one common share for $.25 each for a one year period, and $.75
each after one year [note 12(c)]. The Company has recorded, in additional paid
in capital, the units issued at their fair value of $281,200. Of this amount,
approximately $142,500 has been recorded as an expense in the consolidated
statement of operations for the year ended June 30, 2000 and the remainder has
been recorded as a prepaid expense to be amortized over the period the services
are rendered. The Black Scholes option-pricing model was used to value the
warrants with the following assumptions: no dividend yield; risk free interest
rate of 6.0%; expected volatility of 1.09 and an expected life of 1.5 years.

In October and December 1999, the Company issued 99,521 common shares and
warrants to acquire 99,521 common shares for cash proceeds of $136,069. Each
common share has one attached warrant which entitles the holder to acquire one
common share for exercise prices of $1.25 to $1.50 during the first year and
$1.75 to $2.00 during the second year. The warrants expire September 30, 2001 to
October 13, 2001. Pursuant to the subscription agreements, if at any time until
March 31, 2000 the Company issued common shares at a share price of less than
the subscription price paid by the investors, then additional common shares and
warrants would be issued, such that the effective issue price of the common
shares issued is equal to the lower price paid. In January 2000, the Company
issued an additional 172,617 common shares for no additional consideration,
pursuant to this subscription agreement. In addition, the number of warrants
granted was increased by 172,617 to 272,138 and the exercise price decreased to
$.50 during the first year and $.75 during the second year.

In March 2000, the Company issued 12,467 common shares at $.77 per share to a
vendor for marketing services with a fair market value of $9,570.

During the year ended June 30, 2000, the Company issued 1,962,300 units for cash
proceeds of $890,100 before share issue costs of $16,667. Each unit comprised
one common share and one warrant entitling the holder to acquire one common
share.

The total proceeds of $1,026,169 representing 2,234,438 common shares have been
allocated to the common shares and the warrants based on their relative fair
values. The beneficial conversion feature of the warrants has been determined to
be $564,116 and has been charged to the deficit.


                                       13
<PAGE>   14

CITYXPRESS.COM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)

                              NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                                     (expressed in U.S. dollars)

Information as at September 30, 2000 and for the three months ended September
30, 2000 and 1999 is unaudited.

6. SHARE CAPITAL (CONT'D.)

[B] STOCK OPTIONS

On August 25, 1999, the Board of Directors approved the creation of the
Corporate Stock Option Plan ("Plan") pursuant to which the Company has reserved
2,000,000 shares of common stock. The terms and vesting period of options are
determined by the directors at the date of grant. The majority of the options
granted to date are exercisable over a four-year period and vest on a cumulative
basis at 1/3 per year.

In August 1999, the Company granted 675,000 stock options to employees below the
fair market value of the underlying common shares on the date of grant.
Compensation expense of $31,820, calculated based on the intrinsic value method,
has been recorded in the consolidated statement of operations for the quarter
ended September 30, 2000.

Stock option transactions for the quarter ended September 30, 2000 are
summarized below:

<TABLE>
<CAPTION>
                                                              OUTSTANDING OPTIONS
                                        SHARES           -----------------------------
                                       AVAILABLE                      WEIGHTED AVERAGE
                                     UNDER OPTION        SHARES       EXERCISE PRICE
                                           #                #                $
--------------------------------------------------------------------------------------
<S>                                  <C>                 <C>          <C>
BALANCE, JUNE 30, 1999                        --                --            --
Reserve shares                         2,000,000                --            --
Granted, July 13, 1999                  (675,000)          675,000          1.50
         May 15, 2000                   (872,500)          872,500          0.25
         June 27, 2000                  (200,000)          200,000          0.25
Forfeited                                     --          (185,000)         1.50
                                              --           (47,500)         0.25
--------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2000              252,500         1,515,000          0.65
======================================================================================
</TABLE>

The following table summarizes information about stock options that are
outstanding at September 30, 2000:

<TABLE>
<CAPTION>
                                  OPTIONS OUTSTANDING               OPTIONS EXERCISABLE
                            -----------------------------------------------------------------
RANGE OF        NUMBER          WEIGHTED-       WEIGHTED-         NUMBER         WEIGHTED-
EXERCISE    OUTSTANDING AT       AVERAGE         AVERAGE      OUTSTANDING AT      AVERAGE
 PRICES     SEPTEMBER 30,       REMAINING     EXERCISE PRICE   SEPTEMBER 30,   EXERCISE PRICE
                 2000       CONTRACTUAL LIFE                      2000
    $              #                                 $              #                $
---------------------------------------------------------------------------------------------

<S>         <C>             <C>               <C>             <C>              <C>
  0.25         1,025,000         3.64 yrs          0.25          200,000           0.25
  1.50           490,000         2.78 yrs          1.50          163,333           1.50
---------------------------------------------------------------------------------------------
               1,515,000                                         363,333
=============================================================================================
</TABLE>


                                       14
<PAGE>   15

CITYXPRESS.COM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)

                              NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                                     (expressed in U.S. dollars)

Information as at September 30, 2000 and for the three months ended September
30, 2000 and 1999 is unaudited.

6. SHARE CAPITAL (CONT'D.)

[B] STOCK OPTIONS (CONT'D.)

The weighted average fair value of options granted during the quarter ended
September 30, 2000 was as follows:

<TABLE>
<CAPTION>
                                                         WEIGHTED
                                                          AVERAGE
                                           OPTIONS      FAIR VALUE
                                              #              $
------------------------------------------------------------------

<S>                                       <C>           <C>
Exercise price:
   Equal to fair market value             1,072,500         0.19
   Greater than fair market value                --           --
   Less than fair market value              675,000         2.21
------------------------------------------------------------------
                                          1,747,500         0.97
==================================================================
</TABLE>

Pro forma information regarding net income and earnings per share is required by
Statement of Financial Accounting Standard ("SFAS") No. 123, which also requires
that the information be determined as if the Company had accounted for its
employee stock options under the fair value method of that statement. The fair
value of each option granted during the year was estimated at the date of grant
using a Black-Scholes pricing model with the following weighted average
assumptions: risk free interest rates of 6%; dividend yield of nil; volatility
factors of the expected market price of the Company's common stock of 1.09 and a
weighted average expected life of the option of 3.8 years.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the vesting period. The Company's pro forma
information for the quarter ended September 30, 2000 is as follows:
<TABLE>
<CAPTION>
                                                                              $
-----------------------------------------------------------------------------------

<S>                                                       <C>             <C>
Net loss                                                  As reported     (446,493)
Beneficial conversion feature of warrants [note 12(a)]    As reported           --
APB 25 compensation expense                               As recorded           --
SFAS 123 compensation expense                             Pro forma             --
-----------------------------------------------------------------------------------
Pro forma net loss                                        Pro forma       (446,493)
-----------------------------------------------------------------------------------
Pro forma net loss per common share:
   Basic and diluted                                      Pro forma          (0.02)
===================================================================================
</TABLE>


                                       15
<PAGE>   16

CITYXPRESS.COM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)

                              NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                                     (expressed in U.S. dollars)

Information as at September 30, 2000 and for the three months ended September
30, 2000 and 1999 is unaudited.

6. SHARE CAPITAL (CONT'D.)

[C] WARRANTS

The following represents a summary of warrants outstanding September 30, 2000:

<TABLE>
<CAPTION>
                                                    OUTSTANDING WARRANTS
                                  ---------------------------------------------------------
                                      EXERCISE PRICE
                                    SHARES       YEAR 1       YEAR 2
GRANT DATE                            #            $             $           EXPIRY DATE
-------------------------------------------------------------------------------------------

<S>                               <C>            <C>          <C>        <C>
June 10, 1999                       177,860       1.50          2.00          June 10, 2001
July 14, 1999                        45,260       1.50          2.00          July 14, 2001
August 15, 1999                     100,000       1.50          2.00        August 15, 2001
September 30, 1999                  465,800       0.50          0.75     September 30, 2001
October 13, 1999                    132,138       0.50          0.75       October 13, 2001
December 10, 1999                   408,000       0.50          0.75      December 10, 2001
January 18, 2000                    138,000       0.50          0.75       January 18, 2002
January 31, 2000                    500,000       0.50          0.75       January 31, 2002
May 1, 2000                         405,240       0.25          0.75            May 1, 2002
May 18, 2000                        280,000       0.25          0.75           May 18, 2002
June 13, 2000                       541,600       0.25          0.25          June 13, 2002

-------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2000       3,193,898
===========================================================================================
</TABLE>

[D] LOSS PER COMMON SHARE

The following table sets forth the computation of basic and diluted loss per
share:

<TABLE>
<CAPTION>
                                                                 2000            1999
                                                                   $               $
----------------------------------------------------------------------------------------
<S>                                                          <C>             <C>
NUMERATOR
Net loss for the year                                          (446,493)       (533,340)

----------------------------------------------------------------------------------------
Net loss attributable to common shareholders                   (446,493)       (533,340)

DENOMINATOR
Weighted average number of common shares outstanding         23,008,098      20,558,910

Basic loss per common share                                       (0.02)          (0.03)
========================================================================================
</TABLE>

For the quarters ended September 30, 2000 and 1999, all of the Company's common
shares issuable upon the exercise of stock options and warrants were excluded
from the determination of diluted loss per share, as their effect would be
anti-dilutive.


                                       16
<PAGE>   17

CITYXPRESS.COM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)

                              NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                                     (expressed in U.S. dollars)

Information as at September 30, 2000 and for the three months ended September
30, 2000 and 1999 is unaudited.

7. LOAN PAYABLE

On August 16, 2000, the Company entered into a Loan and Security Agreement with
Lee Enterprises Incorporated (Lee). Under this agreement, the Company received
$290,000 in funding in the form of promissory notes that bear interest at the
Wall Street Journal rate, as detailed below:

<TABLE>
<CAPTION>
                                                                   CURRENT
          DATE              AMOUNT          MATURITY DATE       INTEREST RATE
                              $                                       %
-----------------------------------------------------------------------------
   <S>                     <C>            <C>                   <C>
   AUGUST 17, 2000         125,000        NOVEMBER 17, 2000          9.5
   AUGUST 28, 2000         125,000        NOVEMBER 28, 2000          9.5
   SEPTEMBER 19, 2000       40,000        DECEMBER 19, 2000          9.5
-----------------------------------------------------------------------------

                           290,000
=============================================================================
</TABLE>

As part of the loan and security agreement, the Company is obligated to grant
the note holder the option to acquire 2,223,285 common shares of the Company. In
conjunction with these agreements, the Company entered into a Collateral License
Agreement covering the licensing of the Company's software to Lee in the event
of a default pursuant to the loan and security agreement. Interest to September
30, 2000 on this loan amounted to $2,695.

8. SUBSEQUENT EVENT

As of November 1, 2000, the Company entered into an Investment Agreement with
Lee Enterprises Incorporated (Lee) whereby Lee would provide funding up to
$1,500,000 in the form of a floating rate subordinated convertible debenture.
The $1,500,000 subordinated convertible debenture would consist of a series of
six debentures of $250,000 that would be funded during the period from November
2000 to May 2001. The Company received $250,000 in funding under the debenture
in October 2000. The Investment Agreement provides Lee the right to convert the
floating rate subordinated convertible debenture into 6,902,429 common shares of
the Company at conversion price of $0.2173 per common share until October 31,
2003. The Investment Agreement also contains certain affirmative and negative
covenants that restrict the Company's activities. Each series of $250,000
subordinated convertible debenture bears interest at the Wall Street Journal
rate less 1%. Interest due on the convertible debenture will be converted to
CityXpress shares at fair market value on the date of conversion. As part of the
Investment Agreement, the Loan and Security Agreement dated August 16, 2000 was
amended by changing the repayment terms and maturity dates of the promissory
notes, as per note 7, to October 31, 2002. The amended agreement also cancelled
Lee's right under the Loan Security Agreement to acquire 2,223,285 common
shares. Under the Investment Agreement, the Company has entered into a
Registration Rights Agreement providing Lee the ability to register their shares
under the Investment Agreement based on certain conditions.


                                       17
<PAGE>   18

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The Company incurred a net loss for the three months ended September
30, 2000 of $446,493 as compared to a loss of $533,340 for the same period in
1999 a decrease of $86,847. The Company recorded revenue of $75,716 in the
quarter ended September 30, 2000 resulting in an increase of $71,401 over the
same three-month period last year. This revenue increase resulted primarily from
our media partner Lee Enterprises Incorporated (Lee). The decrease in net loss
for the three months ended September 30, 2000 of $86,847 is the result of
decreased expenses resulting primarily from the following items compared to the
same three month period ended September 30, 1999:

-        Decrease in cost of the listing information for the database of $40.
-        Decrease in development and technology expenses caused by decrease in
         salaries of $34,002.
-        Decrease in general office expenses caused by the decrease in employee
         count of $24,435.
-        Increase in sales and marketing expenses as a result of increase in
         employee count of $10,491.

         Lee portal sites accounted for $74,477 of revenue for the quarter ended
September 30, 2000.

         FINANCING AND LIQUIDITY

         As of September 30, 2000, the Company had an overdraft cash balance of
$22,952, a working capital deficiency of $858,501 that included shareholders'
loans of $249,973 and loan payable of $290,000, demand loan of $166,087 and
accounts payables and accrued liabilities of $300,688.

         As of August 16, 2000, the Company entered into a Loan and Security
Agreement with Lee. Under this agreement, the Company received $290,000 in
funding in the form of promissory notes that bear interest at the Wall Street
Journal rate. As part of the loan and security agreement, the Company is
obligated to grant the note holder the option to acquire 2,223,285 common shares
of the Company. In conjunction with these agreements, the Company entered into a
Collateral License Agreement covering the licensing of the Company's software to
Lee in the event of default pursuant to the loan and security agreement.

         As of November 1, 2000, the Company entered into an Investment
Agreement with Lee Enterprises Incorporated (Lee) whereby Lee would provide
funding up to $1,500,000 in the form of a floating rate subordinated convertible
debenture. The $1,500,000 subordinated convertible debenture would consist of a
series of six debentures of $250,000 that would be funded during the period from
November 2000 to May 2001. The Company received $250,000 in funding under the
debenture in October 2000. The Investment Agreement provides Lee the right to
convert the floating rate subordinated convertible debenture into 6,902,429
common shares of the Company at conversion price of $0.2173 per common share
until October 31, 2003. The Investment Agreement also contains certain
affirmative and negative covenants that restrict the Company's activities. Each
series of $250,000 subordinated convertible debenture bears interest at the Wall
Street Journal rate less 1%. Interest due on the convertible debenture will be
converted to CityXpress shares at fair market value on the date of conversion.
As part of the Investment Agreement, the Loan and Security Agreement dated
August 16, 2000 was amended by changing the repayment terms and maturity dates
of the promissory notes, as per note 7, to


                                       18
<PAGE>   19

October 31, 2002. The amended agreement also cancelled Lee right under the Loan
Security Agreement to acquire 2,223,285 common shares. Under the Investment
Agreement, the Company has entered into a Registration Rights Agreement
providing Lee the ability to register their shares under the Investment
Agreement based on certain conditions.

         Based on the expenditures for the three months ended September 30,
2000, the Company forecasts minimum annual operating cash requirements of
approximately $1.5 million. The Lee investment of $1.5 million provides
sufficient resources to maintain current operations for the next 12 months.
Revenue generated under agreements with additional media companies will also
improve the Company's cash flow over the next 12 months.

         PLAN OF OPERATION

         The Company is dependent on obtaining new financing for ongoing
operation, capital expenditures and working capital. There is no assurance that
such financing will be available when required by or under terms favorable to
the Company.

         The Company anticipates that media revenue from Lee will grow as Lee
implements additional portal sites at their newspapers. Revenue from Lee for the
period ended September 30, 2000 amounted to $74,477. Revenue for the second
quarter from Lee is expected to exceed the previous period revenue as additional
portal sites are implemented. Lee is committed to implementing 54 Special
Sections by September 30, 2001, which will result in additional incremental
revenue. The Company has implemented a business development program with Lee
that will include a CityXpress.com business development employee working with
each Lee Newspaper sales manager to maximize the Internet revenue opportunities
using CityXpress.com products. The Company believes this direct contact with
each sales manager will ensure successful implementation of our products within
Lee and maximize the revenue potential at each Lee Newspaper.

         The Company expects to see revenue from MediaNet commencing in December
2000 which will increase as they implement our eCommerce products at their
affiliate Radio Station Network.

         The Company is actively calling on other media companies regarding its
product offerings. Each additional media company agreement will generate
additional revenue and cash flow. Management is confident that it will be
successful in closing additional media agreements.

         The Company is presently seeking additional funding through private
offerings with individuals and institutions and is actively seeking other
private investors in the range of $100,000 to $500,000 to increase its cash
position.

         The investment by Lee of $1,500,000 in the form of a floating rate
subordinated convertible debenture provides the minimum working capital required
by the Company for a year.


                                       19
<PAGE>   20

         BUSINESS RISKS

         The Company faces three significant business risks on a going forward
basis:

-        Raising the equity financing needed to operate the Company at its
         current operating level and providing the operating funds, capital
         additions and repayment of liabilities in a timely manner. If the
         Company is unsuccessful in this regard it will be required to reduce
         operating expenditures to a level that will be in line with cash flows.
-        The Company may be unsuccessful in obtaining additional media partners
         or the Lee agreement may be unsuccessful in generating revenues. In
         either case, the Company would have to re-evaluate its business model
         to determine if there was another partnership arrangement that would
         provide the economic, cash flow or business advantages it currently
         believes will be provided by media companies. The Company at this time
         cannot assess whether it could find other business partners and
         negotiate favorable terms that would provide the necessary revenue and
         cash flow required by the Company.
-        A major competitor or new company could dominate the market sector
         being targeted by the Company. The Company would then have to assess
         the impact of the situation. The regional eCommerce market sector is
         large and there may be room for two suppliers to media companies. If
         not, then the Company would have to assess what other market sector it
         could successfully operate in.


                                       20
<PAGE>   21

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         The Company is not involved in any legal proceedings

ITEM 2. CHANGES IN SECURITIES

As of November 1, 2000, the Company entered into an Investment Agreement with
Lee Enterprises Incorporated (Lee) whereby Lee would provide funding up to
$1,500,000 in the form of a floating rate subordinated convertible debenture.
The $1,500,000 subordinated convertible debenture would consist of a series of
six debentures of $250,000 that would be funded during the period from November
2000 to May 2001. The Company received $250,000 in funding under the debenture
in October 2000. The Investment Agreement provides Lee the right to convert the
floating rate subordinated convertible debenture into 6,902,429 common shares of
the Company at conversion price of $0.2173 per common share until October 31,
2003. The Investment Agreement also contains certain affirmative and negative
covenants that restrict the Company's activities. Each series of $250,000
subordinated convertible debenture bears interest at the Wall Street Journal
rate less 1%. Interest due on the convertible debenture will be converted to
CityXpress shares at fair market value on the date of conversion. As part of the
Investment Agreement, the Loan and Security Agreement dated August 16, 2000 was
amended by changing the repayment terms and maturity dates of the promissory
notes, as per note 7, to October 31, 2002. The amended agreement also cancelled
Lee's right under the Loan Security Agreement to acquire 2,223,285 common
shares. Under the Investment Agreement, the Company has entered into a
Registration Rights Agreement providing Lee the ability to register their shares
under the Investment Agreement based on certain conditions.

A copy of the Investment Agreement, Second Amendment to the Loan and Security
Agreement and the Registration Rights Agreements are attached.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         There have been no defaults by the Company regarding any senior
         securities.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         There have been no submissions by the Company regarding a vote of
         security holders.

ITEM 5. OTHER INFORMATION

         The Company's Annual Form 10-KSB has been filed with the Securities and
         Exchange Commission on October 13, 2000.

         See Item # 2 above.

ITEM 6. EXHIBITS AND REPORTS

         1.       Investment Agreement by and between the Company and Lee
                  Enterprises Incorporated.


                                       21
<PAGE>   22

         2.       Second Amendment to the Loan and Security Agreement by and
                  between the Company and Lee Enterprises Incorporated.
         3.       Registration Rights Agreement by and between the Company and
                  Lee Enterprises Incorporated.

In accordance with the requirements of the Exchange Act, the registrant caused
         this report to be signed on its behalf by the undersigned, thereunto
         duly authorized.

                                         CityXpress.com Corp.


Date: November 14, 2000                      /s/ Ken Bradley
                                             -----------------------------------
                                                  Signature

                                                 Ken Bradley
                                             -----------------------------------
                                                  Print Name

                                                Chief Operating Officer & CFO
                                             -----------------------------------
                                                  Title


                                       22