<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X]      Quarterly report pursuant to section 13 or 15(d) of the Securities
         Exchange Act of 1934

         FOR THE QUARTERLY PERIOD ENDED  SEPTEMBER 30, 2000
                                                           ---------------------

[ ]      Transition report pursuant to section 13 or 15(d) of the Securities
         Exchange Act of 1934

                        Commission file number 333-89561




                            E-XACT TRANSACTIONS, LTD
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


               DELAWARE                              98-0212722
       (State of Incorporation)                    (IRS Employer
                                                 Identification No.)

     12687 W. CEDAR DR, SUITE  200            LAKEWOOD, COLORADO 80228
(Address of principal executive offices)       (City, state, zip code)


       Registrant's telephone number, including area code: (303) 716-7090

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                  Yes X   No
                                     ---    ---

Transitional Small Business Disclosure format (check one):

                                  Yes     No X
                                     ---    ---

The number of shares outstanding of the Registrant's $0.001 par value common
stock on November 10, 2000 was 8,502,000.


<PAGE>   2


                            E-XACT TRANSACTIONS, LTD
                                   FORM 10-QSB
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
   PART I.        FINANCIAL INFORMATION                                                 PAGE
                                                                                        ----
   <S>            <C>                                                                   <C>
     Item 1.      Financial Statements                                                    3

     Item 2.      Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                               9

   PART II.       OTHER INFORMATION                                                      15

   Signature                                                                             16
</TABLE>





                                       2
<PAGE>   3


                            E-XACT TRANSACTIONS, LTD

                                 BALANCE SHEETS
                           (Expressed in U.S. Dollars)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                 September 30,        December 31,
                                                                     2000                1999
                                                                 -------------        ------------
                                                                  (Unaudited)
<S>                                                               <C>                 <C>
Current assets:

Cash and cash equivalents (Note 2)                                $    21,162         $   304,668
Accounts receivable, net (Note 3)                                     112,520              81,837
Prepaid expenses and deposits                                          13,921               4,334
                                                                  -----------         -----------

Total current assets                                                  147,603             390,839

Non-current assets:

Deferred share issue costs                                                 --             177,299
Capital assets (Note 4)                                               205,907              45,099
                                                                  -----------         -----------
Total assets                                                      $   353,510         $   613,237
                                                                  ===========         ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Current liabilities:
     Accounts payable and accrued liabilities (Note 5)            $   388,217         $   370,758
     Income taxes payable                                              41,756             102,557
                                                                  -----------         -----------

Total current liabilities                                             429,973             473,315
                                                                  -----------         -----------

Stockholders' equity:
     Common stock (Note 6)                                              8,502               5,897
     Additional paid-in capital                                     3,237,921             940,863
     Accumulated deficit                                           (3,322,886)           (806,838)

Total stockholders' equity                                            (76,463)            139,922
                                                                  -----------         -----------
Total liabilities and stockholders' equity                        $   353,510         $   613,237
                                                                  ===========         ===========
</TABLE>


                 The accompanying notes are an integral part of
                          these financial statements.


                                       3
<PAGE>   4


                            E-XACT TRANSACTIONS, LTD

                            STATEMENTS OF OPERATIONS
                           (Expressed in U.S. Dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                              Three Months Ended                       Nine Months Ended
                                                 September 30,                           September 30,
                                        -------------------------------         -------------------------------
                                           2000                1999                2000                 1999
                                        -----------         -----------         -----------         -----------
<S>                                     <C>                 <C>                 <C>                 <C>
Revenue                                 $    81,698         $    11,557         $   184,719         $    54,612

Cost of sales                                44,868               5,265              87,575              13,058
                                        -----------         -----------         -----------         -----------
GROSS MARGIN                                 36,830               6,292              97,144              41,554
                                        -----------         -----------         -----------         -----------
EXPENSES:
     General and administrative             346,921              97,628             912,722             188,834
     Operations                              53,378                  --             201,321                  --
     Sales and marketing                    200,693               7,161             634,272               8,943
     Research and development               227,955              38,768             703,633              76,547
     Stock compensation expense             320,000                  --             320,000                  --
                                        -----------         -----------         -----------         -----------

Total expenses                            1,148,947             143,557           2,771,948             274,324
                                        -----------         -----------         -----------         -----------

OPERATING LOSS                          $(1,112,117)        $  (137,265)        $(2,674,804)        $  (232,770)
                                        -----------         -----------         -----------         -----------
OTHER INCOME (EXPENSE):
     Interest                           $   (18,634)        $        --         $    (2,213)        $        --
     Foreign exchange gain                   29,242                  --             102,245                  --
                                        -----------         -----------         -----------         -----------

Total other income                           10,608                  --             100,032                  --
                                        -----------         -----------         -----------         -----------

NET LOSS BEFORE INCOME TAXES             (1,101,509)           (137,265)         (2,574,772)           (232,770)

INCOME BENEFIT (TAXES)                           --                  --              58,724                  --
                                        -----------         -----------         -----------         -----------
NET LOSS                                $(1,101,509)        $  (137,265)        $(2,516,048)        $  (232,770)
                                        ===========         ===========         ===========         ===========

Basic and diluted loss per share        $     (0.13)        $     (0.03)        $     (0.32)        $     (0.06)
                                        ===========         ===========         ===========         ===========

Weighted average number of
shares used to calculate loss
per share                                 8,472,989           4,200,000           7,756,048           4,200,000
</TABLE>


                 The accompanying notes are an integral part of
                          these financial statements.

                                       4
<PAGE>   5


                            E-XACT TRANSACTIONS, LTD

                        Statement of Stockholders' Equity
                           (Expressed in U.S. Dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                Additional                               Total
                                        Common Stock                              Paid in          Accumulated        Stockholders'
                                          Shares              Amount              Capital            Deficit             Equity
                                        -----------         -----------         -----------        -----------        -------------
<S>                                     <C>                 <C>                 <C>                <C>                <C>
Balance at December 31,1999               5,897,000         $     5,897         $   940,863        $  (806,838)        $   139,922

Issuance of stock pursuant to
   exercise of warrants,
   January 2000                             225,000                 225              74,334                                 74,559

Issuance of stock pursuant to
   IPO, net of cash offering
   costs of $491,393, stock
   issued to the Underwriter of
   $74,556, and warrants
   issued for financing services
   of $75,220                             2,325,000               2,325           1,847,779                              1,850,104

Exercise of stock options,                   25,000                  25              24,975                                 25,000
   June 2000

Issuance of stock warrants                                                          320,000                                320,000

Exercise of warrants,
   September 2000                            30,000                  30              29,970                                 30,000

Net loss for the nine months
   ended September 30, 2000                                                                         (2,516,048)         (2,516,048)
                                        -----------         -----------         -----------        -----------         -----------
Balance at September 30, 2000             8,502,000         $     8,502         $ 3,237,921        $(3,322,886)        $   (76,463)
                                        ===========         ===========         ===========        ===========         ===========
</TABLE>


                 The accompanying notes are an integral part of
                          these financial statements.


                                       5
<PAGE>   6


                            E-XACT TRANSACTIONS, LTD

                            STATEMENTS OF CASH FLOWS
                           (Expressed in U.S. Dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          Nine
                                                                                      Months Ended
                                                                            ---------------------------------
                                                                            September 30,       September 30,
                                                                                2000                1999
                                                                            -------------       -------------
<S>                                                                          <C>                 <C>
NET CASH USED FOR OPERATING ACTIVITIES                                       $(2,086,537)        $  (261,132)
                                                                             -----------         -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of capital assets                                                (200,293)            (31,667)
                                                                             -----------         -----------
NET CASH USED FOR INVESTING ACTIVITIES                                          (200,293)            (31,667)
                                                                             -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Advances from affiliates                                                         --              98,102
     Share issue costs                                                                --              (6,706)
     Proceeds on issuance of capital stock, net of offering costs              1,827,779                  --
     Deferred share issue costs, net of related accounts payable                 175,545                  --
                                                                             -----------         -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                      2,003,324              91,396
                                                                             -----------         -----------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                            (283,506)            201,403

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                 304,668               2,940
                                                                             -----------         -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                   $    21,162         $   204,343
                                                                             ===========         ===========

Supplemental disclosure of non-cash investing and financing cash flow
disclosures:
  Warrants issued for financing services                                     $    75,220         $        --
   Shares issued for financing services                                           74,556                  --
</TABLE>


                 The accompanying notes are an integral part of
                          these financial statements.


                                       6
<PAGE>   7


                            E-XACT TRANSACTIONS, LTD
                          NOTES TO FINANCIAL STATEMENTS
                           (Expressed in U.S. Dollars)
                                   (Unaudited)

1.   BASIS OF PRESENTATION

     The accompanying unaudited financial statements have been prepared in
     accordance with U.S. generally accepted accounting principles ("US GAAP")
     for interim financial information and the instructions to Form 10-QSB and
     Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
     information and disclosures required by US GAAP for annual financial
     statements. In the opinion of E-XACT TRANSACTIONS, LTD (the "Company"), all
     adjustments (consisting of normal recurring adjustments) considered
     necessary for a fair presentation have been included. The balance sheet at
     December 31, 1999 was derived from the audited financial statements
     included in the Company's Annual Report on Form 10-KSB for the year ended
     December 31, 1999 (the "1999 Form 10-KSB"), previously filed with the
     Securities and Exchange Commission. For further information, refer to the
     financial statements of, and the related notes, included in the Company's
     1999 Form 10-KSB, previously filed with the Securities and Exchange
     Commission.

     The results of operations for the three and nine months ended September 30,
     2000 presented are not necessarily indicative of the results of operations
     that may be expected for the year ending December 31, 2000.

2.   CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid financial instruments purchased
     with a maturity of less than three months to be cash equivalents. The
     Company has invested cash in excess of current working capital needs in a
     money market mutual fund, which consists of obligations of U.S. government
     agencies, having maturities of less than three months. These securities are
     recorded at cost, which approximates fair market value.

3.   ACCOUNTS RECEIVABLE

     Accounts receivable are recorded net of approximately $6,500 allowance for
     doubtful accounts at September 30, 2000 (December 31, 1999: approximately
     $3,400). Subsequent to September 30, 2000 approximately $50,000 was
     received from customers as payments on account.

4.   CAPITAL ASSETS

<TABLE>
<CAPTION>
                                            September 30,                   December 31,
                                                2000                            1999
                              ----------------------------------------      ------------
                                            Accumulated       Net Book        Net Book
                                Cost        Depreciation       Value           Value
                              --------      ------------      --------      ------------
<S>                           <C>             <C>             <C>             <C>
Leasehold improvements        $  5,012        $    360        $  4,652        $     --
Computer software               71,025          51,951          19,074          12,892
Computer equipment             218,350          36,169         182,181          32,207
                              --------        --------        --------        --------
                              $294,387        $ 88,480        $205,907        $ 45,099
                              ========        ========        ========        ========
</TABLE>

                                       7
<PAGE>   8


                            E-XACT TRANSACTIONS, LTD
                          NOTES TO FINANCIAL STATEMENTS
                           (Expressed in U.S. Dollars)
                                   (Unaudited)

5.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

      The principal components of accounts payable and accrued liabilities were
as follows:

<TABLE>
<CAPTION>
                                      September 30,   December 31,
                                          2000            1999
                                      -------------   ------------
         <S>                            <C>             <C>
         Trade payables                 $237,354        $205,096
         Accrued liabilities             150,863          33,783
         Financing costs payable              --         131,879

                                        --------        --------
                                        $388,217        $370,758
                                        ========        ========
</TABLE>

6.   COMMON STOCK

     On March 22, 2000, the Company successfully completed its initial public
     offering in Canada of 2,250,000 shares of the Company's common stock at an
     offering price of $1.00 per share on the Canadian Venture Exchange.

     In connection with the Company's Initial Public Offering (the "IPO"), the
     Company granted to Canaccord Capital Corporation and Haywood Securities
     Inc. (the "Agents"), an aggregate of 225,000 share purchase warrants (the
     "Agents' Warrants") entitling the Agents up to 225,000 shares of the
     Company's common stock at any time up to the close of business on the first
     anniversary of the Company's listing on the Canadian Venture Exchange at a
     price of $1.00 per share. 30,000 of these Agents' Warrants were exercised
     in September 2000, leaving an aggregate of 195,000 Agents' warrants
     outstanding.

     The Company incurred costs of approximately $450,000 in connection with the
     initial public offering. The Company received net proceeds from the initial
     public offering of $1,827,779.

7.   FUNCTIONAL CURRENCY CHANGE

     Effective April 2000, the Company changed its functional currency from
     Canadian dollars to United States dollars. This change was made because the
     majority of the Company's cash flows are denominated in U.S. dollars. Under
     US GAAP, this change requires remeasurement of the financial statements.
     The Company has remeasured their annual and first quarter financial
     statements accordingly. The gain occurring as a result of this change is
     included in other income.


                                       8
<PAGE>   9


                            E-XACT TRANSACTIONS, LTD

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     FORWARD-LOOKING STATEMENTS

     The following Management Discussion and Analysis of Financial Condition and
     Results of Operations should be read in conjunction with the accompanying
     condensed financial statements and notes included in this report.
     Statements made in this Form 10-QSB that are not historical or current
     facts are "forward-looking statements" made pursuant to the safe harbor
     provisions of Section 27A of the Securities Act of 1933 and Section 21E of
     the Securities Exchange Act of 1934. These statements often can be
     identified by the use of terms such as "may," "will," "expect," "believes,"
     "anticipate," "estimate," or "continue," or the negative thereof. The
     Company intends that such forward-looking statements be subject to the safe
     harbors for such statements. The Company wishes to caution readers not to
     place undue reliance on any such forward-looking statements, which speak
     only as of the date made. Any forward-looking statements represent
     management's best judgment as to risks, uncertainties and important factors
     beyond the control of the Company that could cause actual results and
     events to differ materially from historical results of operations and
     events from those presently anticipated or projected. These factors include
     adverse economic conditions, entry of new and stronger competitors,
     inadequate capital, unexpected costs, failure to gain product approval in
     the United States or foreign countries and failure to capitalize upon
     access to new markets. Additional risks and uncertainties that may affect
     forward-looking statements about the Company's business and prospects
     include the possibility that a competitor will develop a more comprehensive
     solution, delays in market awareness of its products, possible delays in
     execution of sales and marketing strategy, which could have an immediate
     and material adverse effect. The Company disclaims any obligation
     subsequently to revise any forward-looking statements to reflect events or
     circumstances after the date of such statements or to reflect the
     occurrence of anticipated or unanticipated events.

     OVERVIEW

     The Company was incorporated under the laws of the Province of British
     Columbia on August 13, 1998. On July 29, 1999 the Company filed a
     certificate of domestication and certificate of incorporation with the
     Secretary of State of the State of Delaware, thereby "domesticating" or
     transitioning from a Canadian company to one organized under the laws of
     the State of Delaware.

     The Company provides real-time financial transaction processing services
     using web-centric technology. Its electronic commerce (e-commerce) software
     services allow PC based cash registers, PCs, point-of-sale terminals,
     computer systems and proprietary product platforms to accept credit card
     payments and submit those payments to various payment processing companies
     for pre-authorization, authorization and settlement/deposit. The Company is
     approved to act as a third party payment processor to conduct transaction
     processing with major banks in North America. The Company is also launching
     an on-line application, with real-time credit decisioning, for automatic
     processing of merchant account applications for retailers.

     The Company's success will depend largely upon its ability to compete
     successfully, develop new products and services and market them
     successfully in a market that is becoming increasingly competitive.



                                       9
<PAGE>   10


                            E-XACT TRANSACTIONS, LTD

     BUSINESS SUMMARY

     The Company achieved several accomplishments in the third quarter of 2000,
including:

          o       Comparing the Company's third quarter of 1999 with the third
                  quarter of 2000, the Company grew its client base from a total
                  of 12 clients in the third quarter of 1999 to 325 clients in
                  the third quarter of 2000, while also increasing the number of
                  transactions processed from approximately 120,000 in the third
                  quarter of 1999 to approximately 600,000 in the third quarter
                  of 2000.

          o       Executed a service agreement with Dell Computer Corporation to
                  provide real time processing of credit card transactions for
                  customer purchases made through Dell's Canadian call centers
                  and web storefront. The contract calls for the Company's
                  software to be integrated into Dell's order fulfillment and
                  shipping systems to completely automate a process that
                  involves multiple steps when done manually. The integration
                  was completed to specification just subsequent to quarter end.

          o       Simultaneous with execution of the service agreement, agreed
                  to execute a warrant agreement with Dell Ventures, L.P., the
                  wholly-owned venture fund of Dell Computer Corporation, to
                  allow the purchase of up to 5% of the outstanding common stock
                  of the Company given certain stock price performance during
                  the two year term of the above mentioned service agreement.

          o       Completed development of a beta version of a new service,
                  named Speedy Merchant, to provide on-line application and
                  real-time decisioning as well as account provisioning and
                  document fulfillment for merchant accounts. A merchant account
                  is required for a retailer to accept e-commerce payments from
                  customers.

          o       Executed an agreement with Transfirst, LLC (formerly ACS
                  Merchant Services), the 25th largest credit card acquirer in
                  North America, to provide Speedy Merchant services. The
                  service is scheduled to enter production status within
                  Transfirst, LLC in November 2000.

     With completion of the Company's Version 5.0 transaction processing
     service, certain non-recurring contracting expenses were terminated. Also,
     the Company reduced staffing by approximately 20% and took other
     cost-reduction actions in order to achieve certain operating efficiencies.
     Both of these events, which occurred in the third quarter, have resulted in
     a significant reduction in ongoing operating costs going into the fourth
     quarter.

     RESULTS OF OPERATIONS

     INTERIM FINANCIAL RESULTS
     (All amounts are expressed in U.S. dollars)

     The Company earns its revenues by charging its customers setup fees,
     monthly account maintenance fees and transaction fees for usage of its
     services. Transaction fees are based on the number of transactions
     processed in a month.



                                       10
<PAGE>   11


                            E-XACT TRANSACTIONS, LTD

     Results of Operations, continued

     Interim Financial Results, continued

     Revenues. During the three and nine month periods ended September 30, 2000,
     revenues were $81,698 and $184,719, respectively, compared to $11,557 and
     $54,612, respectively, in the corresponding periods in 1999. The revenues
     were derived primarily from transaction processing fees and monthly service
     fees.

     Approximately 325 clients were using the Company's services at September
     30, 2000 compared to 12 clients at September 30, 1999.

     Revenue from two clients accounted for approximately 45% of total revenue
     for the three months ended September 30, 2000 compared to 82% for the three
     months ended September 30, 1999. For the nine months ended September 30,
     2000 revenue from two clients accounted for approximately 70% of total
     revenue compared to 85% for the corresponding period in 1999. As the
     Company continues to grow, management expects that the relative
     significance of revenue from these two clients should diminish.

     Expenses. Total expenses during the three months ended September 30, 2000
     were $1,148,947 compared to $143,557 for the three months ended September
     30, 1999. For the nine months ended September 30, 2000 total expenses were
     $2,771,948 compared to $274,324 for the nine months ended September 30,
     1999. The increased expenditures were attributed to accelerated development
     of the Company's transaction processing services and capabilities to serve
     the North American market, as well as increased sales and marketing efforts
     for these services.

     General and Administrative (G&A). During the three months ended September
     30, 2000, G&A expenses were $346,921 compared to $97,628 for the comparable
     period in 1999. G&A expenses for the nine months ended September 30, 2000
     were $912,722 compared to $188,834 for the nine months ended September 30,
     1999. For the three months ended September 20, 2000, professional fees
     increased by approximately $80,000; general and administrative salaries and
     employee benefits increased by approximately $80,000; rent and telephone
     expenses increased by approximately $50,000; and office expenses increased
     by approximately $40,000. For the nine months ended September 30, 2000,
     professional fees increased by approximately $260,000; general and
     administrative salaries and employee benefits increased by approximately
     $180,000; rent and telephone expenses increased by approximately $160,000;
     and office expenses increased by approximately $100,000. The increased
     level of expenditures is primarily attributed to hiring professional
     managers and commencing activities in the US as well as fulfilling
     regulatory responsibilities as a publicly held company.

     Operations. Operations expenditures increased from $0 for the three months
     ended September 30, 1999 to $53,378 for the three months ended September
     30, 2000. For the nine months ended September 30, 2000 operations
     expenditures were $201,321 compared to $0 for the corresponding period in
     1999. The increase was primarily due to the start-up of customer service
     and network operations to support the



                                       11
<PAGE>   12


                            E-XACT TRANSACTIONS, LTD

     Results of Operations, continued

     Interim Financial Results, continued

     needs of clients.

     Sales and Marketing. Sales and Marketing expenditures increased from $7,161
     for the three months ended September 30, 1999 to $200,693 for the
     corresponding period in 2000. For the nine months ended September 30, 2000
     sales and marketing expenditures were $634,272 compared to $8,943 in the
     nine months ended September 30, 1999. During the three months ended
     September 30, 2000, salaries and employee benefits increased by
     approximately $120,000; travel expenses increased by approximately $450,000
     ; and advertising and promotions increased by approximately $20,000. During
     the nine months ended September 30, 2000, salaries and employee benefits
     increased by approximately $260,000; travel expenses increased by
     approximately $175,000 ; and advertising and promotions increased by
     approximately $180,000. These additional costs were incurred in order to
     achieve basic market visibility for the Company's service and to hire sales
     professionals in the North American marketplace.

     Research and development. Research and development expenses consist
     primarily of compensation expenses and consulting fees to support the
     development of the Company's software, services and technologies. Research
     and development expenditures were $227,955 for the three months ended
     September 30, 2000 compared to $38,768 for the comparable period in 1999.
     For the nine months ended September 30, 2000 research and development
     expenses were $703,633 compared to $76,547 for the nine months ended
     September 30, 1999. This increase is attributed to accelerating the
     completion of the Company's V5.0 transaction processing software for
     general marketplace use, and for commencement of certain strategic
     initiatives including the start of technical development with Microsoft as
     part of the e-commerce alliance executed in March 2000.

     Stock compensation expense. Stock compensation expense relates to a charge
     for the issuance of the warrant to Dell Ventures, L.P. The expense was
     calculated in accordance with SFAS 123 and represents a one-time non-cash
     charge to earnings.

     Net loss. The Company incurred a net loss of $1,101,509 and $2,516,048 for
     the three and nine months ended September 30, 2000, respectively, compared
     to a net loss of $137,265 and $232,770 in the three and nine months ended
     September 30, 1999, respectively. The increased loss is primarily a result
     of increased expenses.

     In November 2000, management implemented a fifty percent reduction in
     staffing and relocation of primary operations to Vancouver, BC Canada. This
     change will result in a further reduction in monthly operating expenses
     starting in December 2000. However, the Company anticipates continued
     operating losses for the remainder of 2000 while its services gain market
     acceptance.

     LIQUIDITY & CAPITAL RESOURCES
     (All amounts are expressed in U.S. dollars)

     Cash flow. The Company's net cash flows used for operating activities
     during the nine months ended



                                       12
<PAGE>   13


                            E-XACT TRANSACTIONS, LTD

     Liquidity & Capital Resources, continued

     September 30, 2000 was $2,086,537 compared to $261,132 for the nine months
     ended September 30, 1999. This is a result of using working capital to fund
     increases in accounts receivable and operating losses.

     Cash used for investing activities totaled $200,293 during the nine months
     ended September 30, 2000 compared to $31,667 for the nine months ended
     September 30, 1999. The increase is primarily attributed to the purchase of
     capital equipment for new personnel and to expand processing capabilities.

     Cash provided by financing activities was $2,003,324 for the nine months
     ended September 30, 2000 compared to $91,396 for the nine months ended
     September 30, 1999. The Company received net proceeds of approximately
     $1,827,779 on the issuance of capital stock during the first quarter of
     2000. The Company received $25,000 on the exercise of options during the
     second quarter of 2000 and $30,000 on the exercise of common stock warrants
     during the third quarter of 2000.

     The Company's negative cash flow from operations resulted primarily from
     the operating loss of the Company that was due to incurring expenditures
     necessary to position E-xact to deliver reliable real time transaction
     processing services through its Version 5.0 software, and to grow its
     transaction processing business. Management believes this negative cash
     flow will continue through the end of 2000, although at lower levels, as
     sales of services increase and expenses decrease.

     Capital resources. The Company's working capital increased during the three
     and six months ended September 30, 2000 compared to the same periods in
     1999 primarily due to the Company's initial public offering. The Company
     had anticipated closing a private placement financing prior to the end of
     the third quarter 2000. Due to market conditions, this financing will not
     be completed as planned. Instead, the Company secured a short term secured
     note in October 2000 from some principal investors that will provide
     operating funds through early November. The Company is attempting to
     complete additional financings to provide funds for operating activities in
     2001.

     Management believes that the Company will continue to incur losses through
     the remainder of 2000. In the event that cash flow from operations,
     together with the proceeds of any future financings, are insufficient to
     meet these expenses, the Company will be required to re-evaluate its
     planned expenditures and allocate its total resources in such manner as the
     board of directors and management deems to be in the best interest of the
     Company and its stockholders.

     NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standards No. 133 "Accounting for
     Derivative Instruments and Hedging Activities" (SFAS No. 133). The
     standard, which is effective for fiscal years beginning after June 15,
     2000, sets forth guidelines and requirements for measuring derivative
     instruments at fair value as assets and liabilities to be reported in the
     financial statements and that the changes in the fair value of the
     instruments shall be recognized in the results of operations. The Company
     has not completed the process of evaluating the impact that will result
     from adopting this pronouncement.


                                       13
<PAGE>   14


                            E-XACT TRANSACTIONS, LTD

     New Accounting Pronouncements, continued

     In December 1999, the Securities and Exchange Commission issued Staff
     Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
     (SAB No. 101). SAB No. 101, which is effective in the fourth quarter of
     2000, provides guidance on the recognition, presentation, and disclosure of
     revenue in financial statements of all public companies. Management expects
     the adoption of SAB 101 will have no effect on the Company's results of
     operations or financial position.


                                       14
<PAGE>   15


                            E-XACT TRANSACTIONS, LTD

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Not applicable

ITEM 2. CHANGES IN SECURITIES

     During September 2000 Bolder Investment Partners exercised warrants to
     purchase 30,000 shares of the Company's common stock @ $1.00 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     Not applicable

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

     Not applicable

ITEM 5. OTHER INFORMATION

     Not applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         27    Financial Data Schedule

(b)      Reports on Form 8-K.
         During the quarter covered by this report, the Company filed the
         following reports on Form 8-K.

         On August 9, 2000, the Company filed a Form 8-K under Item 5
         announcing the Company's software was selected by Dell Canada for
         order processing and the Company granted Dell Ventures a warrant to
         purchase common shares of the Company's common stock.

         On September 20, 2000, the Company filed a Form 8-K under Item 5
         announcing an agreement with Transfirst, LLC (formerly ACS Merchant
         Services) for on-line merchant account application processing.


                                       15
<PAGE>   16


                            E-XACT TRANSACTIONS, LTD

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1933 the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

                                           E-XACT TRANSACTIONS, LTD
                                                (Registrant)

Dated:   November 13, 2000                 By:   /s/ Ted Henderson
                                              ---------------------------------
                                           Ted Henderson
                                           President and CEO



                                           By:   /s/ Edmund Shung
                                              ----------------------------------
                                           Edmund Shung
                                           CFO

                                       16
<PAGE>   17


                                 EXHIBIT INDEX



Exhibit No.                       Description
-----------                       -----------

    27                      Financial Data Schedule