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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 2002
OR

For the transition period from ____ to ____

Commission File Number 0-30791

eFunds Corporation

Registrant’s telephone number, including area code: (480) 629-7700

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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   þ   No   o

 The number of shares outstanding of the registrant’s common stock, par value $.01 per share, at November 7, 2002 was 46,666,388.

This report on Form 10-Q does not contain the disclosures required by Part I, Items 1, 2, 3, of Form 10Q

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PART I — FINANCIAL INFORMATION

In October 2002, the Company announced that it is reviewing the accounting treatment given to various transactions that occurred in 2000 and 2001 and certain tax matters related to the Company’s India based operations. The scope of the review includes a $5.0 million data license agreement that was entered into in the second quarter of 2000 and $6.2 million of data license sales that occurred in the second quarter of 2001. The review also encompasses the appropriateness of the accounting for certain transactions with the STAR network which generated an aggregate of approximately $30 million in revenues in 2001 and the first nine months of 2002 and certain tax matters related to the Company’s India operations. The possible impact of the tax issues under consideration is not subject to reasonable estimation, although it does not appear likely that the impact on the Company’s tax liabilities could exceed $5 million under any scenario. The timing of the recognition of revenues associated with approximately $1.3 million of software sales by the Company’s subsidiary in the United Kingdom in the first and second quarters of 2001 is also being considered. Issues being considered as part of the review include assessing whether revenues recognized in earlier periods should be deferred and recognized over later periods, whether certain revenues should be treated as a reduction in operating expenses and the timing of the recognition of certain expenses. Pending completion of this review, the Company’s financial statements cannot be completed because the Company is unable to reasonably estimate the effect of any adjustments to the Company’s prior financial results that may be necessary. The Company is in the process of finalizing the conclusions reached by it as a result of the review and will seek to complete its efforts as expeditiously as possible, although the Company cannot provide definitive guidance as to when the review process will be finally concluded.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On March 8, 2002, we received a letter from the Securities and Exchange Commission (the “SEC”) stating that the SEC is conducting an inquiry of us and requesting our voluntary assistance in connection with the provision of certain documents relating to our 2001 financial results and certain transactions between us and Access Cash International L.L.C., among other things. The letter from the SEC states that the inquiry is non-public and that it should not be construed as an indication that the SEC believes any violation of law has occurred.

In October 2002, the Company announced that it is reviewing the accounting treatment given to various transactions that occurred in 2000 and 2001 and certain tax matters related to the Company’s India based operations. The scope of the review includes a $5.0 million data license agreement that was entered into in the second quarter of 2000 and $6.2 million of data license sales that occurred in the second quarter of 2001. The review also encompasses the appropriateness of the accounting for certain transactions with the STAR network which generated an aggregate of approximately $30 million in revenues in 2001 and the first nine months of 2002 and certain tax matters related to the Company’s India operations. The possible impact of the tax issues under consideration is not subject to reasonable estimation, although it does not appear likely that the impact on the Company’s tax liabilities could exceed $5 million under any scenario. The timing of the recognition of revenues associated with approximately $1.3 million of software sales by the Company’s subsidiary in the United Kingdom in the first and second quarters of 2001 is also being considered. Issues being considered as part of the review include assessing whether revenues recognized in earlier periods should be deferred and recognized over later periods, whether certain revenues should be treated as a reduction in operating expenses and the timing of the recognition of certain expenses. Pending completion of this review, the Company’s financial statements cannot be completed because the Company is unable to reasonably estimate the effect of any adjustments to the Company’s prior financial results that may be necessary. The Company is in the process of finalizing the conclusions reached by it as a result of the review and will seek to complete its efforts as expeditiously as possible, although the Company cannot provide definitive guidance as to when the review process will be finally concluded.

The SEC staff has requested additional information related to certain of the matters subject to the current review by the Company and the Company intends to cooperate fully with this request. We may, however, be the subject of additional inquiries or become subject to a fine or other liabilities.

ITEM 5. OTHER INFORMATION

RISK FACTORS AND CAUTIONARY STATEMENTS.

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When used in this Quarterly Report on Form 10-Q and in future filings by the Company with the Securities and Exchange Commission, in our press releases, letters and reports to stockholders and in oral statements made by our representatives, the words or phrases “should result,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to certain risks and uncertainties, including those discussed below, that could cause our actual results to differ materially from our historical experience and our present expectations or projections. Caution should be taken not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The factors listed below could affect our financial performance and could cause our actual results for future periods to differ from any opinions or statements expressed with respect thereto. Such differences could be material and adverse. We will not undertake and specifically decline any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances occurring after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

WE ARE UNABLE TO PREDICT THE RESULTS OF OUR CURRENT REVIEW.

In October 2002, the Company announced that it is reviewing the accounting treatment given to various transactions that occurred in 2000 and 2001 and certain tax matters related to the Company’s India based operations. The scope of the review includes a $5.0 million data license agreement that was entered into in the second quarter of 2000 and $6.2 million of data license sales that occurred in the second quarter of 2001. The review also encompasses the appropriateness of the accounting for certain transactions with the STAR network which generated an aggregate of approximately $30 million in revenues in 2001 and the first nine months of 2002 and certain tax matters related to the Company’s India operations. The possible impact of the tax issues under consideration is not subject to reasonable estimation, although it does not appear likely that the impact on the Company’s tax liabilities could exceed $5 million under any scenario. The timing of the recognition of revenues associated with approximately $1.3 million of software sales by the Company’s subsidiary in the United Kingdom in the first and second quarters of 2001 is also being considered. Issues being considered as part of the review include assessing whether revenues recognized in earlier periods should be deferred and recognized over later periods, whether certain revenues should be treated as a reduction in operating expenses and the timing of the recognition of certain expenses. Pending completion of this review, the Company’s financial statements cannot be completed because the Company is unable to reasonably estimate the effect of any adjustments to the Company’s prior financial results that may be necessary. The Company is in the process of finalizing the conclusions reached by it as a result of the review and will seek to complete its efforts as expeditiously as possible, although the Company cannot provide definitive guidance as to when the review process will be finally concluded.

On March 8, 2002, we received a letter from the Securities and Exchange Commission (the “SEC”) stating that the SEC is conducting an inquiry of us and requesting our voluntary assistance in connection with the provision of certain documents relating to our 2001 financial results and certain transactions between us and Access Cash International L.L.C., among other things. The letter from the SEC states that the inquiry is non-public and that it should not be construed as an indication that the SEC believes any violation of law has occurred. In October 2002, the SEC staff requested additional information from us related to certain of the matters that are the subject of our current review. We have been cooperating fully with the SEC and we intend to continue to do so. We may, however, be the subject of additional inquiries or become subject to a fine or other liabilities.

The existence of the uncertainty associated with the Company’s current review and the ongoing SEC inquiry could have a depressing effect on the market price of our common shares and could cause our customers and potential customers to delay decisions to do business with us or to direct their business to our competitors. Further, if we are unable to complete our review and prepare and file our financial statements in the near future, Nasdaq could take action with respect to the trading and continued listing of our shares. Any such action could reduce the liquidity in the market for our shares and adversely affect the ability of our stockholders to sell their shares.

WE ARE UNABLE TO PREDICT THE RESULTS OF THE INQUIRY BY THE SEC.

On March 8, 2002, we received a letter from the Securities and Exchange Commission (the “SEC”) stating that the SEC is conducting an inquiry of us and requesting our voluntary assistance in connection with the provision of certain documents relating to our 2001 financial results and certain transactions between us and Access Cash International L.L.C., among

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other things. The letter from the SEC states that the inquiry is non-public and that it should not be construed as an indication that the SEC believes any violation of law has occurred. In October 2002, the SEC staff requested additional information from us related to certain of the matters that are the subject of our current review. We have been cooperating fully with the SEC and we intend to continue to do so. We may, however, be the subject of additional inquiries or become subject to a fine or other liabilities.

ESTIMATES OF FUTURE FINANCIAL RESULTS ARE INHERENTLY UNRELIABLE.

From time to time, our representatives make public predictions or forecasts regarding the Company’s future results, including estimates regarding future revenues, expense levels, tax rates, capital expenditures, earnings or earnings from operations. Any forecast regarding our future performance reflects various assumptions. These assumptions are subject to significant uncertainties, and, as a matter of course, many of them will prove to be incorrect. Further, the achievement of any forecast depends on numerous factors (including those described in this discussion), many of which are beyond our control. As a result, there can be no assurance that our performance will be consistent with any management forecasts or that the variation from such forecasts will not be material and adverse. Investors are cautioned not to base their entire analysis of our business and prospects upon isolated predictions, but instead are encouraged to utilize the entire available mix of historical and forward-looking information made available by us, and other information relating to our Company and its products, when evaluating our prospective results of operations.

The Company cannot currently provide definitive guidance regarding its expected revenues and earnings for 2002 as the results for this year could be impacted by any restatement of prior period results that may be required as a result of the Company’s ongoing review of these prior periods. Excluding the effect of any possible changes that could come out of the review, the Company continues to believe, however, that its results for the year ended December 31, 2002 and the quarter ended September 30, 2002 should be in line with the prior guidance contained in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2002.

ADDITIONAL FACTORS.

         Additional information regarding factors that could materially influence the Company’s future results of operations is contained in Part II, Item 5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

The following exhibits are filed as part of this report:

         *Incorporated by reference

None

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SIGNATURES

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

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Index to Exhibits

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