Chidi Kwem broke the deadlock for the Rockets early in the second stanza after a terrible back pass by Phathutshedzo Nange and that was enough to book them a spot in the last 16.
"To be knocked out of the cup, not happy. The goal that we give away for the defeat it's not a great goal, it's a mistake, we missed a couple of chances," Baxter told SuperSport TV.
"As poorly as I thought we played, I thought we lacked quality all throughout the game, the pass was not accurate, the pass was poorly timed, the tackle was a little bit early or late.
"So we were off the pace and for me the whole game and when we did produce the moment of quality, the quality I don't think the players know they have, then we looked okay.
"But to gain momentum and gain some energy and power in a cup game you need to sustain that and we didn't sustain it and I think after 10-15 minutes they started to believe they had a chance and they got more confident on the ball," he said.
"And when our pressing is not coordinated, then it's a waste of energy, we found ourselves not being able to produce what we know we can produce and that's frustrating and that frustration leads to maybe some of the mistakes we saw. But I can't say I can be too analytical immediately after the game but going out of the cup is not what we wanted.
"We've prepared this week, the players looked so good, we have had such quality in training that if we had produced half of it tonight we would have won the game. But the quality on transition for example, that ball we won it, we gave it away immediately, he continued.
"We had great situations, sometimes when we were defending the bad decision not to play forward, play a one-touch and turn it over. For them they could transition on us. We didn't play with enough quality to build momentum.
"And when you build momentum you build confidence and when you build confidence, your opponent find that they are up against it a little bit, then their confidence drops and their momentum slips away. That's cup football and that's what we didn't do.
"If we don't give up the goal then we go into extra-time, if we don't give up the goal we still had big chances, Samir [Nurkovic] had one, 'Mshini' [Nkosingiphile Ngcobo] had one, if we put in one of those, we walk away with a 1-0 and say 'we didn't play well but at least we're through'.
"But giving away the goal gives you an uphill battle because they can sit deeper, waste time and they can run the clock down and that's cup football as well."
