U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

     /X/      ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
              SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
              For the fiscal year ended: DECEMBER 31, 2004

     / /      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
              For transition period from _____ to _____.

                         Commission File Number: 0-12374

                                  EQUITEX, INC.
                       (Name of Registrant in its charter)

DELAWARE                                                              84-0905189
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                            Identification Number)

              7315 EAST PEAKVIEW AVENUE, ENGLEWOOD, COLORADO 80111
               (Address of principal executive offices)(Zip Code)

                    Issuer's telephone number: (303) 796-8940

         Securities registered under Section 12 (b) of the Exchange Act:
                                      NONE

         Securities registered under Section 12 (g) of the Exchange Act:
                          COMMON STOCK, $.01 PAR VALUE
                    COMMON STOCK CLASS A REDEEMABLE WARRANTS
                    COMMON STOCK CLASS B REDEEMABLE WARRANTS
                                (Title of Class)

--------------------------------------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Exchange 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 /_/

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained in this form, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: /X/

Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Act). /_/

The aggregate market value of the voting stock held by non-affiliates of the
Registrant was $19,559,570 based on the last sale price of the Registrant's
common stock on April 6, 2005, ($4.03 per share) as reported by the Nasdaq Stock
Market.

The Registrant had 6,091,513 shares of common stock outstanding as of April 14,
2005.

Documents incorporated by reference: None

<PAGE>

                                  EQUITEX, INC.
                                    FORM 10-K

THIS REPORT MAY CONTAIN CERTAIN "FORWARD-LOOKING" STATEMENTS AS SUCH TERM IS
DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 OR BY THE
SECURITIES AND EXCHANGE COMMISSION IN ITS RULES, REGULATIONS AND RELEASES, WHICH
REPRESENT THE REGISTRANT'S EXPECTATIONS OR BELIEFS, INCLUDING BUT NOT LIMITED
TO, STATEMENTS CONCERNING THE REGISTRANT'S OPERATIONS, ECONOMIC PERFORMANCE,
FINANCIAL CONDITION, GROWTH AND ACQUISITION STRATEGIES, INVESTMENTS, AND FUTURE
OPERATIONAL PLANS. FOR THIS PURPOSE, ANY STATEMENTS CONTAINED HEREIN THAT ARE
NOT STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING
STATEMENTS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, WORDS SUCH AS
"MAY", "WILL", "EXPECT", "BELIEVE", "ANTICIPATE", "INTENT", "COULD", "ESTIMATE",
"MIGHT", OR "CONTINUE" OR THE NEGATIVE OR OTHER VARIATIONS THEREOF OR COMPARABLE
TERMINOLOGY ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES, CERTAIN
OF WHICH ARE BEYOND THE REGISTRANT'S CONTROL, AND ACTUAL RESULTS MAY DIFFER
MATERIALLY DEPENDING ON A VARIETY OF IMPORTANT FACTORS, INCLUDING UNCERTAINTY
RELATED TO ACQUISITIONS, GOVERNMENTAL REGULATION, MANAGING AND MAINTAINING
GROWTH, THE OPERATIONS OF THE COMPANY AND ITS SUBSIDIARIES, VOLATILITY OF STOCK
PRICE AND ANY OTHER FACTORS DISCUSSED IN THIS AND OTHER REGISTRANT FILINGS WITH
THE SECURITIES AND EXCHANGE COMMISSION.

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

(a) General development of business.

Equitex, Inc. was organized under the laws of the State of Delaware in 1983, and
we elected to become a business development company and be subject to the
applicable provisions of the Investment Company Act of 1940 in 1984. Until
January 4, 1999, Equitex was a business development company which is a form of
closed-end, non-diversified investment company under the Investment Company Act
of 1940. A business development company generally must maintain 70% of its
assets in new, financially troubled or otherwise qualified companies, known as
investee companies, and offers significant managerial assistance to such
companies. Business development companies are not subject to the full extent of
regulation under the Investment Company Act of 1940. We primarily were engaged
in the business of investing in and providing managerial assistance to
developing companies that, in our opinion, would have a significant potential
for growth. On April 3, 1998, our stockholders authorized us to change the
nature of our business and withdraw our election as a business development
company, which became effective on January 4, 1999.

Effective December 1, 2001, we acquired all the outstanding common stock of Chex
Services, Inc. in exchange for 332,000 shares of our common stock valued at
$10,119,000 ($30.48 per share), in a transaction accounted for as a purchase.
Chex Services currently provides comprehensive cash access services to 30
casinos and other gaming establishments and 18 other retail establishments.

In August 2002 we formed a new majority owned subsidiary, Denaris Corporation,
to pursue opportunities in stored value card operations. In return for assigning
our rights to certain notes receivable as well as the opportunity to acquire
certain technological and other information from our subsidiary Key Financial
Systems, Denaris agreed to pay Equitex $250,000 in cash in the form of a
promissory note as well as 5,000,000 shares of Denaris common stock. As of
December 31, 2004, Denaris had 6,500,000 shares of common stock outstanding;
therefore, we owned 77% of the outstanding common stock.

On June 7, 2004, a wholly owned subsidiary of Seven Ventures, Inc., a publicly
traded company, merged with and into Chex Services (the "Merger"). Subsequent to

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the merger, Seven Ventures changed its name to FastFunds Financial Corporation
and is presently trading on the Over-the-Counter Bulletin Board under the symbol
"FFFC". In the Merger, we exchanged our 100% ownership of Chex Services for
7,700,000 shares of FastFunds common stock representing approximately 93% of
FastFunds' outstanding common stock immediately following the Merger. In
addition, we received warrants to purchase 800,000 shares of FastFunds common
stock at an exercise price of $0.10 per share, expiring five years from the date
of closing. In connection with the Merger, the FastFunds received $400,000
through the issuance of convertible promissory notes bearing interest at five
percent per annum, which are convertible into 4,000,000 shares of their common
stock upon the occurrence of certain future events. Unless earlier converted,
any outstanding balance of principal and interest is due on April 14, 2007. In
June 2004, $100,000 of principal of the convertible promissory notes was
converted into 1,000,000 shares of common stock; and an additional $100,000 of
principal of the convertible promissory notes was converted into 1,000,000
shares of common stock in August 2004. The remaining $200,000 of convertible
promissory notes remains convertible into 2,000,000 shares of common stock upon
the occurrence of certain future events. As of March 11, 2005, FastFunds had
10,413,627 shares of stock outstanding; therefore, we owned 74% of the
outstanding common stock on that date.

As a holding company, from time to time we evaluate opportunities for strategic
investments or acquisitions that would complement our current services and
products, enhance our technical capabilities or otherwise offer growth
opportunities. As a result, acquisition discussions and, in some cases,
negotiations may take place and future investments or acquisitions involving
cash, debt or equity securities or a combination thereof may result.

Effective January 25, 2005, we effected a one-for-six shares reverse split of
our common stock. As a result, all common share figures and related stock prices
presented throughout this annual report for periods prior to January 25, 2005
have been restated to reflect the reverse stock split.

(b) Financial information about segments.

We currently operate in only one reportable business segment, cash disbursement
services.

(c) Narrative description of business.

EQUITEX

We are a holding company that operates primarily through our majority-owned
subsidiary, FastFunds Financial Corporation ("FastFunds"), a Nevada Corporation,
and its operating subsidiary, Chex Services, Inc. ("Chex"), a Minnesota
corporation, as well as our majority-owned subsidiary, Denaris Corporation
("Denaris"), a Delaware corporation. We also have run-off operations from our
wholly owned subsidiary Nova Financial Systems, Inc., a Florida corporation. Our
wholly-owned subsidiary, Key Financial Systems, Inc., a Florida corporation,
ceased run-off operations in the fourth quarter of 2003. The business operation
of each subsidiary is outlined more fully below.

FASTFUNDS FINANCIAL CORPORATION

FastFunds Financial Corporation's primary business is that of its wholly owned
subsidiary, Chex. Chex was formed to provide comprehensive cash access services
to casinos, and other gaming establishments, and to market its products a la
carte to other establishments in the casino, entertainment, and hospitality
industries. Chex's total funds transfer system allows casino patrons to access
cash through check cashing, credit/debit card cash advances, automated teller
machines and wire transfers. Chex's check and credit card advance systems
compiles detailed demographic data about patrons that utilize these services.
The collected patron demographic data is then provided to the casino operators
and can be used in their marketing efforts.

As of February 1, 2005, Chex operates at 30 casino and gaming locations and 18
other retail establishments throughout the United States. At each of these
locations Chex can provide any one or a combination of: check cashing;

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credit/debit card cash advance systems; and ATM terminals. Chex either staffs
the locations with its personnel or provides its products and services to the
locations based upon the contract with the location.

Chex's services are provided pursuant to the terms of a financial services
agreement entered into with the respective establishment. The agreement
specifies which cash access services will be provided by Chex, the transaction
fees to be charged by Chex to patrons for each type of cash access transaction,
and the amount of compensation to be paid by Chex to the location. Pursuant to
all of these agreements with the locations serviced, Chex maintains the
exclusive rights (with rare exception) to provide its services for the term of
the contract.

At each of the locations where Chex provides its cash access services, it must
have sufficient cash available to process both check cashing and credit card
advance transactions. Additionally, at each location where it operates ATMs,
Chex must have sufficient cash available to replenish the ATM machines. The
amount of cash required is dependent upon the transaction volumes of each
product and the average dollar amount per transaction. To meet its cash needs,
Chex arranges to have the cash it maintains on deposit delivered from a local
bank as needed. If Chex is providing it's products to it's customers, then the
customer is responsible for providing the cash to manage its operations. Chex
has a treasury management account with Wells Fargo Bank that is set up to sweep
all the local banking accounts each day in order to control, expedite, and
realize economies of scale in their money management.

CREDIT/DEBIT CARD CASH ADVANCE SERVICES. Chex's credit/debit card cash advance
services allow patrons to use their VISA, MasterCard, Discover, and American
Express cards to obtain cash. The remote cash access terminals and other
equipment used to provide credit/debit card advance services are provided by a
vendor pursuant to cash advance service agreements between Chex and the vendor.
Each of the agreements requires the vendor to supply, install and maintain, at
the vendor's expense, the equipment and supplies necessary to operate the cash
advance system. Chex has recently completed development of its own proprietary
credit/debit card cash advance system (called CreditGuard(TM)) and began to
retrofit all of its locations to enable them to use the new technology beginning
in the second quarter of 2004. In addition, the Chex sales organization began
marketing the CreditGuard product to the gaming and retail industry in 2004.

At the locations at which Chex provides credit card advance services, it pays
the operator a commission for each completed credit card cash advance
transaction. At locations, which utilize CreditGuard, casinos have the funds
electronically transferred into their account, thus maximizing their cash
position and expediting the float of funds. At the locations where we utilize
third party vendors, under the terms of the vendor agreements, the vendor
charges each patron completing a credit card advance transaction a service fee
based on the cash advance amount and pays a portion of such service fee to Chex.
The service fee and the credit card cash advance amount are charged against the
credit card account of the location patron effecting the transaction and are
deposited by the appropriate credit card company into the vendor's account. The
vendor reimburses Chex for the advance amount, by check, and pays the commission
due to Chex in the month following the month the transaction was completed.

Patrons may initiate a credit/debit card cash advance transaction at a remote
credit card cash advance terminal (`kiosk") at Chex's teller facility. The kiosk
consists of a credit/debit card reader with an integrated keypad and a digital
display. The patron initiates the credit/debit card cash advance transaction by
swiping the credit/debit card's magnetic strip through the card reader and then
entering the amount of cash requested. The remote terminal automatically
accesses the credit card company's authorization center for approval of the
transaction. If the transaction is approved, a cash advance draft is
automatically generated at the teller facility and the patron is directed to go
to the teller facility to obtain the cash advance. At the teller facility, the
employee verifies the patron's identity and performs certain other security
measures gathering certain demographic information, including the patron's
address and telephone number. The patron then endorses the back of the cash
advance draft, initials the front of the draft acknowledging the service fee
charge and receives the cash requested with a transaction receipt. The vendor,
pursuant to the terms of the agreements with Chex, guarantees payment to Chex
for all transactions that are processed in accordance with the procedures
specified in the agreements.

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For the year ended December 31, 2004, Chex processed approximately 256,000
credit/debit card transactions. These transactions totaled over $87 million in
advances and earned fees of approximately $3,719,000.

CHECK CASHING SERVICES. Chex' check cashing services allow location patrons to
access cash by writing a check to Chex at its teller facility staffed by
employees of the company. Chex' employees conduct the authorization and
verification process for check cashing transactions in accordance with detailed
procedures developed by Chex to help minimize bad debt from returned checks.
Chex' new product, ChexGuard(TM), developed with Wells Fargo Bank and VISA POS,
electronically deposits the checks, and utilizes the VISA banking rail to verify
that the account is open and that the funds written for the check amount are
currently in the account. The funds are deposited into Chex's account the
following day, thus significantly speeding up deposits into their account
(compared to the manual deposit method) and decreasing overall bank charges.
Chex has implemented ChexGuard in all of our locations and we are now marketing
the product to potential customers in the retail, entertainment, and gaming
industries.

Chex charges the customer a fee for cashing checks. The fee for personal checks
ranges from 3% to 6% of the amount of the cashed check. At the locations where
Chex provides check-cashing services, Chex pays the location operator a
commission based upon the monthly amount of checks cashed. Chex also cashes
other financial instruments, such as; money orders, government checks, payroll
checks and insurance checks at varying service fee charges.

Chex's check cashing services benefit location operators by providing
demographic information on the location's patrons, relieving the location of any
risk and collection costs associated with returned checks and by allowing the
location to focus on the aspects of the business that they do best.

Chex mitigates its potential for returned items by establishing check-cashing
limits based on the customer's history at Chex locations. In addition, Chex
utilizes its recently developed ChexGuard product to determine if a customer has
a valid open account and whether the funds for the amount of the check written
are currently in the account.

In the event a check is returned, Chex utilizes its own in-house collections
department to pursue collection of returned checks. In September 2002, Chex
incorporated this department as Collection Solutions, Inc. creating a separate
wholly-owned stand-alone collections subsidiary intending to offer its services
to customers other than Chex. During 2003, Chex shut down the operations of
Collection Solutions but continues to operate its in-house collections
department. For the year ended December 31, 2004, Chex collected fees of
approximately $413,000 on returned checks.

For the year ended December 31, 2004, Chex cashed over $213 million in customer
checks and earned fees of approximately $7,183,000 on these transactions.

ATM SYSTEMS. Under the terms of agreements with each processor, also known as a
vendor, Chex receives a surcharge fee for each cash withdrawal and the vendor
credits Chex' bank settlement account for each transaction, less any processing
fees. The surcharge, which is a charge in addition to the cash advance, is made
against the bank account of the patron effecting the transaction and is
deposited in the vendor's account. The vendor reimburses Chex for the cash
advance amount generally within two days of the transaction and pays the
surcharge commission due Chex for each withdrawal either immediately or in the
month following the month the transactions were completed. This variance in the
timing of the surcharge payments is based upon the ATM processing agreements
between Chex and its vendors. The Company generally passes on an agreed upon
percentage of the surcharge commissions to the locations where the ATMs are
placed. For the year ended December 31, 2004, Chex processed 2 million ATM
transactions with $176 million in advances and earned fees or commissions of
approximately $3,807,000.

STORED VALUE CARD. In August 2002, Chex executed an agreement with West Suburban
Bank to issue stored-value cards. Under the terms of this agreement, Chex will
primarily function as an independent marketing agent. The "FastFunds" Stored
Value Card program allows customers to load money onto the "FastFunds" card that

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can be used at ATM's worldwide and at any location that accepts PIN based point
of sale debit transactions. "FastFunds" current gaming customer base can load
jackpot winnings on to the card, up to a maximum of $7,500 per day, which is
less costly and more secure for gaming establishments and generally safer for
the customers. Customers can also load money onto the card rather than leave the
gaming establishment with a significant amount of cash winnings. Using two cards
and transferring money from one card to the other also allows the card to be
used for money remittance in a method that can be less expensive and more
convenient than traditional remittance systems.

PREPAID PAYROLL CARD. Chex has been approved by Visa U.S.A. to market a prepaid
payroll card program through West Suburban Bank to current and prospective
clients. This program allows employees to have their payroll loaded onto the
"PowerCash" payroll card, which they can then use at ATM's to make cash
withdrawals or make purchases at any location that accepts debit and credit
cards. In addition, the payroll card can be used as a virtual checking account
for purposes such as bill payment. The PowerCash payroll card is targeted at
employees who do not have checking accounts or do not prefer direct deposit.

In March 2003, Chex began marketing the PowerCash prepaid payroll card to
employees of the gaming establishments in which Chex operates. By law, employers
are generally required to offer to their employees at least one alternative to
direct deposit for receiving their pay. To comply with this law, employers have
traditionally offered costly manual checks. The PowerCash prepaid payroll card
will allow employers to comply with the law with more ease and less cost. If
requested by the employee, Chex can "load" the amount of the employee's pay, as
reported by the employer, onto a card, which the employee may then utilize to
draw down the balance like a debit card. Chex's PowerCash prepaid payroll cards
are accepted by most merchants throughout the world. Chex receives a transaction
fee each time the employee utilizes the card as well as half of the monthly
maintenance fee. Because we believe this product can be utilized in a broad
context, we intend to market this product outside of the gaming industry.

MARKETING AND SALES OF SERVICES. FastFunds' objective is to increase the number
of locations at which Chex provides cash access services in the gaming industry.
The company intends to pursue obtaining additional contracts with new casinos,
existing casinos not currently contracting with a cash access provider and other
existing casinos when such casino's current contracts with another cash access
service provider are due to expire. At December 31, 2004, Chex had 30 contracts
with casinos and other gaming establishments and 18 contracts with other retail
establishments to provide varying levels of cash access services.

In furtherance of this objective to increase Chex's market share, FastFunds'
marketing plan is designed to increase their profile in the casino industry. The
marketing plan includes increasing direct personal contact with casino
management personnel responsible for making decisions regarding cash access
services, including the implementation of customer service workshops that are
designed for the casino's employees. Chex has developed a network of associates
in the casino industry who are able to refer casino management to Chex's
services. Chex also advertises in trade publications, attends industry trade
shows and distributes sales material to casino operators through direct mail.

SIGNIFICANT CUSTOMERS. For the year ended December 31, 2004, three of Chex's
largest customers represented approximately 46% of the Company's revenues
including approximately 22% from one customer (Potawatomi). While the Company
and Chex strive to maintain good working relationships with contracted casinos
and presently believe those relationships to be satisfactory, the loss of any of
these casinos could adversely affect the Company's results of operations in
future periods.

In January 2004, Chex received a termination notice from Native American Cash
Systems Florida for their contract providing cash access services at five of the
Seminole Tribe of Florida Tribal casino properties located throughout Florida.
These locations accounted for $4,089,557 (22.6%) and $3,486,707 (17.8%) of our
revenues for the years ended December 31, 2003 and 2002, respectively.

COMPETITION. FastFunds competes with a number of companies in their market
niche. The other companies that offer full-service booth check-cashing
operations are Game Financial Corporation, a subsidiary of Certegy, Inc.,
operating as GameCash; Global Cash Access, Inc., Cash Systems, Inc. and
Americash. We also compete with a number of companies that offer ala carte
credit card cash advance systems and ATMs to the gaming and hospitality

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industries which include Global Cash Access, Inc., Game Financial Corporation,
Cash Systems, Inc., Cash & Win (through an alliance with Comerica Bank and NDC),
Americash, and Borrego Springs Bank. With Chex's ChexGuard product, we compete
in the gaming and retail markets with Telecheck, Checkwrite, SCAN and a number
of other vendors for the check conversion, authorization, and guarantee
business. Currently Global Cash Access, Inc. controls a majority of the cash
advance business in the industry. The full booth cash access financial service
centers located in gaming facilities are fairly equally split between, Chex,
Cash Systems, Inc. and GameCash.

GOVERNMENT REGULATION. Many states require companies engaged in the business of
providing cash access services or transmitting funds to obtain licenses from the
appropriate state agencies. In this regard, state agencies have extensive
discretion to deny or revoke licenses. Chex has obtained the necessary licenses
and bonds to conduct business with the casinos where it currently operates, and
the Company will be subject to similar licensing requirements as it expands
operations into other jurisdictions (either through Chex or its other
subsidiaries). As part of our application for licenses and permits, members of
our board of directors (including the boards of directors of our subsidiaries),
our officers and those of our subsidiaries, key employees (and those of our
subsidiaries) and certain stockholders holding five percent or more of our stock
may be required to submit to a personal background check. While there can be no
assurance that we will be able to do so, we anticipate that we will be able to
obtain and maintain the state licenses necessary for the conduct of our
business.

Many suppliers to Native American casinos are subject to the rules and
regulations of the local tribal gaming commission. These gaming commissions have
authority to regulate all aspects of casino operations, including the selection
of vendors (such as Chex) at their casinos. Some gaming commissions require
vendors to obtain licenses and may exercise extensive discretion to deny or
revoke licenses. Chex has obtained the necessary licenses or approvals from the
appropriate tribal gaming commissions where it operates. While there can be no
assurance that it will be able to do so, we anticipate that Chex will be able to
obtain and maintain the tribal licenses and approvals necessary to conduct
business.

Currently, a majority of locations where Chex provides its services are on
tribal lands. Chex is licensed at many of the locations where it operates by the
local tribal authority and/or various state licensing organizations. All of the
tribes operate under various compacts negotiated with the states where they are
domiciled. The Bureau of Indian Affairs, a division of the United States
Department of Commerce, oversees the regulatory aspects of these compacts. If a
tribe were found to be violating the regulations of the state compact, its
gaming and entertainment locations could be closed down. Any such closures would
likely have a materially adverse effect on the Chex's and the Company's
business, growth, financial condition and results of operations. Furthermore,
tribal adherence to the applicable provisions of state compacts is completely
beyond the control of Chex or the Company.

Tribal governments enjoy a form of sovereign governmental immunity that is
comparable to the immunity of states, local governments and the federal
government. Like the federal government, tribal governments retain limited
immunity in order to protect government funds and discretionary governmental
functions from lawsuits and may limit the size of damages or claims. Tribes
provide for insurance and limited waivers of their sovereign immunity, taking
responsibility for the actions of tribal employees. Tribal sovereign immunity
may limit our ability to pursue certain legal remedies should we believe that we
have a claim against a tribal authority.

FastFunds' business may also be affected by state and federal regulations
governing the gaming industry in general. Changes in the general approach to
regulation of casino gaming could affect the number of new gaming establishments
in which we may provide cash access services.

DENARIS

Denaris Corporation was formed on August 16, 2002 to develop and market a
prepaid reloadable stored value card program. Stored value cards offer a
convenient alternative to customers, particularly immigrants, who choose not to
utilize traditional bank accounts due to language barriers and apprehension.
Initially, Denaris intends to focus on the development of marketing programs

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targeting various immigrant populations that utilize international fund
remittance services to transfer funds and other applicable markets targeting
customers who have the need for a branded bank card, but do not qualify for a
credit card. Additionally, we, in conjunction with Denaris and Paymaster
Jamaica, Ltd, intend to market a proprietary stored value card program, with our
initial focus on the international funds remittance business between the United
States and Jamaica.

Reloadable stored value cards can be obtained by anyone without a credit check
or intrusive personal information and allow a customer to place funds on the
card in varying amounts at any time that can be accessed at most ATM's, through
point-of-sale transactions wherever debit cards are accepted or at partner
customer service outlets. They also provide a fast, easy and cost effective
means of transferring funds to anyone, anywhere in the world.

Stored value cards offer a convenient alternative to customers who may not have
convenient access to traditional banking institutions or who choose not to
utilize traditional banking institutions due to language barriers, fear or
mistrust of the banking system. Stored value card customers may be immigrants,
college students, international travelers, armed forces personnel or other
individuals or entities that need a safe way to store, transfer or utilize cash
outside of a traditional bank account.

Once money is loaded onto a card, customers have immediate access to their funds
wherever the card is accepted via ATM or Point of Sale retail locations. If a
customer wishes to transfer funds to family or friends either nationally or
internationally, they may purchase a second card that is sent to the recipient,
which may be used to access the transferred funds for a minimal fee. Often these
transfer fees are significantly lower than those charged by traditional money
transfer services.

PAYMASTER JAMAICA AGREEMENT. In August 2002, we signed a Memorandum of
Understanding ("MOU") with Paymaster Jamaica Ltd. headquartered in Kingston,
Jamaica. Paymaster Jamaica commenced operations in October 1997, offering
improved revenue collection and customer care facilities to businesses,
institutions and consumers on the island of Jamaica. It offers its client
companies a viable, cost effective alternative to retaining their own commercial
offices. Paymaster Jamaica's clients include every local utility company, five
remittance companies, select internet service providers and cable networks,
among others. Paymaster Jamaica presently has over 700,000 consumer clients
accessing services at approximately 100 service outlets processing over 450,000
transactions per month with average collections of Ja$1.7 billion (US$27
million). In addition to its bill payment services, Paymaster Jamaica offers
cash remittance services affording its customers the convenience to send and
receive all types of remittances nationally or internationally via cash or debit
cards.

In 2002, Paymaster Jamaica executed a contract with the Jamaican Postal Service
providing exclusive "transactions system rights" for twenty years throughout the
640 branch network, including the country's prime commercial areas. This
agreement gives Paymaster Jamaica an exclusive right to provide its services at
all post office locations throughout the island.

In 2002, under the terms of the MOU we advanced $500,000 capital advance to
Paymaster Jamaica in exchange for a 10% promissory note. Under the terms of the
Paymaster Jamaica note, Paymaster Jamaica may convert the amounts due under the
capital advance into equity of a newly formed subsidiary, Paymaster Worldwide,
which would then be jointly owned by Denaris and Paymaster Jamaica. Paymaster
Worldwide is to franchise the Paymaster Jamaica business model to other markets
initially in other Caribbean countries with the possibility of eventually going
worldwide. The companies are currently renegotiating the aforementioned MOU.

During 2003, Denaris began designing a funds payment and transfer computer
system which was tested and operated for a short period of time in certain of
Paymaster's locations. Ultimately, Denaris' system will be capable of handling
additional products and services that are similar in nature to Paymaster
Jamaica's existing products as well as remittance and stored value products.
Additional products intended to be supported by the proposed system will include
bill payment transactions, cash transfer program, direct deposit of payroll to
stored value cardholder accounts, and prepaid long distance and prepaid cellular

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products. The system has not been fully completed and was taken out of service
in 2004. Currently, Denaris and Paymaster are working on enhancing the system
and intend to redeploy it when completed.

Denaris is currently working with Paymaster in an effort to create a stored
value card via a "closed loop" system whereby Paymaster's customers will be able
to pay bills, have their payroll loaded onto the card, and receive money
remittances.

Monies placed on the stored value accounts are to be deposited in a Denaris
account, in good funds, prior to or simultaneous to the value being placed on
the stored value card at a Paymaster Jamaica location. Deposits may include
cash, government pension or benefits payments, or local and international
remittances transferred to customer accounts. Authorization policies and
procedures have been established to minimize fraudulent deposits or withdrawals.
Denaris will bear fraud risk as long as established authorization policies and
procedures are met. Paymaster Jamaica, and/or its subagents, will bear fraud
risk for failure to follow procedures. Paymaster Jamaica will establish vault
cash procedures that ensure that sufficient cash is available to pay out demands
on the stored value accounts

A significant feature of the stored value card is the ability to transfer funds
from card to card either locally, or internationally. Utilizing this feature,
customers may transfer balances from one card to another, either locally, or
internationally, with the funds being available to the transferee immediately.
Transfers are made between two separate cards via a PIN based system. In
addition, cardholders may use their card to pay bills with Paymaster Jamaica
bill-pay clients, which include every local utility company, five remittance
companies, select internet service providers and cable networks, among others.

OTHER BUSINESS OPPORTUNITIES. In September 2004, Equitex, through Denaris,
executed a definitive agreement with Financial Freedom International ("Financial
Freedom") of Orem, Utah to distribute Denaris' stored value card and payroll
card products to Financial Freedom's customers. Under the terms of the
agreement, Denaris will provide Financial Freedom stored value cards and payroll
cards for Financial Freedom to market along with their current products.
Financial Freedom is a provider of educational materials, software and services
to consumers with troubled debt.

In October 2004, Denaris signed a marketing agreement with AmeriTech
Advertising, Inc. ("AmeriTech") of Clearwater, Florida, to market Denaris'
stored value card products via the Internet. AmeriTech is an Internet marketing
company that maintains various databases and has relationships with other
Internet marketing companies to which it markets products via the Internet.
Under the terms of the agreement, AmeriTech is to make Denaris' stored value
products available to its customers through a hot linked URL connection to a
designated Denaris product website.

In September of 2004, Denaris signed a Distributor Agreement with Access Cash
Systems (ACS), Inc. of Weston, Florida to market and sell ACS's card and
program. This system will be utilized to service both the Financial Freedom and
AmeriTech agreements. Denaris' website is currently being beta-tested and is
planned for completion in the second quarter of 2005.

In August 2004, we, along with Denaris, executed a non-binding letter of intent
to acquire Digitel Network Corporation, Platinum Benefit Group, Inc., National
Business Communications, Inc., Personal Voice, Inc. and Private Voice, Inc.
(collectively the "Companies") all based in Clearwater, Florida. The Companies
design, develop and market stored value card programs as well as personal voice
mail products through their call center operations. In conjunction with their
stored value card products, the Companies offer the Platinum Benefit Group
premium service that includes vehicle roadside assistance, a prescription
discount program, a dental care discount program, a registered nurse hotline and
a family legal plan. The Companies also offer personal voice mail services
through Personal Voice, Inc. and Private Voice, Inc. Completion of these
acquisitions is subject to further due diligence by both parties, negotiation
and execution of a definitive agreement, necessary state or federal regulatory
approvals, board of director approval and any necessary stockholder approvals.

COMPETITION. Currently many large financial institutions and funds transfer
services are offering stored value cards, which compete directly with Denaris'
products. In addition, Denaris competes with major funds transfer services which
include Western Union and other similar companies operated by multi-national
corporations with resources substantially more significant than those of
Denaris.

                                      -8-
<PAGE>

GOVERNMENT REGULATION. Denaris operations are regulated by individual state
money transmitter licensing requirements and we may be required to obtain and
maintain licenses to do business in certain states. Denaris also may be subject
to certain federal and international anti-money laundering laws.

Many states have licensing laws and other regulatory requirements relating to
money transfers. Such licensing laws may require regulatory approval of agents,
business forms, customer disclosures and require periodic reports by a licensee,
in addition to possible net worth requirements. Many states also require
compliance with federal and/or state anti-money laundering laws and regulations.

Denaris' money transfer programs are subject to regulation by the United States
including provisions of the USA Patriot Act of 2001 and other similar federal
programs administered by the Treasury Department. These regulations include
anti-money laundering laws and regulations relating to foreign money transfers
and may prohibit or restrict transactions to or from, or dealings with,
specified countries, their governments, or certain of their nationals including
individuals and entities designated as narcotics traffickers and terrorists or
terrorist organizations. Money transfer companies may be required to develop and
implement risk-based anti-money laundering programs, report large cash
transactions and suspicious activity, and maintain transaction records.

In addition, money transfer businesses may be subject to some form of regulation
in many foreign countries and territories in which such services are offered.

KEY FINANCIAL SYSTEMS AND NOVA FINANCIAL SYSTEMS

Key Financial Systems, Inc. and Nova Financial Systems, Inc. are Florida
corporations formed in June 1997 and September 1998, respectively. Both
companies were formed to design, market and service credit card products aimed
at the sub-prime market consisting mainly of consumers who may not qualify for
traditional credit card products. Nova processes payments on a single remaining
portfolio which provides the company with "run-off" operations. Key Financial
Systems ceased "run-off" operations in the fourth quarter of 2003 with the
closing of its only portfolio. As a result, Key Financial Systems operations for
the years ended December 31, 2004, 2003 and 2002 have been presented as
discontinued operations in our financial statements as described more fully in
Note 3 to the financial statements accompanying this report.

At the close of business on March 1, 2002, the Office of the Comptroller of the
Currency closed Net First National Bank, the sole issuing bank for the Pay As
You Go credit card program, and appointed the Federal Deposit Insurance
Corporation ("FDIC") as receiver. Subsequent to the closure, the FDIC informed
the Pay As You Go credit card cardholders that their accounts were being closed
and any monies due refunded. As a result, Key Financial Systems immediately
suspended marketing the Pay As You Go credit card. In May 2002, Key Financial
Systems filed a claim with the FDIC for all funds due from Net First National
Bank to Key Financial Systems under the credit card program agreement through
the date federal banking regulators closed Net First. The total amount of the
claim was $4,311,027. As of December 31, 2002, Key Financial Systems and Nova
had ceased business operations, however, Nova continues to receive residual
payments on approximately 1,600 cards still active in the Merrick Bank portfolio
at December 31, 2004, down from approximately 2,000 at December 31, 2003 and
4,000 at December 31, 2002. The Merrick Bank portfolio should continue to see a
decline in active accounts in 2005. Effective October 2003, Key Financial
Systems ceased operating a second card portfolio previously operated through
KBank as only three cards remained active. Key Financial Systems and KBank
terminated the Credit Card Program Agreement on March 31, 2004.

EMPLOYEES

Equitex currently employs four full-time employees. Chex employs 11 full-time
employees at its corporate office, 8 employees in home offices, and 101
full-time and 25 part-time employees at its casino locations. FastFunds has two
employees and its FastFunds International Limited subsidiary employs three
full-time employees. Denaris, Key Financial Systems and Nova currently have no
employees other than their officers and directors.

                                      -9-
<PAGE>

(d) Financial information about geographic areas.

FastFunds International, Inc., a wholly-owned subsidiary of our majority-owned
subsidiary FastFunds Financial Corporation, with operations principally based in
London, has long-lived assets of $158,914 consisting primarily of computer
hardware and software.


ITEM 2. PROPERTIES.

Our principal executive office is located in Englewood, Colorado. We lease this
space, consisting of approximately 1,800 square feet, on a month-to-month basis
for $2,500 per month, from a corporation in which our president is the sole
stockholder. We believe these terms to be no less favorable than those that
could be obtained from a non-affiliated party for similar facilities in the same
area.

Effective April 1, 2004, Equitex also leases four executive office suites from
an unaffiliated third party in West Palm Beach, Florida for $3,710 per month.
This lease expired on March 31, 2005 but was extended until April 30, 2005.

Chex leases approximately 3,300 square feet for its executive office in
Minnetonka, Minnesota, which is adequate for its current needs. The current
minimum lease payment is $6,000 per month through March 31, 2006, when it
expires. Pursuant to the terms of the lease, Chex is also responsible for its
pro-rata share of taxes, operating expenses and improvement costs.

Beginning in July 2004, FastFunds International Limited began to lease office
space in London for approximately $6,800 per month, including taxes. The lease
expires in July 2005. In addition, in August 2004, FastFunds International, Inc.
began to lease office space in Chicago, Illinois for $6,000 per month on a
month-to-month basis. Effective March 2005, FastFunds International, Inc.
terminated the Chicago lease.


ITEM 3. LEGAL PROCEEDINGS.

In August 2000, William G. Hays, Jr., liquidating agent for RDM Sports Group,
Inc. and related debtors, filed an adversary proceeding against us, Smith
Gambrell and Russell, LLP, David J. Harris, P.C. and David J. Harris, in the
United States Bankruptcy Court for the Northern District of Georgia, Newnan
Division, Adversary Proceeding No. 00-1065. The liquidating agent alleges that
we breached our October 29, 1987, consulting agreement with RDM, breached
fiduciary duties allegedly owed to RDM, and that we are liable for civil
conspiracy and acting in concert with directors of RDM. The liquidating agent is
seeking unspecified compensatory and punitive damages, along with attorney's
fees, costs and interest. On April 2, 2001, the court granted our motion to
enforce the arbitration clause contained in the consulting agreement. The
liquidating agent has not commenced an arbitration proceeding. In connection
with the distribution of our assets and liabilities to Equitex 2000, Inc. on
August 6, 2001, Equitex 2000 has agreed to indemnify us and assume defense in
this matter, as well as certain other legal actions existing at August 6, 2001.
In November 2003, Equitex reached a settlement agreement with the liquidating
agent pursuant to which Equitex paid sum of $400,000, in exchange for the
dismissal of the adversary proceeding and the execution of a mutual release of
claims by both parties.

On November 3, 2003, Equitex, along with its then wholly-owned subsidiary Chex,
executed a Stock Purchase Agreement (the "Stock Purchase Agreement") with
iGames, Inc, and Money Centers of America which contemplated iGames, Inc.'s
acquisition of Chex. This Stock Purchase Agreement was terminated on March 12,
2004.

On or about March 15, 2004, iGames, Inc. commenced a lawsuit against Equitex and
Chex alleging breach of the Stock Purchase Agreement. This lawsuit was later
voluntarily withdrawn by iGames, Inc. However, on March 16, 2004, Chex commenced
a lawsuit in Hennepin County, Minnesota against iGames, Inc. demanding repayment
of the $2,000,000 principal balance, accrued interest and other fees, plus

                                      -10-
<PAGE>

payment of $1,000,000 as additional interest (as expressly provided under the
note) due from iGames, Inc. under a term promissory note delivered by iGames,
Inc. in favor of Chex in connection with the Stock Purchase Agreement (the
"iGames Note").

On March 23, 2004, Chex commenced a lawsuit in Delaware state court (New Castle
County) against iGames, Inc. seeking payment of the $1,000,000 termination fee
expressly provided for under the Stock Purchase Agreement, including related
costs.

On March 24, 2004, iGames commenced a lawsuit in United States District Court
for the District of Delaware against Equitex and Chex alleging express and
implied breaches of the terms of both the Stock Purchase Agreement and the
iGames Note, and that both Equitex and Chex had tortuously interfered with
iGames' business relationship with one of its lenders. In sum, iGames has
asserted that it is entitled to approximately $3.3 million in damages, which
includes the termination fee provided for under the Stock Purchase Agreement,
consequential and punitive damages due to our alleged actions and related
attorneys fees.

On September 13, 2004, the three existing legal actions summarized above were
consolidated in the United States District Court for the District of Delaware
and are proceeding in the normal course of litigation. We are confident that our
claims in litigation will be upheld and believe that the various claims made by
iGames lack merit. While the ultimate outcome of these lawsuits cannot presently
be predicted, we intend to vigorously prosecute our claims and defend against
iGames' claims.

We are also involved in various other claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse impact either
individually or in the aggregate on our consolidated results of operations,
financial position or cash flows.

                                      -11-
<PAGE>

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

On January 4, 2005, we completed our Annual Meeting of Stockholders, which was
initially convened and adjourned on December 27, 2004, where our stockholders
re-elected each of four incumbent directors. The votes were cast as follows:

                                                    For                 Withheld
                                                 ---------              --------
        Henry Fong                               4,915,695               87,545
        Russell L. Casement                      4,914,222               89,018
        Aaron Grunfeld                           4,915,337               87,903
        Michael S. Casazza                       4,914,430               87,143

Additionally, the following three proposals were presented and voted upon at the
meeting, and approved by our stockholders, with the votes cast as follows:

To ratify and confirm the stockholders' prior approval of an amendment to
Paragraph Four of our Certificate of Incorporation to effect a one-for-six share
reverse split of our common stock.

                                          For           Against          Abstain
                                       ---------        -------         --------
        Shares voted                   4,925,829         56,244          21,167

The approval of our issuance of common stock upon conversion of presently
unconverted Series D 6% Convertible Preferred Stock, Series G 6% Convertible
Preferred Stock and Series I 6% Convertible Preferred Stock, to the extent such
issuance exceeds 20% of our common stock outstanding as of the dates any such
preferred shares were issued, or upon conversion of a new series of preferred
stock to be issued in exchange for such preferred shares.

                                          For           Against          Abstain
                                       ---------        -------         --------
        Shares voted                   2,903,682         75,929          21,032

To ratify the appointment of GHP Horwath, P.C. (f/k/a Gelfond Hochstadt
Pangburn, P.C.) as the independent auditors of the Registrant for the year
ending December 31, 2004.

                                          For           Against          Abstain
                                       ---------        -------         --------
        Shares voted                   4,946,080         21,900          35,260


                                      -12-
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a) Market Information.

Our common stock trades on the Nasdaq SmallCap Stock Market under the symbol
EQTX. The table below states the quarterly high and low last sale prices for the
common stock as reported by The Nasdaq Stock Market, and represents actual high
and low last sale prices. On January 25, 2005, we completed a one-for-six share
reverse split of our common stock for stockholders of record on January 24,
2005. Accordingly, each of the high and low last sale prices below has been
restated to account for the reverse stock split.

                                                  Last Sale
                                     -------------------------------------
      Quarter ended                       High                   Low
      -------------------            ---------------         -------------

      2003
      March 31, 2003                     $5.40                  $2.46
      June 30, 2003                       7.20                   3.54
      September 30, 2003                  6.90                   5.52
      December 31, 2003                   9.60                   5.22

      2004
      March 31, 2004                     $8.52                  $5.64
      June 30, 2004                       6.60                   5.22
      September 30, 2004                  5.76                   3.24
      December 31, 2004                   3.81                   2.46

(b) Holders.

The number of record holders of our common stock as of March 31, 2005 was
approximately 2,200 according to our transfer agent. This figure excludes an
indeterminate number of shareholders whose shares are held in "street" or
"nominee" name.

(c) Dividends.

On February 8, 2005, we, pursuant to a Warrant Agreement by and between us and
Corporate Stock Transfer, as warrant agent, dated February 7, 2005 (the "Warrant
Agreement"), distributed as a dividend to our stockholders of record as of
February 7, 2005 (the "Record Date") two classes of warrants to purchase Equitex
common stock: Common Stock Class A Redeemable Warrants (the "Class A Warrants")
and Common Stock Class B Redeemable Warrants (the "Class B Warrants").
Stockholders as of the Record date received one Class A Warrant and one Class B
Warrant for every two shares of common stock held of record on the Record Date,
and were sent materials necessary for them to receive certificates representing
the Dividend Warrants. In the aggregate, we distributed 3,046,038 Class A
Warrants and 3,046,038 Class B Warrants.

Each Class A Warrant gives its holder the right to purchase one share of our
common stock at an exercise price of $3.06, until February 7, 2010, upon
compliance with and subject to the conditions set forth in the Warrant
Agreement, including the effectiveness of a registration statement under the
Securities Act of 1933 (the "1933 Act") filed with the Securities and Exchange
Commission covering the common stock issuable upon exercise of such warrants.
Each Class B Warrant gives its holder the right to purchase one share of our
common stock at an exercise price of $6.12, until February 7, 2010, upon
compliance with and subject to the conditions set forth in the Warrant
Agreement, including the effectiveness of a registration statement under the
1933 Act filed with the Securities and Exchange Commission covering the common
stock issuable upon exercise of such warrants. As of the filing of this report,
the registration statement had not been filed and declared effective.

                                      -13-
<PAGE>

The Class A Warrants may be redeemed at our option, at any time when the
per-share closing bid price of the common stock exceeds $7.02 for a period of 15
consecutive trading days, and at a redemption price equal to $.0001 per Class A
Warrant (subject to a minimum redemption price of $.01 for all Class A Warrants
of any particular holder). The Class B Warrants may be redeemed at the option of
the Company, at any time when the per-share closing bid price of the common
stock exceeds $9.00 for a period of 15 consecutive trading days, on notice as
set forth in the Warrant Agreement, and at a redemption price equal to $.0001
per Class B Warrant (subject to a minimum redemption price of $.01 for all Class
B Warrants of any particular holder). No class of Dividend Warrants may be
redeemed by the Company unless the shares of common stock issuable upon exercise
of such class of Dividend Warrants has been registered under the 1933 Act with
the Securities and Exchange Commission or are otherwise freely tradable.

Equitex has not declared nor paid cash dividends on our common stock during the
previous two fiscal years, nor do we anticipate paying any cash dividends in the
foreseeable future. We currently intend to retain any future earnings to fund
operations and for the continued development of our business. While a business
development company, we made an in-kind distribution of one of our larger
investment positions to stockholders. Any further in-kind distribution will be
made only when, in the judgment of our Board of Directors, it is in the best
interest of our stockholders to do so. It is possible that we may make an
in-kind distribution of securities, which have appreciated or depreciated from
the time of purchase depending upon the particular distribution. We have not
established a policy as to the frequency or size of distributions and indeed
there can be no assurance that any future distributions will be made. To date,
only one such distribution has been approved by the Board of Directors and was
distributed in April 1988.

(d) Securities Authorized for Issuance Under Equity Compensation Plans.

We have the following securities authorized for issuance under our equity
compensation plans as of December 31, 2004, including options outstanding or
available for future issuance under our 1993 Stock Option Plan for Non-Employee
Directors, 1999 Stock Option Plan and our 2003 Stock Option Plan.

<TABLE>
<CAPTION>
                      Equity Compensation Plan Information

                                                                          Number of securities
                                                                          remaining available
                                                                          for future issuance
                          Number of securities      Weighted-average          under equity
                            to be issued upon      exercise price of       compensation plans
                               exercise of            outstanding        (excluding securities
                          outstanding options,     options, warrants      reflected in column
     Plan category         warrants and rights         and rights                 (a)
------------------------- ----------------------  ---------------------  -----------------------
                                   (a)                    (b)                     (c)
------------------------- ----------------------  ---------------------  -----------------------
<S>                       <C>                     <C>                    <C>
Equity compensation                     622,784                 $10.56                        0
plans not approved by
security holders
                          ----------------------  ---------------------  -----------------------
  Total                                 622,784                 $10.56                        0
                          ======================  =====================  =======================
</TABLE>

ITEM 6. SELECTED FINANCIAL DATA.

The following table contains selected financial data of Equitex for the previous
five years. On August 6, 2001, we completed the distribution of all of our
assets to Equitex 2000, and Equitex 2000 assumed all of our liabilities.
Immediately following this transaction, we completed the acquisitions of Key
Financial Systems and Nova Financial Systems, which were recorded as reverse
acquisitions. The selected financial data presented for the year ended December
31, 2001 are those of Key Financial Systems and Nova financial Systems presented
on a consolidated basis with those of Equitex for the period from August 6, 2001
through December 31, 2001 as well as those of Chex Services for the month of
December 2001. The selected financial data presented for the years ended
December 31, 2000, 1999 and1998, are those of Key Financial Systems and Nova

                                      -14-
<PAGE>

Financial Systems on a combined basis. In the fourth quarter of 2003, Key
Financial Systems ceased "run-off" operations and Key Financial Systems
operations for all periods presented into a one-line presentation and are
included in "Income (loss) from discontinued operations".

In light of the foregoing, the historical data presented below is not indicative
of future results. You should read this information in conjunction with the
audited consolidated/combined financial statements of the Company, including the
notes to those statements (Item 8), and "Management's Discussion and Analysis of
Financial Conditions and Results of Operations (Item 7) that follows.

<TABLE>
<CAPTION>
------------------------------------ -------------- -------------- --------------- -------------- ---------------
                                         2004           2003            2002           2001            2000
------------------------------------ -------------- -------------- --------------- -------------- ---------------
<S>                                  <C>            <C>            <C>             <C>            <C>
Revenues                               $15,493,991    $18,516,041     $20,461,976     $3,144,479      $4,554,266
------------------------------------ -------------- -------------- --------------- -------------- ---------------
Income (loss) from continuing
   operations                          (7,447,999)    (4,501,384)     (1,390,600)    (1,915,781)         575,937
------------------------------------ -------------- -------------- --------------- -------------- ---------------
Income (loss) from discontinued
   operations, net of income taxes         (9,984)       (75,841)     (2,928,400)        884,412       2,980,783
------------------------------------ -------------- -------------- --------------- -------------- ---------------
Net income (loss)                      (7,457,983)    (4,577,225)     (4,319,000)    (1,031,369)       3,556,720
------------------------------------ -------------- -------------- --------------- -------------- ---------------
Net income (loss) applicable to
   common stockholders                 (7,684,023)    (5,156,075)     (4,439,580)    (4,196,369)       3,556,720
------------------------------------ -------------- -------------- --------------- -------------- ---------------
Basic & diluted net income (loss)
   per common share
------------------------------------ -------------- -------------- --------------- -------------- ---------------
  Continuing operations                     (1.36)         (1.04)          (0.40)         (2.35)            0.39
------------------------------------ -------------- -------------- --------------- -------------- ---------------
  Discontinued operations                        *         (0.02)          (0.77)           0.42            2.01
------------------------------------ -------------- -------------- --------------- -------------- ---------------

------------------------------------ -------------- -------------- --------------- -------------- ---------------
Total assets                            24,217,706     26,257,750      27,431,748     35,349,155       7,163,464
------------------------------------ -------------- -------------- --------------- -------------- ---------------
Total long-term liabilities              3,044,016         37,243         240,629        232,200               -
------------------------------------ -------------- -------------- --------------- -------------- ---------------
Convertible preferred stock              2,378,000      2,378,000       4,015,000      4,285,000               -
------------------------------------ -------------- -------------- --------------- -------------- ---------------
Cash dividends                                   -              -               -      2,000,000       4,225,000
------------------------------------ -------------- -------------- --------------- -------------- ---------------
</TABLE>
* Amount is less than (0.01) per share


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and notes thereto for the years ended December 31, 2004, 2003 and
2002. The financial statements presented for the three years ended December 31,
2004 are those of Equitex along with its subsidiaries FastFunds Financial
Corporation, Key Financial Systems, Nova Financial Systems and Denaris
Corporation. In the fourth quarter of 2003, Key Financial Systems ceased
"run-off" operations and Key Financial Systems operations for all periods are
presented in a one-line presentation and are included in "Loss from discontinued
operations".

In light of the foregoing, the historical data presented below is not indicative
of future results. You should read this information in conjunction with the
audited consolidated financial statements of the Company, including the notes to
those statements (Item 8), and the following "Management's Discussion and
Analysis of Financial Conditions and Results of Operations.

                                      -15-
<PAGE>

(a) Liquidity and Capital Resources.

For the year ending December 31, 2005, we presently anticipate our liquidity and
capital resource needs may not be satisfied from cash flows generated from our
operating activities within our FastFunds subsidiary.

In March 2004, we issued $5,000,000 of convertible promissory notes (the
"Notes") from Pandora Select Partners, LP and Whitebox Hedged High Yield Ltd.
(the "Lenders"). The Notes carry an interest rate of 7% per annum with a 45
month term. Months one through three required interest only payments and
beginning in month four, the principal and interest payments began amortizing
over a 42 month period. The Notes are senior to all other debt of both us and
Chex. The proceeds were loaned by us to Chex under terms identical to those
contained in the Notes. The Notes are collateralized by all of the assets of
Chex, our stock ownership in Chex and the promissory note between us and Chex.

The Notes are convertible into our common stock at $8.10 per share up to an
amount equal to 4.99% of our outstanding common stock. In June 2004, we reduced
the conversion price to $6.885 per share. We have the right to make any monthly
payment of principal and interest in our registered common stock. The common
stock will be issued based on 85% of the average bid price for the 20 trading
days prior to the payment due date. The maximum number of shares that can be
delivered as payment will equal 10% of the average monthly trading volume for
the month prior to the payment due date. We may also issue common shares each
month in an amount not to exceed 10% of the prior month's total share volume up
to a value of $100,000 as payment to be applied to the outstanding principal
balance.

The Notes contain certain anti-dilution provisions requiring us to pay Lenders
the pro-rata number of shares Lenders would receive in any spin-off or dividend
from the Registrant as if the remaining principal balance under the Notes were
fully converted at $6.885 per share. The dividend shares shall be segregated may
be liquidated at the discretion of Lenders. At the end of each quarter, 85% of
the proceeds will be applied to the principal balance so long as we are current
in our monthly principal and interest payments.

In December 2004, FastFunds closed on the sale of $1,774,064 of unsecured
convertible promissory notes (the "Convertible Notes") with various investors,
in a private placement made under Section 4(2) of, and Regulation D under, the
Securities Act of 1933. The Convertible Notes accrue interest at a rate of 9.5%
per annum, have a 9-month term, and are convertible at the holder's option
(including any unpaid interest) into shares of FastFunds common stock at a rate
of $1.00 per share for a three-year period commencing on the due date. The
Convertible Notes may be prepaid at any time, in whole or in part and from time
to time, without premium or penalty, so long as at least 50% of the outstanding
amount due on the Whitebox Notes discussed above have then been paid. At this
time it is uncertain whether FastFunds will prepay the Convertible Notes. In
connection with the sale and issuance of the Convertible Notes, investors also
received warrants to purchase an aggregate of 1,774,064 shares of FastFunds
common stock at an exercise price of $2.00. FastFunds paid an aggregate of
$137,925 to two advisory firms in connection with the transaction, which was
recorded as deferred loan costs and are being amortized over the nine-month term
of the Convertible Notes. Accordingly, $14,261 is included in general and
administrative expense for the year ended December 31, 2004.

For the year ended December 31, 2004, net cash used in operating activities from
continuing operations was $3,299,299 compared to $1,397,642 for the year ended
December 31, 2003, an increase of $1,901,657. The most significant portion of
this change was the increase in the net loss of $2,880,758 during the year ended
December 31, 2004.

The increase in the net loss was attributable to the decrease in the gross
margin for Chex by approximately $1,448,000 during the year ended December 31,
2004, significantly due to the loss of the five location contracts (discussed in
further detail below). Additionally, other operating expenses increased
approximately $778,000 due to FastFunds and its newly formed wholly-owned
subsidiary, FastFunds International, Ltd. start-up operations included in the
year ended December 31, 2004.

                                      -16-
<PAGE>

Non-cash adjustments to the current year's results were approximately
$4,500,000, mostly comprised of depreciation and amortization of $1,415,853,
non-cash interest expense of $477,702 related to warrants and beneficial
conversion features on convertible promissory notes, an increase in the deferred
tax asset valuation allowance of $1,380,000, stock-based compensation of
$659,302 and provision for loan losses of $528,205 compared to total non-cash
adjustments of approximately $1,981,000, mostly comprised of $1,119,446 and
$355,000, respectively, for depreciation and amortization and stock-based
compensation for the year ended December 31, 2003.

Cash used in investing activities from continuing operations for the year ended
December 31, 2004 was $2,469,621 compared to $986,159 for the year ended
December 31, 2003. Cash used in 2004 investing activities was primarily
attributable to $2,041,773 of advances on notes receivable (of which $2,000,000
was advanced to iGames) and purchases of furniture, fixtures and equipment of
$555,082, offset by repayments received on notes receivables, including related
parties of $114,055. The 2003 cash used in investing activities was comprised of
$1,119,416 of advances on notes receivable, including related parties, and
purchases of furniture, fixtures and equipment of $422,544, offset by repayments
of related party notes receivables of $558,666.

Cash provided by financing activities from continuing operations for the year
ended December 31, 2004 was $4,973,427 compared to $1,354,339 for the year ended
December 31, 2003. The cash provided for the year ended December 31, 2004, was
primarily a result of the Company receiving net proceeds of $3,731,711 from the
issuances and payments of various debt instruments, as well as receiving
$919,514 upon the sale of 228,050 shares of treasury stock by Chex. In addition,
the Company received $235,827 upon the exercise of options and warrants, and
$200,000 received on a stock subscription receivable. Chex also purchased shares
for treasury for $113,625. The net proceeds provided by these financing
activities of $4,973,427 were primarily utilized to fund the Company's
operations, including operations of FastFunds International.

The significant financing activity from continuing operations for the year ended
December 31, 2003, included the Company receiving $1,628,117 from the exercise
of warrants and the sale of 37,667 shares of treasury stock by Chex for
$352,002. The Company received proceeds of $1,980,000 upon the issuance of notes
payable and repaid $3,769,564 of notes payable (related parties and other) and
also paid $1,000,000 on its line of credit. During the year ended December 31,
2003, the Company also redeemed 90 shares of its Series I Preferred Stock for
$122,776 in cash.

Net cash used in discontinued operations was $37,925 for the year ended December
31, 2004 as compared to $222,122 for the year ended December 31, 2003. The
decrease in cash used in discontinued operations is the result of Key ceasing
its run-off operations during the fourth quarter of 2003.

For the year ended December 31, 2004, cash decreased by $834,334 compared to a
decrease of $1,251,584 for the year ended December 31, 2003. Ending cash at
December 31, 2004, was $8,389,686 compared to $9,224,020 at December 31, 2003.

Other sources available to us that we may utilize include the sale of equity
securities through private placements of common and/or preferred stock as well
as the exercise of stock options and/or warrants, all of which may cause
dilution to our stockholders. We may also be able to borrow funds from related
and/or third parties.

Contractual obligations for future payments under existing debt and lease
commitments at December 31, 2004, were as follows:

                                      -17-
<PAGE>

CONTRACTUAL OBLIGATION              LESS THAN                         MORE THAN
                            TOTAL    ONE YEAR   1-3 YEARS   3-5 YEARS  5 YEARS
----------------------- ----------- ----------- ----------- ---------- -------
Notes payable(1)        $11,681,321 $11,681,321
Convertible promissory
   notes(2)               1,774,064   1,774,064
Long-term debt(3)         4,558,279   1,352,623 $3,205,656
Operating lease
   obligations              169,787      85,539     84,248
                        ----------- ----------- ----------- ---------- -------
Total                   $18,183,451 $14,893,547 $3,289,904
                        =========== =========== =========== ========== =======

(1)  Notes are unsecured, mature various dates through December 2005, renewable,
     subject to repayment with 90-day notice from noteholder.

(2)  Convertible promissory notes excludes the reduction of $1,588,729 to the
     carrying value of the notes for beneficial conversion features associated
     with the notes that are included in the Company's balance sheet as of
     December 31, 2004.

(3)  Long-term debt excludes the reduction of $368,833 to the carrying value of
     the notes that are included in the Company's balance sheet as of December
     31, 2004.

(b) Results of operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Preparation of the consolidated financial statements in accordance with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the balance sheets and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.

We believe that the following are some of the more critical accounting policies
that currently affect our financial condition and results of operations:

  1)   accounts and notes receivable;
  2)   returned checks;
  3)   stock based compensation;
  4)   litigation;
  5)   income taxes, deferred taxes;
  6)   goodwill and other intangible assets; and,
  7)   revenue recognition

RECEIVABLES

ACCOUNTS RECEIVABLE

Accounts receivable arise primarily from fees from credit card and ATM advances
provided at casino locations. Concentrations of credit risk related to the fees
from credit card and ATM advances are limited to the credit card and ATM
processors who remit to the Company our share of fees earned. The Company
believes these processors are financially stable and no significant credit risk
exists with respect to accounts receivable arising from the fees for ATM and
credit card advances. The allowance for doubtful accounts was $65,000 at
December 31, 2004. No allowance was considered necessary on these receivables at
December 31, 2003.

                                      -18-
<PAGE>

NOTES RECEIVABLE

We have made advances to various third parties, as well as officers, affiliates
and employees of the Company and its subsidiaries under various loan agreements.
The advances made to officers of Chex ("Officer's Loans") were made prior to the
acquisition of Chex by Equitex in December 2001. The Officer's Loans have a face
value of approximately $1,971,000 as of December 31, 2004, that is
collateralized by Equitex common stock, including registered and unregistered
shares. The Company's allowance for doubtful notes receivable is adjusted based
on the value of the underlying collateral. Due to the level of risk associated
with our common stock, it is reasonably possible that changes in the value of
the common stock will occur in the near term and that such changes could
materially affect the value of the collateral underlying the notes. After all
attempts to collect a note receivable have failed, the note receivable is
written-off against the allowance. Based on management's evaluation of repayment
intentions, $485,936 of this amount has been presented as a reduction in
stockholders' equity at December 31, 2004. The allowance for doubtful notes
receivable was $1,279,300 and $1,053,300 as of December 31, 2004 and 2003,
respectively.

The Company establishes an allowance for losses on other notes receivable
through a provision for losses charged to expense. The allowance is an amount
management believes will be adequate to cover estimated losses, based on an
evaluation of the collectibility of the notes receivable. The allowance for
doubtful notes receivable on loans made to other than officers was approximately
$646,500 and $410,000 at December 31, 2004 and 2003, respectively.

RETURNED CHECKS

We charge operations for potential losses on returned checks in the period such
checks are returned, since ultimate collection of these items are uncertain.
Recoveries on returned checks are credited in the period when the recovery is
received.

In September 2003, Chex cashed checks totaling $606,316 from one customer that
were returned for insufficient funds. In March 2004, Chex received a
non-interest bearing, promissory note from this customer (see Note 5 to the
consolidated financial statements included in this report). Based on an imputed
interest rate of 12%, a discount of $256,316 was charged to operating expense in
2003. Based on management's evaluation of the note during the fourth quarter of
2004 an allowance of $236,500 was recorded against this note. We believe the
remaining balance of $100,000 is collectible based upon collateral pledged in
connection with the note.

STOCK BASED COMPENSATION

Statement of Financial Accounting Standard ("SFAS") No. 123, Accounting for
Stock Based Compensation, defines fair value-based method of accounting for
stock-based employee compensation plans and transaction in which an entity
issued its equity instruments to acquire goods or services from non-employees,
and encourages but does not require companies to record compensation cost for
stock-based employee compensation plans at fair value. We have chosen to account
for employee stock-based compensation plans using the intrinsic-value method
prescribed in Accounting Principles Board Opinion No. 25 (APB No. 25),
Accounting form Stock Issued to Employees, and related interpretations.
Accordingly, employee compensation cost for stock is measured as the excess, if
any, of the estimated fair value of our stock at the date of the grant over the
amount an employee must pay to acquire the stock.

In December 2004, the FASB issued SFAS No. 123(R) Share-Based Payment, which
addresses the accounting for share-based payment transactions. SFAS No. 123(R)
eliminates the ability to account for share-based compensation transactions
using APB 25, and generally requires instead that such transactions be accounted
for and recognized in the statement of operations based on their fair value.
SFAS No. 123(R) will be effective for public companies that do not file as small
business issuers as of the beginning of the first interim or annual reporting
period that begins after June 15, 2005. Management is evaluating the provisions
of this standard. Depending upon the number and terms of options that may be
granted in future periods, the implementation of this standard could have a
material impact on the Company's financial position and results of operations.

                                      -19-
<PAGE>

LITIGATION

We are currently involved in certain legal proceedings, as described in Note 11
to the consolidated financial statements included in this report.

INCOME TAXES, DEFERRED TAXES

Income taxes are provided for the tax effects of transactions reported in the
financial statements, and a deferred income tax liability or asset is recognized
for temporary differences between our financial statements and tax returns.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.

During the quarter ended June 30, 2004 management assessed the realization of
its deferred tax assets. Based on this assessment it was determined to be more
likely than not that the Company's deferred tax assets will not be realizable,
and the Company determined that a valuation allowance was required. Accordingly,
the Company's valuation allowance was increased by $1,380,000, which resulted in
an increase to the provision for income taxes of the same amount.

A valuation allowance has been provided to reduce the deferred tax assets, based
on management's estimate of the assets' realizibility. We increased the
valuation allowance by $1,380,000 in 2004, based on these estimates. Realization
of the net deferred tax asset is dependent on generating sufficient taxable
income prior to expiration of the loss carryforwards. Although realization is
not assured, management believes it is more likely than not that the net
deferred tax asset will be realized. The amount of the deferred tax asset
considered realizable, however, could be reduced in the near term if estimates
of future taxable income during the carry forward period are reduced.

ACCOUNTING FOR GOODWILL AND OTHER INTANGIBLE ASSETS

We have significant intangible assets on our balance sheet that include goodwill
and other intangibles related to the acquisition of Chex. The valuation and
classification of these assets and the assignment of useful amortization lives
involves significant judgments and the use of estimates. The testing of these
intangibles under established account guidelines for impairment also requires
significant use of judgment and assumptions. Our assets are tested and reviewed
for impairment on an ongoing basis under the established accounting guidelines.
Changes in business conditions could potentially require future adjustments to
asset valuations.

Since the adoption of SFAS 142 on January 1, 2002, we no longer amortize
goodwill but instead test annually for impairment. If the carrying value of
goodwill exceeds its fair value, an impairment loss must be recognized. A
present value technique is often the best available technique with which to
estimate the fair value of a group of assets. The use of a present value
technique requires the use of estimates of future cash flows. These cash flow
estimates incorporate assumptions that marketplace participants would use in
their estimates of fair value as well as our own assumptions. These cash flow
estimates are based on reasonable and supportable assumptions and consider all
available evidence. However, there is inherent uncertainty in estimates of
future cash flow. As such, different assumptions were used in our calculations
and the likelihood of possible outcomes was considered.

We evaluate long-lived assets whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. In
performing the review of recoverability, we estimate future cash flows expected
to result from the use of the asset and its eventual disposition. The estimates
of future cash flows, based on reasonable and supportable assumptions and
projections, require management's subjective judgments. The time periods for
estimating future cash flows is often lengthy, which increases the sensitivity
to assumptions made. Depending on the assumptions and estimates used, the
estimated future cash flows projected in the evaluation of long-lived assets can
vary within a wide range of outcomes. We consider the likelihood of possible

                                      -20-
<PAGE>

outcomes in determining the best estimate of future cash flows. At December 31,
2004, based on tests performed, management believes no impairment has occurred.

REVENUE RECOGNITION

Revenue is recognized from financial services at the time the service is
provided. Revenues are derived from check cashing fees, credit and debit card
advance fees and ATM surcharge and transaction fees.

In general, check cashing fees are comprised of a fee based upon a percentage of
the face amount of total checks cashed, and is recognized at the point a
transaction is generated by the casino cage.

Credit and debit card advance fees are comprised of the fee charged to patrons
for credit and debit card cash advances and is recognized at the point a
transaction is generated by the casino cage for the patron's transaction or cash
is dispensed from an ATM.

ATM surcharge and transaction fees are comprised of upfront patron transaction
fees or surcharges assessed at the time the transaction is initiated and a
percentage of interchange fees paid by the patron's issuing bank. These issuing
banks share the interchange revenue with the Company. Upfront patron transaction
fees are recognized when a transaction is initiated, and interchange revenue is
recognized on a monthly basis based on the total transactions occurring during
the month.

RESULTS OF CONTINUING OPERATIONS

Financial statements for the years ended December 31, 2004, 2003 and 2002 report
the Registrant's Key Financial Systems Financial Systems subsidiary as
discontinued operations (see Note 3 to the Company's consolidated financial
statements).

RESULTS OF CONTINUING OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 VS.
DECEMBER 31, 2003

REVENUES

Consolidated revenues for the year ended December 31, 2004 were $15,493,991
compared to revenues of $18,516,041 for the year ended December 31, 2003.

REVENUE BY SUBSIDIARY

                                               2004                  2003
                                         -----------------     -----------------
FastFunds Financial Corporation              $15,233,735           $18,100,788
Nova Financial Services                          260,256               415,253
                                         -----------------     -----------------
                                             $15,493,991           $18,516,041
                                         =================     =================

FASTFUNDS FINANCIAL REVENUES

Revenues for the year ended December 31, 2004 were $15,233,735 compared to
revenues of $18,100,788 for the year ended December 31, 2003.

In January 2004, Chex was advised that 5 existing casino locations were
terminating the agreements for Chex to provide its services. These locations
accounted for $4,089,557 in revenues for the year ended December 31, 2003.
Accordingly, Chex experienced a decline in 2004 revenues due to the loss of
these contracts and the absence until the third quarter of 2004, of any
significant new contracts to replace the revenues lost. In the third quarter,
Chex entered into new contracts resulting in approximately $778,000 of revenues
for 2004. Management estimates that these new contracts will provide
approximately $2,200,000 of revenues during fiscal year 2005.

Chex Services recognizes revenue at the time certain financial services are
performed. Revenues are derived from check cashing fees, credit and debit card
advance fees, and automated teller machine ("ATM") surcharge and transaction
fees. Chex revenues were comprised of:

                                      -21-
<PAGE>
<TABLE>
<CAPTION>
                                         2004                                                  2003
                   --------------------------------------------------   --------------------------------------------------
                      Number of         Dollars          Earned            Number of         Dollars           Earned
                    Transactions        Handled         Revenues         Transactions        Handled          Revenues
                   ---------------- ---------------- ----------------   ---------------- ----------------- ---------------
<S>                     <C>            <C>               <C>                <C>              <C>             <C>
Personal checks            674,195     $125,011,732       $6,361,227            796,594      $157,086,984      $8,027,449
"Other" checks             261,662       88,555,373          822,140            373,869       149,762,190       1,061,680
Credit cards               219,354       76,272,507        3,544,278            368,922       125,955,019       4,819,287
Debit cards                 36.442       11,201,804          174,592             65,141        23,785,520         451,503
ATM                      2,008,275      176,176,451        3,807,382          3,620,947       353,699,208       3,178,163
NSF Collection
  Fees                           -                -          413,142                  -                 -         510,375
Other                            -                -          110,974                  -                 -          52,331
                   ---------------- ---------------- ----------------   ---------------- ----------------- ---------------
                         3,199,928     $477,217,867      $15,233,735          5,225,473       810,288,921     $18,100,788
                   ================ ================ ================   ================ ================= ===============
</TABLE>

In July 2004, Chex began to use its own proprietary credit and debit cash
advance platform to process cash advance transactions. Chex anticipates that by
April 2005 all of its customers will be utilizing the proprietary product.
Management expects that this will have the effect of increasing revenues since
Chex will receive the full fee as revenue as opposed to being paid only a
percentage of the surcharge as commission.

OPERATING EXPENSES

Total operating expenses for the year ended December 31, 2004 were $20,210,617
compared to $21,761,944 for the year ended December 31, 2003.

                                                2004                2003
                                          ----------------    ----------------
FastFunds Financial Corporation              $18,044,429          $17,315,563
Nova Financial Services                          221,829              332,404
Corporate                                      1,944,359            4,113,977
                                          ----------------    ----------------
                                             $20,210,617          $21,761,944
                                          ================    ================

FASTFUNDS FINANCIAL EXPENSES

FastFunds' operating expenses were $17,807,929 for the year ended December 31,
2004 compared to $17,315,563 for the year ended December 31, 2003. Expenses were
comprised as follows:

                                                2004                2003
                                           ---------------     ---------------
Fees to casinos                                $5,312,522          $6,300,400
Salaries and related costs                      5,267,433           5,929,429
Returned checks, net of collections               623,871             495,500
General operating expenses                      5,432,154           3,496,468
Depreciation and amortization                   1,408,449           1,093,766
                                           ---------------     ---------------
                                              $18,044,429         $17,315,563
                                           ===============     ===============

Fees to casinos are comprised of compensation paid to the casino pursuant to the
terms of each financial services agreement that the company has entered into
with the respective establishment. At locations where Chex provides
check-cashing services, Chex pays the location operator a commission based upon
the monthly amount of checks cashed or a fixed percentage of the net income from
operations at that location. Chex passes on an agreed upon percentage of the
surcharge commissions to the locations where ATM's are utilized. At the
locations at which Chex uses third party vendors to provide credit/debit card
advance services, it pays the operator a commission for each completed
transaction. For the locations where Chex's proprietary product is used, Chex
pays a fee to the casino based on the fees it receives from processing the

                                      -22-
<PAGE>

transaction. For these transactions, Chex also has a cost of processing the
transaction. Chex began installing their proprietary product in July 2004. As
Chex continues to expand its proprietary product processing costs will increase,
as Chex must now process the transaction. The terminated locations accounted for
approximately $1,900,000 of fees to casinos for the year ended December 31,
2003.

Chex employs personnel at the locations where it provides check cashing services
as well as corporate staff to support its operations. For the year ended
December 31, 2004, location salaries and related costs were $3,098,663, while
corporate salaries and related costs were $2,168,770. For the year ended
December 31, 2003, location salaries and related costs were $4,102,398 and
corporate salaries and related costs were $1,825,031. Due to the terminated
locations, Chex had reduced location staff needs during 2004. Location salaries
decreased by approximately $1,003,000 for the year ended December 31, 2004
compared to December 31, 2003. The decline was directly related to the decline
in revenues, predominantly caused by the five terminated locations. FastFunds
corporate salaries increased by approximately $343,000 for the year ended
December 31, 2004 compared to 2003 as a result of FastFunds hiring a Chief
Executive Officer, as well as the corporate staffing of FastFunds International,
Inc.'s London office. The expenses included in the 2004 results for the above
items were approximately $89,000 and $167,000, respectively.

Chex generally records a returned check expense for potential losses in the
period such checks are returned.

For the year ended December 31, 2004, FastFunds' general operating expenses
increased by approximately $1,936,000. The increase was primarily attributable
to increases in the following, as discussed below:

Professional services                                   $704,000
Processing fees                                          628,000
Travel and entertainment                                 177,000
Valuation of note receivable                             383,800
Stock-based compensation                                 252,000
Impairment of note receivable                            236,500
                                                 ----------------
                                                      $2,381,300
                                                 ================

These increases were partially offset by reduced general location expenses of
approximately $213,000 due to the terminated locations, as well as $256,316
recorded in 2003 as a discount on notes receivable.

Accounting, legal and consulting expenses increased by approximately $704,000
during the year ended December 31, 2004 compared to the year ended December 31,
2003. Accounting fees increased by approximately $124,000 as additional expenses
were incurred in 2004 compared to 2003 as a result of the Merger, upon which
FastFunds became a public reporting company. Legal fees increased by
approximately $248,000 for the year ended December 31, 2004 primarily as a
result of costs related to the Merger, compliance costs of being a public
reporting company, as well as legal costs associated with lawsuits. Consulting
fees were approximately $335,000 for the year ended December 31, 2004. FastFunds
International hired marketing and sales consultants to assist the Company in
entering the store-valued card international market in the gaming and retail
industries. In addition, we have consulting agreements with a financial advisor
and individuals who provide SEC consulting services to the Company.

Processing fees increased due to the installation at locations of Chex's
proprietary credit and debit cash advance platform which is used to process cash
advance transactions. The software allows Chex to record the entire fee as
revenue and a corresponding processing fee, as compared to previously recording
a percentage of the revenue as commission.

Travel and entertainment increased by approximately $177,000 for the year ended
December 31, 2004 compared to December 31, 2003 as a result of the increased
costs of travel associated with employees of FastFunds and FastFunds
International, and consultants.

                                      -23-
<PAGE>

For the year ended December 31, 2004 the valuation allowance on the note
receivable from the estate of a deceased Chex officer was increased by $226,000
compared to a decrease of the allowance of $157,800 for the year ended December
31, 2003. Shares of Equitex common stock collateralize the note and the
allowance is adjusted accordingly based on the value of the underlying
collateral.

The stock based compensation expense of $252,000 recorded in 2004 was a result
of Equitex distributing to Chex employees 280,000 of the 800,000 warrants to
purchase Company common stock at $0.10 per share it had received in the Merger.
The warrants were determined to have a fair value of $1.00 on the distribution
date.

Based on management's evaluation of the note receivable from a customer during
the fourth quarter of 2004, an allowance of $236,500 was recorded.

Depreciation and amortization increased $314,683 in 2004 compared to 2003
primarily as a result of increased depreciation as a result of additional fixed
assets, as well as the amortization of deferred loan costs.

NOVA FINANCIAL SYSTEMS EXPENSES

Nova Financial Systems' operating expenses were $221,829 and $332,404 for the
years ended December 31, 2004 and 2003, respectively. The 2004 expenses were
comprised of third party servicing fees of $151,137 and other operating expenses
of $70,692, compared to the 2003 expenses of $242,431 for third party servicing
fees and $89,973 for other operating expenses. The decrease in the third party
servicing fees for the 2004 period compared to the 2003 period is a direct
result of the reduced credit card revenue in the respective periods based on
attrition of the number of cardholders to approximately 1,600 in 2004 from 2,000
in 2003.

CORPORATE EXPENSES

Corporate activity expenses include those of Equitex and Denaris. Total
corporate activity expenses for 2004 were $1,852,742 compared to $4,113,977 for
2003, and were comprised as follows:

                                               2004                2003
                                         ---------------     ---------------
Employee costs                                 $441,476          $1,976,774
Other                                         1,029,546           1,372,203
Stock based compensation                        381,720             355,000
Impairment of notes receivable                       --             410,000
                                         ---------------     ---------------
                                             $1,852,742          $4,113,977
                                         ===============     ===============

Employee costs for the year ended December 31, 2003 includes approximately
$1,400,000 of expense under a bonus agreement with our president. In 2004, no
expense was incurred by the Company under the bonus agreement.

Other expenses include professional fees of $422,316 and $434,422, consulting
services of $117,630 and $369,376 and general operating costs of $276,766 and
$216,037 for the years ended December 31, 2004 and 2003, respectively.
Additionally, other expenses for the years ended December 31, 2004 and 2003
include $212,834 and $352,368, respectively, of expenses related to professional
fees and associated costs with preparing Chex for an initial public offering.

Stock based compensation represents non-cash expenses related to issuances of
common stock and warrants to third party consultants for services.

Impairment of notes receivable for the year ended December 31, 2003 include an
allowance of $250,000 on a note receivable from Paymaster Jamaica and an
allowance of $160,000 on notes receivable from Equitex 2000, Inc., an affiliate
of the Company. No additional allowances were considered necessary by management
in 2004 (see Note 5 to the consolidated audited financial statements attached to
this report).

                                      -24-
<PAGE>

OTHER INCOME AND EXPENSES

For the year ended December 31, 2004, other expenses were $1,682,094 compared to
$1,217,481 for the year ended December 31, 2003. Interest expense for the year
ended December 31, 2004 increased to $1,937,108 from $1,339,935 for the year
ended December 31, 2003. The primary reason for the increase of $597,173 was
interest expense of approximately $245,000 related to $5,000,000 Whitebox note
and approximately $373,200 expenses related to the beneficial conversion
features on convertible promissory notes. Interest income increased by
approximately $132,000 primarily due to interest income of $96,000 recorded on
the $2.0 million iGames Note.

DISCONTINUED OPERATIONS

The net loss from discontinued operations was $9,984 for the year ended December
31, 2004 compared to $75,841 for the year ended December 31, 2003. The decrease
in 2004 is a direct result of Key ceasing operations during the fourth quarter
of 2003.

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 VS. DECEMBER 31, 2002

REVENUES

Consolidated revenues for the year ended December 31, 2003 were $18,516,041
compared to revenues of $20,461,976 for the year ended December 31, 2002.

REVENUE BY SUBSIDIARY

                                             2003                  2002
                                       -----------------     -----------------
Chex Services, Inc.                        $18,100,788           $19,580,399
Nova Financial Systems                         415,253               881,577
                                       -----------------     -----------------
                                           $18,516,041           $20,461,976
                                       =================     =================

CHEX REVENUE

Chex recognizes revenue at the time certain financial services are performed.
Revenues are derived from check cashing fees, credit and debit card advance
fees, and automated teller machine ("ATM") surcharge and transaction fees. Chex
revenues were comprised of:

                                      -25-
<PAGE>
<TABLE>
<CAPTION>
                                         2003                                                  2002
                   --------------------------------------------------   --------------------------------------------------
                      Number of         Dollars          Earned            Number of         Dollars           Earned
                    Transactions        Handled         Revenues         Transactions        Handled          Revenues
                   ---------------- ---------------- ----------------   ---------------- ----------------- ---------------
<S>                  <C>               <C>              <C>                <C>            <C>               <C>
Personal checks            796,594     $157,086,984       $8,027,449          1,334,375      $167,831,673      $8,782,513
"Other" checks             373,869      147,762,190        1,061,680            (A)           154,146,088       1,178,106
Credit cards               368,922      125,955,019        4,819,287            418,947       149,367,510       5,210,635
Debit cards                 65,141       23,785,520          451,503             62,316        25,092,053         279,589
ATM                      3,620,947      353,699,208        3,178,163          3,385,536       332,525,867       3,453,572
NSF Collection
  Fees                           -                -          510,375                  -                 -         465,820
Other                            -                -           52,331                  -                 -         210,164
                   ---------------- ---------------- ----------------   ---------------- ----------------- ---------------
                         5,225,473      810,288,921      $18,100,788          5,201,174      $828,963,191     $19,580,399
                   ================ ================ ================   ================ ================= ===============
</TABLE>

(A) For the year ended December 31, 2002, "other" checks, number of transactions
are included with the personal checks.

Revenues decreased by approximately $1,480,000 for the year ended December 31,
2003 compared to the year ended December 31, 2002. The reason for the decline in
revenues was attributable to contracts that expired during 2002 and 2003 that
were not renewed that accounted for approximately $3,960,000 of 2002 revenues.
This decline was partially offset by new contracts received by Chex during 2002
and 2003 that accounted for approximately $2,391,000 in revenues in 2003
compared to approximately $1,200,000 in revenues in 2002, representing an
increase of $1,191,000 for the year ended December 31, 2003. Additionally,
revenues from contracts that were in force for two full years ended December 31,
2003 increased by approximately $1,200,000 for the year ended December 31, 2003
compared to December 31, 2002.

In January 2004, Chex was advised that 5 existing casino locations were
terminating the agreements for Chex to provide its services. These locations
accounted for $4,089,557 and $3,486,707 in revenues for the years ended December
31, 2003 and 2002, respectively.

OPERATING EXPENSES

Total operating expenses for the year ended December 31, 2003 were $21,761,944
compared to $20,326,745 for the year ended December 31, 2002.

                                             2003                2002
                                        ----------------    ----------------
Chex Services, Inc.                        $17,315,563          $17,327,542
Nova Financial Systems                         332,404              479,039
Corporate                                    4,113,977            2,520,164
                                        ----------------    ----------------
                                           $21,761,944          $20,326,745
                                        ================    ================

CHEX EXPENSES

Chex operating expenses were $17,315,563 for the year ended December 31, 2003
compared to $17,327,542 for the year ended December 31, 2002. Chex Services
expenses were comprised as follows:

                                      -26-
<PAGE>

                                                 2003                2002
                                            ---------------     ---------------
Fees to casinos                                 $6,300,400          $6,189,730
Salaries and related costs                       5,929,429           5,924,974
Returned checks, net of collections                495,500             634,531
General operating expenses                       3,496,468           3,426,754
Depreciation and amortization                    1,093,766           1,151,553
                                            ---------------     ---------------
                                               $17,315,563         $17,327,542
                                            ===============     ===============

Chex pays a fee to casinos as compensation pursuant to the terms of each
financial services agreement that the company has entered into with the
respective establishment. At locations where Chex provides check cashing
services, Chex pays the location operator a commission based upon the monthly
amount of checks cashed. Chex passes on an agreed upon percentage of the
surcharge commissions to the locations where ATM's are utilized. At all of the
locations at which Chex provides credit/debit card advance services, it pays the
operator a commission for each completed transaction.

Chex employs personnel at the locations where it provides check cashing services
as well as corporate staff to support its operations. For the year ended
December 31, 2003, location salaries and related costs were $4,102,398 and
corporate salaries and related costs were $1,825,031. For the year ended
December 31, 2002, location salaries and related costs were $4,543,489 and
corporate salaries and related costs were $1,381,485.

Chex generally records a returned check expense for potential losses in the
period such checks are returned.

NOVA FINANCIAL SYSTEMS EXPENSES

Nova Financial Systems' operating expenses were $332,404 and $479,039 for the
years ended December 31, 2003 and 2002, respectively. The 2003 expenses were
comprised of third party servicing fees of $242,431 and other operating expenses
of $89,973, compared to the 2002 expenses of $403,496 for third party servicing
fees and $75,546 for other operating expenses. The decrease in the third party
servicing fees for the 2003 period compared to the 2002 period is a direct
result of the reduced credit card revenue in the respective periods.

CORPORATE EXPENSES

Corporate activity expenses include those of Equitex and Denaris for 2003 and
Equitex in 2003 with Denaris beginning August 6, 2002. Total corporate activity
expenses for 2003 were $4,113,977 compared to $2,520,164 for 2002, and were
comprised as follows:

                                             2003                2002
                                        ---------------     ---------------
Employee costs                              $1,976,774            $891,261
Other                                        1,372,203           1,209,600
Stock based compensation                       355,000             419,303
Impairment of notes receivable                 410,000                   -
                                        ---------------     ---------------
                                            $4,113,977          $2,520,164
                                        ===============     ===============

Employee costs for the year ended December 31, 2003 includes approximately
$1,400,000 of expense under a bonus agreement with our president.

Other expenses for the year ended December 31, 2003 include $352,368 of expenses
related to previously incurred professional fees and associated costs with
preparing Chex for an initial public offering. Other expenses include
professional fees of $434,422, consulting services of $369,376 and general
operating costs of $216,037.

                                      -27-
<PAGE>

Other operating expenses for the year ended December 31, 2002 include
professional fees of $368,326, charges related to a late registration filing
regarding the Series I Convertible Preferred Stock of $263,600 and general
operating costs of $577,674.

Stock based compensation represents non-cash expenses related to issuances of
common stock and warrants to third party consultants for services.

Impairment of notes receivable for the year ended December 31, 2003 include an
allowance of $250,000 on a note receivable from Paymaster Jamaica and an
allowance of $160,000 on notes receivable from Equitex 2000 (see Note 6 to the
condensed/combined audited financial statements attached to this report).

OTHER INCOME AND EXPENSES

For the year ended December 31, 2003, other expenses were $1,217,481 compared to
$1,470,831 for the year ended December 31, 2002. For the year ended December 31,
2003, other expenses were $1,217,481 compared to $1,470,831 for the year ended
December 31, 2002. Interest expense decreased to $1,339,935 for the year ended
December 31, 2003 from $1,595,231 for the year ended December 31, 2002. The
primary reason for the decrease was the lower balances in 2003 compared to 2002
of notes payable.

DISCONTINUED OPERATIONS

The net loss from discontinued operations was $75,841 for the year ended
December 31, 2003 compared to $2,928,400 for the year ended December 31, 2002.

                                                2003                2002
                                          -----------------    ----------------
Revenues                                         $36,644            $3,474,273
Operating expenses                              (106,038)           (4,474,588)
Impairment of FDIC receivable                          -            (2,151,207)
Interest expense                                  (6,447)              (16,878)
Other income                                           -               240,000
                                          -----------------    ----------------
  Net loss                                      $(75,841)          $(2,928,400)
                                          =================    ================


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued SFAS No. 123(R) SHARE-BASED PAYMENT, which
addresses the accounting for share-based payment transactions. SFAS No. 123(R)
eliminates the ability to account for share-based compensation transactions
using APB 25, and generally requires instead that such transactions be accounted
for and recognized in the statement of operations based on their fair value.
SFAS No. 123(R) will be effective for public companies that do not file as small
business issuers as of the beginning of the first interim or annual reporting
period that begins after June 15, 2005. Management is evaluating the provisions
of this standard. Depending upon the number and terms of options that may be
granted in future periods, the implementation of this standard could have a
material impact on the Company's financial position and results of operations.

In December 2003, the FASB issued Interpretation No. 46R ("FIN 46R"), a revision
to SFAS Interpretation No. 46 ("FIN 46"), CONSOLIDATION OF VARIABLE INTEREST
ENTITIES. FIN 46R clarifies some of the provisions of FIN 46 and exempts certain
entities from its requirements. FIN 46R requires a variable interest entity to
be consolidated by a company if that company is subject to a majority of the
risk of loss from the variable interest entity's activities or is entitled to
receive a majority of the entity's residual returns or both. FIN 46R also
requires disclosures about variable interest entities that a company is not
required to consolidate but in which it has a significant variable interest. FIN
46R became effective for variable interest entities or potential variable
interest entities for periods ending after December 15, 2003, and became
effective for all other types of entities by the beginning of the first annual

                                      -28-
<PAGE>

reporting period beginning after March 15, 2004. The adoption of FIN 46R did not
have an impact on the Company's financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, ACCOUNTING FOR CERTAIN FINANCIAL
INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY, which
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
No. 150 requires that an issuer classify a financial instrument that is within
its scope, which may have previously been reported as equity, as a liability (or
an asset in some circumstances). Mandatorily redeemable instruments (i.e.,
instruments issued in the form of shares that unconditionally obligate the
issuer to redeem the shares for cash or by transferring other assets) are to be
reported as liabilities by their issuers. This statement does not affect the
classification or measurement of convertible bonds, puttable stock, or other
outstanding shares that are conditionally redeemable. The provisions of SFAS No.
150 are generally effective for all financial instruments entered into or
modified after May 31, 2003, except for those provisions relating to mandatorily
redeemable non-controlling interests, which have been deferred. The adoption of
SFAS No. 150 did not have a material impact on the financial position or results
of operations of the Company. If the deferred provisions of SFAS No. 150 are
finalized in their current form, management does not expect adoption to have a
material effect of the financial position or results of operations of the
Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential loss arising from adverse changes in market rates
and prices, such as interest rates and a decline in the stock market. The
Company does not enter into derivatives or other financial instruments for
trading or speculative purposes. The Company has limited exposure to market
risks related to changes in interest rates. The Company does not currently
invest in equity instruments of public or private companies for business or
strategic purposes.

The principal risks of loss arising from adverse changes in market rates and
prices to which the Company and its subsidiaries are exposed relate to interest
rates on debt. The Company has both fixed and variable rate debt. Chex has
$17,904,731 (before certain discounts on notes) of debt outstanding as of
December 31, 2004, of which $11,402,602 has been borrowed at fixed rates ranging
from 9% to 15%. This fixed rate debt is subject to renewal quarterly or annually
and is payable upon demand with 90 days written notice by the debt holder.
Additionally, $4,358,279, $1,774,064, and $200,000 of the total debt at December
31, 2004 have fixed rates of 7%, 9.5% and 5%, respectively. Chex also has
$169,786 of obligations under capital leases with fixed rates ranging from 6.5%
to 7% at December 31, 2004.

As most of the Company's average outstanding indebtedness is renewed annually
and carries a fixed rate of interest, a change in interest rates is not expected
to have a material impact on the consolidated financial position, results of
operations or cash flows of the Company during the year ending December 31,
2005.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements are listed under Item 15.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

Not applicable.

                                      -29-
<PAGE>

ITEM 9A. CONTROLS AND PROCEDURES.

A review and evaluation was performed by the Company's management, including the
Company's Chief Executive Officer (the "CEO"), of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as of a
date within 90 days prior to the filing of this annual report. Based on that
review and evaluation, the CEO has concluded that the Company's current
disclosure controls and procedures, as designed and implemented, were effective.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the Company's internal controls
subsequent to the date of their evaluation. There were no significant material
weaknesses identified in the course of such review and evaluation and,
therefore, no corrective measures were taken by the Company.

ITEM 9B. OTHER INFORMATION.

Not applicable.


                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

(a)(b)(c) Identification of directors, executive officers and certain
significant persons

                                                                Length of
Name                  Age    Offices held                       Service
-------------------   ---    --------------------------------   ---------------
Henry Fong            69     President, Treasurer,              Since Inception
                             Principal Executive
                             Financial and Accounting
                             Officer and Director of Equitex

Thomas B. Olson       39     Secretary                          Since 1988

Russell L. Casement   61     Director                           Since 1989

Aaron A. Grunfeld     58     Director                           Since 1991

Michael S. Casazza    55     Director                           Since 2004*

* Mr. Casazza was appointed to the board on February 5, 2004.

Our directors hold office until the next annual meeting of the stockholders and
until their respective successors have been elected and qualified. Officers are
appointed by our Board of Directors and hold office until their successors are
duly elected and qualified.

No arrangement exists between any of the above officers and directors pursuant
to which any one of those persons was elected or appointed to such office or
position.

(d) Family relationships.

Not applicable.

                                      -30-
<PAGE>

(e) Business experience.

HENRY FONG
Mr. Fong has been the president, treasurer and a director of Equitex since its
inception. Mr. Fong has been a director of FastFunds Financial Corporation since
June 2004. Mr. Fong has been president and a director of Equitex 2000, Inc.
since its inception in 2001. Mr. Fong has been President and a Director of
Interactive Games, Inc. (f/k/a Torpedo Sports USA, Inc.) since March 2002.
Interactive Games is a publicly traded distributor of gaming equipment. From
1959 to 1982 Mr. Fong served in various accounting, finance and budgeting
positions with the Department of the Air Force. During the period from 1972 to
1981 he was assigned to senior supervisory positions at the Department of the
Air Force headquarters in the Pentagon. In 1978, he was selected to participate
in the Federal Executive Development Program and in 1981, he was appointed to
the Senior Executive Service. In 1970 and 1971, he attended the Woodrow Wilson
School, Princeton University and was a Princeton Fellow in Public Affairs. Mr.
Fong received the Air Force Meritorious Civilian Service Award in 1982. Mr. Fong
has passed the uniform certified public accountant exam. In March 1994, Mr. Fong
was one of twelve CEOs selected as Silver Award winners in FINANCIAL WORLD
magazine's corporate American "Dream Team."

THOMAS B. OLSON
Mr. Olson has been secretary of Equitex since January 1988 and has been a
director of Chex since May 2002. Since March 2002, Mr. Olson has been the
secretary of Interactive Games, Inc. (f/k/a Torpedo Sports USA, Inc.), a
publicly traded manufacturer and distributor of gaming equipment. Mr. Olson has
been Secretary of Equitex 2000, Inc. since its inception in 2001. From August
2002 to July 2004, Mr. Olson was secretary of El Capitan Precious Metals, Inc.,
a publicly traded company with ownership interest in mining properties. Mr.
Olson has attended Arizona State University and the University of Colorado at
Denver.

RUSSELL L. CASEMENT
Dr. Casement has been a director of Equitex since February 1989. Dr. Casement
has been a director of Equitex 2000, Inc. since its inception in 2001. Since
1969, Dr. Casement has been the president of his own private dental practice,
Russell Casement, D.D.S., P.C., in Denver, Colorado. Dr. Casement earned a
Doctor of Dental Science degree from Northwestern University in 1967. Dr.
Casement is a member of the American Dental Association, the Colorado Dental
Association and the Metro Denver Dental Association.

AARON A. GRUNFELD
Mr. Grunfeld has been a director of Equitex since November 1991. Mr. Grunfeld
has been a director of Equitex 2000, Inc. since its inception in 2001. Mr.
Grunfeld has been engaged in the practice of law since 1971 and has been of
counsel to the firm of Resch Polster Alpert & Berger, LLP, Los Angeles,
California since November 1995. From April 1990 to November 1995, Mr. Grunfeld
was a member of the firm of Spensley Horn Jubas & Lubitz, Los Angeles,
California. Mr. Grunfeld received an A.B. in Political Science from UCLA in 1968
and a J.D. from Columbia University in 1971. He is a member of the California
Bar Association.

MICHAEL S. CASAZZA
Mr. Casazza became a director of Equitex in February 2004. From 1998 to the
present, Mr. Casazza has been chairman of the board and president of A&M
Trucking, Inc., a privately-held trucking company based in Denver, Colorado.
From 1993 to 1997, and from 1990 to 1996, Mr. Casazza was president and chief
executive officer of California Pro Sports, Inc. and MacGregor Sports and
Fitness, respectively, both publicly-held manufacturers of sporting goods
equipment. Prior to 1990, Mr. Casazza also held senior executive level positions
with Dunlop Sports Corporation and Wilson Sporting Goods. Mr. Casazza received
his Bachelors degree in Business Administration from St. Bonaventure University
in 1972.

(f) Involvement in certain legal proceedings.

Not applicable.

                                      -31-
<PAGE>

(g) Promoters and control persons.

Not applicable.

(h) Audit committee financial expert.

Our board of directors had determined that Mr. Michael S. Casazza, an
independent member of our board of directors and member of our audit committee,
meets the requirements as our audit committee financial expert. Mr. Casazza is
an "independent" director, as such term is defined in Section 4200(a)(15) of the
National Association of Securities Dealers' listing standards and meets similar
criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Act
of 1934.

(i) Identification of the audit committee.

We have appointed an Audit Committee currently consisting of Dr. Casement as
chairman, Mr. Grunfeld and Mr. Casazza.

(j) Description of changes to procedures by which security holders may nominate
directors.

Not applicable.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 ("Section 16") requires our
officers, directors and persons who own more than ten percent of our voting
securities to file reports of their ownership and changes in such ownership with
the Securities and Exchange Commission (the "Commission"). Commission
regulations also require that such persons provide us with copies of all Section
16 reports they file. Based solely upon its review of such reports received by
us, or written representations from certain persons that they were not required
to file any reports under Section 16, we believe that, during 2001, our officers
and directors have complied with all Section 16 filing requirements.

CODE OF ETHICS

We have adopted a Code of Ethics for our senior executive and financial
management, which includes our president and secretary as principal executive or
accounting officers, which has been filed as an exhibit to this report. A copy
of the Code of Ethics can be found at our website address www.equitex.net.

ITEM 11. EXECUTIVE COMPENSATION.

(a) General.

Henry Fong, our President and the only officer of Equitex whose total
compensation exceeded $100,000 for the fiscal year ended December 31, 2004,
received an annual salary of $210,000 in each of the years ended December 31,
2004 and 2003. Beginning July 1, 2001 and for the year ended December 31, 2002,
the only compensation Mr. Fong received from Equitex was his annual salary. Of
the compensation expense to Mr. Fong during 2001, $76,255 was expensed during
the period from August 6, 2001 to December 31, 2001 following our merger with
Key Financial Systems and Nova Financial Systems with the balance paid by
Equitex 2000.

In January 1998, the Compensation Committee of our Board of Directors retained
an independent consultant to review the President's compensation. As a result of
that review, a new compensation arrangement was instituted based on
recommendations made by the independent consultant. In addition to Mr. Fong's
annual salary, beginning January 1, 1998 and ended June 30, 2001, Mr. Fong
received an annual bonus equaling 1% of our total assets combined with 5% of the
increase in the market value of our common stock, excluding shares owned by him,
calculated quarterly from January 1 to December 31 of any fiscal year. If there
was a negative computation in any given quarter, no bonus was accrued and that

                                      -32-
<PAGE>

negative amount was carried forward to offset the subsequent quarter's bonus
during the fiscal year. Negative amounts were not accumulated nor carried into
subsequent fiscal years. Following our acquisition of Nova Financial Systems and
Key Financial Systems in August 2001, Mr. Fong, in consultation with the
Compensation Committee, agreed to end the bonus plan beginning July 1, 2001
through December 31, 2002. All accrued bonuses due under the plan became the
responsibility of Equitex 2000 following the spin-off in August 2001. In June
2003, the Compensation Committee reviewed Mr. Fong's compensation arrangement
and reinstituted the bonus plan effective June 1, 2003, for a bonus to be
calculated quarterly based on 5% of the increase in the market value of our
common stock as described above.

In addition to his cash compensation, Mr. Fong also received grants of 75,000
stock options in the year ended December 31, 2004 and 54,667 stock options in
the year ended December 31, 2003 under our 2003 Stock Option.

We have no retirement or pension plan for our President, Mr. Fong.

(b) Summary compensation table.

The following table sets forth information regarding compensation paid to our
"named executive officers" (as defined in Regulation S-K under the Securities
Exchange Act of 1934) officers during the years ended December 31, 2004, 2003
and 2002:

                           SUMMARY COMPENSATION TABLE

                                                        Long-Term
                                                      Compensation
                               Annual Compensation       Awards
                    ---------------------------------
Name &                                   Other Annual                All Other
Principal            Salary    Bonus     Compensation   Options     Compensation
Position      Year    ($)       ($)           ($)      & SARs(#)        ($)
---------     ----  -------- ---------   ------------  ---------    ------------
Henry Fong    2004  210,000     -0-           -0-        75,000         -0-
President,
Treasurer     2003  210,000  1,489,566        -0-        54,667         -0-
Principal
Executive     2002  183,013     -0-           -0-         -0-           -0-
Officer and
Accounting
Officer

                                      -33-
<PAGE>

(c) Option/SAR grants table.

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

                                                                     Grant Date
                           INDIVIDUAL GRANTS                           Value
(a)              (b)              (c)           (d)         (e)         (f)
              Number of
             Securities     Percent of total
             Underlying      options/ SARs    Exercise                 Grant
              Options/         granted to     of Base                   Date
                SARs          employees in     Price    Expiration    Present
Name         Granted (#)      Fiscal Year      ($/Sh)      Date       Value($)
----         -----------    ----------------  --------  ----------   ----------
Henry Fong     75,000            22.5%         $5.10     7/14/2009   382,500(1)

(1) Represents the value of the stock options based upon the closing stock price
of the Registrant's common stock ($1.03) on the date of grant.


(d) Aggregated Option/SAR exercises and fiscal year-end Option/SAR value table.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES


                                                  Number of
                                                 Securities          Value of
                                                 Underlying         Unexercised
                                                 Unexercised       In-the-Money
                                                Options/SARs       Options/SARs
                 Shares                         at FY-End (#)      at FY-End (#)
               Acquired on        Value         Exercisable/       Exercisable/
  Name        Exercise (#)     Realized ($)     Unexercisable      Unexercisable
----------    ------------     ------------     -------------      -------------
Henry Fong         -0-             -0-           209,001/-0-         $-0-/-0-


(e) Long Term Incentive Plans -- awards in last fiscal year.

Not applicable.

(f) Defined benefit or actuarial plan disclosure.

Not applicable.

(g) Compensation of directors.

     (1)Standard Arrangements

Each independent member of our Board of Directors, Messrs. Russell L. Casement,
Aaron A. Grunfeld and Michael S. Casazza, receive $10,000 per year payable
monthly and $500 for each Board of Director's meeting attended either in person
or by telephone. For the year ended December 31, 2004, Messrs. Casement and
Grunfeld each received a total of $17,000 while Mr. Casazza received $16,667.
Members of the Board of Directors also receive reimbursement for expenses
incurred in attending board meetings.

                                      -34-
<PAGE>

     (2) Other Arrangements

On December 30, 2002, our Board of Directors adopted a new stock option plan,
the 2003 Stock Option Plan. On June 20, 2003, our two independent directors at
the time, Mr. Russell L. Casement and Mr. Aaron A. Grunfeld, each received
options to purchase 16,667 shares of our common stock at an exercise price of
$6.18 per share expiring on June 20, 2008. On July 14, 2004, our three
independent directors each received options to purchase shares of our common
stock at an exercise price of $5.10 per share expiring on July 14, 2009. Messrs.
Casement and Grunfeld each received 25,000 options while Mr. Casazza received
20,834 options.

(h) Employment contracts and termination of employment and change-in-control
arrangements.

We have no compensation plan or arrangement with respect to any executive
officer which plan or arrangement results or will result from the resignation,
retirement or any other termination of such individual's employment with us. We
have no plan or arrangement with respect to any such persons, which will result
from a change in control of Equitex or a change in the individual's
responsibilities following a change in control. Our employment arrangement with
our President, Mr. Fong, is summarized above under Item 11(a).

 (i) Report on repricing of Options/SARs.

         Not applicable.

(j) Additional information with respect to Compensation Committee Interlocks and
Insider Participation in compensation decisions.

Our Compensation Committee for the year ended December 31, 2004 consisted of Mr.
Grunfeld as chairman and Dr. Casement both of whom continue to serve in that
capacity. No member of the Compensation Committee was an officer or employee of
us or any of our subsidiaries during the year. No executive officer has served
on the board of directors of any other entity with either member of the
Compensation Committee.

(k) Board compensation committee report on executive compensation.

In January 1998, the Compensation Committee of our Board of Directors retained
an independent consultant to review the President's compensation. The
compensation committee directed the consultant to review both the salary and
bonus structure. The independent consultant analyzed the compensation structure
and compared it to the compensation structures of companies similar to us. The
consultant recommended no change in the President's salary but did recommend an
annual bonus plan equaling 1% of our total assets combined with 5% of the
increase in the market value of our common stock not held by the President. The
bonus was calculated and paid quarterly from January 1 to December 31 of any
fiscal year based on a formula provided by the consultant. The Compensation
Committee felt this compensation arrangement, tied primarily to the market
performance of our common stock while including incentives for increases in
assets, was the most equitable method for compensating the President. This
provided a quantitative measure on which to reward the President's performance,
by directly emphasizing market performance, which correlates directly with the
expectations and goals of us and our stockholders.

This plan was in place until June 30, 2001. At that time, our president
approached the Compensation Committee and voluntarily proposed an end to the
bonus portion of his compensation in connection with the acquisition of Key
Financial Systems and Nova Financial Systems. The Compensation Committee agreed
and thereafter beginning July 1, 2001, our President received an annual salary
of $183,013 and no bonus through the year ended December 31, 2002.

During 2003, the Compensation Committee reviewed our president's salary, which
had not been adjusted since 1991. The Compensation Committee determined his
salary should be increased to reflect the approximate annual increase in the
consumer price index for the previous five years. This amounted to an increase

                                      -35-
<PAGE>

of approximately 15% to $210,000. In reviewing Mr. Fong's compensation, the
Compensation Committee also determined it was in the best interest of the
Company to give him additional incentive to maximize the Company's performance.
The Compensation Committee determined the bonus plan based solely on the
increase in market value of our common stock recommended by the independent
consultant in 1998 still presented a viable way to reward our president's
performance by tying his bonus to the goals of our stockholders.

Therefore, effective June 1, 2003, the Compensation Committee reinstated the
previous bonus plan for our president absent payment for 1% of the total assets.

During the year ended December 31, 2004, the Compensation Committee chose to
make no changes to the compensation structure of our President.

Compensation Committee
----------------------
Russell L. Casement
Aaron A. Grunfeld

(i) Performance graph.

On January 25, 2005, we effected a one-for-six share reverse split of our common
stock. As a result, the performance return data for Equitex presented below has
been restated to reflect the reverse split.

<TABLE>
<CAPTION>
                  12/31/1999  12/31/2000  12/31/2001  12/31/2002  12/31/2003  12/31/2004
-----------------------------------------------------------------------------------------
<S>                   <C>          <C>         <C>         <C>         <C>         <C>
Nasdaq US             100.00       60.31       47.84       33.07       49.45       53.81
Nasdaq Financial      100.00      108.11      118.75      122.30      165.41      193.09
Equitex               100.00       60.16       45.25        5.13       20.00        7.94
</TABLE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

(a) (b) Security Ownership of Certain Beneficial Owners and Security Ownership
of Management.

The following table contains information at March 31, 2005, as to the beneficial
ownership of shares of our common stock by each person who, to our knowledge at
that date, was the beneficial owner of five percent or more of the outstanding
shares of the class, each person who is a director or executive officer of us
and all persons as a group who are executive officers and directors, and as to
the percentage of outstanding shares so held by them at March 31, 2005. All
share figures presented below have been restated to account for the one-for-six
share reverse stock split effective January 25, 2005.

                                      -36-
<PAGE>
<TABLE>
<CAPTION>
                                                               Shares of      Shares of
                                 Shares of      Shares of    Common Stock      Common                     Percentage
                                   Common     Common Stock    Underlying        Stock                     of Common
     Name and Address of        Stock Owned    Underlying      Preferred     Underlying                  Stock Owned
       Beneficial Owner             (1)        Options (1)     Stock (1)    Warrants (1)      Total          (14)
------------------------------- ------------- -------------- -------------- -------------- ------------- -------------
<S>                             <C>           <C>            <C>            <C>            <C>           <C>
Henry Fong
7315 E. Peakview Ave.                144,272        209,001              0        144,272       497,545          7.8%
Englewood, CO 80111                      (2)            (3)                           (4)     (2)(3)(4)

Russell L. Casement
1355 S. Colorado Blvd Suite           24,466         61,734              0         25,261       111,461          1.8%
320                                      (5)            (6)                           (7)     (5)(6)(7)
Denver, CO   80222

Aaron A. Grunfeld
10390 Santa Monica Blvd,               5,450         64,001              0          5,450        74,901          1.2%
Fourth Floor                                            (8)                           (9)        (8)(9)
Los Angeles, CA   90025

Michael S. Casazza
4647 National Western Dr                 862         20,833              0            862        22,557          0.4%
Denver, CO 80216                                       (10)                          (11)      (10)(11)

Thomas Olson
7315 E. Peakview Ave                       0         41,665              0              0        41,665          0.7%
Englewood, CO 80111                                    (12)                                        (12)

Daniel Bishop (13)
7315 E Peakview Ave                1,021,268              0              0         46,667     1,067,935         17.5%
Englewood, CO 80111

All officers and directors as
a group (five persons)               175,050        572,274              0        175,845       923,169         13.6%
</TABLE>
_______________

(1)  The beneficial owners exercise sole voting and investment power.
(2)  Includes shares owned by a corporation in which Mr. Fong is an officer and
     director and a partnership in which Mr. Fong is a partner.
(3)  Includes 79,334 shares underlying options granted under our 1999 Stock
     Option Plan and 129,667 shares underlying options granted under our 2003
     Stock Option Plan.
(4)  Includes 72,136 of our Class A Redeemable Warrants and 72,136 of our Class
     B Redeemable Warrants.
(5)  Includes 16,000 shares owned by a profit sharing plan in which Mr. Casement
     is a beneficiary.
(6)  Includes 6,067 shares underlying options granted under our 1993 Stock
     Option Plan for Non-Employee Directors and 14,000 shares underlying options
     granted under the 1999 Stock Option Plan and 41,667 shares underlying
     options granted under our 2003 Stock Option Plan.
(7)  Includes 12,233 of our Class A Redeemable Warrants and 12,233 of our Class
     B Redeemable Warrants.

(8)  Includes 8,334 shares underlying options granted under our 1993 Stock
     Option Plan for Non-Employee Directors and 14,000 shares underlying options
     granted under our 1999 Stock Option Plan and 41,667 shares underlying
     options granted under our 2003 Stock Option Plan.
(9)  Includes 2,725 of our Class A Redeemable Warrants and 2,725 of our Class B
     Redeemable Warrants.
(10) Includes 20,833 shares underlying options granted under our 2003 Stock
     Option Plan.
(11) Includes 431 of our Class A Redeemable Warrants and 431 of our Class B
     Redeemable Warrants.
(12) Includes 5,833 shares underlying options granted under our 1999 Stock
     Option Plan and 35,832 shares underlying options granted under our 2003
     Stock Option Plan. (13) Ownership information obtained from Form 4 filing
     dated October 31, 2003.
(14) As of March 31, 2005, 6,091,513 shares of our common stock were
     outstanding.

                                      -37-
<PAGE>

(c) Changes in control.

We are unaware of any arrangements that may, at a subsequent date, result in a
change in control of our company.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

(a) Transactions with Management and Others.

We currently lease approximately 1,800 square feet of office space in Greenwood
Executive Park, 6400 South Quebec, Englewood, Colorado from a partnership in
which our President is the sole partner, on terms comparable to the existing
market for similar facilities.

During 2004, our President, and a company in which he is the sole officer and
director, loaned us a total of $68,200, which remained unpaid at December 31,
2004. These loans are due on demand and carry an interest rate of 8%.

(b) Certain business relationships.

Not applicable.

(c) Indebtedness of management.

Not applicable.

(d) Transactions with promoters.

Not applicable.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

GHP Horwath, P.C. served as our auditors for the years ended December 31, 2004
and 2003.

AUDIT FEES

Fees billed and expected to be billed by GHP Horwath, P.C. for audit and review
services rendered for each of the years ended December 31, 2004 and 2003
(including fees billed and expected to be billed to Equitex's majority owned
subsidiary, FastFunds) were $221,000 and $209,000, respectively, which includes
out-of-pocket costs incurred in connection with these services.

AUDIT-RELATED FEES

Fees billed by GHP Horwath, P.C. for audit-related fees in each of the years
ended December 31, 2004 and 2003 (including fees billed and expected to be
billed to Equitex's majority owned subsidiary, FastFunds) were $0 and $23,000,
respectively. In 2003, GHP Horwath, P.C. performed due diligence services which
comprised these fees.

                                      -38-
<PAGE>

TAX FEES

Fees billed and expected to be billed by GHP Horwath, P.C. for tax fees rendered
in each of the years ended December 31, 2004 and 2003 (including fees billed and
expected to be billed to Equitex's majority owned subsidiary, FastFunds) are
$25,000 and $17,000, respectively. These fees were for tax return preparation.

ALL OTHER FEES

Fees billed by GHP Horwath, P.C. of approximately $5,000 for the year ended
December 31, 2004 (including fees billed and expected to be billed to Equitex's
majority owned subsidiary, FastFunds) were incurred for time and out-of-pocket
costs related to responding to a plaintiff's subpoena related to certain Company
litigation described in Item 3 to this Form 10-K.

GHP Horwath, P.C. did not bill for any other fees with respect to the year ended
December 31, 2003.

Pursuant to our Audit Committee Charter, before the accountant is engaged by us
to render audit or non-audit services, the engagement is approved by our audit
committee. As a result, 100% of the fees in each of the above categories were
subject to audit committee pre-approval requirements.



                                      -39-
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) The following documents are filed as a part of this report immediately
following the signature page.

                                                                          Page
1. Financial Statements and Supplementary Data                            ----

Report of Independent Registered Accounting Firm                           F-1
-------------------------------------------------------------------------------
Consolidated financial statements:
-------------------------------------------------------------------------------
   Consolidated balance sheets                                       F-2 - F-3
-------------------------------------------------------------------------------
   Consolidated statements of operations                                   F-4
-------------------------------------------------------------------------------
   Consolidated statements of changes in stockholders' equity       F-5 - F-10
-------------------------------------------------------------------------------
   Consolidated statements of cash flows                           F-11 - F-13
-------------------------------------------------------------------------------
   Notes to consolidated financial statements                      F-14 - F-53
-------------------------------------------------------------------------------

2. Financial Statements Schedules.
     Financial statements and exhibits - Schedule II, Valuation and Qualifying
     Accounts, is omitted because the information is included in the
     consolidated financial statements and notes.

3. Exhibits.

3.1     Articles of Incorporation (1)
--------------------------------------------------------------------------------
3.2     Bylaws (1)
--------------------------------------------------------------------------------
3.3     Certificate of Designations of Registrant's Series D Convertible
        Preferred Stock. (4)
--------------------------------------------------------------------------------
3.4     Certificate of Designations of Registrant's Series G Convertible
        Preferred Stock. (5)
--------------------------------------------------------------------------------
3.5     Certificate of Designations of Registrant's Series I Convertible
        Preferred Stock. (6)
--------------------------------------------------------------------------------
10.1    1993 Stock Option Plan for Non-Employee Directors (2)
--------------------------------------------------------------------------------
10.2    1999 Stock Option Plan (3)
--------------------------------------------------------------------------------
10.3    2003 Stock Option Plan (13)
--------------------------------------------------------------------------------
10.4    Distribution Agreement, between Equitex, Inc. and Equitex 2000, Inc.
        dated August 6, 2001 (7)
--------------------------------------------------------------------------------
10.5    Agreement and Plan of Reorganization among Equitex, Inc., Key Financial
        Systems, Inc. and Key Merger Corporation dated June 27, 2000 (8)
--------------------------------------------------------------------------------
10.6    Agreement and Plan of Reorganization among Equitex, Inc., Nova Financial
        Systems, Inc. and Nova Acquisition Corporation dated June 27, 2000 (9)
--------------------------------------------------------------------------------
10.7    Stock Purchase Agreement by and between Equitex, Inc. and the Selling
        Stockholders of Chex Services, Inc. (10)
--------------------------------------------------------------------------------
10.8    Amendment No. 1 to the Stock Purchase Agreement by and between Equitex,
        Inc. and the Selling Stockholders of Chex Services, Inc. (11)
--------------------------------------------------------------------------------
10.9    Purchase Agreement by and among Equitex, Inc., Pandora Select Partners,
        L.P. and Whitebox Hedged High Partners, L.P.  (13)
--------------------------------------------------------------------------------
10.10   Convertible Secured Promissory Note payable by Equitex, Inc. to Pandora
        Select Partners, L.P. (13)
--------------------------------------------------------------------------------
10.11   Convertible Secured Promissory Note payable by Equitex, Inc. to Whitebox
        Hedged High Partners, L.P. (13)
--------------------------------------------------------------------------------
10.12   Secured Promissory Note payable by Chex Services, Inc. to Equitex, Inc.
        (13)
--------------------------------------------------------------------------------
10.13   Security Agreement by and between Equitex, Inc., Pandora Select
        Partners, L.P. and Whitebox Hedged High Partners, L.P.  (13)

                                      -40-
<PAGE>

--------------------------------------------------------------------------------
10.14   Guaranty Agreement by and between Equitex, Inc., Pandora Select
        Partners, L.P. and Whitebox Hedged High Partners, L.P.  (13)
--------------------------------------------------------------------------------
10.15   Security Agreement by and between Chex Services, Inc., Pandora Select
        Partners, L.P. and Whitebox Hedged High Partners, L.P.  (13)
--------------------------------------------------------------------------------
10.16   Security Agreement by and between Equitex, Inc., Pandora Select
        Partners, L.P. and Whitebox Hedged High Partners, L.P.  (13)
--------------------------------------------------------------------------------
10.17   Registration Rights Agreement by and among Equitex, Inc., Pandora Select
        Partners, L.P. and Whitebox Hedged High Partners, L.P.  (13)
--------------------------------------------------------------------------------
14      Code of Ethics for Senior Financial Management.  Filed Herewith.
--------------------------------------------------------------------------------
21      List of Subsidiaries. Filed Herewith.
--------------------------------------------------------------------------------
23      Consent of Independent Registered Public Accounting Firm. Filed
        Herewith.
--------------------------------------------------------------------------------
31      Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
        Filed Herewith.
--------------------------------------------------------------------------------
32      Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
        Filed Herewith.
___________
(1) Incorporated by reference from the like numbered exhibits filed with the
Registrant's Registration Statement on Form S-18, No. 2-82104-D effective April
11, 1983.

(2) Incorporated by reference from the like numbered exhibits filed with the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.

(3) Incorporated by reference from the like numbered exhibits filed with the
Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1998.

(4) Incorporated by reference from Exhibit 4 of the Registrant's Report on Form
8-K, No. 0-12374 filed with the Securities and Exchange Commission on September
8, 1999.

(5) Incorporated by reference from the like numbered exhibits filed with the
Registrant's Annual Report on Form 10-K for the year ended December 31, 2000.

(6) Incorporated by reference from Exhibit 2.1 of the Registrant's Report on
Form 8-K, No. 0-12374 filed with the Securities and Exchange Commission on
August 21, 2001.

(7) Incorporated by reference from Exhibit 4.5 of the Registrant's Report on
Form 8-K, No. 0-12374 filed with the Securities and Exchange Commission on
August 21, 2001.

(8) Incorporated by reference from Exhibit 2.2 of the Registrant's Report on
Form 8-K, No. 0-12374 filed with the Securities and Exchange Commission on
August 21, 2001.

(9) Incorporated by reference from Exhibit 2.3 of the Registrant's Report on
Form 8-K, No. 0-12374 filed with the Securities and Exchange Commission on
August 21, 2001.

(10) Incorporated by reference from Exhibit 2.1 of the Registrant's Report on
Form 8-K, No. 0-12374 filed with the Securities and Exchange Commission on
January 7, 2002.

(11) Incorporated by reference from Exhibit 2.2 of the Registrant's Report on
Form 8-K, No. 0-12374 filed with the Securities and Exchange Commission on
January 7, 2002.

(12) Incorporated by reference from Exhibit 3(i).10 of the Registrant's
Registration Statement on Form S-3, No. 333-101731 effective January 9, 2003.

(13) Incorporated by reference from the like numbered exhibits filed with the
Registrant's Annual Report on Form 10-K for the year ended December 31, 2003.

                                      -41-
<PAGE>

(b) Exhibits required by Item 601 of Regulation S-K

See Item 17(a)(3) above.

(d) Financial statement schedules required by Regulation S-X

Not applicable.

                                      -42-
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


Date: April 15, 2005                      EQUITEX, INC.
                                          (Registrant)


                                          By /S/ HENRY FONG
                                          -------------------------------------
                                          Henry Fong, President


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


Date: April 15, 2005                      /S/ HENRY FONG
                                          -------------------------------------
                                          Henry Fong, President,
                                          Treasurer and Director
                                          (Principal Executive, Financial,
                                          and Accounting Officer)

Date: April 15, 2005                      /S/ RUSSELL L. CASEMENT
                                          -------------------------------------
                                          Russell L. Casement, Director

Date: April 15, 2005                      /S/ AARON A. GRUNFELD
                                          -------------------------------------
                                          Aaron A. Grunfeld, Director

Date: April 15, 2005                      /S/ MICHAEL S. CASAZZA
                                          -------------------------------------
                                          Michael S. Casazza, Director


                                      -43-
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


                                                                     Page


Report of Independent Registered Public Accounting Firm                   F-1

Consolidated financial statements:

 Consolidated balance sheets                                        F-2 - F-3

 Consolidated statements of operations                                    F-4

 Consolidated statements of changes in stockholders' equity        F-5 - F-10

 Consolidated statements of cash flows                            F-11 - F-13

 Notes to consolidated financial statements                       F-14 - F-54





<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
Equitex, Inc.

We have audited the accompanying consolidated balance sheets of Equitex, Inc.
and subsidiaries (the "Company") as of December 31, 2004 and 2003, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the years in the three-year period ended December 31,
2004. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Equitex, Inc. and
subsidiaries as of December 31, 2004 and 2003, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2004, in conformity with accounting principles generally
accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 142,
GOODWILL AND OTHER INTANGIBLE ASSETS, effective January 1, 2002.


/s/ GHP HORWATH, P.C.

Denver, Colorado
April 4, 2005


                                                                             F-1
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2004 AND 2003

                                     ASSETS

<TABLE>
<CAPTION>
                                                                               2004          2003
                                                                           -----------   -----------
<S>                                                                        <C>           <C>
Current assets:
     Cash and cash equivalents                                             $ 8,389,686   $ 9,224,020
     Receivables, net (Note 4)                                               1,338,109     2,344,880
     Current portion of notes and interest receivable, including related
          parties of $212,900 (2004) and $239,206 (2003) (Note 5)              472,291       707,155
     Prepaid expenses and other                                                517,182       315,427
                                                                           -----------   -----------
           Total current assets                                             10,717,268    12,591,482
                                                                           -----------   -----------

Notes and interest receivable, net, including related parties of
  $864,604 (2004) and $1,462,375 (2003) (Note 5)                             3,399,240     2,107,062
Property, equipment and leaseholds, net (Notes 6 and 8)                      1,330,095     1,184,813
Deferred tax asset (Note 9)                                                                1,380,000
Intangible and other assets, net (Note 7)                                    3,135,103     3,358,393
Goodwill (Note 7)                                                            5,636,000     5,636,000
                                                                           -----------   -----------
                                                                            13,500,438    13,666,268
                                                                           -----------   -----------
                                                                           $24,217,706   $26,257,750
                                                                           ===========   ===========
</TABLE>
                                  (Continued)
                                                                             F-2
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                           DECEMBER 31, 2004 AND 2003

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                    2004           2003
                                                                               ------------    ------------
Current liabilities:
<S>                                                                            <C>             <C>
     Bank overdraft (Note 8)                                                                   $  2,497,766
     Accounts payable                                                          $    982,774         651,106
     Accrued expenses and other liabilities, including related party
        accruals of $526,000 (2004) and $1,281,000 (2003) (Note 10)               1,966,890       2,722,986
     Accrued liabilities on casino contracts (Note 11)                              574,516         587,099
     Notes and loans payable, including related parties of $93,719 (2004)
        and $155,421 (2003) (Note 8)                                             11,866,656      11,432,598
     Current portion of long-term debt (Note 8)                                   1,315,217         201,727
     Due to credit card holders (Note 11)                                           187,432         275,499
     Liabilities of discontinued operations (Note 3)                                592,911         621,768
                                                                               ------------    ------------
           Total current liabilities                                             17,486,396      18,990,549

Long-term debt, net of current portion (Note 8)                                   3,044,016          37,243
                                                                               ------------    ------------
           Total liabilities                                                     20,530,412      19,027,792
                                                                               ------------    ------------


Commitments and contingencies (Notes 8, 11 and 12)

Stockholders' equity (Note 12):
     Preferred stock; 2,000,000 shares authorized:
        Series D, 6%; stated value $1,000 per share; 408 shares issued and
           outstanding; liquidation preference $615,000                             408,000         408,000
        Series G, 6%; stated value $1,000 per share; 370 shares issued and
           outstanding; liquidation preference $609,000                             370,000         370,000
        Series I, 6%; stated value $1,000 per share; 1,600 shares issued and
           outstanding; liquidation preference $2,488,000                         1,600,000       1,600,000
     Common stock, $0.01 par value; 50,000,000 shares authorized; 5,893,634
        shares (2004) and 5,755,013 shares (2003) issued; 5,801,589 shares
        (2004) and 5,527,995 shares (2003) outstanding                               58,936          57,550
     Notes, interest and stock subscription receivable                             (763,002)       (800,000)
     Additional paid-in capital                                                  21,322,132      17,748,389
     Accumulated deficit                                                        (18,886,247)    (11,428,264)
     Less common treasury stock at cost; 92,045 shares (2004) and 227,012
        shares (2003)                                                              (422,525)       (725,717)
                                                                               ------------    ------------
           Total stockholders' equity                                             3,687,294       7,229,958
                                                                               ------------    ------------
                                                                               $ 24,217,706    $ 26,257,750
                                                                               ============    ============
</TABLE>
                 See notes to consolidated financial statements.
                                                                             F-3
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

<TABLE>
<CAPTION>
                                                                             2004            2003            2002
                                                                        ------------    ------------    ------------
<S>                                                                     <C>             <C>             <C>
Fee revenue                                                             $ 15,233,735    $ 18,100,788    $ 19,580,399
Credit card income, net of provision for losses (Note 3)                     260,256         415,253         759,576
Other                                                                                                        122,001
                                                                        ------------    ------------    ------------
        Total revenues                                                    15,493,991      18,516,041      20,461,976
                                                                        ------------    ------------    ------------

Fees paid to casinos                                                       5,312,522       6,300,400       6,189,730
Salaries, wages and employee benefits                                      5,708,911       7,909,407       7,271,845
Selling, general and administrative                                        9,038,047       7,309,706       6,461,674
Third party servicing fees                                                   151,137         242,431         403,496
                                                                        ------------    ------------    ------------
                                                                          20,210,617      21,761,944      20,326,745
                                                                        ------------    ------------    ------------
(Loss) income from operations                                             (4,716,626)     (3,245,903)        135,231
                                                                        ------------    ------------    ------------
Other income (expense):
Interest income, including related party interest of $106,298 (2004),
    $71,755 (2003) and $14,634 (2002)                                        214,904         122,454         124,400
Interest expense, including related party interest of $1,718 (2004),
    $12,941 (2003) and $19,285 (2002)                                     (1,937,108)     (1,339,935)     (1,595,231)
                                                                        ------------    ------------    ------------
                                                                          (1,722,204)     (1,217,481)     (1,470,831)
                                                                        ------------    ------------    ------------
Loss from continuing operations before income taxes
    and minority interest                                                 (6,438,830)     (4,463,384)     (1,335,600)
Income tax expense (Note 9)                                               (1,428,889)        (38,000)        (55,000)
                                                                        ------------    ------------    ------------
Loss from continuing operations before minority interest                  (7,867,719)     (4,501,384)     (1,390,600)
Minority interest                                                            419,720
                                                                        ------------    ------------    ------------
Loss from continuing operations                                           (7,447,999)     (4,501,384)     (1,390,600)
Loss from discontinued operations (Note 3)                                    (9,984)        (75,841)     (2,928,400)
                                                                        ------------    ------------    ------------

Net loss                                                                  (7,457,983)     (4,577,225)     (4,319,000)
                                                                        ------------    ------------    ------------
Warrant accretion (Note 12)                                                   (4,640)        (13,280)         (2,080)
Additional warrants issued to preferred stockholders (Note 12)                                               (53,000)
Repricing of warrants to preferred stockholders (Note 12)                                   (375,000)
Redemption of convertible preferred stock  in excess of
    beneficial conversion features (Note 12)                                                   38,430         266,000
Deemed preferred stock dividends (Note 12)                                  (221,400)       (229,000)       (331,500)
                                                                        ------------    ------------    ------------
Net loss applicable to common stockholders                              $ (7,684,023)   $ (5,156,075)   $ (4,439,580)
                                                                        ============    ============    ============
Basic and diluted loss per common share:
    Loss from continuing operations                                     $      (1.36)   $      (1.04)   $      (0.40)
    Loss from discontinued operations                                              *           (0.02)          (0.77)
                                                                        ------------    ------------    ------------
Basic and diluted loss per share                                        $      (1.36)   $      (1.06)   $      (1.17)
                                                                        ============    ============    ============
Weighted average number of common shares outstanding,
    basic and diluted                                                      5,650,808       4,892,843       3,805,527
                                                                        ============    ============    ============
</TABLE>
* Amount is less than ($0.01) per share

                 See notes to consolidated financial statements.
                                                                             F-4
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
<TABLE>
<CAPTION>
                                                     Convertible preferred
                                                            stock           Preferred        Common stock        Additional
                                                     --------------------    treasury   ---------------------     paid-in
                                                     Shares     Amount        stock       Shares      Amount      capital
                                                     ------   -----------   ---------   ---------   ---------   -----------
<S>                                                  <C>      <C>           <C>         <C>         <C>         <C>
Balances, January 1, 2002                             4,285   $ 4,285,000               3,540,800   $  35,408   $10,143,740

Exercise of warrants for common stock                                                      50,810         508       256,539

Issuance of common stock under private placement
 agreements (net of offering costs)                                                       202,065       2,021       704,175

Purchase of shares of the Company's common
 stock by subsidiary

Conversion of promissory note and accrued interest
 to common stock by subsidiary                                                             21,811         218        62,596

Conversion of promissory note, accrued interest and
 accounts payable to common stock                                                          20,639         206       107,705

Redemption of Series I preferred stock for cash        (710)     (710,000)                                         (136,343)

Conversion of Series G preferred stock to common
 stock                                                 (530)     (530,000)                204,037       2,040       527,960

Conversion of Series I preferred stock to common
 stock                                                 (260)     (260,000)                102,673       1,027       258,973

Issuance of common stock and warrants under
 deferred compensation agreement                                                            2,500         25        133,975

Amortization of deferred compensation cost

Cancellation of agreement to issue common stock
 and warrants for services                                                                                          687,500

Conversion of Series D preferred stock to common
 stock                                                 (150)     (150,000)                130,388       1,304       148,696

Issuance of common stock and warrants to
 consultants for services                                                                  69,391         694       220,896

Issuance of Series J preferred stock, including
 650 shares purchased by subsidiary
 (net of offering costs)                              1,380     1,380,000   $(650,000)                             (151,680)

Conversion of accrued liabilities to common stock                                          24,799         248        60,757

Issuance of common stock for services                                                      51,306         513       125,700

Issuance of additional warrants to preferred
 stockholders                                                     (53,000)                                           53,000

Amortization of additional warrants issued to
 preferred stockholders                                            53,000                                           (53,000)

Beneficial conversion feature and warrants
 attached to convertible promissory notes                                                                            55,000

Net loss
                                                    -------   -----------   ---------   ---------   ---------   -----------
Balances, December 31, 2002                           4,015     4,015,000    (650,000)  4,421,219      44,212    13,206,189
</TABLE>
                                  (Continued)
                                                                             F-5
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
<TABLE>
<CAPTION>
                                                                                             Notes,
                                                                                         interest and
                                                  Common     Common stock     Deferred       stock                       Total
                                                 treasury    and warrants   compensation subscription  (Accumulated   stockholders'
                                                  stock      to be issued       cost      receivable     deficit)        equity
                                                 ---------   ------------   ------------   ---------   ------------   -------------
<S>                                              <C>         <C>            <C>            <C>         <C>            <C>
Balances, January 1, 2002                        $(114,037)  $    750,485                              $ (2,532,039)  $  12,568,557

Exercise of warrants for common stock                                (485)                                                  256,562

Issuance of common stock under private
 placement agreements (net of offering costs)                                                                               706,196

Purchase of shares of the Company's common
 stock by subsidiary                               (80,000)                                                                 (80,000)

Conversion of promissory note and accrued
 interest to common stock by subsidiary            (62,814)                                                                       -

Conversion of promissory note, accrued
 interest and accounts payable to common stock                                                                              107,911

Redemption of Series I preferred stock for cash                                                                            (846,343)

Conversion of Series G preferred stock to
 common stock                                                                                                                     -

Conversion of Series I preferred stock to
 common stock                                                                                                                     -

Issuance of common stock and warrants under
 deferred compensation agreement                                            $   (134,000)                                         -

Amortization of deferred compensation cost                                       134,000                                    134,000

Cancellation of agreement to issue common stock
 and warrants for services                                       (750,000)                                                  (62,500)

Conversion of Series D preferred stock to
 common stock                                                                                                                     -

Issuance of common stock and warrants to
 consultants for services                                                                                                   221,590

Issuance of Series J preferred stock, including
 650 shares purchased by subsidiary
 (net of offering costs)                                                                                                    578,320

Conversion of accrued liabilities to common
 stock                                                                                                                       61,005

Issuance of common stock for services                                                                                       126,213

Issuance of additional warrants to preferred
 stockholders                                                                                                                     -

Amortization of additional warrants issued to
 preferred stockholders                                                                                                           -

Beneficial conversion feature and warrants
 attached to convertible promissory notes                                                                                    55,000

Net loss                                                                                                 (4,319,000)     (4,319,000)
                                                 ---------   ------------   ------------   ---------   ------------   -------------
Balances, December 31, 2002                       (256,851)             -              -           -     (6,851,039)      9,507,511
</TABLE>

                                  (Continued)
                                                                             F-6
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
<TABLE>
<CAPTION>
                                                    Convertible preferred
                                                            stock           Preferred        Common stock        Additional
                                                     --------------------    treasury   ---------------------     paid-in
                                                     Shares     Amount        stock       Shares      Amount      capital
                                                     ------   -----------   ---------   ---------   ---------   -----------
<S>                                                  <C>      <C>           <C>         <C>         <C>         <C>
Exercises of options and warrants for common
 stock (net of offering costs)                                                            590,537       5,905     1,727,262

Warrants issued for services                                                                                        254,000

Purchase of shares of common stock by subsidiary,
 including $207,000 from a related party                                                                             78,578

Redemption of Series I preferred stock for cash         (90)      (90,000)                                          (32,776)

Conversion of Series D preferred stock to common
 stock                                                 (167)     (167,000)                 77,876         779       166,221

Conversion of Series J preferred stock to common
 stock                                               (1,380)   (1,380,000)    650,000     582,726       5,827     1,374,173

Conversion of accounts payable and notes payable
 to common stock                                                                           64,803         648       297,887

Common stock issued as contingent consideration
 for accounts payable                                                                      17,852         179          (179)

Sale of treasury stock for cash and note
 receivable                                                                                                         576,034

Repricing of warrants and options                                                                                   101,000

Net loss
                                                     ------   -----------   ---------   ---------   ---------   -----------
Balances, December 31, 2003                           2,378     2,378,000           -   5,755,013      57,550    17,748,389
</TABLE>
                                  (Continued)
                                                                             F-7
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
<TABLE>
<CAPTION>
                                                                                             Notes,
                                                                                         interest and
                                                  Common     Common stock     Deferred       stock                       Total
                                                 treasury    and warrants   compensation subscription  (Accumulated   stockholders'
                                                  stock      to be issued       cost      receivable     deficit)        equity
                                                 ---------   ------------   ------------   ---------   ------------   -------------
<S>                                              <C>         <C>            <C>            <C>         <C>            <C>
Exercises of options and warrants for common
 stock (net of offering costs)                    (105,050)                                                               1,628,117

Warrants issued for services                                                                                                254,000

Purchase of shares of common stock by
 subsidiary, including $207,000 from a
 related party                                    (289,784)                                                                (211,206)

Redemption of Series I preferred stock
 for cash                                                                                                                  (122,776)

Conversion of Series D preferred stock to
 common stock

Conversion of Series J preferred stock to
 common stock                                     (650,000)

Conversion of accounts payable and notes
 payable to common stock                                                                                                    298,535

Common stock issued as contingent
 consideration for accounts payable

Sale of treasury stock for cash and note
 receivable                                        575,968                                  (800,000)                       352,002

Repricing of warrants and options                                                                                           101,000

Net loss                                                                                                 (4,577,225)     (4,577,225)
                                                 ---------   ------------   ------------   ---------   ------------   -------------
Balances, December 31, 2003                       (725,717)             -              -    (800,000)   (11,428,264)      7,229,958
</TABLE>

                                  (Continued)
                                                                             F-8
<PAGE>
                          EQUITEX, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

                   YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
<TABLE>
<CAPTION>
                                                    Convertible preferred
                                                            stock           Preferred        Common stock        Additional
                                                     --------------------    treasury   ---------------------     paid-in
                                                     Shares     Amount        stock       Shares      Amount      capital
                                                     ------   -----------   ---------   ---------   ---------   -----------
<S>                                                  <C>      <C>           <C>         <C>         <C>         <C>
Exercises of options and warrants for common stock                                        131,796       1,318       378,471

Warrants issued for services performed in
 connection with convertible promissory notes                                                                       164,700

Options issued to consultants for services                                                                            6,970

Warrants attached to convertible promissory notes                                                                   461,200

Purchase by subsidiary of 17,250 shares of common
 stock

Conversion of accounts payable for common stock
 previously issued as contingent consideration                                                                       25,647

Proceeds received on stock subscription receivable

Sale of 228,050 shares of treasury stock for cash                                                                   174,267

Distribution of 7,500 shares of treasury stock for
 services                                                                                                            29,180

Issuance of common stock for services                                                       4,325          43        25,539

Acquisition of SVI in exchange for subsidiary
 common stock                                                                                                      (419,720)

Conversion of note payable in exchange for issuance
 of subsidiary common stock (Note 8)                                                                                200,000

Beneficial conversion feature on subsidiary common
 stock issued in connection with convertible
 promissory notes (Note 8)                                                                                          200,000

Conversion of accounts payable to common stock                                              2,500          25         6,425

Beneficial conversion features on subsidiary common
 stock issued in connection with convertible
 promissory notes (Note 8)                                                                                        1,660,967

Cancellation of portion of stock subscription
 receivable and return of stock (Note 12)                                                                          (250,000)

Warrants to purchase subsidiary common stock
 issued for services                                                                                                576,000

Reclassification of notes and interest receivable
 from an officer of Chex (Notes 3 and 10)

Warrants to purchase subsidiary common stock issued
 in connection with convertible promissory notes (Note 8)                                                           113,097

Issuance of subsidiary common stock in exchange
 for note receivable (Note 12)                                                                                      216,000

Exercise of warrants for subsidiary common stock                                                                      5,000

Net loss
                                                     ------   -----------   ---------   ---------   ---------   -----------
Balances, December 31, 2004                           2,378   $ 2,378,000           -   5,893,634   $  58,936   $21,322,132
                                                     ======   ==========    =========   =========   =========   ===========
</TABLE>
                                  (Continued)
                                                                             F-9
<PAGE>
                          EQUITEX, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

                   YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
<TABLE>
<CAPTION>
                                                                                             Notes,
                                                                                         interest and
                                                  Common     Common stock     Deferred       stock                       Total
                                                 treasury    and warrants   compensation subscription  (Accumulated   stockholders'
                                                  stock      to be issued       cost      receivable     deficit)        equity
                                                 ---------   ------------   ------------   ---------   ------------   -------------
<S>                                              <C>         <C>            <C>            <C>         <C>            <C>
Exercises of options and warrants for common
 stock                                                                                                                      379,789

Warrants issued for services performed in
 connection with convertible promissory notes                                                                               164,700

Options issued to consultants for services                                                                                    6,970

Warrants attached to convertible promissory
 notes                                                                                                                      461,200

Purchase by subsidiary of 17,250 shares of
 common stock                                     (113,625)                                                                (113,625)

Conversion of accounts payable for common stock
 previously issued as contingent consideration                                                                               25,647

Proceeds received on stock subscription
 receivable                                                                                  200,000                        200,000

Sale of 228,050 shares of treasury stock for
 cash                                              745,247                                                                  919,514

Distribution of 7,500 shares of treasury stock
 for services                                       21,570                                                                   50,750

Issuance of common stock for services                                                                                        25,582

Acquisition of SVI in exchange for subsidiary
 common stock                                                                                                              (419,720)

Conversion of note payable in exchange for
 issuance of subsidiary common stock (Note 8)                                                                               200,000

Beneficial conversion feature on subsidiary
 common stock issued in connection with
 convertible promissory notes (Note 8)                                                                                      200,000

Conversion of accounts payable to common stock                                                                                6,450

Beneficial conversion features on subsidiary
 common stock issued in connection with
 convertible promissory notes (Note 8)                                                                                    1,660,967

Cancellation of portion of stock subscription
 receivable and return of stock (Note 12)         (350,000)                                  600,000                              -

Warrants to purchase subsidiary common stock
 issued for services                                                                                                        576,000

Reclassification of notes and interest
 receivable  from an officer of Chex
 (Notes 3 and 10)                                                                           (547,002)                      (547,002)

Warrants to purchase subsidiary common stock
 issued in connection with convertible
 promissory notes (Note 8)                                                                                                  113,097

Issuance of subsidiary common stock in exchange
 for note receivable (Note 12)                                                              (216,000)

Exercise of warrants for subsidiary common
 stock                                                                                                                        5,000

Net loss                                                                                                 (7,457,983)     (7,457,983)
                                                 ---------   ------------   ------------   ---------   ------------   -------------
Balances, December 31, 2004                      $(422,525)             -              -   $(763,002)  $(18,886,247)  $   3,687,294
                                                 =========   ============   ============   =========   ============   =============
</TABLE>
                 See notes to consolidated financial statements.
                                                                            F-10
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
<TABLE>
<CAPTION>
                                                                                   2004            2003            2002
                                                                              ------------    ------------    ------------
<S>                                                                           <C>             <C>             <C>
Cash flows provided by operating activities from continuing operations:
    Net loss                                                                  $ (7,457,983)   $ (4,577,225)   $ (4,319,000)
                                                                              ------------    ------------    ------------
Adjustments to reconcile net loss to net cash (used in) provided by operating
    activities from continuing operations:
      Loss from discontinued operations                                              9,984          75,841       2,928,400
      Provision for losses                                                         528,205         250,282         194,174
      Discount on note receivable                                                                  256,316
      Depreciation and amortization                                              1,415,853       1,119,446       1,055,865
      Beneficial conversion features on convertible promissory notes               373,200                          55,000
      Amortization of discount on convertible promissory notes                     104,502                          52,800
      Stock-based compensation expense                                             659,302         355,000         419,303
      Deferred income taxes                                                      1,380,000
      Minority interest                                                           (419,720)
      Changes in assets and liabilities:
        Decrease (increase) in accounts receivable                                 851,429        (579,839)        (44,521)
        (Increase) decrease in other receivables                                   (62,640)        174,651      (6,050,835)
        Decrease in due from shareholders                                                                          300,000
        (Increase) decrease in other assets                                       (201,756)         (4,628)        202,606
        (Decrease) increase in due to credit card holders                          (88,067)       (114,036)      4,855,694
        (Decrease)  increase in accounts payable and accrued liabilities          (391,608)      1,646,550       1,393,446
                                                                              ------------    ------------    ------------
      Total adjustments                                                          4,158,684       3,179,583       5,361,932
                                                                              ------------    ------------    ------------
      Net cash (used in) provided by operating activities from continuing
        operations                                                              (3,299,299)     (1,397,642)      1,042,932
                                                                              ------------    ------------    ------------
Cash flows from investing activities:
    Net decrease (increase) in credit card receivables                              13,179          (2,865)        388,327
    Purchases of furniture, fixtures and equipment                                (555,082)       (422,544)       (430,945)
    Issuances of notes receivable                                               (2,004,673)       (606,316)       (500,000)
    Issuances of related party notes receivable                                    (37,100)       (513,100)       (747,842)
    Repayments of related party notes receivable                                    95,082         558,666         159,457
    Repayments of notes receivable, other                                           18,973
                                                                              ------------    ------------    ------------
      Net cash used in investing activities from continuing operations          (2,469,621)       (986,159)     (1,131,003)
                                                                              ------------    ------------    ------------
Cash flows from financing activities:
    (Decrease) increase in bank overdraft                                       (2,497,766)      2,497,766
    Sale of treasury stock                                                         919,514         352,002
    Proceeds received from stock subscription receivable                           200,000
    Redemption of Series I preferred stock for cash                                               (122,776)       (846,343)
    Proceeds from the exercise of warrants and options                             235,827       1,628,117         256,562
    Proceeds from common stock private placements (net of offering costs)                                          706,196
    Proceeds from Series J preferred stock offering (net of offering costs)                                        578,320
    Purchase of Equitex shares for treasury by subsidiary                         (113,625)       (211,206)        (80,000)
    Increase in deferred loan costs                                               (472,925)                        (29,200)
    Issuances of notes payable, related parties and other                       10,360,794       1,980,000       2,381,839
    Repayments of notes payable, related parties and other                      (3,658,392)     (3,769,564)     (2,438,176)
    Net repayments on line of credit                                                            (1,000,000)         (2,000)
                                                                              ------------    ------------    ------------
      Net cash provided by financing activities from continuing operations       4,973,427       1,354,339         527,198
                                                                              ------------    ------------    ------------
      Net cash used in discontinued operations                                     (38,841)       (222,122)       (414,785)
                                                                              ------------    ------------    ------------
</TABLE>
                                  (Continued)
                                                                            F-11
<PAGE>
                                     EQUITEX, INC. AND SUBSIDIARIES

                           CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                             YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
<TABLE>
<CAPTION>
                                                                               2004            2003            2002
                                                                          ------------    ------------    ------------
<S>                                                                       <C>             <C>             <C>
(Decrease) increase in cash and cash equivalents                              (834,334)     (1,251,584)         24,342
Cash and cash equivalents, beginning of year                                 9,224,020      10,475,604      10,451,262
                                                                          ------------    ------------    ------------
Cash and cash equivalents, end of year                                    $  8,389,686    $  9,224,020    $ 10,475,604
                                                                          ============    ============    ============
Supplemental disclosure of cash flow information:
    Cash paid for interest                                                $  1,858,395    $  1,386,173    $  1,634,000
                                                                          ============    ============    ============
    Cash paid for income taxes                                            $     12,242    $    196,000    $     10,000
                                                                          ============    ============    ============

Supplemental disclosure of non-cash investing and financing activities:

    Amortization of discount on preferred stock                           $      4,640    $     13,280    $      2,080
                                                                          ============    ============    ============
    Conversion of promissory note, accrued interest and
      accounts payable to common stock                                    $      6,450    $    298,535    $    107,911
                                                                          ============    ============    ============
    Capital lease obligations                                             $    145,138                    $     57,000
                                                                          ============                    ============
    Conversion of accounts payable for common stock issued
      as contingent consideration                                         $     25,647    $      2,142
                                                                           ============   ============
    Sale of treasury stock for note receivable                                            $    800,000
                                                                                          ============
    Cancellation of portion of stock subscription receivable              $    250,000

    Return of common stock to subsidiary in exchange for stock
      subscription receivable                                                  350,000
                                                                          ------------
                                                                          $    600,000
                                                                          ============
    Warrants issued in connection with convertible promissory notes       $    625,900
                                                                          ============
    Conversion of notes payable and accrued interest in exchange
      for exercise of warrants                                            $    148,962
                                                                          ============
    Issuance of subsidiary common stock in exchange for note
      receivable                                                          $    216,000
                                                                          ============
    Conversion of note payable in exchange for issuance of
      subsidiary common stock                                             $    200,000
                                                                          ============
    Reclassification of notes and interest receivable from an
      officer of Chex                                                     $    547,002
                                                                          ============
</TABLE>
                                  (Continued)
                                                                            F-12
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
<TABLE>
<CAPTION>
                                                                        2004           2003          2002
                                                                    -----------    -----------   -----------
<S>                                                                 <C>            <C>           <C>
    Warrants to purchase subsidiary common stock issued in
      connection with convertible promissory notes                  $   113,097

    Beneficial conversion features on subsidiary common stock
      issued in connection with convertible promissory notes          1,660,967
                                                                    -----------
                                                                    $ 1,774,064
                                                                    ===========
    Acquisition of SVI in exchange for subsidiary common
      stock                                                         $   419,720
                                                                    ===========
    Conversion of preferred stock to common stock                                  $ 1,547,000   $   940,000
                                                                                   ===========   ===========
    Conversion of promissory note, accrued interest and accounts
      payable to common stock by subsidiary                                                      $    62,814
                                                                                                 ===========
    Equipment exchanged for a reduction in related party
      note payable included in discontinued operations                             $    12,640   $    70,642
                                                                                   ===========   ===========
    Repricing of warrants to preferred stockholders                                $   375,000
                                                                                   ===========
    Issuance of additional warrants to preferred stockholders                                    $    53,000
                                                                                                 ===========
    Cancellation of agreement to issue common stock and
      warrants for services                                                                      $   750,000
                                                                                                 ===========
    Note receivable offset against note payable                                    $   400,000   $   200,000
                                                                                   ===========   ===========
Conversion of accrued liabilities to common stock                                                $    61,005
                                                                                                 ===========
Reclassification of receivables from Net First and
    liabilities to Net First card holders:
      Credit card receivables, net                                                               $ 1,687,931
      Other receivables                                                                            6,261,571
      Accounts payable                                                                              (562,736)
      Due to credit card holders                                                                  (5,235,559)
                                                                                                 -----------
Impairment of FDIC receivable                                                                    $ 2,151,207
                                                                                                 ===========
</TABLE>
                 See notes to consolidated financial statements.
                                                                            F-13
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

1.   ORGANIZATION AND BASIS OF PRESENTATION, PRINCIPLES OF CONSOLIDATION, RECENT
     EVENTS AND MANAGEMENT'S PLANS:

     ORGANIZATION AND BASIS OF PRESENTATION:

     Equitex, Inc. ("Equitex", or the "Company"), a Delaware corporation, was
       incorporated in January 1983.

     Effective June 7, 2004, the Company executed an Agreement and Plan of
       Merger (the "Merger Agreement") with Seven Ventures, Inc. ("SVI") to
       merge its wholly-owned subsidiary Chex Services, Inc. ("Chex") into a
       wholly-owned subsidiary of SVI (the "Merger Subsidiary"), where- upon the
       separate corporate existence of the Merger Subsidiary ceased. Under the
       terms of the Merger Agreement, Equitex exchanged 100% of its equity
       ownership in Chex for 7,700,000 shares of SVI, representing 93% of SVI's
       outstanding common stock following the transaction (subsequently reduced
       to 74% at December 31, 2004 through the issuance of 2,143,957 shares of
       subsidiary common stock). In addition, Equitex received warrants to
       purchase 800,000 shares of SVI common stock at an exercise price of $0.10
       per share, expiring five years from the date of closing. As a result,
       Chex became a wholly-owned subsidiary of SVI, a publicly-traded shell
       company. On June 29, 2004, SVI changed its name to FastFunds Financial
       Corporation.

     PRINCIPLES OF CONSOLIDATION:

     The Company and its subsidiaries operate in three operating segments, which
       consist of the disbursement services segment, the credit card services
       segment and the stored value card segment. For purposes of financial
       statement reporting, the credit card services segment and stored value
       card segment are not considered reportable segments through December 31,
       2004, as defined in Statement of Financial Accounting Standards ("SFAS")
       No. 131, Disclosures about Segments of an Enterprise and Related
       Information. The Company's subsidiaries include the following:

     FASTFUNDS FINANCIAL CORPORATION (FFFC), a Nevada corporation formed in
       1985, is a holding company operating through its wholly-owned subsidiary
       Chex. Chex and its wholly-owned subsidiary, Collection Solutions, Inc.
       ("Collection") represent the cash disbursement services segment; Chex is
       a Minnesota corporation formed in July 1992, and Collection is a
       Minnesota corporation, formed in October 2002; Chex provides financial
       services, primarily check cashing, automated teller machine and credit
       card advances to customers at gaming establishments located in
       Connecticut, Florida (through January 2004), Illinois, Michigan,
       Minnesota, Nebraska, New Mexico, North Dakota, South Dakota and
       Wisconsin; 74% owned by the Company at December 31, 2004. FFFC's other
       wholly-owned subsidiaries are:

         FASTFUNDS INTERNATIONAL, INC. ("FFI"), a Delaware corporation based in
         London, formed in July 2004. FFI was formed to build a presence in
         Europe for the FFFC stored value card program. FFI generated no
         revenues through December 31, 2004.

         FFC FASTFUNDS (CYPRUS) LIMITED ("FFC") formed in September 2004 under
         the laws of Cyprus. FFC was formed to have a presence in Cyprus to work
         with a financial institution regarding the issuance of stored value
         cards throughout Europe. FFC generated no revenues through December 31,
         2004.

                                                                            F-14
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

1.   ORGANIZATION AND BASIS OF PRESENTATION, PRINCIPLES OF CONSOLIDATION, RECENT
     EVENTS AND MANAGEMENT'S PLANS (CONTINUED):

     PRINCIPLES OF CONSOLIDATION (CONTINUED):

         FASTFUNDS INTERNATIONAL LIMITED ("FFIL") formed in October 2004 with
         the Registrar of Companies for England and Wales. FFIL was formed in
         order to have a local presence in the European community. FFIL
         generated no revenues through December 31, 2004.

     KEY FINANCIAL SERVICES, INC. ("Key") AND NOVA FINANCIAL SERVICES, INC.
       ("Nova"), which represent the Company's credit card services segment;
       both Florida corporations formed in June 1997 and September 1998,
       respectively; both companies were formed to design, market and service
       credit card products aimed at the sub-prime market; both companies are
       wholly-owned by the Company at December 31, 2004. Nova processes payments
       on a remaining portfolio, which provides the Company with "run-off"
       operations. Key ceased "run-off" operations in the fourth quarter of
       2003, and Key operations for the years ended December 31, 2004, 2003 and
       2002 have been presented as discontinued operations (Note 3).

     DENARIS CORPORATION ("Denaris"), which represents the stored value card
       segment; a Delaware corporation formed in August 2002 to develop and
       market a prepaid re-loadable stored value card program, which is designed
       to offer customers, particularly immigrants, a convenient alternative to
       traditional bank accounts; 77%-owned by the Company at December 31, 2004;
       Denaris generated no revenues through December 31, 2004.

     The accompanying consolidated financial statements as of December 31, 2004
       and 2003, and for each of the years in the three-year period then ended
       include the accounts of Equitex and its wholly-owned subsidiaries, Key
       and Nova, and its majority-owned subsidiaries FFFC and Denaris. Minority
       interest reflected in the Company's statement of operations for the year
       ended December 31, 2004 represents net loss of FFFC allocated to the
       minority common stockholders for the period from June 7, 2004 through
       December 31, 2004. During the year ended December 31, 2004, the net loss
       incurred by FFFC exceeded the minority interest in the common equity
       (deficiency) of the subsidiary. During the year ended December 31, 2002,
       the net loss incurred by Denaris, exceeded the minority interest in the
       common equity (deficiency) of the subsidiary. The excess of the losses
       applicable to the minority interests have been charged to the Company and
       therefore no minority interest is reflected in the Company's consolidated
       balance sheets. All significant intercompany accounts and transactions
       have been eliminated in consolidation.

     DENARIS RECENT EVENTS:

     In August 2004, the Company, along with its majority owned subsidiary,
       Denaris, executed a non-binding letter of intent to acquire Digitel
       Network Corporation, Platinum Benefit Group, Inc., National Business
       Communications, Inc., Personal Voice, Inc. and Private Voice, Inc.
       (collectively the "Companies") all based in Clearwater, Florida. The
       Companies design, develop and market stored value card programs as well
       as personal voice mail products through their call center operations. In
       conjunction with their stored value card products, the companies offer
       the Platinum Benefit Group premium service that includes vehicle roadside
       assistance, a prescription discount program, a dental care discount
       program, a registered nurse hotline and a family legal plan. The
       companies also offer personal voice mail services through Personal Voice,
       Inc. and Private Voice, Inc. Completion of this transaction is subject to
       further due diligence by both parties, negotiation and execution of a
       definitive agreement, necessary state or federal regulatory approvals,
       board of director approval and any necessary stockholder approvals.

                                                                            F-15
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

1.   ORGANIZATION AND BASIS OF PRESENTATION, PRINCIPLES OF CONSOLIDATION, RECENT
     EVENTS AND MANAGEMENT'S PLANS (CONTINUED):

     RECENT EVENTS AND MANAGEMENT'S PLANS:

     DENARIS RECENT EVENTS (CONTINUED):

     In September 2004, the Company, along with its majority owned subsidiary
       Denaris, executed a definitive agreement (the "Agreement") with Financial
       Freedom International ("Financial Freedom") of Orem, Utah to distribute
       Denaris' stored value card and payroll card products to Financial
       Freedom's customers. Under the terms of the agreement, Denaris is to
       provide Financial Freedom stored value cards and payroll cards for
       Financial Freedom to market along with their current products. Financial
       Freedom is a provider of educational materials, software and services to
       consumers with troubled debt.

     In October 2004, Denaris signed a marketing agreement with AmeriTech
       Advertising, Inc. ("AmeriTech") of Clearwater, Florida, to market
       Denaris' stored value card products via the Internet. AmeriTech is an
       Internet marketing company that maintains various databases and has
       relationships with other Internet marketing companies to which it markets
       products via the Internet. Under the terms of the agreement, AmeriTech is
       to make Denaris' stored value products available to its customers through
       a hotlinked URL connection to a designated Denaris product website.

     AGREEMENT WITH PAYMASTER JAMAICA:

     In August 2002, the Company entered into a binding agreement with Paymaster
       (Jamaica) Limited ("Paymaster Jamaica") to form a jointly-owned and
       operated company to replicate Paymaster Jamaica's financial services
       business model throughout the Caribbean, North America and ultimately,
       worldwide. This newly-formed company was to be named Paymaster Worldwide,
       Inc. ("PWI"). Under the terms of the agreement, the Company advanced
       $500,000 to Paymaster Jamaica that could have been converted into stock
       of PWI if the company had been formed by August 15, 2003. Because the
       Company was not formed by this date, the $500,000 advance became a
       promissory note under the terms of the agreement (Note 5).

     Paymaster Jamaica headquartered in Kingston, Jamaica, commenced operations
       in 1997, and offers revenue collection and customer care to businesses,
       institutions and consumers on the island of Jamaica. It offers its
       customers an alternative to retaining their own commercial offices. In
       addition, through its bill payment services, Paymaster Jamaica is
       developing cash remittance services, affording its customers the
       convenience to send and receive various types of remittances nationally
       or internationally via cash or debit cards.

     NASDAQ COMPLIANCE:

     In July 2004, the Company received a notice from the Nasdaq Stock Market
       ("Nasdaq") notifying the Company that for the last 30 consecutive trading
       days the price of the Company's common stock closed below $1.00, the
       minimum per share requirement for continued inclusion under a Marketplace
       Rule (the "Rule"). Under the Rule, the Company was provided 180 calendar
       days, or until January 24, 2005, to regain compliance.

                                                                            F-16
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

1.   ORGANIZATION AND BASIS OF PRESENTATION, PRINCIPLES OF CONSOLIDATION, RECENT
     EVENTS AND MANAGEMENT'S PLANS (CONTINUED):

     NASDAQ COMPLIANCE (CONTINUED):

     On November 30, 2004, the Company filed a Definitive Proxy Statement with
       the SEC requesting approval for a one-for-six reverse stock split, among
       other items. The Company's stockholders approved the reverse stock split
       at its annual meeting on January 5, 2005. In conjunction with the reverse
       stock split, the Company's board of directors authorized a dividend to be
       declared and paid to stockholders of record as of February 7, 2005. The
       dividend is payable through the issuance of warrants to purchase shares
       of the Company's common stock on a post-reverse-split basis, whereby
       stockholders receive one A warrant and one B warrant for every two shares
       of Equitex stock owned on the record date. The A warrant is exercisable
       at $3.06 per post-split share for a period of five years from issuance
       and is callable by the Company at a nominal price should the stock price
       close above $7.02 per post-split share for 15 consecutive trading days.
       The B warrant is exercisable at $6.12 per post-split share for the
       five-year period and callable at a nominal price should the stock trade
       at $9.00 per post-split share for 15 consecutive trading days. The
       warrants are not exercisable until a registration statement registering
       the underlying common stock is filed and declared effective.

     On January 26, 2005 the Company received a letter from Nasdaq notifying the
       Company that it had not regained compliance with the Rule. On January 31,
       2005, the Company requested a hearing before a Nasdaq Listing
       Qualifications Panel. Also, on January 25, 2005, the Company affected the
       one-for-six reverse stock split and since that time, the Company's
       closing bid price has been above the $1.00 minimum bid price per share
       requirement. Accordingly, on February 16, 2005, the Company received a
       notice from Nasdaq that it achieved compliance for continued listing on
       the Nasdaq Smallcap Market.

     As a result of the reverse split, the number of shares outstanding and per
       share information for all prior periods have been retroactively restated
       to reflect the new capital structure.

     MANAGEMENT'S PLANS:

     The Company has incurred significant net losses, including a net loss of
       $7,457,983 for the year ended December 31, 2004. Although the net loss
       included certain non-cash expenses of approximately $4,500,000, FFFC
       incurred and continues to incur significant costs related to FFIL's
       international marketing strategy and expansion plans, including costs
       associated with the development of proprietary software. Therefore, the
       Company anticipates that its liquidity and capital resources needs for
       the next 12 months may not be satisfied solely from cash flows generated
       from operating activities.

     The Company has developed plans and strategies to address its capital and
       liquidity needs for the next twelve-month period. Management believes
       that cash flows from operations will provide the Company's primary source
       of operating capital, as Chex continues to generate income from its
       casino locations. However, the Company may be required to issue
       additional debt or equity instruments in order to raise additional
       capital, to continue to support the operating costs of Equitex, FFIL's
       international marketing efforts, as well as for the ongoing development
       of new software. Accordingly, Equitex has entered into discussions with
       an investment banker to provide advisory services regarding a
       contemplated equity offering of the 7,700,000 shares of FFFC common stock
       that it owns. Additionally, management is monitoring the activities of
       FFIL to determine if the expenditures associated with FFIL's marketing
       efforts should continue if revenues are not being generated.

                                                                            F-17
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

1.   ORGANIZATION AND BASIS OF PRESENTATION, PRINCIPLES OF CONSOLIDATION, RECENT
     EVENTS AND MANAGEMENT'S PLANS (CONTINUED):

     MANAGEMENT'S PLANS (CONTINUED):

     The Company also evaluates, on an ongoing basis, potential business
       acquisition/restructuring opportunities that become available from time
       to time, which management considers in relation to its corporate plans
       and strategies.

     Management believes that these plans will provide sufficient resources to
       fund its operations, 2005 debt payments, and working capital needs at
       least through December 31, 2005.

2.   SIGNIFICANT ACCOUNTING POLICIES:

     CASH AND CASH EQUIVALENTS AND PRESENTATION OF CASH FLOWS:

     The Company maintains cash in bank accounts which exceed federally insured
       limits. At December 31, 2004 and 2003, the Company had deposits in excess
       of federally insured amounts aggregating approximately $1,183,000 and
       $483,000, respectively, at various financial institutions. The Company
       believes it has its cash deposits at high quality financial institutions.
       In addition, the Company maintains a significant amount of cash at each
       of the casinos. Management believes that the Company has controls in
       place to safeguard these on-hand amounts, and that no significant credit
       risk exists with respect to cash.

     Cash and cash equivalents also include cash in the process of collection
       ("CIPC"). CIPC includes ATM advances, as well as credit card advances
       made to customers. ATM advances made to customers included in CIPC
       totaled approximately $809,000 and $1,164,000 as of December 31, 2004 and
       2003, respectively. Credit card advances made to customers included in
       CIPC totaled approximately $745,000 as of December 31, 2004.
       Concentrations of credit risk related to credit card and ATM advances are
       limited to the credit card and ATM processors who remit the cash back to
       the Company. The Company believes these processors are financially stable
       and no significant credit risk exists with respect to CIPC arising from
       ATM and credit card advances.

     RECEIVABLES:

     Accounts receivable arise primarily from fees from credit card and ATM
       advances provided at casino locations. Concentrations of credit risk
       related to the fees from credit card and ATM advances are limited to the
       credit card and ATM processors who remit to the Company its share of fees
       earned. The Company believes these processors are financially stable and
       no significant credit risk exists with respect to accounts receivable
       arising from the fees for ATM and credit card advances. No allowance was
       considered necessary on these receivables through December 31, 2002 and
       2003. During 2004, the allowance was increased by $65,000 by a charge to
       expense.

                                                                            F-18
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     NOTES RECEIVABLE:

     The Company has made advances to officers of the Company under various loan
       agreements (Notes 5 and 12). The advances made to officers were made
       prior to January 2002. The loans made to officers have a face value of
       approximately $1,971,000 as of December 31, 2004, and are collateralized
       by Equitex common stock, including registered and unregistered shares.
       The Company's allowance for doubtful notes receivable is adjusted based
       on the value of the underlying collateral. Due to the level of risk
       associated with this common stock, it is reasonably possible that changes
       in the value of the common stock will occur in the near term and that
       such changes could materially affect the value of the collateral
       underlying the notes. After all attempts to collect a note receivable
       have failed, the note receivable is written-off against the allowance.
       Based on management's evaluation of repayment intentions, $485,936 of
       this amount has been presented as a reduction in stockholders' equity at
       December 31, 2004. The allowance for doubtful notes receivable made to
       officers was $1,279,300 and $1,053,300 as of December 31, 2004 and 2003,
       respectively.

     The Company establishes an allowance for losses on other notes receivable
       through a provision for losses charged to expense. The allowance is an
       amount management believes will be adequate to cover estimated losses,
       based on an evaluation of the collectibility of the notes receivable. The
       allowance for doubtful notes receivable on loans made to other than
       officers was approximately $646,500 and $410,000 at December 31, 2004 and
       2003, respectively.

     REVENUE RECOGNITION:

     Revenue is recognized from financial services at the time the service is
       provided. Revenues are derived from check cashing fees, credit and debit
       card advance fees and automated teller machine ("ATM") surcharge and
       transaction fees.

     In general, check cashing fees are comprised of a fee based upon a
       percentage of the face amount of total checks cashed, and is recognized
       at a point a transaction is generated by the casino cage.

     Credit and debit card advance fees are comprised of the fee charged to
       patrons for credit and debit card cash advances and is recognized at the
       point a transaction is generated by the casino cage for the patron's
       transaction or cash is dispensed from an ATM.

     ATM surcharge and transaction fees are comprised of upfront patron
       transaction fees or surcharges assessed at the time the transaction is
       initiated and a percentage of interchange fees paid by the patron's
       issuing bank. These issuing banks share the interchange revenue with the
       Company. Upfront patron transaction fees are recognized when a
       transaction is initiated, and interchange revenue is recognized on a
       monthly basis based on the total transactions occurring during the month.

     RETURNED CHECKS:

     The Company charges operations for potential losses on returned checks in
       the period in which the amounts are deemed uncollectible, generally when
       such checks are returned. Recoveries on returned checks are credited in
       the period when the recovery is received.

                                                                            F-19
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

2.   SIGNIFICANT ACCOUNTING POLICIES:

     RETURNED CHECKS (CONTINUED):

     In September 2003, checks totaling $606,316 from one customer were cashed
       by the Company and were returned as insufficient funds. In March 2004,
       the Company received a non-interest bearing promissory note from this
       customer. Based on an imputed interest rate of 12%, a discount of
       $256,316 was applied to this note which was charged to operating expense
       during the fourth quarter of 2003. Based on management's evaluation of
       this note, during the fourth quarter of 2004 an allowance of $236,500 was
       recorded against this note. The Company believes the remaining balance of
       $100,000 is collectible, based on collateral pledged in connection with
       the note (Note 5).

     FAIR VALUE OF FINANCIAL INSTRUMENTS:

     The estimated fair values of financial instruments has been determined by
       the Company using available market information and appropriate
       methodologies; however, considerable judgment is required in interpreting
       information necessary to develop these estimates. Accordingly, the
       Company's estimates of fair values are not necessarily indicative of the
       amounts that the Company could realize in a current market exchange.

     The fair values of cash and cash equivalents, current non-related party
       receivables, and accounts payable approximate their carrying amounts
       because of the short maturities of these instruments.

     The fair values of notes and advances receivable from non-related parties
       approximate their carrying values because of the short maturities of
       these instruments, except for a $606,316 non-interest bearing note
       receivable from a Chex customer (Note 5), as to which the fair value is
       estimated to be approximately $100,000. The fair values of notes and
       advances receivable from related parties are not practicable to estimate,
       based upon the related party nature of the underlying transactions.

     The fair value of notes and loans payable to non-related parties
       approximates their carrying values because of the short maturities of
       these instruments. The fair values of long-term debt payable to financial
       institutions approximates carrying values, net of discounts applied based
       on market rates currently available to the Company. The fair values of
       notes payable to related parties are not practicable to estimate, based
       upon the related party nature of the underlying transactions.

     PROPERTY, EQUIPMENT AND LEASEHOLDS:

     Property, equipment and leaseholds are stated at cost, and depreciation is
       provided by use of accelerated and straight-line methods over the
       estimated useful lives of the assets. The cost of leasehold improvements
       is depreciated over the estimated useful life of the assets or the length
       of the respective leases, whichever period is shorter. The estimated
       useful lives of property, equipment and leaseholds are as follows:

        Office equipment, furniture and vehicles     3 to 7 years
        Computer hardware and software               3 to 5 years
        Leasehold improvements                       7 years

     Expenditures for improvements are capitalized, while repairs and
       maintenance are expensed as incurred.

                                                                            F-20
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     GOODWILL, INTANGIBLE ASSETS AND AMORTIZATION:

     Goodwill represents the excess of the purchase price over the estimated
       fair values of the net tangible and identifiable intangible assets
       acquired prior to 2002. As discussed below, goodwill and intangible
       assets with indefinite lives are not amortized. Identifiable intangible
       assets with finite lives are being amortized on a straight-line basis
       over three to seven years (Note 7).

     The Company applies the provisions of SFAS No. 142, GOODWILL AND OTHER
       INTANGIBLE ASSETS. SFAS No. 142 no longer allows the amortization of
       goodwill and intangible assets with indefinite useful lives. SFAS No. 142
       requires that these assets be reviewed for impairment at least annually,
       or whenever there is an indication of impairment. Intangible assets with
       finite lives continue to be amortized over their estimated useful lives
       and are reviewed for impairment in accordance with SFAS No. 144,
       ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS, discussed
       below.

     SFAS No. 142 requires companies to allocate goodwill to identifiable
       reporting units, which are then tested for impairment using a two-step
       process. The first step requires comparing the fair value of each
       reporting unit with its carrying amount, including goodwill. If the fair
       value exceeds the carrying amount, goodwill of the reporting unit is
       considered not impaired, and the second step of the impairment test is
       not necessary. If the fair value of the reporting unit does not exceed
       the carrying amount, the second step of the goodwill impairment test must
       be performed to measure the amount of impairment loss, if any. This step
       requires the allocation of the fair value of the reporting unit to the
       reporting unit's assets and liabilities (including any unrecognized
       intangible assets) as if the reporting unit had been acquired in a
       business combination and the fair value of the reporting unit was the
       price paid to acquire the reporting unit. The excess of the fair value of
       the reporting unit over its re-evaluated net assets would be the new
       basis for the reporting unit's goodwill, and any necessary goodwill write
       down to this new value would be recognized as an impairment expense.

     The Company adopted SFAS No. 142 on January 1, 2002, and completed the
       first step of the transitional goodwill impairment test as required. The
       Company allocated all goodwill to Chex. The fair value of the reporting
       unit exceeded the carrying value of the reporting unit and accordingly,
       as of that date, there was no goodwill impairment. The Company also
       performed goodwill impairment tests in the fourth quarters of 2004, 2003
       and 2002 and determined that there was no goodwill impairment as of the
       test date. A goodwill impairment test is performed annually in the fourth
       quarter or upon significant changes in the Company's business
       environment.

     IMPAIRMENT OF LONG-LIVED ASSETS:

     Management assesses the carrying value of long-lived assets for impairment
       when circumstances indicate such amounts may not be recoverable from
       future operations. Generally, assets to be held and used are considered
       impaired if the sum of the expected undiscounted future cash flows is
       less than the carrying amount of the asset. At December 31, 2004 and
       2003, management believes no impairment has occurred.

                                                                            F-21
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     SOFTWARE DEVELOPMENT COSTS:

     FFFC and its subsidiary Chex develop computer software for internal use.
       Internal and external costs incurred for the development of computer
       applications, as well as for upgrades and enhancements that result in
       additional functionality of the applications, are capitalized. Internal
       and external training and maintenance costs are charged to expense as
       incurred. When an application is placed in service, the Company begins
       amortizing the related capitalized software costs using the straight-line
       method and an estimated useful life varying from 3 to 5 years.

     ADVERTISING:

     Advertising costs, which are primarily incurred by Chex, are expensed as
       incurred. Advertising costs were approximately $243,000, $392,000 and
       $296,000 in 2004, 2003 and 2002, respectively.

     INCOME TAXES:

     Income taxes are provided for the tax effects of transactions reported in
       the financial statements, and a deferred income tax liability or asset is
       recognized for temporary differences between the Company's financial
       statements and tax returns. Deferred tax assets and liabilities are
       measured using enacted tax rates expected to apply to taxable income in
       the years in which those temporary differences are expected to reverse.
       The effect on deferred tax assets and liabilities of a change in tax
       rates is recognized in the statement of operations in the period that
       includes the enactment date.

     USE OF ESTIMATES:

     Preparation of the consolidated financial statements in accordance with
       accounting principles generally accepted in the United States of America
       requires management to make estimates and assumptions that affect the
       reported amounts of assets and liabilities and disclosure of contingent
       assets and liabilities at the date of the balance sheets and the reported
       amounts of revenues and expenses during the reporting periods. Actual
       results could differ from those estimates.

     NET INCOME (LOSS) PER SHARE:

     SFAS No. 128, Earnings Per Share, requires dual presentation of basic and
       diluted earnings or loss per share ("EPS") with a reconciliation of the
       numerator and denominator of the basic EPS computation to the numerator
       and denominator of the diluted EPS computation. Basic EPS excludes
       dilution. Diluted EPS reflects the potential dilution that could occur if
       securities or other contracts to issue common stock were exercised or
       converted into common stock or resulted in the issuance of common stock
       that then shared in the earnings of the entity.

     Income or loss per share of common stock is computed based on the weighted
       average number of common shares outstanding during the period. Stock
       options, warrants, common stock to be issued, and common stock underlying
       convertible preferred stock are not considered in the calculations for
       the years ended December 31, 2004, 2003 and 2002, as the impact of the
       potential common shares, which total 4,005,480, 2,336,171 and 2,611,379,
       respectively, would be to decrease loss per share. The historical loss
       per share of the Company has been retroactively restated to reflect the
       one-for-six reverse stock split.

                                                                            F-22
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     COMPREHENSIVE INCOME:

     SFAS No. 130, REPORTING COMPREHENSIVE INCOME, establishes requirements for
       disclosure of comprehensive income. During the years presented, the
       Company did not have any components of comprehensive income to report.

     STOCK-BASED COMPENSATION:

     SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION ("SFAS No. 123"),
       defines a fair-value based method of accounting for stock-based employee
       compensation plans and transactions in which an entity issues its equity
       instruments to acquire goods or services from non-employees, and
       encourages but does not require companies to record compensation cost for
       stock-based employee compensation plans at fair value. The Company has
       chosen to continue to account for stock-based compensation using the
       intrinsic value method prescribed in Accounting Principles Board Opinion
       No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and guidance provided
       in SFAS Interpretation ("FIN") No. 44, ACCOUNTING FOR CERTAIN
       TRANSACTIONS INVOLVING STOCK COMPENSATION. Accordingly, compensation cost
       for employee stock options is measured as the excess, if any, of the
       quoted market price of the Company's common stock at the date of the
       grant over the amount an employee must pay to acquire the stock.

     In May 2003, Equitex issued options to purchase 126,667 shares of its
       common stock to employees of Chex for services performed. The options
       were issued with an exercise price of $4.08 per share (the market value
       of the common stock at the date of the grant) and expire in May 2008.

     In July 2004, the Company granted 265,000 options to various employees for
       services. The options were issued with an exercise price of $5.10 (the
       market value at the date of the grants) and expire in July 2009. In
       addition, in July 2004 the Company granted 68,334 options for legal and
       consulting services provided to the Company. The options were issued with
       an exercise price of $5.10 (the market price at the dates of the grants)
       and expire in July 2009. The options granted to consultants were valued
       at $6,970 based upon the Black-Scholes option pricing model.

     Of the 800,000 warrants received by Equitex in conjunction with the Merger
       Agreement, 640,000 were subsequently transferred to officers, directors
       and a consultant of Equitex and Chex. The warrants were determined to
       have a fair value of $1.00 at the date of the grant, resulting in
       $553,000 and $23,000 of compensation expense for employees and
       consultants, respectively, recorded in the Company's consolidated
       financial statements during the year ended December 31, 2004.

     Had compensation cost for stock-based awards issued to employees been
       determined based on the fair values at the grant dates for awards under
       the plans consistent with the fair-value based method of accounting
       prescribed by SFAS No. 123, the Company's results would have been changed
       to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                            2004           2003            2002
                                                       --------------  -------------  -------------

    <S>                                                <C>             <C>            <C>
     Net (loss) income                                 $  (7,457,983)  $ (4,577,225)  $ (4,319,000)

     ADD: Stock-based employee compensation expense
     included in reported net loss                            553,000         19,000              -
</TABLE>
                                                                            F-23
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

2.   SIGNIFICANT ACCOUNTING POLICIES:

     STOCK-BASED COMPENSATION (CONTINUED):
<TABLE>
<CAPTION>
                                                            2004           2003            2002
                                                       --------------  -------------  -------------
     <S>                                               <C>             <C>            <C>
     DEDUCT: Total stock-based employee compensation
     expense determined under fair value based method
     for all awards                                         (587,000)      (503,000)
                                                       --------------  -------------  -------------
     Pro forma net loss                                $  (7,491,983)  $ (5,061,225)  $ (4,319,000)
                                                       ==============  =============  =============
     Net loss per share:

     Basic and diluted - as reported                   $       (1.36)  $      (1.06)  $      (1.17)
                                                       ==============  =============  =============
     Basic and diluted - pro forma                     $       (1.37)  $      (1.03)  $      (1.17)
                                                       ==============  =============  =============
</TABLE>

     The fair value of options granted was estimated on the date of grant using
       the Black-Scholes option pricing model. No options were issued during
       2002. The following weighted average assumptions were utilized:

                                                  2004               2003
                                             -------------       -------------

     Expected dividend yield                             0                   0
     Expected stock price volatility                   99%                 76%
     Risk-free interest rate                            2%                1.2%
     Expected life of options                      2 years           2.5 years

     Recently issued accounting standards:

     In December 2004, the FASB issued SFAS No. 123(R) SHARE-BASED PAYMENT,
       which addresses the accounting for share-based payment transactions. SFAS
       No. 123(R) eliminates the ability to account for share-based compensation
       transactions using APB 25, and generally requires instead that such
       transactions be accounted for and recognized in the statement of
       operations based on their fair value. SFAS No. 123(R) will be effective
       for public companies that do not file as small business issuers as of the
       beginning of the first interim or annual reporting period that begins
       after June 15, 2005. Management is evaluating the provisions of this
       standard. Depending upon the number and terms of options that may be
       granted in future periods, the implementation of this standard could have
       a material impact on the Company's financial position and results of
       operations.

     In December 2003, the FASB issued Interpretation No. 46R ("FIN 46R"), a
       revision to SFAS Interpretation No. 46 ("FIN 46"), CONSOLIDATION OF
       VARIABLE INTEREST ENTITIES. FIN 46R clarifies some of the provisions of
       FIN 46 and exempts certain entities from its requirements. FIN 46R
       requires a variable interest entity to be consolidated by a company if
       that company is subject to a majority of the risk of loss from the
       variable interest entity's activities or is entitled to receive a
       majority of the entity's residual returns or both. FIN 46R also requires
       disclosures about variable interest entities that a company is not
       required to consolidate but in which it has a significant variable
       interest. FIN 46R became effective for variable interest entities or
       potential variable interest entities for periods ending after December
       15, 2003, and became effective for all other types of entities by the
       beginning of the first annual reporting period beginning after March 15,
       2004. The adoption of FIN 46R did not have an impact on the Company's
       financial position or results of operations.

                                                                            F-24
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     RECENTLY ISSUED ACCOUNTING STANDARDS (CONTINUED):

     In May 2003, the FASB issued SFAS No. 150, ACCOUNTING FOR CERTAIN FINANCIAL
       INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY, which
       establishes standards for how an issuer classifies and measures certain
       financial instruments with characteristics of both liabilities and
       equity. SFAS No. 150 requires that an issuer classify a financial
       instrument that is within its scope, which may have previously been
       reported as equity, as a liability (or an asset in some circumstances).
       Mandatorily redeemable instruments (i.e., instruments issued in the form
       of shares that unconditionally obligate the issuer to redeem the shares
       for cash or by transferring other assets) are to be reported as
       liabilities by their issuers. This statement does not affect the
       classification or measurement of convertible bonds, puttable stock, or
       other outstanding shares that are conditionally redeemable. The
       provisions of SFAS No. 150 are generally effective for all financial
       instruments entered into or modified after May 31, 2003, except for those
       provisions relating to mandatorily redeemable non-controlling interests,
       which have been deferred. The adoption of SFAS No. 150 did not have a
       material impact on the financial position or results of operations of the
       Company. If the deferred provisions of SFAS No. 150 are finalized in
       their current form, management does not expect adoption to have a
       material effect of the financial position or results of operations of the
       Company.

     RECLASSIFICATIONS:

     Certain amounts reported in the 2003 and 2002 consolidated financial
       statements have been reclassified to conform to the 2004 presentation.

3.   DISCONTINUED OPERATIONS:

     Through March 1, 2002, Key's credit card products were marketed for Net
       First National Bank ("Net First") under an agreement that provided the
       Company with a 100% participation interest in the receivables and related
       rights associated with credit cards issued, and required the payment of
       monthly servicing fees to Net First. The Company provided collection and
       customer services related to the credit cards issued. On March 1, 2002,
       federal banking regulators closed Net First, which was the sole issuing
       bank for Key's PAY AS YOU GO credit card program.

     In March 2002, the Federal Deposit Insurance Corporation ("FDIC") notified
       the Company that it had been appointed receiver of all funds due from Net
       First to Key. As receiver, the FDIC elected to disaffirm, to the full
       extent, all contracts Key was a party to with Net First. On March 10,
       2002, the Company was made aware that the FDIC was notifying Net First
       credit card holders that their accounts were to be closed, and
       accordingly, Key would not be able to transfer the existing PAY AS YOU GO
       credit card portfolio to a successor financial institution. In November
       2002, the Company filed a lawsuit seeking to recover the full amount of a
       claim with the FDIC for all funds due from Net First to Key through the
       date federal banking regulators closed Net First (Note 11).

                                                                            F-25
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

3.   DISCONTINUED OPERATIONS (CONTINUED):

     The Company immediately implemented steps to eliminate Key's operating
       costs associated with marketing and servicing the Net First program.
       These steps included employee lay-offs of all but essential management
       and employee personnel necessary to re-establish its marketing and
       servicing capabilities upon the establishment of a new relationship with
       another financial institution. The Company had discussions with financial
       institutions to initiate a new credit card program; however, the Company
       was not able to establish such a relationship. During the fourth quarter
       of 2003, "run-off" operations, which consisted of processing residual
       payments on remaining active accounts in its portfolio ceased.

     The carrying amounts of assets and liabilities of Key at December 31, 2004
       and 2003 are as follows:

                                                        2004         2003
                                                     ----------   ----------
       Cash (included in prepaid expenses and other) $      139   $    1,055
                                                     ==========   ==========

       Accounts payable                              $  490,854   $  524,829
       Accrued expenses                                  25,000       25,000
       Notes payable, related party                      77,057       71,939
                                                     ----------   ----------
       Total liabilities (all current)               $  592,911   $  621,768
                                                     ==========   ==========

     Key had no revenues during the year ended December 31, 2004. Key revenues
       for the years ended December 31, 2003 and 2002 reported in discontinued
       operations were $36,644 and $3,474,273, respectively. Losses incurred by
       Key in 2004, 2003 and 2002 were $9,984, $75,841 and $2,928,398,
       respectively. In 2002, Key losses included $2,151,207, related to the
       closure of Net First (Note 11).

4.   RECEIVABLES:

     Receivables at December 31, 2004 and 2003, consist of the following:

                                                         2004         2003
                                                      -----------   -----------
       Credit card and ATM processors, net of
         allowance of $65,000 (2004)                  $   777,723   $ 1,113,992
       Due from Paymaster Jamaica                                       608,000
       Amount held in trust                               182,184       258,642
       Credit card receivables, net of allowance, of
         $705 (2004) and $1,545 (2003)                    139,663       153,547
       Other receivables                                  238,539       210,699
                                                      -----------   -----------

                                                      $ 1,338,109   $ 2,344,880
                                                      ===========   ===========

                                                                            F-26
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


4.   RECEIVABLES (CONTINUED):

     Amounts due from credit card and ATM processors arise primarily from fees
       from credit card and ATM advances by Chex to casino patrons. During 2004,
       the allowance for ATM and credit card processors was increased by $65,000
       by a charge to expense. Credit card receivables are reduced by allowances
       for refundable fees and losses. The amounts due from Paymaster Jamaica
       were due for services performed by Denaris, which were recorded as
       deferred revenue at December 31, 2003 (presented in accrued expenses and
       other liabilities). The amount held in a trust under an agreement is to
       secure payment of reservation fees due customers. The amount is held by a
       third party financial institution. Credit card receivables include
       refundable and earned fees, which represent the balance reported to
       customers.

     Changes in the allowance for credit card losses for the years ended
       December 2004, 2003 and 2002 are as follows:

                                        2004         2003          2002
                                    -----------   ----------   -----------
     Balances, beginning of year    $     1,545   $    3,465   $   208,070
     Provision for recoveries             2,520        4,879       121,307
     Amounts charged-off                (3,360)      (6,799)     (325,912)
                                    -----------   ----------   -----------
     Balances, end of year          $       705   $    1,545   $     3,465
                                    ===========   ==========   ===========

5.   NOTES AND INTEREST RECEIVABLE:

     Notes receivable at December 31, 2004 and 2003, consist of the following:

                                                          2004          2003
                                                      -----------   -----------
       Note receivable from iGames Entertainment,
       Inc. ("iGames"); interest at 10%; maturity
       January 2005, currently in default [A], [C]    $ 2,000,000

       Notes receivable from the estate of a
       deceased officer of Chex; interest at 6%;
       principal and unpaid interest due in
       November 2004; collateralized by
       unregistered shares of the Company's common
       stock; a valuation allowance of $1,279,300
       has been recorded against this receivable
       at December 31, 2004 ($1,053,300 at
       December 31, 2003); currently in default
       [B], [C]                                         1,484,691   $ 1,484,691

                                                                            F-27
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

5.     NOTES AND INTEREST RECEIVABLE (CONTINUED):

                                                          2004          2003
                                                      -----------   -----------
       Note receivable from a customer of Chex;
       non-interest bearing; principal balance of
       $606,316, net of $256,316 discount at
       December 31, 2004 and 2003, based on
       imputed interest rate of 12%; discount
       charged to operating expense in 2003;
       monthly payments of $4,500 beginning May
       2004 through December 2010, at which time
       the balance is due in full; collateralized
       by mortgages on three parcels of real
       property in Florida; a valuation allowance
       of $236,500 has been recorded against this
       receivable at December 31, 2004; currently
       in default [C]                                     336,500       350,000

       Notes receivable from an officer of Chex;
       interest at rates ranging from 5.75% to 6%;
       due on demand; collateralized by
       unregistered shares of the Company's common
       stock; at December 31, 2004 this receivable
       is presented as a reduction to
       stockholders' equity based on management's
       evaluation of repayment intentions (Note
       12) the Company also has $119,624 (2004)
       and $150,000 (2003) of notes payable to
       this officer [B], [C]                                            485,936

       Note receivable from Paymaster Jamaica;
       interest at 10%, collateralized by a pledge
       of Paymaster Jamaica common shares by
       Paymaster Jamaica's president; note matures
       in August 15, 2008; payments of interest
       only due semi-annually beginning August 15,
       2003 through maturity; a valuation
       allowance of $250,000 has been recorded
       against this receivable at December 31,
       2004 and 2003; first interest payment
       waived by the Company                              500,000       500,000

       Notes receivable from Equitex 2000, Inc.,
       an affiliate of the Company through common
       control; interest at 10%; unsecured; due on
       demand; a valuation allowance of $160,000
       has been recorded against this receivable
       at December 31, 2004 and 2003 [B]                1,208,574     1,266,556

                                                                            F-28
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


5.     NOTES AND INTEREST RECEIVABLE (CONTINUED):

                                                          2004          2003
                                                      -----------   -----------
       Notes receivable from various Chex
       employees and a shareholder; non-interest
       bearing; unsecured; due on demand [B]               52,900        53,700
                                                      -----------   -----------
                                                        5,582,665     4,140,883

       Interest receivable, includes related party
       interest of $118,554 (2004) and $110,751
       (2003)                                             214,666       136,634
       Less current maturities                           (472,291)     (707,155)
                                                      -----------   -----------
       Notes receivable, net of current portion,
       before valuation allowance                       5,325,040     3,570,362
       Less valuation allowance                        (1,925,800)   (1,463,300)
                                                      -----------   -----------
       Notes and interest receivable, net, long-term  $ 3,399,240   $ 2,107,062
                                                      ===========   ===========

     [A] In January 2004, Chex advanced iGames $2,000,000 under a Term Loan Note
         (the "Note"). Interest accrues at 10% per annum, and the maturity date
         was in January 2005, as defined in the Note. The Note was to be secured
         by a pledge of capital stock of the borrower pursuant to a stock pledge
         agreement. The stock pledge agreement was not executed, which resulted
         in an event of default under the terms of the Note. Therefore, Chex
         demanded that the entire unpaid principal and accrued interest be paid
         in full. Chex has commenced litigation relating to the collection of
         the Note (Note 11). The Company has presented the Note as a non-current
         asset at December 31, 2004 due to uncertainty as to the anticipated
         litigation settlement date.

     [B] Demand notes and interest receivable, less valuation allowances
         aggregating to $1,372,519 at December 31, 2004, have been classified as
         non-current assets, as it is management's intention not to demand
         payment in 2005. Demand notes receivables aggregating to $1,797,492
         were classified as non-current assets at December 31, 2003.

     [C] The Company in no longer accruing interest on these loans due to
         uncertainty as to collection.

     Changes in the allowance for notes receivable for the years ended December
       31, 2004, 2003 and 2002 are as follows:

                                           2004         2003             2002
                                        -----------   -----------   ------------
     Balances, beginning of year        $ 1,463,300   $ 1,211,100   $  1,150,000
       Additions charged to expense         462,500       410,000         61,100
       Deductions credited to expense                   (157,800)
                                        -----------   -----------   ------------
     Balances, end of year              $ 1,925,800   $ 1,463,300   $  1,211,100
                                        ===========   ===========   ============

                                                                            F-29
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

6.   PROPERTY, EQUIPMENT AND LEASEHOLDS:

     The major classes of property, equipment and leaseholds, and total
       accumulated depreciation at December 31, 2004 and 2003, are as follows:

                                                       2004          2003
                                                  -------------  -------------

       Office equipment, furniture and vehicles   $   1,852,998  $   1,771,948
       Leasehold improvements                            52,765         52,765
       Computer software                                760,834        141,664
                                                  -------------  -------------
                                                      2,666,597      1,966,377
       Less accumulated depreciation                (1,336,502)      (781,564)
                                                  -------------  -------------
                                                  $   1,330,095  $   1,184,813
                                                  =============  =============

     The amounts above include equipment under capital leases with a gross
       carrying value of approximately $302,000 and $157,000 at December 31,
       2004 and 2003, respectively, and accumulated depreciation of
       approximately $99,000 and $47,000 at December 31, 2004 and 2003,
       respectively.

     The amounts above include long-lived assets with a carrying value of
       $158,914 located in London, England consisting primarily of computer
       hardware and software. Depreciation expense was $554,938 and $379,446 for
       the years ended December 31, 2004 and 2003, respectively.

7.   GOODWILL, INTANGIBLE AND OTHER ASSETS:

     At December 31, 2004 and 2003, goodwill was $5,636,000, none of which is
       deductible for tax purposes. Intangible and other assets are as follows:

<TABLE>
<CAPTION>
                                           December 31, 2004                             December 31, 2003
                             --------------------------------------------  --------------------------------------------
                                  Gross                          Net            Gross                          Net
                                Carrying      Accumulated     carrying        carrying      Accumulated     carrying
                                 amount     amortization       amount          amount      amortization      amount
                             -------------  --------------  -------------  -------------   ------------   -------------
     <S>                     <C>            <C>             <C>            <C>            <C>             <C>
     Casino contracts        $   4,300,000  $    1,949,440  $   2,350,560  $   4,300,000  $    1,349,440  $   2,950,560
     Non-compete agreements        350,000        227,300         122,700        350,000        163,300         186,700
     Customer lists                250,000         250,000                       250,000         178,600         71,400
     Trade names                   100,000                        100,000        100,000                        100,000
                             -------------  --------------  -------------  -------------  --------------  -------------
     Total intangible assets     5,000,000       2,426,740      2,573,260      5,000,000       1,691,340      3,308,660
     Loan costs                    637,625         125,515        512,110
     Other assets                   49,733                         49,733         49,733                         49,733
                             -------------  --------------  -------------  -------------  --------------  -------------
                             $   5,687,358  $    2,552,255  $   3,135,103  $   5,049,733  $    1,691,340  $   3,358,393
                             =============  ==============  =============  =============  ==============  =============
</TABLE>
                                                                            F-30
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

7.   GOODWILL, INTANGIBLE AND OTHER ASSETS (CONTINUED):

     Casino contracts represent Chex's renewable agreements with Native American
       owned gaming establishments to operate in those establishments for
       initial terms of between one and five years. Casino contracts have
       historically been renewed by gaming establishments and are amortized
       using the straight-line method over seven years. The non-compete
       agreements with members of Chex management are amortized using the
       straight-line method over the five years. Customer lists relate to core
       customers that rely on the use of Chex's facilities and have been fully
       amortized. Trade names consist of the Chex Services and FastFunds names,
       which are believed to be readily identified and known in the marketplace
       by Chex customers. Trade names are considered to have an indefinite life
       and are therefore not amortized. Other assets primarily represent
       long-term deposits and deferred loan costs. Loan costs are amortized over
       the terms of the related loans, which range from nine to forty-five
       months.

     Aggregate amortization expense for intangible assets for the years ended
       December 31, 2004, 2003 and 2002, was $735,400, $740,000 and $876,755,
       respectively. Estimated amortization expense for intangible assets for
       each of the four remaining succeeding fiscal years is as follows:

                     Year ending
                     December 31,                   Amount
                     ------------                ----------
                        2005                     $  664,000
                        2006                        659,000
                        2007                        600,000
                        2008                        551,000


8.   NOTES AND LOANS PAYABLE AND LONG-TERM DEBT:

     Notes and loans payable and long-term debt at December 31, 2004 and 2003
       consist of the following:

     NOTES AND LOANS PAYABLE:

                                                          2004          2003
                                                      -----------   -----------
       Notes payable to individuals; interest
       rates ranging from 9% to 15%; interest and
       principal payable monthly or quarterly; the
       notes are unsecured and mature on various
       dates through December 2005; the notes are
       subject to repayment with ninety days
       notice at the option of the holder;
       subsequent to December 31, 2004, the
       Company repaid $168,000 of these notes
       payable                                        $11,402,602   $10,692,177

                                                                            F-31
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

8.   NOTES AND LOANS PAYABLE AND LONG-TERM DEBT (CONTINUED):

                                                          2004          2003
                                                      -----------   -----------

       Convertible promissory notes; originally
       due November 2002; notes of $100,000 were
       converted into common stock in November
       2003; notes of $185,000 are currently in
       default [A]                                        185,000       185,000

       Convertible promissory notes; interest at
       9.5%, net of discounts [B]                         185,335

       Note payable to an officer of Chex;
       interest at 8%; unsecured; due on demand            14,519       150,000

       Notes payable to officers of the Company;
       interest at 8%; unsecured; due on demand            57,500

       Notes payable to affiliate through common
       ownership and control by the Company's
       president; interest at 10%; unsecured; due
       on demand                                           21,700         5,421

       Note payable under litigation settlement
       agreement; repaid in May 2004                                    400,000
                                                      -----------   -----------
                                                      $11,866,656   $11,432,598
                                                      ===========   ===========

     The weighted-average interest rates on short-term borrowings were 9.95%,
       10.3% and 11.4% in 2004, 2003 and 2002, respectively

     LONG-TERM DEBT:

       Convertible promissory notes; interest at
       7% per annum; collateralized by all assets
       of Chex and the Company's stock ownership
       in FFFC; net of discount [C]                   $ 3,989,446

       Convertible promissory notes; interest at
       5% [D]                                             200,000

       Obligations under capital leases; imputed
       interest rates ranging from 6.5% to 7%; due
       at various dates through October 2007;
       collateralized by equipment                        169,787   $    88,970

                                                                            F-32
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

8.   NOTES AND LOANS PAYABLE AND LONG-TERM DEBT (CONTINUED):

                                                          2004          2003
                                                      -----------   -----------
       Note payable to a bank; interest at prime
       plus .25%; repaid in June 2004                                   150,000

                                                      -----------   -----------
                                                        4,359,233       238,970
     Less current maturities                           (1,315,217)     (201,727)
                                                      -----------   -----------
                                                      $ 3,044,016   $    37,243
                                                      ===========   ===========

     Aggregate annual maturities of long-term debt are as follows:

                      Year ending
                      December 31,            Amount
                      ------------         -----------
                         2005              $ 1,315,217
                         2006                1,375,755
                         2007                1,668,261
                                           -----------
                                           $ 4,359,233
                                           ===========

     At December 31, 2003, Chex had a bank overdraft of $2,497,766 outstanding
       with a bank. Interest on the overdraft was charged at 4.5%. In March
       2004, Chex paid the amount due on the overdraft with funds received by
       the Company in a $5 million debt refinancing, as discussed below.

     [A]   These convertible promissory notes were issued along with warrants to
           purchase 12,834 shares of the Company's common stock. The portion of
           the proceeds applicable to the warrants was determined to be
           approximately $72,000 utilizing the Black-Scholes pricing model, and
           therefore $72,000 of the total proceeds was allocated to the
           warrants, resulting in an imputed interest rate of 12.5%. The value
           assigned to the warrants was amortized to interest expense using the
           effective interest method over the term of the notes. Through
           December 31, 2002, the Company recognized $72,000 of interest expense
           related to the warrants.

           The convertible promissory notes included beneficial conversion
           features in which the notes are convertible at 80% of the average of
           the closing bid price of the Company's common stock during the ten
           trading days immediately preceding the date on which the holder
           elects to convert the notes. The intrinsic value of the beneficial
           conversion features were determined to be approximately $168,000,
           which was charged to interest expense at the time of issuance, as the
           notes are convertible at any time after the date of issuance at the
           option of the holder.

                                                                            F-33
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

8.   NOTES AND LOANS PAYABLE AND LONG-TERM DEBT (CONTINUED):

     [B]   In December 2004, FFFC closed on $1,774,064 of unsecured convertible
           promissory notes (the "Convertible Notes") with various note holders
           (the "Holders"). The Convertible Notes carry a stated interest rate
           of 9.5% per annum, have a 9-month term and are convertible at the
           Holders' option, including any unpaid interest, into shares of FFFC
           common stock at $1.00 per share for a three-year period commencing on
           the due date. The Convertible Notes may be prepaid at any time, in
           whole or in part and from time to time without premium or penalty,
           provided however that FFFC may not make any prepayments unless at
           least 50% of the outstanding amount due on the $5 million notes
           (discussed below) have been paid. At this time, it is uncertain
           whether FFFC will prepay the Convertible Notes. The Holders also
           received warrants to purchase 1,774,064 shares of FFFC common stock
           at an exercise price of $2.00 per share.

           The proceeds from the Convertible Notes have been allocated between
           the estimated fair value of the Convertible Notes and the warrants
           based on their relative fair values. These warrants were valued at
           approximately $113,100 based upon the Company's assumption that the
           market interest rate for a similar convertible note without the
           warrants and the beneficial conversion features would be
           approximately 18%. Therefore $113,100 of the total proceeds was
           allocated to the warrants. FFFC reduced the carrying value of the
           Convertible Notes for this amount, with an offset to additional
           paid-in capital and is amortizing this discount as additional
           interest expense over the nine-month term of the Convertible Notes.
           Accordingly, $12,135 is included in interest expense during the year
           ended December 31, 2004. The beneficial conversion features were
           valued at $1,660,967 as the intrinsic value of the beneficial
           conversion features is limited to the total amount of the proceeds
           received, net of the amount allocated to the warrants. The Company
           reduced the carrying value of the Convertible Notes for this amount,
           with an offset to additional paid-in capital, and is amortizing this
           discount as additional interest expense to the date first convertible
           by the Holders, which is 9 months. Accordingly, $173,200 is included
           in interest expense during the year ended December 31, 2004.

           FFFC also paid $137,925 to an advisory firm in connection with the
           transaction, which was recorded as deferred loan costs and is being
           amortized over the nine-month term of the Convertible Notes.
           Accordingly, $14,261 is included in general and administrative
           expense for the year ended December 31, 2004.

     [C]   In March 2004, the Company closed on $5,000,000 of convertible
           promissory notes (the "Notes") with two financial institutions (the
           "Lenders"). The Notes carry a stated interest rate of 7% per annum
           and have a 45-month term. Interest only payments were due April 2004
           through June 2004. Beginning in July 2004, principal and interest
           payments amortize over the remaining 42-month period. The Notes are
           senior to all other debt of the Company and are collateralized by all
           assets of Chex as defined in the security agreement.

                                                                            F-34
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

8.   NOTES AND LOANS PAYABLE AND LONG-TERM DEBT (CONTINUED):

           The Notes are convertible into common stock at $8.10 per share up to
           an amount equal to 4.99% of the Company's outstanding common stock.
           In June 2004, the Company reduced this conversion price to $6.885 per
           share (the market value of the Company's common stock at that date).
           The Company has the right to make any monthly payment of principal
           and interest in shares of its common stock. The common stock is to be
           issued based on 85% of the average bid price for 20 trading days
           prior to the payment due date. The maximum number of shares that can
           be delivered as payment is to be equal to 10% of the average monthly
           trading volume for the month prior to the payment due date. The
           Company may also issue common shares each month in an amount not to
           exceed 10% of the prior month's total share volume as payment, to be
           applied to the outstanding principal balance up to a value of
           $100,000. Any beneficial conversion features resulting from future
           payments made by the Company in common stock at 85% will be recorded
           in earnings at the time of conversion, as the number of shares the
           holder will receive is not known until the payment occurs.

           The Notes contain certain anti-dilution provisions requiring the
           Company to pay the Lenders as collateral, the pro-rata number of
           shares the Lenders would receive in any spin-off or dividend from the
           Company as if the remaining principal balance under the Note was
           fully converted at $6.885 per share. The dividend shares are to be
           segregated and may be liquidated at the discretion of Lenders.

           The Lenders also received warrants to acquire up to 133,334 shares of
           the Company's common stock at an exercise price of $9.00 per share.
           The warrants are exercisable for a period of five years, and include
           a cashless exercise provision. These warrants were valued at $358,400
           based upon the Black-Scholes option-pricing model, and therefore
           $358,400 of the total costs were allocated to the warrants, resulting
           in an imputed interest rate of 7.5%. In June 2004, the Company
           reduced the exercise price of these warrants to $7.65 per share. In
           August 2004, the Company reduced the exercise price of these warrants
           to $4.26 per share. As a result of the additional allocation
           resulting from these reductions in exercise price, the Company
           allocated an additional $102,800 to these warrants. The Company
           reduced the carrying value of the Notes by this amount and is
           amortizing the discount to interest expense over the 45-month term of
           the Notes. Accordingly, $92,367 has been recorded as interest expense
           during the year ended December 31, 2004. In addition, warrants to
           acquire up to 50,000 shares of Equitex common stock exercisable at
           $6.00 per share for a period of two years were issued to an advisory
           firm in connection with the transaction. These warrants were valued
           at $164,700 based upon the Black-Scholes option-pricing model. The
           Company also paid cash of $320,000 for legal services and finders'
           fees in connection with the transaction. The Company recorded the
           value of these warrants and the cash paid as deferred loan costs and
           is amortizing these costs over the 45-month term of the Notes.
           Accordingly, $107,710 is included in general and administrative
           expense during the year ended December 31, 2004.

           The Company filed with the Securities and Exchange Commission a
           registration statement registering common shares underlying
           conversion of the Notes, warrants and shares used to make monthly
           payments. The registration statement was declared effective July 13,
           2004.
                                                                            F-35
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

8.   NOTES AND LOANS PAYABLE AND LONG-TERM DEBT (CONTINUED):

     [D]   In connection with the June 7, 2004 Merger Agreement, FFFC received
           $400,000 in exchange for convertible promissory notes. The notes are
           convertible into 4,000,000 shares ($0.10 per share) of FFFC common
           stock upon the occurrence of certain future events, and bear interest
           at 5% per annum. Unless converted, any outstanding balance of
           principal and interest is due in April 2007. On June 29, 2004, an
           advisory agreement between Chex and the financial advisor was
           executed (Note 11). As a result, 25% ($100,000) of the notes were
           converted into 1,000,000 shares of FFFC common stock. An additional
           25% ($100,000) was converted in August 2004 upon an independent
           director being added to the FFFC board of directors and the
           satisfaction of certain other criteria. The remaining 50% ($200,000)
           is to convert into 2,000,000 shares of FFFC common stock upon FFFC's
           execution of a definitive merger agreement or acquisition of an
           entity having not less than $10,000,000 in revenue. The conversion of
           the note is deemed to be beneficial as the note converts to common
           stock of FFFC at $0.10 per share (the estimated fair value of FFFC's
           common stock was determined to be $1.00 per share on the date of
           closing). The intrinsic value of the beneficial conversion feature is
           limited to the amount of the proceeds allocated to the convertible
           note; therefore the value of the convertible feature was determined
           to be $400,000. In connection with each of the conversions of a 25%
           portion of the note to common stock, the Company recorded an
           additional $100,000 of interest expense related to the beneficial
           conversion feature. Accordingly, $200,000 has been recorded as
           additional interest expense during the year ended December 31, 2004.
           As the remaining 50% of the conversion feature is contingent upon the
           occurrence of future events, it will be recorded in earnings when
           converted.

9.   INCOME TAXES:

     Income tax expense for the years ended December 31, 2004, 2003 and 2002 is
       as follows:

                          2004              2003             2002
                      -------------    -------------     -------------
       Current:
         State        $      48,889    $      38,000     $      55,000
                       ------------    -------------     -------------
       Deferred:
         Federal          1,242,000
         State              138,000
                      -------------    -------------     -------------
                          1,380,000
                      -------------    -------------     -------------
                      $   1,428,889    $      38,000     $      55,000
                      =============    =============     =============

     During the quarter ended June 30, 2004 management assessed the realization
       of its deferred tax assets. Based on this assessment it was determined to
       be more likely than not that the Company's deferred tax assets will not
       be realizable, and the Company determined that a valuation allowance was
       required. Accordingly, the Company's valuation allowance was increased by
       $1,380,000, which resulted in an increase to the provision for income
       taxes of the same amount.

     The reconciliation between the expected tax benefit computed at the federal
       statutory income tax rate of 34% and the effective tax rate applied to
       the pre-tax loss from continuing operations for the years ended December
       31, 2004, 2003 and 2002, is as follows:

                                                                            F-36
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

9.   INCOME TAXES (CONTINUED):

                                                         2004    2003     2002
                                                        ------  ------   ------
       Statutory Federal income tax rate                 (34%)   (34%)    (34%)
       State taxes, net of federal income tax benefit     (4%)    (4%)     (4%)
       Effect of change in valuation allowance             60%     39%      42%
                                                        ------  ------   ------
                                                           22%      1%       4%
                                                        ======  ======   ======

     The following is a summary of the Company's deferred tax assets and
       liabilities:

<TABLE>
<CAPTION>
                                                               2004          2003
                                                          -------------   ------------
       <S>                                                <C>             <C>
       Deferred tax assets:
         Allowance for loan losses                        $     859,000   $    680,000
         Intangible and other assets                             19,000         18,000
         Compensation and other accruals                        549,000        357,000
         Net operating loss carryforwards                     6,005,000      4,113,000
                                                          -------------   ------------
       Total deferred tax assets                              7,432,000      5,168,000
         Valuation allowance                                 (7,378,000)    (3,727,000)
                                                          -------------   ------------
                                                                 54,000      1,441,000
       Deferred tax liabilities, credit card receivables        (54,000)       (61,000)
                                                          -------------   ------------
       Net deferred tax asset                             $           -   $  1,380,000
                                                          =============   ============
</TABLE>

     Net operating loss carryforwards of approximately $17,700,000 are available
       to offset future taxable income, if any, and expire between 2016 and
       2024. The net operating loss carryforwards may be subject to certain
       limitations due to business acquisitions and other transactions.

10.  RELATED PARTY TRANSACTIONS:

     BONUS TO OFFICER:

     In June 2003, the Company's Board of Directors approved a bonus arrangement
       with the Company's president. The bonus arrangement, effective June 2,
       2003, provides for an annual bonus calculated quarterly based on 5% of
       the increase in the market value of the Company's common stock, accrued
       quarterly, beginning with the closing price as reported by Nasdaq on
       December 31 of each year, and ending with the closing price on December
       31 of the following year. Payments under the bonus arrangement are to be
       made at the discretion of the Company's management from time to time, as
       cash flow permits. Total compensation expense recorded under this
       arrangement from June 2, 2003 through December 31, 2003, was
       approximately $1,490,000, of which approximately $209,000 and $755,000
       was paid in 2003 and 2004, respectively. Approximately $526,000 and
       $1,281,000 is included in accrued liabilities at December 31, 2004 and
       2003, respectively.

                                                                            F-37
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

11.  COMMITMENTS, CONTINGENCIES AND CREDIT RISK:

     LITIGATION:

     In April 2004, Equitex and Chex executed a settlement agreement with Cash
       Systems, Inc. ("Cash Systems") pursuant to which the Company paid Cash
       Systems $125,000 for expenses related to an Agreement and Plan of Merger
       ("APM"), which was terminated in December 2003. As part of the settlement
       agreement, Cash Systems paid Chex approximately $476,000 for commissions
       owed to Chex by Cash Systems. In April 2004, both Equitex and Chex and
       Cash Systems agreed to mutually release each other from further liability
       related to the APM and the Seminole Tribe termination in January 2004;
       however, Equitex and Chex retained the right to legal action against
       Native American Cash Systems Florida, Inc. (NACSF), Native American Cash
       Systems, Inc. (NACS) and its President, for the wrongful termination of
       the Seminole Tribe casino contracts. In February 2005, Equitex and Chex
       reached a tentative settlement agreement with NACSF, NACS and its
       President under which all the parties have agreed to dismiss their claims
       against each other in exchange for mutual releases. It is anticipated
       that this agreement will end litigation.

     In March 2004, Chex commenced a lawsuit in Hennepin County, Minnesota
       demanding repayment of $2,000,000, plus a $1,000,000 termination fee,
       accrued interest and other fees, due from iGames under a term note
       executed in January 2004. In addition, in March 2004, the Company
       commenced a lawsuit in Delaware state court (New Castle County) relative
       to the termination of the Stock Purchase Agreement ("SPA"). iGames has
       asserted it is entitled to approximately $3.3 million in damages. The
       Company is confident that its claims in litigation will be upheld, and
       management believes that the claims made by iGames lack merit. The
       Company intends to vigorously prosecute its claims and defend against
       iGames' claims.

     In May 2002, Key filed a claim with the FDIC for all funds due from Net
       First to Key under the Credit Card Program Agreement through the date
       federal banking regulators closed Net First. The total amount of the
       claim was $4,311,027. In October 2002, the FDIC notified Key that it had
       determined to disallow all but $111,734 of the total claim. The
       notification states that as the FDIC liquidates the assets of the
       receivership, Key may periodically receive payments on the allowed
       portion of this claim through dividends. Therefore, no assurance can be
       given as to whether or not collection will eventually occur. In November
       2002, the Company filed a lawsuit in the United States District Court for
       the Southern District of Florida seeking to recover the full amount of
       its claim. The FDIC answered the complaint, asserting a counterclaim for
       $1,000,000, which the FDIC asserts is for refunds to be made to customers
       who did not receive credit cards as a result of the closing of Net First.
       In 2002, the Company reserved 100% of the net remaining balance due of
       $2,151,207 from the FDIC, as receiver for Net First, in addition to
       amounts previously reserved.

     In December 2004, the Company settled with the FDIC, resulting in Key
       receiving an additional FDIC receiver's certificate for an allowed claim
       of $400,000. All other claims and counterclaims have been released under
       the settlement. The receiver's certificate is to be paid upon
       distribution as the FDIC liquidates the assets of the receivership.
       Therefore, no assurance can be given as to whether or not collection will
       eventually occur.

                                                                            F-38
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


11.  COMMITMENTS, CONTINGENCIES AND CREDIT RISK (CONTINUED):

     LITIGATION (CONTINUED):

     The Company is involved in various other claims and legal actions arising
       in the ordinary course of business. In the opinion of management, the
       ultimate disposition of these matters will not have a material adverse
       impact either individually or in the aggregate on consolidated results of
       operations, financial position or cash flows of the Company.

     CONTINGENCIES:

     On August 6, 2001, the Company distributed all of its assets (which
       primarily consisted of its investments in subsidiaries) to Equitex 2000,
       Inc. ("Equitex 2000"), a subsidiary formed by the Company in 2001.
       Equitex 2000 also assumed all liabilities of the Company. Simultaneous
       with the distribution of assets and liabilities to Equitex 2000, the
       Company transferred its rights, title and interest in the issued and
       outstanding shares of Equitex 2000 to an escrow account, outside of the
       control of the Company. The shares of Equitex 2000 are to be distributed
       from escrow to the stockholders of the Company upon the effective
       registration of Equitex 2000 with the Securities and Exchange Commission.
       Shares of Equitex 2000 are to be distributed based on each stockholder's
       proportional ownership interest in the Company as of July 20, 2001.

     In September 2000, the Company entered into an athlete endorsement, license
       and consulting agreement (the "Agreement") with a professional athlete
       (the "Athlete"). The Athlete was unable to perform the endorsement
       services pursuant to the original term of the Agreement, which expired in
       September 2001. The parties verbally agreed to extend the contract
       through September 2002. The Company asserts that in November 2001, the
       Athlete violated the "Reputational Standards" clause of the Agreement.
       Accordingly, the Company terminated the Agreement, and all compensation
       called for by the Agreement is being withheld. As a result, the Company
       reversed the common stock and warrants that were to be issued under the
       Agreement and reduced stock-based compensation by $62,500 during the year
       ended December 31, 2002.

     A credit limit has been established for each credit card holder account
       acquired by Nova. By agreement, the credit limit can be terminated at any
       time for any reason. Because the initial reservation fee charged to all
       account holders is fully refundable, the total of accounts with credit
       limits in excess of cardholder balances is reflected as a liability in
       the amount of $187,432 and $275,499 as of December 31, 2004 and 2003,
       respectively.

     The Company's credit card receivables were initiated under membership terms
       with VISA and MasterCard. Modification of these terms by VISA and
       MasterCard could adversely affect operating results.

     LEASE COMMITMENTS:

     The Company rents space under various non-cancelable operating leases that
       provide for monthly lease payments through March 2006. Pursuant to
       certain leases, the Company is required to pay its pro-rata share of
       taxes and operating expenses. Certain leases also contain various renewal
       options. Future minimum rental payments due under these non-cancelable
       leases as of December 31, 2004, are as follows:

                                                                            F-39
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

11.  COMMITMENTS, CONTINGENCIES AND CREDIT RISK (CONTINUED):

     LEASE COMMITMENTS (CONTINUED):

                    Year ending
                    December 31,            Amount
                    ------------         -----------
                       2005              $   129,000
                       2006                   19,000
                                         -----------
                                         $   148,000
                                         ===========

     In addition, the Company leases office space in Colorado on a month to
       month basis for $2,500 per month from a corporation in which the
       Company's president is the sole shareholder.

     Total rent expense under operating leases was approximately $283,000,
       $272,000 and $693,000 for the years ended December 31, 2004, 2003 and
       2002, respectively.

     In February 2003, the Company entered into an agreement to terminate the
       operating lease agreement for Key for the unexpired portion of the term
       of the lease. In consideration for this settlement, the Company paid a
       lease termination fee of $150,000 in 2003. This amount was accrued at
       December 31, 2002 and is included in loss from discontinued operations in
       2002.

     CONSULTING AGREEMENTS:

     In May 2004, Chex entered into a consulting agreement with a financial
       advisor to provide assistance in the placement of debt or equity
       financing with prospective investors and facilitating future merger,
       acquisition and strategic partnerships on behalf of the Company. The term
       of the agreement is two years and requires the Company to pay a total of
       $240,000 to the financial advisor in monthly installments of $10,000 each
       month. Additionally, the advisor is to receive a fee if the advisor is
       successful in completing a debt or equity financing for or on behalf of
       the Company. Pursuant to the agreement and in connection with the
       December 2004 closing on $1,774,064 of convertible promissory notes
       issued by FFFC, the advisory firm earned fees of $101,925. FFFC paid
       $62,000 of the fee and recorded a liability of $39,925 as of December 31,
       2004 to the advisory firm, which was paid in February 2005.

     In July 2004, FFIL entered into a twelve-month agreement with a third party
       consultant who is to provide sales, program and business development, and
       consulting services for FFFC's International operations. Under the terms
       of the agreement, FFIL was required to pay the consultant approximately
       $15,800 per month as an advance against future commissions earned by the
       consultant. The consultant will be entitled to a 10% commission on all
       sales generated. In addition, the consultant is to earn a minimum of 3%
       of the acquisition value if the Company closes on an acquisition
       introduced by the consultant. The agreement can be terminated by either
       party subject to not less than three months written notice. No
       commissions were due under this agreement at December 31, 2004.

                                                                            F-40
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

11.  COMMITMENTS, CONTINGENCIES AND CREDIT RISK (CONTINUED):

     CONSULTING AGREEMENTS (CONTINUED):

     In August 2004, Chex entered into a six-month consulting agreement with a
       business advisor to provide management services to assist FFFC to
       establish operations in Canada, as well as to identify acquisition
       prospects in Canada, the United States and abroad. Under the terms of the
       agreement, FFFC was required to pay $10,000 per month, plus pre-approved
       expenses. The agreement terminated in January 2005 and was not renewed.

     In September 2004, FFFC entered into a non-exclusive financial advisory and
       investment banking services agreement with a third party. The third party
       is to provide strategic direction to the Company and to identify and
       assist the Company in specified transactions, as defined. FFFC agreed to
       pay a fee if the advisor is successful in the closing of a transaction as
       defined in the agreement. Pursuant to the agreement and in connection
       with the December 2004 closing of $1,774,064 of convertible promissory
       notes issued by FFFC, the advisor earned fees of $36,000, which were
       included in accrued expenses at December 31, 2004.

     In October 2004, FFFC entered into a management services agreement on a
       month-to-month basis with a third party consultant. The consultant
       provides general administrative and management services to FFFC, as well
       as develops and implements consumer financial services products. These
       products include the FFFC kiosk and stored-value card programs. FFFC is
       required to pay the consultant $10,000 per month. Additionally, FFFC is
       to pay a monthly revenue participation fee at the rate of 10% of gross
       revenues received from sales of its kiosk and stored-value card programs
       after deducting all third party costs. As of December 31, 2004, there
       were no revenues generated.

     CHEX EMPLOYMENT AGREEMENTS:

     Chex has a salary continuation plan for one of its employees. Pursuant to
       the plan, this individual is guaranteed two years of salary, which totals
       approximately $68,000 at December 31, 2004, in the event that the Company
       is sold and employment is terminated under certain circumstances.

     Chex has employment agreements with four of its employees, which expire at
       various dates through February 2006. Pursuant to each agreement, if
       terminated for other than an egregious act, the employees are to continue
       to receive their annual compensation through the term of the agreements,
       aggregating to approximately $273,000 at December 31, 2004. The amounts
       are to be paid in monthly installments over the duration of the original
       contract terms.

     In 2002, Chex terminated one of its employees under an employment
       agreement. In July 2002, Chex and the former employee entered into a
       settlement agreement and mutual release, in which Chex paid the former
       employee $65,000, which was charged to operating expense in 2002.

                                                                            F-41
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

11.  COMMITMENTS, CONTINGENCIES AND CREDIT RISK (CONTINUED):

     CHEX CASINO CONTRACTS:

     Chex operates at a number of Native American owned gaming establishments
       under contracts requiring the Company to pay a rental fee to operate at
       the respective gaming locations. Occasionally, these agreements require
       the Company to prepay a negotiated amount of such anticipated fees.
       Typically, the fees are earned by the gaming establishment over the life
       of the contract based on one of the following scenarios:

       o  A minimum amount as defined in the contract.
       o  A dollar amount, as defined by the contract, per transaction volume
          processed by Chex.
       o  A percentage of Chex's profits at the respective location.
       o  The greater of the monthly amount, dollar amount per transaction
          volume or percent of Chex's profits payable at the end of the contract
          term.

     As of December 31, 2004 and 2003, the Company has recorded $268,929 and
       $182,498, respectively, of prepaid amounts on casino contracts and has
       recorded $574,516 and $587,099, respectively, of accrued liabilities on
       casino contracts.

     Pursuant to the contracts, the Native American owned casinos have not
       waived their sovereign immunity.

     CHEX EMPLOYEE BENEFIT PLAN:

     In January 2003, Chex adopted a 401(k) retirement plan (the "Plan"), which
       covers defined eligible employees of Chex. Eligible employees are able to
       contribute a portion of their compensation to the Plan, subject to an
       annual Internal Revenue Service deferral limit. Employee contributions
       are 100% vested when made. Company contributions are discretionary.
       During 2004 and 2003, Chex made a matching contribution of 100% on the
       first 3% of employee deferrals and 50% on employee deferrals between 3%
       and 5%. Contribution expense was approximately $83,000 and $88,000 for
       the years ended December 31, 2004 and 2003, respectively.

12.  STOCKHOLDERS' EQUITY:

     SERIES D CONVERTIBLE PREFERRED STOCK:

     The Series D Preferred Stock is convertible, together with any cumulative
       unpaid dividends, at any time into shares of the Company's common stock
       at a conversion price per share of common stock equal to 65% of the
       average closing bid price of the Company's common stock as specified in
       the agreement.

     The holder of each share of Series D Preferred Stock is entitled to a 6%
       cumulative annual dividend, payable quarterly. Dividends are payable in
       cash or, at the Company's option, in shares of the Company's common
       stock. Cumulative unpaid dividends are approximately $85,000
       (approximately $208 per share) at December 31, 2004. The Series D
       Preferred Stock contains a liquidation preference equal to the sum of the
       stated value of each share plus an amount equal to 130% of the stated
       value plus the aggregate of all cumulative unpaid dividends on each share
       of Series D Preferred Stock until the most recent dividend payment date
       or date of liquidation, dissolution or winding up of the Company.

                                                                            F-42
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

12.  STOCKHOLDERS' EQUITY (CONTINUED):

     SERIES D CONVERTIBLE PREFERRED STOCK (CONTINUED):

     During the year ended December 31, 2002, 150 shares of Series D Preferred
       Stock plus cumulative unpaid dividends of $38,041 were converted into
       130,388 shares of common stock, at conversion prices of $1.26 to $1.68
       per share.

     During the year ended December 31, 2003, 167 shares of Series D preferred
       stock, plus cumulative unpaid dividends of $49,135 were converted into
       77,876 shares of common stock at conversion prices of $1.50 to $3.96 per
       share.

     SERIES G CONVERTIBLE PREFERRED STOCK:

     The Series G Preferred Stock is convertible, together with any cumulative
       unpaid dividends, at any time into shares of the Company's common stock
       at a conversion price per share equal to the lesser of $39.00 or 65% of
       the average closing bid price of the Company's common stock as specified
       in the agreement.

     The holder of each share of the Series G Preferred Stock is entitled to
       cumulative dividends at 6% per annum plus a 4% dividend default rate,
       payable quarterly. Dividends are payable in cash or, at the Company's
       option, in shares of the Company's common stock. Cumulative unpaid
       dividends are approximately $128,000 (approximately $346 per share) at
       December 31, 2004. The Series G Preferred Stock contains a liquidation
       preference equal to the sum of the stated value of each share plus an
       amount equal to 130% of the stated par value plus the aggregate of all
       cumulative unpaid dividends on each share of Series G Preferred Stock
       until the most recent dividend payment date or date of liquidation,
       dissolution or winding up of the Company. All outstanding shares of
       Series G Preferred Stock were to automatically convert into common stock
       on August 31, 2003. However, the Company has been negotiating with the
       holder to extend the terms; therefore the holder has not elected to
       convert the shares to common stock. The Series G Preferred Stock is
       redeemable at the Company's option at any time prior to its conversion,
       at a redemption price equal to $1,350 per share plus any cumulative
       unpaid dividends.

     During the year ended December 31, 2002, 530 shares of Series G Preferred
       Stock, plus cumulative unpaid dividends of $54,595, were converted into
       204,037 shares of common stock at average conversion prices of $1.68 to
       $13.98 per share.

     SERIES I CONVERTIBLE PREFERRED STOCK:

     The Series I Preferred Stock is convertible, together with any accrued but
       unpaid dividends, at any time into shares of the Company's common stock
       at a conversion price per share equal to the lesser of $35.88 or 65% of
       the average closing price of the Company's common stock as specified in
       the agreement.

                                                                            F-43
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

12.  STOCKHOLDERS' EQUITY (CONTINUED):

     SERIES I CONVERTIBLE PREFERRED STOCK (CONTINUED):

     The holder of each share of Series I Preferred Stock is entitled to
       cumulative dividends at 6% per annum plus a 4% dividend default rate,
       payable quarterly. Dividends are payable in cash, or at the Company's
       option, in shares of the Company's common stock. Cumulative unpaid
       dividends are approximately $488,000 (approximately $305 per share) at
       December 31, 2004. The Series I Preferred Stock contains a liquidation
       preference equal to the sum of the stated value of each share plus an
       amount equal to 125% of the stated value plus the aggregate of all
       cumulative unpaid dividends on each share of Series I Preferred Stock
       until the most recent dividend payment date or date of liquidation,
       dissolution or winding up of the Company. All outstanding shares of the
       Series I Preferred Stock were to automatically convert into common stock
       on July 20, 2004. The Series I Preferred Stock is redeemable at the
       Company's option at any time prior to its conversion at a redemption
       price equal to $1,250 per share plus any cumulative unpaid dividends. The
       Company is currently negotiating with the holder to extend the terms;
       therefore the holder has not elected to convert the preferred shares to
       common stock.

     During the year ended December 31, 2002, the Company redeemed 710 shares of
       Series I Preferred Stock, plus cumulative unpaid dividends of $30,343,
       for $846,343. The redemption price was less than the amount originally
       allocated to the beneficial conversion feature upon issuance in August
       2001, and as a result, loss applicable to common stockholders was reduced
       by $266,000 for the year ended December 31, 2002. In addition, 260 shares
       of Series I Preferred Stock, plus cumulative unpaid dividends of $13,080,
       were converted into 102,673 shares of common stock, at conversion prices
       of $1.68 to $13.98 per share.

     During the year ended December 31, 2003, the Company redeemed 90 shares of
       Series I preferred stock, plus cumulative unpaid dividends of $22,766,
       for $122,776. The redemption price was less than the amount originally
       allocated to the beneficial conversion feature upon issuance in August
       2001, and as a result, loss applicable to common stockholders was reduced
       by $38,430 for the year ended December 31, 2003.

     SERIES J CONVERTIBLE PREFERRED STOCK:

     During the fourth quarter of 2002, the Company issued 1,380 shares of 6%,
       Series J convertible preferred stock, (the "Series J Preferred Stock")
       along with warrants to purchase 23,000 shares of common stock, of which
       650 shares were sold to Chex and are presented as preferred treasury
       stock at December 31, 2002 (total proceeds of $730,000 less issue costs
       of $151,680). The warrants were valued at $20,000 utilizing the
       Black-Scholes option pricing model, and therefore $20,000 of the total
       proceeds was allocated to the warrants resulting in an imputed dividend
       rate of 6.3%. The value allocated to the warrants has been fully accreted
       to net loss applicable to common shareholders. In connection with this
       placement, the Company issued to the underwriter, warrants to purchase
       57,500 shares of common stock.

     In January 2003, all of the outstanding shares of Series J Preferred Stock
       and unpaid dividends of $18,542 were converted into 582,726 shares of
       common stock at $0.40 per share.

                                                                            F-44
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

12.  STOCKHOLDERS' EQUITY (CONTINUED):

     ISSUANCES OF COMMON STOCK:

     2004 ISSUANCES:

     During the year ended December 31, 2004, the Company issued 131,796 shares
       of common stock upon the exercise of stock options and warrants for
       $230,827 cash and for retirement of interest and note payable of $148,962
       at an average exercise price of $1.75 per share.

     During the year ended December 31, 2004, the Company converted $25,647 of
       accounts payable for common stock previously issued as contingent
       consideration.

     In October 2004, the Company issued 4,325 shares of common stock, in
       exchange for legal services. The shares were valued at $25,582 (the
       market-price of the common stock at the date of issuance).

     In November 2004, the Company issued 2,500 shares of common stock to a
       director of the Company in exchange for $6,450 of accrued amounts owed at
       a conversion price of $2.58 per share, the market price at the date of
       issuance.

     2003 ISSUANCES:

     During the year ended December 31, 2003, the Company issued 590,537 shares
       of common stock upon the conversion of 569,453 warrants and 21,084 stock
       options for $1,869,490 (net of offering costs of $241,373) at an average
       conversion price of $3.18 per share. Of these shares, 37,500 were issued
       to a subsidiary of the Company at exercise prices of $2.28 to $3.00 per
       share. The shares issued to the subsidiary are presented as common
       treasury stock. Accordingly, common treasury stock was increased by
       $105,050.

     During the year ended December 31, 2003, accounts and notes payable of
       $298,535 were converted into 64,803 shares of common stock at conversion
       prices of $3.84 to $5.58 per share, the market price of the common stock
       at the date of issuance.

     In December 2003, the Company issued 17,852 shares of common stock as
       contingent consideration for accounts payable. As the shares of common
       stock are sold by the holder, the amounts received will be applied to
       reduce the accounts payable (approximately $163,000 at December 31, 2003)
       due to the holder by the Company.

     2002 ISSUANCES:

     During the year ended December 31, 2002, the Company sold 202,064 shares of
       common stock for $706,196 under various private placement agreements.
       Under the terms of the agreements, 13,106 shares were sold at $16.50 per
       share, representing a 25% discount from the market price at that time.
       The remainder of the shares were sold at the then current market prices
       which were between $3.00 and $7.20 per share.

     During the year ended December 31, 2002, the Company issued 50,810 shares
       of common stock upon the conversion of 50,810 warrants to purchase common
       stock for $256,562 at an average conversion price of $4.02 per share.

                                                                            F-45
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

12.  STOCKHOLDERS' EQUITY (CONTINUED):

     ISSUANCES OF COMMON STOCK (CONTINUED):

     2002 ISSUANCES (CONTINUED):

     In March 2002, the Company issued 2,500 shares of common stock to a
       consultant for services rendered under a deferred compensation agreement.
       These shares were valued at $57,000, the market value of the common stock
       at the date of commitment.

     In May 2002, convertible promissory notes and accounts payable of $100,000
       and $5,000, respectively, plus accrued interest of $2,911 were converted
       into 19,944 and 695 shares of common stock, respectively.

     In November 2002, the Company received notice from Nasdaq notifying the
       Company that the issuance of 50,000 warrants to purchase common stock at
       $3.00 per share in March 2002 to a director of the company violated
       Nasdaq Marketplace Rule 4310(i)(1)(A) (the "Rule"). This director
       exercised the warrants in March and April 2002 for $150,000. The Company
       provided Nasdaq with requested material regarding the warrants and the
       circumstances upon which they were issued, as well as a plan to achieve
       and sustain compliance. The plan included the rescission of the warrants
       and the Company's acquisition of the common stock that was issued in
       connection with the exercise of the warrants. Accordingly, the director
       returned 50,000 shares of common stock to the Company, and the Company
       agreed to reimburse the director $150,000 for the exercise price.
       Additionally, the Company informed Nasdaq that it implemented polices and
       procedures regarding future issuances of equity-based compensation to
       address compliance with marketplace rules. Nasdaq accepted the plan to
       achieve and sustain compliance with respect to this issue.

     In December 2002, the Company issued 69,390 shares of common stock to a
       consultant for services valued at $170,700 ($2.46 per share), the market
       value of the common stock at the date of issuance. In addition, the
       Company issued 24,799 shares in exchange for accrued liabilities of
       $61,005, and 61,306 shares for services valued at $126,213. The shares
       were valued at $2.46 per share, the market price of the common stock at
       the date of issuance.

     NOTES, INTEREST AND STOCK SUBSCRIPTION RECEIVABLES:

     In December 2003, Chex sold 166,667 shares of Equitex common stock owned by
       Chex and which represent treasury stock of the Company, in exchange for
       an $800,000 promissory note. The note is presented as a component of
       stockholders' equity at December 31, 2003. The note had an interest rate
       of 7% per annum and was originally payable in three installments of
       principal and interest through June 30, 2004. The promissory note was
       collateralized by a pledge agreement, which granted Chex a security
       interest in up to 116,667 of the purchased shares. A payment of $200,000
       was received during the year ended December 31, 2004.

     In June 2004, the Company reached an agreement with the note holder to
       return 83,333 shares of Equitex common stock in full payment of the
       remaining $600,000 receivable. Since the market price of the 83,333
       shares of common stock on the date of the agreement was approximately
       $350,000, the Company reduced the receivable by $250,000 and charged
       equity (additional paid-in capital). The 83,333 shares were returned to
       Chex during the third quarter of 2004.

                                                                            F-46
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

12.  STOCKHOLDERS' EQUITY (CONTINUED):

     NOTES, INTEREST AND STOCK SUBSCRIPTION RECEIVABLES (CONTINUED):

     In August 2004, FFFC issued 40,000 shares of its common stock to a
       convertible note holder in exchange for a stock subscription receivable
       valued at $216,000. In February 2005, 15,000 of the shares were returned
       to FFFC.

     At December 31, 2004, notes and interest receivable from an officer of Chex
       of $547,002 is presented as a reduction in stockholders' equity based on
       management's evaluation of repayment intentions. The notes are due on
       demand and the Company is no longer accruing interest on these notes due
       to uncertainty as to collection. The notes are collateralized by
       unregistered shares of common stock.

     TREASURY STOCK TRANSACTIONS:

     2004 TRANSACTIONS:

     During the year ended December 31, 2004, Chex sold 228,050 shares of
       Equitex common stock for approximately $919,514 or $4.03 per share (the
       market price of the common stock at the date of sale). The stock was
       acquired at an average cost of approximately $3.27 per share and the cost
       of the shares sold ($745,247) has been removed from treasury stock. The
       difference between the sales price and cost of the shares sold ($174,267)
       has been classified as additional paid in capital.

      During the year ended December 31, 2004, Chex purchased 17,250 shares of
       Equitex common stock for $113,625 or $6.59 per share (the market price of
       the Company's common stock on the purchase date). The cost of the shares
       has been added to treasury stock.

     During the year ended December 31, 2004, Chex distributed 7,500 shares of
       Equitex common stock to third parties for services rendered to Equitex.
       Accordingly, Equitex has recorded an expense of $50,750 or approximately
       $6.77 per share (the market price of the common stock on the distribution
       date).

     2003 TRANSACTIONS:

     In January 2003, Chex converted 650 shares of the Company's Series J
       Preferred Stock plus unpaid dividends of $8,884 into 274,536 shares of
       common stock. The cost of the preferred stock was $650,000, which has
       been reclassified from preferred treasury stock to common treasury stock.

     In June 2003, Chex purchased 50,000 shares of Equitex common stock from its
       affiliate, Equitex 2000 for $4.14 per share (the market price of the
       common stock at the date of the purchase). The cost of the shares
       ($207,000) has been classified as treasury stock.

     During the year ended December 31, 2003, Chex exercised warrants to
       purchase 37,500 shares of Equitex common stock at exercise prices of
       $2.31 to $3.00 per share. The cost of these shares issued ($105,050) has
       been classified as treasury stock.

                                                                            F-47
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

12.  STOCKHOLDERS' EQUITY (CONTINUED):

     TREASURY STOCK TRANSACTIONS (CONTINUED):

     2003 TRANSACTIONS (CONTINUED):

     During the year ended December 31, 2003, Chex sold 204,334 shares of
       Equitex common stock between $3.42 and $6.00 per share (the market prices
       of the common stock at the date of each sale). The stock was acquired at
       an average cost of approximately $2.82 per share and the cost of the
       shares sold ($575,968) has been reclassified from treasury stock. The
       excess between the sales price over the cost of the shares sold
       ($576,034) has been classified as additional paid in capital.

     2002 TRANSACTIONS:

     In April 2002, Chex purchased 17,608 shares of the Company's common stock
       from a related party under a Stock Purchase Agreement for $80,000 ($4.56
       per share). The cost of the shares received has been classified as
       treasury stock.

     In August 2002, Chex acquired 21,811 shares of the Company's common stock
       valued at $62,814 ($2.88 per share, the market price of the Company's
       common stock on the purchase date). The cost of the shares received has
       been classified as treasury stock.

     STOCK OPTIONS AND WARRANTS:

     STOCK OPTIONS:

     A summary of the status of stock options outstanding and exercisable and
       weighted average exercise prices is as follows:

<TABLE>
<CAPTION>
                                   2003 Plan                          1999 Plan                            Total
                      ---------------------------------   --------------------------------   ---------------------------------
                                           Weighted                           Weighted                           Weighted
                                            average                            average                            average
                          Shares        exercise price       Shares        exercise price      Shares(1)     exercise price(1)
                      --------------  -----------------   -------------  -----------------   -------------  ------------------
<S>                   <C>             <C>                 <C>            <C>                 <C>            <C>
   January 1, 2002                    $               -         283,334  $           36.84         297,734  $            35.00
       Granted                     -                  -
       Forfeited                   -                  -
       Exercised                   -                  -               -                  -               -                   -
                      --------------  -----------------   -------------  -----------------   -------------  ------------------

   December 31, 2002                                            283,334              36.84         297,734               35.94
       Granted               250,000               4.98               -                  -         250,000                4.98
        Forfeited                  -                  -               -                  -               -                   -
       Exercised            (21,084)               4.08               -                  -        (21,084)                4.08
                      --------------  -----------------   -------------  -----------------   -------------  ------------------

   December 31, 2003         228,916               5.04         283,334              36.84         526,650               22.50
       Granted               333,334               5.10                                            333,334                5.10
       Forfeited                   -                  -       (168,500)              39.00       (168,500)
       Exercised            (68,700)               4.08                                           (68,700)                4.08
                      --------------  -----------------   -------------  -----------------   -------------  ------------------

   December 31, 2004         493,550  $            5.22         114,834  $           32.58         622,784  $            10.56
                      ==============  =================   =============  =================   =============  ==================
</TABLE>

                                                                            F-48
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

12.  STOCKHOLDERS' EQUITY (CONTINUED):

     STOCK OPTIONS AND WARRANTS (CONTINUED):

     STOCK OPTIONS (CONTINUED):

     Options exercisable at December 31, 2004, expire from April 2005 through
       July 2009.

     (1) Total shares and the calculation for the weighted average exercise
         price include 14,400 options outstanding from the 1993 Option Plans
         with an exercise price of $18.00. There have been no changes in the
         number of options issued under the 1993 Option Plans during the three
         years ended December 31, 2002, 2003 and 2004.

     The following table sets forth the exercise price range, number of shares,
       weighted average exercise price and remaining contractual lines by groups
       of options as of December 31, 2004.

                                            Weighted             Weighted
                            Number          average              average
     Exercise price       of options        exercise            remaining
         range            outstanding         price                life
     -----------------    -----------    --------------      -------------
         $4.08 - $6.18        493,550     $        5.21              4.18
       $18.00 - $24.00         20,234     $       19.73               .44
       $33.00 - $36.00        109,000     $       33.05               .31
                          -----------     -------------      ------------
                              622,784     $       10.56              3.38
                          ===========     =============      ============

     In 1993, the Company adopted two stock option plans: the 1993 Stock Option
       Plan and the 1993 Stock Option Plan for Non-Employee Directors (the "1993
       Option Plans"). In January 1999, the Company's Board of Directors adopted
       an incentive stock option plan (the "1999 Option Plan") covering up to
       166,667 shares of the Company's common stock. In April 2000, the
       Company's Board of Directors amended the 1999 Option Plan to cover up to
       283,334 shares of the Company's common stock, which have all been
       granted.

     In January 2003, the Company adopted the 2003 Stock Option Plan (the "2003
       Plan"). Common stock reserved for options under the 2003 Plan total
       583,334.

      In May and June 2003 the Company granted five-year options to purchase
       233,333 shares of common stock to directors, officers and employees of
       the Company (which includes 126,667 options to Chex employees) and 16,667
       options to a consultant for services. The options have exercise prices
       between $4.08 and $6.18 per share (the market price of the common stock
       at the respective grant dates). The options granted to the consultant
       were valued at $19,000 based upon the Black-Scholes option pricing model.

     In July 2004, the Company granted five-year options to purchase 333,334
       shares of common stock to directors, officers, employees and consultants
       of the Company, which includes 97,500 options to Chex employees. The
       options were granted under the 2003 Plan. The options have an exercise
       price of $5.10 per share (the market price of the common stock on the
       date of grant). The 75,000 options that were granted to the consultants
       were valued at $6,970 based upon the Black-Scholes option pricing model.

                                                                            F-49
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

12.  STOCKHOLDERS' EQUITY (CONTINUED):

     STOCK OPTIONS AND WARRANTS (CONTINUED):

     STOCK OPTIONS (CONTINUED):

     No stock options were granted in 2002. In 2003 and 2004, stock options were
       granted to officers, directors, employees and consultants of the Company
       from the 2003 Plan as follows:

                                              2004                  2003
                                    ---------------------  ---------------------
                                    Number of     Option   Number of     Option
         Option type   Grantee        shares       price     shares       price
         -----------  ----------    ---------    --------  ---------    --------

         Incentive    Directors       145,834    $  5.10      88,000    $   6.18
         Incentive    Officers         19,167    $  5.10      16,667    $   6.18
         Incentive    Employees        93,333    $  5.10     128,667    $   4.08
         Incentive    Consultant       75,000    $  5.10      16,666    $   4.08
                                    ---------              ---------
                                      333,334                250,000
                                    =========              =========

     The Company has reduced the exercise price of certain existing stock
       options previously issued to employees to purchase up to 134,051 shares
       of the Company's common stock. As a result of the reduction in exercise
       price, these stock options are now accounted for as variable awards from
       the date of modification through the date the award is exercised,
       forfeited, or expires unexercised in accordance with FIN No. 44,
       Accounting for Certain Transactions involving Stock Compensation. Through
       December 31, 2004, recharacterization of these options as variable awards
       resulted in additional compensation expense of $73,000, which was
       recorded during the year ended December 31, 2003.

     WARRANTS:

     A summary of the status of warrant transactions for the years ending
       December 31, 2004, 2003 and 2002 are as follows:

                                                                  Weighted
                                                                  average
                                                Shares         exercise price
                                              -----------      --------------
        Outstanding at January 1, 2002          1,391,825      $        27.33
          Granted                                 353,752                6.70
          Exercised                              (50,810)                5.05
          Forfeited                              (32,778)               40.98
                                              -----------      --------------

        Outstanding at December 31, 2002        1,661,989               23.35
          Granted                                 290,536                4.06
          Exercised                             (569,453)                3.12
          Forfeited                              (28,865)               11.58
                                              -----------      --------------

                                                                            F-50
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


12.  STOCKHOLDERS' EQUITY (CONTINUED):

     STOCK OPTIONS AND WARRANTS (CONTINUED):

     WARRANTS (CONTINUED):

            Outstanding December 31, 2003           1,354,207             23.32
              Granted                                 183,333              4.74
              Exercised                               (63,096)             1.62
              Forfeited                              (824,141)            31.14
                                                    ---------        ----------
            Outstanding at December 31, 2004          650,303        $    10.02
                                                    =========        ==========

     2004 TRANSACTIONS:

     In March 2004, the Company issued warrants to acquire up to 133,333 shares
       of common stock at an exercise price of $9.00 to the Lenders of the $5
       million convertible promissory notes (Note 8). These warrants were valued
       at $358,400 based upon the Black-Scholes option-pricing model. In June
       2004 the Company reduced the exercise price of these warrants to $7.65
       per share. In August 2004, the Company reduced the exercise price of
       these warrants to $4.26 per share. As a result of the additional
       allocation resulting from these reductions in exercise price, the Company
       allocated an additional $102,800 to these warrants. In addition, warrants
       to acquire up to 50,000 shares of common stock exercisable at $6.00 per
       share for a period of two years were issued to an advisory firm in
       connection with the convertible notes. These warrants were valued at
       $184,200 based upon the Black-Scholes option-pricing model.

     2003 TRANSACTIONS:

     During the year ended December 31, 2003, the Company issued warrants to
       consultants to purchase 290,536 shares of the Company's common stock at
       prices ranging from $2.46 to $6.00 per share (the market price of the
       common stock at the dates of the grant). These warrants were valued at
       $235,000 based upon the Black-Scholes option pricing model. A related
       party received 33,334 of these warrants.

     In addition, during the year ended December 31, 2003, the Company reduced
       the exercise price of certain existing warrants to purchase up to 248,288
       shares of the Company's common stock to induce the holders to exercise
       these warrants. The warrants were initially issued in connection with the
       sale of preferred stock. As a result of the reduction in the exercise
       price, loss applicable to common stockholders was increased by $375,000
       for the year ended December 31, 2003. The Company also reduced the
       exercise price of certain existing warrants to purchase up to 38,335
       shares of the Company's common stock, including 13,334 warrants issued to
       Chex. As a result of the reduction in exercise price, the Company
       recognized an additional $28,000 of stock based compensation expense
       relating to these repriced warrants.

                                                                            F-51
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

12.  STOCKHOLDERS' EQUITY (CONTINUED):

     STOCK OPTIONS AND WARRANTS (CONTINUED):

     WARRANTS (CONTINUED):

     2002 TRANSACTIONS:

     In April 2002, the Company entered into a consulting agreement with an
       individual to assist the Company in obtaining a state or national bank
       charter. Pursuant to the agreement, the Company issued the consultant
       warrants to purchase 16,667 shares of common stock at $4.50 per share
       (the market value of the Company's common stock was $5.94 per share at
       the date of the agreement). The warrants were valued at approximately
       $62,000 based upon the Black-Scholes option pricing model at the date of
       commitment, which was recognized as operating expense during the year
       ending December 31, 2002, as the performance criteria under the agreement
       were fully satisfied.

     In January 2002, the Company entered into a consulting agreement for
       financial services in exchange for 2,500 shares of common stock and
       warrants to purchase an additional 2,500 shares of common stock at an
       exercise price equal to 120% of the closing bid price of the Company's
       common stock at the date of the agreement. At the date of commitment,
       total compensation expense was estimated to be approximately $72,000,
       which was recognized as operating expense during the year ended December
       31, 2002, as the performance criteria were fully satisfied. The Company
       issued the common stock and warrants underlying this agreement in March
       2002.

     During the year ended December 31, 2002, the Company issued three-year
       warrants to purchase an additional 8,889 shares of the Company's common
       stock at prices ranging from $21.00 to $30.00 per share (the market price
       of the common stock at the date of grant was $21.30) to a holder of the
       Company's convertible preferred stock. These warrants were valued at
       $53,000 based upon the Black-Scholes option pricing model. In addition,
       the Company issued warrants to purchase 5,000 shares of common stock at
       prices ranging from $22.44 to $30.00 per share (the market price at the
       date of grant was $23.70) to unrelated parties as additional
       consideration for convertible promissory notes, as well as warrants to
       purchase 25,000 shares of common stock at $2.46 per share (the market
       price of the common stock at the date of issuance).

     In addition, during the year ended December 31, 2002, the Company issued
       warrants to purchase 16,667 shares of common stock to an outside
       consultant. The warrants were exercisable immediately at $2.46 per share
       (the market price of the common stock at the date of issuance). The
       warrants were valued at $10,900, based upon the Black-Scholes option
       pricing model. In addition, the Company converted $39,900 of accounts
       payable due to a consultant into 25,000 warrants to purchase shares of
       common stock in December 2002.

     During the year ended December 31, 2004, in conjunction with various
       private placements, the Company issued warrants to purchase 198,529
       shares of common stock at prices ranging from $3.00 to $6.00 per share.

     The fair value of each warrant and option granted to non-employees during
       2004, 2003 and 2002 was estimated on the date of grant using the
       Black-Scholes option-pricing model. The following weighted average
       assumptions were utilized:

                                                                            F-52
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

12.  STOCKHOLDERS' EQUITY (CONTINUED):

     STOCK OPTIONS AND WARRANTS (CONTINUED):

     WARRANTS (CONTINUED):

     2002 TRANSACTIONS (CONTINUED):

                                             2004          2003         2002
                                           --------   -----------   ----------

       Expected dividend yield                    0             0            0
       Expected stock price volatility          99%           86%          84%
       Risk-free interest rate                   2%         1.25%         2.0%
       Expected life of warrants            2 years    0.85 years    1.3 years

13.  BUSINESS CONCENTRATIONS:

     Chex's operations are not concentrated in any specific geographic region,
       but are tied to the Native American gaming industry. Chex generated its
       fee income from contracts with Native American Tribes for the years ended
       December 31, 2004, 2003 and 2002, as follows:

<TABLE>
<CAPTION>
                                           Number of locations                Percent of fees
                                      ------------------------------   ------------------------------
                                       2004       2003       2002        2004      2003       2002
                                      --------  ---------  ---------   --------  ---------  ---------
       <S>                            <C>       <C>        <C>         <C>       <C>        <C>
       Native American Tribe A               2          2          2        22%        16%        13%
       Native American Tribe B               -          -          3          -          -         7%
       Native American Tribe C               3          1          1        11%         9%         9%
       Native American Tribe D               -          5          5          -        23%        18%
       Native American Tribe E               3          2          2        13%        10%         7%
                                      --------  ---------  ---------   --------  ---------  ---------
                                             8         10         13        46%        58%        54%
                                      ========  =========  =========   ========  =========  =========
</TABLE>

     [A] Effective November 2002, the contract with Native American Tribe B was
       terminated.

     [B] Effective January 2004, the contract with the Native American Tribe D,
       was terminated.

                                                                            F-53
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

14.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):

     Selected unaudited quarterly financial data for the years ended 2004 and
       2003 is summarized below.

<TABLE>
<CAPTION>
                                                                               2004 quarters
                                                       ------------------------------------------------------------
                                                            First         Second           Third         Fourth
                                                           quarter      quarter(a)        quarter      quarter (b)
                                                       --------------  -------------  -------------  --------------

     <S>                                               <C>             <C>            <C>            <C>
     Revenues                                          $    3,541,814  $   3,524,727  $   4,371,927  $    4,055,523
     Net loss                                               (631,014)    (3,479,439)    (1,063,561)     (2,283,969)
     Preferred stock beneficial conversion feature,
       deemed dividends and other transactions               (58,090)       (58,350)       (56,600)        (56,000)
     Loss from continuing operations                        (627,710)    (3,477,014)    (1,061,093)     (2,282,182)
     Loss from discontinued operations                        (3,304)        (2,425)        (2,468)         (1,787)
     Net loss applicable to common shareholders             (689,104)    (3,537,789)    (1,120,161)     (2,339,969)
     Basic and diluted loss per common share(c)                (0.12)         (0.63)         (0.20)          (0.41)
</TABLE>

<TABLE>
<CAPTION>
                                                                               2003 quarters
                                                       ------------------------------------------------------------
                                                            First         Second           Third         Fourth
                                                           quarter        quarter         quarter      quarter(d)
                                                       --------------  -------------  -------------  -------------
     <S>                                               <C>             <C>            <C>            <C>
     Revenues                                          $    4,702,999  $   4,662,227  $   4,910,317  $    4,240,498
     Net loss                                               (306,685)      (453,150)      (761,714)     (3,055,676)
     Preferred stock beneficial conversion feature,
       deemed dividends and other transactions               (27,360)       (60,330)      (295,300)       (195,860)
     Loss from continuing operations                        (278,241)      (442,755)      (739,164)     (3,041,224)
     Loss from discontinued operations                       (28,444)       (10,395)       (22,550)        (14,452)
     Net loss applicable to common shareholders             (334,045)      (513,480)    (1,057,014)     (3,251,536)
     Basic and diluted loss per common share(c)                (0.07)         (0.11)         (0.22)          (0.66)
</TABLE>


     (a)  Includes an increase in the valuation allowance for deferred tax
          assets of $1,380,000 and $626,750 of stock based compensation.

     (b)  Includes $236,500 recorded as a valuation allowance on a note
          receivable and $173,200 recorded as interest expense for beneficial
          conversion features on promissory notes.

     (c)  The basic and diluted loss per share for the quarters ended differs
          from the basic and diluted loss per share reported in the Company's
          previous filings due to the retroactive restatement required for the
          reverse stock split.

     (d)  Includes approximately $1,400,000 of expense recorded in the fourth
          quarter of 2003 under a bonus agreement with the Company's president.
          In addition, during the fourth quarter of 2003 the Company recorded an
          allowance of $250,000 on a note receivable due from Paymaster Jamaica,
          recorded a $256,000 discount on a note receivable due from a customer
          and the Company recorded approximately $300,000 in professional
          expenses relating to litigation and merger and acquisition activities.

                                                                            F-54