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

                                   FORM 10-QSB

              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the quarter ended September 30, 1999

             ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from _________to_________

                           Commission File No. 0-12374


                                  EQUITEX, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


Delaware                                                              84-0905189
-------------------------------                              -------------------
(State or other jurisdiction of                                    (IRS Employer
incorporation or organization)                               Identification No.)

                            7315 East Peakview Avenue
                            Englewood, Colorado 80111
               ---------------------------------------------------
               (Address of principal executive offices) (Zip code)


                                 (303) 796-8940
               ---------------------------------------------------
               (Registrant's telephone number including area code)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months,  and (2) has been subject to such filing  requirements
for the past 90 days. Yes [X] No [ ]

Number of shares of common stock outstanding at November 12, 1999: 7,106,943

<PAGE>

                                  EQUITEX, INC.



PART 1             FINANCIAL INFORMATION

PART 2            OTHER INFORMATION




                                        2
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 1999
                                   (UNAUDITED)

                                     ASSETS

Cash and cash equivalents ....................................   $    908,829
                                                                 ------------
Receivables, net of allowance for
  uncollectible accounts of $223,000:
     Accounts receivable .....................................      1,000,499
     Loans and notes receivable ..............................        891,316
                                                                 ------------
                                                                    1,891,815
Mortgage loans held for sale, less loan
  loss reserve of $958,000 ...................................     28,778,109
                                                                 ------------
Inventories ..................................................        156,383
                                                                 ------------
Fixed assets, net of accumulated
 depreciation of $980,400 ....................................      1,031,818
                                                                 ------------
Investments:
     Trading securities ......................................      1,034,262
     Available for sale securities ...........................         39,836
     Other Investments .......................................        141,434
     Investment in First TeleBanc Corp. ......................        800,000
     Investment in VP Sports, Inc. ...........................      1,957,800
     Investment in First Net One Joint Venture ...............        275,811
                                                                 ------------
                                                                    4,249,143
                                                                 ------------
Intangible assets, net of accumulated
    amortization of $69,000 ..................................      8,810,888
Restricted cash and other deposits ...........................        374,924
Other ........................................................        708,703
                                                                 ------------
                                                                    9,894,515
                                                                 ------------
                                                                 $ 46,910,612
                                                                 ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Accounts payable and accrued liabilities ................   $  6,157,463
     Notes payable and other obligations .....................      2,398,777
     Warehouse loans and other notes payable .................     21,934,169
                                                                 ------------
       Total liabilities .....................................     30,490,409
                                                                 ------------
Minority interest ............................................      2,857,000
                                                                 ------------
Stockholders' equity:
     Preferred stock; convertible, par value $1,000;
         4,500 shares authorized:
         Series D, 6%, 1,200 shares issued and outstanding ...      1,200,000
         Series E, 250 shares issued and outstanding .........        250,000
     Common stock, par value $.02; 7,500,000
       shares authorized; 7,140,293 shares issued; 7,106,943
        shares outstanding ...................................        143,206
     Additional paid-in capital ..............................     21,257,597
     Accumulated comprehensive other income ..................         10,643
     Accumulated deficit .....................................     (9,184,206)
     Less: treasury stock at cost ............................       (114,037)
                                                                 ------------
       Total stockholders' equity ............................     13,563,203
                                                                 ------------
                                                                 $ 46,910,612
                                                                 ============

                 See notes to consolidated financial statements.

                                        3
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          Three                         Nine
                                                       months ended                  months ended
                                                       September 30,                 September 30,
                                                   1999            1998          1999            1998
                                                -----------    -----------    -----------    -----------
                                                               (Pro forma)*                  (Pro forma)*
<S>                                             <C>            <C>            <C>            <C>
Revenues ....................................   $   679,728    $   204,272    $ 1,676,582    $   209,182
Cost of sales ...............................        99,721         79,998        342,273         79,998
                                                -----------    -----------    -----------    -----------

Gross profit ................................       580,007        124,272      1,334,309        129,184
                                                -----------    -----------    -----------    -----------

Selling,  general and administrative expenses     1,302,220      1,282,702      3,128,514      2,128,917
Losses (gains) on trading securities ........       (55,266)      (804,245)        82,489       (480,148)
Interest income .............................       (79,240)                     (154,169)
Interest expense ............................       221,264         29,630        283,085
Equity loss in VP Sports, Inc. ..............       150,330                       150,330         77,135
                                                -----------    -----------    -----------    -----------
                                                  1,539,308        508,087      3,490,249      1,725,904
                                                -----------    -----------    -----------    -----------

Loss before minority interest and taxes .....      (959,301)      (383,815)    (2,155,940)    (1,596,720)
Minority interest ...........................                          903                        26,200
                                                -----------    -----------    -----------    -----------

Loss before income taxes ....................      (959,301)      (382,912)    (2,155,940)    (1,570,520)
Provision for income taxes ..................        41,974         63,180         41,968         63,180
                                                -----------    -----------    -----------    -----------

Net loss ....................................    (1,001,275)      (446,092)    (2,197,908)    (1,633,700)
Other comprehensive income (loss),
  unrealized holding gain (loss) on
   investments ..............................       (39,835)       (35,361)        21,391         16,176
                                                -----------    -----------    -----------    -----------

Comprehensive loss ..........................   $(1,041,110)   $  (481,453)   $(2,176,517)   $(1,617,524)
                                                ===========    ===========    ===========    ===========


Net loss ....................................   $(1,001,275)   $  (446,092)   $(2,197,908)   $(1,633,700)
Amortization of discount on preferred stock .    (1,884,615)                   (3,217,713)
                                                -----------    -----------    -----------    -----------

Net loss applicable to common shareholders ..  $(2,885,890)    $  (446,092)   $(5,415,621)   $(1,633,700)
                                                ===========    ===========    ===========    ===========


Net loss per common share ...................  $       (.40)   $      (.09)   $      (.83)   $      (.40)
                                               ============    ===========    ===========    ===========

Weighted average number of
  common shares outstanding .................  $  7,152,823    $ 4,700,532    $ 6,542,114    $ 4,096,403
                                               ============    ===========    ===========    ===========
</TABLE>
*    As if an operating company rather than a BDC.

                 See notes to consolidated financial statements.

                                        4
<PAGE>

                                  EQUITEX, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                             Three            Nine
                                                                          months ended    months ended
                                                                          September 30,   September 30,
                                                                              1998            1998
                                                                          (while a BDC)   (while a BDC)
                                                                           -----------    -----------
<S>                                                                        <C>            <C>
Revenues:
     Interest and dividends ............................................   $    16,128    $    40,324
     Consulting fees ...................................................                      375,000
     Administrative fees ...............................................           120          2,325
                                                                           -----------    -----------
                                                                                16,248        417,649
                                                                           -----------    -----------
Expenses:
     Salaries and consulting fees ......................................        75,154        225,460
     Officer's bonus ...................................................       714,777        802,342
     Office rent .......................................................         7,501         23,689
     Legal and accounting ..............................................       225,288        276,077
     Employee benefits .................................................        37,186        169,947
     Advertising and promotion .........................................         9,510         15,065
     Other general and administrative ..................................        53,589        224,759
     Interest ..........................................................        29,606         77,135
     Bad debt expense ..................................................                       15,703
     Depreciation and amortization .....................................         2,532          7,888
                                                                           -----------    -----------
                                                                             1,155,143      1,838,065
                                                                           -----------    -----------
Net investment loss ....................................................    (1,138,895)    (1,420,416)
                                                                           -----------    -----------

Net realized gain on investments and net unrealized gain on investments:
     Proceeds from sales of investments ................................       156,853      1,018,446
     Less: cost of investments .........................................       (19,902)      (258,565)
                                                                           -----------    -----------
Net realized gain on investments before income taxes ...................       136,951        759,881
                                                                           -----------    -----------

Net investment loss and net realized gain
  on investments before income taxes ...................................    (1,001,944)      (660,535)
Income tax benefit (provision) - deferred ..............................        87,370        (63,180)
                                                                           -----------    -----------
Net investment loss and net realized
  gain on investments ..................................................      (914,574)      (723,715)
                                                                           -----------    -----------

Decrease in unrealized appreciation on investments .....................      (822,396)    (1,252,859)
Less income tax benefit applicable to decrease
 (increase) in realized appreciation ...................................       320,734        488,616
Add: allowance for income tax benefit ..................................      (488,616)      (488,616)
                                                                           -----------    -----------
                                                                              (990,278)    (1,252,859)
                                                                           -----------    -----------
Net decrease in net assets resulting from
  operations ...........................................................   $(1,904,852)   $(1,976,574)
                                                                           ===========    ===========


Decrease in net assets per share .......................................   $      (.41)   $      (.48)
                                                                           ===========    ===========

Weighted average number of common
   shares outstanding ..................................................     4,700,532      4,096,403
                                                                           ===========    ===========
</TABLE>
                 See notes to consolidated financial statements.

                                        5
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              1999            1998
                                                                           -----------    -----------
                                                                                          (pro forma)*
<S>                                                                        <C>            <C>
Cash flows (used) provided by operating activities:
Net loss ...............................................................   $(2,197,908)   $(1,633,700)
Adjustments to reconcile net loss to net cash
  provided by operating activities:
     Depreciation and amortization .....................................       101,115          7,888
     Services for stock ................................................       200,000
     Minority interest in net loss .....................................                       26,200
     Losses in equity investments ......................................       150,330         77,135
Changes in assets and liabilities, net of business
 acquisitions:
     Receivables .......................................................      (473,578)        22,455
     Mortgage loans held for sale ......................................    (4,525,217)
     Inventories .......................................................       (36,685)
     Restricted cash and other deposits ................................      (374,924)
     Other assets ......................................................      (805,104)        63,216
     Accounts payable and accrued liabilities ..........................    (1,851,824)       463,526
     Warehouse loans and other notes payable ...........................     4,148,093
                                                                           -----------    -----------
Net cash provided by operating activities ..............................    (5,665,692)    (1,018,190)
                                                                           -----------    -----------

Cash flows (used) provided by investing activities:
     Cash acquired on business acquisition .............................    (2,327,500)
     Purchase of fixed assets ..........................................       (76,323)        (5,347)
     Repayment of loans and notes receivable ...........................                     (585,107)
     Increase in other investments .....................................                       27,301
     Increase in deferred acquisition costs ............................      (228,988)
     Increase in deposits and other
     Decrease in tradename and franchise costs .........................       (27,500)
                                                                           -----------    -----------
Net cash used in investing activities ..................................    (2,660,311)      (563,153)
                                                                           -----------    -----------

Cash flows (used) provided by financing activities:
     Common stock issued for cash ......................................     5,819,965      1,664,352
     Preferred stock issued for cash ...................................     3,300,000
     Preferred dividends paid ..........................................       (26,509)
     Issuance of notes payable .........................................       298,624        567,889
     Repayment of notes payable ........................................      (132,601)      (327,599)
                                                                           -----------    -----------
Net cash provided by financing activities ..............................     9,234,832      1,904,642
                                                                           -----------    -----------
</TABLE>
                 See notes to consolidated financial statements.

                                        6
<PAGE>



                         EQUITEX, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              1999            1998
                                                                           -----------    -----------
                                                                                          (pro forma)*
<S>                                                                        <C>            <C>
Change in cash and cash equivalents ....................................       908,829        323,299
Cash and cash equivalents, beginning of period .........................          --            9,187
                                                                           -----------    -----------

Cash and cash equivalents, end of period ...............................   $   908,829    $   332,486
                                                                           ===========    ===========

Supplemental disclosure of non-cash investing and financing activities:

     Common stock issued for common stock of
       previously unrelated entity .....................................                  $   565,639
                                                                                          ===========


     Common stock issued in satisfaction of
       note payable and accrued interest ...............................   $   158,236
                                                                           ===========

     Common stock issued for services ..................................   $   200,000
                                                                           ===========

     Conversion of preferred stock to common
       stock ...........................................................   $ 2,142,459
                                                                           ===========

     Amortization of discount on preferred stock .......................   $ 1,333,098
                                                                           ===========

     Purchase of FBMS, net of cash acquired:
       Fair value of assets acquired ...................................   $26,920,000
       Intangible assets ...............................................     7,828,000
       Liabilities assumed .............................................   (32,997,000)
       Fair value of assets exchanged ..................................    (2,531,000)
                                                                           -----------
       Cash acquired ...................................................   $  (780,000)
                                                                           ===========
     Purchase of Victoria Precision, Inc.:
       Fair value of assets acquired ...................................   $ 5,769,000
       Intangible assets ...............................................     3,166,000
       Liabilities assumed .............................................    (4,969,000)
       Fair value of assets exchanged ..................................      (859,000)
                                                                           -----------
       Cash paid .......................................................   $ 3,107,000
                                                                           ===========
</TABLE>

*    As if an operating company rather than a BDC.

                 See notes to consolidated financial statements.

                                        7
<PAGE>

                                  EQUITEX, INC.
                             STATEMENT OF CASH FLOWS
                      NINE MONTHS ENDED SEPTEMBER 30, 1998
                                  (WHILE A BDC)
                                   (UNAUDITED)


Cash flows from operating activities:
  Net change in net assets ...................................   $ (1,976,574)
  Adjustments to reconcile net change in net assets
    to net cash used in operating activities:
     Depreciation and amortization ...........................          7,888
     Realized gain on sale of investments ....................       (759,881)
     Unrealized loss on investments ..........................      1,252,859
Proceeds from sales of investments ...........................      1,018,446
Purchase of investments ......................................     (1,142,520)
Collection of notes receivable ...............................        173,083
Issuance of notes receivable .................................       (742,897)
Changes in assets and liabilities:
     Increase in interest receivable .........................        (25,244)
     Increase in trade receivables ...........................        (93,144)
     Decrease in accounts receivable - brokers ...............         73,741
     Increase in subscriptions receivable ....................         (1,446)
     Increase in prepaid expense .............................        (23,714)
     Decrease in deferred income tax benefit .................         63,180
     Increase in accounts payable and other accrued liabilities        80,448
     Increase in accounts payable to brokers .................        213,562
     Increase in accrued bonus to officer ....................        347,576
                                                                 ------------
Net cash used in operating activities ........................     (1,534,637)
                                                                 ------------

Cash flows from investing activities:
     Purchase of furniture and equipment .....................         (7,394)
                                                                 ------------
Net cash used in investing activities ........................         (7,394)
                                                                 ------------

Cash flows from financing activities:
     Cash flows from financing activities:
     Issuance of notes payable - officer .....................        142,328
     Issuance of notes payable - other .......................        247,500
     Repayment of notes payable ..............................       (327,599)
     Common stock issued for cash ............................      1,664,352
                                                                 ------------
Net cash provided by financing activities ....................      1,726,581
                                                                 ------------

Net increase in cash .........................................        184,550
Cash, beginning of period ....................................          9,187
                                                                 ------------
Cash, end of period ..........................................   $    193,737
                                                                 ============

Supplemental disclosures of cash flow information:
     Interest paid ...........................................   $     67,874
                                                                 ============
     Interest received .......................................   $     15,079
                                                                 ============
Non-cash financing activities:
     Common stock issued for common stock of previously
         unrelated entity ....................................   $    565,639
                                                                 ============

                 See notes to consolidated financial statements.

                                        8
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

1.   THE INTERIM FINANCIAL STATEMENTS

     The  accompanying  interim  unaudited   consolidated   condensed  financial
       statements  have been  prepared  by  Equitex,  Inc.  (the  "Company")  in
       accordance  with the  instructions  to Form 10-QSB and do not include all
       the information and footnotes required by generally  accepted  accounting
       principles  for  complete  financial   statements.   In  the  opinion  of
       management,  all adjustments (consisting of normal recurring adjustments)
       considered necessary for a fair presentation have been included,  and the
       disclosures   are  adequate  to  make  the   information   presented  not
       misleading.  Operating  results  for the  three  and  nine  months  ended
       September 30, 1999,  are not  necessarily  indicative of the results that
       may be expected for the year ended  December 31, 1999.  These  statements
       should be read in  conjunction  with the financial  statements  and notes
       thereto  included  in the Annual  Report on Form  10-KSB  (filed with the
       Securities and Exchange Commission) for the year ended December 31, 1998.
       The results of operations  for the three and nine months ended  September
       30,  1999 and  1998,  are not  necessarily  indicative  of the  operating
       results for the full year.

2.   ORGANIZATION

     DECERTIFICATION AS A BUSINESS DEVELOPMENT COMPANY (BDC)

     On January 4, 1999, the Company  withdrew  its  election to be treated as a
       BDC  subject  to  the  Investment  Company  Act.  As  a  result  of  this
       withdrawal,  the  Company  is  now  required  to  present  its  financial
       statements consistent with those of a normal operating company as opposed
       to a Business Development Company . Because the Company was a BDC for the
       three  and nine  months  ended  September  30,  1998,  the  statement  of
       operations  and cash flows for the 1998  periods  still  reflect  the BDC
       format.

     The September  30, 1999  unaudited  pro forma  column in the  statement  of
       revenues and statement of cash flows reflects the Company's  consolidated
       activity for the three and nine months ended September 30, 1999 as if the
       Company were an operating company rather than a BDC at that time.

     PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements as of September 30, 1999, include the
       accounts  of  Equitex,   Inc.,   its   wholly-owned   subsidiary,   First
       TeleServices  Corporation,  which  was  acquired  in August  1998,  a 79%
       interest in Triumph Sports,  Inc.,  which was formed in January 1998, and
       nMortgage,  Inc. and its wholly owned subsidiary,  First Bankers Mortgage
       Services, Inc. ("FBMS"), which was acquired August 23, 1999 (Note 3). All
       significant  intercompany  accounts and transactions have been eliminated
       in consolidation.

     Minority interest at September 30, 1999,  represents 285,700 shares of 12%,
       cumulative  preferred  stock of FBMS.  Shares of this preferred stock are
       callable at par value ($10 par), and dividends are payable quarterly.

     Through the second  quarter of 1999,  the  Company  also  consolidated  its
       majority-owned  subsidiary, VP Sports, Inc. (VP Sports). In June 1999, in
       connection  with  financing  a July  27,  1999  acquisition  of  Victoria
       Precision Inc. (Note 3), the Company authorized a private placement of up
       to 40 units  consisting of preferred and common shares of VP Sports,  and
       warrants  to  purchase  common  stock of VP  Sports.  As a result of this
       placement,   the   Company's   ownership   interest   was  reduced   from
       approximately  87%  at  December  31,  1998  to  approximately  35.7%  at
       September 30, 1999. Due to the change in ownership %, the Company changed
       its  method  of  accounting  for its  investment  in VP  Sports  from the
       consolidation to the equity method of accounting.

                                        9
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

3.   BUSINESS ACQUISITIONS

     ACQUISITION OF FIRST BANKERS MORTGAGE SERVICES, INC. (FBMS)

     On August 23, 1999, the Company, through its  wholly-owned  subsidiary FBMS
       Acquisition  Corp.,  entered into an Agreement and Plan of Reorganization
       (the "Acquisition Agreement") with First Bankers Mortgage Services, Inc.,
       a Florida  Corporation  ("FBMS) to acquire all of the outstanding  common
       stock  of FBMS in  exchange  for 250  shares  of the  Company's  Series E
       convertible  preferred  stock (the "Series E Preferred  Stock") valued at
       approximately  $2,531,000,  and contingent consideration consisting of up
       to 750 shares of Series E Preferred  Stock,  as well as potential  "Bonus
       Shares"  issuable  by  the  Company,  as  specified  in  the  Acquisition
       Agreement.  The  transaction  was  accounted  for as a purchase,  and the
       results of operations of FBMS are included in the Company's  consolidated
       statement of operations from the date of acquisition.  The total purchase
       price was allocated to the assets and liabilities acquired based on their
       estimated  fair  values,  including  intangible  assets of  approximately
       $7,828,000,  which is  being  amortized  by the use of the  straight-line
       method over ten years.

     In accordance with the terms of the Acquisition Agreement, FBMS Acquisition
       Corp. was subsequently  merged with, and into FBMS. At the effective date
       of the agreement (the "Effective  Date"), all shares of FBMS common stock
       were converted  into,  and represent the right to receive,  250 shares of
       the Company's Series E Preferred Stock, and each share of common stock of
       FBMS Acquisition  Corp. was converted into one share of newly issued FBMS
       common stock.  Subsequent to the merger of FBMS  Acquisition  Corp.  into
       FBMS, the Company formed nMortgage, Inc., a Delaware corporation,  as the
       Company's subsidiary holding company for FBMS.

     In connection  with the  Company's  acquisition  of  FBMS, the  Company  is
       proceeding  with a $4,000,000  private  placement of up to  $4,000,000 of
       equity  securities  by  nMortgage,  Inc.,  and has  received  non-binding
       commitments for the purchase of these equity  securities from prospective
       shareholders.  The  Company  anticipates  that as a result of the private
       placement  by  nMortgage,  Inc.,  the  Company's  ownership  interest  in
       nMortgage,  Inc. and its  subsidiary  FBMS,  will be reduced from 100% to
       approximately 75%.

     INVESTMENT IN VP SPORTS, INC.

     Effective  July  27,  1999,   the  Company,   through  its   majority-owned
       subsidiary,  VP Sports,  Inc. ("VP  Sports") and VP Sports'  wholly-owned
       subsidiary 9066-8609 Quebec Inc., a Canadian corporation, acquired all of
       the  outstanding  common  shares of Victoria  Precision  Inc.  ("Victoria
       Precision"),  also a  Canadian  corporation,  as well as the  rights to a
       four-year  international   consulting  and  non-compete  agreement.   The
       transaction was accounted for as a purchase.  The total purchase price of
       $3,966,600  ($6,000,000  CDN) was allocated to the assets and liabilities
       acquired  based on their  estimated  fair  values,  including  intangible
       assets of approximately $477,000, which are being amortized by the use of
       the straight-line method over ten years.

     In order to finance the acquisition,  in June 1999 VP Sports  authorized  a
       private  placement of up to 40 units,  each unit consisting of 100 shares
       of $1,000 per share, 8% convertible  preferred stock, 12,500 shares of VP
       Sports  common shares at $2 per share,  and warrants to purchase  287,500
       shares of VP Sports common stock at $.10 per shares.  As a result of this
       placement of subsidiary  stock,  the Company's  ownership  interest in VP
       Sports  was  reduced  from  approximately  87% at  December  31,  1998 to
       approximately 35.7% at September 30, 1999. Due to the change in ownership
       %, the Company  changed its method of accounting for its investment in VP
       Sports from the consolidation to the equity method of accounting.

                                       10
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

3.   BUSINESS ACQUISITIONS (CONTINUED)

     PRO FORMA FINANCIAL INFORMATION

     The following unaudited pro forma financial information for the nine months
       ended September 30, 1999 and 1998, give effect to the above  acquisitions
       as if they had occurred at the beginning of each respective period.

                                              Nine months ended September 30,
                                              -------------------------------
                                                    1999            1998
                                               -------------   -------------
         Revenue                               $  12,145,000   $  19,603,000
         Net loss                              $  (8,509,000)  $     (48,000)
         Net loss applicable to
           common shareholders                 $  (9,843,000)  $     (48,000)
         Loss per share                        $       (1.50)  $        (.01)
         Shares used in per share calculation      6,542,114       4,096,403

     The unaudited  pro forma  financial  information  above does not purport to
       represent  the results  which would  actually  have been  obtained if the
       acquisitions  had been in effect during the periods covered or any future
       results which may in fact be realized.

4.   LOAN ORIGINATION, SALES AND SERVICING

     Mortgage loans held for sale are recorded at the lower of aggregate cost or
       market value. Gain or loss on sales of loans is recognized at the time of
       the sale.  Origination fees and loan origination  costs on such loans are
       recognized when the mortgage is sold, which is normally within 30 days of
       the  origination  of the  loan.  Interest  earned on these  mortgages  is
       recognized as income from the time the mortgage is closed to the time the
       mortgage is sold.

     The Company generally sells the servicing rights on mortgages.  The Company
       has adopted the  provisions  of Financial  Accounting  Standards No. 122,
       Accounting for Mortgage Servicing Rights, and accordingly capitalizes the
       fair value (quoted market price) of retained mortgage servicing rights on
       loans sold.  Capitalized  mortgage servicing rights on such loans will be
       amortized in proportion to and over the period of estimated net servicing
       income.  The carrying amount of capitalized  mortgage servicing rights is
       evaluated  for  impairment  based upon  quoted  market  prices of similar
       loans.

     Estimated  losses  (approximately  $2,322,000  at  September  30, 1999) are
       provided on loans sold subject to repurchase by the Company.  However, an
       adequate  provision is made by way of a general loan loss reserve for any
       potential loss that may result on loans for the periods reported.

                                       11
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

5.   WAREHOUSE LOANS AND OTHER NOTES PAYABLE

     The Company uses  certain  loan  financing  and  warehouse  credit lines to
       finance its mortgage  production.  These  warehouse  lines bear different
       terms and  interest  rates  ranging  from 7.00% to 8.00%.  Each line also
       requires  certain  equity and  leverage  ratios to be  maintained  by the
       company. The lines are collateralized by the mortgage loans closed by the
       company.

     The Company also has other notes  payable,  which  consist of bank debt and
       notes with private  investors  bearing interest rate of 10.25% to 15.00%,
       with interest payable as agreed upon.

6.  STOCKHOLDERS' EQUITY

     SERIES A, B, C, PREFERRED STOCK

     In January and February 1999, the Company issued a total of 2,100 shares of
       6% Series A, B, and C Convertible  Preferred Stock in  consideration  for
       $1,000 cash per share,  which is the stated value per share.  Each series
       of stock was convertible  into common stock at any time by the holders at
       a conversion  price equal to 65% of the average  closing bid price of the
       Company's common stock as specified in the agreement.

     Because this preferred stock contained an immediate  beneficial  conversion
       feature, both additional paid-in capital and the accumulated deficit were
       increased  by  $1,333,098,  the  amount  of  the  discount  due  to  this
       beneficial  conversion  feature.  The holders were  entitled to receive a
       cumulative annual dividend of $60 per share,  payable quarterly,  and had
       preference  to any  other  dividends  which  might  have been paid by the
       Company.  The  dividend  was  payable  either in cash or in shares of the
       Company's   common  stock,  at  the  Company's   option.   The  preferred
       stockholders also received warrants to purchase a total of 250,000 shares
       of the Company's common stock at 120% of the market price as of the grant
       date. In addition,  the  placement  agent was issued 20,000 shares of the
       Company's  common  stock,  valued at $200,000 in exchange for services in
       connection with the preferred stock sales.

     In April 1999 all  2,100  shares  of the  Company's  6%  Series  A, B and C
       Convertible Preferred Stock, plus accrued dividends on those shares, were
       converted  into  approximately  320,528  shares  of common  stock,  at an
       average conversion price of $6.63 per share.

     SERIES D PREFERRED STOCK

     In May 1999, the Company reached an agreement  with an accredited  investor
       to sell 3,500  shares of Series D, 6%  convertible  preferred  stock (the
       "Series D  Preferred  Stock")  for $1,000  cash per  share,  which is the
       stated  value per share.  In August 1999,  the Company  issued a total of
       1,200  shares  of the  Series  D  Preferred  Stock in  consideration  for
       $1,200,000.  The balance of $2,300,000 for the remaining 2,300,000 shares
       of Series D Preferred Stock is being held in escrow pending authorization
       by the  Company's  stockholders  of a sufficient  number of shares of the
       Company's  common  stock to cover those  shares  underlying  the Series D
       Preferred Stock.

                                       12
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)

     SERIES D PREFERRED STOCK (CONTINUED)

     The holder of each  share of Series D  Preferred  Stock is  entitled  to 6%
       annual  dividends,  payable  quarterly.  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 100% of the  stated  value plus the
       aggregate  of all accrued and 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.

     The Series D Preferred  Stock is convertible  into common stock at any time
       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.  Because  this  preferred  stock  contained  an immediate
       beneficial  conversion  feature,  both additional paid-in capital and the
       accumulated  deficit  were  increased  by  $1,884,615,  the amount of the
       discount  due to this  beneficial  conversion  feature.  The  holders are
       entitled  to  receive a  cumulative  annual  dividend  of $60 per  share,
       payable quarterly,  and had preference to any other dividends which might
       have been paid by the Company.  The dividend is payable either in cash or
       in  shares  of the  Company's  common  stock,  at the  discretion  of the
       Company.

     SERIES E PREFERRED STOCK

     In connection with the FBMS  acquisition,  the Company issued 250 shares of
       Series E  Convertible  Preferred  Stock (the "Series E Preferred  Stock")
       valued  at  approximately   $2,531,000,   and  contingent   consideration
       consisting  of up to 750 shares of Series E Preferred  Stock,  as well as
       potential  "Bonus  Shares"  issuable by the Company,  as specified in the
       Acquisition Agreement.

     The holders of the Series E Preferred  Stock are not entitled to dividends,
       do not have a liquidation  preference and do not have voting rights.  The
       Series E Preferred  stock,  if fully  issued,  automatically  converts to
       1,000,000  shares of common stock upon the approval of an increase in the
       authorized  shares of common stock from  7,500,000  shares to  50,000,000
       shares,  or the  subsequent  merger of the Company  with or into  another
       company, or the sale of substantially all the Company's assets.

     COMMON STOCK

     Through June 30, 1999, the Company sold 330,312 shares of common stock in a
       private  placement for cash of $3.25 per share.  In addition,  during the
       first  quarter  of 1999,  a note  holder  exchanged  a note  and  accrued
       interest  totaling  $158,236 for 48,688  shares of the  Company's  common
       stock.

     Through September 30, 1999, employees and officers of the Company exercised
       options to purchase  677,600  shares of common stock for  $2,132,826.  In
       addition, 337,500 shares were issued pursuant to warrant exercises.

                                       13
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)

     STOCK OPTIONS AND WARRANTS

     In January 1999,  the  Company's  Board of  Directors  adopted an incentive
       stock option plan covering up to 1,000,000 shares of the Company's common
       stock.  During the six months  ended June 30, 1999,  the Company  granted
       incentive  stock  options  for  29,000  shares  and  8,000  shares to the
       Company's   officers   and   employees,    respectively.   In   addition,
       non-statutory  stock options for 472,000 and 491,000  shares were granted
       to officers and  directors,  respectively.  All options were granted at a
       price of $6.75 per share which  represents fair market value at the grant
       date.

     A warrant to purchase 50,000 shares of the Company's  common stock at $3.75
       per share was  granted  to an  unrelated  entity for  services  rendered,
       valued at $150,000.  In addition,  a warrant to purchase 62,500 shares at
       an  exercise  price of $7.25 per share was  granted to another  unrelated
       party.

7.   PROPOSED BUSINESS TRANSACTIONS

     PROPOSED SALE OF NMORTGAGE, INC.

     On September 22, 1999, the Company entered into a letter of intent, whereby
       all of the  outstanding  common  stock of  nMortgage is to be acquired by
       Innovative  Gaming  Corporation  of America  ("IGCA"),  an SEC  reporting
       company  whose  common stock  trades on the Nasdaq  SmallCap  Market (the
       "Proposed  nMortgage  Transaction").  Under  the  terms  of the  Proposed
       nMortgage  Transaction,   in  exchange  for  all  outstanding  shares  of
       nMortgage,  Inc., the Company and the other nMortgage shareholders are to
       receive, in the aggregate, approximately 45,000,000 shares of IGCA common
       stock,  assuming that there will be  approximately  15,000,000  shares of
       IGCA  common  stock  outstanding  on a  fully-diluted  basis,  before the
       Proposed nMortgage Transaction.

     IGCA was formed in 1991 to  develop,  manufacture,  market  and  distribute
       specialty video gaming machines. As a condition of the Proposed nMortgage
       Transaction,  IGCA will dispose of all of its gaming assets. As a result,
       upon completion of the transaction, the business of nMortgage will be the
       sole business operation of IGCA.

     There are a number of material  conditions  that must be satisfied prior to
       the  completion  of the Proposed  nMortgage  Transaction,  including  any
       required approval of the Proposed nMortgage  Transaction by the Company's
       shareholders,  the disposal of IGCA's gaming assets,  the negotiation and
       execution of a definitive  agreement between the Company and IGCA for the
       Proposed  nMortgage  Transaction,  and approval of the Proposed nMortgage
       Transaction  from all  governmental  bodies or agencies,  and  regulatory
       authorities,  including  the  gaming  authorities  of  Nevada  and  other
       applicable  jurisdictions.  There is no  assurance  that  the  conditions
       summarized  above  will be  satisfied,  or that  the  Proposed  nMortgage
       Transaction will be consummated on the terms as outlined above.

                                       14
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

7.   PROPOSED BUSINESS TRANSACTIONS (CONTINUED)

     PROPOSED TRANSACTIONS WITH FIRST TELEBANC CORP.

     On May 4, 1999, the Company  entered  into a definitive  agreement  whereby
       First TeleBanc Corp.  ("First  TeleBanc"),  a single bank holding company
       based in Boca Raton, Florida, is to merge with and into the Company, with
       the Company  being the surviving  corporation  (the  "TeleBanc  Merger").
       First  TeleBanc owns all of the issued and  outstanding  stock of net 1st
       National  Bank,  a  national  banking  association.  Consummation  of the
       TeleBanc Merger is subject to a number of conditions,  including approval
       by the Federal  Reserve Bank of Atlanta,  Georgia,  the  distribution  of
       certain of the Company's assets to a new wholly-owned  subsidiary and the
       "spin-off" of that subsidiary, and the approval of the TeleBanc Merger by
       the Company's shareholders.

                                       15
<PAGE>

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

FORWARD LOOKING STATEMENTS

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 COMPANY'S  EXPECTATIONS OR BELIEFS,  INCLUDING BUT NOT LIMITED TO,
STATEMENTS CONCERNING THE COMPANY'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  COMPANY'S  CONTROL,  AND  ACTUAL  RESULTS  MAY DIFFER
MATERIALLY  DEPENDING ON A VARIETY OF IMPORTANT FACTORS,  INCLUDING  UNCERTAINTY
RELATED  TO THE  COMPANY'S  OPERATIONS,  MERGERS OR  ACQUISITIONS,  GOVERNMENTAL
REGULATION, THE VALUE OF THE COMPANY'S ASSETS AND ANY OTHER FACTORS DISCUSSED IN
THIS AND OTHER COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

OVERVIEW

On  January  4,  1999,  Equitex,   Inc.  ("Equitex",   the  "Company",   or  the
"Registrant")  filed with the Securities and Exchange Commission to withdraw its
election to be treated as a business  development company ("BDC") and elected to
be treated for a maximum period of one year as a "transient  investment company"
as that term is defined in the Investment  Company Act of 1940 (the  "Investment
Company Act"). A BDC is a form of closed-end, non-diversified investment company
under the  Investment  Company  Act.  As a result of the  Company's  acquisition
during the third quarter of First Bankers Mortgage Services,  Inc. ("FBMS"), the
Company is no longer operating as a transient  investment company but as a fully
operating company.

Following the withdrawal,  the Registrant is no longer subject to the regulatory
provisions of the Investment Company Act for BDC's, such as insurance,  custody,
composition of the board, affiliated transactions and compensation arrangements.
Despite the Company's withdrawal of its election as a BDC, the Company continues
to be subject to the reporting  requirements  of the Securities  Exchange Act of
1934, as amended (the  "Exchange  Act").  Under the Exchange Act, the Registrant
continues to file  periodic  reports on Form 10-KSB and Form 10-QSB,  as well as
reports on Form 8-K and proxy  statements  and any other reports  required under
the Exchange Act. As a result of the Company's  withdrawal of its election to be
treated as a BDC, the Company is now  operating as a holding  company which must
consolidate its financial  statements with those of its wholly owned subsidiary,
First  TeleServices Corp.  ("FTC"),  and  majority-owned  subsidiaries,  Triumph
Sports, Inc. ("Triumph") and nMortgage,  Inc. The results for the three and nine
months ended  September 30, 1999 include one month of  operations  for nMortgage
following the acquisition of FBMS in late August 1999. The Company also accounts
for its minority investment in VP Sports, Inc. ("VP") using the equity method of
accounting.

On August 13, 1998, the Registrant  acquired all of the outstanding stock of FTC
in exchange for 625,000 shares of the Registrant's  common stock. As a result of
this transaction,  FTC became a wholly owned subsidiary of the Company. FTC is a
financial  services  marketing  company  marketing  various  financial  products
targeted to the sub-prime consumer.

                                       16
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

FTC is in the development stage, has only partially begun operations and has not
yet generated significant income. As a marketing arm for financial institutions,
FTC's  business  plan calls for it to perform  as a  consumer  finance  company,
offering financial products and services to the sub-prime market. These products
will  be  developed   through   correspondent   relationships   with   companies
specializing in the particular product offered.

During the first  quarter,  FTC entered into a joint venture  agreement with RLG
Holdings, LLC ("RLG") to service,  collect and sell portfolios of consumer debt.
RLG is a Florida based financial  services company  specializing in acquisition,
value enhancement and profitable  disposition of consumer collection  portfolios
and  performing  and   non-performing   real  estate  secured  notes  receivable
portfolios.  Utilizing funds provided by FTC and RLG, the joint venture company,
FirstNet Capital,  acquired two debt portfolios,  the first of which consists of
over 13,000 accounts representing in excess of $100 million. The second and most
recent acquisition consists of 15,600 charged-off credit accounts in Canada with
an aggregate balance of approximately $34 million Canadian. The Company, through
FTC,  advanced a total of  $565,000  to the joint  venture,  First Net  Capital,
during the quarter ended March 31, 1999.  Payments  totaling  $275,000 have been
received  from First Net  Capital as of  September  30,  1999 and an  additional
$25,000 was received during the fourth quarter.

In the first and second  quarters of 1999,  the  Company,  through  FTC,  loaned
$300,000 to National Business Finance, LLC ("NBF"). NBF is a SBA (Small Business
Administration)  loan  originator  which  originates  and sells to SBA  lenders,
including net First National Bank, SBA loans for a fee.

In the fourth  quarter of 1998,  the  Registrant  acquired a number of shares of
First TeleBanc Corp. ("FTB") which now totals 7.5% of FTB's outstanding  capital
stock.  On April 12, 1998 the Registrant  announced its intent to merge with FTB
(the "TeleBanc  Merger") and has since  executed a definitive  agreement for the
merger  which calls for the Company to acquire  all of the  outstanding  capital
stock of FTB in an  exchange  of stock.  Under the terms of the  agreement,  the
existing  stockholders  of FTB will receive shares of Equitex common stock based
on certain factors, principally the relative value of each company. In addition,
certain of the non-financial services related assets of Equitex will be spun off
to the Company's  stockholders  through a newly formed  publicly traded company.
Equitex has filed its final application with the Federal Reserve Bank of Atlanta
which must approve  Equitex as a bank holding company prior to completion of the
proposed  merger.  The application has been amended in response to comments from
the Federal Reserve Bank.

Consummation  of the  TeleBanc  Merger is  subject  to a number  of  conditions,
including:  (i) approval by the Federal Reserve Bank of Atlanta,  Georgia of the
Company's  application  to become a bank holding  company under the Bank Holding
Company Act of 1956;  (ii) the  distribution  of all of the  Company's  business
development company assets to a new wholly-owned subsidiary,  Equitex 2000, Inc.
("E2000"), and the spin-off of E2000 to the Company's existing shareholders; and
(iii) the approval of the TeleBanc  Merger by the  Company's  shareholders.  The
Company will solicit the approval of its shareholders for the TeleBanc Merger at
a special meeting of shareholders to be called later this year.

FTB is the bank holding company for net 1st National Bank, N.A.,  formerly known
as Boca Raton First National Bank, a 13 year-old nationally chartered bank based
in Boca Raton,  Florida. FTB intends to operate as a single bank holding company
through net 1st National Bank offering both traditional walk-in banking services
as well as Internet banking.  net 1st National Bank will also focus on fee-based
programs such as SBA lending,  secured credit cards and  electronic  transaction
processing. Concurrent with the closing of the merger, if consummated, the newly
merged  company  intends to change its name to more  accurately  reflect the new
business  operations of the Company,  and FTB's existing board of directors will
become the board of the new bank holding company.

                                       17
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

On August 23, 1999,  the Company,  through a wholly-owned  subsidiary,  acquired
FBMS. Subsequent to the acquisition of FBMS, all outstanding shares of FBMS were
transferred to a new majority owned subsidiary of the Company,  nMortgage. FBMS,
a Florida corporation,  is a full service mortgage banking company headquartered
in  the  Fort  Lauderdale,  Florida  area.  The  Company  acquired  all  of  the
outstanding  common stock of FBMS from its sole  shareholder,  Vincent Muratore.
The total  aggregate  purchase price for FBMS, was 1,000 shares of the Company's
Series E Convertible  Preferred Stock (the "Series E Preferred Stock"). Of these
shares,  250 shares valued at  $2,531,000  were issued at closing and 750 shares
are issuable upon  satisfaction  of certain future  performance  conditions.  In
addition, the purchase price is subject to post-closing  adjustments pursuant to
the Agreement and Plan of Reorganization, dated June 22, 1999.

The  holders of the Series E  Convertible  Preferred  Stock are not  entitled to
dividends,  do not have a liquidation  preference and do not have voting rights.
The  Series  E  Convertible  Preferred  Stock,  if fully  issued,  automatically
converts  to  1,000,000  shares of common  stock  upon (i) the  approval  of the
increase  in the  authorized  shares of common  stock from  7,500,000  shares to
50,000,000 or the subsequent  merger of the Company with or into another company
or (ii) the sale of substantially all the Company's assets.

The  Company  is  proceeding  with a  $4,000,000  private  placement  of  equity
securities by nMortgage the result of which will reduce the Company's  ownership
interest in nMortgage and its subsidiary from 100% to approximately 75% assuming
all of the shares are sold.

In  connection  with the FBMS  transaction,  the  Company  has  invested,  as of
September 30, 1999,  $4,534,000 in FBMS for working  capital  purposes.  Of this
amount,  $2,750,000  had been  previously  advanced  as loans to FBMS.  Prior to
September  30,  1999,  all of the  principal  and  interest  on these  loans was
converted to equity.

On September 22, 1999,  the Company  entered into a letter of intent whereby all
of the  outstanding  common  stock of nMortgage  will be acquired by  Innovative
Gaming Corporation of America ("IGCA"), a reporting company under the Securities
Exchange Act of 1934,  whose common stock trades on the Nasdaq  National  Market
under the symbol "IGCA" (the "Proposed nMortgage Transaction").  Under the terms
of the Proposed nMortgage Transaction, in exchange for all outstanding shares of
nMortgage,  the Company and other nMortgage  shareholders  will receive,  in the
aggregate,  approximately  45,000,000 shares of IGCA common stock, assuming that
there will be approximately  15,000,000  shares of IGCA common stock outstanding
on a fully-diluted basis, before the Proposed nMortgage Transaction.

IGCA was formed in 1991 to develop, manufacture, market and distribute specialty
video gaming  machines.  As a condition of the Proposed  nMortgage  Transaction,
IGCA will dispose of all of its gaming assets.  As a result,  upon completion of
the transaction,  the business of nMortgage will be the sole business  operation
of IGCA.

There are a number of  additional  customary  conditions  that must be satisfied
prior to the completion of the Proposed nMortgage  Transaction,  including:  the
negotiation   and  execution  of  a  definitive   agreement;   approval  by  the
stockholders of both  companies,  if required;  and any necessary  regulatory or
governmental approval.

In June 1998,  the  Registrant  commenced a private  placement  of up to 300,000
shares  of the  Registrant's  common  stock at  $3.25  per  share to  accredited
investors.  In October 1998, the board of directors of the Registrant  increased
the number of shares which could be sold  pursuant to the offering  from 300,000
to 750,000 shares. As of April 1999, the Registrant completed this offering with
the sale of 379,000  shares of common  stock for total  proceeds of  $1,231,750,
$158,236 of which was converted debt.

                                       18
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

During the first  quarter of 1999,  the  Registrant  completed  three  offerings
through which a total of 2,100 shares of the Company's $.01 par value  preferred
stock were sold to accredited  investors for $1,000 per share.  The Company sold
900 shares of its Series A 6% Convertible  Preferred Stock for total proceeds of
$900,000,  less offering expenses.  The Series A 6% Convertible  Preferred Stock
carries a 6%  interest  rate paid  quarterly  in either cash or stock and may be
convertible  into shares of the  Company's  common  stock at 65% of the five day
average bid price of the  Company's  common stock for the five days  immediately
preceding conversion. The Company sold 600 shares of its Series B 6% Convertible
Preferred  Stock for  proceeds  of  $600,000  and 600  shares of its Series C 6%
Convertible  Preferred  Stock  for  proceeds  of  $600,000.  The  Series B and C
Preferred  Stock  carries  the same terms and  conditions  as those of Series A.
During the month of April 1999, all of the outstanding shares of the Series A, B
and C preferred stock,  including dividends payable, were converted into a total
of 320,528 shares of Equitex common stock.

During the month of May 1999, the Company  reached  agreement with an accredited
investor to sell 3,500  shares of its Series D 6%  Convertible  Preferred  Stock
under terms and  conditions  similar to those of the Series A, B and C Preferred
Stock.  On August 27,  1999,  the investor  purchased  1,200 of these shares for
gross proceeds of $1,200,000.  The balance of $2,300,000,  less offering  costs,
are being held in escrow pending authorization by the Company's  stockholders of
a  sufficient  number of shares of the  Company's  common  stock to cover  those
shares  underlying  the  Series D  preferred  stock.  The  Company  has  filed a
preliminary  proxy  statement with the Securities and Exchange  Commission for a
Special  Meeting of  Stockholders  at which the Company's  stockholders  will be
asked to vote on a proposal to increase the number of  authorized  shares of the
Company's common stock from 7,500,000 to 50,000,000.

In addition to the above common stock issuances, the Registrant has issued stock
pursuant to the exercise of certain  warrants to purchase  common stock. A total
of 250,000 warrants to purchase common stock were issued in conjunction with the
Series A, B and C 6% Convertible Preferred Private Placements at exercise prices
ranging from $8.205 to $11.73 per share. Of these outstanding warrants,  190,000
were exercised  during the quarter ended June 30, 1999 for total proceeds to the
Registrant of $1,798,000. During the nine month period ended September 30, 1999,
an  additional  147,500  shares of common  stock  were  issued  pursuant  to the
exercise of 147,500  warrants to purchase  common stock issued to three separate
entities for total proceeds to the Registrant of $815,625.

During the nine months  ended  September  30,  1999,  officers,  directors,  and
employees of the  Registrant  exercised  677,600 stock  options  pursuant to the
Registrant's 1993 Stock Option Plan and 1993 Stock Option Plan for Non- Employee
Directors. Total proceeds from these exercises were $2,132,826.

A majority of the proceeds from the issuances of common stock,  preferred stock,
and  warrants  have been and will be used in  connection  with the  Registrant's
merger and acquisition  activities as well as for working capital.  For the nine
months ended  September  30, 1999,  the Company has total loans  outstanding  of
$1,172,872  to its  wholly  owned  subsidiary,  FTC,  which  funds  were used in
connection  with FTC's  investment  activities as outlined  above as well as for
working capital and operating overhead.  Additionally,  portions of the proceeds
were also used in the advances made to FBMS totaling $4,534,000 at September 30,
1999, as explained above.

As part of the  Company's  transition  from a BDC to an operating  company,  the
operations of one of the Company's BDC investments,  Triumph,  which is majority
owned by the Registrant, must be consolidated with those of the

                                       19
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

Registrant,  its wholly owned subsidiary FTC, and its majority owned subsidiary,
nMortgage.  In the latter  part of 1998,  Triumph  acquired  four  health  food,
nutritional  and  supplement  related  retail  outlets in south  Florida and now
operates a total of five  locations.  Triumph  is an  authorized  franchisee  of
General  Nutrition  Centers ("GNC") which stores comprise two of those operated.
The Company owns approximately 79% of Triumph.

On July  27,  1999 VP  completed  an  acquisition  pursuant  to  which  Victoria
Precision,  Inc. ("Victoria"),  a corporation incorporated under the laws of the
Province of Quebec,  merged with and into a  wholly-owned  subsidiary  of VP. VP
acquired all of the capital  stock of Victoria  from its existing  stockholders.
Total invested proceeds were approximately $6,000,000 CDN resulting in ownership
of all of the assets,  liabilities  and business  operations  of  Victoria.  The
transaction included future rights to a four-year  international  consulting and
non-compete  agreement executed with an entity affiliated with Victoria's former
principal stockholder. Of the purchase price, $4,700,000 CDN was paid in cash at
closing with the  remaining  $1,300,000  paid in the form of a  promissory  note
bearing interest at 6% per annum.

Victoria is a Canadian manufacturer and distributor of a broad range of bicycles
and tricycles.  All  production and assembly is performed in Victoria's  175,000
square foot manufacturing facility in Montreal,  Quebec, Canada. Victoria is one
of the second largest manufacturer's of bicycles in Canada. Victoria targets the
low to  middle  price  ranges  of the  bicycle  market,  manufacturing  durable,
precision  crafted  bicycles and  tricycles  priced to retail up to $600 CDN per
unit.  Victoria  has a product  assortment  of more  than 90 models of  bicycles
ranging  from adult  mountain  and hybrid  bicycles to juvenile  and  children's
bicycles, BMX bikes and tricycles.

In June 1999, VP commenced a private  placement  through which it is offering up
to 40 units  with  each unit  consisting  of 100  shares of $1,000  per share 8%
preferred  stock,  12,500 shares of common stock at $2.00 per share, and 287,500
warrants to purchase  287,500  shares of common  stock at $.10 per share.  As of
September 30, 1999, 38 units had been sold for proceeds to VP of  $4,750,000.  A
majority  of these  funds  were  used for  payment  of the  $4,700,000  CDN cash
purchase component of the Victoria  acquisition while the remainder will be used
for working capital purposes.

Given the increase in shares outstanding following the VP private placement, the
Company's ownership percentage in VP has been substantially reduced resulting in
Equitex presently owning approximately 35% of VP's outstanding common stock. For
the first two quarter's of 1999, the Company  consolidated  the operations of VP
with  that of the  Company  and its  subsidiaries.  Due to the  changes  in VP's
capital  structure,  for the three and nine months ended September 30, 1999, the
Company is utilizing the equity method of accounting for its ownership in VP.

RESULTS OF OPERATIONS

The following  discussion and analysis of the Company's  financial condition and
results  of  operations  should  be read in  conjunction  with the  consolidated
financial statements and notes thereto. As a result of the Company's change from
a BDC to an  operating  company  effective  January 4, 1999,  the Company is now
required  to  present  its  financial  statements  consistent  with  those of an
operating  company  as  opposed  to  an  investment  company.  Accordingly,  the
statements  of  operations  and cash flows for the three and nine  months  ended
September  30, 1998 are  presented in both a pro-forma  format which assumes the
Company  was an  operating  company  instead of a BDC as well as the  investment
company format which includes the actual results for the Company's operations as
a BDC in the presented  periods.  The results of operations include those of the
Company,   its   wholly-owned   subsidiary,   First   TeleServices   Corp.,  its
majority-owned  subsidiary,  Triumph  Sports,  one  month of its  majority-owned
subsidiary,  nMortgage, and the equity loss in the Registrant's investment in VP
Sports, Inc.

                                       20
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

REVENUES:  Revenues for the quarter  ended  September  30, 1999 were $679,728 as
compared to  pro-forma  revenues of  $204,272 at  September  30, 1998 and actual
revenues of $16,248 for the Company's BDC  operations  for the same period.  For
the nine months ended September 30, 1999,  revenues were $1,676,582  compared to
pro-forma  revenues of $209,182 and actual revenues of $417,649 at September 30,
1998. Of these revenues for the nine months ended  September 30, 1999,  $572,433
are  attributed  directly  to the  operations  of  Triumph,  $352,862  from  the
operations  of  nMortgage,  with  $282,244  from  FTC and the  balance  from the
Registrant itself. Cost of sales was $99,721 and $342,273 for the three and nine
months ended  September 30, 1999 as compared to pro-forma  $79,998 for the three
and nine months ended  September  30, 1998.  Gross profit for the quarter  ended
September  30, 1999 was $580,007 or 85% of revenues  compared to $124,272 or 61%
of sales on a  pro-forma  basis for the  similar  period  in 1998.  For the nine
months ended  September 30, 1999,  gross profit was $1,334,309 or 80% of revenue
as  compared to $129,184  which is 62% of revenue  for the  pro-forma  period in
1998.

A majority of these revenues for the Registrant prior to consolidation represent
realized gains on the sales of investments which can vary greatly from period to
period.  The revenues  from FTC were derived  primarily  from its joint  venture
activities  and were  relatively  stable as  compared to the  previous  quarter.
Triumph revenues  consist of sales from the company's  health food,  vitamin and
supplement  operations  which were down  slightly  versus the previous  periods.
nMortgage  revenues are derived primarily from loan origination  fees,  mortgage
sales and short-term interest gains.

Due to  the  Registrant's  change  from a BDC  to an  operating  company  at the
beginning  of 1999,  and as the  Registrant  implements  its plans  relative  to
becoming a fully operating  company through the FTB merger and FBMS acquisition,
the Registrant has recorded  minimal  revenues  through the first nine months of
1999. Now that the Registrant is a fully  operational  company with the addition
of nMortgage  and its  operating  subsidiary,  FBMS,  it is  anticipated  that a
significant increase in revenues will be recorded for the quarter ended December
31, 1999 and throughout the year 2000.

EXPENSES:  The  Registrant's  expenses  during the  third   quarter of 1999 were
$1,539,308 as compared to a pro-forma  $508,087 and actual  expenses as a BDC of
$1,155,143 for the same period in 1998. For the nine months ended  September 30,
1999, the Registrant had total expenses of $3,490,249 with pro-forma expenses of
$1,725,904  and actual  expenses as a BDC of  $1,838,065  for the same period in
1998. Of these amounts, FTC accounted for $141,891 and 372,861 for the three and
nine months  ended  September  30,  1999,  respectively,  Triumph  $170,350  and
$457,705 for the same periods, and nMortgage $560,258 for both periods. Included
in the expenses for the three and nine months ended September 30, 1999 is equity
loss in VP Sports of $150,330. While the Registrant's expenses, on a stand alone
basis prior to  consolidation,  remained  nearly  identical to that of 1998, the
consolidation  of three new entities with that of the  Registrant as well as the
equity loss for VP Sports were major  contributors  in the increase from 1998 to
1999.

Included  in these  expenses are losses  (gains)  on  trading  securities.  This
represents  both the realized and  unrealized  gain or loss on those  securities
that have been designated as trading securities. For the quarter ended September
30, 1999,  unrealized holding losses (gains) on trading securities was $(55,266)
as compared to

                                       21
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

$(804,245) on a pro-forma basis during the previous year's period.  For the nine
months ended  September 30, 1999,  unrealized  holding losses (gains) on trading
securities was $82,489 as compared to $(480,148)  for the 1998 period.  With the
exception  of a  significant  realized  gain on the sale of  certain  shares  of
IntraNet  Solutions common stock during the first quarter of 1999 which accounts
for the gain of $177,810 at  September  30,  1999,  a majority of these gains or
losses are  unrealized  and  represent  the  change in the  market  value of the
trading  securities  from  period to period.  While these  unrealized  gains and
losses are  categorized  as expenses,  they represent only paper gains or losses
which have not actually been incurred.

MINORITY  INTEREST:  For the three and nine months ended September 30, 1999, the
Registrant  had no minority  interest in net income as a result of the change in
accounting  method  for the  Company's  ownership  in VP. For the three and nine
months ended  September 30, 1998, the  Registrant  had minority  interest in net
income of $903 and $26,200.

OTHER  INCOME:   The  Registrant   recorded   $(39,835)  and  $21,391  in  other
comprehensive  income  (loss),  net of tax,  for the three and nine months ended
September 30, 1999 as compared to $(35,361) and $16,176 pro-forma, respectively,
for the same  period in 1998.  This  represents  non-cash  income or losses  for
unrealized  gains  on  certain  of  the  Company's  securities  that  have  been
classified as "available for sale securities".

NET LOSS: For the three months ended September 30, 1999, the Registrant recorded
a net loss of  $1,001,275  as compared to pro-forma net loss of $446,092 for the
quarter ended September 30, 1998. As a BDC, the Company  recorded net investment
loss and net realized gain on  investments  of $(914,574)  and a net decrease in
net assets  resulting  from  operations of  $1,904,852  for the third quarter of
1998. For the nine months ended  September 30, 1999,  the Registrant  recorded a
net loss of  $2,197,908 as compared to pro-forma  net loss of $1,633,700 for the
nine months  ended  September  30,  1998.  As a BDC,  the Company  recorded  net
investment  loss and net realized gain on  investments  of $(723,715)  and a net
decrease in net assets  resulting  from  operations of $1,976,574  for the first
nine months of 1998.

COMPREHENSIVE  LOSS:  Comprehensive  loss for the  three and nine  months  ended
September 30, 1999 was $1,041,110 and  $2,176,517,  respectively.  Comprehensive
loss at September  30, 1998 on a pro-forma  basis was  $481,453 and  $1,617,524,
respectively.  Comprehensive  loss  is the net  loss  less  other  comprehensive
income,  net  of  tax  which  includes   unrealized  gains  and  losses  on  the
Registrant's "available for sale securities".

NET LOSS  ATTRIBUTABLE TO COMMON  SHAREHOLDERS:  Net loss attributable to common
shareholders   following   amortization  of  discount  on  preferred  stock  was
$2,885,890 or $.40 per common share and  $5,415,621 or $.83 per common share for
the three and nine months  ended  September  30, 1999 as compared to $446,092 or
$.09 per common share and $1,633,700 or $.40 per common share, respectively, for
the pro-forma three and nine months ended September 30, 1998.

LIQUIDITY  AND CAPITAL  RESOURCES:  The  Registrant's  sources of liquidity  and
capital resources prior to consolidation  are derived from varied sources,  most
notably sales of investments and proceeds from sales of the Registrant's  common
and preferred  stock.  The  Registrant's  subsidiaries  sources of liquidity and
capital  resources  are  derived  primarily  from  their  operations  as well as
infusions of capital from the Registrant,  if and when necessary. As a result of
the cash  receipts  outlined  below as well as the sale of the a portion  of the
Series D Convertible  Preferred stock, the Registrant presently  anticipates its
liquidity and capital resources are sufficient to fund the Company's current and
planned operations for the foreseeable future.  However, as more fully explained
in "Overview" above, the Company has signed  agreements,  which, if consummated,
would result in a fundamental  change in the nature of the  Company's  business.
While terms of those  agreements  call for  significant  cash balances to remain
with the  Registrant  following the proposed  transactions,  no assurance can be
made that

                                       22
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

the Company's present liquidity and capital resources will be sufficient to fund
the future  operations of the  Registrant  should the  contemplated  mergers and
acquisitions take place.  Further sales of the Registrant's  securities or other
sources of income may be necessary to adequately fund those operations.

During  the  first  nine  months of 1999,  the  Registrant  received  a total of
$9,073,000,  before expenses, from the sale of common stock and preferred stock,
the  exercise of common  stock  purchase  warrants  and the exercise of officer,
director and employee stock options. At September 30, 1999, the Registrant had a
total cash  position  of  $908,829  on a  consolidated  basis.  Of this  amount,
$465,418  was  held  by the  Registrant,  $431,464  was  held by  FBMS,  and the
remainder was held by Triumph and FTC.

The Company has received a third party  commitment  to purchase  3,500 shares of
its Series D 6%  Convertible  Preferred  stock for total proceeds of $3,500,000.
During the third  quarter,  the  Company  sold  1,200 of these  shares for gross
proceeds of  $1,200,000.  The  balance of 2,300  shares are being held in escrow
pending  an  increase  in the  number  of  authorized  shares  of  the  Company.
Completion  of this  offering may be necessary  to  implement  the  Registrant's
business  plan and could be required  for  completion  of the FTB  merger.  This
transaction is more fully described in "Overview" above.

During  the fourth  quarter of 1999,  the  market  values of the  Company's  two
"trading  securities"  increased  significantly.  As a  result,  the  Registrant
anticipates  that  it will  liquidate  all or a  portion  of  these  investments
generating additional cash and further liquidity in the fourth quarter.

YEAR 2000 READINESS

The   inability   of   computers,   software  and  other   equipment   utilizing
microprocessors  to  recognize  and  properly  process  date field  containing a
two-digit  year is commonly  referred  to as the "Year 2000  Issue." As the year
2000  approaches,  such systems may recognize a date using "00" as the year 1900
rather than the year 2000 and be unable to accurately process certain date-based
information.  This  error  could  potentially  result  in a  system  failure  or
miscalculation causing disruptions of operations, including, among other things,
a  temporary  inability  to process  transactions  or engage in  similar  normal
business activities.

The Registrant has reviewed its computer systems in order to evaluate  necessary
modifications for the Year 2000 readiness. In addition, the Registrant is in the
process of communicating  with others with whom it does significant  business to
determine  their Year 2000 readiness  status and the extent to which the Company
could be affected by any third party Year 2000  readiness  issues.  Although the
Registrant has not received  responses from all third parties with which it does
business, The Registrant does not anticipate that it will be materially affected
by any third  party Year 2000  readiness  issues.  However,  the  systems of the
Registrant or those of other  companies on which the  Registrant's  systems rely
may not be timely  converted.  A failure to convert  by  another  company,  or a
conversion  that is  incompatible  with  the  Company's  systems,  could  have a
material adverse effect on the Registrant.

Currently,  the Registrant estimates its cost related to Year 2000 modifications
to be less than  $3,000 for the Company and its  subsidiaries.  The  anticipated
costs and  timeliness  of  completion  of Year 2000  modifications  are based on
management's  best  estimates,  which were derived  using  numerous  assumptions
relating  to  future  events,  including,   without  limitation,  the  continued
availability of certain resources and third party modification  plans.  However,
these estimates and assumptions  may turn out to be inaccurate.  Presently,  the
Company has no formal  contingency  plan in place as it does not  anticipate its
systems  will be  materially  affected by any  internal  or  external  Year 2000
readiness issues.

                                       23
<PAGE>

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

       None

Item 2. Changes in Securities

       On April 8, 1999 the Registrant issued 145,788 shares of its common stock
       in  exchange  for 900  shares of the  registrant's  Series A  Convertible
       Preferred  Stock. The Registrant  relied on exemptions from  registration
       provided by Sections 4(2) and/or 4(6) of the Securities Act.

       On April 8, 1999 the Registrant  issued 77,941 shares of its common stock
       in  exchange  for 600  shares of the  Registrant's  Series B  Convertible
       Preferred  Stock. The Registrant  relied on exemptions from  registration
       provided by Sections 4(2) and/or 4(6) of the Securities Act.

       On April 8, 1999 the Registrant  issued 96,799 shares of its common stock
       in  exchange  for 600  shares of the  Registrant's  Series C  Convertible
       Preferred  Stock. The Registrant  relied on exemptions from  registration
       provided by Sections 4(2) and/or 4(6) of the Securities Act.

       On April 19, 1999 the Registrant issued 50,000 shares of its common stock
       in exchange for warrants to purchase common stock at $3.75 per share. The
       Registrant  relied on exemptions from  registration  provided by Sections
       4(2) and/or 4(6) of the Securities Act.

       On April 19, 1999 the Registrant issued 40,000 shares of its common stock
       in exchange  for 40,000  warrants to purchase  common stock at $8.895 per
       share. The Registrant relied on exemptions from registration  provided by
       Sections 4(2) and/or 4(6) of the Securities Act.

       On April 23, 1999 the Registrant issued 90,000 shares of its common stock
       in exchange  for 90,000  warrants to purchase  common stock at $8.205 per
       share. The Registrant relied on exemptions from registration  provided by
       Sections 4(2) and/or 4(6) of the Securities Act.

       On April 23, 1999 the Registrant issued 20,000 shares of its common stock
       in exchange  for 20,000  warrants to purchase  common  stock at $7.25 per
       share. The Registrant relied on exemptions from registration  provided by
       Sections 4(2) and/or 4(6) of the Securities Act.

       On April 27, 1999 the Registrant issued 60,000 shares of its common stock
       in exchange  for 60,000  warrants to purchase  common stock at $11.73 per
       share. The Registrant relied on exemptions from registration  provided by
       Sections 4(2) and/or 4(6) of the Securities Act.

       On May 6, 1999 the Registrant issued 20,000 shares of its common stock in
       exchange for 20,000 warrants to purchase common stock at $7.25 per share.
       The  Registrant  relied  on  exemptions  from  registration  provided  by
       Sections 4(2) and/or 4(6) of the Securities Act.

       On July 7, 1999, the  Registrant  issued 35,000 shares of it common stock
       in exchange  for 35,000  warrants to purchase  common  stock at $5.00 per
       share. The Registrant relied on exemptions from registration  provided by
       Sections 4(2) and/or 4(6) of the Securities Act.

                                       24
<PAGE>

                     PART II. OTHER INFORMATION (CONTINUED)


Item 3. Defaults Upon Senior Securities

       None

Item 4. Submission of Matters to a Vote of Security Holders

       None

Item 5. Other Information

       None

Item 6. Exhibits and Reports of Form 8-K

     (a)      Financial data schedule for SEC registrants

     (b)      On  August12,  1999,  the  Company  filed a  report  on  Form  8-K
              reporting the Company's  acquisition of Victoria Precision Inc. (a
              Canadian Corporation).

              On  August  23,  1999,  the  Company  filed a  report  on Form 8-K
              reporting a change in its auditors.

              On  September  8,  1999,  the  Company  filed a report on Form 8-K
              reporting the acquisition of First Bankers Mortgage Services, Inc.
              and subsidiary.

              On October  12,  1999,  the  Company  filed a report on Form 8-K/A
              amending  the 8-K filed on August 12, 1999,  to include  financial
              statements of the business acquired (Victoria  Precision Inc.) and
              pro forma financial information.

              On  November  4, 1999,  the  Company  filed a report on Form 8-K/A
              amending the 8-K filed on September 8, 1999, to include  financial
              statements  of  the  business  acquired  (First  Bankers  Mortgage
              Services,   Inc.   and   subsidiary)   and  pro  forma   financial
              information.

                                       25
<PAGE>

                                   SIGNATURES

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


                                       EQUITEX, INC.
                                       (Registrant)



Dated: November 19, 1999               By: /s/   Henry Fong
                                           ------------------------------
                                           Henry Fong
                                           President, Treasurer and Chief
                                           Financial Officer



                                       26