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


                                    FORM 10-Q


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

                    For the quarter ended September 30, 2000


             ( ) 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 14, 2000: 7,106,943

<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES



PART I  FINANCIAL INFORMATION                                               Page
                                                                            ----

        Item 1. Financial statements:

                Independent accountants' report                                3

                Condensed consolidated balance sheets - September
                30, 2000 and December 31, 1999                                 4

                Condensed consolidated statements of operations-
                 three and nine months ended September 30, 2000 and 1999       5

                Condensed consolidated statement of changes in
                stockholders' equity - nine months ended
                September 30, 2000                                           6-7

                Condensed consolidated statements of cash
                flows - nine months ended September 30, 2000, and 1999      8-10

                Notes to condensed consolidated financial statements       11-18

        Item 2. Management's discussion and analysis of financial
                condition and results of operations                        19-23

        Item 3. Quantitative and qualitative disclosures of market risk       24

PART II OTHER INFORMATION

        Item 1.  Legal proceedings                                            24

        Item 2.  Changes in securities and use of proceeds                    24

        Item 3.  Defaults upon senior securities                              24

        Item 4.  Submission of matters to a vote of security holders          24

        Item 5.  Other information                                            24

        Item 6.  Exhibits and reports on Form 8-K                             25

                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements




                         INDEPENDENT ACCOUNTANTS' REPORT



Board of Directors
Equitex, Inc.

We have  reviewed  the  accompanying  condensed  consolidated  balance  sheet of
Equitex,  Inc.  and  subsidiaries  as of  September  30,  2000,  and the related
condensed  consolidated   statements  of  operations  for  the  three-month  and
nine-month  periods then ended,  and the  condensed  consolidated  statements of
stockholders'  equity and cash flows for the nine-month period then ended. These
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the  consolidated  balance  sheet as of December 31,  1999,  and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for the year then ended (not  presented  herein);  and in our report dated
April 10,  2000,  we  expressed  an  unqualified  opinion on those  consolidated
financial  statements.  In  our  opinion,  the  information  set  forth  in  the
accompanying  condensed  consolidated  balance sheet as of December 31, 1999, is
fairly stated, in all material  respects,  in relation to the balance sheet from
which it has been derived.


GELFOND HOCHSTADT PANGBURN, P.C.




Denver, Colorado
November 14, 2000

                                       3
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                       September 30,   December 31,
                                                                            2000            1999
                                                                       ------------    ------------
                                                                       (Unaudited)
<S>                                                                    <C>             <C>
Cash and cash equivalents ..........................................   $    342,652    $    783,606
Mortgage loans held for sale, net ..................................     14,787,080
Receivables, net:
     Related parties ...............................................        864,597         958,810
     Other .........................................................        773,622         504,571
Inventories ........................................................         88,978         167,346
Investments:
     Equity investments ............................................        615,500       1,707,898
     Other investments .............................................      1,423,385       1,767,537
Furniture, fixtures, and equipment, net ............................        267,840       1,058,032
Technological and intellectual property rights .....................      3,141,667
Goodwill and other assets, net .....................................      3,996,948      20,010,057
                                                                       ------------    ------------
                                                                       $ 11,515,189    $ 41,744,937
                                                                       ============    ============

                                        LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Warehouse loans ...............................................   $ 18,582,351
     Accounts payable ..............................................   $    346,840       1,584,926
     Accrued liabilities:
       Related parties .............................................        611,460         454,235
       Others ......................................................        113,878       2,773,989
     Notes and advances payable:
       Related parties .............................................      1,275,550         832,000
       Others ......................................................        117,575       1,941,954
                                                                       ------------    ------------
         Total liabilities .........................................      2,465,303      26,169,455
                                                                       ------------    ------------
Minority interest ..................................................      5,593,070       6,473,070
                                                                       ------------    ------------
Commitments and contingencies

Mandatory  redeemable  Series G, 6% preferred  stock;
  1,300 shares  issued and
  outstanding, liquidation
  preference, $  1,690,000..........................................      1,240,000
                                                                       ------------    ------------
Stockholders' equity:
     Convertible preferred stock; 4,500 shares authorized:
       Series D, 6%; stated value $1000 per share; 1,200 shares
         issued and outstanding; liquidation preference $1,585,000 .      1,200,000       1,200,000
       Series E, stated value $1,000 per share; 250 shares
         issued and outstanding ....................................        250,000         250,000
       Series F, 460,000 shares issued and outstanding,
        liquidation preference $3,864,000 ..........................      3,162,500
     Common stock, par value $.02; 7,500,000
       shares authorized; 7,140,293 shares issued;
       7,106,943 shares outstanding ................................        142,806         142,806
     Additional paid-in capital ....................................     19,152,634      18,820,223
     Accumulated deficit ...........................................    (21,577,087)    (11,196,580)
     Less treasury stock at cost (33,350 shares) ...................       (114,037)       (114,037)
                                                                       ------------    ------------
         Total stockholders' equity ................................      2,216,816       9,102,412
                                                                       ------------    ------------
                                                                       $ 11,515,189    $ 41,744,937
                                                                       ============    ============
</TABLE>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                      Three months                     Nine months
                                                   ended September 30,             ended September 30,
                                                   2000            1999            2000            1999
                                               ------------    ------------    ------------    ------------
<S>                                            <C>             <C>             <C>             <C>
Revenues:
   Product sales ...........................   $     84,808    $    162,744    $    305,396    $    572,433
   Loan production and processing revenues .                        263,877         293,065         263,877
   Secondary marketing revenues, net .......                         38,985         871,134          38,985
   Interest and dividend income ............         22,510          79,240         357,165         154,169
   Other ...................................         90,095          83,379         149,373         103,939
                                               ------------    ------------    ------------    ------------
                                                    197,413         628,225       1,976,133       1,133,403
                                               ------------    ------------    ------------    ------------
Expenses:
   Cost of product sales ...................         51,498          99,721         187,819         342,273
   Loan production and processing ..........        153,440         739,735         153,440
   Selling, general and administrative .....      1,218,124       1,148,781       5,749,244       2,975,075
   Loss on FBMS rescission (Note 3) ........                                      3,979,000
                                               ------------    ------------    ------------    ------------
                                                  1,269,622       1,401,942      10,655,798       3,470,788
                                               ------------    ------------    ------------    ------------
Loss from operations .......................     (1,072,209)       (773,717)     (8,679,665)     (2,337,385)
                                               ------------    ------------    ------------    ------------
Other income (expenses):
   Investment gains, net ...................        126,494          55,266          23,704         332,616
   Equity in (losses) earnings of affiliates       (529,500)        (19,586)     (1,092,398)        131,914
   Interest expense:
     Related parties .......................        (21,233)       (221,264)       (275,726)       (283,085)
     Other .................................       (429,900)
   Other, net ..............................                                         73,478
                                               ------------    ------------    ------------    ------------
                                                   (424,239)       (185,584)     (1,700,842)        181,445
                                               ------------    ------------    ------------    ------------
Loss before income taxes ...................     (1,496,448)       (959,301)    (10,380,507)     (2,155,940)
Provision for income taxes .................                         41,964                          41,968
                                               ------------    ------------    ------------    ------------
Net loss ...................................     (1,496,448)     (1,001,265)    (10,380,507)     (2,197,908)
Other comprehensive income, unrealized
 holding gains (losses) on investments .....                        (39,835)                         21,391
                                               ------------    ------------    ------------    ------------
Comprehensive loss .........................   $ (1,496,448)   $ (1,041,110)   $(10,380,507)   $ (2,176,517)
                                               ============    ============    ============    ============

Net loss ...................................   $ (1,496,448)   $ (1,001,265)   $(10,380,507)   $ (2,197,908)
Amortization of discount on preferred stock        (700,000)     (1,884,615)       (700,000)     (3,217,713)
Deemed preferred stock dividends ...........        (23,500)         (6,700)        (59,400)        (33,000)
                                               ------------    ------------    ------------    ------------
Net loss applicable to common
  shareholders .............................   $ (2,219,948)   $ (2,892,580)   $(11,139,907)   $ (5,448,621)
                                               ============    ============    ============    ============

Basic and diluted net loss per common
  share ....................................   $      (0.31)   $      (0.40)   $      (1.56)   $      (0.83)
                                               ============    ============    ============    ============

Weighted average number of common
  shares outstanding .......................      7,140,293       7,152,823       7,140,293       6,542,114
                                               ============    ============    ============    ============
</TABLE>

           See notes to condensed consolidated financial statements.
                                       5
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                      NINE MONTHS ENDED SEPTEMBER 30, 2000
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                       Convertible preferred stock             Common stock
                                       ----------------------------    ----------------------------

                                          Shares          Amount          Shares          Amount
                                       ------------    ------------    ------------    ------------

<S>                                    <C>             <C>             <C>             <C>
Balances, January 1, 2000 ..........          1,450    $  1,450,000       7,140,293    $    142,806

Subsidiary equity transaction

Issuance of Series F Preferred Stock        460,000       3,162,500



Net loss
                                       ------------    ------------    ------------    ------------

Balances, September 30, 2000 .......        461,450    $  4,612,500       7,140,293    $    142,806
                                       ============    ============    ============    ============
</TABLE>

                                   (Continued)
                                        6
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

                      NINE MONTHS ENDED SEPTEMBER 30, 2000
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                        Additional
                                         Treasury         paid-in       Accumulated
                                          stock           capital         deficit         Total
                                       ------------    ------------    ------------    ------------

<S>                                    <C>             <C>             <C>             <C>
Balances, January 1, 2000 ..........   $   (114,037)   $ 18,820,223    $(11,196,580)   $  9,102,412

Subsidiary equity transactions .....                        345,904                         345,904

Issuance of Series F Preferred Stock                        (13,493)                      3,149,007



Net loss ...........................                                    (10,380,507)    (10,380,507)
                                       ------------    ------------    ------------    ------------

Balances, September 30, 2000 .......   $   (114,037)   $ 19,152,634    $(21,577,087)   $  2,216,816
                                       ============    ============    ============    ============
</TABLE>

           See notes to condensed consolidated financial statements.
                                       7
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                         NINE MONTHS ENDED SEPTEMBER 30,
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                           2000            1999
                                                                       ------------    ------------

<S>                                                                    <C>             <C>
Cash flows used in operating activities:
Net loss ...........................................................   $(10,380,507)   $ (2,197,908)
                                                                       ------------    ------------
Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
     Depreciation and amortization .................................      1,630,487         101,115
     Loss on FBMS rescission .......................................      3,979,000
     Gain on sale of subsidiary assets .............................        (76,620)
     Stock issued for services .....................................                        200,000
     Provision for bad debts .......................................        172,628
     Investment gains, net .........................................        (23,704)       (332,616)
     Equity in losses (earnings) of affiliates .....................      1,092,398        (131,914)
     Changes in assets and liabilities, net of business
       acquisitions and FBMS rescission:
       Decrease in investments in trading securities ...............        448,199
       Increase in receivables .....................................        (99,229)       (473,578)
       Decrease (increase) in mortgage loans held for sale .........     13,838,929      (4,525,207)
       Decrease (increase) in inventories ..........................         10,306         (36,685)
       Increase in other assets ....................................        (42,717)       (583,584)
       Increase (decrease) in accounts payable and
        accrued liabilities ........................................      1,463,183      (1,851,824)
                                                                       ------------    ------------
       Total adjustments ...........................................     22,392,860      (7,634,293)
                                                                       ------------    ------------
Net cash provided by (used in) operating activities ................     12,012,353      (9,832,201)
                                                                       ------------    ------------

Cash flows from investing activities:
     Cash acquired on business acquisition .........................       (256,000)     (2,327,500)
     Purchase of other investments .................................        (12,471)         (6,231)
     Purchase of intellectual property rights ......................       (850,000)
     Sales of other investments ....................................        278,032
     Purchases of furniture, fixtures and equipment ................        (20,487)        (76,323)
     Repayment of loans and notes receivable .......................        133,298
     Issuance of loans and notes receivable ........................     (2,986,575)
     Increase in other assets ......................................                       (256,488)
                                                                       ------------    ------------
Net cash used in investing activities ..............................     (3,714,203)     (2,666,542)
                                                                       ------------    ------------
</TABLE>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                         NINE MONTHS ENDED SEPTEMBER 30,
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                           2000            1999
                                                                       ------------    ------------

<S>                                                                    <C>             <C>
Cash flows from financing activities:
     Preferred stock issued for cash ...............................      1,240,000       5,819,965
     Preferred stock dividends paid ................................                      3,300,000
     Contribution from minority interest ...........................                        (26,509)
     Issuance of notes payable .....................................      3,431,432         298,624
     Repayment of notes payable ....................................       (131,292)       (132,601)
     Warehouse loans and other notes payable .......................    (14,906,244)      4,148,093
     Proceeds from subsidiary stock transactions ...................      1,627,000
                                                                       ------------    ------------

Net cash (used in) provided by financing activities ................     (8,739,104)     13,407,572
                                                                       ------------    ------------

(Decrease) increase in cash and cash equivalents ...................       (440,954)        908,829
Cash and cash equivalents, beginning ...............................        783,606
                                                                       ------------    ------------
Cash and cash equivalents, ending ..................................   $    342,652    $    908,829
                                                                       ============    ============

Supplemental disclosure of cash flow information:
     Cash paid for interest: .......................................   $    538,028
                                                                       ============

Supplemental disclosure of non-cash investing and financing activities:

     Rescission and divestiture of FBMS:
       Assets $ ....................................................     22,133,000
       Liabilities .................................................    (15,654,000)
       Intangible assets acquired ..................................     (2,500,000)
                                                                       ------------
         Loss on FBMS rescission ...................................   $  3,979,000
                                                                       ============

     Sale of subsidiary assets:
       Equipment ...................................................   $     38,500
       Intangible assets ...........................................         84,800
       Inventory ...................................................         68,142
       Note receivable issued in exchange ..........................       (268,062)
                                                                       ------------
         Gain on sale of subsidiary assets .........................   $    (76,620)
                                                                       ============

     Purchase of Meridian Residential Group, Inc, net of cash acquired:
       Fair value of assets acquired ...............................   $    130,000
       Intangible assets ...........................................      2,581,000
       Liabilities assumed .........................................        (45,000)
       Fair value of common stock issued ...........................     (2,922,000)
                                                                       ------------
     Cash acquired .................................................   $   (256,000)
                                                                       ============
</TABLE>

                                  (Continued)
                                       9
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                         NINE MONTHS ENDED SEPTEMBER 30,
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                           2000            1999
                                                                       ------------    ------------

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

Amortization of discount on preferred stock ........................   $    700,000    $  1,333,098
                                                                       ============    ============

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

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

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>

           See notes to condensed consolidated financial statements.
                                       10
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999



1.   Basis of presentation:

     The  condensed  consolidated  financial  statements  of Equitex,  Inc.  and
       subsidiaries  (the "Company") for the three-month and nine-month  periods
       ended  September  30, 2000 and 1999,  have been  prepared by the Company,
       without audit by the Company's  independent  auditors.  In the opinion of
       the Company's management, all adjustments necessary to present fairly the
       financial position,  results of operations, and cash flows of the Company
       as of September 30, 2000,  and for the periods then ended have been made.
       Those  adjustments  consist  only of normal  and  recurring  adjustments,
       except for those described in Note 3. The condensed  consolidated balance
       sheet as of  December  31,  1999,  has  been  derived  from  the  audited
       consolidated balance sheet of the Company as of that date.

     Certain information and note disclosures normally included in the Company's
       annual  financial   statements  prepared  in  accordance  with  generally
       accepted  accounting  principals  have been  condensed or omitted.  These
       condensed consolidated financial statements should be read in conjunction
       with a reading of the financial  statements and notes thereto included in
       the Company's Form 10-K annual report for 1999, filed with the Securities
       and Exchange  Commission.  The results of operations  for the nine months
       ended September 30, 2000 and 1999, are not necessarily  indicative of the
       results to be expected for the full year.

     The condensed  consolidated  financial statements as of and for the periods
       ended September 30, 2000,  include the accounts of Equitex,  Inc. and the
       following significant  subsidiaries:  nMortgage,  Inc.  ("nMortgage") and
       through June 27, 2000, its wholly-owned subsidiary First Bankers Mortgage
       Services, Inc. ("FBMS") (Note 3), First Teleservices Corporation ("FTC"),
       Triumph Sports Group, Inc. ("Triumph"), and beginning September 27, 2000,
       GR.com,  Inc.  "GR.com"  and its  wholly-owned  subsidiary  The  Meridian
       Residential Group, Inc. (Note 2). All significant  intercompany  accounts
       and transactions have been eliminated in consolidation.

     Minority interest at September 30, 2000,  represents issued and outstanding
       preferred stock of nMortgage.  During the nine months ended September 30,
       2000,  nMortgage issued 1,627,000 additional shares of Series A preferred
       stock for $1,627,000,  and as a result of the FBMS divestiture  (Note 3),
       minority  interest was reduced by $2,507,000 during the nine months ended
       September  30, 2000,  the amount of the FBMS  preferred  stock issued and
       outstanding.  During the nine months ended September 30, 2000, net losses
       incurred  by  the  Company's  majority-owned  subsidiaries  exceeded  the
       minority interest in the common equity  (deficiency) of the subsidiaries.
       As a result,  the excess of losses  applicable  to the minority  interest
       have been  charged  against  the  Company  and no  minority  interest  is
       reflected in the Company's  statement of  operations  for the nine months
       ended September 30, 2000.

                                       11
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

2.   Acquisition of Meridian Residential Group, Inc.:

     On September  27, 2000,  the Company,  through a  newly-formed  subsidiary,
       GR.com,  acquired all of the issued and  outstanding  common stock of The
       Meridian  Residential  Group, Inc. ("MRG") in exchange for 425,000 shares
       of  Series  F  participating,   convertible  preferred  stock  valued  at
       approximately  $2,922,000.  The value of the Series F Preferred Stock was
       based  upon  the  quoted  market  price  of the  Company's  common  stock
       underlying the Series F Preferred  Stock at the date of  acquisition.  In
       addition,  Equitex 2000, Inc. (Note 9) is to issue  additional  shares of
       common stock to the MRG  shareholders  having a market value, at the time
       of issuance,  equal to 20% of the annual increase in pre-tax net earnings
       compared to the  immediately  preceding year of the MRG business for each
       of the five years subsequent to closing,  commencing with the year ending
       December 31, 2000, subject to certain limitations, as defined.

     The  transaction  was  accounted  for as a  purchase,  and the  results  of
       operations  of  MRG  are  included  in  the  Company's   2000   condensed
       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 goodwill of approximately
       $2,581,000,  which is  being  amortized  by the use of the  straight-line
       method over ten years.

     The Company,  through its  subsidiary  nMortgage,  Inc.,  also acquired the
       proprietary business model, website, trademarks,  corporate names and all
       intellectual  property  rights  related  to  the  Meridian  GreatRate.com
       business,  including the names  GreatRate.com and GreatRate  Mortgage.com
       from Meridian Capital Group, LLC ("MCG)",  a company  affiliated with MRG
       through common  ownership,  for $850,000 cash. The intellectual  property
       rights are being  amortized  by use of the  straight-line  method  over a
       three-year period.

     The  following  pro  forma  information  has  been  prepared  assuming  the
       acquisition  of MRG and the  intellectual  property  rights  from MCG had
       taken place at the  beginning of the  respective  periods.  The pro forma
       information includes adjustments to include the operating results of MRG,
       and related  amortization of goodwill arising from the acquisition of MRG
       and amortization of the intellectual property acquired from MCG.

     The pro forma financial  information is not  necessarily  indicative of the
       results of  operations as they would have been had the  transaction  been
       effected on the assumed date.

                                                 Nine months ended September 30,
                                                       2000           1999
                                                    ------------   -----------
        Revenues                                    $  3,771,000   $ 2,816,000
        Net loss                                    $(10,374,000)  $(2,445,000)
        Net loss applicable to common shareholders  $(11,133,000)  $(6,395,000)
        Basic and diluted loss per common share     $      (1.56)  $      (.89)
        Shares used in per share calculation           7,140,293     6,542,114


                                       12
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

3.   Rescission of August 23, 1999, FBMS Agreement and Plan of Reorganization
     and divestiture of FBMS:

     On August 23, 1999,  the Company  acquired  all of the  outstanding  common
       stock  of FBMS in  exchange  for 250  shares  of the  Company's  Series E
       Convertible  Preferred  Stock  valued at  approximately  $2,531,000.  The
       transaction was accounted for as a purchase. The total purchase price was
       allocated to the assets and liabilities acquired based on their estimated
       fair values, including goodwill of approximately  $18,900,000,  which has
       been amortized by use of the straight line method over ten years.

     Effective June 28, 2000,  the Company  entered into a rescission  agreement
       with the  previous  owner of FBMS,  in which the Company and the previous
       owner  agreed to rescind the terms of the August 23, 1999 FBMS  Agreement
       and Plan of Reorganization  (the "August 23, 1999 Agreement").  Under the
       terms of the rescission agreement,  all assets and liabilities of FBMS as
       of June 28, 2000 were returned to the previous owner of FBMS.

     Pursuant  to  the  terms  of the  settlements  relating  to the  rescission
       agreement,  the parties have agreed that  nMortgage is to retain  certain
       technological  rights which were  developed  since  August 23, 1999,  and
       which were funded through the Company's investment.  In addition, as part
       of the  settlement,  the Company has agreed to issue up to 50  additional
       shares of Series E  Preferred  Stock (Note 7) to fund the  resolution  of
       certain  claims.  The  technological  rights that were retained have been
       valued at  approximately  $2,500,000,  which are being  amortized  over a
       three-year period.

     As a result of the rescission agreement, the Company divested itself of the
       assets, liabilities, and operations of FBMS as of June 28, 2000, and as a
       result, recorded a loss of $3,979,000,  which represents the write off of
       the Company's investment in FBMS, which includes remaining goodwill as of
       the date of the rescission,  net of technological  rights  retained.  The
       operating  results  of  FBMS  have  been  included  in  the  consolidated
       statements of operations from the date of acquisition through the date of
       rescission.

     The  following  pro  forma  information  has  been  prepared  assuming  the
       rescission  of FBMS had taken place at the  beginning  of the  respective
       periods.  The pro forma  information  includes  adjustments to remove the
       operating results of FBMS, related  amortization of goodwill arising from
       the  acquisition  of FMBS,  and the loss on the FBMS  rescission,  and to
       include amortization expense related to the technological rights retained
       in the rescission transaction.

     The pro forma financial  information is not  necessarily  indicative of the
       results of  operations as they would have been had the  transaction  been
       effected on the assumed date.

                                                 Nine months ended September 30,
                                                       2000           1999
                                                    ------------   -----------
       Revenues                                     $    543,000   $    774,000
       Net loss                                     $ (4,360,000)  $ (2,033,000)
       Net loss applicable to common shareholders   $ (5,120,000)  $ (5,284,000)
       Basic and diluted loss per common share      $       (.72)  $       (.81)
       Shares used in per share calculation            7,140,293      6,542,114

                                       13
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

4.   Subsidiary transactions:

     Effective  January  1,  2000,  Triumph  sold the  assets of one of its four
       retail stores in exchange for a $268,000 note  receivable.  In connection
       with  this   transaction,   Triumph  recorded  a  gain  on  the  sale  of
       approximately  $76,600,  which  is  presented  as  other  income  in  the
       accompanying statement of operations.

     During the nine months ended September 30, 2000, an  officer/shareholder of
       the Company sold  marketable  securities to Triumph at a cost of $10,000.
       Triumph  subsequently  sold a portion of these marketable  securities for
       approximately $278,000. The market value of the remaining securities held
       by the Company at  September  30, 2000,  was  approximately  $5,700.  The
       difference  between  the cost and  market  value of these  securities  of
       $345,904 was recorded as an increase in additional paid-in capital during
       the nine-months ended March 31, 2000.

5.   Equity investment:

     During the  nine-months  ended  September  30, 2000,  VP Sports,  Inc. ("VP
       Sports") issued additional shares of its common stock in exchange for the
       exercise of  warrants,  which  resulted  in a decrease  in the  Company's
       ownership  interest  in VP Sports  from  approximately  36% at January 1,
       2000, to approximately 15% at September 30, 2000.

6.   Litigation:

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

7.   Stockholders' equity:

     Series A, B, and C convertible 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 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.

                                       14
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

7.   Stockholders' equity (continued):

     Series A, B, and C convertible preferred stock (continued):

     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  during the first quarter of 1999,  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 Series A, B and C convertible  preferred
       stock,  plus accumulated  dividends on those shares,  were converted into
       320,528 shares of common stock, at an average  conversion  price of $6.63
       per share.

     Series D convertible preferred stock:

     In May 1999, the Company reached an agreement  with an accredited  investor
       to sell up to 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.  No  further  shares  of Series D  Preferred  Stock are to be
       issued.

     The holder of each share of Series D  Preferred  Stock is  entitled to a 6%
       cumulative annual dividend,  payable  quarterly.  The dividend is payable
       either  in  cash or in  shares  of the  Company's  common  stock,  at the
       discretion  of the  Company.  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 during the third quarter
       of 1999,  the amount of the  discount due to this  beneficial  conversion
       feature.

                                       15
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

7.   Stockholders' equity (continued):

     Series E convertible preferred stock:

     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.

     Series F convertible preferred stock:

     In connection with the Company's acquisition of MRG, in September 2000, the
       Company  issued  a total  of  460,000  shares  of  Series  F  convertible
       preferred  stock (the  "Series F Preferred  Stock") for $6.875 per share.
       The Series F Preferred  Stock  includes a stated value of $8.00 per share
       and contains a liquidation preference in the amount of 105% of the stated
       value.  Series F  shareholders  are  entitled to  dividends in the amount
       declared  with  respect  to the  Company's  common  stock.  The  Series F
       Preferred  Stock may be  converted  into shares of the  Company's  common
       stock at any time following the date of issuance until  forty-two  months
       following the issue date at a conversion  price per share of common stock
       equal to $7.00 per share.  Forty-two  months  after  issue,  the Series F
       Preferred  Stock  outstanding  is subject to  mandatory  conversion  into
       shares of the  Company's  common  stock,  utilizing  the stated value per
       share.

8.   Series G mandatory convertible preferred stock:

     In September  2000, the  Company  issued  1,300  shares  of  6%,  Series  G
       convertible  preferred stock (the "Series G Preferred  Stock") for $1,000
       per share,  which is the stated  value per share.  The Series G Preferred
       Stock is convertible,  together with any accrued but unpaid dividends, at
       any time into shares of the Company's  common stock at a conversion price
       per share equal to the lesser of $6.50 or 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 $700,000 during the third quarter of 2000, the amount of the
       discount due to the beneficial conversion feature. The Series G Preferred
       Stock  holders are  entitled  to  cumulative  dividends  at 6% per annum,
       payable quarterly commencing September 30, 2000. Dividends in cash or, at
       the  Company's  option,  in shares of the  Company's  common  stock.  All
       outstanding  Series G Preferred  Stock shall be  automatically  converted
       into common  stock on August 31,  2003.  The Series G Preferred  Stock is
       redeemable  at the  Company's  option at any time at a  redemption  price
       equal to $1,350 per share plus any  accrued  but  unpaid  dividends.  The
       Company  is  required  to  redeem  the  Series G  Preferred  Stock if its
       shareholders  have not  approved  an  increase in the number of shares of
       authorized  common  stock from  7,500,000 to  50,000,000  effective on or
       before March 4, 2001 or a registration  statement  relating to the resale
       of certain shares of the Company's  common stock  underlying the Series G
       Preferred  Stock is not  declared  effective on or before 180 days of its
       filing.

                                       16
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

9.   Proposed business transactions:

     Proposed sale of nMortgage, Inc.:

     On December 31, 1999,  the Company  entered  into an agreement  and plan of
       merger,  whereby all of the outstanding  common stock of nMortgage was to
       be acquired by Innovative Gaming Corporation of America ("IGCA"),  an SEC
       reporting  company  whose  common  stock  trades on the  Nasdaq  SmallCap
       Market. Under the terms of this proposed transaction, in exchange for all
       outstanding  shares  of  nMortgage,  Inc.,  the  Company  and  the  other
       nMortgage shareholders were to receive approximately 46,000,000 shares of
       IGCA common stock, assuming that there would be approximately  16,000,000
       shares of IGCA common stock outstanding on a fully-diluted  basis, before
       the  transaction.  On  September  21,  2000 the  previous  agreement  was
       mutually terminated by both parties.

     Acquisition of Nova Financial Systems, Inc. and Key Financial Systems,
     Inc.:

     On June 29,  2000, the  Company  signed a  definitive  agreement  with Nova
       Financial Systems,  Inc. ("Nova") and Key Financial Systems, Inc. ("Key")
       to acquire all the outstanding  capital stock of Nova and Key in exchange
       for the greater of 7,140,000 shares of the Company's common stock, or 50%
       of the post-acquisition outstanding common stock of the Company, and cash
       of $5,000,000. Nova and Key are both financial companies which specialize
       in selling  credit card programs  designed for sub-prime high credit risk
       clients.

     Consummation  of the Nova and Key  acquisitions  is  subject to a number of
       conditions,  including (i) the  distribution  of the  Company's  business
       development  assets,  net of liabilities  assumed,  to a new wholly-owned
       subsidiary,  Equitex 2000, Inc.  ("E2000"),  and the spin-off of E2000 to
       existing  shareholders;  (ii) the approval of the Nova and Key mergers by
       the  Company's  stockholders;  and  (iii)  stockholder  approval  of  the
       increase  in the  authorized  shares of common  stock from  7,500,000  to
       50,000,000 shares.

     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, was to merge with the  Company,  with the
       Company being the surviving  corporation (the "TeleBanc  Merger").  First
       TeleBanc  owns all of the issued and  outstanding  stock of 1st  National
       Bank, a national banking association.

     This agreement  expired on July 31, 2000, and the Company has withdrawn its
       application  to become a Bank  Holding  Company.  The  Company  and First
       TeleBanc are continuing discussions,  which may result in a new agreement
       and submission of a revised application with the Federal Reserve.

                                       17
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

10.  Operating segments:

     As of and during the three and nine month periods ended September 30, 2000,
       and 1999, the segment results were as follows:

<TABLE>
<CAPTION>
     Three months ended September 30,:
     ---------------------------------
     2000:
                                        Sporting
                                         goods/        Corporate activities
                          Financial      product     -------------------------
                          services       related     Investments      Other         Total
                         -----------   -----------   -----------   -----------   ------------
     <S>                 <C>           <C>           <C>           <C>           <C>
     Revenues            $    86,930   $    96,012   $    11,306   $     3,165   $    197,413
     Segment loss           (867,060)     (115,640)     (331,338)     (182,410)    (1,496,448)

     1999:
                                        Sporting
                                         goods/        Corporate activities
                          Financial      product     -------------------------
                          services       related     Investments      Other         Total
                         -----------   -----------   -----------   -----------   ------------
     Revenues            $   302,862   $   162,744   $    79,240   $    83,379   $    628,225
     Segment loss           (260,512)     (107,327)      (95,064)     (538,362)    (1,001,265)


     Nine months ended September 30,:
     --------------------------------
     2000:
                                        Sporting
                                         goods/        Corporate activities
                          Financial      product     -------------------------
                          services       related     Investments      Other         Total
                         -----------   -----------   -----------   -----------   ------------
     Revenues            $ 1,579,205   $   334,078   $    59,207   $     3,643   $  1,976,133
     Segment gain loss    (4,334,188)     (259,393)     (902,012)   (4,884,914)   (10,380,507)
     Total assets          3,024,652     1,503,922     1,590,708     5,395,907     11,515,189

     1999:
                                        Sporting
                                         goods/        Corporate activities
                          Financial      product     -------------------------
                          services       related     Investments      Other         Total
                         -----------   -----------   -----------   -----------   ------------
     Revenues            $   302,862   $   572,433   $   154,169   $   103,939   $  1,133,403
     Segment gain loss      (339,982)     (227,545)     (232,819)   (1,397,562)    (2,197,908)
</TABLE>

                                       18
<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.

(a) Liquidity.
(b) Capital Resources.

During 1999,  as the  Registrant  restructured  its business  from an investment
company to an operating  company,  the  Registrant  relied  primarily on private
placements of equity  securities to fund its operations and  acquisitions  as it
sought to become a fully  operating  entity.  Also during 1999,  the  Registrant
divested certain of its portfolio  securities  providing additional liquidity to
fund its operations.  These trends have continued  during 2000 as the Registrant
continues to fully implement this transition. Presently, all of the Registrant's
subsidiaries operate on a stand-alone basis and each is individually responsible
for  its  own  liquidity.  However,  the  Registrant  may  need  to  assist  its
subsidiaries from time-to-time  should liquidity issues arise. Should additional
liquidity be necessary to fund the operations of its subsidiaries or to complete
any merger or  acquisition,  the Registrant  believes it has sources  available,
including the sales of certain  investments  or the private  placement of equity
securities, to cover any such needs.

On August 23,  1999,  the  Registrant  through its  majority  owned  subsidiary,
nMortgage,  Inc.,  acquired First Bankers  Mortgage  Services,  Inc.  ("FBMS") a
mortgage banking company  headquartered in Ft.  Lauderdale,  Florida in exchange
for 250 shares of the  Registrant's  Series E Convertible  Preferred  Stock.  On
August 15, 2000, the Registrant reached an agreement in principal to rescind the
acquisition of FBMS,  effective June 28, 2000. Under the terms of the agreement,
all assets and liabilities of FBMS were returned to the previous owner effective
June  28,  2000.  Pursuant  to the  terms  of the  settlements  relating  to the
rescission  agreement,  the parties  have agreed  that the  Registrant,  through
nMortgage,  is to retain certain technological rights which were developed after
August 23, 1999,  funded by the  Registrant's  investment.  These  technological
rights are valued at approximately $2.3 million, net of accumulated depreciation
at September 30, 2000. Also as part of the settlement, the Registrant has agreed

                                       19
<PAGE>

to issue up to 50 additional shares of its Series E Convertible  Preferred Stock
bringing  the  total  Series E shares  outstanding  to 300.  As a result  of the
rescission,  the  Registrant  divested  itself of the  assets,  liabilities  and
operations of FBMS as of June 28, 2000 and the  Registrant's  investment in FBMS
was written-off as of June 28, 2000 resulting in a loss of $3,979,000.

On September 7, 2000,  effective  September 27, 2000, Equitex acquired by merger
of all of the issued and  outstanding  common stock of the Meridian  Residential
Group, Inc. ("Meridian") through its wholly-owned  subsidiary,  GR.com, Inc., in
exchange for 425,000 shares of the Registrant's  Series F Convertible  Preferred
Stock.  In connection  with the Meridian  acquisition,  nMortgage  acquired from
Meridian  Capital  Group,   LLC,  the  proprietary   business  model,   website,
trademarks, corporate names and all related intellectual property rights related
to  Meridian  Capital  Group's  GreatRate.com  business,   including  the  names
GreatRate.com and  GreatRateMortgage.com  for a cash purchase price of $850,000.
The Registrant  issued 1,300 shares of its Series G Convertible  Preferred Stock
for net proceeds of $1,240,000 to fund the  acquisition  of  GreatRate.com.  The
remaining funds were utilized for working capital needs.

Meridian was  established  to become a mortgage  banker,  however,  over time it
became a provider of mortgage management services and E-commerce  infrastructure
platforms to the mortgage  industry.  As a result,  Meridian set out to create a
strategic alliance with an entity that could provide technology  compatible with
its net stream lined virtual back office. Since March 1, 2000, Meridian has laid
the  groundwork  for a new  business  model.  Through  the  GreatRate.com  site,
Meridian  is  developing  web  based  mortgage  products  that  will  allow  the
Registrant to capitalize  on a streamlined  back office  operation to expand its
business  nationwide.  The  goal of the new  business  plan is to  create  a B2B
platform  for  Meridian to reach out to small banks and  financial  institutions
allowing them to utilize  Meridian's/nMortgage's  technology and infrastructure.
This will  enable  the  financial  institution  to enter  into the  business  of
providing  residential  and small  commercial  mortgages to their clientele with
almost no startup costs.

Meridian  recently  announced  that it has signed a letter of intent  with Situs
Technologies for exclusive  licensing and technology  development  rights to the
Virtual Backroom Mortgage  Origination System ("VBS") created by Situs.  Subject
to the execution of a definitive agreement,  Situs has been selected to serve as
the  exclusive  E-Mortgage  Platform for all  mortgage  business  originated  by
Meridian and its  affiliates.  The Situs  technology  will provide  secure fully
interactive  web-based  e-mortgage systems and connectivity between Meridian and
its lenders, vendors and customers.

nMortgage  continues to offer its loan products through the Internet.  Customers
accessing the  nmortgage.com  website are being redirected to the  GreatRate.com
website  which  currently  operates  in the  states of New York,  New Jersey and
Connecticut. In addition, nMortgage continues to derive revenues from consulting
services provided to the mortgage industry.

Following  the  acquisition  of FBMS  through  nMortgage  in  August  1999,  the
Registrant  began  incorporating  major  operational  changes at nMortgage.  The
purpose of these  changes  was to  significantly  reduce  nMortgage's  operating
overhead as it  attempted  to  transition  from a  traditional  brick and mortar
mortgage  banker to a technology  driven  mortgage  banker,  broker and Internet
solution provider to the mortgage industry.  This restructuring continued during
the first half of 2000 until the Registrant rescinded the FBMS transaction.

Prior to the rescission,  additional  capital  expenditures were incurred during
the first half of 2000 as nMortgage further developed its information technology
in connection with its Internet-based  product offerings.  Following the closing
of the Meridian  transaction  GR.com has become the operating  unit of nMortgage
which plans to move forward with its business  plan and continue the roll out of
its  business  to  consumer  and  business to  business  mortgage  programs.  As
nMortgage moves forward with its business plan, it will initially rely primarily
on  origination  and other  loan  related  fees from  lenders to whom it brokers

                                       20
<PAGE>

mortgage  loans.  As  nMortgage  continues  to develop its  business to business
Internet  solutions,  additional fees will be recognized from fee-based programs
for  private  labeling  third party  website  solutions.  This  should  generate
additional loan-related as well as service-related fees.

Triumph  and VP Sports both rely  primarily  on cash flows from  operations  for
their working  capital.  In addition,  during 1999 and 2000,  Triumph received a
cash  infusion  from the sale of an  investment  purchased  from an  officer  of
Triumph   considerably  below  market  value.  This  capital  infusion  provided
additional  cash of  approximately  $270,000  to operate  its  business  and was
considered a  contribution  of capital.  The  Registrant  anticipates  Triumph's
liquidity and capital resources will be sufficient to fund its operations during
the year 2000.

On June 29, 2000,  the  Registrant  announced  that it had executed a definitive
agreement for the acquisitions of Key Financial  Systems,  Inc. ("Key") and Nova
Financial Systems,  Inc. ("Nova") based in Clearwater,  Florida.  Key is a three
year old financial  services call center  organization that markets and services
credit  card  programs  and  provides   customer   service  support  for  online
applications.  Under the  agreement,  Key and Nova's current  stockholders  will
receive  a  combination  of cash and  stock of the  Registrant.  The  Registrant
presently  believes that it will have sources of cash  available to complete the
Key  acquisition  through  the  private  offering  of equity  securities  of the
Registrant.

On August 2, 2000, the Registrant announced its agreement for the acquisition of
First  TeleBanc  Corp.  ("First  TeleBanc")  had  expired on July 31,  2000.  In
addition,  as a result of certain  deficiencies noted in the operations of First
TeleBanc's  operating  bank,  Net 1st National  Bank,  following an  examination
performed  by  the  Office  of the  Comptroller  of the  Currency  ("OCC"),  the
Registrant  withdrew its  application  with the Federal Reserve to become a bank
holding  company.  The Registrant is engaged in discussions  with First TeleBanc
which,  although  there is no  assurance,  may  result  in a new  agreement  and
submission of application to the Federal Reserve.


(c) Results of operations.

The  Registrant  has  divested  itself  of the  assets  and  operations  of FBMS
effective  June 28, 2000.  The FBMS results of operations  have been included in
the  Registrant's  consolidated  statement of operations  during the period from
August 23, 1999 through June 28, 2000.

The Registrant  fundamentally  changed its  operations  during 1999 most notably
with the  acquisition  of FBMS in August 1999.  As a result,  comparison  of the
results of operations  for the first nine months of 1999 as compared to the same
2000 period  would not provide for a meaningful  analysis.  The  discussion  and
analysis of the  Registrant's  results of  operations  have been analyzed with a
view toward the Registrant's current and future business operations.

REVENUES:  The  Registrant's  consolidated  revenues  for the nine months  ended
September 30, 2000 increased  significantly  when compared to September 30, 1999
as a result of the addition of nMortgage and more  specifically  FBMS during the
first six months of 2000. Of the total  consolidated  revenues of $1,976,133 for
the  nine  months  ended  September  30,  2000,   approximately   $1,500,000  is
attributable to nMortgage,  most of which was recorded in the first quarter. For
the three months ended September 30, 2000, total revenues were $197,413. Of this
amount,   approximately   $87,000  is   attributable   to  nMortgage  and  First
TeleServices, approximately $96,000 to Triumph Sports, and approximately $14,000
to the  Registrant  itself.  Revenues were  significantly  lower for the quarter
ended September 30, 2000 when compared to the two previous quarters in 2000 as a
result  of  the  FBMS   rescission  and  the  resulting   decrease  in  mortgage
originations.

                                       21
<PAGE>

As discussed above, during the first nine months of 2000, nMortgage continued to
implement  changes  in its  operations.  During  the  second  quarter  of  2000,
nMortgage  materially  completed its transition from warehouse  funding to table
funding a majority of its mortgage loans. As a result of this change,  nMortgage
consolidated  its operations and decreased its operating  overhead  resulting in
certain  write-offs and severance costs during the first six months of the year.
Given these operational  changes,  nMortgage  experienced an overall decrease in
loan  originations  during the period both in the quarter ended June 30, 2000 as
it changed its loan funding method,  and in the quarter ended September 30, 2000
as it ceased operations following the FBMS rescission and began discussions with
Meridian. In addition,  nMortgage saw a decrease in mortgage originations due to
higher  interest  rates  affecting  both new  home  purchases  and more  notably
refinancings as most consumers chose not to refinance at the higher rates.

With the merger of GR.com and Meridian  complete,  the combined companies intend
to seek an agreement with a compatible  financial  institution  allowing them to
operate in a greater number of jurisdictions.  When nMortgage completely resumes
operations,  a majority of its revenues should be derived from origination fees.
Under the table  funding  concept,  once a mortgage  originated  by nMortgage is
closed and funded by the lender,  nMortgage  will be paid its fee directly  from
that lender.  In addition to limiting  overhead costs,  management  believes the
table funding concept is more  advantageous as, among other things, it minimizes
the  necessity to maintain  warehouse  lines of credit and reduces the potential
for repurchasing loans.

Triumph,  the second largest contributor to the Registrant's  revenues,  derived
those  revenues  from product sales at its three retail  locations.  Total sales
were down as  compared  to the prior  year as a result of the sale of one of its
retail locations.  Triumph  experienced a slight decrease in third quarter sales
as  compared  to the first and  second  quarters  of 2000.  The sale of a retail
location  resulted in a gain of  approximately  $73,000,  which is  presented as
other income recorded  during the first quarter.  Triumph expects total revenues
will be lower for the entire year 2000 given the sale of this location.

The  Registrant's  revenues for the quarter and nine months ended  September 30,
2000 on a stand-alone  basis  consisted  primarily of interest income related to
certain long-term and short-term loans to non-affiliated  entities. As a holding
company,  the Registrant has no significant  sources of revenue other than those
of its  operating  subsidiaries.  During  both  1999  and  2000  the  Registrant
partially funded its operations from the sales of certain investments,  which is
considered  other  income not  revenue.  For the  remainder  of year  2000,  the
Registrant  may  continue  to divest  certain  of its  investments  to cover its
operating overhead as it continues to work toward completion of its contemplated
acquisition and merger transactions.

EXPENSES:  Of the  Registrant's  total expenses on a consolidated  basis for the
nine months ended September 30, 2000,  approximately $4,697,000 are attributable
to nMortgage, $1,137,000 to Equitex, $334,000 to First TeleServices and $509,000
to Triumph.  In addition,  a one time loss of $3,979,000  representing the write
off  of the  Registrant's  investment  in  FBMS  and  related  goodwill,  net of
technological  rights was recorded.  This is an increase of  approximately  200%
when  compared to the  previous  year which did not include  the  operations  of
nMortgage. Total expenses for the third quarter of 2000 were marginally lower as
compared to the second  quarter of 2000 while both the second and third quarters
were significantly lower when compared to the first quarter of this year.

A  majority  of the total  expenses  are  selling,  general  and  administrative
expenses with nMortgage  accounting for  approximately  $4,000,000 of the nearly
$5,750,000 total.  nMortgage's  operating overhead following the FBMS rescission
and divestiture is significantly  lower which translated to significantly  lower
expenses  incurred in the second  and third quarters of 2000 as compared  to the


                                       22
<PAGE>

first  quarter of 2000.  The  remaining  portion  of  expenses  attributable  to
Equitex, Triumph and First TeleServices were slightly lower when compared to the
previous year's quarter and nine month period. First TeleServices,  however, saw
a  significant  increase in its expenses  during the third  quarter of 2000 as a
result of the write-down of $150,000 on a note receivable.

OTHER INCOME  (EXPENSES):  Other income (expense) includes a net investment gain
of  approximately  $23,700 for the nine months ended  September 30, 2000,  which
accounts  for the realized and  unrealized  gain on certain of the  Registrant's
investments,  equity in losses of affiliates of $1,092,000,  interest expense of
approximately  $706,000 and other income of approximately $73,000 from Triumph's
sale of assets.

Of the  total  interest  expense,  approximately  $680,000  is  attributable  to
nMortgage.  This expense is related to nMortgage's warehouse lines of credit. As
a  result  of  the  rescission  of  the  FBMS   transaction  this  expense  will
significantly  decrease in future periods as nMortgage  discontinues  the use of
warehouse lines of credit to fund its loans.  Interest  expense  recorded in the
third quarter ended September 30, 2000 was significantly  lower when compared to
the first and second quarters of 2000.

Equity in loss of affiliates  corresponds to the Registrant's  approximately 15%
ownership  interest  in VP Sports  which is  accounted  for based on the  equity
method. VP Sports' business is seasonal and traditionally,  the first and second
calendar  quarters  are the peak  sales  periods  for VP Sports  with the latter
portion of the year being the slowest.  However, at the end of the first quarter
2000,  VP  Sports  acquired  certain  assets of  Torpedo,  Inc.  ("Torpedo")  of
Montreal, Canada.  Assimilating the operations of Torpedo with the operations of
VP  Sports  contributed  to the  losses  for the  third  quarter.  Torpedo  is a
manufacturer of children's winter toy products and accordingly has peak sales in
the fourth quarter.  In addition,  due to the exercise of certain warrants in VP
Sports  during  the third  quarter  by  unaffiliated  third  parties,  Equitex's
ownership  was  reduced  from  approximately  24%  to  approximately  15%  which
accounted  for  an  unrealized  loss  on  the  Registrant's  investment  further
contributing  to the equity in losses of affiliates.  Also included in equity in
losses of affiliates is a loss of $117,500 by First  TeleServices  on one of its
equity investments.

NET  LOSS:  Of the net  loss for the  nine  months  ended  September  30,  2000,
approximately $3,861,000 is attributable to nMortgage,  approximately $1,808,000
to Equitex,  approximately  $473,000  to First  TeleServices  and  approximately
$259,000 to Triumph. Additionally, $3,979,000 is attributable to the loss on the
FBMS  divestiture.  This compares to a net loss of approximately  $2,198,000 for
the nine months ended  September  30, 1999 which  included only one month of the
operations of nMortgage.  The net loss for the third quarter ended September 30,
2000 was  approximately  $1,496,000 as compared to approximately  $6,975,000 for
the second  quarter  ended June 30, 2000 and  approximately  $1,909,000  for the
first quarter ended March 31, 2000.

NET LOSS  APPLICABLE  TO  COMMON  STOCKHOLDERS:  Net loss  applicable  to common
stockholders was  approximately  $11,140,000 for the nine months ended September
30,  2000  This  amount  includes  deemed   preferred  stock  dividends  on  the
Registrant's  outstanding  preferred  stock of $59,400 and the  amortization  of
discount on preferred  stock of $700,000 for the nine months ended September 30,
2000.

                                       23
<PAGE>
                                   ITEM THREE
             QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

Not applicable


                           PART II. OTHER INFORMATION

Item 1.       Legal Proceedings

              None

Item 2.       Changes in Securities

On  September  6,  2000 the  Registrant  issued  1,300  shares  of its  Series G
Convertible   Preferred  Stock  (the  "Series  G  Preferred   Stock")  for  cash
consideration  of $1,300,000 to an accredited  investor.  The Series G Preferred
Stock is  convertible  into common stock at the lesser of $6.50 per share or 65%
of the average closing bid price of the Registrant's common stock as reported by
the Nasdaq  Stock  Market for the five days  immediately  preceding  conversion,
including interest due and payable. The Registrant relied on the exemptions from
registration  provided by Sections  4(2)  and/or 4(6) of the  Securities  Act of
1933, as amended (the "Act) and/or Rule 506 promulgated thereunder.

On  September  6, 2000 the  Registrant  issued  31,250  shares  of its  Series F
Convertible  Preferred Stock (the "Series F Preferred Stock") valued at $250,000
to an accredited  investor.  The Series F Preferred  Stock is  convertible  into
common stock at $7.00 per share.  The Registrant  relied on the exemptions  from
registration  provided by  Sections  4(2) and/or 4(6) of the Act and/or Rule 506
promulgated thereunder.

On  September  7, 2000 the  Registrant  issued  425,000  shares of its  Series F
Preferred Stock to Meridian  Residential  Group,  LLC in  consideration  for the
acquisition  of all of the issued and  outstanding  common stock of The Meridian
Residential  Group, Inc. The Series F Preferred Stock is convertible into common
stock  at  $7.00  per  share.  The  Registrant  relied  on the  exemptions  from
registration  provided by  Sections  4(2) and/or 4(6) of the Act and/or Rule 506
promulgated thereunder.

On  September  21,  2000 the  Registrant  issued  3,750  shares of its  Series F
Preferred  Stock in  exchange  for legal  services in the amount of $30,000 to a
creditor. The Series F Preferred Stock is convertible into common stock at $7.00
per share. The Registrant relied on the exemptions from registration provided by
Sections 4(2) and/or 4(6) of the Act and/or Rule 506 promulgated thereunder.

Item 3.       Defaults upon Senior Securities

              None

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

              None

Item 5.       Other Information

              None

                                       24
<PAGE>

Item 6.       Exhibits and Reports on Form 8-K

              (a) Financial Data Schedule for SEC Registrants

              (b) On August 30, 2000 the  Registrant  filed a Current  Report on
                  Form 8-K reporting the Rescission of the  acquisition of First
                  Bankers Mortgage  Services,  Inc. ("FBMS") under Items 2 and 7
                  which  included  pro  forma  financial   information  prepared
                  assuming the  rescission of FBMS had taken place on January 1,
                  2000 and January 1, 1999.


                                       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)



Date: November 16, 2000                By:/s/ Henry Fong
                                          --------------------------------------
                                          Henry Fong
                                          President, Treasurer and
                                          Chief Financial Officer



                                       26