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 JUNE 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 August 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 - June
                    30, 2000 and December 31, 1999                             4

                    Condensed consolidated statements of operations-
                    three and six months ended June 30, 2000 and 1999          5

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

                    Condensed consolidated statements of cash
                    flows - six months ended June 30, 2000, and 1999         8-9

                    Notes to condensed consolidated financial statements   10-17

          Item 2.   Management's discussion and analysis of financial
                    condition and results of operations                    18-22

          Item 3.   Quantitative and qualitative disclosures of market
                    risk                                                      22

PART II   OTHER INFORMATION

          Item 1.   Legal proceedings                                         23

          Item 2.   Changes in securities and use of proceeds                 23

          Item 3.   Defaults upon senior securities                           23

          Item 4.   Submission of matters to a vote of security holders       23

          Item 5.   Other information                                         23

          Item 6.   Exhibits and reports on Form 8-K                          23

                                       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 June 30, 2000, and the related  condensed
consolidated  statements of operations for the three-month and six-month periods
then ended, and the condensed  consolidated  statements of stockholders'  equity
and cash flows for the six-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
August 14, 2000

                                       3
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                      June 30,     December 31,
                                                        2000           1999
                                                   -------------   ------------
                                                      (Unaudited)

Cash and cash equivalents ........................  $    220,161   $    783,606
Mortgage loans held for sale, net ................                   14,787,080
Receivables, net:
  Related parties ................................       705,468        958,810
  Other ..........................................       770,769        504,571
Inventories ......................................       103,615        167,346
Investments:
  Equity investments .............................     1,145,000      1,707,898
  Other investments ..............................     1,397,214      1,767,537
Furniture, fixtures, and equipment, net ..........       162,260      1,058,032
Intangible and other assets, net .................     3,776,653     20,010,057
                                                    ------------   ------------
                                                    $  8,281,140   $ 41,744,937
                                                    ============   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Warehouse loans ................................                 $ 18,582,351
  Accounts payable ...............................  $    193,456      1,584,926
  Accrued liabilities:
    Related parties ..............................       586,456        454,235
    0thers .......................................        77,804      2,773,989
  Notes and advances payable:
    Related parties ..............................     1,232,550        832,000
    Others .......................................       138,547      1,941,954
                                                    ------------   ------------
      Total liabilities ..........................     2,228,813     26,169,455
                                                    ------------   ------------

Minority interest ................................     5,488,070      6,473,070
                                                    ------------   ------------
Commitments and contingencies

Stockholders' equity:
  Convertible preferred stock; par value $1,000;
    4,500 shares authorized:
      Series D, 6%; 1,200 shares issued and
       outstanding; liquidation
       preference $1,585,000 .....................     1,200,000      1,200,000
      Series E; 250 shares issued and outstanding        250,000        250,000
   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 ....................    19,166,127     18,820,223
   Accumulated deficit ...........................   (20,080,639)   (11,196,580)
   Less treasury stock at cost (33,350 shares) ...      (114,037)      (114,037)
                                                    ------------   ------------
      Total stockholders' equity .................       564,257      9,102,412
                                                    ------------   ------------
                                                    $  8,281,140   $ 41,744,937
                                                    ============   ============

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

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                    Three months                    Six months
                                                    ended June 30,                ended June 30,
                                                 2000            1999           2000          1999
                                              -----------    -----------    -----------    -----------
<S>                                           <C>            <C>            <C>            <C>
Revenues:
 Product sales ............................   $   105,024    $   187,341    $   220,588    $   409,689
 Loan production and processing revenues ..        96,590                       293,065
 Secondary marketing revenues, net ........        10,559                       871,134
 Interest and dividend income .............       105,340         48,766        334,655         60,815
 Other ....................................         3,914                        59,278         32,647
                                              -----------    -----------    -----------    -----------
                                                  321,427        236,107      1,778,720        503,151
                                              -----------    -----------    -----------    -----------
Expenses:
 Cost of product sales ....................        63,688        111,466        136,321        242,552
 Loan production and processing ...........       146,361                       739,735
 Selling, general and administrative ......     1,429,242        845,315      4,071,120      1,747,272
 Loss on FBMS rescission (Note 2) .........     4,439,000                     4,439,000
                                              -----------    -----------    -----------    -----------
                                                6,078,291        956,781      9,386,176      1,989,824
                                              -----------    -----------    -----------    -----------
Loss from operations ......................    (5,756,864)      (720,674)    (7,607,456)    (1,486,673)
                                              -----------    -----------    -----------    -----------
Other income (expenses):
 Investment (losses) gains, net ...........      (256,915)      (121,844)      (102,790)       177,810
 Equity in (losses) earnings of affiliates       (629,404)       151,500       (562,898)       151,500
 Interest expense:
   Related parties ........................       (74,560)                     (114,618)
   Other ..................................      (257,101)        (6,766)      (569,775)       (27,552)
 Other income .............................                                      73,478
                                              -----------    -----------    -----------    -----------
                                               (1,217,980)        22,890     (1,276,603)       301,758
                                              -----------    -----------    -----------    -----------

Loss before minority interest .............    (6,974,844)      (697,784)    (8,884,059)    (1,184,915)
Minority interest .........................                       16,260                        28,047
                                              -----------    -----------    -----------    -----------
Net loss ..................................    (6,974,844)      (681,524)    (8,884,059)    (1,156,868)
Other comprehensive income, unrealized
 holding (losses) gains on investments ....                      (20,228)                       15,623
                                              -----------    -----------    -----------    -----------
Comprehensive loss ........................   $(6,974,844)   $  (701,752)   $(8,884,059)   $(1,141,245)
                                              ===========    ===========    ===========    ===========

Net loss ..................................   $(6,974,844)   $  (701,752)   $(8,884,059)   $(1,141,245)
Amortization of discount on preferred stock                   (1,333,098)                   (1,333,098)
Deemed preferred stock dividends ..........       (18,200)        (2,600)       (35,900)       (26,300)
                                              -----------    -----------    -----------    -----------
Net loss applicable to common
  shareholders ............................   $(6,993,044)   $(2,037,450)   $(8,919,959)   $(2,500,643)
                                              ===========    ===========    ===========    ===========
Basic and diluted net loss per common
  share ...................................   $      (.98)   $      (.30)   $     (1.25)   $      (.40)
                                              ===========    ===========    ===========    ===========
Weighted average number of common
  shares outstanding ......................     7,140,293      6,854,356      7,140,293      6,236,754
                                              ===========    ===========    ===========    ===========
</TABLE>

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

       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                         SIX MONTHS ENDED JUNE 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

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

Balances, June 30, 2000 ...................         1,450    $ 1,450,000      7,140,293    $   142,806
                                              ===========    ===========    ===========    ===========
</TABLE>

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

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

                         SIX MONTHS ENDED JUNE 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

Net loss ..................................                                   (8,884,059)    (8,884,059)
                                              -----------    -----------    ------------    -----------

Balances, June 30, 2000 ...................   $  (114,037)   $19,166,127    $(20,080,639)   $   564,257
                                              ===========    ===========    ============    ===========
</TABLE>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                            SIX MONTHS ENDED JUNE 30,
                                   (UNAUDITED)

                                                         2000           1999
                                                    ------------   ------------
Cash flows used in operating activities:

Net loss .........................................  $ (8,884,059)  $ (1,156,868)
                                                    ------------   ------------
Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
     Depreciation and amortization ...............     1,087,393         35,880
     Loss on FBMS rescission .....................     4,439,000
     Gain on sale of subsidiary assets ...........       (76,620)
     Stock issued for services ...................                      150,000
     Provision for bad debts .....................        22,628
     Investment gain, net ........................       102,790       (177,810)
     Equity in earnings of affiliates ............       562,898       (151,500)
     Minority interest ...........................                      (28,047)
     Changes in assets and liabilities:
       Decrease in investments in trading
        securities ...............................       347,876        189,105
       Increase in investments in available-for-
        sale securities ..........................                        8,964
       Increase in receivables ...................        (6,820)       (28,574)
       Decrease in mortgage loans held for sale ..    13,838,929
       Increase in inventories ...................        (4,331)       (30,581)
       Increase in other assets ..................      (317,971)       (75,814)
       Decrease (increase) in accounts payable and
        accrued liabilities ......................       832,675       (737,807)
                                                    ------------   ------------

       Total adjustments .........................    20,828,447       (846,184)
                                                    ------------   ------------

Net cash provided by (used in) operating activities   11,944,388     (2,003,052)
                                                    ------------   ------------

Cash flows from investing activities:

     Purchase of other investments ...............       (12,471)      (290,000)
     Increase in equity investments ..............                     (387,517)
     Sales of other investments ..................       278,032
     Purchases of furniture, fixtures and equipment      (16,243)       (20,968)
     Repayment of loans and notes receivable .....       115,998
     Issuance of loans and notes receivable ......    (2,767,017)    (3,178,469)
     Increase in intangible and other assets .....                     (483,233)
                                                    ------------   ------------

Net cash used in investing activities ............    (2,401,701)    (4,360,187)
                                                    ------------   ------------

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

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                            SIX MONTHS ENDED JUNE 30,
                                   (UNAUDITED)

                                                        2000           1999
                                                   -------------   ------------
Cash flows from financing activities:

     Common stock issued for cash ................                    5,699,299
     Preferred stock issued for cash .............                    1,950,000
     Preferred stock dividends paid ..............                      (26,509)
     Contribution from minority interest .........                      516,750
     Increase in bank overdraft ..................                      (12,666)
     Issuance of notes payable ...................     3,358,432        298,624
     Repayment of notes payable ..................       (80,320)      (133,601)
     Warehouse loans and other notes payable .....   (14,906,244)
     Proceeds from subsidiary stock transactions .     1,522,000      1,837,000
                                                    ------------   ------------

Net cash (used in) provided by financing
 activities ......................................   (10,106,132)    10,128,897
                                                    ------------   ------------

(Decrease) increase in cash and cash equivalents .      (563,445)     3,765,658

Cash and cash equivalents, beginning .............       783,606
                                                    ------------    ------------
Cash and cash equivalents, ending ................  $    220,161   $  3,765,658
                                                    ============   ============

Supplemental disclosure of cash flow information:

     Cash paid for interest: .....................  $    530,424   $     57,251
                                                    ============   ============

Supplemental disclosure of non-cash investing and
 financing activities:

     Recission and divestiture of FBMS:
       Assets ....................................  $ 22,593,000
       Liabilities ...............................   (15,654,000)
       Intangible assets acquired ................    (2,500,000)
                                                    ------------
         Loss on FBMS rescission .................  $  4,439,000
                                                    ============

     Sale of subsidiary assets:
       Equipment .................................  $     38,500
       Intangible assets .........................        84,880
       Inventory .................................        68,062
       Note receivable issued in exchange ........      (268,062)
                                                    ------------
         Gain on sale of subsidiary assets .......  $    (76,620)
                                                    ============

Common stock issued in satisfaction of note payable                $    150,000
                                                                   ============
Amortization of discount on preferred stock ......                 $  1,333,098
                                                                   ============
Conversion of preferred stock to common stock ....                 $  2,142,459
                                                                   ============

           See notes to condensed consolidated financial statements.
                                       9
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                     SIX MONTHS ENDED JUNE 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 six-month  periods
       ended June 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 June 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 2. 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 six months
       ended  June 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 June 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 2), First Teleservices Corporation ("FTC"),
       and Triumph Sports Group, Inc. ("Triumph").  All significant intercompany
       accounts and transactions have been eliminated in consolidation.

     Minority  interest  at June 30,  2000,  represents  issued and  outstanding
       preferred  stock of  nMortgage.  During the three  months ended March 31,
       2000,  nMortgage issued 1,522,000 additional shares of Series A preferred
       stock for $1,522,000,  and as a result of the FBMS divestiture  (Note 2),
       minority interest was reduced by $2,507,000 during the three months ended
       June  30,  2000,  the  amount  of the FBMS  preferred  stock  issued  and
       outstanding.  During  the six  months  ended  June 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 six months
       ended June 30, 2000.

                                       10
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999

2.   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 5) to fund the  resolution  of
       certain  claims.  The  technological  rights that were retained have been
       valued  at  approximately  $2,500,000,  which is to be  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 $4,439,000,  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
       recission  of FBMS had taken  place on  January  1,  2000.  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.

                                       11
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999

2.   Rescission of August 23, 1999,  FBMS  Agreement and Plan of  Reorganization
     and divestiture of FBMS (continued):

     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.
                                                                 Six months
                                                             ended June 30, 2000
                                                             -------------------
           Revenues                                          $         345,000
           Net loss                                          $      (2,195,000)
           Net loss applicable to common shareholders        $      (2,231,000)
           Basic and diluted loss per common share           $            (.31)
           Shares used in per share calculation                      7,140,293

3.   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 six months ended June 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 March 31,  2000 and June 30,  2000,  was  approximately
       $77,000 and $22,000  respectively.  The  difference  between the cost and
       market value of these  securities of $345,904 and $40,701 was recorded as
       an increase in additional  paid-in capital during the quarter ended March
       31, 2000, and as an investment  loss for the quarter ended June 30, 2000,
       respectively.

4.   Equity investment:

     During the three-months ended June 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 March 31,  2000,  to
       approximately 24% at June 30, 2000.

5.   Commitments and contingencies:

     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.

                                       12
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999

6.   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.

     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 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 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.

     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.

                                       13
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999

6.   Stockholders' equity (continued):

     Series D convertible preferred stock (continued):

     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.

     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 July 2000,  the  Company  authorized  the  designation  of the  Series F
       convertible preferred stock, and authorized the issuance of up to 425,000
       shares of the Series F preferred stock, which is convertible into 425,000
       shares of the  Company's  common  stock  (Note 7). 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 pre 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.  Through
       June 30, 2000, no shares of Series F preferred stock have been issued.

7.   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 is 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 are to receive approximately  46,000,000 shares of
       IGCA common stock,  assuming that there will be approximately  16,000,000
       shares of IGCA common stock outstanding on a fully-diluted  basis, before
       the transaction.

     IGCA was formed in 1991 to  develop,  manufacture,  market  and  distribute
       specialty  video  gaming  machines.   As  a  condition  of  the  proposed
       transaction,  IGCA is to  dispose  of its  gaming  assets,  resulting  in
       nMortgage as the sole business operation of IGCA.

                                       14
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999

7.   Proposed business transaction (continued):

     Proposed sale of nMortgage, Inc. (continued):

     There are a number of material  conditions  that must be satisfied prior to
       the completion of this  transaction,  including any required  approval by
       the Company's  shareholders,  the disposal of IGCA's gaming  assets,  and
       approval  from  all  governmental   bodies  or  agencies  and  regulatory
       authorities.  There is no assurance that the conditions  summarized above
       will be satisfied, or that the transaction will occur consistent with the
       terms outlined above.

     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 approximately  7,000,000 shares of the Company's common stock, or 50%
       of the  then  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 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.

                                       15
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999

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 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.

     Proposed  transactions with Meridian  Residential  Group, Inc. and Meridian
     Capital Group, LLC:

     In July 2000,  the  Company  signed an  agreement  and plan of merger  with
       Meridian  Residential  Group,  Inc. ("MRG"),  a New York Corporation,  in
       which the Company plans to acquire all of the outstanding common stock of
       MRG in exchange  for 425,000  shares of newly  issued  Series F preferred
       stock of the Company,  convertible  into 425,000  shares of the Company's
       common stock, and contingent  consideration of up to $3,400,000 in shares
       of the Company's common stock, issuable annually over a five-year period,
       based on  performance  measures,  as  defined.  The  Company  anticipates
       closing the  transaction in the third quarter 2000,  subject to final due
       diligence and financing.

     In connection  with  the MRG transaction,  the  Company  is  negotiating  a
       purchase agreement with Meridian Capital Group, LLC ("MCG"), in which the
       Company plans to purchase certain intellectual  property owned by MCG for
       cash of  $850,000  and a  42-month  option to  exchange  up to 50% of the
       Equitex  common shares issued to MRG (upon the conversion of the Series F
       preferred  stock) for shares of nMortgage  common shares based on certain
       conversion terms, as defined.

                                       16
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999

8.   Operating segments:

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

     Three months ended June 30,
     ---------------------------
     2000:
     -----
<TABLE>
<CAPTION>
                                       Sporting goods/    Corporate activities
                            Financial      product     -------------------------
                            services       related     Investments      Other        Total
                           -----------   -----------   -----------   -----------   -----------
<S>                        <C>           <C>           <C>           <C>           <C>
     Revenues              $   186,330   $   122,502   $    12,481   $       114   $   321,427
     Segment gain (loss)    (1,299,114)     (127,664)     (414,183)   (5,133,883)   (6,974,844)
</TABLE>

     1999:
     ----
<TABLE>
<CAPTION>
                                       Sporting goods/    Corporate activities
                            Financial      product     -------------------------
                            services       related     Investments      Other        Total
                           -----------   -----------   -----------   -----------   -----------
<S>                        <C>           <C>           <C>           <C>           <C>
     Revenues                            $   187,341   $    16,119   $    32,647   $   236,107
     Segment gain (loss)   $     8,394       (83,613)     (137,775)     (468,530)     (681,524)
</TABLE>

     Six months ended June 30,
     -------------------------
     2000:
     -----
<TABLE>
<CAPTION>
                                       Sporting goods/    Corporate activities
                            Financial      product     -------------------------
                            services       related     Investments      Other        Total
                           -----------   -----------   -----------   -----------   -----------
<S>                        <C>           <C>           <C>           <C>           <C>
     Revenues              $ 1,492,275   $   238,066   $    47,901   $       478   $ 1,778,720
     Segment gain (loss)    (3,007,128)     (143,753)     (570,674)   (5,162,504)   (8,884,059)
     Total assets            3,462,312     1,530,515     1,960,218     1,328,095     8,281,140
</TABLE>

     1999:
     -----
<TABLE>
<CAPTION>
                                       Sporting goods/    Corporate activities
                            Financial      product     -------------------------
                            services       related     Investments      Other        Total
                           -----------   -----------   -----------   -----------   -----------
<S>                        <C>           <C>           <C>           <C>           <C>
     Revenues                            $   409,689   $    60,815   $    32,647   $   503,151
     Segment gain (loss)   $   (80,732)     (130,099)     (137,775)     (808,262)   (1,156,868)
</TABLE>

                                       17
<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 and
may continue to do so in 2000. 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  unforeseen   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.

In August 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 June 28, 2000, the
Registrant notified the former owners of FBMS that it was rescinding,  effective
June 28, 2000, the Agreement and Plan of  Reorganization  in connection with the
acquisition.  The  Registrant has executed an agreement for the recission of the
FBMS  acquisition  whereby all assets and liabilities of FBMS are being returned
to the  previous  owner  effective  June 28,  2000.  The parties  are  presently
negotiating  the full  details of this  agreement.  Pursuant to the terms of the
settlements  relating to the recission  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 have been valued at approximately $2.5


                                       18
<PAGE>
                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

million.  Also as part of the settlement,  the Registrant has agreed to issue up
to 50 additional shares of its Series E Convertible  Preferred Stock which would
bring the total Series E shares outstanding to 300.

nMortgage  continues to offer its loan products  through the Internet as part of
an arrangement with The Meridian Residential Group, Inc. ("Meridian")  described
below.  In addition,  nMortgage  continues to derive  revenues  from  consulting
services  provided to the  mortgage  industry.  Equitex,  through  Gr.com,  Inc.
("Gr.com"), a newly formed subsidiary, has signed a definitive agreement for the
merger of Gr.com with Meridian which is based in Brooklyn,  New York. Closing of
the   transaction  is  subject  to  final  due  diligence  and  other  customary
pre-closing conditions.  It is presently anticipated this transaction will close
in the third quarter.  Customers  accessing the nmortgage.com  website are being
redirected to Meridian's website, greatrate.com, which currently operates in the
states of New York,  New Jersey and  Connecticut.

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.  nMortgage was seeking to mitigate
the risk  associated  with the  warehouse  funding  and  subsequent  sale of its
mortgage  portfolios by employing the "table funding" method described below for
closing its retail mortgage loans. This restructuring continued during the first
half of 2000 until the Registrant rescinded the FBMS transaction.

Prior to the recission, 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.  Upon the closing of the
Meridian  transaction,  anticipated to occur in the third  quarter,  Gr.com will
become the  operating  unit of  nMortgage  which plans to move  forward with its
business  plan as  described  below and continue the roll out of its business to
consumer and business to business mortgage programs.  As nMortgage continues the
first  phase  of the  planned  changes,  it will  initially  rely  primarily  on
origination and other loan related fees from lenders to whom it brokers mortgage
loans.  As  nMortgage  continues  to develop its  business to business  Internet
solutions, which debuted during the second quarter of 2000, 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 acquisition of Key/Nova Financial Systems,  Inc. ("Key") 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's
current  stockholders  will  receive  a  combination  of cash  and  stock of the
Registrant.  The  Registrant  presently  believes  that it has  sources  of cash
available to complete the Key acquisition through the private offering of equity
securities of the Registrant.

                                       19
<PAGE>
                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

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.  Both the Registrant and First TeleBanc remain committed to the
transaction and both parties will continue to work toward the execution of a new
agreement and submission of a revised  application  with the Federal  Reserve at
the  appropriate  time once Net 1st National Bank has  adequately  addressed the
concerns of the OCC.

(c) Results of operations.

The  Registrant  is  divesting  itself  of the  assets  and  operations  of FBMS
effective  June 28, 2000.  The FBMS  operating  results of operations  have been
included in the  Registrant's  consolidated  statement of operations  during the
period from August 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 1999 as  compared  to 2000 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 six months ended June
30, 2000 increased  significantly  when compared to June 30, 1999 as a result of
the addition of nMortgage.  Of the total consolidated revenues of $1,778,720 for
the six  months  ended  June  30,  2000,  approximately  $1,400,000  million  is
attributable to nMortgage,  most of which was recorded in the first quarter. For
the three months  ended June 30, 2000,  total  revenues  were  $321,427 of which
nMortgage  contributed  approximately  $183,000.  Triumph  Sports  accounted for
approximately  $115,000  and  $122,000  in  revenue  for the  first  and  second
quarters, respectively.

As  discussed  above,  during the first  half of 2000,  nMortgage  continued  to
implement changes in its operations.  During the six months ended June 30, 2000,
while continuing to offer retail  mortgages  through both traditional as well as
Internet oriented  channels,  nMortgage began to transition from its practice of
warehouse funding to table funding a majority of its mortgage loans.  During the
second quarter of 2000, nMortgage materially completed this transition and table
funded  nearly  100%  of  its  loans.  This  change  results  in  the  need  for
significantly  fewer employees as the  responsibilities  for underwriting,  post
closing,  closing,  auditing and disbursing loans are transferred from nMortgage
to the investors  underwriting and funding the  originations.  With this change,
nMortgage  consolidated  its  operations  and decreased its operating  overhead.
These changes  resulted in certain  write-offs  and  severance  costs during the
first  six  months  of the  year.  As a  result  of these  operational  changes,
nMortgage  experienced  an  overall  decrease  in loan  originations  during the
period,  most notably in the quarter ended June 30, 2000, as it trimmed its work
force and  began  implementing  its  Internet  product  roll-out.  In  addition,
nMortgage  saw a decrease in mortgage  originations  due to  increased  interest
rates which  affected both new home purchases and more notably  refinancings  as
most consumers chose not to refinance given the higher rates.

                                       20
<PAGE>
                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

The  Registrant has executed an agreement for the merger of Gr.com with Meridian
as described above which when completed would allow nMortgage to resume offering
mortgage loans in the New York, New Jersey,  Connecticut  area. When that merger
is  completed,  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  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.  Management  believes the table
funding concept is more  advantageous  due to, among other things,  it minimized
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.  Second  quarter 2000 sales were  slightly  higher than those
recorded  in the first  quarter  of 2000.  The sale of the retail  location  did
result in a gain of  approximately  $73,000,  which is presented as other income
booked during the first quarter.  Triumph  expects total sales will be lower for
the year on the whole given the sale of this location.

The Registrant's  revenues for the quarter and six months ended June 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.  The Registrant partially offset its operating overhead
during  1999 from the sales of certain  investments  which is  considered  other
income not revenue.  For the 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 or merger transactions.

EXPENSES: Of the Registrant's total expenses on a consolidated basis for the six
months  ended  June 30,  2000,  approximately  $3,745,000  are  attributable  to
nMortgage,  $725,000 to Equitex,  $128,000 to First Teleservices and $349,000 to
Triumph. In addition,  a one time loss of $4,439,000  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  471%
when  compared to the  previous  year which did not include  the  operations  of
nMortgage.  Excluding  the  one-time  charge  for the write  off of FBMS,  total
expenses  for the second  quarter of 2000 as compared to the first  quarter were
significantly lower.

A  majority  of the total  expenses  are  selling,  general  and  administrative
expenses with nMortgage  accounting for  approximately  $3,000,000 of the nearly
$4,000,000 total.  nMortgage's  operating  overhead following the FBMS recission
and divestiture is significantly  lower which translated to significantly  lower
expenses  incurred in the second  quarter ended June 30, 2000 as compared to the
first  quarter of 2000.  This trend is expected to continue in the remaining six
months of 2000.  The  remaining  portion of  expenses  attributable  to Equitex,
Triumph and First TeleServices did not change significantly when compared to the
previous year's quarter and six month period..

OTHER INCOME  (EXPENSES):  Other income (expense) includes a net investment loss
of $102,790  for the six months  ended June 30,  2000,  which  accounts  for the
realized and unrealized loss on certain of the Registrant's investments,  equity
in losses of  affiliates  of  $562,898,  interest  expense of $684,393 and other
income of $73,478 from Triumph's sale of assets.

                                       21
<PAGE>
                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         FINANCIAL CONDITION (CONTINUED)

Of the  total  interest  expense,  approximately  $611,000  is  attributable  to
nMortgage.  This expense is related to nMortgage's warehouse lines of credit. As
a  result  of  the  recission  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
second quarter ended June 30, 2000 did not change significantly when compared to
the first quarter ended March 31, 2000.

Equity in loss of affiliates  corresponds to the Registrant's  approximately 24%
ownership  interest in VP Sports which is accounted for on an equity  basis.  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 Torpedo,  Inc. ("Torpedo") of Montreal,  Canada.  Torpedo's business is
counter seasonal to the operations of VP Sports which  contributed to the losses
for the second quarter. In addition,  due to the exercise of certain warrants in
VP Sports during the second quarter by  unaffiliated  third  parties,  Equitex's
ownership  was  reduced  from  approximately  36%  to  approximately  24%  which
accounted  for  an  unrealized  loss  on  the  Registrant's  investment  further
contributing to the equity in loss of affiliates.

NET LOSS: Of the net loss for the six months ended June 30, 2000,  approximately
$2,937,000 is  attributable to nMortgage,  approximately  $1,295,000 to Equitex,
approximately  $69,000  to First  TeleServices  and  approximately  $144,000  to
Triumph.  Additionally,  $4,439,000  is  attributable  to the  loss on the  FBMS
divestiture.  This compares to a net loss of $1,141,245 for the six months ended
June 30, 1999 which did not include the  operations of nMortgage.  Excluding the
one-time write off of the FBMS recission and  divestiture,  the net loss for the
second quarter ended June 30, 2000 was  approximately  $2,536,000 as compared to
$1,909,000 for the first quarter ended March 31, 2000.

NET LOSS  APPLICABLE  TO  COMMON  STOCKHOLDERS:  Net loss  applicable  to common
stockholders  was  $8,919,959 for the six months ended June 30, 2000 This amount
includes deemed preferred stock dividends on the Registrant's outstanding Series
D preferred stock of $35,900 for the quarter.


                                   ITEM THREE
             QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

       Not applicable

                                       22
<PAGE>
                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

     On March 10,  2000,  summary  judgment  was granted in favor of Equitex and
Henry Fong in the following matters:  THEOHAROUS, ET AL. V. HENRY FONG, EQUITEX,
INC., CHARLES E. SANDERS AND METROMEDIA  INTERNATIONAL GROUP, INC., Civil Action
No. 1_98_CV_2366 (U.S. District Court for the Northern District of Georgia), and
LESLIE SCHUETTE,  ET AL. V. HENRY FONG,  EQUITEX,  INC.,  CHARLES E. SANDERS AND
METROMEDIA  INTERNATIONAL  GROUP,  INC.,  Civil  Action No.  1_98_CV_2366  (U.S.
District  Court for the  Northern  District of  Georgia).  These  alleged  class
actions on behalf of a purported class of stockholders of RDM Sports Group, Inc.
("RDM") were filed on August 19, 1998, and October 19, 1998, respectively.  Both
cases assert that during 1996 and 1997, the defendants  (including Equitex) made
numerous allegedly false statements and overly optimistic  predictions regarding
the business  and  financial  condition of RDM in the press  releases and public
filings of RDM,  with  knowledge  of their  falsehood,  thereby  misleading  RDM
stockholders.  The complaints alleged that the defendants,  (including  Equitex)
violated  Section 10(b) of the Securities  Exchange Act and SEC Rule 10b_5,  and
that the individual  defendants  violated Section 20(a) of the Exchange Act, and
seek unspecified  compensatory  damages,  costs, expenses and attorney fees. The
plaintiff's  have appealed the court's  granting of summary judgment in favor of
Equitex and Henry Fong. As of June 30, 2000,  that appeal was pending before the
court.  Counsel for the plaintiffs has agreed to remove Equitex from the appeal.

Item 2.  Changes in Securities

     None

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 on Form 8-K

     (a) Financial Data Schedule for SEC Registrants

     (b) None

                                       23
<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: August 16, 2000                  By:  /s/ Henry Fong
                                            --------------
                                            Henry Fong
                                            President, Treasurer and
                                            Chief Financial Officer



                                       24