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

                                   FORM 10-QSB

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

                      For the quarter ended March 31, 1999


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

               For the transition period from _________to_________

                           Commission File No. 0-12374

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


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

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


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


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


Number of shares of common stock outstanding at April 30, 1999: 7,014,443

<PAGE>

                                  EQUITEX, INC.


Part 1.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

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





                                       F-1
<PAGE>

                                  EQUITEX, INC.
                           Consolidated Balance Sheet
                                   (Unaudited)


                                                                      MARCH 31,
                                                                        1999
ASSETS
Current assets
      Cash and cash equivalents ...............................     $ 1,520,419
      Account receivable - related entity .....................          40,000
      Accounts receivable - other .............................          33,500
      Advances to FirstNet Capital ............................         567,629
      Loans receivable - National Business Finance, LLC .......         175,000
      Inventories .............................................         142,672
      Prepaid expenses and other current assets ...............          50,298
      Notes receivable - other, net of allowance
           for uncollectible accounts of $100 .................          56,375
      Investments:
           Trading securities .................................       1,370,887
           Available-for-sale securities ......................          44,815
                                                                    -----------
                                                                      4,001,595

Fixed assets:
      Furniture and equipment .................................         224,213
      Leasehold improvements ..................................          68,494
                                                                    -----------
                                                                        292,707
      Less: accumulated depreciation ..........................        (145,256)
                                                                    -----------
                                                                        147,451

Other assets:
      Investment in First TeleBanc ............................         800,000
      Other investments, at cost ..............................         135,000
      Deferred acquisition costs ..............................         127,000
      Goodwill, net of accumulated amortization
           of $14,237 .........................................         627,584
      Trade name, franchise rights and other
           intangibles, net of accumulated
           amortization of $10,768 ............................         184,232
      Contract deposit receivable, net of
           allowance for uncollectibility of $150,000 .........         150,000
      Deposits and other ......................................          47,770
                                                                    -----------
                                                                      2,071,586

                                                                    $ 6,220,632
                                                                    ===========

                                                                     (Continued)
                                       F-2
<PAGE>

                                  EQUITEX, INC.
                           Consolidated Balance Sheet
                                   (Unaudited)


                                                                      MARCH 31,
                                                                        1999

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
      Notes payable - related parties .........................     $   240,498
      Notes payable - other ...................................          37,845
      Accounts payable and other accrued liabilities ..........         168,485
      Accounts payable to brokers .............................         282,161
      Accrued bonus to officer ................................         798,105
                                                                    -----------
                                                                      1,527,094

Minority interest .............................................         238,213

STOCKHOLDERS' EQUITY
      Preferred stock, par value $.01; 2,000,000
           shares authorized; 2,100 shares
           issued and outstanding .............................              21
      Common stock, par value $.02; 7,500,000
           shares authorized; 5,861,265 shares
           issued; 5,827,915 shares outstanding
           in 1999 ............................................         117,225
      Additional paid-in capital ..............................      10,676,681
      Accumulated comprehensive other income ..................          35,851
      Accumulated deficit .....................................      (6,260,416)
      Less: treasury stock at cost ............................        (114,037)
                                                                    -----------
                                                                      4,455,325

                                                                    $ 6,220,632
                                                                    ===========

The accompanying notes are a part of this consolidated statement.

                                       F-3
<PAGE>

                                  EQUITEX, INC.
                      Consolidated Statement of Operations
                                   (Unaudited)

                                                     FOR THE THREE MONTHS ENDED
                                                              MARCH 31,
                                                         1999           1998
                                                                    (PRO FORMA)*
REVENUES
    Sales ........................................   $   222,348    $      --
    Consulting fees ..............................        30,000           --
    Interest income ..............................        12,050            365
    Administrative fees ..........................         2,647            941
    Realized gain on investments .................       315,564        492,474
                                                     -----------    -----------
                                                         582,609        493,780
EXPENSES
    Cost of goods sold ...........................       131,086           --
    Salaries .....................................       163,988         75,153
    Officer's bonus ..............................       222,561         43,545
    Consulting fees ..............................       152,500         88,000
    Employee benefits ............................        97,101         96,174
    Rent .........................................        36,470          8,689
    Advertising and promotion ....................        31,322          2,334
    Office expense ...............................        19,581         32,990
    Legal and accounting .........................        43,507         30,715
    Interest .....................................        20,786         20,324
    Repairs and maintenance ......................         3,984           --
    Bad debt expense .............................        13,748         13,733
    Depreciation and amortization ................        17,644          2,721
    Other general and administrative .............        99,551         86,643
    Unrealized loss (gain) on trading securities .        15,911       (131,559)
                                                     -----------    -----------
                                                       1,069,740        369,462
                                                     -----------    -----------
        Net income (loss) before minority
         interest and taxes ......................      (487,131)       124,318

    Minority interest in net income (loss) .......        11,787         15,115
                                                     -----------    -----------
        Net income (loss) before income taxes ....      (475,344)       139,433

    Provision for income taxes - deferred ........          --          (51,308)
                                                     -----------    -----------
        Net income (loss) ........................      (475,344)        88,125

    Other comprehensive income, net of tax
        Unrealized holding gains (losses) on
          securities arising during period .......        35,851         52,475
                                                     -----------    -----------
    Comprehensive income (loss) ..................   $  (439,493)   $   140,600
                                                     ===========    ===========
    Net income (loss) per common share - primary .   $      (.07)   $       .04
                                                     ===========    ===========
    Net income (loss) per common share -
        fully diluted ............................   $      (.07)   $       .04
                                                     ===========    ===========
    Weighted average number of common shares .....     5,612,291      3,560,115
                                                     ===========    ===========

*   As if an operating company rather than a BDC.

The accompanying notes are a part of this consolidated statement.

                                       F-4
<PAGE>

                                  EQUITEX, INC.
                             Statement of Operations
                                   (Unaudited)

                                                                  FOR THE THREE
                                                                      MONTHS
                                                                 ENDED MARCH 31,
                                                                       1998
                                                                  (WHILE A BDC)

Revenues
   Interest and dividends .....................................     $    10,380
   Consulting fees ............................................         250,000
   Administrative fees ........................................             941
   Miscellaneous ..............................................            --
                                                                    -----------
                                                                        261,321

Expenses
   Salaries and consulting fees ...............................          75,153
   Officer's bonus ............................................          43,545
   Office rent ................................................           8,689
   Legal and accounting .......................................          27,633
   Employee benefits ..........................................          96,174
   Other general and administrative ...........................          96,779
   Interest ...................................................          20,324
   Bad debt expense ...........................................          13,733
   Depreciation and amortization ..............................           2,721
                                                                    -----------
                                                                        384,751

Net investment loss ...........................................        (123,430)

Net realized gain on investments and
 net unrealized gain on investments:

   Proceeds from sales of investments .........................         712,143
   Less: cost of investments ..................................         219,669
                                                                    -----------
Net realized gain on
   investments before income taxes ............................         492,474

Net investment loss and net realized gain
   on investments before income taxes .........................         369,044

Income tax benefit (provision) - current
Income tax benefit (provision) - deferred .....................         (89,451)
                                                                    -----------

Net investment loss and net realized
   gain on investments ........................................         279,593

                                                                     (Continued)

The accompanying notes are a part of this statement.

                                       F-5
<PAGE>

                                  EQUITEX, INC.
                        Statement of Operations (Page 2)
                                   (Unaudited)

                                                                  FOR THE THREE
                                                                      MONTHS
                                                                 ENDED MARCH 31,
                                                                       1998
                                                                  (WHILE A BDC)

Increase in unrealized
   appreciation on investments ................................     $   261,283

Less income tax benefit (provision)
   applicable to (increase) in
   realized appreciation ......................................        (101,899)
                                                                    -----------
                                                                        159,384
                                                                    -----------
Net increase in net assets
   resulting from operations ..................................     $   438,977
                                                                    ===========

Increase in net assets per
   share - primary ............................................     $       .12
                                                                    ===========

Increase in net assets per
   share - fully diluted ......................................     $       .11
                                                                    ===========

Weighted average number of common shares ......................       3,560,115
                                                                    ===========

The accompanying notes are a part of this statement.

                                       F-6
<PAGE>

                                  EQUITEX, INC.
                      Consolidated Statement of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                MARCH 31,
                                                           1999           1998
                                                                      (PRO FORMA)*
<S>                                                    <C>            <C>
Cash flows (used) provided by operating activities:
      Net income (loss) ............................   $  (475,344)   $    88,125
      Adjustments to reconcile net income
           (Loss) to net cash provided by
             operating activities:
           Depreciation ............................        17,644          2,721
           Services for stock ......................       150,000
           Minority interest in net loss ...........       (11,787)        15,115
      Changes in assets and liabilities:
           Trade receivables .......................                      (62,053)
           Accounts receivable - other .............       (27,500)
           Accounts receivable - brokers ...........                       73,741
           Advances in FirstNet Capital ............      (567,629)
           Loans receivable ........................      (175,000)
           Inventories .............................       (22,974)
           Prepaid expense and other ...............       (13,694)        (5,100)
           Investments - trading securities ........        87,839       (276,143)
           Investments available for sale securities       (35,851)       (86,024)
           Bank overdraft ..........................       (12,666)
           Accounts payable and other accrued
              liabilities ..........................       (30,294)        89,018
           Accounts payable to brokers .............      (373,899)       287,555
           Deferred income taxes ...................                       84,857
           Accrued bonus to officer ................       121,937       (111,456)
                                                       -----------    -----------
              Net cash (used) provided by operating
              activities ...........................    (1,369,218)       100,357

Cash flows (used) provided by investing activities:
      Purchase of fixed assets .....................        (1,662)        (2,901)
      Repayment of note receivable .................                       16,083
      Increase in deferred acquisition costs .......       (41,000)
      Increase in deposits and other ...............       (46,619)
      Increase in tradename and franchise costs ....       (27,500)
      Investment in First TeleBanc .................      (175,000)
                                                       -----------    -----------
              Net cash (used) provided by
                 investing activities ..............      (291,781)        13,182
</TABLE>
                                                                     (Continued)

The accompanying notes are a part of this consolidated statement.

*     As if an operating company rather than a BDC.

                                       F-7
<PAGE>

                                  EQUITEX, INC.
                  Consolidated Statement of Cash Flows (Page 2)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                MARCH 31,
                                                           1999           1998
                                                                      (PRO FORMA)*
<S>                                                    <C>            <C>
Cash flows (used) provided by financing activities:
      Common stock issued for cash .................   $ 1,214,650    $   247,500
      Minority interest increase ...................                       62,000
      Preferred stock issued for cash ..............     2,100,000
      Offering costs incurred ......................      (150,000)
      Issuance of notes payable - related parties ..        18,199
      Repayment of notes payable ...................        (1,431)      (327,599)
                                                       -----------    -----------
      Net cash (used) provided by financing activities   3,181,418        (18,099)

Change in cash and cash equivalents ................     1,520,419         95,440

Cash and cash equivalents,
      beginning of period ..........................          --            9,187
                                                       -----------    -----------
Cash and cash equivalents,
      end of period ................................   $ 1,520,419    $   104,627
                                                       ===========    ===========

Supplemental disclosures of cash flow information:
           Interest paid ...........................   $    21,829    $    21,249
                                                       ===========    ===========

           Interest received .......................   $    11,390    $     4,456
                                                       ===========    ===========
</TABLE>



Supplemental disclosure of non-cash activities:
      In March 1999, a noteholder  converted  his note payable of $150,000  into
      the Company's common stock.

      In the first quarter of 1999,  $200,000 of the Company's  common stock was
      issued  to the  placement  agent for  services  rendered  relative  to the
      preferred stock sale.


The accompanying notes are a part of this consolidated statement.

*     As if an operating company rather than a BDC.

                                       F-8
<PAGE>

                                  EQUITEX, INC.
                             Statement of Cash Flows
                                   (Unaudited)

                                                                  FOR THE THREE
                                                                      MONTHS
                                                                 ENDED MARCH 31,
                                                                       1998
                                                                  (WHILE A BDC)

Cash flows from operating activities:
   Net change in net assets ....................................    $   438,977
       Adjustments to reconcile net change in
       net assets to net cash provided by
       operating activities:
         Depreciation and amortization .........................          2,721
         Donation of stock
         Provision for bad debts on notes
           receivable ..........................................           --
         Realized (gain) loss on sale of
           investments .........................................       (492,474)
         Unrealized (gain) loss on investments .................       (261,283)
   Proceeds from sales of investments ..........................        712,143
   Purchase of investments .....................................       (725,328)
   Repayment of notes receivable ...............................         16,083
   Issuance of notes receivable ................................        (18,266)
   Changes in assets and liabilities:
       (Increase) decrease in interest receivable ..............         (5,835)
       (Increase) decrease in other assets .....................         (5,100)
       (Increase) decrease in trade receivables ................        (62,053)
       (Increase) decrease in accounts
         receivable - brokers ..................................         73,741
       Increase in accounts payable and
         other accrued liabilities .............................        104,436
       Increase in accounts payable to brokers .................        287,555
       Increase (decrease) in accrued bonus
         to officer ............................................       (111,456)
       Increase (decrease) in deferred income taxes ............        191,350
                                                                    -----------
       Net cash (used) by operating
         activities ............................................        145,211

Cash flows from investing activities:
   Purchase of furniture and equipment .........................         (2,901)
                                                                    -----------
       Net cash (used) by investing activities .................         (2,901)

                                                                     (Continued)

The accompanying notes are a part of this statement.

                                       F-9
<PAGE>

                                  EQUITEX, INC.
                        Statement of Cash Flows (Page 2)
                                   (Unaudited)

                                                                  FOR THE THREE
                                                                      MONTHS
                                                                 ENDED MARCH 31,
                                                                       1998
                                                                  (WHILE A BDC)

Cash flows from financing activities:
   Repayment of notes payable ..................................    $  (327,599)
   Common stock issued for cash ................................        247,500
                                                                    -----------
       Net cash provided (used) by
          financing activities .................................        (80,099)

Increase (decrease) in cash ....................................         62,211

Cash, beginning of period ......................................          9,187
                                                                    -----------
Cash, end of period ............................................    $    71,398
                                                                    ===========

Supplemental disclosures of cash flow information:
       Interest paid ...........................................    $    21,249
                                                                    ===========

       Interest received .......................................    $     4,546
                                                                    ===========



The accompanying notes are a part of this statement.

                                      F-10
<PAGE>

                                  EQUITEX, INC.
                     Selected Notes to Financial Statements
                          (Not a Complete Presentation)
                                 March 31, 1999
                                   (Unaudited)


NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES
         Significant accounting policies include:

         a. DECERTIFICATION AS A BUSINESS DEVELOPMENT COMPANY (BDC)
         On January 4, 1999, the Company  withdrew its election to be treated as
a BDC subject to the Investment Company Act. As a result of this withdrawal, the
Company is now  required to present its  financial  statements  consistent  with
those of a normal operating company as opposed to a business development company
(BDC).  Because the  Company was a BDC for the quarter  ended March 31, 1998 the
statement of  operations  and cash flows for the 1998 quarter  still reflect the
BDC format.

         b. PRINCIPLES OF CONSOLIDATION
         The consolidated  financial statements for 1999 include the accounts of
Equitex, Inc., its wholly-owned subsidiary, First TeleServices Corporation which
was acquired August 1998, and two majority-owned  subsidiaries,  VP Sports, Inc.
and Triumph  Sports,  Inc.  which were formed in December 1997 and January 1998,
respectively.  All significant  intercompany accounts and transactions have been
eliminated.  The equity method of accounting is used for the Company's  interest
in two  50%-owned  joint  ventures  over which the  Company  has the  ability to
exercise significant influence.  These joint ventures were started in late March
1999 and had no  operational  activity in the first quarter of 1999. The Company
also has other investments that are less than 20%-owned and are accounted for at
either cost or fair market value as described in Note 1d. below.

         The March 31, 1999  unaudited  pro forma  column  in the  statement  of
revenues  and  statement  of cash  flows  reflects  the  Company's  consolidated
activity  for the three  months  ended March 31, 1999 as if the Company  were an
operating company rather than a BDC at that time.

         c. INVENTORIES
         Inventories  consist of retail merchandise  inventory and are stated at
the lower of cost or market. Cost is determined on the average cost method.

         d. INVESTMENTS UNDER 20%-OWNED
         Investments in marketable securities are stated at fair market value as
determined  by the most  recently  traded price of each  security at the balance
sheet date.  All  marketable  securities  are defined as trading  securities  or
available-for-sale  securities  under the  provisions  of Statement of Financial
Accounting  Standards No. ("SFAS") 115,  "Accounting for Certain  Investments in
Debt and Equity Securities."

         Management  will  determine  the  appropriate   classification  of  its
investments in marketable securities at the time of purchase and will reevaluate
such  determination  at each balance sheet date.  Securities that are bought and
held principally for the purpose of selling them in the near term are classified
as trading  securities and  unrealized  holding gains and losses are included in

                                      F-11
<PAGE>

                                  EQUITEX, INC.
                     Selected Notes to Financial Statements
                          (Not a Complete Presentation)
                                 March 31, 1999
                                   (Unaudited)

NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         d. INVESTMENTS UNDER 20%-OWNED (CONTINUED)
earnings.  Debt  securities  for which the  Company  does not have the intent or
ability  to  hold  to  maturity  and  equity   securities   are   classified  as
available-for-sale.  Available-for-sale  securities  are  carried at fair value,
with the  unrealized  gains  and  losses,  net of tax,  reported  as a  separate
component of stockholders' equity. The cost of investments sold is determined on
the specific identification or the first-in,  first-out method. If an investment
does not have a readily  determinable  fair market value,  then it is carried at
cost.

         e. INTANGIBLE ASSETS
         Intangibles include covenants-not-to-compete,  lease assignments, trade
name and franchise  rights and the excess of costs over fair value of net assets
of business (four retail stores) acquired.  All intangibles are amortized by the
straight-line method over estimated useful lives as follows:
                                                  LIFE
         Tradename and franchise rights        10 years
         Lease assignment                      10 years
         Non-compete agreement                 10 years
         Goodwill                              10-15 years

NOTE 2.  NOTES PAYABLE

         As discussed in Note 3b.  below,  a noteholder  exchanged  his $150,000
note and accrued interest for the Company's common stock.

NOTE 3.  STOCKHOLDERS' EQUITY

         a. PREFERRED STOCK
         During the quarter ended March 31, 1999,  the Company issued a total of
2,100  shares  of  6%  Series  A,  B,  and  C  Convertible  Preferred  Stock  in
consideration  for $1,000  cash per share  which is the stated  value per share.
Each series of stock is 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.  The holders are entitled
to receive a  cumulative  annual  dividend  of $60 per  share,  which is payable
quarterly and has preference to any other  dividends  which might be paid by the
Company.  The dividend is payable  either in cash or in shares of the  Company's
common stock, at the Company's option.  The Company is required to convert these
shares at the  three-year  anniversary  date.  See Note 5  regarding  subsequent
conversion of these  shares.  The preferred  stockholders  received  warrants to
purchase a total of 250,000 whares 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.

         b. COMMON STOCK ISSUANCES
         During the first  quarter of 1999,  the Company sold 315,312  shares of
its  common  stock  in a  private  placement  for cash of $3.25  per  share.  In
addition,  during  the  quarter a note  holder  exchanged  his note and  accrued
interest for 48,688 shares of the Company's common stock.

         During the first  quarter of 1999,  employees  and  officers  exercised
previously granted stock options for 59,600 shares of common stock.

                                      F-12
<PAGE>

                                  EQUITEX, INC.
                     Selected Notes to Financial Statements
                          (Not a Complete Presentation)
                                 March 31, 1999
                                   (Unaudited)

NOTE 3.  STOCKHOLDERS' EQUITY (CONTINUED)

         c. STOCK OPTIONS AND WARRANTS
         In January 1999, the Company's Board of Directors  adopted an incentive
stock option plan covering up to 1,000,000 shares of the Company's common stock.
During the quarter ended March 31, 1999,  the Company  granted  incentive  stock
options  for  29,000  shares  and 8,000  shares to the  Company's  officers  and
employees,  respectively.  In addition,  non-statutory stock options for 472,000
and 291,000  shares were granted to officers and  directors,  respectively.  All
options were granted at a price of $6.75 per share which  represents fair market
value at the grant date.

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

NOTE 4.  COMMITMENTS

         As of March 31, 1999 additional rental commitments for office space and
equipment  relative to the Company's  consolidated  subsidiaries are as follows:
         Year                              Amount
         1999                             $57,558
         2000                              76,742
         2001                              74,943
         2002                              73,658
         2003                              50,887
         Thereafter                       103,704
                                         --------
           Total                         $437,492

NOTE 5.  SUBSEQUENT EVENTS

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

         b. ISSUANCE OF SERIES D PREFERRED
         In May 1999 the Company  issued  3,500  shares of Series D  convertible
preferred  stock at $1,000 per share.  The Series D preferred stock contains the
same rights as the Series A, B and C Preferred stock discussed in Note 3a.

         c. ADDITIONAL COMON STOCK ISSUANCES
         Subsequent to March 31, 1999,  591,000  shares of the Company's  common
stock were issued pursuant to stock option exercises,  15,000 shares were issued
as part of the private  placement,  and 260,000  shares were issued  pursuant to
warrant exercises.


                                      F-13

<PAGE>

         d. PROPOSED BUSINESS ACQUISITION
         In May  1999  the  Company  entered  into a  letter  of  intent  with a
previously  unrelated mortgage lender.  Under the terms of the letter of intent,
the Company is to acquire  the  mortgage  company in exchange  for shares of the
Company's  common  stock and a working  capital  contribution.  In May 1999 $2.5
million in working  capital  funds were  loaned to this  entity  pursuant to the
letter of intent.  The mortgage  company's  common stock  secures  $2,000,000 of
these advances and the $500,000 remainder is unsecured.

                                      F-14
<PAGE>

Part 1.  FINANCIAL INFORMATION

Item 2.  MANAGEMENTS 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  REGISTRANT'S  EXPECTATIONS OR BELIEFS,  INCLUDING BUT NOT LIMITED
TO, STATEMENTS  CONCERNING THE REGISTRANT'S  OPERATIONS,  ECONOMIC  PERFORMANCE,
FINANCIAL CONDITION, GROWTH AND ACQUISITION STRATEGIES,  INVESTMENTS, AND FUTURE
OPERATIONAL  PLANS. FOR THIS PURPOSE,  ANY STATEMENTS  CONTAINED HEREIN THAT ARE
NOT  STATEMENTS  OF  HISTORICAL  FACT  MAY  BE  DEEMED  TO  BE   FORWARD-LOOKING
STATEMENTS.  WITHOUT  LIMITING THE  GENERALITY OF THE  FOREGOING,  WORDS SUCH AS
"MAY", "WILL", "EXPECT", "BELIEVE", "ANTICIPATE", "INTENT", "COULD", "ESTIMATE",
"MIGHT", OR "CONTINUE" OR THE NEGATIVE OR OTHER VARIATIONS THEREOF OR COMPARABLE
TERMINOLOGY  ARE  INTENDED  TO  IDENTIFY   FORWARD-LOOKING   STATEMENTS.   THESE
STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES,  CERTAIN
OF WHICH ARE BEYOND THE  REGISTRANT'S  CONTROL,  AND ACTUAL  RESULTS  MAY DIFFER
MATERIALLY  DEPENDING ON A VARIETY OF IMPORTANT FACTORS,  INCLUDING  UNCERTAINTY
RELATED TO THE REGISTRANT'S  OPERATIONS,  MERGERS OR ACQUISITIONS,  GOVERNMENTAL
REGULATION, THE VALUE OF THE REGISTRANT'S ASSETS AND ANY OTHER FACTORS DISCUSSED
IN  THIS  AND  OTHER  REGISTRANT   FILINGS  WITH  THE  SECURITIES  AND  EXCHANGE
COMMISSION.


OVERVIEW

On  January  4,  1999,  Equitex,   Inc.  ("Equitex",   the  "Company",   or  the
"Registrant")  filed with the Securities and Exchange Commission to withdraw its
election to be treated as a business  development company ("BDC") and elected to
be treated for a maximum period of one year as a "transient  investment company"
as that term is defined in the Investment  Company Act of 1940 (the  "Investment
Company Act"). A BDC is a form of closed-end, non-diversified investment company
under the Investment Company Act. Following the withdrawal, the Registrant is no
longer  subject to the regulatory  provisions of the Investment  Company Act for
BDC's,  such  as  insurance,  custody,  composition  of  the  board,  affiliated
transactions and compensation arrangements.  Despite the Company's withdrawal of
its  election as a BDC,  the Company  continues  to be subject to the  reporting
requirements  of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act"). Under the Exchange Act, the Registrant continues to file periodic reports
on Form  10-KSB  and Form  10-QSB,  as well as  reports  on Form  8-K and  proxy
statements and any other reports required under the Exchange Act. As a result of
the Company's  withdrawal of its election to be treated as a BDC, the Company is
now  operating  as a  holding  company  which  must  consolidate  its  financial
statements with those of its majority-owned subsidiaries.

On August 13, 1998,  the  Registrant  acquired all of the  outstanding  stock of
First  TeleServices  Corp.  ("FTC")  in  exchange  for  625,000  shares  of  the
Registrant's common stock. As a result of this transaction,  FTC became a wholly
owned  subsidiary  of  the  Company.  FTC  is  a  fee-based  financial  services
organization  consisting  of a database  marketing  division,  consumer  finance
division, an inbound/outbound  calling center, and an operations center. FTC has
developed  strategic  alliances  with a number of  nationwide  organizations  to
outsource  certain of its  operations  as well as the  products  and services it
offers.

                                      F-15
<PAGE>

FTC has only partially begun operations and has not yet generated  income.  As a
marketing arm for financial institutions, FTC will perform as a consumer finance
company,  offering a broad  array of  financial  products  and  services  to the
sub-prime  market.  These  products  will  be  developed  through  correspondent
relationships with companies specializing in those particular products which may
include:  debt transfer servicing;  balance transfer  servicing;  secured credit
cards;  sub-prime mortgage loans;  sub-prime auto loans;  prepaid calling cards;
prepaid residential long distance service;  prepaid cellular service;  insurance
products; and other selected products and services.

During the first  quarter,  FTC entered into a joint venture  agreement with RLG
Holdings, LLC ("RLG") to service,  collect and sell portfolios of consumer debt.
RLG is a Florida based financial  services company  specializing in acquisition,
value enhancement and profitable  disposition of consumer collection  portfolios
and  performing  and   non-performing   real  estate  secured  notes  receivable
portfolios.  Utilizing funds provided by FTC and RLG, the joint venture company,
FirstNet Capital,  acquired two debt portfolios,  the first of which consists of
over 13,000 accounts representing in excess of $100 million. The second and most
recent acquisition consists of 15,600 charged-off credit accounts in Canada with
an aggregate balance of approximately $34 million Canadian. The Company, through
FTC,  advanced a total of $568,000 to the joint venture during the quarter ended
March 31, 1999.

Also during the quarter ended March 31, 1999, the Company,  through FTC,  loaned
$175,000 to National Business Finance, LLC ("NBF"). NBF is a SBA (Small Business
Administration)  loan  originator  which  originates  and sells to SBA  lenders,
including  Net1Bank,  SBA loans for a fee. An additional  $125,000 was loaned to
NBF following quarter end and prior to the filing of this report.

In the fourth  quarter of 1998,  the  Registrant  acquired a number of shares of
First TeleBanc Corp. ("FTB") which now totals 7.5% of FTB's outstanding  capital
stock.  On April 12, 1998 the Registrant  announced its intent to merge with FTB
and has since executed a definitive agreement for the merger which calls for the
Company to acquire all of the outstanding capital stock of FTB in an exchange of
stock. Under the terms of the agreement,  the existing  stockholders of FTB will
receive shares of Equitex common stock based on certain factors, principally the
relative  value of each  company.  In  addition,  certain  of the  non-financial
services   related  assets  of  Equitex  will  be  spun  off  to  the  Company's
stockholders  through a newly  formed  publicly  traded  company  which  will be
managed by the Company's current  management and board of directors.  Equitex is
in the process of filing for  regulatory  approval of the  transaction  with the
Federal  Reserve Bank of Atlanta.  A meeting of Equitex  stockholders to vote on
the merger will be scheduled as soon as possible.

FTB is the bank holding company for Net1Bank, N.A., formerly known as Boca Raton
First  National  Bank,  a 13 year-old  nationally  chartered  bank based in Boca
Raton,  Florida. FTB intends to operate as a single bank holding company through
Net1Bank offering both traditional  walk-in banking services as well as Internet
banking.  Net1Bank  will also focus on fee-based  programs  such as SBA lending,
secured credit cards and electronic transaction processing.  Concurrent with the
closing of the merger, if consummated,  the newly merged company will change its
name to Net1Bank  Corp.  and FTB's  existing  board of directors will become the
board of the new bank holding company.

                                      F-16
<PAGE>

On May 13, 1999,  the Company  announced  the signing of a letter of intent with
First Bankers Mortgage Services,  Inc. ("FBMS") of Ft. Lauderdale,  Florida. The
letter  of intent  calls for the  acquisition  by the  Registrant  of all of the
outstanding  capital stock of FBMS for a combination of Equitex common stock and
a commitment of working capital to the ongoing  entity.  Following the execution
of the letter of intent,  the  Registrant  made loans  totaling  $2.5 million to
FBMS, $2 million of which is secured by all of the issued and outstanding common
stock of FBMS. As of the filing of this report,  the  companies  are  performing
customary  due diligence and  negotiating  the terms of a definitive  agreement.
FBMS is one of the 70 largest mortgage lenders in the United States operating in
25 states and is the  largest  privately  held  mortgage  lender in the state of
Florida.  FBMS profitably originated in excess of $850 million in mortgage loans
during 1998.

In June 1998,  the  Registrant  commenced a private  placement  of up to 300,000
shares  of the  Registrant's  common  stock at  $3.25  per  share to  accredited
investors.  In October 1998, the board of directors of the Registrant  increased
the number of shares which could be sold  pursuant to the offering  from 300,000
to 750,000  shares.  During the quarter  ended March 31,  1999,  the  Registrant
completed  this  offering  with the sale of 364,000  shares of common  stock for
total proceeds of $1,183,000, $158,236 of which was converted debt.

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

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

                                      F-17
<PAGE>

A majority  of the  proceeds  of these  offerings  have been and will be used in
connection with the  Registrant's  merger and acquisition  activities as well as
for working capital. During the quarter ended March 31, 1999, the Company loaned
a total of  $935,129  to its wholly  owned  subsidiary,  FTC,  which was used in
connection  with FTC's  investment  activities as outlined  above as well as for
working capital and operating overhead. Portions of the proceeds as well as cash
received  from the exercise of  outstanding  stock options were also used in the
loans made to FBMS as explained above.

As part of the  Company's  transition  from a BDC to an operating  company,  the
operations  of  two of the  Company's  BDC  investments,  Triumph  Sports,  Inc.
("Triumph") and VP Sports,  Inc. ("VP"), both of which are majority owned by the
Registrant,  must be  consolidated  with those of the Registrant and that of its
wholly owned  subsidiary FTC. In the latter part of 1998,  Triumph  acquired and
currently  operates four health food,  nutritional and supplement related retail
outlets  in south  Florida.  Triumph  is an  authorized  franchisee  of  General
Nutrition  Centers  ("GNC")  which  stores  comprise one of those  operated.  In
addition, Truimph has signed an agreement with GNC to open an additional unit in
the south Florida area. The Company owns  approximately  79% of Triumph.  VP has
executed a letter of intent for the acquisition of a Canada based  manufacturing
company and is currently  finalizing a definitive  agreement.  VP has received a
non-binding  financing commitment from an asset-based lender which is performing
its due diligence review. Equitex owns approximately 87% of VP.

RESULTS OF OPERATIONS

The following  discussion and analysis of the Company's  financial condition and
results  of  operations  should  be read in  conjunction  with the  consolidated
financial statements and notes thereto. As a result of the Company's change from
a BDC to an  operating  company  effective  January 4, 1999,  the Company is now
required  to  present  its  financial  statements  consistent  with  those of an
operating company as opposed to an investment  company.  Accordingly,  the March
31,  1998  statements  of  operations  and cash  flows are  presented  in both a
pro-forma format which assumes the Company was an operating company instead of a
BDC as well as the  investment  company format which includes the actual results
for the Company's operations as a BDC in that period.

REVENUES:  Revenues  for the  quarter  ended  March 31,  1999 were  $582,609  as
compared to pro-forma revenues of $493,780 at March 31, 1998 and actual revenues
of $261,321 for the  Company's  BDC  operations  for the same  period.  Of these
revenues,  $360,261 are attributed  directly to the operations of the Registrant
while $222,348 are  attributed to its  consolidated  subsidiaries,  all of which
came from the  operations  of  Triumph.  Neither FTC nor VP  generated  revenues
during  the  quarter.  Of these  revenues,  $222,348  were  sales  generated  by
Triumph's  retail stores while $315,564 were realized gains on the  Registrant's
investments most of which was received from the sale of certain of the Company's
shares of IntraNet Solutions.

EXPENSES:  The Registrant's  expenses increased  significantly  during the first
quarter of 1999 to  $1,069,740  as compared to a pro-forma  $369,462  and actual
expenses of $384,751 for the same period in 1998. A majority of this increase is
a direct  result of the  consolidation  of three new  entities  with that of the
Registrant.  The  addition of cost of goods sold of $131,086 for Triumph as well
as  salaries,  rent,  advertising  and  promotion,   depreciation,  general  and
administrative  and other costs  associated  with the operating  overhead of the
Company's  subsidiaries  combine to form a significant portion of this increase.

                                      F-18
<PAGE>

In  addition,  officer's  bonus  increased  from  $43,545 in the prior period to
$222,561  for the current  period as a result of a change in the nature in which
the  officer's  bonus is paid from a percentage of total assets to primarily the
increase in the market value of the Registrant's  common stock. Of the Company's
total expenses, approximately $274,349 are attributed to Triumph and $83,918 are
attributed to FTC.  VP had only minimal expenses for the quarter.

MINORITY  INTEREST:  For the quarter ended March 31, 1999,  the  Registrant  had
minority  interest  in net loss of $11,787 as  compared  to $15,115 for the same
period in the previous year.

OTHER INCOME: The Registrant recorded $35,851 in other comprehensive income, net
of tax for the quarter  ended March 31, 1999 as compared to $52,475 for the same
period in 1998. This represents  non-cash income for unrealized gains on certain
of the Company's securities  investments that have been classified as "available
for sale securities".

NET LOSS: For the quarter ended March 31, 1999,  the  Registrant  recorded a net
loss of  $475,344  or $.07 per share as  compared  to  pro-forma  net  income of
$88,125 or $.04 per share for the quarter  ended March 31,  1998.  As a BDC, the
Company  recorded net  investment  loss and net realized gain on  investments of
$279,593 and a net increase in net assets  resulting from operations of $438,977
for the first quarter of 1998.

Several factors accounted for the net loss in the current year as opposed to net
income for the same period in 1998 on a pro-forma basis including  consolidation
of  the  Company's  subsidiaries.   Of  the  net  loss,  Triumph  accounted  for
approximately  $26,000  while FTC accounted for about  $84,000.  In addition,  a
one-time  non-cash  consulting  fee paid  with  the  Registrant's  common  stock
totaling  $150,000 in expenses was recorded during the quarter which contributed
to the loss as well as the $222,561  bonus to officer  which was accrued but not
paid during the quarter.

LIQUIDITY  AND CAPITAL  RESOURCES:  The  Registrant's  sources of liquidity  and
capital  resources are primarily derived from several sources including sales of
investments and proceeds  from sales of the  Registrant's  common and  preferred
stock. As a result of the cash receipts outlined below, the Registrant presently
anticipates  its  liquidity  and capital  resources  are  sufficient to fund the
Company's current and planned operations for the foreseeable future. However, as
more fully  explained in "Overview"  above,  the Company has signed  agreements,
which, if consummated, would result in a fundamental change in the nature of the
Company's  business.  While terms of those  agreements call for significant cash
balances to remain with the Registrant following the proposed  transactions,  no
assurance can be made that the Company's present liquidity and capital resources
will be sufficient to fund the future  operations of the  Registrant  should the
contemplated   mergers  and  acquisitions  take  place.  Further  sales  of  the
Registrant's  securities  or  other  sources  of  income  may  be  necessary  to
adequately fund those operations.

During the first quarter of 1999, the Registrant  received a total of $2,100,000
before expenses from the sale of preferred stock and $1,183,000 from the sale of
common stock in a private placement.  As a result of the aforementioned sales of
the  Company's  securities  along with the proceeds from sales of certain of the
Company's investments which totaled in excess of $400,000,  the Registrant had a
cash  position at March 31, 1999 of  $1,520,419  all but a very small portion of
which was held directly by the Registrant, not its subsidiaries.

Subsequent to March 31, 1999,  additional cash was received through the exercise
of certain options and warrants which  generated  approximately  $2,500,000.  In
addition,  the  Company  has sold 3,500  shares of its  Series D 6%  Convertible
Preferred stock for total proceeds of $3,500,000  which currently are being held
in escrow.

                                      F-19
<PAGE>

PART II.       OTHER INFORMATION

Item 1.        Legal Proceedings
               None

Item 2.        Changes in Securities
               On January 4, 1999 the Registrant issued 900 shares of its Series
               A Convertible  Preferred Stock for cash consideration of $900,000
               to an accredited  investor.  The Preferred  Stock is  convertible
               into common stock at 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).

               On  January  12,  1999 the  Registrant  issued  600 shares of its
               Series B Convertible  Preferred Stock for cash  consideration  of
               $600,000 to a group of accredited investors.  The Preferred Stock
               is  convertible  into common stock at 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).

               On January 20, 1999 the  Registrant  issued  20,000 shares of its
               common  stock to the  Placement  Agent for its  Series A, B and C
               Convertible  Preferred  Stock in exchange for services  rendered.
               The  Registrant   relied  on  the  exemptions  from  registration
               provided by Sections 4(2) and/or 4(6).

               On  January  29,  1999 the  Registrant  issued  600 shares of its
               Series C Convertible  Preferred Stock for cash  consideration  of
               $600,000  to an  accredited  investor.  The  Preferred  Stock  is
               convertible  into common stock at 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).

Item 3.        Defaults Upon Senior Securities
               None

Item 4.        Submission of Matters to a Vote of Security Holders
               None

Item 5.        Other Information
               None

Item 6.        Exhibits and Reports of Form 8-K

                  (a)     Financial data schedule for SEC registrants
                  (b)     The Company filed no reports on Form 8-K during the
                          quarter covered by this report



                                       F-20
<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)



                                  By /S/ HENRY FONG
                                     -----------------------------------
                                     Henry Fong
                                     President, Treasurer and Chief
                                     Financial Officer


Date: May 24, 1999




                                      F-21