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, 1998


             ( ) 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 May 8, 1998: 3,791,115

<PAGE>

                                  EQUITEX, INC.


Part I.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

     The accompanying interim unaudited 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, 1998 are not  necessarily  indicative of the results that
may be expected for the year ended December 31, 1998. 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, 1997.








                                       F-1
<PAGE>

                                  EQUITEX, INC.
                      Statements of Assets and Liabilities


                                                       MAR. 31,      DEC. 31,
                                                         1998          1997
                                                      (Unaudited)
ASSETS

Investments, at fair value:

 Securities (cost of $4,073,704 and
   $3,568,045 in 1998 and 1997, respectively) ......   $4,932,935   $4,165,993
 Notes receivable, net of allowance
   for uncollectible accounts of $40,293
   in 1998 and 1997, respectively ..................      420,393      418,210
 Accrued interest receivable, net of
   allowance for uncollectible interest
   of $35 ..........................................       11,536        5,701
 Trade receivables, net of allowance
   for uncollectible accounts of $67,475
   and $53,742 in 1998 and 1997, respectively ......      173,007      110,954
                                                       ----------   ----------
                                                        5,537,871    4,700,858

Cash ...............................................       71,398        9,187

Accounts receivable - brokers ......................         --         73,741

Contract deposit receivable, net of
   allowance for uncollectibility of $150,000 ......      150,000      150,000

Income taxes refundable ............................        2,150        2,150

Furniture and equipment, net of
   accumulated depreciation of $120,472
   and $117,750 in 1998 and 1997, respectively .....       29,384       29,204

Deferred income tax benefit ........................         --         63,180

Other ..............................................       15,205       10,105
                                                       ----------   ----------
                                                       $5,806,008   $5,038,425
                                                       ==========   ==========

                                                                     (Continued)
The accompanying notes are a part of this statement.

                                       F-2
<PAGE>

                                  EQUITEX, INC.
                      Statements of Assets and Liabilities


                                                       MAR. 31,      DEC. 31,
                                                         1998          1997
                                                      (Unaudited)
LIABILITIES AND NET ASSETS

Liabilities
   Notes payable - officer .........................   $     --     $  177,599
   Notes payable - others ..........................      100,000      250,000
   Accounts payable and other
     accrued liabilities ...........................      225,784      121,349
   Accounts payable to brokers .....................      937,857      650,302
   Accrued bonus to officer ........................      187,803      299,259
   Deferred income taxes ...........................      128,170         --
                                                       ----------   ----------
                                                        1,579,614    1,498,509

Net Assets
   Preferred stock, par value $.01;
     2,000,000 shares authorized; no
     shares issued
   Common stock,  par value $.02;
     7,500,000 shares authorized; 3,824,465
     and 3,494,465 shares issued; 3,791,115
     and 3,461,115 shares outstanding in
     1998 and 1997, respectively ...................       76,489       69,889
   Additional paid-in capital ......................    4,885,175    4,644,275

   Retained earnings
     Accumulated deficit prior to
       becoming a BDC ..............................     (118,874)    (118,874)
     Accumulated net investment loss ...............   (13,644,149) (13,431,269)
     Accumulated net realized gains from
       sales and permanent write-downs
       of investments ..............................   12,617,659   12,125,185
     Unrealized net gains on investments
       (net of deferred income taxes of
       $318,038 and $233,201 in 1998 and
       1997, respectively) .........................      524,131      364,747
   Less: treasury stock at cost
       (33,350 shares) .............................     (114,037)    (114,037)
                                                       ----------   ----------
                                                        4,226,394    3,539,916
                                                       ----------   ----------
                                                       $5,806,008   $5,038,425
                                                       ==========   ==========

The accompanying notes are a part of this statement.

                                       F-3
<PAGE>

                                  EQUITEX, INC.
                             Schedule of Investments
                                 March 31, 1998
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                NUMBER           COST
                                                  OF            AND/OR        FAIR
COMPANY                                      SHARES OWNED       EQUITY        VALUE
-------                                      ------------       ------        -----
<S>                                      <C>                 <C>           <C>
CONTROLLED COMPANIES
COMMON STOCKS - PRIVATE
  MARKET METHOD OF VALUATION (a)(e)
VP Sports, Inc. .......................
  Entity formed to seek acquisitions
  in the manufacturing segment of
  the sporting goods and leisure-
  time industry .......................       2,000,000      $  250,000    $1,000,000

COMMON STOCKS - COST METHOD
  OF VALUATION
Triumph Sports Group ..................       1,000,000         250,000       250,000
  Entity formed to seek acquisitions
  in the non-manufacturing licensed and
  supplemental segments of the sporting
  goods and leisure-time industry

AFFILIATED COMPANIES
COMMON STOCKS - PUBLIC MARKET
  METHOD OF VALUATION (c)(e)
RDM Sports Group
  Manufacturer of fitness
  equipment and juvenile products .....       4,979,437       1,088,815        89,630

OTHER - PUBLIC MARKET METHOD
  OF VALUATION
RDM Sports Group                         8% Convertible
  Manufacturer of fitness                  Subordinated
  equipment and juvenile products .....      Debentures         150,682         2,625
                                                             ----------    ----------

   Sub-Total
   CONTROLLED AND AFFILIATED COMPANIES                        1,739,497     1,342,255
                                                             ----------    ----------

UNAFFILIATED COMPANIES
COMMON STOCKS - PUBLIC MARKET
  METHOD OF VALUATION
IntraNet Solutions, Inc. (formerly
  MacGregor Sports & Fitness, Inc.)
  Document management services,
    web-based internet software,
    electronic document management
    and demand printing ...............         403,250       1,407,992     2,469,904
Racotek
  Medical technology ..................         175,000         722,715       557,812
NevStar Gaming Corporation
  Gaming development ..................           7,000          38,500        21,000
</TABLE>

The accompanying notes are a part of this statement.                 (Continued)

                                       F-4
<PAGE>

                                  EQUITEX, INC.
                        Schedule of Investments (Page 2)
                                 March 31, 1998
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                NUMBER           COST
                                                  OF            AND/OR        FAIR
COMPANY                                      SHARES OWNED       EQUITY        VALUE
-------                                      ------------       ------        -----
<S>                                      <C>                 <C>           <C>
COMMON STOCKS - PRIVATE MARKET
  METHOD OF VALUATION (a)(e)

All Systems Go
  Software development ................          20,000(b)       25,000        25,000

Ocean Power Technology
  Alternative energy
  research and development ............          35,714(b)       40,000        98,214
                                                100,000            --         275,000
Gain, Inc.
  Male vascular devices ...............          20,000(b)       50,000        50,000

Juice Island
  Health food stores ..................          10,000(b)       20,000        20,000

WARRANTS (f)(e)
Juice Island
  Health food stores ..................           2,500            --            --

PREFERRED STOCKS - PRIVATE METHOD
  OF VALUATION
Osage System Group, Inc. ..............
  Network computing solutions
  provider ............................               1          30,000        73,750
                                            -----------      ----------    ----------

  Sub-total
  UNAFFILIATED COMPANIES ..............                       2,334,208     3,590,680
                                                             ----------    ----------

  Total
  ALL COMPANIES .......................                      $4,073,704    $4,932,935
                                                             ==========    ==========
</TABLE>

                                                                     (Continued)
The accompanying notes are a part of this statement.

                                       F-5
<PAGE>

                                  EQUITEX, INC.
                        Schedule of Investments (Page 3)
                                 March 31, 1998
                                   (Unaudited)


RESTRICTIONS AS TO RESALE

(a)  Non-public  company  whose  securities  are privately  owned.  The Board of
     Directors  determines fair value in good faith using cost information,  but
     also  taking into  consideration  the impact of such  factors as  available
     financial  information  of the  investee,  the nature and  duration  of any
     restrictions  on resale,  and other factors  which  influence the market in
     which a security is purchased and sold.

(b)  May be sold under the  provisions of Rule 144 of the Securities Act of 1933
     after an initial holding period expires.

(c)  Since the Company is an affiliate,  it may be affected by sales limitations
     of one  percent  of the  investee's  outstanding  common  stock  during any
     three-month   period,  or  four-week  average  trading  volume  during  any
     three-month period.

(e)  Since certain of these  securities have certain  restrictions as to resale,
     the Board of  Directors  determines  fair value in good faith using  public
     market  information,  but also taking into consideration the impact of such
     factors as available financial information of the investee,  the nature and
     duration  of  restrictions  on the  disposition  of  securities,  and other
     factors  which  influence  the market in which a security is purchased  and
     sold.

(f)  Valued at higher of cost or fair  market  value of  underlying  stock  less
     exercise  price,  subject to valuation  adjustments  as  determined in good
     faith by the Board of Directors,  taking into  consideration  the impact of
     such factors as available financial information of the investee, the nature
     and  duration  of any  restrictions  on  resale,  and other  factors  which
     influence the market in which a security is purchased and sold.


The accompanying notes are a part of this statement.

                                       F-6
<PAGE>

                                  EQUITEX, INC.
                             Schedule of Investments
                                December 31, 1997

<TABLE>
<CAPTION>
                                                NUMBER           COST
                                                  OF            AND/OR        FAIR
COMPANY                                      SHARES OWNED       EQUITY        VALUE
-------                                      ------------       ------        -----
<S>                                      <C>                 <C>           <C>
CONTROLLED COMPANIES
COMMON STOCKS - PRIVATE
  MARKET METHOD OF VALUATION (a)(e)
VP Sports, Inc. .......................
  Entity formed to seek-out
  acquisitions in the sports
  and health products industries ......       2,000,000      $  250,000    $1,000,000

AFFILIATED COMPANIES
COMMON STOCKS - PUBLIC MARKET
  METHOD OF VALUATION (c)(e)
IntraNet Solutions, Inc. (formerly
  MacGregor Sports & Fitness, Inc.)
  Document management services,
    web-based internet software,
    electronic document management
    and demand printing ...............         473,250       1,410,776     2,498,529

RDM Sports Group (formerly
  Roadmaster Industries, Inc.)
  Manufacturer of fitness
  equipment and juvenile products .....       4,979,437       1,088,815         4,481

OTHER - PUBLIC MARKET METHOD
  OF VALUATION
RDM Sports Group                         8% Convertible
  Manufacturer of fitness                  Subordinated
  equipment and juvenile products .....      Debentures         150,682         1,750
                                                             ----------    ----------

   Sub-Total
   CONTROLLED AND AFFILIATED COMPANIES                        2,900,273     3,504,760
                                                             ----------    ----------

UNAFFILIATED COMPANIES
COMMON STOCKS - PUBLIC MARKET
  METHOD OF VALUATION
IVI Publishing
  Publishing technology ...............          25,000         116,881        64,063
Racotek
  Medical technology ..................          75,000         377,391       110,156
NevStar Gaming Corporation
  Gaming development ..................           7,000          38,500        18,750
</TABLE>

                                                                     (Continued)
The accompanying notes are a part of this statement.

                                       F-7
<PAGE>

                                  EQUITEX, INC.
                        Schedule of Investments (Page 2)
                                December 31, 1997

<TABLE>
<CAPTION>
                                                NUMBER           COST
                                                  OF            AND/OR        FAIR
COMPANY                                      SHARES OWNED       EQUITY        VALUE
-------                                      ------------       ------        -----
<S>                                      <C>                 <C>           <C>
COMMON STOCKS - PRIVATE MARKET
  METHOD OF VALUATION (a)(e)

All Systems Go
  Software development ................          20,000(b)       25,000        25,000

Ocean Power Technology
  Alternative energy
  research and development ............          35,714(b)       40,000        98,214
                                                100,000            --         275,000
Gain, Inc. ............................
  Male vascular devices ...............          20,000(b)       50,000        50,000

Juice Island
  Health food stores ..................          10,000(b)       20,000        20,000

WARRANTS (f)(e)
Nationsmart
  Consumer services ...................          10,000            --              50

Juice Island
  Health food stores ..................           2,500            --            --
                                            -----------      ----------    ----------

  Sub-total
  UNAFFILIATED COMPANIES ..............                         667,772       661,233
                                                             ----------    ----------

  Total
  ALL COMPANIES .......................                      $3,568,045    $4,165,993
                                                             ==========    ==========
</TABLE>

                                                                     (Continued)
The accompanying notes are a part of this statement.

                                       F-8
<PAGE>

                                  EQUITEX, INC.
                        Schedule of Investments (Page 3)
                                December 31, 1997


RESTRICTIONS AS TO RESALE

(a)  Non-public  company  whose  securities  are privately  owned.  The Board of
     Directors  determines fair value in good faith using cost information,  but
     also  taking into  consideration  the impact of such  factors as  available
     financial  information  of the  investee,  the nature and  duration  of any
     restrictions  on resale,  and other factors  which  influence the market in
     which a security is purchased and sold.

(b)  May be sold under the  provisions of Rule 144 of the Securities Act of 1933
     after an initial holding period expires.

(c)  Since the Company is a greater  than five  percent  shareholder,  it may be
     affected by a sales limitation of one percent of the investee's outstanding
     common stock during any three-month period.

(e)  Since certain of these  securities have certain  restrictions as to resale,
     the Board of  Directors  determines  fair value in good faith using  public
     market  information,  but also taking into consideration the impact of such
     factors as available financial information of the investee,  the nature and
     duration  of  restrictions  on the  disposition  of  securities,  and other
     factors  which  influence  the market in which a security is purchased  and
     sold.

(f)  Valued at higher of cost or fair  market  value of  underlying  stock  less
     exercise  price,  subject to valuation  adjustments  as  determined in good
     faith by the Board of Directors,  taking into  consideration  the impact of
     such factors as available financial information of the investee, the nature
     and  duration  of any  restrictions  on  resale,  and other  factors  which
     influence the market in which a security is purchased and sold.



The accompanying notes are a part of this statement.

                                       F-9
<PAGE>

                                  EQUITEX, INC.
                            Statements of Operations
                                   (Unaudited)

                                                         FOR THE THREE MONTHS
                                                           ENDED MARCH 31,
                                                          1998         1997
                                                          ----         ----
Revenues
   Interest and dividends ..........................   $   10,380   $    7,590
   Consulting fees .................................      250,000         --
   Administrative fees .............................          941       14,123
   Miscellaneous ...................................         --         63,655
                                                       ----------   ----------
                                                          261,321       85,368

Expenses
   Salaries and consulting fees ....................       75,153       77,763
   Officer's bonus .................................       43,545       75,323
   Office rent .....................................        8,689        7,500
   Legal and accounting ............................       27,633       28,396
   Employee benefits ...............................       96,174       38,006
   Other general and administrative ................       96,779       46,751
   Interest ........................................       20,324       18,297
   Bad debt expense ................................       13,733         --
   Depreciation and amortization ...................        2,721        2,904
                                                       ----------   ----------
                                                          384,751      294,940

Net investment loss ................................     (123,430)    (209,572)

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

   Proceeds from sales of investments ..............      712,143       60,258
   Less: cost of investments .......................      219,669       81,978
                                                       ----------   ----------

Net realized gain (loss) on
   investments before income taxes .................      492,474      (21,720)

Net investment loss and net realized gain
   (loss) on investments before income taxes .......      369,044     (231,292)

Income tax benefit (provision) - current ...........         --         (3,648)
Income tax benefit (provision) - deferred ..........      (89,451)     (59,950)
                                                       ----------   ----------

Net investment loss and net realized
   (loss) on investments ...........................      279,593     (294,890)


                                                                     (Continued)

                                      F-10
<PAGE>

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

                                                         FOR THE THREE MONTHS
                                                           ENDED MARCH 31,
                                                          1998         1997
                                                          ----         ----
RIncrease (decrease) in unrealized
   appreciation on investments .....................   $  261,283   $ (308,055)

Less income tax benefit (provision)
   applicable to decrease (increase) in
   realized appreciation ...........................     (101,899)     120,141
                                                       ----------   ----------

                                                          159,384     (187,914)
                                                       ----------   ----------

Net increase (decrease) in net assets
   resulting from operations .......................   $  438,977   $ (482,804)
                                                       ==========   ==========

Increase (decrease) in net assets per
   share - primary .................................   $      .12   $     (.15)
                                                       ==========   ==========

Increase (decrease) in net assets per
   share - fully diluted ...........................   $      .11   $     (.15)
                                                       ==========   ==========

Weighted average number of common shares ...........    3,560,115    3,214,708
                                                       ==========   ==========



                                      F-11
<PAGE>

                                  EQUITEX, INC.
                            Statements of Cash Flows
                                   (Unaudited)

                                                         FOR THE THREE MONTHS
                                                           ENDED MARCH 31,
                                                          1998         1997
                                                          ----         ----
RCash flows from operating activities:
   Net change in net assets ........................   $  438,977   $ (482,804)
      Adjustments to reconcile net change in
      net assets to net cash provided by
      operating activities:
        Depreciation and amortization ..............        2,721        2,904
        Donation of stock ..........................         --          4,136
        Provision for bad debts on notes
          receivable ...............................         --           --
        Realized (gain) loss on sale of
          investments ..............................     (492,474)      21,720
        Unrealized (gain) loss on investments ......     (261,283)     308,055
   Proceeds from sales of investments ..............      712,143       60,258
   Purchase of investments .........................     (725,328)      (1,210)
   Repayment of notes receivable ...................       16,083       19,150
   Issuance of notes receivable ....................      (18,266)        --
   Changes in assets and liabilities:
      (Increase) decrease in interest receivable ...       (5,835)         135
      (Increase) decrease in other assets ..........       (5,100)         768
      (Increase) decrease in trade receivables .....      (62,053)       1,338
      (Increase) decrease in accounts
        receivable - brokers .......................       73,741        3,992
      Increase in accounts payable and
        other accrued liabilities ..................      104,435       22,961
      Increase in accounts payable to brokers ......      287,555        9,777
      Increase (decrease) in accrued bonus
        to officer .................................     (111,456)      75,323
      Increase (decrease) in deferred income taxes .      191,350      (60,190)
                                                       ----------   ----------

      Net cash (used) by operating
        activities .................................      145,211      (13,687)

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

      Net cash (used) by investing activities ......       (2,901)        --


                                                                     (Continued)

                                      F-12
<PAGE>

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

                                                         FOR THE THREE MONTHS
                                                           ENDED MARCH 31,
                                                          1998         1997
                                                          ----         ----
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      (13,687)

Cash, beginning of period ..........................        9,187       53,795
                                                       ----------   ----------

Cash, end of period ................................   $   71,398   $   40,108
                                                       ==========   ==========

Supplemental disclosures of cash flow information:
       Interest paid ...............................   $   21,249   $   18,297
                                                       ==========   ==========

       Interest received ...........................   $    4,546   $    7,725
                                                       ==========   ==========



                                      F-13
<PAGE>

                                  EQUITEX, INC.
                     Selected Notes to Financial Statements
                                 March 31, 1998
                                   (Unaudited)


NOTE 1.  INVESTMENT IN TRIUMPH SPORTS
         During the first quarter of 1998, the Company received 1,000,000 shares
of the common stock of Triumph Sports,  a private company formed for the purpose
of seeking  out and  acquiring  an  operating  entity in the non-  manufacturing
licensed  and  supplemental  segments  of the  sporting  goods and  leisure-time
industry.  The stock was received in exchange for consulting  services valued at
$250,000.  The  Company's  president  is also the  President  and a director  of
Triumph Sports.

NOTE 2.  PRIVATE PLACEMENT OF COMMON STOCK
         In March 1998,  the Company's  Board of Directors  authorized a private
placement  offering of the Company's  common stock. The Company is authorized to
sell up to 500,000  shares of its common stock at $1.16 per share.  As of May 5,
1998, 260,000 shares have been subscribed.

NOTE 3.  SUBSEQUENT EVENT
         At a meeting held on April 3, 1998, the Company's stockholders approved
a proposal  authorizing  the  Company to change the nature of its  business  and
withdraw its election as a Business  Development  Company  under the  Investment
Company Act of 1940.  The withdrawal  will become  effective when the Securities
and Exchange  Commission  receives the Company's  official notice of election of
withdrawal. The Company does not intend to file its election of withdrawal until
such time as it is  relatively  certain  that it will  qualify  as an  operating
business rather than an investment company.




                                      F-14
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

         FORWARD-LOOKING STATEMENTS
         The 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 acquisition,  governmental regulation, managing
and  maintaining  growth,  the  value  of  the  Registrant's  investments,   the
operations of the Registrant's investee companies, volatility of stock price and
any other  factors  discussed  in this and  other  Registrant  filings  with the
Securities and Exchange Commission.

         LIQUIDITY AND CAPITAL RESOURCES
         Of the  Registrant's  liabilities  of $1,579,614 at March 31, 1998, the
Registrant  had no amounts due to banks.  This compares to total  liabilities of
$1,498,509 at December 31, 1997.  The Registrant is not obligated to discharge a
significant portion of its current liabilities in the near future;  however, the
Registrant  intends to extinguish these liabilities to make other investments as
cash flow permits.

         In connection with its  investments,  the Registrant is required,  from
time  to  time,  to  make  loans  to its  investees  in  order  to  protect  its
investments.  As a result of these loans as well as other notes receivable,  the
Registrant  carried notes  receivable of $420,393 and $418,210 at March 31, 1998
and  December  31,  1997,  respectively.  The  majority of the increase in notes
receivable  at both of these  dates as  compared  to 1996 is the  result  of the
Registrant  covering  portions  of  expenses  and  start-up  costs  for  two new
investees during the latter part of 1997. As these companies complete mergers or
acquisitions,  or raise capital through private or public offerings, these notes
may be repaid or otherwise  extinguished  although no assurance  can be given at
this time that such repayments will take place.

         The Registrant's  cash position  increased by $71,390 at March 31, 1998
as compared to December 31, 1997. Net cash provided by operating  activities was
$145,211 for 1998 as compared to $13,687  used in 1997.  No one use or provision
of cash from  operating  activities  accounted for the change from 1997 to 1998.


                                                                     (Continued)
                                      F-15
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued).

Cash flows from  investing  activities  used  $2,601 for the  purchase  of fixed
assets in 1998  compared  to $0 in the  first  three  months  of 1997.  The cash
provided by financing  activities of $247,500 in 1998 was derived from a sale of
the Registrant's common stock in a private placement offering.  These funds were
used to repay notes payable of $327,599  resulting in an overall cash usage from
financing activities of $80,098.

         The  Registrant's  sources of income to defray  operating  overhead are
derived  from  consulting  fees,  transaction  fees gained  from the  Registrant
assisting both existing and new investees in structuring and completing mergers,
acquisitions or asset-based financing transactions,  administrative fees through
which the  Registrant  directly  apportions  a certain  amount of its  operating
overhead to investees as warranted to help defray  operating costs, and sales of
the  Registrant's  investments.  During 1997 and the first quarter of 1998,  the
Registrant's  sources of income were sufficient to cover its operating  overhead
and it is anticipated this trend will continue during the remainder of 1998.

         The  Registrant's  liquidity  is  affected  primarily  by the  business
success,  securities prices and  marketability of its investee  companies and by
the  amount  and  timing of any new or  incremental  investments  it makes.  The
Registrant  believes  that its  present  liquidity  and  capital  resources  are
adequate to finance  anticipated  needs arising from or relating to its business
in the 1998 year due to its  increased  ability to sell portions of its investee
companies'  stock  positions as  restrictions  on their  ability to be sold end.
However,  the Registrant has sold and anticipates that it will continue to offer
limited private placements of the Registrant's common stock in order to increase
its present liquidity.  Although the Registrant's  ability to liquidate portions
of its portfolio  companies have increased as the restrictions as to resale end,
the Registrant  generally is a long-term holder of its investments and therefore
does not necessarily  liquidate them upon the expiration of these  restrictions.
As the Registrant  cannot forecast the types of large-scale sales which generate
significant  profits,  the Registrant has not typically  relied on sales of this
large nature for its financing needs.  However,  as the Registrant expects lower
transaction and consulting fees and therefore reduced revenue during 1998, sales
of portfolio securities may be necessary for its financing needs.

         The Registrant's  largest investee company is IntraNet, a publicly held
company which provides  document  handling,  storage and retrieval  solutions to
Fortune 1000 companies  utilizing  internet and intranet  technologies.  For the
nine months ended December 31, 1997,  the latest  available  date,  IntraNet had
total revenues of $14.6 million and net loss of $4.0 million.

         On August 29, 1997 RDM Sports  Group,  Inc.  ("RDM")  filed  Chapter 11
bankruptcy  petitions for the company and all of its subsidiaries  with the U.S.
Bankruptcy Court for the Northern District of Georgia and ceased all operations.

                                                                     (Continued)

                                      F-16
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued).

As part of the ongoing bankruptcy proceedings, certain of RDM's assets have been
sold to pay  creditors  and no plan of  reorganizations  has been filed to date.
Following the initiation of this  bankruptcy  proceeding,  the fair value of the
Registrant's  investment in RDM was  substantially  reduced so that at March 31,
1998 and December 31, 1997, the Registrant had a cost basis of $1,239,497 in its
investment in RDM with fair value of $92,255 and $6,231, respectively.

         As of March  31,  1998,  the  Registrant  had  made no  other  material
commitments  for  capital  expenditures  or loans  to  investees.  However,  the
Registrant  may be  required  to make  such  expenditures  or loans  during  the
remainder of 1998,  the amount of which is unknown at this time.  The Registrant
expects that it will continue to sell certain of its  investments,  resulting in
additional  realized  gains,  during the  remainder of the current  year. At the
discretion of the Board of Directors,  the  Registrant  also may sell certain of
its investments  resulting in a realized loss in order to prevent further losses
from occurring.  The Registrant does not currently  anticipate any extraordinary
costs will be incurred as a result of year 2000 computer date conversions.

         RESULTS OF OPERATIONS
         Revenues  for the three  months  ended March 31, 1998 were  $261,321 as
compared  to  $85,368 for the  three months ended  March 31, 1997.  The increase
in revenues for 1998 over 1997 is  primarily  the result of the  consulting  fee
revenue recognized relative to the Registrant's newest investee company, Triumph
Sports  (Triumph).  The  Registrant  received  stock in Triumph in exchange  for
consulting  services.  In the first  quarter of 1997,  the  Registrant  received
payments  of $63,850 on notes  receivable  which had been  written  off in prior
years.  In the past,  the  Registrant  has  received  consulting  fees on both a
monthly  contract  basis as well as on a per  transaction  basis when  assisting
investees with acquisitions,  refinancing or restructuring, however, the timing,
nature and amount of these fees cannot be predicted. The Registrant expects that
overall 1998 revenues will be similar or possibly  slightly higher than those of
1997.

         The  realized  gain on  investments  before  income  taxes for 1998 was
$492,474  as  compared  to a loss of  $21,720  in 1997.  Proceeds  from sales of
investments were significantly higher in 1998 than 1997. A majority of the sales
of  investments  in  1998  was  IntraNet   Solutions  common  stock.  While  the
restrictions as to resale on many of the  Registrant's  investments  continue to
diminish,  the  opportunity  for the sale of large  portions of the  investments
cannot be predicted.  However,  the Registrant  currently has fewer positions in
its portfolio which are valued  utilizing the public market method and presently
believes there is sufficient  market  liquidity for the Registrant to conduct an
orderly sale of any position over a relatively short period of time.

         Expenses  for the first  quarter of 1998 were  $384,751  as compared to
$294,940  in  the  first  quarter  of  1997,  an  increase  of  30%.  While  the
Registrant's  expenses  were  fairly  similar in  many  categories,  significant

                                                                     (Continued)
                                      F-17
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued).

changes were recorded in officer's  bonus, bad debt expense,  employee  benefits
and  other  general  and   administrative  in  1998.  The  officer's  bonus  was
significantly  lower as a result of the Registrant's  lower assets while the bad
debt  provision  for bad  debts  increased  as a result  of  additional  lending
activity  which  occurred  in  the  latter  half  of  1997.  Other  general  and
administrative  expenses  increased as a result of additional  costs  associated
with the April shareholders  meeting and the private  placement.  The Registrant
currently  believes that expenses for the remainder of the year ending  December
31, 1998 will continue at levels  similar to those of 1997 should the Registrant
continue to operate as a BDC.  Should the  Registrant  decertify as a BDC as set
forth  below,  the  Registrant  is unable to estimate  its expenses for later in
1998.

         At March 31, 1998,  unrealized  appreciation  of investments  increased
$261,283 as compared to a decrease of $308,055 at March 31,  1997.  The increase
was caused by slight  improvements  in the fair market values of RDM,  IntraNet,
and Racotek,  and the addition of Osage System  Group.  During the quarter ended
March 31, 1997, the Registrant's investment in RDM was experiencing market value
declines.  As there is no way to predict  the future  value of the  Registrant's
investment  portfolio,  the  Registrant  cannot  predict  future  changes in the
unrealized  value of its investments,  however,  the Registrant is encouraged by
recent  developments  with respect to IntraNet,  and a new investee,  VP Sports,
which the Registrant  added during 1997, and which the Registrant  believes will
enhance its  portfolio in 1998.  The net increase in net assets  resulting  from
operations  was  $438,977 for 1998 as compared to a decrease of $482,804 for the
comparable period of 1997.

         In 1987 the  Registrant  began  concentrating  on  investments  in more
mature investee companies.  Due to this change, the Registrant's net asset value
and cash flows have  fluctuated  as a result of the market  fluctuations  of its
largest investees. The Registrant must increase the number of its investments in
order to reduce  its  susceptibility  to the  operating  performance  and market
fluctuations  of its investee  companies  that have  occurred  over the past few
years.  During the past several years, the Registrant had been concentrating its
efforts on assisting its existing portfolio companies and therefore had not made
any  major  new  investments.  During  1997,  the  Registrant  added a major new
investee company,  VP Sports, and in the first quarter of 1998 added another new
investee,  Triumph Sports.  Until such time as more of these mature  investments
are added, the Registrant will continue to be susceptible to market fluctuations
as long as it continues to operate as a BDC.

         At a  special  meeting  of  stockholders  held on  April 3,  1998,  the
Registrant's  stockholders  approved  a  proposal  authorizing the Registrant to

                                                                     (Continued)

                                      F-18
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued).

change the nature of its  business  and withdraw its election as a BDC under the
Investment  Company Act. The Registrant's  Board of Directors has adopted a plan
which began with  stockholder  approval for the Registrant to withdraw as a BDC,
with the intent of becoming an operating  company.  The  Registrant  is actively
pursuing  business  opportunities  to acquire or  otherwise  purchase an ongoing
business or, in the alternative,  target an appropriate  merger  candidate.  The
Registrant  has not  reached a level in its  discussions  which would lead it to
believe that any particular  acquisition,  purchase or merger is likely to occur
with any of the  opportunities  it has  pursued to date;  however,  based on the
types of discussions held so far, the Registrant  believes that a transaction of
this nature could be completed within six to twelve months following stockholder
approval of the proposal.  Further, the Board believes that with the flexibility
and  authority  to  withdraw  as a BDC  prior to  entering  into any  definitive
acquisition  or merger  agreement,  the  Registrant has increased its ability to
attract interested businesses which it may acquire or consider merging with.

         The  Registrant  does not intend to file its  election to withdraw as a
BDC with  the  Securities  and  Exchange  Commission  until  such  time as it is
relatively  certain that it will qualify as an operating business rather than as
an  investment  company.  A  voluntary  election  to  withdraw  as a BDC becomes
effective upon filing with the Securities and Exchange Commission unless a later
date is  specified in the election  form.  The Board of Directors  has opted for
this  approach  because it believes  that if it does not qualify as an operating
company  within a short  period  of time  after  the  Registrant  withdraws  its
election as a BDC, the Registrant  could possibly be considered an  unregistered
investment  company which is not in compliance with the Investment  Company Act.
The Registrant will continue to conduct business as a BDC until such time as the
election to withdraw becomes effective.


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
               None

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

                                      F-19
<PAGE>

PART II. OTHER INFORMATION (CONTINUED)

Item 6.  Exhibits and Reports of Form 8-K

         (a)     Financial data schedule for SEC registrants

         (b)     On January 29, 1998, the  Registrant  filed a Current Report on
                 Form 8-K dated  January 13, 1998  covering a  disclosure  under
                 Item 5, Other Events.




                                      F-20
<PAGE>

                                   SIGNATURES
                                   ----------

     Pursuantto 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 14, 1998



                                      F-21