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 June 30, 1999


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

               For the transition period from _________to_________

                           Commission File No. 0-12374

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


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


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


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


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


Number of shares of common stock outstanding at August 6, 1999: 7,140,293

<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 and six  months  ended  June 30,  1999 are not
necessarily  indicative  of the results  that may be expected for the year ended
December 31,  1999.  These  statements  should be read in  conjunction  with the
financial  statements  and notes  thereto  included in the Annual  10-KSB Report
(filed with the Securities and Exchange  Commission) for the year ended December
31, 1998,  and in conjunction  with the quarterly  10-QSB Report (filed with the
Securities and Exchange Commission) for the quarter ended March 31, 1999.




                                       F-1
<PAGE>

                                  EQUITEX, INC.
                           Consolidated Balance Sheet
                                   (Unaudited)


                                                                     JUNE 30,
                                                                       1999
                                                                   ------------
ASSETS
Current assets
      Cash and cash equivalents ..............................     $  3,765,658
      Account receivable - related entity ....................           40,000
      Accounts receivable - other ............................           34,574
      Advances to FirstNet Capital ...........................          565,327
      Loans receivable - National Business Finance, LLC ......          300,000
      Inventories ............................................          150,279
      Prepaid expenses and other current assets ..............          112,418
      Notes receivable - First Bankers Mortgage Service ......        2,750,000
      Notes receivable - other, net of allowance
           for uncollectible accounts of $100 ................          184,844
      Investments:
           Trading securities ................................        1,269,621
           Available-for-sale securities .....................             --
                                                                   ------------
                                                                      9,172,721

Fixed assets:
      Furniture and equipment ................................          226,926
      Leasehold improvements .................................           85,087
                                                                   ------------
                                                                        312,013
      Less: accumulated depreciation .........................         (153,938)
                                                                   ------------
                                                                        158,075

Other assets:
      Investment in First TeleBanc ...........................          800,000
      Equity in First Net One Joint Venture ..................          151,500
      Other investments, at cost .............................          250,000
      Deferred acquisition costs .............................          467,634
      Goodwill, net of accumulated amortization
           of $20,314 ........................................          586,856
      Trade name, franchise rights and other
           intangibles, net of accumulated
           amortization of $14,168 ...........................          215,483
      Contract deposit receivable, net of
           allowance for uncollectibility of $150,000 ........          150,000
      Deposits and other .....................................           75,250
                                                                   ------------
                                                                      2,696,723
                                                                   ------------
                                                                   $ 12,027,519
                                                                   ============

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

                                       F-2
<PAGE>

                                  EQUITEX, INC.
                           Consolidated Balance Sheet
                                   (Unaudited)


                                                                     JUNE 30,
                                                                       1999
                                                                   ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
      Notes payable - related parties ........................     $    178,328
      Notes payable - other ..................................          248,270
      Accounts payable and other accrued liabilities .........          240,588
      Accounts payable to brokers ............................          288,451
      Accrued bonus to officer ...............................          264,161
                                                                   ------------
                                                                      1,219,798

Minority interest ............................................          738,703

STOCKHOLDERS' EQUITY
      Preferred stock, par value $.01; 2,000,000
           shares authorized; no shares
           issued and outstanding ............................             --
      Common stock, par value $.02; 7,500,000
           shares authorized; 7,090,293 shares
           issued; 7,056,943 shares outstanding
           in 1999 ...........................................          142,906
      Additional paid-in capital .............................       18,099,591
      Accumulated comprehensive other income .................           15,623
      Accumulated deficit ....................................       (8,075,065)
      Less: treasury stock at cost ...........................         (114,037)
                                                                   ------------
                                                                     10,069,018
                                                                   ------------
                                                                   $ 12,027,519
                                                                   ============

The accompanying notes are a part of this statement.

                                       F-3
<PAGE>
                                  EQUITEX, INC.
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>
                                              FOR THE THREE                  FOR THE SIX
                                               MONTHS ENDED                  MONTHS ENDED
                                                 JUNE 30,                      JUNE 30,
                                           1999            1998          1999            1998
                                        -----------    -----------    -----------    -----------
                                                       (PRO FORMA)*                  (PRO FORMA)*
<S>                                     <C>            <C>            <C>            <C>
REVENUES
    Sales ...........................   $   187,341           --      $   409,689           --
    Consulting fees .................          --             --           30,000           --
    Interest income .................        48,766          2,309         60,815          2,674
    Administrative fees .............          --            1,297          2,647          2,238
    Income from joint venture .......       151,500           --          151,500           --
                                        -----------    -----------    -----------    -----------
                                            387,607          3,606        654,651          4,912
EXPENSES
    Cost of goods sold ..............       111,466           --          242,552           --
    Salaries ........................       163,763         75,153        327,751        150,306
    Officer's bonus .................       288,103         44,020        510,664         87,565
    Consulting fees .................         7,117           --          159,617         88,000
    Employee benefits ...............        63,588         36,587        160,689        132,761
    Rent ............................        38,587          7,499         75,057         16,188
    Advertising and promotion .......        53,291          3,221         84,613          5,555
    Office expense ..................        16,136          4,290         35,717         37,280
    Legal and accounting ............        35,922         20,074         79,429         50,789
    Interest ........................         6,766         27,181         27,552         47,505
    Repairs and maintenance .........         1,071          4,191          5,055          4,191
    Bad debt expense ................          --            1,970         13,748         15,703
    Cost of abandoned acquisition ...          --           20,000           --           20,000
    Depreciation and amortization ...        18,236          2,635         35,880          5,356
    Other general and
        administrative ..............       159,501        145,878        259,052        232,521
    Unrealized holding losses (gains)
        on trading securities .......       121,844        635,009       (177,810)       324,097
                                        -----------    -----------    -----------    -----------
                                          1,085,391      1,027,708      1,839,566      1,217,817
                                        -----------    -----------    -----------    -----------
        Net income (loss)
           before minority
           interest and taxes .......      (697,784)    (1,024,102)    (1,184,915)    (1,212,905)

    Minority interest in net
           income (loss) ............        16,260         10,182         28,047         25,297
                                        -----------    -----------    -----------    -----------
        Net income (loss) before
           income taxes .............      (681,924)    (1,013,920)    (1,156,868)    (1,187,608)
    Provision for income taxes -
           deferred .................          --             --             --             --
                                        -----------    -----------    -----------    -----------
        Net income (loss) ...........      (681,924)    (1,013,920)    (1,156,868)    (1,187,608)
    Other comprehensive income,
           net of tax
        Unrealized holding gains
           (losses) on securities
           arising during period ....       (20,228)          (938)        15,623         51,537
                                        -----------    -----------    -----------    -----------
    Comprehensive income (loss) .....   $  (701,752)   $(1,014,858)   $(1,141,245)   $(1,136,071)
                                        ===========    ===========    ===========    ===========
</TABLE>

*   As if an operating company rather than a BDC.
The accompanying notes are a part of this statement.
                                       F-4
<PAGE>

                                  EQUITEX, INC.
                      Consolidated Statements of Operations
                                   (Unaudited)
                                    (Page 2)
<TABLE>
<CAPTION>
                                              FOR THE THREE                  FOR THE SIX
                                               MONTHS ENDED                  MONTHS ENDED
                                                 JUNE 30,                      JUNE 30,
                                           1999            1998          1999            1998
                                        -----------    -----------    -----------    -----------
                                                       (PRO FORMA)*                  (PRO FORMA)*
<S>                                     <C>            <C>            <C>            <C>
Net income (loss) per common
    share - primary .................   $      (.10)   $      (.25)   $      (.19)   $      (.31)
                                        ===========    ===========    ===========    ===========

Net income (loss) per common
    share - fully diluted ...........   $      (.10)   $      (.25)   $      (.19)   $      (.31)
                                        ===========    ===========    ===========    ===========

Weighted average number of
    common shares ...................     6,854,356      4,016,029      6,236,754      3,789,331
                                        ===========    ===========    ===========    ===========
</TABLE>

*   As if an operating company rather than a BDC.
The accompanying notes are a part of this statement.

                                       F-5

<PAGE>

                                  EQUITEX, INC.
                            Statements of Operations
                                   (Unaudited)

                                                  FOR THE THREE   FOR THE SIX
                                                  MONTHS ENDED    MONTHS ENDED
                                                  JUNE 30, 1998  JUNE 30, 1998
                                                  (WHILE A BDC)  (WHILE A BDC)
                                                   -----------    -----------
Revenues
   Interest and dividends ......................   $    13,816    $    24,196
   Consulting fees .............................       125,000        375,000
   Administrative fees .........................         1,264          2,205
   Miscellaneous ...............................          --             --
                                                   -----------    -----------
                                                       140,080        401,401

Expenses
   Salaries and consulting fees ................        75,153        150,306
   Officer's bonus .............................        44,020         87,565
   Office rent .................................         7,499         16,188
   Legal and accounting ........................        23,156         50,789
   Employee benefits ...........................        36,587        132,761
   Advertising and promotion ...................         3,221          5,555
   Other general and administrative ............        76,749        171,194
   Interest ....................................        27,181         47,505
   Bad debt expense ............................         1,970         15,703
   Depreciation and amortization ...............         2,635          5,356
                                                   -----------    -----------
                                                       298,171        682,922

Net investment loss ............................      (158,091)      (281,521)

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

   Proceeds from sales of investments ..........       149,450        861,593
   Less: cost of investments ...................       (18,994)      (238,663)
                                                   -----------    -----------

Net realized gain on investments
   before income taxes .........................       130,456        622,930
                                                   -----------    -----------

Net investment loss and net realized gain
   on investments before income taxes ..........       (27,635)       341,409

Income tax benefit (provision) - current .......          --             --
Income tax benefit (provision) - deferred ......       (61,099)      (150,550)
                                                   -----------    -----------

Net investment loss and net realized
   gain on investments .........................       (88,734)       190,859

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

                                       F-6
<PAGE>

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

                                                  FOR THE THREE   FOR THE SIX
                                                  MONTHS ENDED    MONTHS ENDED
                                                  JUNE 30, 1998  JUNE 30, 1998
                                                  (WHILE A BDC)  (WHILE A BDC)
                                                   -----------    -----------
Increase (decrease) in unrealized
   appreciation on investments .................   $  (691,746)   $   190,859

Less income tax benefit (provision)
   applicable to (increase) in
   realized appreciation .......................       269,781        167,882
                                                   -----------    -----------
                                                      (421,965)      (262,581)
                                                   -----------    -----------

Net decrease in net assets
   resulting from operations ...................   $  (510,699)   $   (71,722)
                                                   ===========    ===========

Decrease in net assets per
   share - primary .............................   $      (.13)   $      (.02)
                                                   ===========    ===========

Decrease in net assets per
   share - fully diluted .......................   $      (.13)   $      (.02)
                                                   ===========    ===========

Weighted average number of common shares .......     4,016,029      3,789,331
                                                   ===========    ===========



The accompanying notes are a part of this statement.

                                       F-7
<PAGE>

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

<TABLE>
<CAPTION>
                                                                 FOR THE SIX
                                                                 MONTHS ENDED
                                                                   JUNE 30,
                                                             1999            1998
                                                          -----------    -----------
                                                                         (PRO FORMA)*
<S>                                                       <C>            <C>
Cash flows (used) provided by operating activities:
      Net income (loss) ...............................   $(1,156,868)   $(1,187,608)
      Adjustments to reconcile net income
           (loss) to net cash provided by
              operating activities:
           Depreciation ...............................        35,880          5,356
           Services for stock .........................       150,000
           Minority interest in net loss ..............       (28,047)        25,297
           Equity in joint venture ....................      (151,500)
      Changes in assets and liabilities:
           Trade receivables
           Accounts receivable - other ................       (28,574)
           Accounts receivable - brokers ..............                       45,241
           Advances in FirstNet Capital ...............      (565,327)
           Loans receivable ...........................      (300,000)
           Inventories ................................       (30,581)
           Prepaid expense and other ..................       (75,814)          (800)
           Investments - trading securities ...........       189,105        153,093
           Investments - available for sale securities          8,964
           Notes receivable ...........................    (2,878,469)      (202,472)
           Bank overdraft .............................       (12,666)
           Accounts payable and other accrued
              liabilities .............................        41,809        200,172
           Accounts payable to brokers ................      (367,609)       403,209
           Deferred income taxes ......................                      (17,332)
           Accrued bonus to officer ...................      (412,007)      (216,216)
                                                          -----------    -----------
              Net cash (used) provided by operating
              activities ..............................    (5,581,704)      (792,060)

Cash flows (used) provided by investing activities:
      Purchase of fixed assets ........................       (20,968)        (5,347)
      Repayment of note receivable
      Increase in other investments ...................      (115,000)      (115,000)
      Increase in deferred acquisition costs ..........      (381,634)       (50,000)
      Increase in deposits and other ..................       (74,099)
      Increase in tradename and franchise costs .......       (27,500)
      Investment in First TeleBanc ....................      (175,000)
                                                          -----------    -----------
              Net cash (used) provided by
                 investing activities .................      (794,201)      (170,347)
</TABLE>

                                                                     (Continued)
 *    As if an operating company rather than a BDC.
The accompanying notes are a part of this statement.

                                       F-8
<PAGE>

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

<TABLE>
<CAPTION>
                                                                 FOR THE SIX
                                                                 MONTHS ENDED
                                                                   JUNE 30,
                                                             1999            1998
                                                          -----------    -----------
                                                                         (PRO FORMA)*
<S>                                                       <C>            <C>
Cash flows (used) provided by financing activities:
      Common stock issued for cash ....................   $ 5,699,299    $   826,572
      Minority interest increase ......................       516,750        250,000
      Subsidiary's preferred stock issued for cash ....     1,837,000
      Preferred stock issued for cash .................     2,100,000
      Offering costs incurred .........................      (150,000)
      Preferred dividends paid ........................       (26,509)
      Issuance of notes payable - related parties .....        18,199
      Issuance of notes payable - other ...............       280,425        257,328
      Repayment of notes payable - related parties ....       (62,170)
      Repayment of notes payable - other ..............       (71,431)      (327,599)
                                                          -----------    -----------
      Net cash (used) provided by financing
           activities .................................    10,141,563      1,006,301

Change in cash and cash equivalents ...................     3,765,658         43,894

Cash and cash equivalents,
      beginning of period .............................          --            9,187
                                                          -----------    -----------
Cash and cash equivalents,
      end of period ...................................   $ 3,765,658    $    53,081
                                                          ===========    ===========

Supplemental disclosures of cash flow information:
           Interest paid ..............................   $    57,251    $    29,906
                                                          ===========    ===========

           Interest received ..........................   $    60,811    $       662
                                                          ===========    ===========
</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.

      In 1999,  additional paid-in capital and the accumulated deficit were both
      increased by  $1,333,098  which is the amount of the discount  relative to
      the immediate beneficial conversion feature on the preferred stock.

      During the second quarter of 1999,  $2,142,459 of the Company's  preferred
      stock was converted into common stock.


*     As if an operating company rather than a BDC.
The accompanying notes are a part of this statement.

                                       F-9
<PAGE>

                                  EQUITEX, INC.
                             Statement of Cash Flows
                                   (Unaudited)

                                                                   FOR THE SIX
                                                                   MONTHS ENDED
                                                                   JUNE 30, 1998
                                                                   (WHILE A BDC)
                                                                   ------------
Cash flows from operating activities:
   Net change in net assets ..................................     $    (71,722)
       Adjustments to reconcile net change in
       net assets to net cash provided by
       operating activities:
         Depreciation and amortization .......................            5,356
         Donation of stock ...................................             --
         Provision for bad debts on notes
           receivable ........................................             --
         Realized (gain) loss on sale of
           investments .......................................         (622,930)
         Unrealized (gain) loss on investments ...............          430,463
   Proceeds from sales of investments ........................          861,593
   Purchase of investments ...................................         (942,520)
   Collection of notes receivable ............................           16,083
   Issuance of notes receivable ..............................         (462,876)
   Changes in assets and liabilities:
       (Increase) decrease in interest receivable ............           (9,352)
       (Increase) decrease in trade receivables ..............          (77,071)
       (Increase) decrease in accounts
         receivable - brokers ................................           45,241
       (Increase) in prepaid expense .........................             (800)
       (Increase) in deferred income tax benefit .............          (17,332)
       Increase in accounts payable and
         other accrued liabilities ...........................           42,631
       Increase in accounts payable to brokers ...............          403,209
       Increase (decrease) in accrued bonus
         to officer ..........................................         (216,216)
       Increase (decrease) in deferred income taxes ..........             --
                                                                   ------------
       Net cash (used) by operating
         activities ..........................................         (616,243)

Cash flows from investing activities:
   Purchase of furniture and equipment .......................           (5,347)

       Net cash (used) by investing activities ...............           (5,347)

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

                                      F-10
<PAGE>

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

                                                                   FOR THE SIX
                                                                   MONTHS ENDED
                                                                   JUNE 30, 1998
                                                                   (WHILE A BDC)
                                                                   ------------
Cash flows from financing activities:
   Issuance of notes payable .................................     $    142,328
   Repayment of notes payable ................................         (327,599)
   Common stock issued for cash ..............................          826,572
                                                                   ------------

       Net cash provided (used) by
          financing activities ...............................          641,301

Increase (decrease) in cash ..................................           19,711

Cash, beginning of period ....................................            9,187
                                                                   ------------
Cash, end of period ..........................................     $     28,898
                                                                   ============

Supplemental disclosures of cash flow information:
       Interest paid .........................................     $     45,040
                                                                   ============

       Interest received .....................................     $     14,844
                                                                   ============


The accompanying notes are a part of this statement.

                                      F-11
<PAGE>

                                  EQUITEX, INC.
                     Selected Notes to Financial Statements
                          (Not a Complete Presentation)
                                  June 30, 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 three and six months ended June 30,
1998 the  statement  of  operations  and cash flows for the 1998  periods  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  until the second  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 June 30,  1999  unaudited  pro  forma  column in the  statement  of
revenues  and  statement  of cash  flows  reflects  the  Company's  consolidated
activity for the three and six months ended June 30, 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
earnings. Debt securities for which the Company

                                      F-12
                                                                     (Continued)
<PAGE>

                                  EQUITEX, INC.
                     Selected Notes to Financial Statements
                          (Not a Complete Presentation)
                                  June 30, 1999
                                   (Unaudited)

NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         d. INVESTMENTS UNDER 20%-OWNED (CONTINUED)
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

         The  Company  periodically  assesses  whether  its  goodwill  and other
intangible  assets are impaired as required by SFAS No. 121,  Accounting for the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed Of,
based  on an  evaluation  of  undiscounted  projected  cash  flows  through  the
remaining  amortization  period.  If an  impairment  exists,  the amount of such
impairment is  calculated  based on the  estimated  fair value of the asset.  In
management's opinion, no material impairment exists at June 30, 1999.

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  during the first
quarter of 1999.

NOTE 3.  STOCKHOLDERS' EQUITY

         a. PREFERRED STOCK
         In January  and  February  1999,  the  Company  issued a total of 2,100
shares of 6% Series A, B, and C Convertible Preferred Stock in consideration for
$1,000 cash per share which is the stated value per share.  Each series of stock
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.  Because this preferred  stock contained an
immediate beneficial conversion feature, both additional paid-in capital and the
accumulated  deficit were increased by $1,333,098 the amount of the discount due
to this  beneficial  conversion  feature.  The holders are entitled to receive a
cumulative annual dividend of $60 per share, which is payable quarterly and has

                                      F-13
                                                                     (Continued)
<PAGE>

                                  EQUITEX, INC.
                     Selected Notes to Financial Statements
                          (Not a Complete Presentation)
                                  June 30, 1999
                                   (Unaudited)


NOTE 3.  STOCKHOLDERS' EQUITY (CONTINUED)

         a. PREFERRED STOCK (CONTINUED)
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. The preferred  stockholders  received warrants to
purchase a total of 250,000 shares of the Company's  common stock at 120% of the
market price as of the grant date. In addition,  the placement  agent was issued
20,000 shares of the Company's common stock,  valued at $200,000 in exchange for
services in connection with the preferred stock sales.

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

         b. COMMON STOCK ISSUANCES
         During the first six months of 1999, the Company sold 330,312 shares of
its  common  stock  in a  private  placement  for cash of $3.25  per  share.  In
addition,  during the first quarter a note holder exchanged his note and accrued
interest for 48,688 shares of the Company's common stock.

         During  the six  months  of  1999,  employees  and  officers  exercised
previously  granted  stock  options  for  650,600  shares  of common  stock.  In
addition, 302,500 shares were issued pursuant to warrant exercises.

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

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

NOTE 4.  PRIVATE PLACEMENT OF SUBSIDIARY'S CONVERTIBLE PREFERRED STOCK

         In June 1999 the Company's subsidiary, VP Sports, Inc. (VP), authorized
a private  placement  of up to 40 units with total  possible  gross  proceeds of
$5,000,000.  Each unit  consists  of 100  shares of $1,000  per share 8% secured
convertible preferred stock, 12,500 shares of VP's common stock at $2 per share,
and warrants to purchase  287,500 shares of VP's common stock at $.10 per share.
The preferred

                                F-14
                                                                     (Continued)
<PAGE>

                                  EQUITEX, INC.
                     Selected Notes to Financial Statements
                          (Not a Complete Presentation)
                                  June 30, 1999
                                   (Unaudited)


NOTE 4.  PRIVATE PLACEMENT OF SUBSIDIARY'S CONVERTIBLE PREFERRED STOCK
         (CONTINUED)
stock is  convertible  into VP's  common  stock at any time by the  holders at a
conversion price equal to $4.00 per share. The holders are entitled to receive a
cumulative annual dividend of $80 per share,  which is payable quarterly and has
preference  to any other  dividends  which might be paid by VP. The  dividend is
payable  either  in cash or in  shares  of the VP's  common  stock,  at the VP's
option.  VP is required to convert  these shares at the  three-year  anniversary
date. As of June 30, 1999 18.37 units with gross proceeds of $2,296,250 had been
sold by VP. The  portion of the  proceeds  applicable  to the  preferred  stock,
$1,837,000,  has  been  included  as part of the  Company's  additional  paid-in
capital.

NOTE 5.  SUBSEQUENT EVENTS

         a. EXPECTED ISSUANCE OF SERIES D PREFERRED
         In May  1999  gross  proceeds  of  $3,500,000  were  received  into  an
independent  escrow account in exchange for 3,500 shares of Series D convertible
preferred stock, which the Company is committed to issue. The Series D preferred
stock  contains  the  same  rights  as the  Series  A, B and C  Preferred  stock
discussed above. Because the Company does not have sufficient  authorized common
shares available for issuance, this transaction has not yet been completed.

         b. PROPOSED BUSINESS ACQUISITION
         In  June 1999  the  Company  executed  a  definitive  agreement  with a
previously  unrelated  mortgage  lender.  Under the terms of the agreement,  the
Company  is to  acquire  the  mortgage  company  in  exchange  for shares of the
Company's common stock and a working capital  contribution.  During May and June
1999 $2.75 million in working  capital funds were loaned to this entity pursuant
to the  letter  of  intent.  Subsequent  to June 30,  1999  additional  loans of
$916,561 were made pursuant to this  agreement.  The mortgage  company's  common
stock  secures  all  of  these  advances.  The  Company  is in  the  process  of
negotiating an amendment to this agreement.

         c. ADDITIONAL COMMON STOCK ISSUANCES
         Subsequent to June 30, 1999,  47,850  shares and 175,000  shares of the
Company's  common  stock  were  issued  pursuant  to stock  option  and  warrant
exercises, respectively.

         d. ISSUANCE OF ADDITIONAL PREFERRED STOCK OF SUBSIDIARY
         Subsequent  to June 30,  1999,  an  additional  16.38  units of VP's 8%
Series A Convertible  Preferred  Stock were sold  generating  gross  proceeds of
$2,047,500.

         e. ACQUISITION BY VP
         On July 17, 1999 VP completed an acquisition pursuant to which Victoria
Precision,  Inc. ("Victoria"),  a corporation incorporated under the laws of the
Province of Quebec, merged with and into a wholly-owned

                                      F-15
                                                                     (Continued)
<PAGE>

                                  EQUITEX, INC.
                     Selected Notes to Financial Statements
                          (Not a Complete Presentation)
                                  June 30, 1999
                                   (Unaudited)


         e. ACQUISITION BY VP (CONTINUED)
subsidiary of VP.  Pursuant to the  acquisition,  VP acquired all of the capital
stock of Victoria from its existing  stockholders.  Total consideration paid was
$6,000,000  CDN  resulting in ownership  of all of the assets,  liabilities  and
business  operations  of Victoria,  and the rights to a four-year  international
consulting and noncompete agreement.  Of the purchase price,  $4,700,000 CDN was
paid in cash at  closing  with the  remaining  $1,300,000  paid in the form of a
promissory note bearing  interest at 6% per annum payable in equal  installments
at 6 and 12 months following the closing.


                                      F-16
<PAGE>
Part 1.  FINANCIAL INFORMATION

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION

FORWARD LOOKING STATEMENTS

THIS REPORT MAY CONTAIN  CERTAIN  "FORWARD-LOOKING"  STATEMENTS  AS SUCH TERM IS
DEFINED  IN THE  PRIVATE  SECURITIES  LITIGATION  REFORM  ACT OF  1995 OR BY THE
SECURITIES AND EXCHANGE COMMISSION IN ITS RULES, REGULATIONS AND RELEASES, WHICH
REPRESENT THE COMPANY'S  EXPECTATIONS OR BELIEFS,  INCLUDING BUT NOT LIMITED TO,
STATEMENTS CONCERNING THE COMPANY'S OPERATIONS, ECONOMIC PERFORMANCE,  FINANCIAL
CONDITION,   GROWTH  AND  ACQUISITION   STRATEGIES,   INVESTMENTS,   AND  FUTURE
OPERATIONAL  PLANS. FOR THIS PURPOSE,  ANY STATEMENTS  CONTAINED HEREIN THAT ARE
NOT  STATEMENTS  OF  HISTORICAL  FACT  MAY  BE  DEEMED  TO  BE   FORWARD-LOOKING
STATEMENTS.  WITHOUT  LIMITING THE  GENERALITY OF THE  FOREGOING,  WORDS SUCH AS
"MAY", "WILL", "EXPECT", "BELIEVE", "ANTICIPATE", "INTENT", "COULD", "ESTIMATE",
"MIGHT", OR "CONTINUE" OR THE NEGATIVE OR OTHER VARIATIONS THEREOF OR COMPARABLE
TERMINOLOGY  ARE  INTENDED  TO  IDENTIFY   FORWARD-LOOKING   STATEMENTS.   THESE
STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES,  CERTAIN
OF WHICH ARE  BEYOND  THE  COMPANY'S  CONTROL,  AND  ACTUAL  RESULTS  MAY DIFFER
MATERIALLY  DEPENDING ON A VARIETY OF IMPORTANT FACTORS,  INCLUDING  UNCERTAINTY
RELATED  TO THE  COMPANY'S  OPERATIONS,  MERGERS OR  ACQUISITIONS,  GOVERNMENTAL
REGULATION, THE VALUE OF THE COMPANY'S ASSETS AND ANY OTHER FACTORS DISCUSSED IN
THIS AND OTHER COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

OVERVIEW

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

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

                                      F-17
<PAGE>

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.

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 $565,000 to the joint venture during the quarter ended
March 31,  1999 all of which  remained  unpaid at June 30,  1999.  A payment  of
$200,000 was received from First Net Capital during July 1999.

Through the quarter  ended June 30,  1999,  the  Company,  through  FTC,  loaned
$300,000 to National Business Finance, LLC ("NBF"). NBF is a SBA (Small Business
Administration)  loan  originator  which  originates  and sells to SBA  lenders,
including net First National Bank, SBA loans for a fee.

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

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

                                      F-18
<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.  As of June 30, 1999, the
Registrant  made loans  totaling  $2,750,000 to FBMS which are secured by all of
the issued and outstanding  common stock of FBMS. During the period from July 1,
1999 to the filing of this report,  additional loans totaling $916,561 have been
advanced.  As of the  filing  of  this  report,  the  companies  have  performed
customary  due  diligence  and are  presently  renegotiating  certain terms of a
definitive  agreement  executed  in June  1999.  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  reached  agreement with an accredited
investor to sell 3,500  shares of its Series D 6%  Convertible  Preferred  Stock
under terms and  conditions  similar to those of the Series A, B and C Preferred
Stock.  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.

In addition to the above common stock issuances, the Registrant has issued stock
pursuant to the exercise of certain  warrants to purchase  common stock. A total
of 250,000 warrants to purchase common stock were issued in conjunction with the
Series A, B and C 6% Convertible Preferred Private Placements at exercise prices
ranging from $8.205 to $11.73 per share. Of these outstanding warrants,  190,000
were exercised  during the quarter ended June 30, 1999 for total proceeds to the
Registrant of $1,798,000. An additional 112,500 shares of common stock were

                                      F-19
<PAGE>

issued  pursuant to the  exercise of 112,500  warrants to purchase  common stock
issued  to two  separate  entities  for  total  proceeds  to the  Registrant  of
$640,625.

During the six months ended June 30, 1999, officers, directors, and employees of
the Registrant exercised 662,600 stock options pursuant to the Registrant's 1993
Stock Option Plan and 1993 Stock Option Plan for Non-Employee  Directors.  Total
proceeds from these exercises were $2,084,976.

A majority of the proceeds from the issuances of common stock,  preferred stock,
and  warrants  have been and will be used in  connection  with the  Registrant's
merger and acquisition  activities as well as for working  capital.  For the six
months ended June 30, 1999,  the Company has loaned a total of $1,110,129 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.  Additionally,  portions of the  proceeds  were also used in the loans
made to FBMS totaling $3,666,561 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 four
health food,  nutritional and supplement related retail outlets in south Florida
and now operates a total of five locations.  Triumph is an authorized franchisee
of  General  Nutrition  Centers  ("GNC")  which  stores  comprise  two of  those
operated. The Company owns approximately 79% of Triumph.

On July  27,  1999 VP  completed  an  acquisition  pursuant  to  which  Victoria
Precision,  Inc. ("Victoria"),  a corporation incorporated under the laws of the
Province  of  Quebec,  merged  with and into a  wholly-owned  subsidiary  of VP.
Pursuant to the  acquisition,  VP acquired all of the capital  stock of Victoria
from its existing  stockholders.  Total  consideration  paid was  $6,000,000 CDN
resulting in ownership of all of the assets, liabilities and business operations
of  Victoria,  and  the  rights  to a  four-year  international  consulting  and
non-compete agreement. Of the purchase price, $4,700,000 CDN was paid in cash at
closing with the  remaining  $1,300,000  paid in the form of a  promissory  note
bearing  interest  at 6% per annum  payable  in equal  installments  at 6 and 12
months following the closing.

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

In June 1999, VP commenced a private  placement  through which it is offering up
to 40 units  with  each unit  consisting  of 100  shares of $1,000  per share 8%
preferred  stock,  12,500 shares of common stock at $2.00 per share, and 287,500
warrants to purchase  287,500  shares of common  stock at $.10 per share.  As of

                                      F-20
<PAGE>

June 30, 1999, 18.37 units had been sold for proceeds to VP of $2,296,250. As of
the filing of this report, 16.38 additional units have been sold for proceeds of
$2,047,500.  A majority of these  funds were used for payment of the  $4,700,000
cash purchase component of the Victoria  acquisition while the remainder will be
used for working capital purposes.

RESULTS OF OPERATIONS

The following  discussion and analysis of the Company's  financial condition and
results  of  operations  should  be read in  conjunction  with the  consolidated
financial statements and notes thereto. As a result of the Company's change from
a BDC to an  operating  company  effective  January 4, 1999,  the Company is now
required  to  present  its  financial  statements  consistent  with  those of an
operating  company  as  opposed  to  an  investment  company.  Accordingly,  the
statements of operations  and cash flows for the three and six months ended June
30, 1998 are presented in both a pro-forma  format which assumes the Company was
an operating  company instead of a BDC as well as the investment  company format
which includes the actual results for the Company's  operations as a BDC in that
period.

REVENUES: Revenues for the quarter ended June 30, 1999 were $387,607 as compared
to pro-forma revenues of $3,606 at June 30, 1998 and actual revenues of $140,080
for the Company's BDC operations  for the same period.  For the six months ended
June 30, 1999,  revenues were $654,651 compared to pro-forma  revenues of $4,912
and actual  revenues of $401,401 at June 30, 1998. Of these revenues for the six
months ended June 30, 1999,  $409,689 are attributed  directly to the operations
of Triumph with $151,500 from FTC and the balance from the Registrant itself. VP
generated  no  revenues  during  the  quarter  or six month  period.  Due to the
Registrant's change from a BDC to an operating company at the beginning of 1999,
and as the  Registrant  continues to carry out its plans  relative to becoming a
fully  operating  company  through  the FTB  merger  and FBMS  acquisition,  the
Registrant  anticipates  it will continue to record minimal  revenues.

EXPENSES:  The  Registrant's  expenses  during the  second  quarter of 1999 were
$1,085,391 as compared to a pro-forma $1,027,708 and actual expenses of $298,171
for the same  period  in 1998.  For the six  months  ended  June 30,  1999,  the
Registrant  had  total  expenses  of  $1,839,566  with  pro-forma   expenses  of
$1,217,817  and actual  expenses  of  $682,922  for the same  period in 1998.  A
majority  of  this  increase  for the  six  months  is a  direct  result  of the
consolidation of three new entities with that of the Registrant. The addition of
cost of goods sold of $242,522  for Triumph as well as the  addition of salaries
for Triumph and FTC totaling $177,445,  combine to form a significant portion of
this increase.

In  addition,  officer's  bonus  increased  from  $87,565 in the prior period to
$510,664  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  $530,463 are attributed to Triumph and $193,170
are attributed to FTC. VP had only minimal expenses during the period.

Included in these expenses is unrealized  holding losses on trading  securities.
This  represents  both  the  realized  and  unrealized  gain or  loss  on  those
securities  that have been  designtated as trading  securities.  For the quarter
ended June 30, 1999, unrealized holding losses (gains) on trading securities was
$121,844 as compared to $635,009 on a pro-forma basis during the previous year's
period.  For the six  months  ended June 30,  1999,  unrealized  holding  losses

                                      F-21
<PAGE>

(gains) on trading  securities  was  $(177,810)  as compared to $324,097 for the
1998 period.  With the exception of a  significant  realized gain on the sale of
certain  shares of IntraNet  Solutions  common stock during the first quarter of
1999 which  accounts  for the gain of $177,810 at June 30,  1999,  a majority of
these losses are  unrealized and represent the change in the market value of the
trading  securities  from  period to period.  While these  unrealized  gains and
losses are categorized as expenses, they typically represent only paper gains or
losses which have not actually been incurred.

MINORITY  INTEREST:  For the three  and six  months  ended  June 30,  1999,  the
Registrant  had  minority  interest  in net  income of  $16,260  and  $28,047 as
compared to $10,182 and $25,297, respectively, on a pro-forma basis for the same
period in the previous year.

OTHER  INCOME:   The  Registrant   recorded   $(20,228)  and  $15,623  in  other
comprehensive  income (loss), net of tax for the three and six months ended June
30, 1999 as compared to $(938) and $51,537 pro-forma, respectively, 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 three months ended June 30, 1999,  the  Registrant  recorded a
net loss of $701,752 or $.10 per primary and fully  diluted share as compared to
pro-forma net loss of $1,014,858 or $.25 per primary and fully diluted share for
the quarter ended June 30, 1998. As a BDC, the Company  recorded net  investment
loss and net realized gain on investments of $(88,734) and a net decrease in net
assets  resulting from operations of $510,699 for the first quarter of 1998. For
the six  months  ended  June 30,  1999,  the  Registrant  recorded a net loss of
$1,141,245  or $.19 per primary and fully diluted share as compared to pro-forma
net loss of  $1,187,608  or $.31 per primary and fully diluted share for the six
months ended June 30, 1998. As a BDC, the Company  recorded net investment  loss
and net  realized  gain on  investments  of $190,859  and a net  decrease in net
assets resulting from operations of $71,722 for the first six months of 1998.

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  as  well  as the
anticipated sale of the Series D Convertible Preferred, 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  six  months  of 1999,  the  Registrant  received  a total of
$7,650,000  before  expenses from the sale of common stock and preferred  stock,
the  exercise of common  stock  purchase  warrants  and the exercise of officer,
director and employee stock options. As a result of the aforementioned  proceeds
from the sale and issuance of equity securities of the Company, as well as other
cash  revenues  generated  as a  result  of  the  Registrant's  operations,  the
Registrant  had a total cash  position at June 30, 1999 of  $3,765,658.  Of this
amount,  $1,386,564 was held by the  Registrant,  $2,354,434 was held by VP, and
the remainder was held by Triumph and FTC.

                                      F-22
<PAGE>

In addition, the Company has received a third party commitment to purchase 3,500
shares of its Series D 6%  Convertible  Preferred  stock for total  proceeds  of
$3,500,000  which  currently are being held in escrow pending an increase in the
number of  authorized  shares of the Company.  Completion  of this offering is a
crucial part of the Registrant's  business plan and is integral to completion of
both the FTB merger and FBMS acquisition.

YEAR 2000 READINESS

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

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

     Currently,   the  Registrant  estimates  its  cost  related  to  Year  2000
modifications to be less than $3,000 for the Company and its  subsidiaries.  The
anticipated  costs and timeliness of completion of Year 2000  modifications  are
based  on  management's  best  estimates,  which  were  derived  using  numerous
assumptions  relating  to future  events,  including,  without  limitation,  the
continued  availability of certain resources and third party modification plans.
However, these estimates and assumptions may turn out to be inaccurate.

                                      F-23
<PAGE>

PART II.        OTHER INFORMATION

Item 1.         Legal Proceedings
                None

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

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

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

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

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

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

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

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

                On May 6, 1999 the Registrant issued 20,000 shares of its common
                stock in exchange for 20,000  warrants to purchase  common stock
                at $7.25 per share.  The  Registrant  relied on exemptions  from
                registration provided by Sections 4(2) and/or 4(6) of the
                Securities Act.
                                                                     (Continued)
                                      F-24
<PAGE>

PART II.        OTHER INFORMATION (CONTINUED)

                On May 19,  1999 the  Registrant  issued  22,500  shares  of its
                common stock in exchange for 22,500  warrants to purchase common
                stock at $7.25 per share.  The  Registrant  relied on exemptions
                from  registration  provided by Sections 4(2) and/or 4(6) of the
                Securities Act.

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-25
<PAGE>

                                   SIGNATURES


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



                                       EQUITEX, INC.

                                       (Registrant)



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


Date: August 20, 1999