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


                                    FORM 10-Q


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

                    For the quarter ended September 30, 2001


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

               For the transition period from _________to_________

                           Commission File No. 0-12374


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


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


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


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


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

Number of shares of common stock outstanding at November 14, 2001: 18,494,502
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

PART I    FINANCIAL INFORMATION                                             Page
                                                                            ----
          Item 1.  Financial statements:

                   Independent accountants' report                             3

                   Condensed consolidated/combined balance sheets -
                   September 30, 2001 and December 31, 2000 (unaudited)        4

                   Condensed consolidated/combined statements of
                   operations- three and nine months ended
                   September, 2001 and 2000 (unaudited)                        5

                   Condensed consolidated/combined statement of
                   changes in stockholders' equity - nine months ended
                   September 30, 2001(unaudited)                             6-7

                   Condensed consolidated/combined statements of cash
                   flows - nine months ended September 30, 2001
                   and 2000 (unaudited)                                      8-9

                   Notes to condensed consolidated/combined
                   financial statements                                    10-22

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

          Item 3.  Quantitative and qualitative disclosures of market risk    28

PART II   OTHER INFORMATION

          Item 1.  Legal proceedings                                          29

          Item 2.  Changes in securities and use of proceeds                  29

          Item 3.  Defaults upon senior securities                            30

          Item 4.  Submission of matters to a vote of security holders        30

          Item 5.  Other information                                          30

          Item 6.  Exhibits and reports on Form 8-K                           30

                                       2

<PAGE>

                         INDEPENDENT ACCOUNTANTS' REPORT



Board of Directors
Equitex, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of
Equitex, Inc. and subsidiaries as of September 30, 2001 and the related
condensed consolidated/combined statements of operations for the three-month and
nine-month periods then ended, the condensed consolidated/combined statements of
stockholders' equity for the nine months ended September 30, 2001 and cash flows
for the nine-month periods ended September 30, 2001 and 2000. These financial
statements are the responsibility of the Company's management.

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

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated/combined financial statements
as of September 30, 2001 and for the three-month and nine-month periods ended
September 30, 2001 and 2000 for them to be in conformity with generally accepted
accounting principles.



/S/ GELFOND HOCHSTADT PANGBURN, P.C.
GELFOND HOCHSTADT PANGBURN, P.C.

Denver, Colorado
November 16, 2001

                                        3
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED/COMBINED BALANCE SHEETS
                                   (UNAUDITED)
                                    (Note 1)

                                     ASSETS
<TABLE>
<CAPTION>
                                                            September 30,   December 31,
                                                                2001            2000
                                                             -----------    -----------

<S>                                                          <C>            <C>
Cash and cash equivalents                                    $   315,689    $    73,611
Credit card receivables, net                                   1,692,109        906,296
Other receivables                                              6,106,604      5,278,085
Leaseholds and equipment, net                                    296,985        266,643
Prepaid expenses and other                                       207,967        638,829
Deferred income tax benefit                                    1,380,000           --
                                                             -----------    -----------
                                                             $ 9,999,354    $ 7,163,464
                                                             ===========    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Due to cardholders                                           $ 4,999,740    $ 4,389,443
Notes and advances payable, related parties                      249,700        325,000
Accounts payable                                               1,280,681        680,635
Accrued liabilities:
    Related parties                                              250,092           --
    Others                                                       100,557        870,221
                                                             -----------    -----------
       Total liabilities                                       6,880,770      6,265,299
                                                             -----------    -----------
Commitments and contingencies (Note 7)

Stockholders' equity:
    Preferred stock; 2,000,000 shares authorized:
     Series D, 6%, stated value
     $1,000 per share;
       725 shares issued and outstanding;
       liquidation preference $1,034,000                         725,000           --
     Series G, 6%, stated value $1,000 per share; 1,300
       shares issued and outstanding; liquidation
       preference $1,834,000                                   1,770,500           --
     Series I, 6%, stated value $1,000 per share; 3,600
       shares issued and outstanding; liquidation
       preference $4,535,000                                   3,600,000           --
    Common stock, $0.02 par value; 50,000,000 shares
     authorized; 18,384,835 and 8,903,730 shares issued;
     18,351,485 and 8,903,730 shares outstanding at
      September 30, 2001 and December 31, 2000,
      respectively                                               367,697        178,075
    Common stock and warrants to be issued                     2,640,009           --
    Deferred compensation cost                                (1,733,000)          --
    Additional paid-in capital                                (4,102,500)       220,760
    Retained earnings (deficit)                                  (35,085)       499,330
    Less treasury stock at cost (33,350 common shares)          (114,037)          --
                                                             -----------    -----------
         Total stockholders' equity                            3,118,584        898,165
                                                             -----------    -----------
                                                             $ 9,999,354    $ 7,163,464
                                                             ===========    ===========
</TABLE>
       See notes to condensed consolidated/combined financial statements.
                                        4
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED/COMBINED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                                    (Note 1)

<TABLE>
<CAPTION>
                                                    Three months                   Nine months
                                                ended September 30,            ended September 30,
                                                2001            2000           2001            2000
                                            ------------    ------------   ------------    ------------
<S>                                         <C>             <C>            <C>             <C>
Credit card income:
   Card servicing fees                      $  2,946,653    $  2,477,045   $  7,627,389    $  8,814,801
   Other                                         109,174         105,539        307,434         301,454
                                            ------------    ------------   ------------    ------------
                                               3,055,827       2,582,584      7,934,823       9,116,255
Provision for (recovery of) losses                40,256         146,310        245,601         (90,267)
                                            ------------    ------------   ------------    ------------
   Net credit card income after
     provision for losses                      3,015,571       2,436,274      7,689,222       9,206,522
                                            ------------    ------------   ------------    ------------
Other income:
   Application fees,
     net of direct marketing costs               941,624       1,539,763      3,172,562       2,191,907
   Other                                         154,998          58,785        335,809         107,677
                                            ------------    ------------   ------------    ------------
                                               1,096,622       1,598,548      3,508,371       2,299,584
                                            ------------    ------------   ------------    ------------
Total income                                   4,112,193       4,034,822     11,197,593      11,506,106
                                            ------------    ------------   ------------    ------------
Operating expenses:
   Salaries and wages                          1,188,857         686,661      3,179,621       1,923,858
   Employee benefits                             113,461          82,497        330,882         259,427
   Third party servicing fees                  1,639,082       1,469,888      4,339,950       4,346,229
   Occupancy and equipment                       155,156         129,950        390,407         336,070
   Interest expense, related parties                 672            --              672            --
   Other operating expenses                      784,058         530,563      1,547,976       1,217,979
                                            ------------    ------------   ------------    ------------
                                               3,881,286       2,899,559      9,789,508       8,083,563
                                            ------------    ------------   ------------    ------------
Income before taxes                              230,907       1,135,263      1,408,085       3,422,543
Income tax (expense) benefit                     (60,000)           --           57,500            --
                                            ------------    ------------   ------------    ------------
Net income                                       170,907       1,135,263      1,465,585       3,422,543

Beneficial conversion features (Note 8)       (2,366,156)           --       (2,366,156)           --
Deemed preferred stock dividends (Note 8)        (60,600)           --          (60,600)           --
                                            ------------    ------------   ------------    ------------
Net income (loss) applicable to common
  shareholders                              $ (2,255,849)   $  1,135,263   $   (961,171)   $  3,422,543
                                            ============    ============   ============    ============
Basic and diluted net income (loss) per
  common share                              $      (0.15)   $       0.13   $      (0.09)   $       0.38
                                            ============    ============   ============    ============
Weighted average number of common
  shares outstanding                          14,585,390       8,903,730     10,896,018       8,903,730
                                            ============    ============   ============    ============
</TABLE>

            See notes to condensed consolidated financial statements.
                                        5

<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

  CONDENSED CONSOLIDATED/COMBINED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                      NINE MONTHS ENDED SEPTEMBER 30, 2001
                                   (UNAUDITED)
                                    (Note 1)

<TABLE>
<CAPTION>
                                             Convertible preferred stock          Common stock                         Common stock
                                             --------------------------    --------------------------    Treasury      and warrants
                                               Shares         Amount          Shares        Amount        stock        to be issued
                                             -----------    -----------    -----------    -----------   -----------    -----------
<S>                                          <C>            <C>            <C>            <C>           <C>            <C>
Balances, January 1, 2001 (Note 1)                  --             --        7,506,614    $   150,132          --             --

Common stock of Key and Nova
issued for cash                                                                181,043          3,621

Dividends paid to Key and Nova
shareholders by Key and Nova

Common stock of Equitex issued from July
1, 2001 through August 5, 2001 - Includes
525,716 common shares issued upon
conversion of Series F Preferred Stock,
471,800 common shares issued upon
conversion of Series H Preferred Stock,
239,484 common shares issued upon the
exercise of options and warrants, and
163,466 common shares issued uon the
conversion of debt (Note 8)                                                  1,430,466         28,610
                                                                           -----------    -----------
Balances as of August 6, 2001, prior to
acquisition of Key and Nova (represents
issued shares, including 33,350 shares
of treasury stock)                                                           9,118,123        182,362

Issuance of common stock in connection
with the acquisition of Key and Nova -
preferred stock of Equitex outstanding
includes 725 shares of Series D, 1,300
shares of Series G, and 4,000 shares of
Series I Preferred Stock                           6,025    $ 6,495,500      9,084,773        181,696   $  (114,037)   $ 1,528,000

Conversion of Series I Preferred Stock
to common stock                                     (400)      (400,000)       115,274          2,305

Common stock issued for services                                                66,665          1,333                     (345,991)

Cancellation of agreement to issue
common stock for services                                                                                                 (415,000)

Agreements to issue common stock
and warrants for services                                                                                                1,873,000

Amortization of deferred compensation cost

Net income
                                             -----------    -----------    -----------    -----------   -----------    -----------
Balances, September 30, 2001                       5,625    $ 6,095,500     18,384,835    $   367,697   $  (114,037)   $ 2,640,009
                                             ===========    ===========    ===========    ===========   ===========    ===========
</TABLE>
                                   (Continued)
                                        6
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

  CONDENSED CONSOLIDATED/COMBINED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                  (CONTINUED)
                      NINE MONTHS ENDED SEPTEMBER 30, 2001
                                   (UNAUDITED)
                                    (Note 1)
<TABLE>
<CAPTION>
                                                       Deferred       Additional     Retained         Total
                                                     compensation      paid-in       earnings      stockholders'
                                                         cost          capital       (deficit)       equity
                                                      -----------    -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>            <C>
Balances, January 1, 2001 (Note 1)                           --      $   248,703    $   499,330    $   898,165

Common stock of Key and Nova
issued for cash                                                          996,379                     1,000,000

Dividends paid to Key and Nova
Shareholders                                                                         (2,000,000)    (2,000,000)

Common stock of Equitex issued from July
1, 2001 through August 5, 2001 - Includes
525,716 common shares issued upon
conversion of Series F Preferred Stock,
471,800 common shares issued upon
conversion of Series H Preferred Stock,
239,484 common shares issued upon the
exercise of options and warrants, and
163,466 common shares issued uon the
conversion of debt (Note 8)                                              (28,610)                           --
                                                                     -----------

Balances as of August 6, 2001, prior to
acquisition of Key and Nova (represents
issued shares, including 33,350 shares
of treasury stock)                                                     1,216,472

Issuance of common stock in connection
with the acquisition of Key and Nova -
preferred stock of Equitex outstanding
includes 725 shares of Series D, 1,300
shares of Series G, and 4,000 shares of
Series I Preferred Stock                              $  (589,834)    (6,061,325)                    1,440,000

Conversion of Series I preferred stock
to common stock                                                          397,695                            --

Common stock issued for services                                         344,658                            --

Cancellation of agreement to issue
common stock for services                                 415,000                                           --

Agreements to issue common stock
and warrants for services                              (1,733,000)                                     140,000

Amortization of deferred compensation cost                174,834                                      174,834

Net income                                                                            1,465,585      1,465,585
                                                      -----------    -----------    -----------    -----------
Balances, September 30, 2001                          $(1,733,000)   $(4,102,500)   $   (35,085)   $ 3,118,584
                                                      ===========    ===========    ===========    ===========
</TABLE>

       See notes to condensed consolidated/combined financial statements.
                                        7
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED/COMBINED STATEMENTS OF CASH FLOWS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                  2001          2000
                                                              -----------    -----------

<S>                                                           <C>            <C>
Cash flows provided by operating activities:
Net income                                                    $ 1,465,585    $ 3,422,543
                                                              -----------    -----------
Adjustments to reconcile net income to net cash
  provided by operating activities:
     Provision for (recovery of) losses                           245,601        (90,267)
     Depreciation and amortization                                 84,310         91,507
     Deferred compensation expense for services                   174,834           --
     Changes in assets and liabilities:
       Increase in other receivables                             (828,915)      (180,127)
       Increase in due from shareholders                             --         (606,500)
       Decrease in deferred income taxes                           60,000        606,500
       Decrease in other assets                                   430,862            900
       Increase in due to card holders                            610,297        373,023
       Increase in accounts payable and accrued liabilities        70,270        571,146
                                                              -----------    -----------
     Total adjustments                                            847,259        766,182
                                                              -----------    -----------
Net cash provided by operating activities                       2,312,844      4,188,725
                                                              -----------    -----------

Cash flows from investing activities:
     Net (increase) decrease in credit card receivables        (1,031,414)       282,954
     Purchases of furniture, fixtures and equipment              (114,652)       (49,325)
                                                              -----------    -----------
Net cash (used in) provided by investing activities            (1,146,066)       233,629
                                                              -----------    -----------

Cash flows from financing activities:
     Common stock of Key and Nova issued for cash               1,000,000           --
     Dividends paid to Key and Nova shareholders               (2,000,000)    (3,925,000)
     Issuance of notes payable, related parties                  (249,700)          --
     Repayment of notes payable, related parties                  325,000           --
                                                              -----------    -----------
Net cash used in financing activities                            (924,700)    (3,925,000)
                                                              -----------    -----------

Increase in cash and cash equivalents                             242,078        497,354
Cash and cash equivalents, beginning                               73,611         57,664
                                                              -----------    -----------
Cash and cash equivalents, ending                             $   315,689    $   555,018
                                                              ===========    ===========
</TABLE>
                                   (Contineud)
                                        8
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

      CONDENSED CONSOLIDATED/COMBINED STATEMENTS OF CASH FLOWS (CONTINUED)

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                2001            2000
                                                              -----------    -----------


<S>                                                           <C>
Supplemental disclosure of non-cash investing and
     financing activities:

   Issuance of common stock by Equitex to acquire
    Key and Nova resulting recognition of a deferred tax
    asset                                                     $ 1,440,000
                                                              ===========


   Conversion of preferred stock to common stock              $   400,000
                                                              ===========

   Common stock issued under deferred compensation
     agreements                                               $   345,991
                                                              ===========

   Cancellation of agreement to issue common stock
      for services                                            $   415,000
                                                              ===========

   Amortization of discount on preferred stock                $ 2,366,156
                                                              ===========
</TABLE>

       See notes to condensed consolidated/combined financial statements.
                                        9
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

1.   ORGANIZATION AND BASIS OF PRESENTATION AND INTERIM FINANCIAL STATEMENTS:

     ORGANIZATION AND BASIS OF PRESENTATION:

      On August 6, 2001, Equitex, Inc. ("Equitex") distributed all of its assets
       (which primarily consisted of its investments in subsidiaries) to Equitex
       2000, Inc. ("Equitex 2000"), a newly-formed subsidiary of Equitex.
       Equitex 2000 also assumed all liabilities of Equitex. The outstanding
       common shares of Equitex 2000 are to be distributed to the stockholders
       of Equitex based on proportional ownership of the shares held by the
       Equitex stockholders in a spin-off transaction. The shares of Equitex
       2000 are being held in escrow pending effectiveness of Equitex 2000's
       Form 10 Registration Statement. Subsequent to the distribution, Equitex
       had no remaining operations.

      Also on August 6, 2001, immediately following the transaction described
       above, Equitex acquired Key Financial Systems, Inc. ("Key") and Nova
       Financial Systems, Inc. ("Nova"), both Florida companies that were under
       common control with nearly an identical ownership structure. The Company
       acquired Key and Nova in exchange for (i) 9,084,773 shares of the
       Company's common stock, (ii) cash of $5 million, (iii) warrants to
       acquire an aggregate of 990,134 shares of common stock exercisable at
       $0.02 per share, and (iv) warrants to acquire an aggregate of 3,933,350
       shares of the Company's common stock exercisable at $5.65 per share. In
       order to raise the cash consideration of $5 million, the Company issued
       two new series of convertible preferred stock: 2,359 shares of Series H,
       8% convertible preferred stock in exchange for $2,359,000, and 4,000
       shares of Series I, 6% convertible preferred stock in exchange for
       $4,000,000 (Note 8).

      The transaction has been recorded as a reverse acquisition. The purchase
       price applied to the reverse acquisition has been based on the net book
       value of the underlying assets of the Company prior to the transaction
       plus $5,000,000. The historical stockholders' equity of Key and Nova
       prior to the merger has been retroactively restated (a recapitalization)
       for the equivalent number of shares received in the merger after giving
       effect to any differences in the par value of the Equitex, Key, and Nova
       common stock, with an offset to additional paid-in capital. The restated
       retained earnings of the acquirer is carried forward after the
       acquisition.

      Key and Nova design and market credit card products aimed at the sub-prime
       market. The credit card products are marketed for an unaffiliated bank
       under an agreement that provides the Company with a 100% participation
       interest in the receivables and related rights associated with credit
       cards issued and requires the payment of monthly servicing fees to the
       bank. The Company provides collection and customer service related to the
       credit cards issued.

      The accompanying unaudited financial statements present the condensed
       consolidated financial position of the Company, Key and Nova as of
       September 30, 2001, and the results of their operations and cash flows
       for the three month and nine month periods ended September 30, 2001 and
       2000. The financial statements presented for periods prior to August 6,
       2001 consist of a combined balance sheet of Key and Nova as of December
       31, 2000, and combined statements of operations and cash flows of Key and
       Nova through August 5, 2001. Subsequent to August 5, 2001, the
       accompanying unaudited financial statements present the financial
       position, results of operations and cash flows of the Company on a
       consolidated basis. The condensed combined balance sheet as of December
       31, 2000 has been derived from the separate audited balance sheets of Key
       and Nova as of that date. All significant intercompany accounts and
       transactions have been eliminated in consolidation.

                                       10
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

1.    ORGANIZATION, AND BASIS OF PRESENTATION AND INTERIM FINANCIAL STATEMENTS
      (CONTINUED):

      INTERIM FINANCIAL STATEMENTS:

      The condensed consolidated interim financial statements of Equitex, Inc.
       and subsidiaries (the "Company") for the three-month and nine-month
       periods ended September 30, 2001 and 2000, have been prepared by the
       Company without audit by the Company's independent auditors. In the
       opinion of the Company's management, all adjustments necessary to present
       fairly the financial position, results of operations, and cash flows of
       the Company as of September 30, 2001 and December 31, 2000, and for the
       periods ended September 30, 2001 and 2000 have been made. Except as
       described above, those adjustments consist only of normal and recurring
       adjustments.

      Certain information and note disclosures normally included in the
       Company's annual financial statements prepared in accordance with
       accounting principals generally accepted in the United States of America
       have been condensed or omitted. These condensed consolidated/combined
       financial statements should be read in conjunction with a reading of the
       financial statements and notes thereto included in the Company's Form
       10-K/A annual report for 2000 and the Company's definitive proxy
       statement, both filed with the Securities and Exchange Commission ("SEC")
       on May 16, 2001, as well as a Form 8-K/A filed with the SEC on October
       22, 2001. The results of operations for the nine months ended September
       30, 2001 are not necessarily indicative of the results to be expected for
       the full year.

2.    SIGNIFICANT ACCOUNTING POLICIES:

      PRESENTATION OF CASH FLOWS:

      Cash flows from credit card receivables are reported net.

      CREDIT CARD RECEIVABLES:

      Credit card receivables are stated at cost plus refundable and earned fees
       (the balance reported to customers), reduced by allowances for refundable
       fees and losses.

      Fees are accrued monthly on active credit card accounts and included in
       credit card receivables, net of estimated uncollectable amounts. Accrual
       of income is discontinued on credit card accounts that have been closed
       or charged off. Accrued fees on credit card loans are charged off with
       the card balance, generally when the account becomes 90 days past due.

      The allowance for losses is established through a provision for losses
       charged to expense. Receivables are charged against the allowance for
       losses when management believes that collectibility of principal is
       unlikely. The allowance is an amount that management believes will be
       adequate to absorb estimated losses on existing accounts, based on
       evaluation of the collectibility of the accounts and prior loss
       experience. This evaluation also takes into consideration such factors as
       changes in the volume of the credit card receivable portfolio, overall
       portfolio quality, and current economic conditions that may affect the
       borrower's ability to pay. While management uses the best information
       available to make its evaluation, this estimate is susceptible to
       significant change in the near term.

                                       11
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

2.    SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

      OTHER RECEIVABLES AND DUE TO CARDHOLDERS:

      The Company charges a fully refundable reservation fee equal to each
       cardholder's borrowing limit upon issuance of a credit card. The amount
       due to cardholders represents the balance of reservation fees that would
       have to be refunded to cardholders should they close their accounts at
       the balance sheet date. Funds held in trust at Key Bank & Trust to secure
       payment of this liability are reflected in other receivables in the
       accompanying balance sheets.

      LEASEHOLDS AND EQUIPMENT:

      Leaseholds and equipment are stated at cost less accumulated depreciation.
       Depreciation is computed principally by the double declining-balance
       method over the assets' estimated useful lives.

      INCOME TAXES:

      Through August 5, 2001, both Key and Nova maintained S Corporation status
       for federal income tax purposes. As an S corporation, the shareholders
       reported their respective share of net income on their income tax
       returns. Effective August 6, 2001, in connection with the Company's
       acquisition of Key and Nova, Key and Nova terminated their S corporation
       status and became C corporations. As a C corporation, income taxes are
       provided for the tax effects of transactions reported in the financial
       statements and a deferred income tax liability or asset is recognized for
       temporary differences between the Company's financial statements and tax
       returns. Deferred tax assets and liabilities are measured using enacted
       tax rates expected to apply to taxable income in the years which those
       temporary differences are expected to reverse. The effect on deferred tax
       assets and liabilities of a change in tax rates is recognized in the
       statement of operations in the period that includes the enactment date.

      ESTIMATES:

      Preparation of the financial statements in accordance with accounting
       principles generally accepted in the United States of America requires
       management to make estimates and assumptions that affect the reported
       amounts of assets and liabilities and disclosure of contingent assets and
       liabilities at the date of the balance sheet and the reported amounts of
       revenues and expenses during the reporting periods. Actual results could
       differ from those estimates.

      SEGMENT INFORMATION:

      Statement of Financial Accounting Standards ("SFAS") No. 131, DISCLOSURES
       ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION, establishes
       standards for the reporting and disclosure of information about operating
       segments in annual and interim financial statements. Operating segments
       are defined as components of an enterprise for which separate financial
       information is available that is evaluated regularly by the chief
       operating decision maker(s) in deciding how to allocate resources and in
       assessing performance. SFAS No. 131 also requires disclosures about
       products and services, geographic areas and major customers.

                                       12
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

2.    SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

      SEGMENT INFORMATION (CONTINUED):

      Management has determined that the Company operates in one dominant,
       operating segment that involves designing and marketing credit card
       products aimed at the sub-prime market. Substantially all of the
       Company's assets and employees are located in Florida, and all revenues
       are generated within the United States.

      NET INCOME (LOSS) PER SHARE:

      SFAS No. 128, EARNINGS PER SHARE, requires dual presentation of basic and
       diluted earnings or loss per share ("EPS") with a reconciliation of the
       numerator and denominator of the basic EPS computation to the numerator
       and denominator of the diluted EPS computation. Basic EPS excludes
       dilution. Diluted EPS reflects the potential dilution that could occur if
       securities or other contracts to issue common stock were exercised or
       converted into common stock or resulted in the issuance of common stock
       that then shared in the earnings of the entity.

      Earnings and loss per share of common stock is computed based on the
       average number of common shares outstanding during the period. The
       historical earnings per share of Key and Nova prior to the merger has
       been retroactively restated to reflect the new capital structure. Stock
       options, warrants, common stock to be issued, and convertible preferred
       stock are not considered in the calculations for the three month and nine
       month periods ended September 30, 2001, as the impact of the potential
       common shares would be to decrease loss per share. Therefore, diluted
       loss per share is equivalent to basic loss per share. Key and Nova did
       not have any outstanding dillutive equity instruments outstanding for the
       three month or nine month periods ending September 30, 2000, therefore
       diluted earnings per share is equivalent to basic loss per share.

      RECENTLY ISSUED ACCOUNTING STANDARDS:

      In July 2001, the Financial Accounting Standards Board ("FASB") issued
       SFAS No. 141, BUSINESS COMBINATIONS, and SFAS No. 142, GOODWILL AND OTHER
       INTANGIBLE ASSETS. SFAS No. 141 requires that the purchase method of
       accounting be used for all business combinations initiated after June 30,
       2001. Use of the pooling-of-interests method is prohibited after that
       date. SFAS No. 142 changes the accounting for goodwill and intangible
       assets with indefinite lives from an amortization method to an
       impairment-only approach and requires intangible assets with finite lives
       to be amortized over their useful lives. Thus, amortization of goodwill
       and intangible assets with indefinite lives will cease upon adoption of
       the statement. SFAS No. 142 is required to be applied in fiscal years
       beginning after December 15, 2001. The Company is currently assessing the
       impact, if any, that SFAS No. 141 and SFAS No. 142 may have on its
       financial condition or results of operations.

      In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR IMPAIRMENT OR
       DISPOSAL OF LONG-LIVED ASSETS, which addresses accounting and financial
       reporting for the impairment or disposal of long-lived assets. This
       statement is effective for fiscal years beginning after December 15,
       2001. The Company is currently assessing the impact, if any, that SFAS
       No. 144 may have on its financial condition and results of operations.

                                       13
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

3.    CREDIT CARD RECEIVABLES:

      The composition of credit receivables at September 30, 2001, and at
       December 31, 2000, is as follows:

                                                    2001            2000
                                                ------------    ------------
                                                (Unaudited)     (Unaudited)

      Credit card receivables                   $ 49,865,331    $ 31,994,865
      Refundable reservation fees                (47,982,019)    (30,834,483)
                                                ------------    ------------
                                                   1,883,312       1,160,382
      Less allowance for losses                      191,203         254,086
                                                ------------    ------------
                                                $  1,692,109    $    906,296
                                                ============    ============

      Changes in the allowance for losses for the nine-month and three month
       periods ended September 30, 2001 and 2000, are as follows:

                                Nine-months ended      Three-months ended
                                  September 30,            September 30,
                              ---------------------   ---------------------
                                2001         2000       2001         2000
                              ---------   ---------   ---------   ---------
                             (Unaudited) (Unaudited) (Unaudited) (Unaudited)

      Balances, beginning     $ 254,086   $ 529,498   $ 217,921   $ 116,340

       Provision for
        (recovery of) losses    245,601     (90,267)     40,256     146,310
       Amounts charged-off     (308,484)   (261,612)    (66,974)    (85,031)
                              ---------   ---------   ---------   ---------
      Balances, ending        $ 191,203   $ 177,619   $ 191,203   $ 177,619
                              =========   =========   =========   =========

                                       14
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

4.    OTHER RECEIVABLES:

      The composition of other receivables at September 30, 2001, and at
       December 31, 2000, is as follows:

                                                  2001              2000
                                             --------------    --------------
                                               (Unaudited)       (Unaudited)

      Due from Key Bank & Trust              $      479,485    $    1,532,254
      Due from Net 1st National Bank              4,018,000         2,150,410
      Due from Merrick Bank                         937,230         1,490,231
      Other                                         671,889           105,190
                                             --------------    --------------
                                             $    6,106,604    $    5,278,085
                                             ==============    ==============

      The amounts due from Key Bank & Trust and Net 1st National Bank are held
       in trust accounts by the respective bank.

5.    LEASEHOLDS AND EQUIPMENT:

      The major classes of property and equipment and total accumulated
       depreciation at September 30, 2001, and at December 31, 2000, are as
       follows:

                                                  2001              2000
                                             --------------    --------------
                                               (Unaudited)       (Unaudited)

      Leasehold improvements                 $      125,854    $      116,202
      Furniture and equipment                       464,522           360,011
      Software                                       16,433            15,944
                                             --------------    --------------
                                                    606,809           492,157
      Less accumulated depreciation                 309,824           225,514
                                             --------------    --------------
                                             $      296,985    $      266,643
                                             ==============    ==============

6.    TRANSACTIONS WITH RELATED PARTIES:

      Notes payable include $249,700 and $325,000 at September 30, 2001 and
       December 31, 2000, respectively, of short-term borrowings from
       shareholders. Such amounts were borrowed in September 2001 and December
       2000, respectively, to provide working capital. Shareholder borrowings
       bear interest at 10%, are due on demand, and are repaid from cash flow
       generated by ongoing operations.

                                       15
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

6.    TRANSACTIONS WITH RELATED PARTIES (CONTINUED):

      Key has entered into an agreement with Paragon Water Member Services
       ("Paragon"), a company that was affiliated with Key through common
       ownership prior to Equitex's acquisition of Key on August 6, 2001,
       whereby Paragon provides credit card marketing services for the Company.
       Paragon earns commissions for card applications that are not subsequently
       refunded. Total expense under this agreement was $1,771,523 and $318,796
       for the three months ended September 30, 2001 and 2000, respectively, and
       $3,765,359 and $318,796 during the nine months ended September 30, 2001
       and 2000, respectively. The Company owed Paragon $250,092 as of September
       30, 2001, and no amount was owed to Paragon at December 31, 2000.

      Effective March 19, 2001, Key entered into an agreement with Paragon to
       assume the management of Paragon's telemarketing operations. Under the
       agreement Key assumed certain operating expenses and is paid a management
       fee representing 75% of the net operating profits of the telemarketing
       operations. Total net losses under this agreement were $20,548 and $0 for
       the three months ended September 30, 2001 and 2000, respectively, and
       $216,698 and $0 during the nine months ended September 30, 2001 and 2000,
       respectively. The Company is responsible for any operating losses, with
       the right of offset against future operating profits.

7.    COMMITMENTS, CONTINGENCIES AND CREDIT RISK:

      LITIGATION:

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

      LEASE COMMITMENTS:

      Key and Nova rent office space under a non-cancelable operating lease with
       initial terms through September 30, 2004. The office lease has a five
       year renewal option. The future minimum rental payments due under the
       non-cancelable lease as of September 30, 2001, is as follows:

                    Year ending
                    December 31,                         Amount
                    -------------------------------------------------
                    2001 (Remainder)               $          100,400
                    2002                                      408,300
                    2003                                      431,000
                    2004                                      450,100
                                                   ------------------
                                                   $        1,389,800
                                                   ==================

      During the nine months ended September 30, 2001 and 2000, rent expense
       amounted to approximately $258,000 and $222,000, respectively.

      In addition, the Company leases office space in Colorado on a
       month-to-month basis for $2,500 per month from a corporation in which the
       Company's president is the sole shareholder.

                                       16
<PAGE>
                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

7.    COMMITMENTS, CONTINGENCIES AND CREDIT RISK (CONTINUED):

      CONTINGENCIES:

      A credit limit has been established for each cardholder account acquired
       by Key and Nova. By agreement, the credit limit can be terminated at any
       time for any reason. Because the initial reservation fee charged to all
       account holders is fully refundable, the total of accounts with credit
       limits in excess of cardholder balances is reflected as a liability in
       the amount of $4,999,740 and $4,389,443 as of September 30, 2001 and
       December 31, 2000, respectively, in the accompanying balance sheets.

      Credit cards are issued throughout the United States to customers that are
       considered high credit risks. The Company evaluates each customer's
       credit worthiness on a case-by-case basis. Because of the reservation fee
       charged upon issuance of credit cards, charges for purchases or cash
       advances are generally limited to the amount of payments collected from
       each customer less fees charged.

      The Company's credit card receivables were initiated under membership
       terms with VISA and MasterCard. Modification of these terms by VISA and
       MasterCard could adversely affect operating results.

      CONSULTING AGREEMENTS:

      In September 2000, the Company entered into a consulting agreement for
       services to be performed subsequent to December 31, 2000, in which, upon
       the satisfaction of various performance criteria, the Company is to issue
       75,000 shares of common stock and warrants to purchase and additional
       75,000 shares of common stock at an exercise price equal to 80% of the
       average closing bid price of the Company's common stock ten days prior to
       issuance. At the date of commitment, the total compensation cost was
       calculated to be approximately $750,000, which was recognized subsequent
       to December 31, 2000, as the performance criteria were satisfied. The
       Company recognized $687,500 of expense prior to the August 6, 2001
       merger, and $62,500 of expense subsequent to the August 6, 2001 merger,
       which is included in the Company's operations for the three month and
       nine month periods ended September 30, 2001.

      In April 2001, the Company entered into a consulting agreement for
       investor relations and development services, in which, upon the
       satisfaction of various performance criteria, the Company is to issue
       150,000 shares of common stock. At the date of commitment, the total
       compensation cost was calculated to be approximately $778,000, which was
       to be recognized as the performance criteria are satisfied. In October
       2001, the Company exercised its right to cancel this contract and agreed
       to issue only 70,000 shares of common stock for certain performance
       criteria that were met upon cancellation of the contract. Therefore,
       compensation cost was recalculated to be approximately $363,000 at the
       date of the original commitment. The Company recognized $250,666 of
       expense prior to the August 6, 2001 merger, and $112,334 of expense
       subsequent to the August 6, 2001 merger, which is included in the
       Company's operations for the three month and nine month periods ended
       September 30, 2001.

                                       17
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

7.    COMMITMENTS, CONTINGENCIES AND CREDIT RISK (CONTINUED):

      CONSULTING AGREEMENTS (CONTINUED):

      In September 2001, the Company entered into a consulting agreement for
       investor communications and public relations, in which the Company is to
       issue 350,000 shares of common stock and warrants to purchase an
       additional 350,000 shares of common stock in equal increments of 50,000
       shares at exercise prices from $4 to $10 per share. At the date of the
       commitment, the total compensation cost was calculated to be
       approximately $1,733,000, which is to be recognized in subsequent periods
       as the services are performed.

8.    STOCKHOLDERS' EQUITY:

      ISSUANCES AND ACTIVITY PRIOR TO THE AUGUST 6, 2001 MERGER:

      SERIES D CONVERTIBLE PREFERRED STOCK:

      The holder of each share of Series D convertible preferred stock (the
       "Series D Preferred Stock") is entitled to a 6% cumulative annual
       dividend, payable quarterly. The dividend is payable either in cash or in
       shares of the Company's common stock, at the discretion of the Company.
       The Series D Preferred Stock contains a liquidation preference equal to
       the sum of the stated value of each share plus an amount equal to 30% of
       the stated value plus the aggregate of all accrued and unpaid dividends
       on each share of Series D Preferred Stock until the most recent dividend
       payment date or date of liquidation, dissolution or winding up of the
       Company.

      The Series D Preferred Stock is convertible into common stock at any time,
       at a conversion price per share of common stock equal to 65% of the
       average closing bid price of the Company's common stock as specified in
       the agreement.

      SERIES G REDEEMABLE CONVERTIBLE PREFERRED STOCK:

      The holder of the Series G redeemable convertible preferred stock (the
       "Series G Preferred Stock") is entitled to cumulative dividends at 6% per
       annum plus a 4% dividend default rate, payable quarterly commencing
       September 30, 2000. Dividends are payable in cash or, at the Company's
       option, in shares of the Company's common stock. The Series G Preferred
       Stock contains a liquidation preference equal to the sum of the stated
       value of each share plus an amount equal to 30% of the stated par value
       plus the aggregate of all accrued and unpaid dividends on each share of
       Series G Preferred Stock until the most recent dividend payment date or
       date of liquidation, dissolution or winding up of the Company. All
       outstanding shares of Series G Preferred Stock automatically convert into
       common stock on August 31, 2003. The Series G Preferred Stock is
       redeemable at the Company's option at any time through August 31, 2003 at
       a redemption price equal to $1,350 per share plus any accrued but unpaid
       dividends.

                                       18
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

8.   STOCKHOLDERS' EQUITY (CONTINUED):

      ISSUANCES AND ACTIVITY PRIOR TO THE AUGUST 6, 2001 MERGER (CONTINUED):

      SERIES G REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED):

      The Series G Preferred Stock is convertible, together with any accrued but
       unpaid dividends, at any time into shares of the Company's common stock
       at a conversion price per share equal to the lesser of $6.50 or 65% of
       the average closing bid price of the Company's common stock as specified
       in the agreement. The warrants were valued at $242,000 utilizing the
       Black-Scholes option-pricing model, and therefore $242,000 of the total
       proceeds was allocated to the warrants, resulting in an imputed interest
       rate of 7.4%.

      At June 30, 2001, Equitex, Inc. had 7,687,657 shares of common stock
       issued and 462,025 shares of Series D, F and G convertible preferred
       stock outstanding valued at $5,485,500. In July 2001, prior to the
       merger, all of the Series F convertible shares (460,000 shares) valued at
       $2,990,000 were converted into 525,716 shares of common stock at a
       conversion price of $7.00 per share.

      SERIES H CONVERTIBLE PREFERRED STOCK:

      In July 2001, prior to the merger, the Company issued 2,359 shares of 8%,
       Series H Convertible Preferred Stock (the "Series H Preferred Stock") for
       $1,000 per share, which is the stated value per share (total proceeds of
       $2,359,000 less issue costs of approximately $300,000). Each share of
       Series H Preferred Stock automatically converted into 200 shares of the
       Company's common stock (471,800 shares) and 200 warrants to purchase
       common stock on July 19, 2001. Each warrant is exercisable until July 19,
       2004 at an exercise price of $5.78 per share.

      Because the Series H Preferred Stock contained an immediate beneficial
       conversion feature, net income applicable to common stockholders was
       decreased by $212,310 during the third quarter of 2001, the amount of the
       discount resulting from the beneficial conversion feature.

      SERIES I REDEEMABLE CONVERTIBLE PREFERRED STOCK:

      In August 2001, the Company issued 4,000 shares of 6%, Series I
       Convertible Preferred Stock (the "Series I Preferred Stock") along with
       warrants to purchase 400,000 shares of common stock for $1,000 per share,
       which is the stated value per share (total proceeds of $4,000,000 less
       issue costs of approximately $500,000). The holder of each share of
       Series I Preferred Stock is entitled to cumulative dividends at 6% per
       annum plus a 4% dividend default rate if any dividend is not paid in full
       on any dividend payment due date, payable quarterly commencing September
       30, 2001. Dividends are payable in cash or at the Company's option, in
       shares of the Company's common stock. The Series I Preferred Stock
       contains a liquidation preference equal to the sum of the stated value of
       each share plus an amount equal to 30% of the stated par value plus the
       aggregate of all accrued and unpaid dividends on each share of Series I
       Preferred Stock until the most recent dividend payment date or date of
       liquidation, dissolution or winding up of the Company. All outstanding
       shares of the Series I Preferred Stock automatically convert into common
       stock on July 20, 2004.

                                       19
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

8.    STOCKHOLDERS' EQUITY (CONTINUED):

      ISSUANCES AND ACTIVITY PRIOR TO THE AUGUST 6, 2001 MERGER (CONTINUED):

      SERIES I REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED):

      The Series I Preferred Stock is redeemable at the Company's option at any
       time through July 20, 2004 at a redemption price equal to $1,250 per
       share plus any accrued but unpaid dividends. The Series I Preferred Stock
       is convertible, together with any accrued but unpaid dividends, at any
       time into shares of the Company's common stock at a conversion price per
       share equal to the lesser of $5.98 or 65% of the average closing price of
       the Company's common stock as specified in the agreement.

      Because the Series I Preferred Stock contained an immediate beneficial
       conversion feature, net income applicable to common stockholders was
       decreased by $2,153,846 during the third quarter of 2001, the amount of
       the discount resulting from the beneficial conversion feature.

      OPTIONS AND WARRANTS:

      In July 2001, prior to the merger, the Company issued 112,500 shares of
       common stock to consultants upon the conversion of 112,500 warrants to
       purchase common stock at an exercise price of $4.00 per share.

      In August 2001, prior to the merger, the Company issued 78,645 shares of
       common stock at a price equal to the closing stock price at the date of
       issuance along with warrants to purchase 78,645 shares of common stock in
       exchange for $495,510 in related party receivables due by the Company's
       subsidiary Triumph. The warrants were granted with an exercise price
       above market value at the date of issuance and are exercisable through
       August 2006.

      In August 2001, prior to the merger, the Company issued 78,339 shares of
       common stock along with warrants to purchase 78,339 shares of common
       stock to Equitex 2000, a wholly owned subsidiary of the Company. The
       warrants were granted with an exercise price above market at the date of
       issuance and are exercisable through August 2006. The stock and warrants
       were valued at approximately $410,000.

      DEBT CONVERSIONS:

      In August 2001, prior to the merger, the Company converted $859,062 in
       notes and other payables to related parties of the Company into 163,466
       shares of the Company's common stock at a price equal to the closing
       stock price at the date of issuance along with warrants to purchase
       163,466 shares of common stock. The warrants were granted with an
       exercise price above market value at the date of issuance and are
       exercisable through August 2006.

                                       20
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

8.    STOCKHOLDERS' EQUITY (CONTINUED):

      ISSUANCES AND ACTIVITY SUBSEQUENT TO THE AUGUST 6, 2001 MERGER:

      COMMON STOCK:

      In September 2001, 400 shares of Series I Preferred Stock were converted
       into 115,274 shares of common stock, at an average conversion price of
       $3.47 per share. In addition, the Company issued 66,665 shares of common
       stock to a consultant for services under a deferred compensation
       agreement entered into in April 2001.

      Also in September 2001, the Company agreed to issue 35,000 shares of
       common stock valued at $140,000 in exchange for acquisition costs
       incurred by third parties in connection with the Company's proposed
       acquisition of Chex Services, Inc. (Note 11).

      SERIES G PREFERRED STOCK:

      In November 2001, 200 shares of Series G Preferred Stock, plus accrued
       dividends of $13,833 on those shares, were converted into 78,664 shares
       of common stock at an average conversion price of $2.54 per shares.

      SERIES I PREFERRED STOCK:

      In October 2001, 370 shares of Series I Preferred Stock, plus accumulated
       unpaid dividends of $1,652 on those shares, were converted into 64,353
       shares of common stock, at an average conversion price of $2.64 per
       share.

      In November 2001, the Board of Directors authorized the redemption of 330
       shares of Series I Preferred Stock for $330,000 plus related accumulated
       and unpaid dividends of approximately $6,200. The scheduled redemption
       date is November 27, 2001.

9.    INCOME TAXES:

      Effective August 6, 2001, in conjunction with the acquisitions of Key and
       Nova by Equitex, and in conjunction with Key and Nova's termination of S
       Corporation status, the Company recorded a net deferred tax asset of
       approximately $1,440,000, which was recorded as an increase to deferred
       tax assets and an increase in additional paid-in capital. The net
       deferred tax asset primarily consists of approximately $3,700,000 of net
       operating losses of Equitex accumulated through August 5, 2001, and
       available to offset future taxable income. The net operating loss
       carryforwards expire between 2015 and 2021, and may be subject to certain
       limitations due to business acquisitions and other transactions.

                                       21
<PAGE>

                         EQUITEX, INC. AND SUBSIDIARIES

          NOTES TO CONDENSED CONSOLIDATED/COMBINED FINANCIAL STATEMENTS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)

10.   OTHER OPERATING EXPENSES:

                                  Three months ended       Nine months ended
                                    September 30,             September 30,
                               -----------------------   -----------------------
                                  2001         2000         2001         2000
                               ----------   ----------   ----------   ----------
                              (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)

      Telecommunications       $  166,522   $  227,751   $  408,984   $  395,926
      Professional fees           456,797      171,880      721,282      476,343
      Printing and supplies         4,323        4,520       16,492       12,400
      Bank Charges                  5,029       50,673      111,028       50,673
      Other                       151,387       75,739      290,190      282,637
                               ----------   ----------   ----------   ----------
                               $  784,058   $  530,563   $1,547,976   $1,217,979
                               ==========   ==========   ==========   ==========

11.   PROPOSED BUSINESS TRANSACTIONS:

      PROPOSED TRANSACTION WITH CHEX SERVICES, INC.:

      In September 2001, the Company announced the signing of a definitive
       agreement for the acquisition of all the outstanding capital stock of
       Chex Services, Inc. ("Chex"), the effectiveness of which is subject to
       the completion and acceptance of certain due diligence-related items,
       completion of final closing documents and other customary pre-closing
       conditions. Chex is a financial services company that provides check
       cashing, automated teller machines and credit card advances to customers
       primarily at gaming establishments located in Minnesota.

      PROPOSED TRANSACTIONS WITH MONEY CENTERS OF AMERICA, INC.:

      In September 2001, the Company signed a non-binding letter of intent to
       acquire Money Centers of America, Inc. ("MOA" ), the effectiveness of
       which is subject to the completion of customary due diligence,
       negotiation and execution of a definitive agreement and other customary
       conditions. MOA is a financial services company that provides cash
       access, technology, and marketing services to the gaming and retail
       markets. MOA funds-transfer systems allow casino patrons to access cash
       through check cashing, credit/debit card advances, automated teller
       machines and wire transfer. MOA also owns a proprietary "Cash Access
       System", which processes check, credit, and debit card transactions,
       thereby reducing the need for third party vendors.

                                       22
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                              FINANCIAL CONDITION

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

(a) Liquidity.
(b) Capital Resources.

On August 6, 2001, the Registrant completed the distribution of all of its
assets to Equitex 2000, Inc., and Equitex 2000, Inc. assumed all liabilities of
the Registrant. Immediately following this transaction, the Registrant completed
the acquisitions of Key Financial Systems, Inc. ("Key") and Nova Financial
Systems, Inc. ("Nova"), which were recorded as reverse acquisitions. The
financial statements presented for the three and nine months ended September 30,
2000, are those of Key and Nova. For the three and nine months ended September
30, 2001, the financial results of Key and Nova are presented on a consolidated
basis with those of the Registrant for the period from August 6, 2001 through
September 30, 2001.

Net income will provide the most significant portion of the Registrant's
liquidity at the operating company level for Key and Nova. This may be augmented
from time to time by the issuance of notes payable for short-term financing
needs. For the Registrant at the holding company level, a majority of liquidity
needs will be derived from financing activities including the issuance of stock
for cash through the exercise of warrants and options, as well as the issuance
of notes payable. Holding company liquidity may also be affected by
inter-company payments of cash from Key and Nova. Presently, the Registrant
believes its liquidity and capital resources are sufficient to fund its
operations through fiscal 2002.

At September 30, 2001, the Registrant had a cash position on a consolidated
basis of $315,689. Net cash provided by operating activities for the nine months
ended September 30, 2001 was $2,312,844 versus $4,188,725 during the same period
of 2000 for Key and Nova. The most significant portion of this change was the
decrease in net income for the nine month period from $3,422,543 in 2000 to
$1,465,585 in 2001. Total adjustments to reconcile net income to net cash
increased by $81,077 to $847,259 at September 30, 2001. Increases in provision
for recovery of losses and increase in other receivables were offset by a
significantly lower decrease in deferred income taxes and a decrease in other
assets.

                                       23
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                              FINANCIAL CONDITION

Net cash used in investing activities was $(1,146,066) in the nine months ended
September 30, 2001 as compared to net cash provided by investing activities of
$233,629 in 2000 for Key and Nova. Net increase in credit card receivables of
$(1,031,414) in 2001 from a net decrease in credit card receivables of $282,954
in 2000 accounted for nearly all of this change.

Net cash used in financing activities was $(924,700) for the nine months ended
September 30, 2001 as compared to $(3,925,000) in 2000 for Key and Nova. Common
stock of Key and Nova issued for cash of $1,000,000 in 2001, a decrease in
dividends paid to Key and Nova shareholders from $3,925,000 in 2000 to
$2,000,000 in 2001, and net changes in notes receivable of $75,300 accounted for
this significant decrease.

(c) Results of operations.

The financial statements presented for the three and nine months ended September
30, 2000, are those of Key and Nova. For the three and nine months ended
September 30, 2001, the financial results of Key and Nova are presented on a
consolidated basis with those of the Registrant for the period from August 6,
2001 through September 30, 2001.

NINE MONTHS ENDED SEPTEMBER 30, 2001 VS. SEPTEMBER 30, 2000

CREDIT CARD INCOME

Credit card servicing fees, Key and Nova's principal source of earnings, are
credit card fees accessed on credit card accounts owned by each companies'
client bank. These include monthly membership fees, late charges, overlimit
fees, and return check fees. The fees are paid to Key and Nova under a 100% loan
participation agreement with the client bank. Credit card servicing fees for the
nine months ended September 30, 2001 decreased 13% to $7,627,389 from the 2000
period as a result of a slight decrease in average active credit card accounts.
The year-to-date average number of active accounts during 2001 was 100,889
versus 104,035 in 2000, a 3% decrease. The year-to-date new account volume in
2001 was 117,212 compared to 45,627 for 2000, a 157% increase.

At the inception of the program, all applicants that paid the processing fee
were issued a credit card account. In June 2000, Key implemented a new account
activation procedure that required applicants to return a signed activation
certificate. This procedure greatly reduced the number of credit cards issued to
individuals that historically never activated their accounts.

In March of 2001,  Key performed a detailed analysis comparing the number of
active accounts on file for three months and longer between the two different
card issuance methodologies. The company found a significantly smaller
percentage of active accounts on file in relationship to applications for the
new method versus the original card issuance policy. Though the average credit
card income per account was higher during 2000 when the activation certificates
were required, the number of net remaining accounts was significantly less,
which reduces the amount of residual income Key will earn over the life of
the account relationships. Therefore, effective April 2001, new applicants that
have paid the processing fee are issued credit cards without the need to return
a signed activation certificate. The majority of the accounts that represent the
increase in new accounts in 2001 versus 2000 were booked after the change in the
card issuance policy.

                                       24
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                               FINANCIAL CONDITION

Marketing accelerated in May 2001, increasing from 23,646 new accounts added
during January through April 2001 to 93,566 added during May through September.
This increase in marketing placed a larger expense burden on Key that will be
borne by income generated in subsequent periods. A few months lapse before new
accounts become profitable, with later period profits recovering earlier losses.
While the accelerated marketing plans continue, effects of the September 11,
2001 disaster and subsequent slowing of mail delivery due to bioterrorism
concerns may affect the timing and effectiveness of Key's direct marketing
campaigns during the fourth quarter of 2001 and into 2002.

PROVISION FOR LOSSES

The provision for losses is the charge to operating earnings that management
feels is necessary to maintain the reserve for possible losses at an adequate
level. The provision is determined based on growth of the portfolio, the net
amount of losses incurred, and management's estimation of potential future
losses based on an evaluation of the portfolio risks and economic conditions. In
the 2001 period, Key and Nova had a total provision of $245,601 compared to a
recovery of $90,267 for the same period in 2000. This resulted from a reduced
year-to-date 2000 provision, $28,329, and not from a decrease in credit quality.
The allowance for losses at September 30, 2001 was $191,203 or 10.2% of credit
card receivables, net of unearned income, compared to $177,619 or 15.8% of
credit card receivables, net of unearned income, at September 30, 2000.
Management believes that the reserve for possible losses was adequate to provide
for potential losses at September 30, 2001 and 2000.

The 2000 reduction in provision came from the maturation of Key's credit card
portfolio. Key ceased marketing of new accounts from April of 1999 to January
2000, at the request of the initial client bank. New card volume during this
time was transferred to the client bank of Key Financial Systems' affiliate
company, Nova Financial Systems. Marketing resumed in February 2000.

OTHER INCOME

Other income for the nine months ended September 30, 2001 increased 52.6% to
$3,508,371 compared to the same period in 2000. The major component of other
income is application processing fee income which increased 44.7% to $3,172,562
due to increased new application volume. New account volume was 117,212 in 2001
compared to 45,627 for the same period in 2000.

OPERATING EXPENSES

Operating expenses for the nine months ended September 30, 2001 increased
$1,705,945 to $9,789,508 from $8,083,563 for the same period in 2000. This
operating expense corresponds to increases in salaries and wages of $1,255,763
due to increases in call center staffing. The year-to-date average account base
of 100,889 was similar to the average account base of 104,035 for the
year-to-date period in 2000. However, the average life of the average account
was significantly less in the 2001 period. Additionally, in 2001, there were
117,212 average monthly new accounts compared to 45,627 average monthly new
accounts in 2000. This resulted in a higher percentage of newer accounts, the
most costly period of the account's life. Included in the nine months ended
September 30, 2001 are other operating expenses for Equitex of approximately
$326,000 for the period from August 6, 2001 through September 30, 2001.

                                       25
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                              FINANCIAL CONDITION

THREE MONTHS ENDED SEPTEMBER 30, 2001 VS. SEPTEMBER 30, 2000

CREDIT CARD INCOME

Third quarter 2001 credit card servicing fees increased 19% to $2,946,653 from
the third quarter 2000 as a result of an increase in active credit card
accounts. Quarterly average number of active accounts during 2001 was 132,082
versus 109,572 in 2000, a 21% increase. The third quarter new account volume in
2001 was 49,977 compared to 15,322 for 2000, a 326% increase. Applicants
marketed during the third quarter of 2000 were required to return a signed
activation certificate prior to the establishment of an account. During 2001,
all applicants that paid the processing fee were issued a credit card account
resulting in higher new account volume.

PROVISION FOR LOSSES

The provision for losses is the charge to operating earnings that management
feels is necessary to maintain the reserve for possible losses at an adequate
level. The provision is determined based on growth of the portfolio, the net
amount of losses incurred, and management's estimation of potential future
losses based on an evaluation of the portfolio risks and economic conditions.
For the three months ended September 30, 2001, the provision for losses was
$40,256 compared to $146,310 for the three months ended September 30, 2000.

OTHER INCOME

Third quarter other income for the year 2001 decreased 31.3% to $1,096,622
compared to the third quarter 2000. The major component of other income is
application processing fee income which decreased 38.8% to $941,624 due to lower
new paid application volume, 49,037 for third quarter 2001 versus 65,076 for the
same period in 2000. The lower volume was primarily in the Internet related
marketing activities.

OPERATING EXPENSES

Operating expenses for the quarter ended September 30, 2001 increased $981,727
to $3,881,286. This 33.9% operating expense increase corresponds to the 20%
increase in average active accounts. Additionally, the average account base of
109,572 for the third quarter 2000 was comprised of more seasoned accounts,
since the marketing of new accounts ceased from April 1999 through January 2000.
The third quarter 2001 average account base of 132,082 was comprised of a higher
percentage of newer accounts, the most costly period of the account's life

The increase of $981,727 was principally comprised of increased salaries and
wages of $502,196 for the three months ended September 30, 2001 compared to the
three months ended September 30, 2000. This increase is directly associated with
the increased costs of obtaining new accounts as well as higher costs related to
the higher percentage of newer accounts. Included in the three months ended
September 30, 2001 are other operating expenses of approximately $326,000 for
the period from August 6, 2001 through September 30, 2001 for the operations of
Equitex, Inc.

                                       26
<PAGE>

                                    ITEM TWO
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                               FINANCIAL CONDITION

PREFERRED STOCK

Non-cash amortization of beneficial conversion costs relating to the
Registrant's H and I Preferred Stock was $2,366,156 for the three and nine
months ended September 30, 2001. Deemed preferred dividends was $60,600 for the
three and nine months ended September 30, 2001. As a result of these non-cash
expenses, net loss applicable to common stockholders was $(2,274,349) for the
three months ended September 30, 2001 and $(1,078,871) for the nine months ended
September 30, 2001.

OTHER ISSUES

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. This statement, as
amended by SFAS No. 137, is effective for fiscal years beginning after June 15,
2000. Currently, the Company does not have derivative financial instruments and
does not participate in hedging activities. Therefore, management believes that
SFAS No. 133 will not have an impact on the Company's financial position or
results of operations.

In July 2001, The Financial Accounting Standards Board ("FASB") issued SFAS No.
141, BUSINESS COMBINATIONS, and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE
ASSETS. SFAS No. 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method is prohibited after that date. SFAS No. 142 changes
the accounting for goodwill and intangible assets with indefinite lives from an
amortization method to an impairment-only approach and requires intangible
assets with finite lives to be amortized over their useful lives. Thus,
amortization of goodwill and intangible assets with indefinite lives will cease
upon adoption of the statement. SFAS No. 142 is required to be applied in fiscal
years beginning after December 15, 2001. The Company is currently assessing the
impact, if any, that SFAS No. 141 and SFAS No. 142 may have on its financial
condition or results of operations.

In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR IMPAIRMENT OR
DISPOSAL OF LONG-LIVED ASSETS, which addresses accounting and financial
reporting for the impairment or disposal of long-lived assets. This statement is
effective for fiscal years beginning after December 15, 2001. The Company is
currently assessing the impact, if any, that SFAS No. 144 may have on its
financial condition and results of operations.

In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial
Statements. SAB No. 101, as amended by SAB No. 101A and SAB No. 101B, effective
no later than the fourth fiscal quarter of fiscal years beginning after December
15, 1999. SAB No. 101 provides the Staff's views in applying generally accepted
accounting principles to selected revenue recognition issues. The Company
believes that it complies with the accounting and disclosure described in SAB
No. 101; therefore, management believes that SAB No. 101 will not impact the
Company's financial statements.



                                   ITEM THREE
             QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

Not applicable

                                       27
<PAGE>

                           PART II. OTHER INFORMATION

Item 1.       Legal Proceedings

              None

Item 2.       Changes in Securities

         During the quarter ended September 30, 2001, the Company issued a total
of 10,697,178 shares of its $0.02 par value common stock, 2,359 shares of its
Series H 8% Convertible Preferred Stock ("Series H Preferred") and 4,000 shares
of its Series I 6% Convertible Preferred Stock ("Series I Preferred") in various
transactions as described below. For each of the following transactions, the
Company relied upon the exemptions from registration provided by Sections 4(6)
or 4(2) of the Securities Act and Rule 506 promulgated thereunder based upon (i)
representations from each investor that it is an accredited or sophisticated
investor with experience in investing in securities such that it could evaluate
the merits and risks related to the Company's securities; (ii) that no general
solicitation of the securities was made by the Company; (iii) each investor
represented to the Company that it was acquiring the securities for its own
account and not with a view towards further distribution; (iv) the securities
issued were "restricted securities" as that term is defined under Rule 144
promulgated under the Securities Act; (v) the Company placed appropriate
restrictive legends on the certificates representing the securities regarding
the restricted nature of these securities; and (vi) prior to completion of the
transaction, each investor was informed in writing of the restricted nature of
the securities, provided with all information regarding the Company as required
under Rule 502 of Regulation D and were given the opportunity to ask questions
of and receive additional information from the Company regarding its financial
condition and operations. The shares were issued as follows:

         On July 9, 2001, the Company issued 12,500 shares of its $0.02 par
value common stock to an accredited investor upon conversion of 12,500 warrants
to purchase common stock at an exercise price of $4.00 per share for total
proceeds to the Company of $50,000.

         On July 19, 2001, the Company issued 525,716 shares of its $0.02 par
value common stock to Meridian Residential Group and two accredited investors,
upon conversion of 460,000 shares of the Company's Series F Convertible
Preferred Stock valued at $2,990,000. This represents a conversion price of
$7.00 per share. Under the terms of the Series F Shares, conversion does not
require the payment of any consideration. The Company relied upon the exemption
provided under Section 3(a)(9) of the Securities Act for the issuance of the
common stock upon conversion, based upon the following factors: (i) the Company
was the issuer of the Series F Shares and the common stock issued upon
conversion; (ii) the conversion right is only available to holders of the Series
F Shares; (iii) no additional consideration was paid to the Company by the
holders of the Series F Shares to complete the conversion, nor were the terms of
the Series F Shares modified to provide for the conversion; and (iv) no
commission or other remuneration was paid in connection with the conversion.

         On July 19, 2001, the Company issued 100,000 shares of its $0.02 par
value common stock to an accredited investor upon conversion of 100,000 warrants
to purchase common stock at an exercise price of $4.00 per share for total
proceeds to the Company of $400,000.

         On July 19, 2001, the Company issued 2,359 shares of its Series H
Preferred to twenty-three accredited investors at a purchase price of $1,000 per
share for total proceeds to the Company of $2,359,000. Each share of Series H
Preferred automatically converted on July 19, 2001 into 200 shares of the
Company's $0.02 par value common stock and 200 warrants, each warrant to
purchase one share of the Company's common stock at $5.78 per share exercisable
until July 19, 2004. Accordingly, on July 19, 2001, the Company issued 471,800
shares of its $0.02 par value common stock to twenty-three accredited investors
upon conversion of 2,359 shares of Series H Preferred stock valued at
$2,359,000.  A commission and non-refundable expense allowance of $306,670 was
paid to Miller Johnson Steichen Kinnard with respect to this transaction.

         On August 2, 2001, the Company issued 191,425 shares of its $0.02 par
value common stock to Gulfstream 1998 Irrevocable Trust upon conversion of
$786,201 in debt owed the President of the Company as well as the purchase of
$216,868 in notes and accrued interest issued by the Company's subsidiary,
Triumph Sports, Inc. This represents a conversion price of $5.24 per share.

                                       28
<PAGE>

         On August 2, 2001, the Company issued 12,156 shares of its $0.02 par
value common stock to TR Capital Corp upon conversion of $63,695 in debt owed to
TR Capital by the Company. This represents a conversion price of $5.24 per
share.

         On August 2, 2001, the Company issued 37,258 shares of its $0.02 par
value common stock to USA Skate Corp for the purchase of $195,235 in notes and
accrued interest issued by the Company's subsidiary, Triumph Sports, Inc. This
represents a conversion price of $5.24 per share.

         On August 2, 2001, the Company issued 78,339 shares of its $0.02 par
value common stock to Equitex 2000, Inc. as compensation for $410,496 costs and
expenses incurred by the Company in connection with the acquisitions of Key
Financial Systems, Inc. and Nova Financial Systems, Inc. that were transferred
to Equitex 2000 as a result of the distribution of the Company' assets and
liabilities to Equitex 2000 effective August 6, 2001. This represents a
conversion price of $5.24 per share.

         On August 2, 2001, the Company issued, 795 shares of its $0.02 par
value common stock to Russell Casement, a director of the Company, upon
conversion of $4,167 in debt owed Mr. Casement by the Company. This represents a
conversion price of $5.24 per share.

         On August 2, 2001, the Company issued, 477 shares of its $0.02 par
value common stock to Joseph W. Hovorka, a director of the Company, upon
conversion of $2,500 in debt owed Mr. Hovorka by the Company. This represents a
conversion price of $5.24 per share.

         On August 3, 2001 through August 6, 2001, the Company issued 4,000
shares of its Series I Preferred to five accredited investors at a purchase
price of $1,000 per share for total proceeds to the Company of $4,000,000. The
Series I Preferred is convertible into the Company's common stock at the lesser
of $5.98 per share or 65% of the average closing bid price of the Registrant's
common stock as reported by the Nasdaq Stock Market for the five days
immediately preceding conversion, including accured dividends. Finders fees
totaling $400,000 were paid to World Capital Funding and Blake Street Capital
in connection with this transaction.

         On August 6, 2001, the Company issued 9,084,773 shares of its $0.02 par
value common stock to the stockholders of Key Financial Systems, Inc. ("Key")
and Nova Financial Systems, Inc. ("Nova") in consideration for the acquisition
of all of the outstanding securities of Key and Nova. The value of these
securities was $48,966,926 or $5.39 per share, which represents the closing
price of the Company's common stock as reported by the Nasdaq Stock Market on
that date.

         On August 9, 2001, the Company issued 115,274 shares of its $0.02 par
value common stock to an accredited investor upon conversion of 400 shares of
Series I Preferred valued at $400,000. This represents a conversion price of
$3.47 per share.

         On September 24, 2001, the Company issued 66,665 shares of its $0.02
par value common stock to a consultant for services valued at $345,325 or $5.19
per share.

Item 3.       Defaults upon Senior Securities

              None

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

              None

                                       29
<PAGE>

Item 5.       Other Information

              None

Item 6.       Exhibits and Reports on Form 8-K

         On August 21, 2001, the Company filed a Current Report on Form 8-K
under Items 2 and 7 reporting the distribution of the assets and liabilities of
the Company to Equitex 2000, Inc. as well as the subsequent acquisitions of Key
Financial Systems, Inc. and Nova Financial Systems, Inc.

                                       30
<PAGE>

                                   SIGNATURES

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


                                      Equitex, Inc.
                                      (Registrant)



Date: November 19, 2001               By:  /s/ Henry Fong
                                           -------------------------------------
                                           Henry Fong
                                           President, Treasurer and
                                           Chief Financial Officer


                                       31