FORM 10-QSB/A

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
                          For Quarter Ended March 31, 2004

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
               For the Transition Period from _______ to _______

                         Commission file number 33-20432

                       MAGNITUDE INFORMATION SYSTEMS, INC.
                       -----------------------------------
             (Exact Name of Registrant as Specified in its Charter)

               Delaware                                75-2228828
               --------------------------------------------------
       (State or other Jurisdiction of                (IRS Employer
        Incorporation or Organization)             Identification No.)

                  401 State Route 24, Chester, New Jersey 07930
                  ---------------------------------------------
               (Address of Principal Executive Office) (Zip Code)

                                 (908) 879-2722
                                 --------------
              (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 (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes |x| No |_|

      The number of shares of Registrant's Common Stock, $0.0001 par value,
             outstanding as of May 5, 2004, was 79,624,641 shares.

Explanatory Note

This Form 10-QSB/A is being filed for the purpose of restating the financial
statements for the quarter ended March 31, 2004 and as contained in the
Company's Form 10-QSB filed with the U.S. Securities and Exchange Commission on
May 13, 2004.

As discussed in the footnote to the financial statements entitled "Restatement
of Results", the Company determined that certain warrants and options that were
in excess of authorized shares for the period from December 2003 through July
2004 required reclassification as liabilities for the period that these
instruments could not be physically settled. Such liabilities were marked to
fair value until they reverted to equity on July 10, 2004 when the Company
amended its certificate of incorporation increasing its authorized common
shares, as approved by the Company's shareholders.

<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


                                      INDEX

                                                                        Page
                                                                        Number
                                                                        ------

PART  1  -  FINANCIAL INFORMATION

Item 1   Financial Statements (unaudited) - As restated

         Consolidated Balance Sheet
          - March 31, 2004                                               3

         Consolidated Statements of Operations
          - Three months ended March 31, 2004 and 2003                   4

         Consolidated Statements of Cash Flows
          - Three months ended March 31, 2004 and 2003                   5

         Notes to Consolidated Financial Statements                      6 - 12


Item 2   Management's Discussion and Analysis of Financial
         Condition and Results of Operations                             13 - 14

Item 3   Controls and Procedures                                         15


PART II  -  OTHER INFORMATION                                            16 - 17


SIGNATURES                                                               18


Certifications pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002                                                              19 - 20

                                       2
<PAGE>

PART I  - Item 1

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)

ASSETS                                                            March 31, 2004
                                                                   (as restated)
                                                                  --------------
     Current Assets
     Cash  ......................................................    $  100,825
     Accounts receivable, net of allowance for
        doubtful accounts of $212 ...............................        21,014
     Miscellaneous receivables ..................................         1,800
     Inventories ................................................        26,917
     Prepaid expenses ...........................................       243,278
                                                                     ----------
        Total Current Assets ....................................       393,834
     Property and equipment, net of accumulated
        depreciation of $137,404 ................................        15,983
     Software, net of accumulated amortization of $924,318 ......       582,972
     Other assets ...............................................        43,432
                                                                     ----------
TOTAL ASSETS ....................................................     1,036,221
                                                                     ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (IMPAIRMENT)
LIABILITIES
     Accounts payable and accrued expenses ......................       311,565
     Deferred revenue ...........................................        48,279
     Dividends payable ..........................................       416,948
     Loans and notes payable ....................................       100,000
     Current maturities of long-term debt .......................       133,419
     Current maturities of capitalized lease obligations ........         2,805
     Liability for warrant and options exercise .................       940,672
                                                                   ------------
        Total Current Liabilities ...............................     1,953,688
     Capitalized lease obligations, less current portion ........         3,234
                                                                   -------------
TOTAL LIABILITIES ...............................................     1,956,922

STOCKHOLDERS' EQUITY
     Preferred Stock, $0.001 par value, non-voting, 3,000,000
     shares authorized:
     2,500 shares have been designated Cumulative Preferred
     Stock, of which 1 share is issued and outstanding ..........             0
     300,000 shares have been designated Series A Convertible
     Preferred Stock,
     350,000 shares have been designated Series B Convertible
     Preferred Stock,
     120,000 shares have been designated Series C Convertible
     Preferred Stock,
     500,000 shares have been designated Series D Convertible
     Preferred Stock,
     500,000 shares have been designated Series E Convertible
     Preferred Stock, of which a combined total 526,582 shares
     are issued and outstanding .................................           527
     Common Stock, $0.0001 par value, 100,000,000 shares
     authorized, 79,482,141 shares are issued and outstanding ...         7,948
     Additional paid-in capital .................................    24,487,742
     Accumulated deficit ........................................   (25,416,918)
                                                                   ------------
TOTAL STOCKHOLDERS' EQUITY ........................................    (920,701)

TOTAL LIABILITIES AND EQUITY ......................................$  1,036,221
                                                                   ============

                 See notes to consolidated financial statements


                                       3
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                                                                       March 31,
                                                                                2004            2003
                                                                           (as restated)
                                                                           ------------     -----------
<S>                                                                        <C>              <C>
Total Revenues .........................................................   $     44,580     $    35,452
     Cost of Goods Sold ................................................         38,955          38,987
                                                                           ------------     -----------

Gross Profit ...........................................................          5,625          (3,535)
     Selling expenses ..................................................        118,237         154,596
     Stock-based compensation ..........................................        150,055         146,006
     General & administrative expenses .................................        434,050         373,696
                                                                           ------------     -----------

Operating (Loss) .......................................................       (696,717)       (677,833)
     Changes in fair value of options and warrants .....................       (291,955)             --
     Interest expense, net .............................................         (5,796)         (6,583)
                                                                           ------------     -----------
Non-Operating Income (Expense) .........................................       (297,751)         (6,583)
                                                                           ------------     -----------

Net (Loss) before taxes ................................................       (994,468)       (684,416)
     Provision for income taxes ........................................              0               0
Net (Loss) .............................................................   $   (994,468)    $  (684,416)
                                                                           ============     ===========

Dividends accrued on preferred stock ...................................         57,380          28,817
Amortized discount on convertible preferred stock ......................        716,436               0

Net (Loss) applicable to common shareholders ...........................   $ (1,768,284)    $  (713,233)
                                                                           ============     ============
Loss per Common Share ..................................................   $      (0.02)    $     (0.01)
                                                                           ============     ============
Weighted Average Number of
     Common Shares Outstanding .........................................     78,136,586      60,469,245
                                                                           ============     ============
</TABLE>


                 See notes to consolidated financial statements


                                       4
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                           Three Months Ended
                                                               March 31,
                                                           2004         2003
                                                      (as restated)
                                                        ---------    ----------
Cash Flows from Operating Activities
     Net (loss) .....................................   $(994,468)   $(684,416)
     Adjustments to net (loss)
        Depreciation and amortization ...............      41,453       50,746
        Securities issued for expenses and debt .....     276,350      146,006
        Changes in fair value of options and
          warrants ..................................     291,955           --
     Decreases (increases) in Assets
        Accounts receivable .........................      14,827      (34,261)
        Miscellaneous receivables ...................          --        1,458
        Prepaid expenses ............................    (166,180)    (124,600)
        Other assets ................................       5,693           --
     Increases (decreases) in Liabilities
        Deferred revenues ...........................      50,041         (386)
        Change in prepayments .......................          --       35,925
        Accounts payable and accrued expenses .......    (111,894)      55,989
                                                        ---------    ---------
Net Cash (Used) by Operating Activities .............    (592,223)    (553,539)

Cash Flows from Investing Activities
     Purchases of equipment and fixtures ............      (3,443)      (1,885)
                                                        ---------    ---------
Net Cash (Used) by Investing Activities .............      (3,443)      (1,885)

Cash Flows from Financing Activities
     Proceeds from notes payable ....................          --      139,500
     Repayment of loans and notes ...................    (282,851)          --
     Issuance of common and preferred stock .........     881,364      407,553
                                                        ---------    ---------
Net Cash Provided by Financing Activities ...........     598,513      547,053
Net Increase (Decrease) in Cash .....................       2,847       (8,371)
Cash at Beginning of Period .........................      97,978        9,976
                                                        ---------    ---------
Cash at End of Period ...............................   $ 100,825    $   1,605
                                                        =========    =========

                 See notes to consolidated financial statements


                                       5
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Nature of Organization

         Magnitude Information Systems, Inc. (the "Company" or "Magnitude") was
         incorporated as a Delaware corporation on April 19, 1988 under the name
         Fortunistics Inc. On November 18, 1998, the Company changed its name to
         Magnitude Information Systems, Inc.

         The Company's primary product is an integrated suite of proprietary
         software modules marketed under the name ErgoManager(TM) which are
         designed to help individual computer users and businesses increase
         productivity and reduce the risk of potentially preventable repetitive
         stress injury (RSI). These software modules can be applied individually
         or together in a comprehensive ergonomic and early intervention program
         that seeks to modify a user's behavior by monitoring computer usage
         patterns over time and warning the user when to break a dangerous trend
         in repetitive usage of an input device, such as a keyboard or mouse.
         The product was developed to train people working on computers, monitor
         computer-use related activities and evaluate a user's risk exposure and
         propensity towards injury or loss of effectiveness in connection with
         his/her day-to-day work. Moreover, the software enables a company to
         not only address the issue of health risks involving employees and to
         minimize resulting potential liabilities, but delivers a powerful tool
         to increase overall productivity.

         On June 24, 1997, the Company extended a stock exchange offer to the
         shareholders of Magnitude, Inc., a Delaware corporation and
         manufacturer of ergonomic keyboarding systems. At the time of this
         submission, holders of 99.4% of Magnitude, Inc. common stock have
         tendered their shares. The remaining Magnitude, Inc. shareholders hold
         a minority interest which is valued at $0. The Company and Magnitude,
         Inc. remain as two separate legal entities whereby Magnitude, Inc.
         operates as a subsidiary of Magnitude Information Systems, Inc. The
         operations of the combined entity are currently comprised solely of the
         operations of Magnitude, Inc.

     Basis of Presentation

         The accompanying unaudited consolidated financial statements have been
         prepared in accordance with generally accepted accounting principles
         for interim financial statements and with the instructions to Form
         10-QSB and Article 10 of Regulation S-X. Accordingly, they do not
         include all of the information and disclosures required for annual
         financial statements. These financial statements should be read in
         conjunction with the consolidated financial statements and related
         footnotes included in the Company's annual report on Form 10-KSB for
         the year ended December 31, 2003.

         In the opinion of the Company's management, all adjustments (consisting
         of normal recurring accruals) necessary to present fairly the Company's
         financial position as of March 31, 2004, the results of operations for
         the three months ended March 31, 2004 and 2003, and the cash flows for
         the three months ended March 31, 2004 and 2003, have been included.


                                       6
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

     Principles of Consolidation

         The consolidated financial statements include the accounts of Magnitude
         Information Systems, Inc. and its subsidiary Magnitude, Inc. All
         significant inter-company balances and transactions have been
         eliminated.

     Inventories

         Inventory consists of finished goods that are stated at the lower of
         cost (determined by the first-in, first out method) or market.

     Depreciation and Amortization

         Property and equipment are recorded at cost. Depreciation on equipment,
         furniture and fixtures and leasehold improvements is computed on the
         straight-line method over the estimated useful lives of such assets
         between 3-10 years. Maintenance and repairs are charged to operations
         as incurred. Software assets are capitalized at the fair value of stock
         exchanged/granted upon acquisition and are amortized on the
         straight-line method on a product-by-product basis over the estimated
         economic life of the products which has been determined to be 10 years.

     Securities Issued for Services

         The Company accounts for stock, stock options and stock warrants issued
         for services and compensation by employees under the intrinsic value
         method. For non-employees, the fair market value of the Company's stock
         on the date of stock issuance or option/grant is used. The Company
         determined the fair market value of the warrants/options issued under
         the Black-Scholes Pricing Model. Effective January 1, 1996, the Company
         adopted Statement of Financial Accounting Standard (SFAS) No. 123,
         "Accounting for Stock-based Compensation". The statement generally
         suggests, but does not require, employee stock-based compensation
         transactions to be accounted for based on the fair value of the
         services rendered or the fair value of the equity instruments issued,
         whichever is more reliably measurable. As permitted by the statement,
         the Company has elected to continue to follow the requirements of
         Accounting Principles Board Opinion No. 25, "Accounting for Stock
         Issued to Employees' for employees under the intrinsic value method.
         The adoption of SFAS No. 123 does not have a material impact on the
         financial statements.

     Reclassification  of  certain  securities  under EITF  00-19

         Pursuant to Emerging Issues Task Force (EITF) Issue 00-19, if a company
         has  more  than  one  contract  subject  to  this  Issue,  and  partial
         reclassification is required, there may be different methods that could
         be used to determine which contracts, or portions of contracts,  should
         be  reclassified.  The Company's  method for  reclassification  of such
         contracts is  reclassification  of contracts  with the latest  maturity
         date first.

     Income Taxes

         The Company provides for income taxes based on enacted tax law and
         statutory tax rates at which items of income and expenses are expected
         to be settled in the Company's income tax return. Certain items of
         revenue and expense are reported for Federal income tax purposes in
         different periods than for financial reporting purposes, thereby
         resulting in deferred income taxes. Deferred taxes are also recognized
         for operating losses that are available to offset future taxable
         income. Valuation allowances are established when necessary to reduce
         deferred tax assets to the amount expected to be realized. The Company
         has incurred net operating losses for financial-reporting and
         tax-reporting purposes. Accordingly, for Federal and state income tax
         purposes, the benefit for income taxes has been offset entirely by a
         valuation allowance against the related federal and state deferred tax
         asset for the year ended December 31, 2003.


                                       7
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

     Net Loss Per Share

         Net loss per share, in accordance with the provisions of Financial
         Accounting Standards Board No. 128, "Earnings Per Share" is computed by
         dividing net loss by the weighted average number of shares of Common
         Stock outstanding during the period. Common Stock equivalents have not
         been included in this computation since the effect would be
         anti-dilutive.

     Revenue Recognition

         The Company's revenue recognition policy for software sales is in
         accordance with Accounting Statement of Position 97-2. Revenue is
         recognized at the time of licensing provided that the resulting
         receivable position is deemed probable of collection and is fixed or
         determinable. Revenue from software maintenance contracts is recognized
         ratably as earned. Where a sales contract includes multiple elements,
         revenues are allocated to the various elements based on
         Company-specific objective evidence of fair value, regardless of any
         separate prices for each element that may be stated within the
         contract.

     Use of Estimates

         The preparation of financial statements in conformity with generally
         accepted accounting principles 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 financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates.

GOING CONCERN

     The ability of the Company to continue its operations is dependent on
     increasing sales and obtaining additional capital and financing. In their
     report for the fiscal year ended December 31, 2003, our auditors had
     expressed an opinion that, as a result of the losses incurred, there was
     substantial doubt regarding our ability to continue as a going concern. The
     accompanying financial statements do not include any adjustments that might
     be necessary if the Company were unable to continue as a going concern.
     During the last two years and the first quarter in 2004 the Company has
     relied on the private placement of its common and preferred stock to fund
     its operations. Management's plans are to continue seeking additional
     working capital through equity and debt placements with private and
     institutional investors.


                                       8
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

CONCENTRATIONS OF BUSINESS AND CREDIT RISK

     The Company maintains cash balances in a financial institution which are
     insured by the Federal Deposit Insurance Corporation up to $100,000.
     Balances in these accounts may, at times, exceed the federally insured
     limits.

     The Company provides credit in the normal course of business to customers
     located throughout the U.S. and overseas. The Company performs ongoing
     credit evaluations of its customers and maintains allowances for doubtful
     accounts based on factors surrounding the credit risk of specific
     customers, historical trends, and other information.

PREPAID EXPENSES

     The major positions in Prepaid Expenses at the end of the quarter included
     $75,000 representing the value of the unamortized portion of part of the
     Company's chief executive officer's base salary for the remainder of the
     current year which was prepaid in January 2004 in the form of convertible
     preferred stock and warrants, in lieu of cash (see "Related Party
     Transactions"). Also included were approximately $116,000 representing the
     value of restricted stock and options issued to certain consultants for
     services to be rendered in the near future, and approximately $22,000
     prepaid insurance costs.

PROPERTY AND EQUIPMENT

     Property and equipment consist of the following at March 31, 2004:

              Equipment                                         $    81,157
              Furniture and fixtures                                 72,230
                                                                -----------
                                                                    153,387
              Less accumulated depreciation                         137,404
                                                                -----------
                                        Total                   $    15,983
                                                                ===========

Depreciation expense charged to operations was $2,472 in the first three months
of 2004 and $11,767 in the first three months of 2003.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at March 31,
2004:

              Accounts payable                                  $   129,266

              Accrued interest                                       54,069

              Accrued commissions                                    10,118

              Accrued salaries, bonuses, vacations                   47,933

              Accrued professional fees                              58,709

              Miscellaneous accruals                                 11,470
                                                                -----------
                                    Total                       $   311,565
                                                                ===========


                                       9
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

DEFERRED REVENUES

     Deferred revenues at March 31, 2004, consist of prepaid software
     maintenance and support charges which are amortized ratably over the
     remaining duration of the underlying maintenance agreements.

LOANS AND NOTES PAYABLE

     At March 31, 2004, Magnitude,  Inc. and the Company had borrowings under
     short term loan agreements with the following terms and conditions:

         On December 4, 1996, Magnitude, Inc. repurchased 500,000
         shares of its common stock and retired same against
         issuance of a promissory note maturing twelve months
         thereafter accruing interest at 5% per annum and due
         December 4, 1998. This note is overdue at March 31, 2004
         and no demand for payment has been made.                     $   75,000

         At December 31, 1999 the Company had $1,475,000 of
         notes outstanding related to a June 1995 private
         placement offering. During 2000 the holders of $1,450,000
         worth of notes agreed to accept partial repayment of
         approximately 30% of the note balances and converted the
         remaining balances into common shares or convertible
         preferred shares. The total amount of non-converted notes
         outstanding at March 31, 2004 is $25,000. Attempts to
         locate the holder of this note, to settle this liability,
         have been unsuccessful.                                          25,000
                                                                      ----------
         Total                                                        $  100,000
                                                                      ==========



                                       10
<PAGE>

LONG TERM DEBT

        Long-term debt as of March 31, 2004, is comprised of the
        following:

        Pursuant to the February 2, 1998, Agreement and Plan of
        Merger with Rolina Corporation, the Company had issued
        155,556 shares (the "Shares") of its common stock to the
        principal of Rolina Corporation who currently serves as the
        Company's Chief Executive Officer and Board Chairman, and
        had issued a Put Option for such Shares at a price of $2.41
        per share in accordance with the provisions contained
        therein, with notice for exercise eligible to be given at
        any time after February 1, 2000, and before 5:00 p.m. on
        the 90th day thereafter. This liability was converted into
        a Company obligation for $274,890 maturing March 31, 2002
        and a demand loan for $100,000 both carrying interest at
        the rate of 7% per year, subsequently increased to 10%,
        payable monthly. The demand portion of this note was repaid
        in April 2002 and the due date for $274,890 of the
        remaining balance was extended to July 1, 2003. During the
        first quarter of 2004, $175,000 was repaid and the maturity
        of the unpaid balance was changed to January 1, 2005. The
        obligation includes an option to the holder for conversion
        of the outstanding principal into shares of the Company's
        convertible preferred stock and warrants at the rate of
        $0.06 per common share equivalent.                            $   99,890

        Discounted present value of a non-interest bearing $70,000
        settlement with a former investor of Magnitude, Inc. to be
        paid in monthly payments commencing July 1, 1997. The
        imputed interest rate used to discount the note is 8% per
        annum. This obligation is in default.                             33,529
                                                                      ----------
             Total                                                       133,419
             Less current maturities                                     133,419
                                                                      ----------
             Long-term debt, net of current maturities                $        0
                                                                      ==========

INCOME TAXES

     At December 31, 2003, the Company had net operating loss carry-forwards
     approximating $22,043,000 for federal income tax purposes which expire
     between the years 2007 and 2023 and are subject to certain annual
     limitations. At December 31, 2003, the Company has available approximately
     $4,905,000 of net operating losses to carry-forward and which may be used
     to reduce future state taxable income which expire December 31, 2010.

     The Company's total deferred tax asset and valuation allowance at December
     31, 2003 are as follows:

            Total deferred tax asset, non-current                 $   7,274,000
            Less valuation allowance                                 (7,274,000)
                                                                  -------------
            Net deferred tax asset                                $          --
                                                                  =============

COMMITMENTS AND CONTINGENCIES

   Lease Agreement
     On March 15, 2000, the Company entered into a lease agreement for office
     space which is utilized for the Company's principal offices. Such lease
     commenced April 15, 2000 and expires on March 31, 2005 and requires monthly
     payments of $6,500 from April 15, 2000 through March 31, 2002; of $6,695
     thereafter through March 31, 2003; of $6,896 thereafter through March 31,
     2004; and of $7,103 thereafter through March 31, 2005. In August 2002 the
     Company rented additional office space at this location commencing
     September 1, 2002. The add-on rental requires monthly payments of $1,955
     throughout the remainder of the original lease term.


                                11
<PAGE>


         MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2004

COMMITMENTS AND CONTINGENCIES, continued


     Under the lease agreement, the Company is required to make future minimum
     lease payments as follows in addition to a pro-rata share of certain
     operating expenses:

          Year Ending December 31,
          ------------------------
                  2004                                                   84,615
                  2005                                                   21,309
                                                                  --------------
                  Total                                           $     105,924
                                                                  ==============

Employment Agreements

     The Company has entered into employment agreements with certain key
     personnel which provide for a base salary, yearly bonuses in common stock
     and/or options of the Company and other benefits. Termination of the
     agreements may be made by either party with advance notice.

RELATED PARTY TRANSACTIONS

     In January 2004, the Company and its President and Chief Executive Officer
     agreed to convert most of his base salary for the remainder of the year
     2004 into 16,667 shares of convertible preferred stock, convertible into
     1,666,667 restricted common shares, and 833,333 warrants, exercisable
     during three years at the price of $0.15 per share, in lieu of $100,000
     cash. The Company also repaid $239,088 notes payable due to this officer.

     During the first quarter in 2004, an outside director of the Company was
     awarded a stock grant for 150,000 restricted common shares, for services
     rendered. The same director exercised an option for 250,000 restricted
     common shares at the price of $0.01 per share which option was acquired by
     him in a private transaction with an unrelated party.

RESTATEMENT OF RESULTS

      Under the provisions of EITF 00-19, the Company determined that certain
      warrants and options that were in excess of authorized shares for the
      period from December 2003 through July 2004 required reclassification as
      liabilities for the period that these instruments could not be physically
      settled. Such liabilities reverted to equity on July 10, 2004 when the
      Company amended its certificate of incorporation increasing its authorized
      common shares, as approved by the Company's shareholders.

      The reclassifications of the approximate 11,300,000 warrants and options
      that exceeded the authorized share amount during the three months ended
      March 31, 2004 were initially recorded as adjustments to stockholders'
      equity of $648,717 for the change in fair value of the contracts for the
      period such instruments were classified as equity, as applicable. The
      contracts were subsequently marked to fair value through the date of the
      approved increase in authorized shares, resulting in increase in the Net
      Loss for quarter ended March 31, 2004 of $291,955 accompanied by an
      increase in the current liabilities at March 31, 2004 of $940,672 and a
      partially compensating increase in the amount of Additional Paid-in
      Capital of $648,717.

                                12
<PAGE>

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


CAUTIONARY STATEMENT PURSUANT TO "SAFE HARBOR" PROVISIONS OF SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934

Except for historical information, the Company's reports to the Securities and
Exchange Commission on Form 10-KSB and Form 10-QSB and periodic press releases,
as well as other public documents and statements, contain "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934. Forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from those expressed or implied
by the statements. These risks and uncertainties include general economic and
business conditions, development and market acceptance of the Company's
products, and other risks and uncertainties identified in the Company's reports
to the Securities and Exchange Commission, periodic press releases, or other
public documents or statements.

Readers are cautioned not to place undue reliance on forward-looking statements.
The Company undertakes no obligation to republish or revise forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrences of unanticipated events.


Results of Operations:

During the first quarter in 2004 our efforts were focused on further refining
our marketing strategy that emphasizes a leveraging of certain characteristics
of our software products for the purpose of providing clients with unique
management tools for operations control and risk management. Negotiations for
company-wide deployment of our software products with several well known large
corporate clients have progressed satisfactorily although at the time of this
report, larger contracts are still in the negotiation stage. These efforts go
hand-in-hand with a program of co-marketing the Company's products together with
selected partners in the insurance and risk management industry. We expect to
conclude such discussions with finalized joint venture agreements in the very
near future.

For the quarter ended March 31, 2004, the Company had revenues of $44,580,
compared to $35,452 achieved in the first quarter of 2003. Revenues consisted of
$25,910 licensing fees for our software products and $18,670 for maintenance and
support services. Total orders booked during the quarter amounted to $76,218.

Gross profits amounted to $5,625. Gross profits are burdened with a fixed charge
for amortization of certain proprietary software assets. Such software assets
underlie the Company's products and are being amortized on a straight line over
10 years, resulting in a level charge of approximately $13,000 per month to
cost-of-goods-sold. Owing to the fact that variable cost-of-goods-sold expenses
are less than 5%, the gross margins will increase with larger revenues, as the
portion of fixed expenses decreases relatively. After deducting selling - and
general and administrative expenses of $702,342 which increased by 4% over the
$674,298 recorded in 2003, the Company realized an operating loss of $696,717
compared to an operating loss of $677,833 in 2003. Non-operating expenses
consisted of $5,796 net interest expense and a charge for changes in the fair
value of certain options and warrants, of $291,955. The quarter concluded with a
net loss of $994,468 compared to a loss of $684,416 in the first three months of
2003.

After accounting for dividend accruals on outstanding preferred stock which
totaled $57,380, and an accounting charge to capital for amortization of
discount for warrants issued in connection with the placement of certain
convertible stock, amounting to $716,436, the net loss applicable to common
shareholders was $1,768,284 or $0.02 per share, compared to a loss of $713,233
or $0.01 per share for the same quarter in the previous year.


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Liquidity and Capital Resources

The Company's liquidity showed a relative improvement during the quarter, as a
result of the successful conclusion of a round of private equity placements. The
Company obtained approximately $880,000 cash from such transactions.

At March 31, 2004, the deficit in working capital amounted to $1,559,854 of
which $940,672 was attributable to the reclassification of certain options and
warrants from equity to liabilities (see Explanatory Note on page 1 of this
report), compared to $968,183 at December 31, 2003. Stockholders' equity showed
an impairment of $920,701 at the end of the quarter, compared to an impairment
of $377,851 at the beginning of the year. The negative cash flow from operations
totaled approximately $592,000 and was financed by new equity which was obtained
through the placement of convertible preferred stock with accredited private
investors. Details of such transactions can be found in the "Changes in
Securities" section in this report. In February 2004, the Company had filed a
new registration statement on Form SB-2 and an amendment to a previously filed
registration statement on Form SB-2, both of which covered common shares
directly issued as well as common shares underlying the previously issued
convertible preferred stock and warrants, in connection with these and prior
financing transactions. These filings are currently under review by the
Securities and Exchange Commission.

At the time of this submission, the Company had no bank debt. At March 31, 2004
our short-term liabilities, aside from trade payables and accruals and the
position pertaining to reclassified options and warrants, included certain notes
aggregating $233,419 of which $99,890 was owed to the chairman and chief
executive officer of the Company in form of a demand note (see "Long Term
Debt"). Also included are 416,948 in accrued dividends, most of which on
outstanding series A, C, and D preferred stock which in view of the absence of
surplus funds, management does not plan to liquidate in the immediate future.

Current cash reserves and net cash flow from operations expected during the near
future are inadequate when measured against present and anticipated future
needs. In order to remedy the resulting liquidity constraints and address any
"going-concern" issues, management is continuing negotiations with several
financing sources with the goal of obtaining commitments for further investments
in form of debt or equity capital, to be funded during the upcoming quarter.
There can be no assurance, however, that these negotiations will lead to the
desired outcome.


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Item 3.    CONTROLS AND PROCEDURES

         (a) Evaluation of Disclosure Controls and Procedures.

             Prior to the filing date of this Quarterly Report on Form 10-QSB,
our Chief Executive Officer and our Chief Financial Officer evaluated the
effectiveness of our disclosure controls and procedures as defined in Rule
13a-14(c) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Based upon that evaluation, the Chief Executive Officer and the Chief
Financial Officer, have concluded that our current disclosure controls and
procedures are adequate and effective to ensure that information required to be
disclosed in the reports we file under the Exchange Act is recorded, processed,
summarized and reported on a timely basis.

         (b) Changes in Internal Controls.

             There have been no significant changes in our internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of their evaluation by the Chief Executive Officer and the Chief
Financial Officer.


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PART  II  -  OTHER INFORMATION

Item 1   LEGAL PROCEEDINGS

     The Company is not a party in any legal proceedings.

Item 2   CHANGES IN SECURITIES

     a) - None

     b) - None

     c) Issuance of unregistered securities

        During the quarter ended March 31, 2004, the Company issued the
following unregistered securities:

        (i)     1,145,000 shares of common stock and 1,900 shares of Series E
                Convertible Preferred Stock convertible into 190,000 common
                shares, accompanied by warrants for the purchase of 95,000
                common shares at the price of $0.15 per share, to three
                consultants for investor relations and general business
                consulting services.

        (ii)    673,333 shares of common stock to a financial services firm for
                finder's fees in connection with the private placement of
                convertible preferred stock.

        (iii)   50,000 shares of common stock in lieu of cash, for rent
                expenses.

        (iv)    150,000 shares of common stock to an outside director of the
                Company for services rendered. The same director was issued
                250,000 shares pursuant to his exercise of an option at the
                price of $0.01 per share which option was acquired by him in a
                private transaction with an unrelated party.

        (v)     156,993 shares of Series E Convertible Preferred Stock
                convertible into 15,699,333 common shares, accompanied by
                warrants for the purchase of 7,849,667 common shares at the
                price of $0.15 per share, to thirty-nine accredited investors
                pursuant to private placement subscriptions, issued in reliance
                upon exemptions provided under Section 4(2), Rule 506 of
                Regulation D and Regulation S of the Securities Act, altogether
                resulting in the receipt by the Company of approximately
                $880,000 in cash.

        (vi)    16,667 shares of Series E Convertible Preferred Stock
                convertible into 1,666,667 common shares, accompanied by
                warrants for the purchase of 833,333 common shares, exercisable
                during three years at the price of $0.15 per share, to the
                Company's chief executive officer in lieu of $100,000 salary.


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Item 3   DEFAULTS ON SENIOR SECURITIES

      The Company, as of the date of this filing, is in arrears on the payment
      of certain dividends on its Series A, C, and D Senior Convertible
      Preferred Stock. Such arrears total approximately $368,000. These
      dividends have been accrued, however, the Company's management has
      refrained from making payments at this time because of the absence of
      positive equity and/or surplus funds.

Item 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES' HOLDERS

         -  None

Item 5   OTHER INFORMATION

         -  None

Item 6   EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibit (3)(i) - Articles of Incorporation and Amendments thereto,
            incorporated herein by reference to Exhibits of previous filings
            with the Commission.

            Exhibit (3)(ii) - By-laws of the Company, incorporated herein by
            reference to Exhibits of previous filings with the Commission.

      (b)   Reports on Form 8-K:

            On February 6, 2004, the Company filed a report on Form 8-K,
            informing about the completion of a round of private equity
            placement financings.




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                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 2 to its Form 10-QSB to be signed
on its behalf by the undersigned, thereunto duly authorized.



                                        MAGNITUDE INFORMATION SYSTEMS, INC.




Date:   March 3, 2006                   By: /s/  Steven D. Rudnik
                                            ------------------------------------
                                            Steven D. Rudnik
                                            Chairman and Chief Executive Officer


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