FORM 10-QSB

                       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 June 30, 1999

                                       OR

              [ ] TRANSITION REPORT PURSUANT O 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.)

                  50 Tannery Road, Branchburg, New Jersey 08876
                  ---------------------------------------------
               (Address of Principal Executive Office) (Zip Code)

                                 (908) 534-6400
                                 --------------
               (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 June 30, 1999, was 8,424,491 shares.


<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


                                      INDEX
                                      -----


                                                                           Page
                                                                          Number
                                                                          ------

PART 1 - FINANCIAL INFORMATION

Item 1   Financial Statements (unaudited)

         Consolidated Balance Sheet
         - June 30, 1999                                                   3

         Consolidated Statements of Operations
         - Three and six months ended June 30, 1999 and 1998               4

         Consolidated Statements of Cash Flows
         - Six months ended June 30, 1999 and 1998                         5

         Notes to Consolidated Financial Statements                       6 - 12


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


PART II  -  OTHER INFORMATION                                             15


SIGNATURES                                                                16


FINANCIAL DATA SCHEDULE                                                   17


                                       2
<PAGE>

PART I - Item 1

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                                                                   June 30, 1999
                                                                   -------------
ASSETS
     Current Assets
     Cash  ......................................................  $    246,720
     Accounts receivable, net of allowance for
     doubtful accounts of 100,868 ...............................        93,307
     Inventories ................................................        17,963
     Prepaid expenses ...........................................       501,779
                                                                   ------------
        Total Current Assets ....................................       859,769
     Property, plant and equipment ..............................       127,347
     Acquired software assets ...................................     1,266,497
     Other assets ...............................................        65,561
                                                                   ------------
TOTAL ASSETS ....................................................     2,319,174
                                                                   ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
     Accounts payable and accrued expenses ......................       993,330
     Dividends payable ..........................................         9,000
     Prepayments received .......................................            --
     Loans and notes payable ....................................     2,091,060
     Current maturities long-term debt ..........................        46,529
     Current maturities lease obligations .......................        15,826
                                                                   ------------
        Total Current Liabilities ...............................     3,155,745
     Long-term debt, less current portion .......................       950,000
     Lease obligations, less current portion ....................        29,839
                                                                   ------------
TOTAL LIABILITIES ...............................................     4,135,584

STOCKHOLDERS' EQUITY
     Preferred Stock Ser.A, $0.01 par value, 3,000,000
     shares authorized, 0 shares issued .........................            --
     Cumulative Preferred Stock, $0.001 par value,
     10 shares issued and outstanding ...........................             0
     Common Stock, $0.0001 par value, 30,000,000 shares
     authorized, 8,424,491 issued and outstanding ...............           842
     Contributed capital ........................................        81,000
     Additional paid-in capital .................................     8,317,437
     Accumulated deficit ........................................   (10,215,689)
                                                                   ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ............................    (1,816,410)

TOTAL LIABILITIES AND EQUITY ....................................  $  2,319,174
                                                                   ============

                 See notes to consolidated financial statements


                                       3
<PAGE>

<TABLE>
<CAPTION>
              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                             Three Months Ended            Six Months Ended
                                                  June 30,                      June 30,
                                             1999           1998           1999          1998
                                         -----------    -----------    -----------    -----------

<S>                                      <C>            <C>            <C>            <C>
Hardware Revenues ....................   $         0    $ 1,422,521    $         0    $ 2,408,826
Software Revenues ....................        65,673          6,554        110,180         32,667
                                         -----------    -----------    -----------    -----------
Total Revenues .......................        65,673      1,429,075        110,180      2,441,493
     Cost of Goods Sold ..............        43,563        703,391         86,439      1,195,128
                                         -----------    -----------    -----------    -----------
Gross Profit .........................        22,110        725,684         23,741      1,246,365

     Selling expenses ................       191,363        552,412        356,834        851,609
     General & administrative expenses       512,464        675,416        934,439      1,123,919
                                         -----------    -----------    -----------    -----------
Operating Income (Loss) ..............      (681,717)      (502,144)    (1,267,532)      (729,163)

     Miscellaneous income ............        23,921            333         87,596            333
     Interest expense (net) ..........       (58,161)       (98,640)      (109,998)      (179,357)
     Miscellaneous expenses ..........        (6,004)       (10,000)       (19,689)       (10,000)
                                         -----------    -----------    -----------    -----------
Non-Operating Income (Expense) .......       (40,244)      (108,307)       (42,091)      (189,024)
                                         -----------    -----------    -----------    -----------

Net Loss .............................   $  (721,961)   $  (610,451)   $(1,309,623)   $  (918,187)
                                         ===========    ===========    ===========    ===========

Loss per Common Share ................   $     (0.09)   $     (0.12)   $     (0.17)   $     (0.22)
                                         ===========    ===========    ===========    ===========
Weighted Average Number of
     Common Shares Outstanding .......     8,372,824      4,960,143      7,833,959      4,203,492
</TABLE>

                 See notes to consolidated financial statements


                                       4
<PAGE>

<TABLE>
<CAPTION>
                                        MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                         (Unaudited)


                                                                                   Six Months Ended June 30,
                                                                                     1999             1998
                                                                                 -----------    -----------
<S>                                                                              <C>            <C>
Cash Flows from Operating Activities
     Net income (loss) .......................................................   $(1,309,623)   $  (918,187)
     Adjustments to net income (loss)
        Depreciation and Amortization ........................................        92,819        144,891
        Loss on disposition of certain assets ................................         1,934              0
     Decreases (increases) in Assets
        Accounts receivable ..................................................        70,686       (936,562)
        Inventories ..........................................................         8,827       (232,169)
        Prepaid advertising ..................................................             0       (401,550)
        Prepaid expenses .....................................................      (116,171)        33,935
        Other assets .........................................................          (450)           450
     Increases (decreases) in Liabilities
        Accounts payable and accrued expenses ................................      (622,138)       202,765
                                                                                 -----------    -----------
Net Cash Provided (Used) by Operating Activities .............................    (1,874,116)    (2,106,427)

Cash Flows from Investing Activities
     Rolina & Vanity acquisition .............................................             0     (1,455,390)
     Investment Input Technologies ...........................................             0        (25,776)
     Capital expenditures ....................................................        (1,049)      (147,345)
                                                                                 -----------    -----------
Net Cash Provided (Used) by Investing Activities .............................        (1,049)    (1,628,511)

Cash Flows from Financing Activities
     Proceeds from notes payable .............................................       942,500        225,000
     Conversion of equity subscriptions ......................................             0       (275,000)
     Repayment of loans and notes ............................................      (283,427)      (235,000)
     Repayment of long-term debt .............................................       (39,000)      (128,584)
     Issuance of common stock ................................................     1,492,409      4,146,992
                                                                                 -----------    -----------
Net Cash Provided (Used) by Financing Activities .............................     2,112,482      3,733,408
Net Increase (Decrease) in Cash ..............................................       237,317         (1,530)
Cash at Beginning of Period ..................................................         9,403          4,546
                                                                                 -----------    -----------
Cash at End of Period ........................................................   $   246,720    $     3,016
                                                                                 ===========    ===========
</TABLE>

                 See notes to consolidated financial statements


                                       5
<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999


BACKGROUND

      Magnitude  Information  Systems,  Inc. (the "Company" or "Magnitude")  was
      incorporated  as a Delaware  corporation  on April 19, 1988 under the name
      Fortunistics  Inc.  On March 4,  1993,  the  Company  changed  its name to
      Whitestone Industries, Inc. On July 14, 1997, the Company changed its name
      to Proformix Systems,  Inc., and on November 18, 1998, the Company changed
      its name to Magnitude Information Systems, Inc. .

      In November, 1998, the Company sold its hardware product line comprised of
      Magnitude,  Inc.'s ergonomic  keyboard  platform products and accessories.
      Prior to that,  its business  was  primarily  centered  around the design,
      development,   manufacture,  and  marketing  of  research-based  ergonomic
      accessory  products  for the  computerized  workplace.  In  parallel,  and
      beginning  with the  February  1998  acquisition  by the Company of Rolina
      Corporation,  which had developed an ergonomic  software  product that was
      being marketed under the name "ErgoSentry", and the subsequent acquisition
      in May  1998  of  substantially  all  of the  assets  of  Vanity  Software
      Publishing  Corporation,  which also included a certain ergonomic software
      package known as "ErgoBreak",  the Company engaged in the development of a
      unique suite of software packages designed to increase productivity in the
      computer  related  work  environment  which  include the before  mentioned
      "ErgoSentry" and "ErgoBreak" products. These efforts resulted, in November
      1998,  in the  release to the market of the  proprietary  "Proformix  EMS"
      (Ergonomic  Management  System)  software  system.  With  the  sale of the
      hardware product line, the Company's  business is now focused  exclusively
      on the further  development and marketing of these software products.  The
      Company  has  not  yet  realized  material  revenues  from  licensing  its
      software,  and must  currently be  considered  an enterprise in transition
      (see Item2: "Management's Discussion and Analysis").

      On June 24, 1997, the Company, Royal Capital, Inc., and Proformix, Inc., a
      Delaware  corporation and manufacturer of ergonomic  keyboarding  systems,
      entered into an Acquisition  Agreement.  Proformix,  Inc. in November 1998
      changed  its name to  Magnitude,  Inc.  and is  hereafter  referred  to as
      Magnitude,  Inc..  Pursuant to the Acquisition  Agreement,  Magnitude Inc.
      shareholders  were offered 1 share of the Company's common stock for every
      3.4676 shares of Magnitude,  Inc.  common stock,  and 1 share of preferred
      stock for every 1 share of Magnitude, Inc. preferred stock. At the time of
      this submission,  holders of approximately  98% of Magnitude,  Inc. common
      stock have tendered their shares in exchange for Whitestone common shares.
      The remaining 2% of Magnitude,  Inc. stockholders hold a minority interest
      which is valued at $0. For accounting  purposes,  the acquisition has been
      treated  as  an  acquisition  of  Whitestone  by  Magnitude,  Inc.  and  a
      recapitalization  of  Magnitude,  Inc..  As  a  result,  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 newly combined entity are currently  comprised solely of
      the operations of Magnitude, Inc.

      On February 2, 1998,  the Company  entered into an  Agreement  and Plan of
      Merger  with Rolina  Corporation,  a  privately  held New Jersey  software
      developing  firm, and on April 30, 1998, into an Asset Purchase  Agreement
      with Vanity Software  Publishing Co., a Canadian  developer of specialized
      software,  whereby the Company, in return for payments in form of cash and
      equity,  acquired  the rights to certain  software  products  and  related
      assets, with such software products subsequently forming the basis for the
      further  development,  during  the  year,  of  the  Company's  proprietary
      Proformix EMS Software System.


                                       6
<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999


      On  November  18,  1998,  the  Company  and its  wholly  owned  subsidiary
      Magnitude,  Inc.  entered  into an Asset  Purchase  Agreement  and several
      related  agreements  with 1320236 Ontario Inc.  ("OS"),  a publicly traded
      Canadian designer,  manufacturer and distributor of office furniture based
      in  Holland  Landing,  Ontario,  Canada,  pursuant  to which  OS  acquired
      Magnitude,  Inc.'s  hardware  product  line  comprised  of  the  Company's
      ergonomic  keyboard  platform  products and  accessories,  and all related
      inventory  and  production   tooling  and  warehousing   assets,  and  all
      intellectual  property rights including the Proformix name, against a cash
      consideration and an ongoing  contingent stream of royalty payments on OS'
      sales of the  Proformix  hardware  products.  The Company will continue to
      market its proprietary  software under the Proformix  label. The Agreement
      with OS also provided for the  retirement  of the Company's  then existing
      bank  debt,  out  of the  proceeds  of the  transaction.  Further  details
      regarding  this  transaction  may be obtained from the  Company's  related
      filing of February 9, 1999, on Form 8-K, incorporated herein by reference.

      Magnitude Inc.'s wholly owned subsidiary,  Corporate Ergonomic  Solutions,
      Inc.  (Ergonomics)  was  incorporated  in the State of New  Jersey  during
      October 1992.  Ergonomics,  which commenced  operations in September 1997,
      was formed primarily to market hardware  products.  Its operations  during
      1998 and 1999 have not been significant.


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation
      The consolidated  financial  statements  include the accounts of Magnitude
      Information  Systems,  Inc.  and its  subsidiaries,  Magnitude,  Inc.  and
      Corporate Ergonomic Solutions,  Inc. All significant intercompany balances
      and transactions have been eliminated.

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

  Depreciation and Amortization
      Property,  plant 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 5-10 years.  Maintenance  and repairs are charged to operations as
      incurred.  Software  assets  acquired  pursuant  to the  Rolina and Vanity
      agreements are amortized on the straight line method over 10 years.

  Securities Issued for Services
      The Company accounts for stock options issued for services by reference to
      the fair market value of the Company's stock on the date of stock issuance
      or option  grant.  Compensation  expense is  recorded  for the fair market
      value of the stock issued,  or in the case of options,  for the difference
      between the stock's  fair market value on the date of grant and the option
      exercise price.

      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 be accounted for based on
      the fair  value of the  consideration  received  or the fair  value of the
      equity instruments issued, whichever is more reliably measurable.


                                       7
<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

  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,
      the  benefit  for income  taxes has been  offset  entirely  by a valuation
      allowance  against the related  deferred  tax asset for the periods  ended
      June 30,  1999.  Notwithstanding  the  above,  the  Company  has  filed an
      application  with  the  New  Jersey  Economic  Development  Authority  who
      administers the current NJ Technology  Business Tax Certification  program
      to qualify for and be the  beneficiary of this program which will permit a
      participant to liquidate its State NOL tax benefits.

  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
      Revenue from hardware  product sales is recognized at the time of shipment
      provided that the resulting  receivable is deemed  probable of collection.
      Revenue  from  software  sales  is  recognized  at the  time of  licensing
      provided that the resulting receivable is deemed probable of collection.

  Use of Estimates
      The  preparation  of financial  statements  in conformity  with  generally
      accepted  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.

PREPAID EXPENSES

      Prepaid  expenses  include  a  position  of  $375,000  resulting  from  an
      agreement  in  February  1998  with BNN  Business  News  Network  Inc.,  a
      nationwide  media  advertising  and radio  network  company , whereby  the
      Company  purchased   advertising  time  on  the  Business  News  Network's
      broadcasts , usable over a period of three years and aggregating  $900,000
      in retail value,  against  issuance of 150,000 new and  restricted  common
      shares.  The services  purchased were  capitalized at the then fair market
      value of the stock issued,  for a total of $375,000.  The resulting  asset
      will be amortized as utilized,  over the time frame of the next two years.
      As per the  date of this  report,  no  portion  of  this  asset  has  been
      utilized.   The  Company  is  currently  analyzing  the  utility  of  this
      advertising credit in light of current business strategies.  If management
      deems that it may not be able to  economically  utilize the entire  amount
      during  the  time  allotted,   it  may  elect  to  effect  an  accelerated
      amortization or write-down of this asset position.


                                       8
<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consist of the following at June 30, 1999:

Equipment                                                               $196,952
Furniture and fixtures                                                    66,093
Leasehold improvements                                                    45,770
                                                                        --------
                                                                         308,815
Less accumulated depreciation                                            181,468
                                                                        --------
                          Total                                         $127,347
                                                                        ========

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts  payable and accrued  expenses  consisted of the  following at June 30,
1999:

Accounts payable                                              $403,301

Accrued interest                                               310,790

Accrued commissions                                             53,821

Accrued salaries and professional fees                         142,830

Miscellaneous accruals                                          82,588
                                                              ========

                      Total                                   $993,330
                                                              ========

LOANS AND NOTES PAYABLE

   At June 30, 1999,  Magnitude,  Inc. and the Company had  borrowings  under
   short term loan agreements with the following terms and conditions:

   Pursuant to three  promissory  notes signed  throughout 1995 and   $   90,000
   1996, an investor  advanced  Magnitude,  Inc. a total of $90,000
   payable upon demand with interest at 12% per annum.

   On December 4, 1996, Magnitude,  Inc. repurchased the equivalent       75,000
   of 144,192  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 June 30,  1999 and no demand for  payment has
   been made through today's date.


                                       9
<PAGE>

           MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               JUNE 30, 1999

LOANS AND NOTES PAYABLE  continued

   Pursuant  to the Rolina  Corporation  Agreement & Plan of Merger       100,00
   dated  February  2, 1998 the Company was to deliver to Steven D.
   Rudnik, current President and CEO of the Company, $100,000 eight
   months from the closing date. This  indebtedness has been recast
   as a promissory note maturing  10/1/99 and accruing  interest at
   10% p.a.. In consideration of the indebtedness, Mr. Rudnik has a
   lien on certain software products owned by the Company.

   Note to the board chairman, principal due May 31, 2000, accruing      351,060
   interest at a rate of 10% per annum. This note is secured by all
   of Magnitude  Inc.'s  assets and property and  guaranteed by the
   Company.

   Private Placement  Offering:  During February through June 1995,    1,475,000
   an  underwriter   acting  as  placement   agent,  on  behalf  of
   Magnitude,  Inc. placed,  in a private  placement  offering,  an
   aggregate  16  units,   each  consisting  of  a  $100,000,   12%
   promissory  note and 10,000 shares of  Magnitude,  Inc.'s common
   stock.  The promissory  notes were originally due on the earlier
   of 12 months from their  issuance or the  completion of a public
   or private  financing  of either  debt or equity  securities  of
   Magnitude,   Inc.,  and  were   subsequently   extended  for  an
   additional 6 months,  and further by an additional 9 months.  In
   May 1997 a restructuring  agreement  caused  $1,075,000 of these
   notes to be extended and  modified  to,  among other,  mature by
   April 30, 2000. Two such notes, however,  totaling $200,000 were
   extended and modified to, among other,  mature on dates  ranging
   from October 1, 1998 through April 30, 2000. The total amount of
   notes outstanding at June 30, 1999 was $1,475,000.
                                                                      ----------
                Total                                                 $2,091,060
                                                                      ==========


LONG-TERM DEBT

  Long-term debt as of June 30, 1999 is comprised of the following:   $  750,000

   Convertible promissory notes to seven private investors accruing
   interest  at 7% p.a.  and $ 750,000  maturing in July and August
   2000.  The notes  provide the holders with the option to convert
   part or all of the outstanding  principal amounts into shares of
   the common  stock of the Company at the rate of $0.50 per share.

   Promissory  note issued to a member of the board of directors of      200,000
   the Company,  carrying interest 200,000 at 12% p.a. and maturing
   July 2000, convertible at the holders' option into shares of the
   common  stock of the  Company  at the rate of $0.50  per  share.

   Discounted  present  value  of a  non-interest  bearing  $70,000       33,529
   settlement with a former  investor 33,529 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.

   Discounted  present  value of a  non-interest  bearing  $176,000       13,000
   settlement with former counsel of 13,000  Magnitude,  Inc. to be
   paid in 24 monthly  payments  commencing  September 1, 1997. The
   imputed interest rate used to discount the note is 8% per annum.
                                                                      ----------
    Total                                                                996,529


                                  10
<PAGE>

   Less current  maturities                                               46,529
                                                                      ----------
   Long-term  debt,  net of  current  maturities
                                                                      $  950,000
                                                                      ==========


                                  11
<PAGE>

         MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 1999

INCOME TAXES

   At December  31,  1998,  the Company had net  operating  loss carry  forwards
   approximating $8,900,000 which expire between the years 2008 and 2013 and are
   subject to certain annual limitations.

   The Company's  total  deferred tax asset and valuation  allowance at December
   31, 1998 are as follows:

          Total deferred tax asset                   $3,560,000
          Less valuation allowance                    3,560,000
          Net deferred tax asset                     $       --
                                                     ==========

COMMITMENTS AND CONTINGENCIES

   Lease Agreement

     Magnitude,  Inc.  leases its  administrative  offices  pursuant  to a lease
     agreement dated December 9, 1998.  Such lease  commences  December 16, 1998
     and expires on December  31, 2001 and requires  monthly  payments of $3,700
     from December 16, 1998 to October 31, 1999 and $3,250 from November 1, 1999
     to December 31,1999.

   Licensing Agreement

     Pursuant to an August 29,  1997  letter of intent,  the Company may acquire
     Cornell Ergonomics ("Cornell"),  a software developer of a unique ergonomic
     assessment  tool.  This agreement was  subsequently  revised on December 1,
     1997  through a Software  Distribution  and Option  Agreement  whereby  the
     Company obtained a two-year exclusive license to distribute and sub-license
     a certain software product and obtained the exclusive right,  under certain
     circumstances,  to  purchase  either  the  assets of  Cornell or all of the
     issued and outstanding capital stock of Cornell.

   Put Option

     Pursuant to the February 2, 1998,  Agreement and Plan of Merger with Rolina
     Corporation (see  "Background")  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  President and Chief Executive  Officer,
     and a Put Option for such Shares.  This Put Option  requires the Company to
     repurchase  up to  155,556 of the Shares at a price of $2.41 per share upon
     notice of such option exercise in accordance with the provisions  contained
     therein,  such notice  eligible  to be given at any time after  February 1,
     2000, and before 5:00 p.m. on the 90th day thereafter.

RELATED PARTY TRANSACTIONS

     On June 4, 1999, a director and shareholder  exercised  options to purchase
     85,000  shares of the common  stock of the  Company at a price of $0.50 per
     share.

     During the quarter ended June 30, 1999, a private investor who subsequently
     joined the Company's board of directors, extended a loan of $200,000 to the
     Company.  Such loan accrues  interest at 12% p.a. and matures in July 2000,
     and is convertible  at the holders'  option into shares of the common stock
     of the Company at the rate of $0.50 per share.

     On April 1, 1999, the Company's board of directors  authorized the issuance
     of an option to the Company's  President and CEO,  holder of an outstanding
     promissory note in the amount of $100,000,  to convert the principal amount
     of such  note into  common  stock of the  Company  at the rate of $0.50 per
     share.


                                       12
<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999


RELATED PARTY TRANSACTIONS, continued

     On July 21,  1999,  the Company  and two members of the board of  directors
     entered into a Resignation  Agreement whereby these directors resigned from
     all offices of the  Company.  In  consideration  of certain  covenants  and
     releases the Company  agreed to increase the number of shares to be awarded
     these individuals pursuant to previous board resolutions, by 62,895 shares,
     to be registered on Form S-8.

     In July 1999 John Duncan became Executive Vice President in charge of Sales
     and Marketing.  The terms of his employment  provide,  among other, for the
     issuance of stock options for 100,000 shares, and, conditionally,  of up to
     a further  400,000  shares  depending upon  achievement of certain  revenue
     goals for the Company.

CHANGES IN KEY PERSONNEL

     In April 1999, John Duncan joined the Board of Directors of the Company. In
     May 1999,  Seymour  Kroll was  appointed  to the Board of  Directors of the
     Company.  In July 1999,  J. Swon and B. Deichl  resigned from the Company's
     Board of Directors.


                                       13
<PAGE>

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

New Software Business and Results of Operations:

Effective  with the sale of the  hardware  business in  November  1998 to Office
Specialty  (see  "Background"  in  Notes to  Financial  Statements)  no  further
revenues were being  generated  from this product line,  aside from royalties on
third party revenues from the sales of such hardware  products which amounted to
$23,921 for the quarter and which are included in non-operating  income.  In the
aftermath of the Office  Specialty  transaction,  the Company's  revenue base is
being supplied  solely by the licensing of the Company's  proprietary  software.
The Company has not yet realized  material revenues from licensing its software,
and must  currently be  considered an  enterprise  in  transition.  The software
business  accounted for less than 3% of total revenues during 1998 or $72,486. A
comparison  of  revenues  to  last  year's  fiscal  quarters  therefore  is  not
meaningful.   Comparisons  of  operating   expenses   likewise  are  of  limited
usefulness, and will therefore only be made where appropriate.

The Company is currently  introducing  to the market its new  Proformix  EMS(TM)
suite of software products. This unique product is the first integrated suite of
software tools that provides a complete  system for evaluation and management of
ergonomic risk factors for the computer workplace. The software also provides an
effective  productivity  measuring tool that can make a verifiable difference in
any company's  bottom line.  The  Company's  proprietary  software  products are
designed to help businesses deal with potentially  preventable repetitive stress
injuries, by real-time monitoring of keyboarding  activities,  pro-active dialog
with at-risk employees,  and strategic  profiling and management of computer use
throughout an organization.  A significant step towards introducing EMS to the a
large number of potential  corporate  users was a 1998 joint  venture  agreement
with AON Ergonomic Services,  a division of AON Worldwide  Resources,  to market
and sell this product.

The sales  cycle for larger  projects  involving  software  related  products is
relatively  long, and while the Company is  investigating  strategies to shorten
it, the new products are not expected to yield  significant  new revenues before
the fourth  quarter of this fiscal  year and the first two  quarters of the next
year.  Revenues during the quarter ended June 30, 1999, totaled $65,673 and were
supplied  primarily  from  what the  Company  classifies  as  "pilot  projects".
Typically,  in view of the  new-ness of product and market,  a client  initially
purchases a license for a "pilot version" of the software, functionally complete
but  limited  to a smaller  number  of  users.  After  undergoing  a process  of
familiarization and evaluation the client is expected to upgrade to the intended
ultimate  number of users which, by definition,  should  encompass all personnel
exposed to the above described  risks.  Currently,  more than 100 companies in a
broad cross  selection of industries,  among them  insurance,  risk  management,
financial institutions, oil and energy, technology, and transportation,  as well
as several  state and  federal  agencies  and  several  companies  in the UK and
Brazil,  are at various  stages of evaluating  the Proformix EMS software.  Many
such tests and  evaluations  by third  parties have  confirmed to the  Company's
satisfaction  that its product is mature,  stable,  and effective.  It is with a
high  degree of  confidence,  therefore,  that the Company  expects  many of the
ongoing  trial  installations  to lead to larger  enterprise  orders  during the
periods to come and thereby to the targeted revenue stream,  despite some delays
that must be  anticipated  as a  consequence  of  potential  clients  postponing
decisions involving software acquisitions due to the "Year-2000" phenomenon.

Software  assets  underlying  the  Company's  products are being  amortized on a
straight  line  over 10 years,  resulting  in a level  charge  of  approximately
$12,000 per month to  cost-of-goods-sold.  Selling expenses amounted to $191,363
and general and  administrative  expenses totaled $512,464 for the quarter.  The
relatively large amount of G&A expenses is attributable to the fact that most of
the Company's  operating expenses currently have fixed or quasi-fixed  character
covering the cost of maintaining an operational  infrastructure required for the
business.  The operating results for the quarter ended June 30, 1999, was a loss
of $681,717. The net loss for the quarter was $721,961 or $0.09 per share.


                                       14
<PAGE>

Liquidity and Capital Resources

As a  consequence  of the  operating  losses  the  Company's  liquidity  remains
strained. The working capital deficit grew to $2,295,976 as of June 30, 1999 and
is expected to increase further as current long-term liabilities will reclassify
to short-term  status as a consequence  of approaching  maturities.  Even though
management is confident  that - as a  consequence  of  anticipated  first larger
orders - the situation will improve  somewhat during the remainder of the fiscal
year such development  will be gradual and its impact may be incremental.  Thus,
the need for additional  cash to augment working capital from outside sources to
finance operations during the upcoming quarters will persist.

During the quarter ended June 30, 1999,  the Company  completed the placement of
an aggregate  $950,000 in convertible debt with private  investors which, at the
time of this  submission has resulted in the receipt of  approximately  the same
amount in cash. This debt unless  converted will mature during the third quarter
2000. As stated previously,  anticipated future cash needs are planned to be met
from  a  variety  of  sources  including   relatively  smaller  additional  debt
placements and a liquidation of unused NOL tax benefits on the State level which
are expected to generate  approximately $500,000 during the fourth quarter 1999.
Thus,  management  expects to be able to meet cash needs  throughout the rest of
the year and also that, by year end, cash flow from  operations  will have grown
sufficiently to finance future operations.


                                       15
<PAGE>

PART II - OTHER INFORMATION

Item 1 LEGAL PROCEEDINGS

In response to this item,  reference  is made to the  Company's  reports on Form
10-KSB for the year ended  December 31, 1998, and on Form 10-QSB for the quarter
ended March 31, 1999, as previously submitted.


Item 2 CHANGES IN SECURITIES - None


Item 3 DEFAULTS ON SENIOR SECURITIES - None


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 27 - Financial Data Schedule - is attached hereto.

       (b) Reports on Form 8-K: - None


                                       16
<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.


                                MAGNITUDE INFORMATION SYSTEMS, INC.



Date: August 12, 1999          By:   /s/Steven D. Rudnik
                                   ------------------------------------------
                                        Steven D. Rudnik
                                        President and Chief Executive Officer


                                       17