FORM
10-Q





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, 2010





OR





o
            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





KIWIBOX.COM,
INC.


Formerly
known as Magnitude Information Systems, Inc.


(Exact
Name of Registrant as Specified in its Charter)





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




330 West 38 St. Suite 1602 New York, NY
      10018
            
            (212)
      239-8210(Address
      of Principal Executive Office)  (Zip Code)
            
            (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 xNo o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act (Check
one):




Large
      accelerated filer o
              
              Accelerated
      filer o
              
              Non-accelerated
      filer o
              
              Smaller
      reporting company x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.):


Yes oNo x





The
number of shares of Registrant’s Common Stock, $0.0001 par value, outstanding as
of April 30, 2010, was 497,743,060 shares.









KIWIBOX.COM,
INC.




INDEX





PageNumberPART
      1 - FINANCIAL INFORMATIONItem
      1 Financial StatementsCondensed
      Balance Sheets – March 31,
      2010 (unaudited) and December 31, 2009
            
            
            3Condensed
      Statements of Operations – Three
      months ended March 31, 2010 and 2009 (unaudited)
            
            
            4Condensed
      Statements of Cash Flows – Three
      months ended March 31, 2010 and 2009 (unaudited)
            
            
            5 –
      6Notes
      to Condensed Financial Statements
            
            
            7 –
      15Item
      2 Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
            
            
            16
      – 17Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
            
            
            18Item
      4 Controls and Procedures
            
            
            18PART
      II - OTHER INFORMATION
            
            
            19
      – 20Item
      1. Legal Proceedings
            
            19Item
      1A. Risk Factors
            
            19Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
            
            
            19Item
      3. Defaults Upon Senior Securities
            
            19Item
      4T. Submission of Matters to a Vote of Security Holders
            
            19Item
      5. Other information
            
            19Item
      6. Exhibits
            
            20SIGNATURES
            
            
            21




2




PART
I  - Item 1   Financial Statements





KIWIBOX.COM,
INC.


CONDENSED
BALANCE SHEETS





March
      31,
              2010
            
            
            December
      31,
              2009(Unaudited)AssetsCurrent
      AssetsCash
            
            $
            21,010
            
            
            $
            2,518Accounts receivable, net of
      allowance for doubtful accounts of
      $0
            
            
            1,148
            
            
            
            2,000Prepaid
      expenses and other current assets
            
            
            84,156
            
            
            
            80,523Total
      Current Assets
            
            
            106,314
            
            
            
            85,041Property and equipment, net of
      accumulated depreciation of $80,466 and
      $85,841
            
            
            15,461
            
            
            
            18,705Website development cost, net of
      accumulated amortization of $3,832 and
      $1,813
            
            
            25,327
            
            
            
            19,945Other
      assets .
            
            
            17,724
            
            
            
            17,724Total
      Assets
            
            
            164,826
            
            
            
            141,415Liabilities
      and Stockholders’ Equity (Impairment)Current
      LiabilitiesAccounts
      payable and accrued expenses
            
            
            557,451
            
            
            
            535,618Obligations
      to be settled in stock
            
            
            125,840
            
            
            
            132,900Dividends
      payable
            
            
            492,155
            
            
            
            479,339Loans
      and notes payable – related parties
            
            
            1,140,000
            
            
            
            990,000Loans
      and notes payable - other
            
            
            140,000
            
            
            
            140,000Current
      maturities of long-term debt
            
            
            33,529
            
            
            
            33,529Total
      Current Liabilities
            
            
            2,488,975
            
            
            
            2,311,386Long-term
      Debt
            
            
            -
            
            
            
            -Total
      Liabilities
            
            
            2,488,975
            
            
            
            2,311,386Stockholders’
      Equity (Impairment)Preferred Stock,$0.001
      par value, non-voting, 3,000,000 shares authorized; 85,890 and 85,890
      shares issued and outstanding
            
            
            86
            
            
            
            86Common Stock,$0.0001 par
      value, 1,400,000,000 shares authorized; issued and outstanding 497,743,060
      and 478,168,060 shares
            
            
            49,774
            
            
            
            47,817Common
      Stock subscribed
            
            
            -
            
            
            
            500Additional
      paid-in capital
            
            
            45,546,918
            
            
            
            45,519,375Stock
      subscription receivable
            
            
            -
            
            
            
            (125,000
            )Accumulated
      (deficit)
            
            
            (47,920,927
            )
            
            
            (47,612,749
            )Total
      Stockholders’ Equity (Impairment)
            
            
            (2,324,149
            )
            
            
            (2,169,971
            )Total
      Liabilities and Equity (Impairment)
            
            $
            164,826
            
            
            $
            141,415




The
accompanying notes are an integral part of the consolidated financial
statements.




3





KIWIBOX.COM,
INC.


CONDENSED
STATEMENTS OF OPERATIONS


(Unaudited)





Three
      Months Ended
              March
      31,2010
            
            
            2009Total
      Revenues
            
            $
            734
            
            
            $
            17,885Cost
      of Goods Sold
            
            
            -
            
            
            
            9,234Gross
      Profit
            
            
            734
            
            
            
            8,651Selling
      expenses
            
            
            25,131
            
            
            
            88,796General
      and administrative expenses
            
            
            240,929
            
            
            
            585,515Loss
      from Operations
            
            
            (265,326
            )
            
            
            (665,660
            )Other
      Income (Expense)Misc.
      non-operating expenses
            
            
            (3,185
            )
            
            
            -Change
      in fair value –derivative liability
            
            
            -
            
            
            
            (77,806
            )Amortization
      of deferred financing cost
            
            
            -
            
            
            
            (4,000
            )Gain
      on disposition of assets
            
            
            2,285
            
            
            
            -Interest
      expense
            
            
            (29,136
            )
            
            
            (615,187
            )Total
      Other Income (Expense)
            
            
            (30,036
            )
            
            
            (696,993
            )Loss
      before Benefit for Income Taxes
            
            
            (295,362
            )
            
            
            (1,362,653
            )Benefit
      from Income Taxes
            
            
            -
            
            
            
            -Net
      Loss
            
            $
            (295,362
            )
            
            $
            (1,362,653
            )Dividends
      on Preferred Shares
            
            
            (12,816
            )
            
            
            (12,816
            )Net
      Loss applicable to Common Shareholders, basic and diluted
            
            $
            (308,178
            )
            
            $
            (1,375,469
            )Net
      Loss per Common Share, basic and diluted
            
            $
            (0.001
            )
            
            $
            (0.003
            )Weighted
      Average Number of Common Shares Outstanding
            
            
            490,180,560
            
            
            
            445,171,141




The
accompanying notes are an integral part of the consolidated financial
statements.




4




KIWIBOX.COM,
INC.


CONDENSED
STATEMENTS OF CASH FLOWS


(Unaudited)





Three
      Months Ended
              March
      31,2010
            
            
            2009Cash
      Flows from Operating ActivitiesNet
      Loss
            
            $
            (295,362
            )
            
            $
            (1,362,653
            )Adjustments
      to Reconcile Net Loss to Net Cash Used by OperationsDepreciation
      and amortization
            
            
            5,232
            
            
            
            18,224Change
      in fair value – derivative liabilities
            
            
            -
            
            
            
            77,806Gain
      on disposal of assets
            
            
            (2,285
            )
            
            
            -Intrinsic
      value of beneficial conversion rights
            
            
            -
            
            
            
            600,000Decreases
      (Increases) in AssetsAccounts
      receivable
            
            
            852
            
            
            
            (6,110
            )Prepaid
      expenses
            
            
            (3,633
            )
            
            
            (15,962
            )Increases
      (decreases) in LiabilitiesLiabilities
      to be settled in stock
            
            
            21,940
            
            
            
            -Accounts
      payable and accrued expenses
            
            
            21,833
            
            
            
            184,845Net
      Cash Used by Operating Activities
            
            
            (251,424
            )
            
            
            (503,850
            )Cash
      Flows from Investing ActivitiesProceeds
      from sale of assets
            
            
            4,520
            
            
            
            -Cash
      outlay - website development costs
            
            
            (7,401
            )
            
            
            -Purchases
      of property and equipment
            
            
            (2,204
            )
            
            
            -Net
      Cash Used by Investing Activities
            
            
            (5,085
            )
            
            
            -Cash
      Flows from Financing ActivitiesProceeds
      from loans and notes
            
            
            150,000
            
            
            
            500,000Proceeds
      from stock subscriptions receivable
            
            
            125,000
            
            
            
            -Net
      Cash Provided by Financing Activities
            
            
            275,000
            
            
            
            500,000Net
      Increase (Decrease) in Cash
            
            
            18,492
            
            
            
            (3,850
            )Cash
      at Beginning of Period
            
            
            2,518
            
            
            
            5,000Cash
      at End of Period
            
            $
            21,010
            
            
            $
            1,150





The
accompanying notes are an integral part of the consolidated financial
statements.




5




KIWIBOX.COM,
INC.


CONDENSED
STATEMENTS OF CASH FLOWS


(Unaudited)




NON-CASH
      INVESTING AND FINANCING ACTIVITIES:Three
      Months Ended March 31, 2010Cashless
      exercise of warrants
            
            $
            1,312Settlement
      of obligations with common stock and common stock options
            
            $
            29,000Three
      Months Ended March 31, 2009Reclassification
      of derivative liabilities to Additional Paid-in capital
            
            $
            3,408,618





6




KIWIBOX.COM


NOTES TO
CONDENSED FINANCIAL STATEMENTS


March 31,
2010





1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Nature of Organization





Kiwibox.Com,
Inc. (the “Company”) 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. On December 31,
2009, the Company changed its name to Kiwibox.com, Inc.





On
August 16, 2007 the Company acquired all outstanding shares of Kiwibox Media,
Inc.





The
Company, Magnitude, Inc. and Kiwibox Media Inc. were separate legal entities
until December 31, 2009, with Kiwibox Media, Inc. being a wholly owned
subsidiary. On December 31, 2009, the two subsidiaries Magnitude, Inc. and
Kiwibox Media, Inc.  merged into the Company.





Prior to
the implementation of its strategic business plan in 2007, the Company’s primary
product was an integrated suite of proprietary software modules previously
marketed under the name ErgoEnterpriseTM. During the latter half of fiscal
year 2006, Company management concluded that the marketplace for the Company’s
ergonomic software products was not developing, and would not develop to the
material extent necessary in the next 12 to 24 months, to support and sustain
the Company’s sales efforts. Accordingly, management determined that it would be
in the best interests of the Company and its shareholders to identify another
business opportunity and pursue it for the benefit of our shareholders. On
February 19, 2007, the Company, pursuant to its strategic plan to seek another
business opportunity, signed an Agreement and Plan of Reorganization with the
owners of a social networking website, to acquire their Kiwibox.com website and
business, represented by Kiwibox Media, Inc. Pursuant to that certain Agreement
and Plan of Reorganization, in August, 2007, Kiwibox Media, Inc. merged with and
into Magnitude Operations, Inc., a wholly owned subsidiary of Magnitude
Information Systems, Inc., in a “reverse merger” transaction. The three
shareholders of Kiwibox Media, Inc. transferred and delivered all of the
outstanding stock of Kiwibox Media, Inc. to Magnitude Operations, Inc. for
cancellation and received in exchange shares of Magnitude Information
Systems, Inc. at closing. Also at closing and as a result of the merger, the
separate legal existence of Magnitude Operations, Inc. ceased and Kiwibox Media,
Inc. became the surviving corporation of the merger and a wholly owned
subsidiary of Magnitude Information Systems, 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-Q 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-K for the year
ended December 31, 2009.





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, 2010, the results of operations for the three months ended March
31, 2010 and 2009, and the cash flows for the three months ended March 31, 2010
and 2009, have been included.





Principles
of Consolidation





The
financial statements for the period ended March 31, 2009 included the accounts
of Magnitude Information Systems, Inc. and its subsidiaries Magnitude, Inc. and
Kiwibox Media, Inc. All significant inter-company balances and transactions have
been eliminated.





7




KIWIBOX.COM,
INC


NOTES TO
CONDENSED FINANCIAL STATEMENTS


March 31,
2010





SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES, Continued





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, or lease term for leasehold improvements, if for a shorter
period.  Maintenance and repairs are charged to operations as
incurred.





Evaluation
of Long Lived Assets




Long-lived
assets are assessed for recoverability on an ongoing basis.   In
evaluating the fair value and future benefits of long-lived assets, their
carrying value would be reduced by the excess, if any, of the long-lived asset
over management’s estimate of the anticipated undiscounted future net cash flows
of the related long-lived asset.





Fair
Value Measurements




The
Company adopted the provisions of ASC 820, Fair Value Measurements and
Disclosures, which is effective for fiscal years beginning after November
15, 2007, and interim periods within those fiscal years. Under ASC 820, a
framework was established for measuring fair value in generally accepted
accounting principles (GAAP), and expands disclosures about fair value
measurements. Since the number of shares issuable under the Company’s Series G
convertible preferred stock was indeterminable during the year ended December
31, 2008, the Company had measured the fair value of warrants and options
outstanding at December 31, 2008, which was determined to be $3,330,812,
measured using significant unobservable inputs (Level 3) under a Black-Scholes
valuation method. On February 19, 2009, all outstanding shares of the Series G
stock automatically converted into 17,857,142 common shares, thereby removing
the indeterminable factor and giving rise to a reclassification of the entire
position of $3,408,618 into additional paid-in capital, which included a further
$77,806 loss incurred during the first quarter 2009, reported in the Statement
of Operations under Other Income (Expense).





Securities
Issued for Services





The
Company accounts for stock, stock options and stock warrants issued for services
and compensation by employees under the fair 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 has determined the fair
market value of the warrants/options issued under the Black-Scholes Pricing
Model. The Company has adopted the provisions of ASC 718, “Compensation – Stock
Compensation”, which establishes accounting for equity instruments exchanged for
employee services. Under the provisions of ASC 718, share-based compensation
cost is measured at the grant date, based on the fair value of the award, and is
recognized as an expense over the employee's requisite service period (generally
the vesting period of the equity grant).





Reclassification
of certain securities under ASC 815-15





Pursuant
to ASC 815-15, “Contracts in Entity’s own Equity”, 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. During the first quarter of 2009, we
reclassified a position of $3,408,618 from liabilities for derivative securities
to additional paid-in capital after the indeterminate factor in connection with
the conversion clause of certain convertible preferred shares was
removed.





Capitalization
of Software /Website development costs




The
Company capitalizes outside-contracted development work in accordance with the
guidelines published under ASC 350-50, “Website Development
Costs”.  Under ASC 350-50, costs incurred during the planning stage
are expensed, whilecosts
relating to software used to operate a web site or for developing initial
graphics should be  accounted for under ASC
350-50, Accounting for the
Costs of Computer Software Developed or Obtained for  Internal
Use, unless a plan exists or is being developed to market the software
externally. Under ASC 350-50,  internal and external costs incurred to
develop internal-use computer software during the application
development   stage should be capitalized. Costs to develop or
obtain software that allows for access or conversion of old data
by   new systems should also be capitalized, excluding training
costs.




8




KIWIBOX.COM,
INC.


NOTES TO
CONDENSED FINANCIAL STATEMENTS


March 31,
2010





SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES, Continued





Capitalization
of Software /Website development costs (continued)





Fees
incurred for web site hosting, which involve the payment of a specified,
periodic fee to an Internet service provider in return for hosting the web site
on its server(s) connected to the Internet, are expensed over the period of
benefit, and included in cost of sales in the accompanying financial statements.
A total of $7,401 and $21,758 was capitalized for web-site development work
during the three months ended March 31, 2010 and the year ended December 31,
2009, respectively. During 2009, a new software platform was placed into
service. The old capitalized cost of $64,650, including the remaining
unamortized balance from  2008 totaling $30,771 was written off as
they were deemed to be impaired.





The
Company adopted the provisions of "The Fair Value Option for Financial Assets
and Financial  Liabilities" under ASC 820, which included and
amendment with respect to improvement of financial  reporting of
certain  investments  in debt
and  equity  securities.  This Statement permits
entities to choose to measure many financial instruments and certain other items
at fair value. The implementation of this new standard did not have a material
impact on the Company's financial position, results of operations and cash flows
for the three months ended March 31, 2010 and 2009, and at December 31,
2009.





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.





Net Loss
Per Share





Net loss
per share, in accordance with the provisions of ASC 260, “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.
Such common stock equivalents totaled 193,854,852 common shares at March 31,
2010, comprised of 159,731,315 shares issuable upon exercise of stock purchase
warrants, 7,050,000 shares issuable upon exercise of stock options, 729,537
shares exercisable upon conversion of convertible preferred shares, and
26,344,000 shares potentially issuable upon conversion of convertible debt. Such
debt, presently convertible at the option of two holders at a price of $0.01 per
share, totals $1,140,000 which would yield 114,000,000 shares if fully
exercised, however, the respective notes, all of which were issued to these two
investors, carry a stipulation whereby the number of all shares issued pursuant
to a conversion, may in the aggregate not exceed a number that would increase
the total share holdings beneficially owned by such investor to a level above
9.99%. At the end of the quarter, this clause limits any conversion to the
aforementioned number of shares. All of the aforementioned conversions or
exercises, as the case may be, are at the option of the holders.




9








KIWIBOX.COM,
INC


NOTES TO
CONDENSED FINANCIAL STATEMENTS


March 31,
2010





SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES, Continued




Revenue
Recognition




The
Company’s revenue is derived from advertising on the Kiwibox.Com website. Most
contracts require the Company to deliver the customer impressions,
click-throughs or new customers, or some combination thereof. Accordingly,
advertising revenue is estimated and recognized for the period in which customer
impressions, click through or new customers are delivered. Licensing or hosting
revenue consists of an annual contract with clients to provide web-site hosting
and assistance.





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.





2. GOING
CONCERN





The
ability of the Company to continue its operations is dependent on increasing
sales and obtaining additional capital and financing. Our revenues during the
foreseeable future are insufficient to finance our business and we are entirely
dependent on the willingness of existing investors to continue supporting the
Company with working capital loans and equity investments, and our ability to
find new investors should the financial support from existing investors prove to
be insufficient. If we were unable to obtain a steady flow of new debt or
equity-based working capital we would be forced to cease
operations.  In their report for the fiscal year ended December 31,
2009, 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. Management’s plans are to continue seeking equity and debt
capital until cash flow from operations cover funding needs.





3.
CONCENTRATIONS OF BUSINESS AND CREDIT RISK





The
Company maintains cash balances in a financial institution which is insured by
the Federal Deposit Insurance Corporation up to $250,000.  Balances in
these accounts may, at times, exceed the federally insured limits. At March 31,
2010, cash balances in bank accounts did not exceed this limit. 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.





4.
PREPAID EXPENSES





Prepaid
Expenses at the end of the quarter consisted of $8,081 in prepaid business
insurance costs, $69,138 in prepayments on promotional supplies inventory, and
$6,937 made up of several smaller positions.





5.
PROPERTY AND EQUIPMENT




Property
and equipment consist of the following at





March 31,
              2010
            
            
            December 31,
              2009Furniture
            
            $
            8,334
            
            
            $
            6,646Leasehold
      Improvements
            
            
            24,130
            
            
            
            24,131Equipment
            
            
            63,463
            
            
            
            73,77095,927
            
            
            
            104,546Less
      accumulated depreciation
            
            
            80,466
            
            
            
            85,841Total
            
            $
            15,461
            
            
            $
            18,705





Depreciation
expense charged to operations was $3,213 and $8,836  in the first
three months of 2010 and 2009,


respectively.




10




KIWIBOX.COM,
INC.


NOTES TO
CONDENSED FINANCIAL STATEMENTS


MARCH 31,
2010





6.  INTANGIBLE
ASSETS





Intangible
assets consisted of software for website development costs as
follows:




March
      31,
              2010
            
            
            December
      31,
              2009Website
      development costs
            
            $
            29,159
            
            
            $
            21,758Less
      accumulated amortization
            
            
            3,832
            
            
            
            1,813Total
            
            $
            25,327
            
            
            $
            19,945





During
2009, a new software platform developed by a third party was adapted for use by
the Company and placed into service. The developmental costs associated with
this adaptation, amounting to $21,758 were capitalized and the remaining
unamortized balance of the 2008 capitalized costs, totaling $30,771 were written
off as they were deemed to be impaired. Amortization expense for the three
months ending March 31, 2010 and 2009 was $2,019 and $5,387,
respectively.





7.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES





Accounts
payable and accrued expenses consisted of the following at





March
      31,
              2010
            
            
            December
      31,
              2009Accounts
      payable
            
            $
            232,099
            
            
            $
            208,792Accrued
      interest
            
            
            198,596
            
            
            
            170,860Accrued
      payroll, payroll taxes and commissions
            
            
            8,621
            
            
            
            15,331Accrued
      professional fees
            
            
            94,400
            
            
            
            116,900Miscellaneous
      accruals
            
            
            23,735
            
            
            
            23,735Total
            
            $
            557,451
            
            
            $
            535,618




8.  OBLIGATIONS
TO BE SETTLED IN STOCK





Obligations
to be settled in stock consisted of the following at





March
      31,
              2010
            
            
            December
      31,
              2009Obligation
      for warrants granted for compensation
            
            $
            30,000
            
            
            $
            20,000600,000
      common shares issuable to a consultantwho
      was a director of the company, for servicesrendered.
            
            
            36,000
            
            
            
            36,000100,000
      (2010) and 1,250,000 (2009) commonshares,
      and 2,500,000 (2010) and 2,200,000 (2009)stock
      options issuable to two officers of theCompany
      pursuant to their respective employmentagreements
            
            
            47,960
            
            
            
            67,9901,200,000
      (2010) and 900,000 (2009) stock optionsissuable
      to one director who also serves as theCompany’s
      general counsel
            
            
            11,880
            
            
            
            8,910$
            125,840
            
            
            $
            132,900





11








KIWIBOX.COM,
INC.


NOTES TO
CONDENSED FINANCIAL STATEMENTS


MARCH 31,
2010




9. LOANS
PAYABLE





The
Company had borrowings under short term loan agreements with the following terms
and conditions at March 31, 2010 and December 31, 2009:





On
      December 4, 1996, the company 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 as of September 30, 2005
      and no demand for payment has been made.
            
            $
            75,000Total
            
            $
            75,000




10. NOTES
PAYABLE




March
      31,
              2010
            
            
            December
      31,
              2009Balance
      of non-converted notes outstanding. Attempts tolocate
      the holder of this note, to settle this liability, have beenunsuccessful.
            
            $
            25,000
            
            
            $
            25,000In
      January 2008 a shareholder loaned the Company $40,000pursuant
      to which the Company issued a demand note bearinginterest
      at the rate of 5% per year.
            
            
            40,000
            
            
            
            40,000In
      September 2008 and December 2008 a shareholder loanedthe
      Company $50,000 and $100,000, repayable underconvertible
      promissory notes bearing interest at 10% per annumand
      payable on demand.
            
            
            150,000
            
            
            
            150,000In
      January and February 2009 a shareholder loaned theCompany
      $350,000 and $150,000, repayable under convertiblepromissory
      notes bearing interest at 10% per annum andpayable
      on demand. On March 31, 2009, these notes and$100,000
      of notes listed above were amended to include anoption
      for the holder to convert the debt into common stock at$0.01
      per share. The intrinsic value of the beneficialconversion
      feature was valued at $600,000 resulting in acharge
      to interest and a credit to additional paid-in capital inthe
      same amount.
            
            
            500,000
            
            
            
            500,000During
      March 2009, the same shareholder loaned the Company$50,000
      under the same terms as the earlier notes issued in thefirst
      quarter. The note (and the notes above) was subsequentlyamended
      to include the stipulation that the shares to be issuedif
      the holder elected a conversion, together with other sharesheld
      by this shareholder, may not result in an ownershipinterest
      exceeding 9.9%.
            
            
            50,000
            
            
            
            50,000During
      April, May and June 2009, the same shareholder loanedthe
      Company an aggregate $250,000 under the same terms asthe
      earlier notes issued in the first quarter. All of the noteswere
      subsequently amended to include the stipulation that theshares
      to be issued if the holder elected a conversion, togetherwith
      other shares held by this shareholder, may not result in anownership
      interest exceeding 9.9%.
            
            
            250,000
            
            
            
            250,000During
      June 2009 through December 2009, another shareholderloaned
      the Company an aggregate $640,000 under the sameterms
      as the earlier investor who had extended loans during thefirst
      two quarters in 2009 as mentioned above. In December2009,
      the Company repaid $600,000 against such notes, leavinga
      balance of $40,000 open at year-end.
            
            
            40,000
            
            
            
            40,000During
      January and February 2010, a shareholder loaned theCompany
      $150,000 under the same terms as the earlier notesissued
      in 2009.
            
            
            150,000
            
            
            
            -Total
            
            $
            1,205,000
            
            
            $
            1,055,000




12




11.
LONG-TERM DEBT





Long-term
debt as of March 31, 2010 and December 31, 2009 is comprised of the
following:





Discounted
      present value of a non-interest bearing $70,000 settlement with a former
      investor of Magnitude, Inc. to be paid in 24 equal monthly payments
      commencing July 1, 1997.  The imputed interest rate used to
      discount the note is 8% per annum.  This obligation is in
      default.
            
            
            33,529Total
            
            
            33,529Less
      current maturities
            
            
            33,529Long-term
      debt, net of current maturities
            
            $
            -





13





KIWIBOX.COM


NOTES TO
CONDENSED FINANCIAL STATEMENTS


MARCH 31,
2010





12.
COMMITMENTS AND CONTINGENCIES





We
maintain offices for our operations at 330 W. 38th Street, New York, New York
10018, for approximately 1,400 square feet. These leases expires at the end of
2010 and requires minimum monthly rentals of $3,769 plus tenants’ share of
utility/cam/property tax charges which average approximately $800 per
month.





Our total
rent expenses were $12,143 and $32,434 during the three months ended March 31,
2010 and 2009, respectively.





During
the second quarter in 2009 we entered into an agreement with a consultant to
serve as the Company’s Chief Technology Officer. The agreement has a term of
twelve months and may be extended by mutual consent. It provides for
remuneration for services and expenses at the rate of $20,000 and 100,000
restricted shares per month, and a signing bonus of 500,000 restricted shares.
During the first quarter in 2010, the Company issued the 500,000 shares for the
signing bonus and 950,000 shares towards the accrued monthly
allowance.





During
the third quarter in 2009 we entered into an engagement agreement with a
consultant to assist the Company in the liaison to the Company’s shareholders
and investors, to promote the Company and its website to the public markets, and
to identify potential strategic partners, acquisition opportunities, and joint
venture partners for the Company’s social networking website business. The
agreement is deemed to have commenced on January 1, 2009 and extends through
December 31, 2011, and calls for compensation to the consultant in the form of
2,000,000 five years warrants for the purchase of common shares, exercisable at
$ 0.025 per share with a cashless exercise provision, for every six months
period during the term of the agreement, and the payment in cash of unspecified
amounts, the latter at the sole discretion of the Company.  The
agreement furthermore recognizes that the same consultant had previously
provided similar services to the Company for which he received a one-time
payment in form of 15,000,000 five years warrants, exercisable at $0.0025 per
share. The 15,000,000 warrants were exercised during the three months ended
March 31, 2010 pursuant to a cashless exercise into 13,125,000 shares of common
stock.





13.
RELATED PARTY TRANSACTIONS





During
the three months ended March 31, 2010 and 2009 one outside director of the
Company who also serves as the Company’s general and securities counsel, was
paid an aggregate $ 15,000 and $30,000, respectively, for legal
services.


The
director also received 300,000 common stock options during the three months
ended March 31, 2010, valued at $2,970.





14. FAIR
VALUE




Some of the Company’s financial
instruments are not measured at fair value on a recurring basis but are recorded
at amounts that approximate fair value due to their liquid or short-term nature,
such as cash and cash equivalents, receivables and payables.





We have
determined that it is not practical to estimate the fair value of our notes
payable because of their unique nature and the costs that would be incurred to
obtain an independent valuation. We do not have comparable outstanding debt on
which to base an estimated current borrowing rate or other discount rate for
purposes of estimating the fair value of the notes payable and we have not been
able to develop a valuation model that can be applied consistently in a cost
efficient manner. These factors all contribute to the impracticability of
estimating the fair value of the notes payable. At March 31, 2010, the
carrying value of the notes payable and accrued interest was
$1,478,596.





14




KIWIBOX.COM,
INC.


NOTES TO
CONDENSED FINANCIAL STATEMENTS


MARCH
31, 2010




15.
SUBSEQUENT EVENTS




On April
25, 2010 the company was able negotiate a lease termination agreement with its
landlord Hudson Holdings, LLC on a
second office it held at 330 West 38 St. New York, NY. 10018. This resulted in
no early termination payments
due from the Company and will reduce operating costs over the remainder of 2010
by $15,000.




On May 3,
2010, the Company filed a report on Form 8-K, advising that Joerg H. Klaube
resigned as the Chief Financial
Officer and as a member of the Company’s Board of Directors and that effective
as of May 4, 2010, the Company
promoted  Craig S. Cody to serve as Chief financial Officer. Mr. Cody,
a licensed Certified Public Accountant,
had  been serving as  the Comptroller of the Company during
the past year.




15




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





The
information in this annual report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such Act
provides a “safe harbor” for forward-looking statements to encourage companies
to provide prospective information about their businesses so long as they
identify these statements as forward looking and provide meaningful cautionary
statements identifying important factors that could cause actual results to
differ from the projected results. All statements other than those statements of
historical fact made in this report are forward looking. In particular, the
statements herein regarding industry prospects and future results of operations
or financial position are forward-looking statements. Forward-looking statements
reflect management’s current expectations and are inherently uncertain. Our
actual results may differ significantly from management’s
expectations.




The
following discussion and analysis should be read in conjunction with the
consolidated financial statements of Kiwibox.Com, Inc., contained herein and in
the Company’s annual report for the year ended December 31, 2009 as filed on
Form 10-K. This discussion should not be construed to imply that the results
discussed herein will necessarily continue into the future, or that any
conclusion reached herein will necessarily be indicative of actual operating
results in the future. Such discussion represents only the best present
assessment of our management.





Description of
Business





The
Company is currently in the process of completing the final stages of platform
integration and the completed site will  include
all of the technologically advanced features found in current leading social
networks. We will continue to improve
the technology of our site in order to increase the competitive status of the
Company, and these improvements will
put Kiwibox.Com on a pedestal as a trendsetter for online communities. In the
first quarter of 2010, Kiwibox.Com improved
on its efforts to target old teens and young adults, as part of The Company’s
marketing strategy.





This
effort goes hand to hand with a continued drive to reduce overhead costs. Our
operating expenses, not including stock-based compensation, for current
operations have been reduced to a level of approximately $60,000 to $80,000 per
month. We are currently receiving funding at these levels from existing
investors (see sections “Loans and Notes Payable”).





Results of Operations for
the Three Months Ended March 31, 2010 Compared to the Three  Months
Ended March 31, 2009





For the
quarter ended March 31, 2010, total revenues amounted to $734, compared to
$17,885 recorded in the first quarter in 2009.





Gross
profits for the quarter ended March 31, 2010 amounted to $734.  After
deducting selling and general and administrative expenses of $266,060 for the
first quarter  ended March 31, 2010 compared to $674,311 recorded in
the same period in 2009, the Company realized operating losses of $265,326 for
the first quarter of 2010 compared to an  operating loss of $665,660
in the same period of 2009. The significant decline in operating expenses was
the result of severe cost cutting measures initiated in the course of current
restructuring efforts. In particular, outlays for salaries and consulting
expenses were sharply reduced due to cut-backs in staffing and curtailment of
consultant retentions.




The
quarter concluded with a net loss of $295,362. After accounting for dividends
accrued on outstanding preferred stock which totaled $12,816 , the net loss
applicable to common shareholders was $308,178 or $0.001 per share compared to a
loss of $1,375,469 or $0.003 per share for the first quarter in the previous
year.




16





Liquidity and Capital
Resources





We have
financed our business with new debt since our cash flow is insufficient to
provide the working capital necessary to fund our operations. We received
$150,000 in cash from short-term loans and $125,000 in cash for common stock
subscriptions from accredited private investors during the quarter. We have
an ongoing and urgent need for working capital to fund our operations. If we are
unable to continue to receive new equity investments or obtain loans, we will
not be able to fund our operations and we will be required to close our
business.





Our
deficit in working capital amounted to $2,382,661 at March 31, 2010, as compared
to $2,226,345 at December 31, 2019.  The change is primarily
attributable the losses incurred in the first quarter of  2010, and
the receipt by the company of an aggregate $150,000 in short term loans during
2010.  Stockholders’ equity showed an impairment of $2,324,149 at the
end of the period, compared to an impairment of $2,169,971 at the beginning of
the year. The negative cash flow from operations during the three months totaled
$251,424 and was financed by new debt and $125,000 in equity capital from
subscriptions for “units” consisting of common stock shares and stock purchase
warrants.




We have
no bank debt and aside from trade payables and accruals, our indebtedness at
March 31, 2010, consisted of certain notes and loans aggregating $1,280,000. The
position “Obligations to be settled in stock” of $125,840 accounts for common
shares due under consulting agreements, and for services to be settled in common
stock options and warrants, where the underlying securities had not yet been
issued. Current liabilities also include $492,155 accrued unpaid dividends on
outstanding preferred stock. Such dividends will be paid only if and when
capital surplus and cash-flow from operations are sufficient to cover the
outstanding amounts without thereby unduly impacting the Company’s ability to
continue operating and growing its business.




Our
current cash reserves and net cash flow from operations expected during the near
future will be insufficient to fund our operations and website development and
marketing plan over the next twelve months. We expect to fund these requirements
with further investments in form of debt or equity capital and are in ongoing
discussions with existing investors to secure funding. There can be no
assurance, however, that we will be able to secure needed financing in the
future and identify a financing source or sources, and if we do, whether the
terms of such financing will be acceptable or commercially
reasonable.





Absent
the receipt of needed
equity investment or loans, we will be compelled to severely curtail operations
and possibly, close our business operations. Assuming we can receive current
funds to continue to operate our businesses, we may need additional funding for
marketing and website development, absent of which our website development,
results of operations and financial condition could be subject to material
adverse consequences.





17





Item 3. Quantitative and
Qualitative Disclosures about Market Risk





A smaller
reporting company is not required to provide the information required by this
Item.





Item 4T. CONTROLS AND
PROCEDURES





(a) Evaluation
of Disclosure Controls and Procedures.





As of the
end of the period covered by this Form 10-Q for the quarter ended March 31,
2010, an evaluation was undertaken, under the supervision and with the
participation of the Company’s management, including the Company’s Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company’s disclosure controls and procedures
pursuant to Rule 13a-15(e) of the Exchange Act; and; based upon that evaluation,
Company management, including the Chief Executive Officer and the Chief
Financial Officer, has concluded that the design of the Company’s disclosure
controls and procedures are effective and ensure that all material information
required to be disclosed by the Company in the reports that it files or submits
under the Act, are recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms; in addition, the
evaluation confirmed that the Company’s disclosure controls and procedures are
designed to ensure that the information required to be disclosed by the Company
in the reports that it files or submits under the Act is accumulated and
communicated to Company management, including its Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure.





The
Company maintains a system of internal controls designed to provide reasonable
assurance that:  (i) the Company’s transactions are properly
authorized; (ii) the Company’s assets are protected against unauthorized or
improper use, and (iii) the Company’s transactions are properly recorded and
reported, all to permit the preparation of complete and accurate financial
statements in conformity with generally accepted accounting
principles.





(b)
Changes in Internal Control over Financial Reporting




Since the
date of the most recent evaluation of the Company’s internal controls by the
Chief Executive Officer and Chief Financial Officer, there have not been any
significant changes in the Company’s internal controls or other factors for the
period covered by the subject Form 10-Q that materially affected or were likely
to materially affect the Company’s internal control over financial
reporting.





18





PART  II  – OTHER
INFORMATION





Item
1 LEGAL
PROCEEDINGS




At the
time of this report, the Company is not a party in any pending material legal
proceedings.





Item 1A.
RISK
FACTORS





A smaller
reporting company is not required to provide the information required by this
Item.





Item
2 UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





a)
            Issuance
      of unregistered securities





During
the first quarter in 2010 the Company issued the following unregistered
securities:





(i) 5,000,000
common shares and 1,250,000 stock purchase warrants, exercisable during three
years at $0.05 per share, to two investors pursuant to private placement
subscriptions, resulting in the receipt by the Company of
$125,000.




(ii)  1,450,000
common shares to an officer of the Company pursuant to the terms of his
employment agreement (see “Commitments and Contingencies”).




(iii)  13,125,000
common shares to a consultant pursuant to his cashless exercise of stock
purchase warrants for 15,000,000 shares (see “Commitments and
Contingencies”).





The
Company relied upon the private placement exemption from the registration
requirements of the Securities Act of 1933, as amended (the “Securities Act”),
provided by Section 4(2) thereof in connection with the issuance of the above
identified securities. The Company had a pre-existing relationships with the
recipients of above securities and no general solicitation was involved; the
certificates representing the common shares issued contained restrictive
legends, designated them as restricted securities and stating that any transfer
or other disposition of such shares can only be made in compliance with the
registration requirements of the Securities Act or pursuant to exemptions there
from.




(b)
            Not
      applicable




(c)
            None




Item
3 DEFAULTS UPON
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 $492,000.  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 S ECURITY
HOLDERS





-  None





Item
5 OTHER
INFORMATION





-  None




19





Item 6
EXHIBITS AND REPORTS
ON FORM 8-K





(a)
                Exhibits
                  
                  (3)(i)
      - Articles of Incorporation and Amendments thereto, incorporated herein by
      reference to Exhibits of previous filings with the
Commission.
                    
                    (3)(ii)
      - By-laws of the Company, incorporated herein by reference to Exhibits of
      previous filings with the Commission.
                    
                    (31.1)
      -  Certification of Rudolf Hauke, Chief Executive Officer,
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
                    
                    (31.2)
      -  Certification of Craig S. Cody, Chief Financial Officer,
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
                    
                    (32.1)  -  Certification
      of Rudolf Hauke, Chief Executive Officer, pursuant to Sections 906 of the
      Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
                    
                    (32.2)  -  Certification
      of Craig S. Cody, Chief Financial Officer, pursuant to Sections 906 of the
      Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350(b)
                Reports
      on Form 8-K:
                  
                  On
      May 4, 2010, the Company filed a report on 8K, disclosing the resignation
      of the Chief Financial Officer and appointment of a new Chief Financial
      Officer .
                    
                    On
      March 2, 2010, the Company filed a current report on Form 8-K, disclosing
      its receipt of the final tranche from an accredited investor in connection
      with its private placement.
                    
                    On
      February 19, 2010, the Company filed a current report on Form 8-K,
      disclosing that that the Financial Industry Regulatory Agency (“FINRA”)
      approved the Company’s corporate name change and assigned a new trading
      symbol to the Company’s common
stock.





20





SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report on Form 10-Q to be signed on its behalf by the
undersigned, thereunto duly authorized.




Kiwibox.Com,
    INC.Date:   May
      14, 2010
            By:
            craigCraig
      S. CodyChief
      Financial Officer




21