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, 2001

                                       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.)

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

                                 (908) 879-2722
               (Registrant's telephone number including area code)


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

     The  number of shares of  Registrant's  Common  Stock,  $0.0001  par value,
outstanding as of June 30, 2001, was 21,607,109 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, 2001                                                 3

         Consolidated Statements of Operations
          - Three and six months ended June 30, 2001 and 2000             4

         Consolidated Statements of Cash Flows
          - Six months ended June 30, 2001 and 2000                       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

                                       2

<PAGE>



PART I  - Item 1
              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                    June 30, 2001
ASSETS
     Current Assets
<S>                                                                             <C>
     Cash  ...........................................................          $         6,106
     Accounts receivable, net of allowance for
        doubtful accounts of 72,111 ..................................                  288,205
     Miscellaneous receivables........................................                   25,000
     Due from officer ................................................                   19,500
     Inventories .....................................................                    2,260
     Deferred tax asset...............................................                  122,044
     Prepaid expenses ................................................                  240,537
                                                                                        -------

        Total Current Assets .........................................                  703,652
     Receivables due for payment after 12 months......................                  251,562
     Property, plant and equipment, net of accumulated
        depreciation of $191,650......................................                   88,987
     Software, net of accumulated amortization of $495,541 ...........                1,011,749
     Other assets ....................................................                   23,229
                                                                                    -------------
TOTAL ASSETS .........................................................                2,079,179
                                                                                      ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
     Accounts payable and accrued expenses ...........................                  824,297
     Deferred revenue.................................................                  234,539
     Dividends payable ...............................................                  124,233
     Prepayments received ............................................                        0
     Loans and notes payable .........................................                  472,500
     Current maturities long-term debt ...............................                   33,529
     Current maturities lease obligations ............................                    7,440
                                                                                   -------------
        Total Current Liabilities ....................................                1,696,538
     Long-term debt, less current portion ............................                  274,890
     Lease obligations, less current portion .........................                    6,118
                                                                                   -------------
TOTAL LIABILITIES .....................................................               1,977,546

STOCKHOLDERS' EQUITY
     Preferred Stock, $0.001 par value, non-voting, 3,000,000 shares authorized:
     2,500 shares have been designated Cumulative Preferred Stock,
     of which 1 share is issued and outstanding ...............................               0
     300,000 shares have been designated Series A Convertible Preferred Stock,
     350,000 shares have been designated Series B Convertible Preferred Stock,
     120,000 shares have been designated Series C Convertible Preferred Stock,
     500,000 shares have been designated Series D Convertible Preferred Stock,
     of which a combined total 225,957 shares are issued and outstanding                    226
     Common Stock, $0.0001 par value, 100,000,000 shares authorized,
     21,607,109 shares are issued and outstanding.............................             2,161
     Additional paid-in capital ...............................................       16,822,135
     Accumulated deficit ......................................................      (16,722,889)
                                                                                     ------------
TOTAL STOCKHOLDERS' EQUITY.....................................................          101,633

TOTAL LIABILITIES AND EQUITY .................................................  $      2,079,179
                                                                                       ==========
</TABLE>

                 See notes to consolidated financial statements

                                       3
<PAGE>




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

<TABLE>
<CAPTION>

                                                           Three Months Ended                Six Months Ended
                                                                June 30,                         June 30,
                                                           2001            2000             2001            2000
                                                         ----------     ----------     ------------    -----------

<S>                                                   <C>            <C>                 <C>              <C>
Total Revenues......................................  $    290,411   $    247,981        492,933          348,003

     Cost of Goods Sold ............................        42,211         43,720         81,042           84,654
                                                       -------------    -----------     ------------    ----------
Gross Profit .......................................       248,200        204,261        411,891          263,349

     Selling expenses ..............................       328,126        378,259        749,608          605,079
     General & administrative expenses .............       638,190        610,567      1,206,194        1,132,853
                                                        -----------      ----------     ------------    -----------

Operating Income (Loss) ............................      (718,116)      (784,565)    (1,543,911)      (1,474,583)

     Miscellaneous income ..........................             0              0              0           14,048
     Interest expense, net..........................       (18,968)       (23,264)       (33,231)        (132,843)
     Miscellaneous expenses ........................            (0)        (3,201)            (0)          (1,149)
                                                        -------------   -----------       --------       -----------
Non-Operating Income (Expense) ....................        (18,968)       (26,465         (33,231)       (119,944)
                                                        -------------   -----------       ---------      -----------
Net Loss before taxes..............................       (737,084)      (811,030)      (1,577,142)    (1,594,527)

     Provision for income taxes....................              0              0                0              0
Net Loss ..........................................    $  (737,084)   $  (811,030)     $(1,577,142)   $(1,594,527)
                                                         =========       ========         ========     ===========

Dividends .........................................         53,280         48,087          131,207         64,848


Net Loss after Dividends ..........................    $  (790,364)    $ (859,117)    $ (1,708,349)   $(1,659,375)

Loss per Common Share .............................    $     (0.04)    $    (0.06)    $      (0.09)   $     (0.12)
                                                           ========       ========         ========        ========
Weighted Average Number of
     Common Shares Outstanding ...................      21,558,223     15,194,570       18,651,908      14,026,451
</TABLE>








                 See notes to consolidated financial statements

                                       4

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                     Six Months Ended June 30,
                                                                                   2001                     2000
                                                                                   ----                     ----
Cash Flows from Operating Activities
<S>                                                                             <C>                     <C>
     Net income (loss) ..............................................           $(1,577,142)            $ (1,594,527)
     Adjustments to net income (loss)
        Depreciation and amortization ...............................               102,018                   98,200
        Stock and debt issued for expenses...........................                27,388                  191,667
        Disposition of certain assets /liabilities...................                     0                    1,122
        Dividend payments............................................               (14,003)                 (26,250)
     Decreases (increases) in Assets
        Accounts receivable .........................................              (192,295)                (260,275)
        Miscellaneous receivables....................................                22,196                   14,872
        Inventories .................................................                   240                      215
        Prepaid expenses ............................................               113,280                  (57,432)
        Other assets ................................................                 1,200                  (25,050)
     Increases (decreases) in Liabilities
        Prepayments received........................................                      0                    5,000
        Deferred revenues...........................................                207,220                   19,410
        Accounts payable and accrued expenses ......................                237,043                  (72,447)
                                                                                --------------        -----------------
Net Cash Provided (Used) by Operating Activities                                 (1,072,855)              (1,705,495)

Cash Flows from Investing Activities
     Purchases of equipment and fixtures ...........................                   (944)                 (51,860)
     Disposition of equipment and other assets .....................                      0                    3,358
                                                                                --------------       -----------------
Net Cash Provided (Used) by Investing Activities                                       (944)                 (48,502)

Cash Flows from Financing Activities
     Proceeds from notes payable ...................................                 397,500                       0
     Repayment of loans and notes ..................................                 (46,000)               (444,534)
     Reclassification of long-term debt ............................                (100,000)                     (0)
     Issuance of preferred stock....................................                 145,004               1,800,083
     Issuance of common stock ........... ..........................                 645,700                 550,000
                                                                                --------------           ------------
Net Cash Provided (Used) by Financing Activities                                   1,042,204               1,905,549
Net Increase (Decrease) in Cash ....................................                 (31,595)                151,552
Cash at Beginning of Period ........................................                  37,701                 249,569
                                                                                --------------           ------------
Cash at End of Period ..............................................            $      6,106       $         401,121
                                                                                =================      ================
</TABLE>









                 See notes to consolidated financial statements

                                       5
<PAGE>



              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

DESCRIPTION OF BUSINESS

         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.

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

BACKGROUND

     On   June 24, 1997,  the Company,  extended a stock  exchange  offer to the
          shareholders   of  Proformix,   Inc.,  a  Delaware   corporation   and
          manufacturer  of ergonomic  keyboarding  systems.  Proformix,  Inc. in
          November 1998 changed its name to Magnitude,  Inc. and is now referred
          to as Magnitude, Inc. At the time of this submission, holders of 99.4%
          of  Magnitude,  Inc.  common stock have  tendered  their  shares.  The
          business  combination which took the form of a reverse acquisition has
          been  accounted  for as a  purchase.  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 ErgoManager(TM) software system.

         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,  all
         related inventory and production  tooling and warehousing  assets,  and
         all intellectual  property rights including the Proformix name, against
         a cash  consideration  and certain royalty payments on OS' sales of the
         Proformix hardware products.
         .

                                       6
<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NARRATIVE DESCRIPTION OF INDUSTRY AND MARKET

         Magnitude  Information  Systems,  Inc.  is a pioneer  in the  Ergonomic
         Productivity   Software   (EPS)  market.   With   ErgoManager(TM),   an
         interactive  suite of  Windows(TM)  software  products,  Magnitude  has
         developed  and  delivered  the first  integrated  systems  approach  to
         computer ergonomics. Our patented proprietary software products provide
         business  and  government  employers  with a  complete  system  for the
         evaluation  and management of ergonomic and  productivity  risk factors
         with  respect  to the  use of  computers  in  the  office  environment.
         ErgoManager(TM)  is designed  to help  employers  minimize  preventable
         Repetitive Stress Injuries ("RSI") and enhance productivity through:

         -- Real-time monitoring of keyboarding activities to ensure proper
            posture and work pacing.
         -- Pro-active dialogue with at-risk employees, including surveys and
            training in the best practices for wellness and productivity.
         --  Strategic  profiling and the  management of computer use throughout
             an  organization  to employ best  practices and to measure  health,
             safety, and performance results.
         -- Computer workstation assessment tools.

         We have received a patent from the U.S. Patent and Trademark  Office on
         our  application   relative  to  certain  core  inventions  within  its
         ErgoManager(TM) system and we have applied for several more patents for
         our products.

         As  the   utilization   of  computers  in  the  office  has   increased
         significantly  in the last decade,  so has the rate of health  problems
         believed  to be related to the use of  computers.  Computer  ergonomics
         focus  on  optimizing   the  design  of  technology   involved  in  the
         utilization of computers in the office, and also attempts to affect the
         manner in which people interact with  computers,  so as to minimize the
         associated  health  risks.  A  successful  technology  delivery  system
         positively impacts the cost of doing business by improving the comfort,
         productivity,  job  satisfaction and safety of the computer user, while
         reducing the costs of absenteeism and work related disability.

         Repetitive  stress injury (RSI) is a classification  of diseases caused
         by  the  excessive  use  of  joints.  It  is  a  sub-classification  of
         Cumulative Trauma Disorders (CTDs). RSI accounts for a large portion of
         work-related illnesses, and the incidence of RSI is expected to grow as
         the number of people operating keyboards  increases.  The impact of RSI
         is measured not only in the pain and suffering of its victims, but also
         in time  lost from  work and  medical  costs.  The  Company's  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 new  study  released  in  January  2001 by the  National  Academy  of
         Sciences,  originally  commissioned  by  Congress  and  produced by the
         National Research Council, finds that work-related back, hand and wrist
         injuries affect about 1 million U.S. workers every year. The total cost
         of the  resultant  disorders  is between $45 billion and $54 billion in
         compensation, lost wages and lower productivity. Increased awareness of
         the  health  risks and  associated  costs  led the State of  California
         several years ago  implemented  an ergonomic  regulation  which directs
         qualifying  employers to establish  and maintain a program  designed to
         minimize  RSI's.  Such  program  shall  include  work-site  evaluation,
         control of the  exposures  that have  caused  RSI's,  and  training  of
         employees.  State agencies and employers in California face fines of up
         to $25,000 per incident for violating these  regulations.  The State of
         Washington  adopted similar  regulations in 2000, and other states have
         indicated a willingness to follow suit.  The Company  believes that the
         growing  recognition  of  these  trends  will  give  rise to a  rapidly
         expanding market for the Company's products.

                                       7
<PAGE>



              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

GOING CONCERN

     The ability of the Company to  continue  its  operations  is  dependent  on
     increasing sales and obtaining  additional capital and financing.  In their
     report for the fiscal  year ended  December  31,  2000,  our  auditors  had
     expressed  an  opinion  that,  as a result of the losses  incurred  and the
     relative lack of working capital, there was substantial doubt regarding our
     ability  to  continue  as  a  going  concern.  The  accompanying  financial
     statements  do not include any  adjustments  that might be necessary if the
     Company  were unable to continue as a going  concern.  During the last year
     and the first two  quarters  in 2001 the  Company has relied on the private
     placement  of its  common  and  preferred  stock  to fund  its  operations.
     Management's  plans are to  continue  seeking  additional  working  capital
     through  equity  and  debt  placements   with  private  and   institutional
     investors.


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

     Depreciation and Amortization
         Property,  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 3-10 years.  Maintenance and repairs are charged to
         operations   as  incurred.   Software   assets  are  amortized  on  the
         straight-line method over 10 years.

     Securities Issued for Services
         The Company accounts for stock, stock options and stock warrants issued
         for services and  compensation  by employees  under the intrinsic value
         method. For non-employees, the fair market value of the Company's stock
         on the date of  stock  issuance  or  option  grant  is used.  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  services  rendered  or the fair value of the equity
         instruments issued, whichever is more reliably measurable. As permitted
         by the  statement,  the  Company  has elected to continue to follow the
         requirements of Accounting Principles Board Opinion No. 25, "Accounting
         for Stock Issued to Employees' for employees  under the intrinsic value
         method. The adoption of SFAS No. 123 does not have a material impact on
         the financial statements.

     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

                                       8
<PAGE>



              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

         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  income tax  purposes,  the benefit  for income  taxes has been
         offset  entirely by a valuation  allowance  against the related federal
         deferred  tax asset for the year ended  December  31,  2000.  For state
         income tax  purposes,  a partial  valuation  allowance  has been offset
         against  the  related  state  deferred  tax  asset  for the year  ended
         December 31, 2000.

     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 the  licensing  of our  proprietary  software  products is
         recognized  at the  time  of  licensing  provided  that  the  resulting
         receivable is deemed probable of collection. In determining the amounts
         to be  recognized,  we follow the  guidelines  established by SEC Staff
         Accounting  Bulletin  SAB 101 and  Statement  of  Position  (SOP) 97-2.
         Revenue from software maintenance contracts and services are recognized
         ratably as earned.

     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.

DEFERRED TAX ASSET

         During 2000, the Company had filed an  application  with the New Jersey
         Economic  Development  Authority who administers the current New Jersey
         Tax   Certification   program  pursuant  to  the  New  Jersey  Emerging
         Technology and  Biotechnology  Financial  Assistance Act to qualify for
         and be the  beneficiary of this program which will permit a participant
         to liquidate  its State NOL tax benefits  against cash  considerations.
         The Company has been  accepted  under this  program and has been issued
         tax transfer  certificates  which will, upon  liquidation,  result in a
         cash benefit in the amount stated.

PREPAID EXPENSES

         Prepaid  expenses  include a position  of  $210,789  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  to  be  utilized  on  stations
         associated  with Business  News Network  Inc.,  usable over a period of
         three years,  since then extended,  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 is
         being amortized as utilized.  Management believes that the Company will
         derive economic benefits  commensurate with the remaining value of this
         asset.  If  management  were  to  determine  that it may not be able to
         economically  utilize the entire  amount during the time  allotted,  it
         will effect an  accelerated  amortization  or  write-down of this asset
         position.

                                       9

<PAGE>


              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001


RECEIVABLES DUE AFTER 12 MONTHS

     Two major contracts,  entered into during the second quarter,  provided for
     deferred payment schedules of which portions  amounting to $251,562 are due
     and payable in installments during the months July through December 2002.


PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consist of the following at June 30, 2001:
              Equipment                                   $       164,891
              Furniture and fixtures                               69,976
              Leasehold improvements                               45,770
                                                            --------------

                                                                  280,637

              Less accumulated depreciation                       191,650
                                                            --------------

                                        Total             $        88,987
                                                            ==============


ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts  payable and accrued  expenses  consisted of the  following at June 30,
2001:

              Accounts payable                           $       536,474

              Accrued interest                                    47,781

              Accrued commissions                                 34,134

              Accrued salaries and professional fees             122,808

              Miscellaneous accruals                              83,060
                                                            =============

                                    Total                $       824,297
                                                            =============


DEFERRED REVENUES

     During the  second  quarter,  the  Company  entered  into a  licensing  and
     distribution  agreement  with a foreign  distributor  which  resulted  in a
     $175,000  receivables  position with extended  payment  terms.  The Company
     deferred all of the accompanying revenue to future time periods when it has
     received  more  assurance  with  respect  to  the   collectibility  of  the
     receivable






                                       10


<PAGE>




              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001
<TABLE>
<CAPTION>

LOANS AND NOTES PAYABLE

     At June 30, 2001,  Magnitude,  Inc. and the Company had borrowings  under short term loan  agreements with the following
     terms and conditions:

<S>                                                                                                        <C>
         Note issued by Magnitude,  Inc.  originally  maturing December 4, 1998 and accruing interest at   $        75,000
         5% per year.  This note is  overdue  at June 30,  2001;  no demand  for  payment  has been made
         through today's date.
         Note issued by Magnitude,  Inc.  originally maturing June 1996 and accruing interest at 12% per
         year.  This note is  overdue at June 30,  2001;  no demand for  payment  has been made  through            25,000
         today's date.
         Discounted  present value of a non-interest  bearing $70,000  settlement with a former investor
         of  Magnitude,  Inc.  to be paid in  monthly  payments  commencing  July 1, 1997.  The  imputed            33,529
         interest rate used to discount the note is 8% per annum.
         Cash  advances from and notes to officers and  directors of the Company,  carrying  interest at
         the rate of 7% p.a.
                                                                                                                   372,500


                  Total                                                                                    $       506,029
                                                                                                             ==============


LONG-TERM DEBT

        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           274,890
        principal of Rolina  Corporation  who  currently  serves as the  Company's  President  and Chief
        Executive Officer,  and had issued a Put Option for such Shares at a price of $2.41 per share in
        accordance with the provisions contained therein,  with notice for exercise eligible to be given
        at any time after  February  1, 2000,  and before  5:00 p.m.  on the 90th day  thereafter.  This
        current  liability was converted into a Company  obligation  maturing July 1, 2002, and carrying
        interest at the rate of 7% per year  payable  monthly,  of which a portion of $100,000  has been
        reclassified  as due on demand.  The obligation  includes an option to the holder for conversion
        of the outstanding  principal into shares of the Company's common stock at the rate of $0.50 per
        share.


  INCOME TAXES

       At December 31, 2000,  the Company had net operating  loss carry forwards
       approximating  $14,000,000  for federal  income tax purpose  which expire
       between  the  years  2007 and  2020 and are  subject  to  certain  annual
       limitations.

  The Company's total deferred tax asset and valuation allowance at December 31, 2000 are as follows:
            Total deferred tax asset                                                                    $       5,600,000
            Less valuation allowance                                                                            5,600,000
            Net deferred tax asset                                                                      $               -
                                                                                                          ================
</TABLE>


                                       11

<PAGE>



              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

COMMITMENTS AND CONTINGENCIES

   Lease Agreements

     On March 15, 2000,  the Company  entered into a lease  agreement for office
     space which is utilized for the  Company's  principal  offices.  Such lease
     commenced April 15, 2000 and expires on March 31, 2005 and requires monthly
     payments of $6,500 from April 15, 2000 through  March 31,  2002;  of $6,695
     thereafter  through March 31, 2003; of $6,896 thereafter  through March 31,
     2004; and of $7,103 thereafter through March 31, 2005.


RELATED PARTY TRANSACTIONS

      On March 31,  2000,  the Company  and its  President  and Chief  Executive
      Officer agreed to convert a current liability payable to him in the amount
      of $374,890 into a Company obligation,  of which $100,000 was subsequently
      classified  as due on  demand  with  the  remaining  balance  of  $274,890
      maturing July 1, 2002. The obligation among others provides for a right to
      the holder to convert  such  obligation  into common  stock of the Company
      (see "Long-term debt").

      During the first two quarters in 2001,  several  officers and directors of
      the Company extended cash advances to the Company that totaled $272,500 at
      June 30, 2001, and which accrue interest at the rate of 7% per year. These
      advances are repayable upon demand (see "Subsequent Events" below).


SUBSEQUENT EVENTS

      During July 2002,  a director of the  Company  converted  demand loan cash
      advances totaling $130,000 into common stock and warrants for the purchase
      of common stock of the Company,  commensurate with terms currently offered
      to independent private investors.  In July 2002, the board of directors of
      the Company authorized the grant of a stock option for the purchase of 2.5
      million  common  shares to the Chief  Executive  Officer  of the  Company,
      exercisable over ten years at a price of $0.50 per share. The option has a
      cash-less exercise feature










                                       12
<PAGE>



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


Results of Operations:

         After  receiving - during the first quarter in 2001 - a major  software
contract from a Fortune 100 large industrial business concern,  Magnitude during
the second quarter signed major  distribution and licensing  agreements with two
distributors  in Florida and in Europe,  valued at  $409,000.  While the Florida
agreement  contributed  to  revenues  already  during the  quarter,  the Company
deferred revenue  recognition on the other transaction (see "Deferred  Revenues"
in Notes to Financial  Statements).  These  contracts  re-affirmed the Company's
ErgoManager(TM)  software product as the premier software solution for improving
the quantity  and quality of computer  data input work  through  application  of
ergonomic   principles.   Several  pilot  studies  have  shown  a  statistically
significant  improvement  in  work  accuracy  following  implementation  of  the
software.  Pilot project  installations  are designed to impart  credibility and
awareness  of the  product's  unique  potential  in the  areas  of  productivity
enhancement and risk reduction with respect to repetitive stress injuries in the
office  environment.  Pilot projects involving smaller numbers of employees also
provide a potential  client with an opportunity  to test the software's  utility
and reliability,  systems and network friendliness, and staff acceptance without
incurring the perceived and sometimes real risk associated with installing a new
product on an enterprise-wide scale. Management assigns great importance to this
purchase  and  expects  other  current  pilot   installations   to  mature  into
enterprise-wide contracts in the upcoming quarters.

         Revenues  for the quarter  ended June 30,  2001,  increased to $290,411
compared to  $247,981  for the same  period in 2000 and  $202,522  for the first
quarter,  all such revenues  generated by the Company's  wholly owned subsidiary
Magnitude, Inc. from the licensing of the Company's proprietary  ErgoManager(TM)
software and related  maintenance and support  services.  The revenue figure for
the quarter,  however,  represents a significant  concentration  on one customer
with whom the Company entered into an exclusive regional distribution  agreement
and who  accounted for  approximately  80% of total  revenues.  The terms of the
resultant  purchase contract  furthermore  provide for extended payment terms so
that the Company will realize cash  receipts only in  installments  through 2002
(see  "Receivables  due  after 12  months"  in Notes to  Financial  Statements).
Revenues  for the six  months  period  ended  June 30,  2001,  totaled  $492,933
compared to $348,003 in the first half of 2000. Gross profits during the quarter
totaled  $248,200 for a 85% gross margin.  The gross profits are burdened with a
fixed  charge  for  amortization  of  software   investments.   Software  assets
underlying the Company's products are being amortized on a straight line over 10
years,  resulting  in a level  charge  of  approximately  $13,000  per  month to
cost-of-goods-sold.  Since  variable  product costs are low, the gross margin is
expected to further increase as revenues grow. After deducting  selling expenses
and general and  administrative  expenses totaling $966,316 the Company realized
an operating loss of $718,116, compared to an operating loss of $784,565 for the
second quarter in 2000. Non-operating expenses totaled $18,968 primarily in form
of  interest  expense.  The net result for the  quarter,  after  accounting  for
dividends paid and accrued on the Company's  outstanding  preferred stock, was a
loss of $790,364 or $0.04 per share, compared to a loss of $859,117 or $0.06 per
share  for the same  period  last  year.  The six  month'  result  was a loss of
$1,708,349 in 2001, and a loss of $1,659,375 in 2000.

         Operating  expenses  continue  to be  high  relative  to  revenues.  In
management's  opinion,  however,  they  represent  close to a practical  minimum
necessary  to  maintain  the  Company's  presence on the  marketplace.  Moderate
savings  vis-a-vis  prior  quarters were achieved in selling  expenses where the
quarterly  total  decreased  from  $378,259  in 2000 and  $421,482  in the first
quarter of this year,  to $328,126  for the  reporting  period.  A reduction  in
certain  non-critical  marketing  programs  was the  primary  reason  for  these
decreases.  Some of these  savings,  however,  were  offset  by a small  rise in
general and  administrative  expenses,  at the rate of 5%,  over the  comparable
periods last year.






                                       13
<PAGE>




         The  increase in bookings and revenues  during the second  quarter,  as
mentioned above, is entirely  founded in reseller  agreements which constitute a
new distribution channel for the Company's products. This channel is expected to
grow into a major revenue and profit  contributor during the next twelve months,
and  management  is  presently in  negotiations  with  several  other  primarily
overseas - distributors to expand in this area.  Success if measured in terms of
current  revenues,  in the core B2B  business  segment  that focuses on domestic
medium and large companies with the goal of installing enterprise-wide solutions
has not been  apparent  in the second  quarter.  Sales  cycles  for such  larger
contacts are long and somewhat  unpredictable,  and the  conclusion of any major
contract will significantly  impact any given quarter's  results.  Management is
confident  that its  current  sales  approach  remains  valid and will result in
tangible revenue improvements during the upcoming quarters.

         As a result of the slower than initially  forecasted  growth in the B2B
sector,  the quarter concluded with a significant loss that cut further into the
Company's financial resources.  A partial  replenishment of these resources came
in the form of new working capital provided by private investors,  however,  the
amounts  obtained were not sufficient to entirely offset the negative  cash-flow
from  operations,  and  came  at  the  cost  of  occupying  a  growing  part  of
management's time and efforts.  Since revenues from the licensing of software do
not yet cover operating expenses, and are not expected to do so in the immediate
future,  the Company will continue to depend on new capital infusions to be able
to operate and pursue its marketing goals.


Liquidity and Capital Resources

         The  cash  outflow  from  losses  during  the  first  quarter  could be
partially  compensated by new equity investments through equity subscriptions by
accredited investors who purchased the Company's common and preferred stock in a
series  of  private  placements.  Such  transactions  contributed  approximately
$375,000 in cash.  The remaining  shortfall was partially  covered by short-term
cash advances from related parties,  in the aggregate amount of $230,000.  These
receipts were not sufficient to stem a further  erosion of working capital which
declined from negative  $370,000 at March 31, 2001, to negative  905,000 at June
30, 2001.

         In June,  2001,  the Company  entered into a consulting  agreement with
Rodman & Renshaw for the  purpose of  introducing  the Company to  institutional
lenders and investors.  In addition  management is presently in discussion  with
several  private  lenders  and  investors  with  the goal of  securing  a larger
infusion of equity or debt  capital.  The outcome of these  discussions  and the
timing for any resulting  capital  inflows can not,  however,  be predicted with
certainty at this time, and there can be no assurance that the necessary capital
for an  orderly  continuation  of  the  Company's  business  and  redemption  of
liabilities  will be obtained in a timely fashion.  Should the Company be unable
to  successfully  complete such financing  transactions  we may have to severely
curtail operations.

         At the time of this submission,  the Company had no bank debt. At March
31, 2001,  its short-term  liabilities,  aside from trade payables and accruals,
consisted of certain notes and loans aggregating approximately $500,000 of which
$372,500 are owed to certain  officers  and  directors of the Company in form of
demand notes (see "Related  Party  Transactions").  All of the long-term debt of
approximately  $275,000 was owed to the chairman and chief executive officer and
evidenced  by a promissory  note  maturing in 2002.  Owing to present  liquidity
constraints,  the Company is currently in arrears with approximately  $80,000 in
accrued unpaid dividends.








                                       14

<PAGE>




PART  II  -  OTHER INFORMATION

Item 1   LEGAL PROCEEDINGS

The Company is not a party in any legal proceedings.


Item 2   CHANGES IN SECURITIES      -  None

c)   Issuance of unregistered securities

In addition to the issuance of unregistered  securities  previously noted in the
Company's  report  on  Form  10-QSB  for  the  quarter  ended  March  31,  2001,
incorporated  herein by  reference,  the Company,  during the second  quarter of
2001, issued the following unregistered securities:

(i) 932,200  shares of common stock  accompanied by warrants for the purchase of
932,200  shares of  common  stock  exercisable  at prices of $0.60 and $0.90 per
share, to ten accredited investors pursuant to private placement  subscriptions,
issued in reliance upon  exemptions  provided  under  Section 4(2),  Rule 506 of
Regulation  D and  Regulation S of the  Securities  Act,  which  resulted in the
receipt by the Company of approximately  $380,000 in cash; (ii) 2,033,920 shares
of  common  stock  pursuant  to the  conversion  of  203,392  shares  of  Senior
Convertible Preferred Stock, Series B and D, of the Company;

(iii) 92,666 shares of common stock  pursuant to the  conversion  into equity of
accrued dividends on certain Convertible Preferred Stock and interest accrued on
notes payable;

(iv)     250,000 shares of common stock pursuant to the  cash-less exercise of
         certain warrants;

(v)      3,750 shares of common stock for services performed.

Item 3   DEFAULTS ON SENIOR SECURITIES

The  Company,  as of the date of this  filing,  is in arrears on the  payment of
certain  dividends  on its  Series A, B, C, and D Senior  Convertible  Preferred
Stock. Such arrears total approximately $80,000 .

Item 4   SUBMISSION OF MATTERS TO A VOTE OF
         SECURITIES' HOLDERS                    -  None

Item 5 OTHER  INFORMATION  The  Company  and  Torneaux  Fund Ltd.  executed  and
delivered  a  certain  Termination  Agreement,  dated  as  of  August  1,  2001,
terminating  the  Common  Stock  Purchase  Agreement  (providing  for an  equity
drawdown facility) by mutual consent.

Item 6   EXHIBITS AND REPORTS ON FORM 8-K

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

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

                  Exhibit 10.5 - Termination  Agreement,  dated as of August 1,
                  2001, by and between the Company and Torneaux Fund Ltd.

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

                                       15
<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 1, 2001         By: _____/s/  Steven D. Rudnik___________
                                ----------------------------------------
                                     Steven D. Rudnik
                                     Chairman and Chief Executive Officer
















                                       16

<PAGE>

                                                            EXHIBIT 10.5

                             TERMINATION AGREEMENT


     THIS  TERMINATION  AGREEMENT (the  "Termination  Agreement") is dated as of
August 1, 2001 by and between Magnitude  Information  Systems,  Inc., a Delaware
corporation  (the  "Company") and Torneaux Fund Ltd., a company  organized under
the laws of the Commonwealth of the Bahamas ("Torneaux").

                              B A C K G R O U N D:


     WHEREAS,  the Company and Torneaux  executed and delivered a certain Common
Stock  Purchase  Agreement,  dated  as of  December  18,  2000  ( the  "Purchase
Agreement"),  pursuant to the general terms and conditions of which Torneaux was
to provide the Company with an equity draw down facility by  purchasing  certain
quantities of the Company's equity securities from time to time; provided, among
other  conditions  to  be  satisfied,  that  the  Company  register  the  equity
securities  to be purchased by Torneaux  under the  Securities  Act of 1933,  as
amended (the "1933 Act"); and

     WHEREAS,   pursuant  to  the  Purchase  Agreement,   the  Company  filed  a
registration  statement  with  the  Securities  and  Exchange  Commission  ( the
"Commission"),  seeking to  register  its equity  securities  under the 1933 Act
which  registration  statement  has  not  yet  been  declared  effective  by the
Commission; and

     WHEREAS,  the parties  desire to now execute and deliver  this  Termination
Agreement,  providing,  among other things,  for the termination of the Purchase
Agreement and the withdrawal of the above mentioned registration statement.

     NOW, THEREFORE,  in consideration of the mutual premises, the parties agree
as follows:

1.  Termination.  The Company and Torneaux agree that the Purchase  Agreement is
hereby  terminated as of the date hereof by mutual  consent in  accordance  with
Section 8.1 of the Purchase Agreement.  Any and all rights, duties,  benefits or
obligations  arising  out of or set  forth  in the  Purchase  Agreement  or this
Termination Agreement that are not expressly identified as a surviving provision
in Section 3 below  shall  automatically  terminate  and be deemed null and void
upon the execution and delivery of this Termination Agreement.

2. Withdrawal of Registration  Statement.  The Company hereby undertakes to file
an application with the Commission to withdraw its registration  statement filed
on Form SB-2 with the  Commission  on December  22,  2000,  Commission  File No.
333-52618 ( the  "Registration  Statement")  pursuant to Rule 477(a) of the 1933
Act as  soon  as  practicable  following  the  execution  and  delivery  of this
Termination Agreement.  The Company hereby further undertakes to notify Torneaux
and its counsel in writing of the receipt of the  Commission's  consent or other
response to the Company's  application  within 2 business days' of the Company's
receipt.

3.  Survival.  The  following  provisions  of  the  Purchase  Agreement,  hereby
incorporated  by  reference in this  Termination  Agreement,  shall  survive the
termination of the Purchase  Agreement and any  termination of this  Termination
Agreement:  (a) the Company's obligation under Section 10.1(i) to pay Torneaux's
reasonable  attorneys'  fees and  expenses,  and;  (b)  Torneaux's  promises  to
maintain confidentiality under Section 10.14.

                                        1
<PAGE>


4. Notices.

If to the Company:                  MAGNITUDE INFORMATION SYSTEMS, INC.
                                    401 Route 24
                                    Chester, New Jersey 07930
                                    Tel. No.:  (908) 879-2722
                                    Fax No.:  (908) 879-7006

With copies to:                     Joseph J. Tomasek, Esq.
                                    77 North Bridge Street
                                    Somerville, New Jersey 08876
                                    Tel. No.:  (908) 429-0030
                                    Fax: No.: (908) 429-0040

If to the Purchaser:                Torneaux Fund Ltd.
                                    c/o Portia Fund Services (Bahamas)
                                    Limited
                                    Montague Sterling Centre
                                    East Bay Street
                                    P.O. Box SS-6238
                                    Nassau, Bahamas
                                    Tel. No.:  (242) 394-2700
                                    Fax No.:  (242 394-8348
                                    Attention:  Karen Zyp

With copies to:                     Jenkens & Gilchrist Parker Chapin LLP
                                    The Chrysler Building
                                    405 Lexington Avenue
                                    New York, New York 10174
                                    Tel. No.: (212) 704-6000
                                    Fax No.: (212) 704-6288

         Any party  hereto may from time to time  change its address for notices
by giving at lest ten (10) days prior written notice of such changed  address to
the other party hereto.

5.  Governing  Law.  This  Agreement  shall  be  governed  by and  construed  in
accordance  with the  internal  laws of the  State of New York,  without  giving
effect to the choice of the law provisions.

6.  Publicity.  The Company shall include a disclosure of the material  facts of
this Termination Agreement, and file a copy hereof as an exhibit thereto, in its
Form 10-QSB for the quarter  ended June 30, 2001,  intended to be filed with the
Commission no latter than August 3, 2001.



                                        2
<PAGE>


     IN WITNESS WHEREOF,  the parties have caused this Termination  Agreement to
be executed by their respective authorized officers as of the date first written
above.

                                     MAGNITUDE INFORMATION SYSTEMS, INC.


                                     By:   /s/Steven D. Rudnik
                                              Steven D. Rudnik
                                              Chief Executive Officer


                                     TORNEAUX FUND LTD.


                                     By:  /s/ Richard Colpron
                                          --------------------
                                            Richard Colpron
                                            Vice President




























                                        3