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, 2006

                                       OR

              |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the Transition Period from         to
                                               -------    --------

                         Commission file number 33-20432

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

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

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

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

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

The  number  of  shares  of  Registrant's  Common  Stock,   $0.0001  par  value,
outstanding as of June 30, 2006, was 175,862,612 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, 2006                                                     3

         Consolidated Statements of Operations
          - Three and six months ended June 30, 2006 and 2005                 4

         Consolidated Statements of Cash Flows
          - Six months ended June 30, 2006 and 2005                           5

         Notes to Consolidated Financial Statements                      6 - 12


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

Item 3   Controls and Procedures                                             15


PART II  -  OTHER INFORMATION                                           16 - 17


SIGNATURES                                                                   18


                                       2
<PAGE>


                      PART I - ITEM 1 FINANCIAL STATEMENTS

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                            June 30, 2006 (Unaudited)
<TABLE>


<S>                                                                           <C>
Assets
  Current Assets
  Cash                                                                        $      7,118
  Accounts receivable, net of allowance for
    doubtful accounts of $0                                                          5,958
  Prepaid expenses                                                                  24,644
                                                                              ------------
    Total Current Assets                                                            37,720
  Property and equipment, net of accumulated
   depreciation of $156,067                                                         11,551
  Software, net of accumulated amortization
    of $1,259,566                                                                  247,724
  Deposits                                                                          23,996
  Covenant not to compete, net of accumulated
   amortization of $6,250                                                           53,750
                                                                              ------------
   Total Assets                                                                    374,741
                                                                              ============
Liabilities and Stockholders' Equity (Impairment)

  Current Liabilities
  Accounts payable and accrued expenses                                            420,695
  Deferred revenue                                                                  15,823
  Prepayments                                                                      100,000
  Obligations to be settled in stock                                                48,000
  Derivative conversion feature                                                     96,559
  Dividends payable                                                                296,864
  Loans and notes payable                                                          398,000
  Current maturities of long-term debt                                             133,419
  Current maturities of capitalized lease obligations                                  256
                                                                              ------------
      Total Current Liabilities                                                  1,509,616
 Capitalized lease obligations, less current portion                                    --
                                                                              ------------
   Total Liabilities                                                             1,509,616

Stockholders' Equity (Impairment)
Preferred Stock, $0.001 par value, non-voting, 3,000,000 shares authorized:
2,500 shares have been designated Cumulative Preferred Stock,
of which 1 share is issued and outstanding                                               0
300,000 shares have been designated Series A Convertible Preferred Stock,
350,000 shares have been designated Series B Convertible Preferred Stock,
120,000 shares have been designated Series C Convertible Preferred Stock,
500,000 shares have been designated Series D Convertible Preferred Stock,
500,000 shares have been designated Series E Convertible Preferred Stock,
of which a combined total 109,858 shares are issued and outstanding                    110
Common Stock, $0.0001 par value, 300,000,000 shares authorized;
issued and outstanding 175,862,612 shares                                           17,586
Additional paid-in capital
                                                                                32,510,500
Accumulated (deficit)                                                          (33,663,071)
                                                                              ------------
   Total Stockholders' Equity (Impairment)                                      (1,134,875)

   Total Liabilities and Equity (Impairment)                                  $    374,741
                                                                              ============
</TABLE>


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


                                       3
<PAGE>


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


<TABLE>
<CAPTION>
                                                    Three Months Ended                 Six Months Ended
                                                          June 30,                         June 30,
                                                   2006             2005             2006             2005
                                               -------------    -------------    -------------    -------------

<S>                                            <C>              <C>              <C>              <C>
Total Revenues                                 $      21,079    $      45,569    $      32,154    $      64,833

  Cost of Goods Sold                                  36,384           36,375           72,749           72,742
                                               -------------    -------------    -------------    -------------


Gross Profit (Loss)                                  (15,305)           9,194          (40,595)          (7,909)
  Selling expenses                                   170,351          116,399          310,472          212,618
  Stock-based compensation (see below)               409,065           57,852          521,557          123,975
  Research and development cost                       34,967           12,118           70,529           14,618
  General and administrative expenses                462,587          405,073          868,851          838,813
                                               -------------    -------------    -------------    -------------

Loss from Operations                              (1,092,275)        (582,248)      (1,812,004)      (1,197,933)

Other Income (Expense)
  Miscellaneous income                                    --               --               --           17,537
  Misc. non-operating expenses                        (5,000)              --           (5,000)              --
  Change in fair value -derivative liability          25,681               --            6,203               --
  Interest income                                         20                4               20                6
  Interest expense                                   (41,427)          (4,392)        (149,404)          (7,574)
                                               -------------    -------------    -------------    -------------

     Total Other Income (Expense)                    (20,726)          (4,392)        (148,181)          (9,969)
                                               -------------    -------------    -------------    -------------

Loss before Provision for Income Taxes            (1,113,001)        (586,636)      (1,960,185)      (1,187,964)

     Provision for income taxes                           --               --           (1,000)            (630)
                                               -------------    -------------    -------------    -------------

Net Loss                                       $  (1,113,001)   $    (586,636)   $  (1,961,185)   $  (1,188,594)
                                               =============    =============    =============    =============

Dividends on Preferred Stock                        (486,884)         (28,380)        (515,264)         (56,759)
                                               -------------    -------------    -------------    -------------

Net Loss applicable to Common Shareholders     $  (1,599,885)   $    (615,016)   $  (2,476,449)   $  (1,245,353)
                                               =============    =============    =============    =============
Net Loss per Common Share                      $      (0.010)   $      (0.004)   $      (0.016)   $      (0.009)
                                               =============    =============    =============    =============
Weighted Average Number of
  Common Shares Outstanding                      167,740,390      139,104,279      155,227,698      135,880,945
                                               =============    =============    =============    =============
</TABLE>

All  of  the   stock-based   compensation   relates  to  selling,   general  and
administrative expenses.

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


                                       4
<PAGE>


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


<TABLE>
<CAPTION>
                                                            Six Months Ended
                                                                June 30,
                                                           2006           2005
                                                      -----------    -----------
<S>                                                   <C>            <C>
Cash Flows from Operating Activities
  Net Loss                                            $(1,961,185)   $(1,188,594)
  Adjustments to Reconcile Net Loss
  to Net Cash Used by Operations
    Depreciation and amortization                          81,705         77,894
    Change in fair value - derivative liabilities          (6,203)            --
    Accretion of beneficial conversion feature              8,000             --
    Securities issued for various expenses                521,557        288,738
    Recognition of expense - deferred compensation             --         71,690
    Recognition of expense - derivative liabilities       102,762             --
Decreases (Increases) in Assets
    Accounts receivable .                                  16,339        (16,544)
    Miscellaneous receivables                                  --          8,918
    Inventories                                                --             --
    Prepaid expenses                                       (1,858)        (7,379)
    Obligations to be settled in stock                     24,000             --
Increases (Decreases) in Liabilities
    Deferred revenues                                      (9,716)       (15,249)
    Prepayments                                           100,000             --
    Accounts payable and accrued expenses                  41,399       (126,263)
                                                      -----------    -----------
Net Cash Used by Operating Activities                  (1,083,202)      (906,789)

Cash Flows from Investing Activities
    Purchases of equipment and fixtures                    (6,876)        (2,160)
                                                      -----------    -----------
Net Cash Used by Investing Activities                      (6,876)        (2,160)

Cash Flows from Financing Activities
    Proceeds from loans and notes payable                 378,250         29,500
    Repayment of loans and notes                          (48,250)            --
    Prepayments on stock subscriptions                     24,000             --
    Payment of dividends                                       --         (1,020)
    Issuance of common and preferred stock                624,500        870,000
                                                      -----------    -----------
Net Cash Provided by Financing Activities                 978,500        898,480

Net Decrease in Cash                                     (111,578)       (10,469)
Cash at Beginning of Period                               118,696         44,144
                                                      -----------    -----------
Cash at End of Period                                 $     7,118    $    33,675
                                                      ===========    ===========
</TABLE>



SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
The Company  issued  10,250,000  shares of common stock to the holder of 100,000
shares  of  Series  C  convertible  preferred  stock  pursuant  to a  settlement
agreement  whereby in exchange  against  the above  common  shares,  the 100,000
preferred shares were cancelled and $350,895 accrued unpaid dividends forfeited.

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


                                       5
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Nature of Organization

         Magnitude Information Systems, 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.

         The Company and Magnitude, Inc. are two separate legal entities whereby
         Magnitude,  Inc. operates as a subsidiary of the Company.  However, the
         operations of the combined entity are currently comprised solely of the
         operations  of Magnitude,  Inc. The 1% of Magnitude,  Inc. not owned by
         the Company constitutes a minority interest which is valued at $0.

         The Company's  primary  product is an integrated  suite of  proprietary
         software  modules  marketed under the name  ErgoEnterpriseTM  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.

     Basis of Presentation

         The accompanying  unaudited consolidated financial statements have been
         prepared in accordance with generally  accepted  accounting  principles
         for interim  financial  statements  and with the  instructions  to Form
         10-QSB  and  Article 10 of  Regulation  S-X.  Accordingly,  they do not
         include all of the  information  and  disclosures  required  for annual
         financial  statements.  These  financial  statements  should be read in
         conjunction  with the  consolidated  financial  statements  and related
         footnotes  included in the  Company's  annual report on Form 10-KSB for
         the year  ended  December  31,  2005 and the  quarterly  report on Form
         10-QSB/A for the quarter ended March 31, 2006..
          .
         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 June 30, 2006,  the results of operations for
         the three and six  months  ended June 30,  2006 and 2005,  and the cash
         flows  for the six  months  ended  June 30,  2006 and  2005,  have been
         included.

     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.

     Depreciation and Amortization

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


                                       6
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

     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.

     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  determined
         the  fair  market  value  of  the  warrants/options  issued  under  the
         Black-Scholes  Pricing  Model.  Effective  January 1, 2006, the Company
         adopted the provisions of Statement of Financial  Accounting  Standards
         (SFAS) 123R,  SHARE-BASED  PAYMENT,  which  establishes  accounting for
         equity  instruments   exchanged  for  employee   services.   Under  the
         provisions of SFAS 123(R), 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).  Prior to January 1, 2006, the
         Company   accounted  for  share-based   compensation  to  employees  in
         accordance  with  Accounting  Principles  Board  (APB)  Opinion No. 25,
         ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES,  and related interpretations.
         The Company also  followed  the  disclosure  requirements  of SFAS 123,
         ACCOUNTING FOR STOCK-BASED  COMPENSATION.  The Company elected to adopt
         the modified  prospective  transition method as provided by SFAS 123(R)
         and,  accordingly,  financial  statement  amounts for the prior periods
         presented in the Form 10-QSB have not been restated to reflect the fair
         value method of expensing share-based compensation.

     Reclassification of certain securities under EITF 00-19

         Pursuant to Emerging Issues Task Force (EITF) Issue 00-19, if a company
         has  more  than  one  contract  subject  to  this  Issue,  and  partial
         reclassification is required, there may be different methods that could
         be used to determine which contracts, or portions of contracts,  should
         be  reclassified.  The Company's  method for  reclassification  of such
         contracts is  reclassification  of contracts  with the latest  maturity
         date first.  The changes in fair value for any  contracts  reclassified
         during the first quarter in 2006 were not material.

     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 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.


                                       7
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

     Revenue Recognition

         The  Company's  revenue  recognition  policy for  software  sales is in
         accordance with  Accounting  Statement of Position (SOP) 97-2 "Software
         Revenue  Recognition" and SOP 98-9 "Software Revenue recognition" which
         modifies  SOP 97-2.  Revenue  is  recognized  at the time of  licensing
         provided that the resulting receivable is deemed probable of collection
         and  is  fixed  or  determinable.  Revenue  from  software  maintenance
         contracts  is  recognized  ratably  as  earned.  When a sales  contract
         includes  multiple  elements,  revenues  are  allocated  to the various
         elements based on  Company-specific  objective  evidence of fair value,
         regardless  of any separate  prices for each element that may be stated
         within the contract.
         .
     Use of Estimates

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities and disclosure of contingent  assets and liabilities at the
         date of the financial  statements and the reported  amounts of revenues
         and expenses during the reporting  period.  Actual results could differ
         from those estimates.

2. 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,  2005,  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  additional  working  capital
     through  equity  and  debt  placements   with  private  and   institutional
     investors.

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  $100,000.
     Balances in these  accounts  may, at times,  exceed the  federally  insured
     limits.  The Company  provides  credit in the normal  course of business to
     customers  located  throughout the U.S. and overseas.  The Company performs
     ongoing credit  evaluations  of its customers and maintains  allowances for
     doubtful accounts based on factors  surrounding the credit risk of specific
     customers, historical trends, and other information.

4. PREPAID EXPENSES

     Prepaid  Expenses  at the  end  of the  quarter  included  $14,399  prepaid
     insurance  costs,  with the remainder  representing  miscellaneous  prepaid
     expenses.

5. PROPERTY AND EQUIPMENT

     Property and equipment consist of the following at June 30, 2006:

              Equipment                                        $        95,388
              Furniture and fixtures                                    72,230
                                                               ---------------
                                                                       167,618
              Less accumulated depreciation                            156,067
                                                                 -------------
                                        Total                  $        11,551
                                                               ===============

Depreciation  expense  charged to operations  was $2,685 and $5,125 in the first
six months of 2006 and 2005, respectively.


                                       8
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts  payable and accrued  expenses  consisted of the  following at June 30,
2006:

              Accounts payable                                 $       279,001

              Accrued interest                                          63,646

              Accrued salaries                                          15,365

              Accrued commissions                                       22,183

              Accrued professional fees                                 38,500

              Miscellaneous accruals                                     2,000
                                                               ---------------
                                    Total                      $       420,695
                                                               ===============

     Accrued commissions are due to a consultant who is retained in the capacity
     of Senior Vice President of Business  Development.  In accordance  with the
     terms of the consulting agreement, one half of such commissions are payable
     in cash and the other half in form of  restricted  shares of the  Company's
     common stock,  valued at the market price of the Company's  common stock on
     the date payment of such  commissions are made. At June 30, 2006, the price
     of the stock was $0.06 which would, had payment of the commission been made
     that day, require issuance of 369,717 shares.


7. DEFERRED REVENUES

     Deferred revenues at June 30, 2006 consist of prepaid software  maintenance
     and support charges which are amortized ratably over the remaining duration
     of the underlying maintenance agreements.

8. LOANS PAYABLE

     The  Company  and  Magnitude,  Inc.  had  borrowings  under short term loan
     agreements with the following terms and conditions at June 30, 2006:

     On December 4, 1996,  Magnitude,  Inc. repurchased
     500,000  shares of its  common  stock and  retired
     same  against   issuance  of  a  promissory   note
     maturing   twelve   months   thereafter   accruing
     interest at 5% per annum and due December 4, 1998.
     This  note is  overdue  at June  30,  2006  and no
     demand for payment has been made.                         $        75,000

     During May 2006 a non-affiliated lender extended a
     short-term  loan  bearing  interest at the rate of
     10% per year.                                                      25,000

     During  March  2006  a  director  of  the  Company
     provided for a cash advance, repayable on demand.                  25,000
                                                               ---------------
                                                               $       125,000
             Total                                             ===============


                                        9
<PAGE>


     MAGNITUDE INFORMATION SYSTEMS, INC. SUBSIDIARY
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     JUNE 30, 2006
                   9. NOTES PAYABLE


     At December 31, 1999 the Company had $1,475,000 of
     notes  outstanding  related to a June 1995 private
     placement  offering.  During  2000 the  holders of
     $1,450,000 worth of notes agreed to accept partial
     repayment  of   approximately   30%  of  the  note
     balances and converted the remaining balances into
     common shares or convertible preferred shares. The
     total amount of non-converted notes outstanding at
     June 30, 2006 is  $25,000.  Attempts to locate the
     holder of this  note,  to settle  this  liability,
     have been unsuccessful.                                   $       25,000

     On May 12, 2006 a  shareholder  loaned the Company
     $40,000  pursuant  to which the  Company  issued a
     promissory note bearing interest at the rate of 5%
     per year,  maturing  August 15, 2006.  The note is
     convertible  at the  holder's  option  into  Units
     comprised each of one common share and one warrant
     for the  purchase  of one  share,  exercisable  at
     $0.08  /share,  at a  conversion  price  of  $0.06
     /unit.                                                             40,000

     Discount   on   $40,000   note   from   beneficial
     conversion value                                                  (32,000)

     In June 2005 two  shareholders  loaned the Company
     $240,000  pursuant  to which  the  Company  issued
     promissory  notes bearing  interest at the rate of
     8% per year.  The notes are  repayable  on demand.                240,000
                                                               ---------------
                                                               $       273,000
             Total                                             ===============


10. LONG-TERM DEBT

     Long-term debt as of June 30, 2006 is comprised of
     the following:

     Pursuant to the  February 2, 1998,  Agreement  and
     Plan  of  Merger  with  Rolina  Corporation,   the
     Company had issued  155,556  shares (the "Shares")
     of its  common  stock to the  principal  of Rolina
     Corporation who currently  serves as the Company's
     Chief Executive  Officer and Board  Chairman,  and
     had issued a Put Option for such Shares at a price
     of  $2.41  per  share  in   accordance   with  the
     provisions  contained  therein,  with  notice  for
     exercise  eligible  to be given at any time  after
     February 1, 2000, and before 5:00 p.m. on the 90th
     day thereafter.  This liability was converted into
     a Company  obligation for $274,890  maturing March
     31,  2002 and a  demand  loan  for  $100,000  both
     carrying  interest  at the  rate  of 7% per  year,
     subsequently  increased to 10%,  payable  monthly.
     The  demand  portion  of this  note was  repaid in
     April  2002 and the due date for  $274,890  of the
     remaining  balance  was  extended to July 1, 2003.
     Subsequently,  the maturity of the unpaid  balance
     was  changed to a portion of  $174,890  payable on
     demand,  and a portion of $100,000 due and payable
     on January 2,  2005.  During the first  quarter of
     2004,  $175,000 was repaid and the maturity of the
     unpaid  balance was changed to "due upon  demand".
     The  obligation  includes  an option to the holder
     for conversion of the  outstanding  principal into
     Units  consisting  of one  share of the  Company's
     common  stock  and  one  warrant,  exercisable  at
     $0.08/share,  whereby such Units are priced at the
     rate extended to outside  investors  prevailing at
     the time the conversion  option is exercised.  The
     conversion  feature  has been  accounted  for as a
     derivative liability.                                     $        99,890


                                       10
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006

LONG-TERM DEBT continued


     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.                              33,529
                                                               ---------------
                                                                       133,419
             Total
                 Less current maturities                               133,419
                                                               ---------------
                 Long-term debt, net of current maturities     $            --
                                                               ===============



11. PREPAYMENTS RECEIVED

     On April 13, 2006 the Company  received a deposit of $100,000 from a client
     who also is an investor in the Company. These funds were paid pursuant to a
     contract for the purchase of a customized version of the Company's software
     products.  At June  30,  2006 the  contract  had not  been  filled  and the
     prepayment is booked as a current liability.


12. CAPITALIZED LEASE OBLIGATIONS

     The Company leases office  equipment under a  non-cancelable  capital lease
     agreement  expiring in 2006. The capital lease obligation has been recorded
     at the present  value of future  minimum lease  payments,  discounted at an
     interest rate of 6.00%.  The capitalized cost of equipment at June 30, 2006
     amounted to $257 net of accumulated depreciation of $8,252.


                                       11
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006


13. COMMITMENTS AND CONTINGENCIES

     Lease Agreement

     On March 15, 2000,  the Company  entered into a lease  agreement for office
     space which is utilized for the  Company's  principal  offices.  Such lease
     commenced  April 15,  2000 and expired on March 31,  2005.  The Company had
     subsequently  negotiated  a lease  renewal  which  extended the term of the
     lease to March 31, 2007 at a monthly rental of $10,000.

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


         Year Ending December 31,

                  2006                                         $        90,000
                  2007                                                  30,000
                                                               ---------------
                                   Total minimum payments      $       120,000
                                                               ===============
     Consulting Agreements

     During the second quarter in 2006 the Company's board of directors ratified
     a  two-year  consulting  agreement  with an  outside  director  to  provide
     specialized  business  advisory services and to work directly for the chief
     executive officer in connection with certain sales and marketing  projects.
     The  agreement  provides  for a  compensation  package  which  includes the
     issuance of (a) 200,000  restricted common shares and an option to purchase
     500,000  shares  at  the  price  of  $0.15/share  at the  beginning  of the
     consultancy and again after twelve month, and (b) 150,000 restricted shares
     per month during the term.


     Employment Agreements

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

14. RELATED PARTY TRANSACTIONS

     In September 2005 our officers and directors  surrendered for  cancellation
     4,507,709  stock  options,  2,283,916  common stock  purchase  warrants and
     11,247,607 common shares in order to provide  sufficient  authorized common
     shares to accommodate the Company's current private placement.  We replaced
     the  surrendered  and  cancelled  common shares with shares of our Series E
     preferred stock which were automatically  convertible after six months into
     11,247,607  common shares,  which  conversion  occurred  during the quarter
     ended June 30, 2006. We also intend to reissue the 4,507,709  stock options
     and 2,283,916  warrants also  surrendered for  cancellation by our officers
     and  directors  with an equal  amount of  common  shares  underlying  these
     securities. The recipients of the Series E preferred stock had waived their
     right to receive any dividends on these shares.

                                       12
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006


     RELATED PARTY TRANSACTIONS continued

     In February  2006, the board of directors  approved a  modification  to the
     conversion  option on debt  outstanding  and  payable  to an officer of the
     Company (see Note 10).

     During  March 2006,  a director of the Company  extended a cash  advance of
     $25,000 to the Company, repayable on demand.

     During May 2006 the  Company's  board of  directors  ratified a  consulting
     agreement with an outside director to provide specialized business advisory
     services. (see Note 13 above)


15. REDEMPTION OF PREFERRED STOCK

     The  Company  issued  10,250,000  shares of common  stock to the  holder of
     100,000  shares of  Series C  convertible  preferred  stock  pursuant  to a
     settlement  agreement  whereby in exchange against the above common shares,
     the 100,000  preferred shares will be cancelled and $350,895 accrued unpaid
     dividends forfeited. Since the fair value of shares issued to the holder in
     settlement of the dividend obligation and redemption of the preferred stock
     held  exceeded  the  carrying  value of the  preferred  stock,  the Company
     recorded  the  excess  as  a  reduction  in  income   available  to  common
     shareholders,  shown in the Statement of Operations as preferred  dividends
     of $469,005.

     The  agreement  furthermore  stipulated  that $60,000 would be paid in cash
     over the course of twelve  months for  covenants  in the  agreement  by the
     former  holder,  including  a covenant  not to compete  for a period of two
     years.  This amount has been recorded as an intangible  asset,  amortizable
     over the term of the agreement.


16. SUBSEQUENT EVENTS


     On August 8, 2006 Steven D. Rudnik  resigned  from the position of Chairman
     of the Board of Directors of the Company. A settlement agreement stipulated
     among others that (a) his current employment  agreement be terminated,  (b)
     he resigns the  position of chairman,  (c) he receive 6 million  restricted
     common  shares and cash  payments  totaling  $60,000.00 to be paid in equal
     installments  through  November  1,  2006.  In his place,  Steven  Gray was
     appointed  Chairman of the Board, and Edward Marney was named a director of
     the Company.

     On August 17,  2006  Edward  Marney  vacated  the  position  of  President,
     however,  continues  to serve as Chief  Executive  Officer.  Matthew  Scott
     assumed the office of President of the Company.


                                       13
<PAGE>


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

RESULTS OF OPERATIONS

During   the   second   quarter,   Magnitude   began   an   evaluation   of  its
ErgoEnterprise(R)  product line with a focus on evolving  customer  needs.  This
evaluation  confirmed  the value of  Magnitude's  award winning  technology  and
assisted  the  company in  understanding  that a more  robust  "Complete  Office
Ergonomics  Solution"  would best meet future market  demand.  As a result,  the
company  began  development  of a new  product  line that  incorporates  many of
ErgoEnterprise's features, in a web-enabled environment. Market research efforts
continue  and will  drive all  future  product  development.  Additionally,  the
company began an evaluation of synergistic  technologies  to expand and expedite
the companies' strategic initiatives.

Revenues for the quarter totaled  $21,079,  compared to the $45,569  achieved in
the second  quarter of 2005. The six months figures were $32,154 and $64,833 for
2006 and 2005, respectively.

Gross profits for the quarter  amounted to negative  $15,305,  including a fixed
charge for amortization of certain  proprietary  software assets.  Such software
assets  underlie the  Company's  products and are being  amortized on a straight
line over 10 years,  resulting  in a level charge of  approximately  $12,000 per
month  to   cost-of-goods-sold.   After  deducting   selling-  and  general  and
administrative expenses, stock-based compensation and R&D expenses of $1,076,970
which significantly exceeded the $591,442 recorded in 2005, the Company realized
a loss from operations of $1,092,275,  compared to an operating loss of $582,248
in the second  quarter in 2005.  The increase in expenses was  primarily  due to
stock-based  compensation  and other non-cash  expenditures  paid for in form of
stock and/or warrants.  Non-operating  income and expenses  included $41,407 net
interest expense and a credit of $25,681 for the change in value of a derivative
liability.  The period result was a net loss of $1,113,001 compared to a loss of
$586,636 for the same period in 2005.

After  accounting  for dividend  accruals on outstanding  preferred  stock which
totaled  $17,879  and a  charge  of  $469,005  representing  net  effect  of the
settlement  agreement  described  in Part II Item 2 (iv),  the net  loss for the
quarter  applicable to common  shareholders  was $1,599,885 or $0.010 per share,
compared to a loss of  $615,016 or $0.004 per share for the same  quarter in the
previous  year,  and $2,476,449 or $0.016 per share and $1,245,353 or $0.009 per
share for the six months ended June 30, 2006 and 2005, respectively.

LIQUIDITY AND CAPITAL RESOURCES

In the absence of cash flow from operations, required working capital to finance
ongoing  operations  was supplied  almost  entirely from new equity  capital and
issuance of short-term debt.

At June 30,  2005,  the deficit in working  capital  amounted to  $1,547,336  as
compared  to  $1,335,076  at March  31,  2005.  Stockholders'  equity  showed an
impairment of $1,134,875 at the end of the quarter, compared to an impairment of
$1,335,076 at March 31, 2006. The negative cash flow from operations for the six
months  ended  June  30,  2006   totaled   approximately   $1,083,000   and  was
substantially financed by new debt and equity which was obtained through private
placements.  The new equity  placements  were  consummated by issuance of common
stock and warrants to accredited private investors in the United States. Details
of such  transactions  can be found in the "Changes and Issuance of  Securities"
section of this  report and the report on Form  10-QSB for the first  quarter in
2006.

At the time of this  submission,  the Company had no bank debt. At June 30, 2006
its short-term liabilities, aside from trade payables and accruals, consisted of
certain notes and loans, details of which can be found in the Notes to Financial
Statements in this report. Current liabilities include $296,864 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.

Current cash reserves and net cash flow from operations expected during the near
future are  inadequate  when measured  against  present and  anticipated  future
needs, and the Company's  financial  situation remains  precarious.  In order to
remedy the current liquidity constraints and address any "going-concern" issues,
management is currently negotiating with several financing sources with the goal
of  obtaining  commitments  for  further  investments  in form of debt or equity
capital, to be effected during the upcoming quarter.  There can be no assurance,
however,  that these  negotiations will lead to the desired outcome and that the
Company will be successful in its efforts to obtain the working  capital  needed
to fund  on-going  operations.  If the  Company  failed to do so,  either by not
acquiring  sufficient  funds,  or not receiving  such funds in a timely  manner,
management may be forced to drastically cut back operations.


                                       14
<PAGE>


ITEM 3.    CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

         As of the end of the period covered by this Form 10-QSB for the quarter
ended March 31, 2006,  an  evaluation  was  undertaken  by 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, as defined in
Exchange  Act  Rule  13(a)-14(c),  and;  based  upon  that  evaluation,  Company
management,  including  the Chief  Executive  Officer  and the  Chief  Financial
Officer,  has concluded  that the Company's  disclosure  controls and procedures
were  effective  as of the end of the period  covered by the subject Form 10-QSB
and  ensured  that all  material  information  required to be  disclosed  in the
subject Form 10-QSB, was recorded, processed,  summarized and reported as of the
end of the period covered by the subject Form 10-QSB.

         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-QSB  that
materially  affected or were likely to materially affect the Company's  internal
control over financial reporting.


                                       15
<PAGE>


PART  II  -  OTHER INFORMATION

Item 1   LEGAL PROCEEDINGS

On March 21, 2005, the Company filed a patent infringement lawsuit in the United
States District Court, District of New Jersey,  against Niche Software,  Ltd. of
New Zealand,  alleging that its software product called Workplace(TM)  willfully
infringed on the Company's  patent  underlying  its  ErgoEnterprise(TM)  product
line. On September 13, 2005, defendant filed an answer and counterclaim, denying
the allegations in our complaint and seeking a judgment  declaring our patent to
be invalid.  The Company intends to vigorously prosecute its infringement claims
against this infringer. Except for this infringement lawsuit, the Company is not
a party in any legal proceedings.



Item 2   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     a) Issuance of unregistered securities

         During  the  quarter  ended  June 30,  2006,  the  Company  issued  the
following unregistered securities:

         (i)      5,833,333 shares of common stock,  accompanied by warrants for
                  the purchase of 5,833,333  common shares,  exercisable  during
                  three  years  at  the  price  of  $0.08  per  share,  to  four
                  accredited    investors    pursuant   to   private   placement
                  subscriptions,  issued in reliance  upon  exemptions  provided
                  under Section 4(2) of the Securities Act, altogether resulting
                  in the receipt by the Company of $350,000 in cash,  $50,000 of
                  which were received already during the first quarter.

         (ii)     500,000  shares of common  stock and warrants for the purchase
                  of  2,500,000  shares,  exercisable  at $0.08  per  share to a
                  consultant,  and 1,100,000  shares of common stock and options
                  to acquire  500,000  shares at the price of $0.15 per share to
                  an   outside    director   (see   section    "Related    Party
                  Transactions"), for services rendered.

         (iii)    11,247,607  shares  of  common  stock  to five  directors  and
                  officers  pursuant  to the  conversion  of  112,476  shares of
                  Series E convertible preferred stock..

         (iv)     10,500,000  shares of common  stock to the  holder of  100,000
                  shares of Series C convertible  preferred stock pursuant to an
                  agreement whereby in exchange against the above common shares,
                  the 100,000  preferred  shares will be cancelled  and $350,895
                  accrued unpaid dividends forfeited.  The agreement furthermore
                  stipulated  that $60,000 would be paid in cash over the course
                  of twelve months.


(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 and D Senior Convertible Preferred Stock.
     Such  arrears  total  approximately  $300,000.  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.


                                       16
<PAGE>


Item 4   SUBMISSION OF MATTERS TO A VOTE OF
         SECURITY HOLDERS

             None


Item 5   OTHER INFORMATION

         -  None


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  Edward  Marney,  Chief  Executive
                  Officer,  pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002.

                  (31.2) -  Certification  of Joerg H. Klaube,  Chief  Financial
                  Officer,  pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002.

                  (32.1) -  Certification  of  Edward  Marney,  Chief  Executive
                  Officer, pursuant to Sections 906 of the Sarbanes-Oxley Act of
                  2002, 18 U.S.C. Section 1350

                  (32.2) -  Certification  of Joerg H. Klaube,  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  April  5,  2006 the  Company  filed a  report  on Form 8-K
                  informing about the voting results from a shareholder  meeting
                  held on March 31, 2006.

                  On  April  8,  2006 the  Company  filed a  report  on Form 8-K
                  informing  about  a  settlement  agreement  concluded  with  a
                  shareholder  and  former  officer  pursuant  to which  certain
                  convertible  preferred  shares and dividends  accrued  thereon
                  where cancelled against issuance of common shares and a stream
                  of cash payments.

                  On May 8,  2006  the  Company  filed  a  report  on  Form  8-K
                  informing  about the  resignation of Steven D. Rudnik from the
                  offices of  President  and Chief  Executive  Officer,  and the
                  appointment of Edward Marney to these executive positions.


                                       17
<PAGE>


                                   SIGNATURES


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



                                        MAGNITUDE INFORMATION SYSTEMS, INC.




Date:   August 18, 2006                 By: /s/  Edward Marney
                                            ----------------------
                                            Edward Marney
                                            Chief Executive Officer


                                       18