FORM
10-Q





SECURITIES
AND EXCHANGE COMMISSION





WASHINGTON,
DC 20549








x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


For
Quarter Ended March 31, 2009





OR





o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


For the
Transition Period from _______ to _______





Commission
file number  33-20432





MAGNITUDE INFORMATION
SYSTEMS, INC.


(Exact
Name of Registrant as Specified in its Charter)








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











330 West 38th Street, New York, New York
      10018
                (212) 967-1953(Address of Principal Executive Office) (Zip
      Code)
                (Registrant’s telephone number including area
      code)








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




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




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




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.):    Yes  o    No  x








The
number of shares of Registrant’s Common Stock, $0.0001 par value, outstanding as
of May 15, 2009, was 455,324,712 shares.


















MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES














INDEX





PageNumberPART
      1 - FINANCIAL INFORMATIONItem
      1
                              Financial
      StatementsConsolidated
      Balance Sheets-
      March 31, 2009 (unaudited) and December 31, 2008 (audited)
                              3Consolidated
      Statements of Operations-
      Three months ended March 31, 2009 and 2008 (unaudited)
                              4Consolidated
      Statements of Cash Flows-
      Three months ended March 31, 2009 and 2008 (unaudited)
                              5 -
      6Notes
      to Consolidated Financial Statements
                              7 -
      16Item
      2
                              Management’s
      Discussion and Analysis of Financial Conditionand
      Results of Operations
                              17
      – 19Item
      3.
                              Quantitative
      and Qualitative Disclosures About Market Risk
                              19Item
      4
                              Controls
      and Procedures
                              19PART
      II - OTHER INFORMATION
                              20Item
      1.
                              Legal
      Proceedings
                              20Item
      1A.
                              Risk
      Factors
                              20Item
      2.
                              Unregistered
      Sales of Equity Securities and Use of Proceeds
                              20Item
      3.
                              Defaults
      Upon Senior Securities
                              20Item
      4.
                              Submission
      of Matters to a Vote of Security Holders
                              20Item
      5.
                              Other
      information
                              20Item
      6.
                              Exhibits
                              21SIGNATURES
                              22





2





PART
I  - Item 1   Financial Statements





MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS







March 31, 2009
                    (Unaudited)
                  
                  
                  December 31, 2008
                    (Audited)AssetsCurrent
      AssetsCash
                  
                  $
                  1,150
                  
                  
                  $
                  5,000Accounts
      receivable, net of allowance fordoubtful
      accounts of $0 and $0
                  
                  
                  15,910
                  
                  
                  
                  9,800Prepaid
      expenses
                  
                  
                  32,124
                  
                  
                  
                  16,162Total
      Current Assets
                  
                  
                  49,184
                  
                  
                  
                  30,962Property
      and equipment, net of accumulateddepreciation
      of $72,558 and $63,722
                  
                  
                  31,329
                  
                  
                  
                  40,165Software,
      net of accumulated amortization of $17,717 and $12,329
                  
                  
                  46,933
                  
                  
                  
                  52,321Deferred
      financing costs, net of accumulated amortization of$619,900
      and $615,900
                  
                  
                  -
                  
                  
                  
                  4,000Other
      assets
                  
                  
                  3,224
                  
                  
                  
                  3,224Total
      Assets
                  
                  
                  130,670
                  
                  
                  
                  130,672Liabilities
      and Stockholders’ Equity (Impairment)Current
      LiabilitiesAccounts
      payable and accrued expenses
                  
                  
                  1,116,522
                  
                  
                  
                  931,676Obligations
      to be settled in stock
                  
                  
                  135,200
                  
                  
                  
                  135,200Dividends
      payable
                  
                  
                  440,891
                  
                  
                  
                  428,076Loans
      and notes payable
                  
                  
                  820,000
                  
                  
                  
                  320,000Derivative
      liability – warrants and options
                  
                  
                  -
                  
                  
                  
                  3,330,812Current
      maturities of long-term debt
                  
                  
                  33,529
                  
                  
                  
                  33,529Total
      Current Liabilities
                  
                  
                  2,546,142
                  
                  
                  
                  5,179,293Long-term
      Debt
                  
                  
                  -
                  
                  
                  
                  -Total
      Liabilities
                  
                  
                  2,546,142
                  
                  
                  
                  5,179,293Stockholders’
      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
                  
                  
                  
                  0300,000
      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,43,610
      shares have been designated Series G Convertible Preferred
      Stock,of
      which a combined total 85,890 and 129,500 shares are issued and
      outstanding
                  
                  
                  86
                  
                  
                  
                  129Common
      Stock, $0.0001 par value, 1,400,000,000 shares authorized;issued
      and outstanding 454,099,712 and 436,242,570 shares
                  
                  
                  45,410
                  
                  
                  
                  43,624Additional
      paid-in capital
                  
                  
                  44,166,784
                  
                  
                  
                  40,159,909Loans
      receivable – stockholders
                  
                  
                  (131,262
                  )
                  
                  
                  (131,262
                  )Accumulated
      (deficit)
                  
                  
                  (46,496,490
                  )
                  
                  
                  (45,121,021
                  )Total
      Stockholders’ Equity (Impairment)
                  
                  
                  (2,415,472
                  )
                  
                  
                  (5,048,621
                  )Total
      Liabilities and Equity (Impairment)
                  
                  $
                  130,670
                  
                  
                  $
                  130,672






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


3





MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


(Unaudited)




Three
      Months EndedMarch
      31,2009
                                                
                                                
                                                2008Total
      Revenues
                                                
                                                $
                                                17,885
                                                
                                                
                                                $
                                                13,914Cost
      of Goods Sold.
                                                
                                                
                                                9,234
                                                
                                                
                                                
                                                13,191Gross
      Profit
                                                
                                                
                                                8,651
                                                
                                                
                                                
                                                723Selling
      expenses
                                                
                                                
                                                88,796
                                                
                                                
                                                
                                                60,794Provision
      for bad debts
                                                
                                                
                                                -
                                                
                                                
                                                
                                                7,893General
      and administrative expenses
                                                
                                                
                                                585,515
                                                
                                                
                                                
                                                534,844Loss
      From Operations
                                                
                                                
                                                (665,660
                                                )
                                                
                                                
                                                (602,808
                                                )Miscellaneous
      income
                                                
                                                
                                                -
                                                
                                                
                                                
                                                27,008Change
      in fair value – derivative liability
                                                
                                                
                                                (77,806
                                                )
                                                
                                                
                                                (2,191,437
                                                )Gain
      on extinguishment of debt
                                                
                                                
                                                -
                                                
                                                
                                                
                                                693,856Amortization
      of deferred financing costs (4,000)
                                                
                                                
                                                (58,637
                                                )Interest
      expense
                                                
                                                
                                                (615,187
                                                )
                                                
                                                
                                                (5,375
                                                )Total
      Other Income (Expense)
                                                
                                                
                                                (696,993
                                                )
                                                
                                                
                                                (1,534,585
                                                )Loss
      Before Provision for Income Taxes
                                                
                                                
                                                (1,362,653
                                                )
                                                
                                                
                                                (2,137,393
                                                )Provision
      for Income Taxes
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Net
      Loss
                                                
                                                $
                                                (1,362,653
                                                )
                                                
                                                $
                                                (2,137,393
                                                )Dividends
      on Preferred Stock.
                                                
                                                
                                                (12,816
                                                )
                                                
                                                
                                                (13,916
                                                )Net
      Loss Applicable to Common Shareholders
                                                
                                                $
                                                (1,375,469
                                                )
                                                
                                                $
                                                (2,151,309
                                                )Net
      Loss per Common Share
                                                
                                                $
                                                (0.003
                                                )
                                                
                                                $
                                                (0.007
                                                )Weighted
      Average Number ofCommon
      Shares Outstanding
                                                
                                                
                                                445,171,141
                                                
                                                
                                                
                                                298,298,126





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




MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)







Three
      Months EndedMarch
      31,2009
                                                        
                                                        
                                                        2008Cash
      Flows from Operating ActivitiesNet
      Loss
                                                        
                                                        $
                                                        (1,362,653
                                                        )
                                                        
                                                        $
                                                        (2,137,393
                                                        )Adjustments
      to Reconcile Net Lossto
      Net Cash Used by OperationsDepreciation
      and amortization
                                                        
                                                        
                                                        18,224
                                                        
                                                        
                                                        
                                                        70,429Change
      in fair value – derivative liabilities
                                                        
                                                        
                                                        77,806
                                                        
                                                        
                                                        
                                                        2,191,437Change
      in bad debts reserve
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        7,893Intrinsic
      value of beneficial conversion rights
                                                        
                                                        
                                                        600,000
                                                        
                                                        
                                                        
                                                        -Gain
      on extinguishment of debt
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (693,856
                                                        )Decreases
      (Increases) in AssetsAccounts
      receivable
                                                        
                                                        
                                                        (6,110
                                                        )
                                                        
                                                        
                                                        -Prepaid
      expenses
                                                        
                                                        
                                                        (15,962
                                                        )
                                                        
                                                        
                                                        (17,471
                                                        )Increases
      (decreases) in LiabilitiesAccounts
      payable and accrued expenses
                                                        
                                                        
                                                        184,845
                                                        
                                                        
                                                        
                                                        (242,629
                                                        )Net
      Cash Used by Operating Activities
                                                        
                                                        
                                                        (503,850
                                                        )
                                                        
                                                        
                                                        (821,590
                                                        )Cash
      Flows from Investing ActivitiesCash
      outlay for website development costs
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (24,120
                                                        )Cash
      paid as additional consideration-KiwiboxAcquisition
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (50,000
                                                        )Purchases
      of equipment and fixtures
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (11,021
                                                        )Net
      Cash Used by Investing Activities
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (85,141
                                                        )Cash
      Flows from Financing ActivitiesProceeds
      from loans and notes
                                                        
                                                        
                                                        500,000
                                                        
                                                        
                                                        
                                                        40,000Issuance
      of common stock
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        1,610,000Net
      Cash Provided by Financing Activities
                                                        
                                                        
                                                        500,000
                                                        
                                                        
                                                        
                                                        1,650,000Net
      Increase (Decrease) in Cash
                                                        
                                                        
                                                        (3,850
                                                        )
                                                        
                                                        
                                                        743,269Cash
      at Beginning of Period
                                                        
                                                        
                                                        5,000
                                                        
                                                        
                                                        
                                                        470,148Cash
      at End of Period
                                                        
                                                        $
                                                        1,150
                                                        
                                                        
                                                        $
                                                        1,213,417








SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONInterest
      paid
                          
                          
                          -
                          
                          
                          
                          -Taxes
      paid
                          
                          
                          -
                          
                          
                          
                          -




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




5




MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)







NON-CASH
      INVESTING AND FINANCING ACTIVITIES:
                      
                      Three
      Months EndedMarch
      31, 2009Reclassification
      of derivative liabilities to Additional Paid-in capital
                      
                      $
                      3,408,618









6


MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


MARCH 31,
2009





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, Magnitude, Inc. and Kiwibox Media Inc. are separate legal entities,
with Kiwibox Media, Inc. being a wholly owned subsidiary. The 1% of Magnitude,
Inc. not owned by the Company constitutes a minority interest which is valued at
$0. The operations of the combined entity are currently comprised almost
exclusively of the operations of Kiwibox Media, Inc.





Business





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





Through
our subsidiary, we own and operate “Kiwibox.com”, a social networking website
for teens.Initially launched in
1999, Kiwibox.com is an online social networking website dedicated to teen
users. The Kiwibox website provides online content in several categories,
dedicated to teens, including entertainment, fashion and games. We have formed a
user-based contingent of contributors that submit, review and comment upon
content and articles from all over the world, 24 hours a day, seven days a week.
Kiwibox.com uses a “points” reward system for users, where a user may acquire
elevated peer status and/or earn prizes which in many cases are provided by
advertiser and/or sponsors.








7





MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


MARCH 31,
2009





SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES, Continued





Basis of
Presentation





The
accompanying unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
statements and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and disclosures
required for annual financial statements. These financial statements should be
read in conjunction with the consolidated financial statements and related
footnotes included in the Company’s annual report on Form 10-K for the year
ended December 31, 2008.





In the
opinion of the Company’s management, all adjustments (consisting of normal
recurring accruals) necessary to present fairly the Company’s financial position
as of March 31, 2009, the results of operations for the three months ended March
31, 2009 and 2008, and the cash flows for the three months ended March 31, 2009
and 2008, have been included.





Principles
of Consolidation





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





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.





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.





Goodwill
and Intangible Assets





The
Company accounts for its goodwill and intangible assets pursuant to SFAS No.
142, "Goodwill and Other Intangible Assets". Under SFAS 142, intangibles with
definite lives continue to be amortized on a straight-line basis over the lesser
of their estimated useful lives or contractual terms. Goodwill and intangibles
with  indefinite  lives  are  evaluated  at
least  annually  for  impairment  by
comparing the asset's  estimated  fair value with its
carrying  value,  based on cash flow
methodology.





The
Company’s intangible assets including goodwill are subject to impairment testing
in the event of certain indicators.  Impairment in the carrying value
of an asset is recognized whenever anticipated future cash flows (undiscounted)
from an asset are estimated to be less than its carrying value.  The
amount of the impairment recognized is the difference between the carrying value
of the asset and its fair value.




8




MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


MARCH 31,
2009





SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES, Continued





Securities
Issued for Services





The
Company accounts for stock, stock options and stock warrants issued for services
and compensation by employees under the fair value method.  For
non-employees, the fair market value of the Company’s stock on the date of stock
issuance or option/grant is used.  The Company has determined the fair
market value of the warrants/options issued under the Black-Scholes Pricing
Model. The Company has adopted the provisions of Statement of Financial
Accounting Standards (SFAS) 123(R), 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).





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. During the first quarter of 2009, we reclassified a
position of $3,408,618 from liabilities for derivative securities to additional
paid-in capital after the  indeterminate factor in connection with the
conversion clause of certain convertible preferred shares was
removed.





Capitalization
of Software /Website development costs




The
Company capitalized outside-contracted development work in accordance with the
guidelines published under EITF 00-2, Accounting for Web Site Development
Costs, adopted during the quarter ended March 31, 2008.  Under
EITF 00-2, costs incurred during the planning stage are expensed, whilecosts
relating to software used to operate a web site or for developing initial
graphics should be accounted for under SOP 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use, unless a plan exists or
is being developed to market the software externally. Under SOP 98-1, internal
and external costs incurred to develop internal-use computer software during the
application development stage should be capitalized. Costs to develop or obtain
software that allows for access or conversion of old data by new systems should
also be capitalized, excluding training costs.Fees
incurred for web site hosting, which involve the payment of a specified,
periodic fee to an Internet service provider in return for hosting the web site
on its server(s) connected to the Internet, are expensed over the period of
benefit, and included in cost of sales in the accompanying financial statements.
A total of $0 and $64,650 was capitalized for web-site development work during
the three months ended March 31, 2009 and the year ended December 31, 2008,
respectively.




Fair
Value Measurements




The
Company adopted the provisions of Statement of Financial Accounting Standards
(SFAS) No. 157, Fair Value
Measurements, which is effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. Under FASB
Statement No. 157, a framework was established for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. Since the number of shares issuable under the Company’s
Series G convertible preferred stock was indeterminable during the year ended
December 31, 2008, the Company had measured the fair value of warrants and
options outstanding at December 31, 2008, which was determined to be $3,330,812,
measured using significant unobservable inputs (Level 3) under a Black-Scholes
valuation method. The change in value during the three months ended March 31,
2008 was a loss of $2,191,437 reported in the Statement of Operations under
Other Income (Expense). On February 19, 2009, all outstanding shares of the
Series G stock automatically converted into 17,857,142 common shares, thereby
removing the indeterminable factor and giving rise to a reclassification of the
entire position of $3,408,618 into additional paid-in capital, which included a
further $77,806 loss incurred during the first quarter 2009.




9


MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


MARCH 31,
2009





SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES, Continued






The
Company adopted the provisions of
Statement  of  Financial  Accounting  Standards  (SFAS)
No. 159,  "The Fair Value Option for Financial Assets and
Financial  Liabilities", which included and amendment of FASB
Statement No. 115 with respect to improvement of financial  reporting
of certain  investments  in debt
and  equity  securities.  This Statement permits
entities to choose to measure many financial instruments and certain other items
at fair value. The implementation of this new standard did not have a material
impact on the Company's financial position, results of operations and cash flows
for the three months ended March 31, 2009.





Income
Taxes





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





Net Loss
Per Share





Net loss
per share, in accordance with the provisions of 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. Such common stock
equivalents totaled 237,822,727 common shares at March 31, 2009, comprised of
158,639,648 shares issuable upon exercise of stock purchase warrants, 18,453,542
shares issuable upon exercise of stock options, 729,537 shares exercisable upon
conversion of convertible preferred shares, and 60,000,000 shares issuable upon
conversion of convertible debt. All of the aforementioned conversions or
exercises, as the case may be, are at the option of the holders.





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.





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


.


Use of
Estimates





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




10




MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


MARCH 31,
2009





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, 2008, our auditors had expressed an opinion that,
as a result of the losses incurred, there was substantial doubt regarding our
ability to continue as a going concern.  The accompanying financial
statements do not include any adjustments that might be necessary if the Company
were unable to continue as a going concern. Management’s plans are to continue
seeking equity and debt capital until cash flow from operations cover funding
needs.





3.
CONCENTRATIONS OF BUSINESS AND CREDIT RISK





The
Company maintains cash balances in a financial institution which is insured by
the Federal Deposit Insurance Corporation up to $250,000.  Balances in
these accounts may, at times, exceed the federally insured limits. At March 31,
2009, cash balances in bank accounts did not exceed this limit. The Company
provides credit in the normal course of business to customers located throughout
the U.S. and overseas.  The Company performs ongoing credit
evaluations of its customers and maintains allowances for doubtful accounts
based on factors surrounding the credit risk of specific customers, historical
trends, and other information.





4.
PREPAID EXPENSES





Prepaid
Expenses at the end of the quarter consisted of $11,365 prepaid health insurance
and $20,759 prepaid business insurance costs.





5.
PROPERTY AND EQUIPMENT





Property
      and equipment consist of the following at
                          
                          March
      31,
                            2009
                          
                          
                          December
      31,
                            2008Furniture
                          
                          $
                          2,014
                          
                          
                          $
                          2,014Leasehold
      Improvements
                          
                          
                          24,131
                          
                          
                          
                          24,131Equipment
                          
                          
                          77,742
                          
                          
                          
                          77,742103,887
                          
                          
                          
                          103,887Less
      accumulated depreciation
                          
                          
                          72,558
                          
                          
                          
                          63,722Total
                          
                          $
                          31,329
                          
                          
                          $
                          40,165








Depreciation
expense charged to operations was $8,836 and $2,953 in the first three months of
2009 and 2008, respectively.






6.  INTANGIBLE
ASSETS





Intangible
assets at March 31, 2009 consisted of software for website development
cost:





March
      31,
                            2009
                          
                          
                          December
      31,
                            2008Website
      development costs
                          
                          $
                          64,650
                          
                          
                          $
                          64,650Less
      accumulated depreciation
                          
                          
                          17,717
                          
                          
                          
                          12,329Total
                          
                          $
                          46,933
                          
                          
                          $
                          52,321




11




MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


MARCH 31,
2009





7.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES




Accounts
      payable and accrued expenses consisted of the following
      at
                          
                          March
      31,
                            2009
                          
                          
                          December
      31,
                            2008Accounts
      payable
                          
                          $
                          588,660
                          
                          
                          $
                          474,315Accrued
      interest
                          
                          
                          81,040
                          
                          
                          
                          65,872Accrued
      salaries
                          
                          
                          21,150
                          
                          
                          
                          21,119Accrued
      commissions
                          
                          
                          3,720
                          
                          
                          
                          3,720Accrued
      professional fees
                          
                          
                          374,607
                          
                          
                          
                          324,636Miscellaneous
      accruals
                          
                          
                          47,345
                          
                          
                          
                          42,014Total
                          
                          $
                          1,116,522
                          
                          
                          $
                          931,676






8.
GOODWILL





On August
16, 2007, the Company completed its acquisition of 100% of the outstanding
capital stock of KiwiBox Media, Inc. The total initial purchase price of
$2,850,273 was calculated as follows: we issued 30,000,000 restricted common
shares based on a total value of $1,500,000 determined by the lower of $0.05 per
share and the average sales price of the Company’s common stock for the ten (10)
successive trading days immediately preceding the closing, 43,610 shares of our
Series G Preferred Stock worth $500,000, paid $450,000 in cash to the three
KiwiBox owners, and incurred $57,500 in acquisition fees. In addition, based on
the initial Agreement and Plan of Reorganization from February 2007, the Company
committed to investing $3.5 million for the operations of Kiwibox. Based on an
amendment in July 2007, in the event that certain investment tranches were not
made by their respective due dates, the Company agreed to issue 60,000
restricted shares to the former shareholders of Kiwibox for each day that the
funds were in arrears. The Company estimated the fair value of this
pre-acquisition contingency as of the acquisition date based on the present
value of the total expected liability at a discount rate of 5%, with an accreted
value of $295,800 at June 30, 2008 (current period value of $3,027 was charged
to operations, so net increase in purchase price was $292,773). In February
2008, the Company entered into another amendment that superseded the provisions
of amendments in December 2007, whereby the Company agreed to issue 20 million
reset shares, valued at $200,000, and a promissory note for $225,000, and
$250,000 cash penalties ($100,000 paid in 2007, $150,000 paid in 2008) as
additional consideration due to the delays in financing, which increased the
value of Goodwill at March 31, 2008. This additional consideration eliminated
the requirement for penalty shares to continue accruing, as long as the Company
received $1.5 million in financing by March 7, 2008, and invested $700,000 in
Kiwibox operations. This financing was received in a timely
fashion.





The
amendment also provided the former shareholders of Kiwibox the option to receive
the value of the reset shares in common stock options of equivalent value. To
date, all of the penalty shares have been issued. The promissory note for
$225,000 had subsequently been reduced by $75,000 in connection with a
settlement agreement reached with one of the former shareholders of Kiwibox, and
the remaining $150,000 was paid during the last quarter of 2008.





12





MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


MARCH 31,
2009








GOODWILL
(continued)





The
excess of the purchase price over the net assets acquired had been previously
recognized as Goodwill in the amount of $3,138,751.





Management
projected the discounted cash flow for the operations of the Company’s Kiwibox
Media Inc. subsidiary, including the costs incurred by the Company’s Magnitude,
Inc. subsidiary which has no own revenue basis but provides management,
accounting, and investor relations and other professional services for the
combined entity, over a period of five years. This analysis showed that the
reliance on outside investors to provide needed additional funding to augment
cash flow from operations would likely persist for a period in excess of one
year. Management decided to write off the entire goodwill position at the end of
the 2008 year because the willingness of outside investors to continue funding
operations until positive cash flow can be realized, cannot be assured. A fair
value of the Kiwibox subsidiary cannot be determined due to the fact that at
this time this is essentially a start-up business with minimal
revenues.







9. LOANS
PAYABLE





The
Company and Magnitude, Inc. had borrowings under short term loan agreements with
the following terms and conditions at March 31, 2009 and December 31,
2008:





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 as of September 30, 2005
      and no demand for payment has been made.
                
                $
                75,000Total
                
                $
                75,000





10. NOTES
PAYABLE





On
February 28, 2008, two debtholders agreed to convert their outstanding notes of
$350,000, finance cost obligations to be settled in stock of $385,000 and
finance cost obligations that could be settled in stock or cash of $22,500 into
a total of 9,333,333 common shares and 3,500,000 five-year common stock warrants
with an exercise price of $0.07 per share, resulting in a gain on extinguishment
of $633,856. The warrants were valued at $30,311 using a Black-Scholes model,
with the following assumptions: volatility - 169%, dividends – none, risk-free
rate – 2.1%. In addition, in January 2008, the Company converted the $100,000
deposit recorded previously as deferred revenue into equity on behalf of the
depositor by issuing 2,000,000 restricted common shares and 2,000,000 five-year
common stock warrants with an exercise price of $0.07 per share. The warrants
were valued at $36,051 using a Black-Scholes model, with the following
assumptions: volatility - 169%, dividends – none, risk-free rate – 2.6%. This
issuance resulted in a gain on extinguishment of this liability of $23,949 based
on the fair value of the shares delivered in settlement.





13


MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31,
2009





11.  NOTES
PAYABLE (continued)





March
      31,
                                
                                
                                December
      31,2009
                                
                                
                                2008Balance
      of non-converted notes outstanding.  Attempts to locate the
      holder of this note, to settle this liability, have been
      unsuccessful.
                                
                                $
                                25,000
                                
                                
                                $
                                25,000In
      January 2008 a shareholder loaned the Company $40,000 pursuant to which
      the Company issued a demand note bearing interest at the rate of 5% per
      year.
                                
                                
                                40,000
                                
                                
                                
                                40,000In
      September 2008 and December 2008 a shareholder loaned the Company $50,000
      and $100,000, repayable under convertible promissory notes bearing
      interest at 10% per annum and payable on demand.
                                
                                
                                150,000
                                
                                
                                
                                150,000In
      December 2008 an investor loaned the Company $30,000 repayable on January
      15, 2009, bearing interest at 6.5% per year. The Company promised to issue
      500,000 restricted common shares as loan origination fee. The note is
      overdue at March 31, 2009.
                                
                                
                                30,000
                                
                                
                                
                                30,000In
      January and February 2009 a shareholder loaned the Company $350,000 and
      $150,000, repayable under convertible promissory notes bearing interest at
      10% per annum and payable on demand. On March 31, 2009, these notes and
      $100,000 of notes listed above were amended to include an option for the
      holder to convert the debt into common stock at $0.01 per
      share.  The intrinsic value of the beneficial conversion feature
      was valued at $600,000 resulting in a charge to interest and a credit to
      additional paid-in capital in the same amount.
                                
                                
                                500,000
                                
                                
                                
                                -Total
                                
                                $
                                745,000
                                
                                
                                $
                                245,000









14


MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


MARCH 31,
2009





11.
LONG-TERM DEBT





Long-term
debt as of March  31, 2009 and December 31, 2008 is comprised of the
following:




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








12.
COMMITMENTS AND CONTINGENCIES





On
February 1, 2009, the Company entered a one year lease for approximately 900
square feet of office space at 1250 Route 28, Suite 309, Branchburg, New Jersey.
This lease agreement currently calls for a base rental payment of $1,250 per
month plus utility/cam/property tax charges of approximately $900 per
month.





In
addition, we maintain offices for our Kiwibox operations at 330 W. 38th Street,
New York, New York 10018, consisting of approximately 1,600 square feet. We have
a two-year lease covering these offices and pay minimum monthly rentals of
$3,908 plus tenants’ share of 0.86% of utility/cam/property tax charges through
August 31, 2008, and minimum monthly rentals of $4,013 plus additional rentals
for the twelve months ending August 31, 2009. On August 19, 2008, we amended the
lease to include additional 600 square feet office space, at an added cost of
$1,569 /month and an increase in the tenants’ share to 1.18%. The amended lease
runs through August 2009. Our total
rent expenses were $32,434 and $24,387 during the three months ended March 31,
2009 and 2008, respectively.




In
connection with the restructuring of our business operations in March, 2009, we
commenced consolidating our operations in New York. As part of this consolidation, we
vacated our New Jersey offices, located at 1250 Route 28, Branchburg, New
Jersey. As a consequence, the landlord has commenced a collection lawsuit,
seeking to obtain payment of the rent and expenses owned under the terms of the
lease. We expect that the landlord’s claims range between $20,000 to $25,000 and
we expect to settle these claims with the landlord in the near
term.


13.
RELATED PARTY TRANSACTIONS





During
the three months ended March 31, 2009 and 2008, one outside director of the
Company who also serves as the Company’s general and securities counsel, was
paid an aggregate $30,000 and $170,963, respectively, for legal services. At
March 31, 2009, the Company owed this director $313,570.





During
the second quarter in 2008, we paid $24,000 to a major shareholder for investor
relations services.





In
August, 2008, we issued an aggregate 30,560,000 restricted common shares to the
three Kiwibox principals pursuant to our Agreement and Plan of Reorganization,
dated February 19, 2007, and subsequent amendments, as disclosed in our report
and exhibit, filed on Form 8-K with the U.S. Securities and Exchange Commission
on March 4, 2008.





On August
17, 2008, one of the three Kiwibox Shareholders resigned his employment. As part
of this agreement, his outstanding stock options were cancelled and the
consultant entered into an agreement that provided for his future services to
the Company as an independent consultant for six months at $12,500 per month. On
September 5, 2008, the Company reached a Settlement Agreement with the
consultant whereby the Company forgave the balance of loans due from the former
shareholder in the balance of $155,459 for $75,000 in cash and by offsetting of
$75,000 of notes payable due to the former shareholder. The difference of $5,459
was treated as additional compensation.




15


MAGNITUDE
INFORMATION SYSTEMS, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


MARCH 31,
2009





RELATED
PARTY TRANSACTIONS (continued)





On
October 30, 2008, the Company terminated its the employment agreement with Lin
Dai for cause. On December 8, 2008, Mr. Dai resigned his position as a member of
the Company's Board of Directors. Since this resignation, the Company has been
in negotiations with Lin Dai to acquire all of Mr. Dai's Company securities and
resolve all potential claims of the parties. Although these negotiations have
ceased, neither the Company nor Mr. Dai have formally instituted any claims
against the other and it is not possible to determine whether any claims will be
instigated, or if commenced, what the outcomes of any such litigation may
be.








14.
SUBSEQUENT EVENTS





On April
24, 2009, the Company filed a report on Form 8-K, advising about the lay-off
effective April 24, 2009 of its employees in the course of a restructuring
program. The announcement also indicated that the Company was in  the
process of re-employing certain employees and negotiating employment agreements
with others.






16




Item
2.


MANAGEMENT’S DISCUSSION AND
ANALYSIS OF


FINANCIAL CONDITION AND
RESULTS OF OPERATIONS





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





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




The
following discussion and analysis should be read in conjunction with the
consolidated financial statements of Magnitude Information Systems, Inc.,
contained herein and in the Company’s annual report for the year ended December
31, 2008 as filed on Form 10-K. This discussion should not be construed to imply
that the results discussed herein will necessarily continue into the future, or
that any conclusion reached herein will necessarily be indicative of actual
operating results in the future. Such discussion represents only the best
present assessment of our management.








Description of
Business





During
2008, we achieved the following milestones:





-
            Complete
      Re-Launch Kiwibox 2.0 - In August, 2008, we launched our new Web 2.0 site,
      which contains significant enhancements over the original website,
      expanding our operations that includes the following new features: Dynamic
      Profile Pages, Revamped Points and Prizes, Custom Backgrounds and Layouts
      for users, Kiwibox TV, Enhanced Games Area, Increased Weekly and Daily
      Content, Photo Albums, Friends List
Manager.





-
            Launch
      Kiwibox Mobile WAP Site – Partnering with Quattro Wireless, Kiwibox
      designed a mobile version of Kiwibox.com delivering up to the minute
      articles and news to our users mobile phones. Users can login, check
      messages, leave profile comments, read KiwiNotes, update their status and
      many other social networking
activities.





-
            Development
      of SMS platform (Actually Launched 4/2/09) - Kiwibox members and their
      friends will be able to use their mobile phones to receive the latest
      updates from Kiwibox.com. These SMS services will work on any mobile phone
      with text-messaging capabilities and are free of charge to our members
      (regular text messaging rates may apply). To receive the alerts, teens opt
      into the service through their profile on Kiwibox.com. Users can manage
      the content they receive based on personal preference (type of content,
      quantity per day, time of delivery, etc.) allowing users very granular
      control of their SMS experience on
Kiwibox.





-
            Kiwibox
      Accepted Into YouTube Partner Program (1/20/09) - Kiwibox was accepted
      into the YouTube Partner Program. Kiwibox will be able to share in
      advertising revenue from the over 500 Kiwibox exclusive videos appearing
      on YouTube. The videos appearing on YouTube's Kiwibox Channel
      (http://youtube.com/KiwiboxMedia) feature exclusive interviews with
      musicians and celebrities such as: Alicia Keys, Katy Perry, Lauren Conrad,
      Mark Wahlberg.




17





-
            UMG
      partnership gives Kiwibox users free access to 5,000+ music videos, full
      screen, streaming through Kiwibox.com - The videos, a result of the
      partnership struck between UMG and Kiwibox, bring high quality
      entertainment to Kiwibox's 2.4 million teen members while providing them
      the opportunity to connect and interact about their favorite artists. The
      launch of Kiwibox Music Videos creates a branded and sponsor friendly
      environment where advertisers can interact with the Kiwibox teen audience
      around high quality video content.





-
            Built
      a custom Video Player to integrate with BrightCove for UMG, as well as
      future partners using the BrightCove
system.





-
            Kiwibox
      COO Mike Howard Speaks at Ad-Tech conference on Panel “Mobile Social
      Networking: Now Is The Time for
Innovation”





-
            Kiwibox
      covered in the following media outlets, LA Times, USA Today, Cnet, ADOTAS,
      Mobile Marketer, Ypulse, Media Post, Mashable, 901am,
      VentureBeat





-
            eFriendFinder
      service launched on Kiwibox to allow members to find their friends on
      Kiwibox, and also invite their other friends over to
    Kiwibox.





-
            Launch
      of Kiwibox Teen Network –The network has now expanded to reach more than
      17 million U.S.-based unique visitors per month and is comprised of 80+
      teen-focused websites that offer brand advertisers and marketers a
      targeted method for reaching this key consumer demographic. For
      advertisers, the Kiwibox Teen Network represents an efficient way to reach
      a highly valued audience in a fully transparent, youth-safe environment.
      For publishers, it enables them to monetize their inventory more
      effectively with access to larger brand campaigns as well as participate
      in other partnership opportunities, providing additional revenue
      streams.





Results of Operations for
the Three Months Ended March 31, 2009 Compared to the Three Months Ended March
31, 2008





The
Company had no material revenues during either the first quarter in 2009 or
2008.  Its only revenues are derived by its subsidiary Kiwibox Media
Inc. whose business had not yet matured to a stage where significant revenues
could be generated. For the quarter ended March 31, 2009, total revenues
amounted to $17,885 compared to $13,914 recorded in the first quarter of
2008.





Gross
profits amounted to $8,651 after considering $9,234 in website hosting
expenses.  After deducting selling -, research -, and general and
administrative expenses of $674,311 compared to the $603,531 recorded in the
first quarter of 2008, the Company realized an operating loss of $665,660
compared to an operating loss of $602,808 in the same period in
2008.




The major
items included in non-operating income and expenses were the recognition of
$600,000 in interest expense from the intrinsic value of a beneficial conversion
option on convertible debt and a charge of $77,806 from the change in fair value
of derivative liabilities.  The quarter concluded with a net loss of
$1,362,653. After accounting for dividends accrued on outstanding preferred
stock which totaled $12,816 the net loss applicable to common shareholders was
$1,375,469 or $0.003 per share, compared to a loss of $2,151,309 or $0.007 per
share for the first quarter in the previous year.




Liquidity and Capital
Resources





We have
financed our business with new debt since our cash flow is insufficient to
provide the working capital necessary to fund our operations. We received
$500,000 in cash from short-term loans from accredited private investors during
the quarter. We have an urgent need for working capital to fund our operations.
If we are unable to immediately receive new equity investments or obtain loans,
we will not be able to fund our operations and we will be required to close our
business.








18





Our
deficit in working capital amounted to $2,496,958 at March 31, 2009, as compared
to $5,148,331 at December 31, 2008.  The change is primarily
attributable to a reclassification of a position of $3,330,812 derivative
liabilities included in the December 31, 2008 balance sheet to additional
paid-in capital, following the conversion of certain shares of the Series G
convertible preferred stock into common stock, in February
2009.  Stockholders’ equity showed an impairment of $2,415,472 at the
end of the period, compared to an impairment of $5,048,621 at the beginning of
the year. The negative cash flow from operations totaled $503,850 and was
financed by new debt.




We have
no bank debt and aside from trade payables and accruals, our indebtedness at
March 31, 2009, consisted of certain notes and loans aggregating $820,000. The
position “Obligations to be settled in stock” of $135,200 includes $106,000 for
common shares due under consulting agreements, finance costs of $10,000 to be
settled in common shares and $19,200 for services to be settled in common stock
warrants, where the underlying securities had not yet been issued by year-end.
Current liabilities also include $440,891 accrued unpaid dividends on
outstanding preferred stock. Such dividends will be paid only if and when
capital surplus and cash-flow from operations are sufficient to cover the
outstanding amounts without thereby unduly impacting the Company’s ability to
continue operating and growing its business.




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





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







Item 3. Quantitative and
Qualitative Disclosures about Market Risk




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






Item
4.    CONTROLS AND PROCEDURES





(a)      Evaluation
of Disclosure Controls and Procedures.





As of the
end of the period covered by this Form 10-Q for the quarter ended March 31,
2009, an evaluation was undertaken, under the supervision and with the
participation of the Company’s management, including the Company’s Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company’s disclosure controls and procedures
pursuant to Rule 13a-15(e) of the Exchange Act; and; based upon that evaluation,
Company management, including the Chief Executive Officer and the Chief
Financial Officer, has concluded that the design of the Company’s disclosure
controls and procedures are effective and ensure that all material information
required to be disclosed by the Company in the reports that it files or submits
under the Act, are recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms; in addition, the
evaluation confirmed that the Company’s disclosure controls and procedures are
designed to ensure that the information required to be disclosed by the Company
in the reports that it files or submits under the Act is accumulated and
communicated to Company management, including its Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure.





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




(b)
Changes in Internal Control over Financial Reporting


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




19





PART  II  -  OTHER
INFORMATION





Item1
            LEGAL
      PROCEEDINGS





At the time of this report, the Company
is not a party in any legal proceedings, except as follows: in March, 2009, in
connection with the restructuring of our business operations, we commenced
consolidating our operations in New York. As part of this consolidation, we
vacated our New Jersey offices, located at 1250 Route 28, Branchburg, New
Jersey. As a consequence, the landlord has commenced a collection lawsuit,
seeking to obtain payment of the rent and expenses owed of approximately between
$20,000 and $25,000 under the lease. We expect to settle this claim with the
landlord in the near term.





Item
      1A.
            RISK
      FACTORS




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







Item
      2
            UNREGISTERED SALES OF
      EQUITY SECURITIES AND USE OF
PROCEEDS





a)
            Issuance
      of unregistered securities





On
February 19, 2009, 43,610 shares of our Series G convertible stock, originally
issued to the three former shareholders of Kiwibox, automatically converted into
an aggregate 17,857,142 restricted common shares. One of the Kiwibox
shareholders had sold his shares of Series G convertible stock in a private
transaction prior to their automatic conversion. We are in negotiations with the
two other Kiwibox shareholders and have not yet authorized the delivery of any
certificates representing the underlying restricted common shares to them
pending the conclusion of these ongoing negotiations. We issued the 43,610
shares of our Series G convertible stock to the former three shareholders of
Kiwibox in connection with our acquisition of their business on August 16, 2007.
As reported in the current report on Form 8-K filed with the Commission on
August 20, 2007, we issued these preferred shares to the three Kiwibox
shareholders in a private transaction and relied upon the exemptions from the
registration requirements of the Securities Act provided by Regulation D and
Section 4(2) of the Securities Act.




(b)
              Not
      applicable





(c)
              None





Item
      3
            DEFAULTS UPON SENIOR
      SECURITIES





The
Company, as of the date of this filing, is in arrears on the payment of certain
dividends on its Series A, C, and D Senior Convertible Preferred Stock. Such
arrears total approximately $440,000.  These dividends have been
accrued, however, the Company’s management has refrained from making payments at
this time because of the absence of positive equity and/or surplus
funds.





Item
      4
            SUBMISSION OF MATTERS
      TO A VOTE OFSECURITY
      HOLDERS





On
January 29, 2009, shareholders of a total 244,725,773 common shares, out of the
436,242,570 shares outstanding, voted to increase our authorized common shares
to 1,400,000,000 shares and voted to ratify the appointment of Rosenberg Rich
Baker Berman and Company to serve as our independent auditors for the fiscal
year ending December 31, 2009, as follows:





Proposition
No. 1: to increase the authorized common shares to 1,400,000,000 shares
–





FOR
            AGAINST
            ABSTAIN241,941,210
            2,357,063
            427,500




Proposition
No. 2: to ratify the appointment of Rosenberg Rich Baker Berman & Company to
serve as the Company’s auditors for the fiscal year ending December 31, 2009
–





FOR
            AGAINST
            ABSTAIN244,552,663
            66,565
            106,545




Item
      5
            OTHER
      INFORMATION





-  None






20





Item
      6
            EXHIBITS AND REPORTS
      ON FORM 8-K





(a)
            Exhibits





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





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





(31.1)
-  Certification of Rudolf Hauke, Chief Executive Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.





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





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





(32.2)  -  Certification
of 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
January 7, 2009, the Company filed a report on Form 8-K, informing about a press
release which announced the release of a Research Coverage Initiation report
providing information about Magnitude Information Systems Inc.





On
January 20, 2009, the Company filed a report on Form 8-K, informing about a
press release which announced the participation of Kiwibox Media Inc. in a
“partner program” with YouTube.





On
January 29, 2009, the Company filed a report on Form 8-K, informing about the
voting results of a shareholder vote relative to a Consent Solicitation relating
to an increase in the authorized number of common shares, and the appointment of
the Company’s independent auditors for the year 2009.





On March
4, 2009, the Company filed a report on Form 8-K, informing about a press release
which announced a marketing program involving Kiwibox Media Inc, and Universal
Music Group.





On March
11, 2009, the Company filed a report on Form 8-K, informing about a press
release which announced a rapid increase in the number of Unique Visitors to the
Kiwibox youth-oriented website.





On March
24, 2009, the Company filed a report on Form 8-K, informing about the
resignation of one outside director from the Company’s board of
directors.




21




SIGNATURES








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











MAGNITUDE
      INFORMATION SYSTEMS, INC.Date:
      May 18, 2009
                          By:
                          /s/
                          Rudolf
      HaukeRudolf
      HaukeChief
      Executive Officer







22