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 March 31, 2004

                                       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 May 5, 2004, was 79,624,641 shares.

<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES

                                      INDEX
                                      -----


                                                                        Page
                                                                       Number
                                                                       ------

PART  1  -  FINANCIAL INFORMATION

Item 1   Financial Statements (unaudited)

         Consolidated Balance Sheet
          - March 31, 2004                                               3

         Consolidated Statements of Operations
          - Three months ended March 31, 2004 and 2003                   4

         Consolidated Statements of Cash Flows
          - Three months ended March 31, 2004 and 2003                   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                                         14


PART II  -  OTHER INFORMATION                                            15


SIGNATURES                                                               16


Certifications pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                      17 - 19


                                       2
<PAGE>


PART I  - ITEM 1

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                      March 31, 2004
                                                                                       ------------
ASSETS
     Current Assets
<S>                                                                                    <C>
     Cash ..........................................................................   $    100,825
     Accounts receivable, net of allowance for
        doubtful accounts of $212 ..................................................         21,014
     Miscellaneous receivables .....................................................          1,800
     Inventories ...................................................................         26,917
     Prepaid expenses ..............................................................        243,278
                                                                                       ------------
        Total Current Assets .......................................................        393,834
     Property and equipment, net of accumulated
        depreciation of $137,404 ...................................................         15,983
     Software, net of accumulated amortization of $924,318 .........................        582,972
     Other assets ..................................................................         43,432
                                                                                       ------------
TOTAL ASSETS .......................................................................      1,036,221
                                                                                       ============
LIABILITIES AND STOCKHOLDERS' EQUITY (IMPAIRMENT)
LIABILITIES
     Accounts payable and accrued expenses .........................................        311,565
     Deferred revenue ..............................................................         48,279
     Dividends payable .............................................................        416,948
     Loans and notes payable .......................................................        100,000
     Current maturities of long-term debt ..........................................        133,419
     Current maturities of capitalized lease obligations ...........................          2,805
                                                                                       ------------
        Total Current Liabilities ..................................................      1,013,016
     Capitalized lease obligations, less current portion ...........................          3,234
                                                                                       ------------
TOTAL LIABILITIES ..................................................................      1,016,250

STOCKHOLDERS' EQUITY
     Preferred Stock, $0.001 par value, non-voting, 3,000,000 shares authorized:
     2,500 shares have been designated Cumulative Preferred Stock,
     of which 1 share is issued and outstanding ....................................              0
     300,000 shares have been designated Series A Convertible Preferred Stock,
     350,000 shares have been designated Series B Convertible Preferred Stock,
     120,000 shares have been designated Series C Convertible Preferred Stock,
     500,000 shares have been designated Series D Convertible Preferred Stock,
     500,000 shares have been designated Series E Convertible Preferred Stock,
     of which a combined total 526,582 shares are issued and outstanding ...........            527
     Common Stock, $0.0001 par value, 100,000,000 shares authorized,
     79,482,141 shares are issued and outstanding ..................................          7,948
     Additional paid-in capital ....................................................     25,136,459
     Accumulated deficit ...........................................................    (25,124,963)
                                                                                       ------------
TOTAL STOCKHOLDERS' EQUITY .........................................................         19,971

TOTAL LIABILITIES AND EQUITY .......................................................   $  1,036,221
                                                                                       ============
</TABLE>

                 See notes to consolidated financial statements

                                       3
<PAGE>

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


<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                                         March 31,
                                                                   2004             2003
                                                               ------------    ------------

<S>                                                            <C>             <C>
Total Revenues .............................................   $     44,580    $     35,452
     Cost of Goods Sold ....................................         38,955          38,987
                                                               ------------    ------------

Gross Profit ...............................................          5,625          (3,535)
     Selling expenses ......................................        118,237         154,596
     Stock-based compensation ..............................        150,055         146,006
     General & administrative expenses .....................        434,050         373,696
                                                               ------------    ------------

Operating (Loss) ...........................................       (696,717)       (677,833)
     Interest expense, net .................................         (5,796)         (6,583)
                                                               ------------    ------------
Non-Operating Income (Expense) .............................         (5,796)         (6,583)
                                                               ------------    ------------

Net (Loss) before taxes ....................................       (702,513)       (684,416)
     Provision for income taxes ............................              0               0
Net (Loss) .................................................   $   (702,513)   $   (684,416)
                                                               ============    ============

Dividends accrued on preferred stock .......................         57,380          28,817
Amortized discount on convertible preferred stock ..........        716,436               0

Net (Loss) applicable to common shareholders ...............   $ (1,476,329)   $   (713,233)
                                                               ============    ============
Loss per Common Share ......................................   $      (0.02)   $      (0.01)
                                                               ============    ============
Weighted Average Number of
     Common Shares Outstanding .............................     78,136,586      60,469,245
                                                               ============    ============
</TABLE>

                 See notes to consolidated financial statements

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                               March 31,
                                                            2004        2003
                                                        ----------   ----------
Cash Flows from Operating Activities
<S>                                                     <C>          <C>
     Net (loss) ......................................  $ (702,513)  $ (684,416)
     Adjustments to net (loss)
        Depreciation and amortization ................      41,453       50,746
        Securities issued for expenses and debt ......     276,350      146,006
     Decreases (increases) in Assets
        Accounts receivable ..........................      14,827      (34,261)
        Miscellaneous receivables ....................          --        1,458
        Prepaid expenses .............................    (166,180)    (124,600)
        Other assets .................................       5,693           --
     Increases (decreases) in Liabilities
        Deferred revenues ............................      50,041         (386)
        Change in prepayments ........................          --       35,925
        Accounts payable and accrued expenses ........    (111,894)      55,989
                                                        ----------   ----------
Net Cash (Used) by Operating Activities ..............    (592,223)    (553,539)

Cash Flows from Investing Activities
     Purchases of equipment and fixtures .............      (3,443)      (1,885)
                                                        ----------   ----------
Net Cash (Used) by Investing Activities ..............      (3,443)      (1,885)

Cash Flows from Financing Activities
     Proceeds from notes payable .....................          --      139,500
     Repayment of loans and notes ....................    (282,851)          --
     Issuance of common and preferred stock ..........     881,364      407,553
                                                        ----------   ----------
Net Cash Provided by Financing Activities ............     598,513      547,053
Net Increase (Decrease) in Cash ......................       2,847       (8,371)
Cash at Beginning of Period ..........................      97,978        9,976
                                                        ----------   ----------
Cash at End of Period ................................  $  100,825   $    1,605
                                                        ==========   ==========
</TABLE>


                 See notes to consolidated financial statements

                                       5
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Nature of Organization

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

            On June 24, 1997, the Company extended a stock exchange offer to the
            shareholders of Magnitude, Inc., a Delaware corporation and
            manufacturer of ergonomic keyboarding systems. At the time of this
            submission, holders of 99.4% of Magnitude, Inc. common stock have
            tendered their shares. The remaining Magnitude, Inc. shareholders
            hold a minority interest which is valued at $0. The Company and
            Magnitude, Inc. remain as two separate legal entities whereby
            Magnitude, Inc. operates as a subsidiary of Magnitude Information
            Systems, Inc. The operations of the combined entity are currently
            comprised solely of the operations of Magnitude, Inc.

      Basis of Presentation

            The accompanying unaudited consolidated financial statements have
            been prepared in accordance with generally accepted accounting
            principles for interim financial statements and with the
            instructions to Form 10-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, 2003.

            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, 2004, the
            results of operations for the three months ended March 31, 2004 and
            2003, and the cash flows for the three months ended March 31, 2004
            and 2003, have been included.


                                       6
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

      Principles of Consolidation

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

      Inventories

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

      Depreciation and Amortization

            Property 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.

      Securities Issued for Services

            The Company accounts for stock, stock options and stock warrants
            issued for services and compensation by employees under the
            intrinsic value method. For non-employees, the fair market value of
            the Company's stock on the date of stock issuance or option/grant is
            used. The Company determined the fair market value of the
            warrants/options issued under the Black-Scholes Pricing Model.
            Effective January 1, 1996, the Company adopted Statement of
            Financial Accounting Standard (SFAS) No. 123, "Accounting for
            Stock-based Compensation". The statement generally suggests, but
            does not require, employee stock-based compensation transactions to
            be accounted for based on the fair value of the services rendered or
            the fair value of the equity instruments issued, whichever is more
            reliably measurable. As permitted by the statement, the Company has
            elected to continue to follow the requirements of Accounting
            Principles Board Opinion No. 25, "Accounting for Stock Issued to
            Employees' for employees under the intrinsic value method. The
            adoption of SFAS No. 123 does not have a material impact on the
            financial statements.

      Income Taxes

            The Company provides for income taxes based on enacted tax law and
            statutory tax rates at which items of income and expenses are
            expected to be settled in the Company's income tax return. Certain
            items of revenue and expense are reported for Federal income tax
            purposes in different periods than for financial reporting purposes,
            thereby resulting in deferred income taxes. Deferred taxes are also
            recognized for operating losses that are available to offset future
            taxable income. Valuation allowances are established 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 for the year ended
            December 31, 2003.


                                       7
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

      Net Loss Per Share
            Net loss per share, in accordance with the provisions of Financial
            Accounting Standards Board No. 128, "Earnings Per Share" is computed
            by dividing net loss by the weighted average number of shares of
            Common Stock outstanding during the period. Common Stock equivalents
            have not been included in this computation since the effect would be
            anti-dilutive.

      Revenue Recognition
            The Company's revenue recognition policy for software sales is in
            accordance with Accounting Statement of Position 97-2. Revenue is
            recognized at the time of licensing provided that the resulting
            receivable position is deemed probable of collection and is fixed or
            determinable. Revenue from software maintenance contracts is
            recognized ratably as earned. Where 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.


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, 2003, 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. During the last two years and the first quarter in 2004 the
      Company has relied on the private placement of its common and preferred
      stock to fund its operations. Management's plans are to continue seeking
      additional working capital through equity and debt placements with private
      and institutional investors.


                                       8
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

CONCENTRATIONS OF BUSINESS AND CREDIT RISK

      The Company maintains cash balances in a financial institution which are
      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.

PREPAID EXPENSES

      The major positions in Prepaid Expenses at the end of the quarter included
      $75,000 representing the value of the unamortized portion of part of the
      Company's chief executive officer's base salary for the remainder of the
      current year which was prepaid in January 2004 in the form of convertible
      preferred stock and warrants, in lieu of cash (see "Related Party
      Transactions"). Also included were approximately $116,000 representing the
      value of restricted stock and options issued to certain consultants for
      services to be rendered in the near future, and approximately $22,000
      prepaid insurance costs.

PROPERTY AND EQUIPMENT

      Property and equipment consist of the following at March 31, 2004:
            Equipment                                       $ 81,157
            Furniture and fixtures                            72,230
                                                            --------
                                                             153,387
            Less accumulated depreciation                    137,404
                                                            --------
                        Total                               $ 15,983
                                                            ========

Depreciation expense charged to operations was $2,472 in the first three months
of 2004 and $11,767 in the first three months of 2003.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at March 31,
2004:

            Accounts payable                                $129,266
            Accrued interest                                  54,069
            Accrued commissions                               10,118
            Accrued salaries, bonuses, vacations              47,933
            Accrued professional fees                         58,709
            Miscellaneous accruals                            11,470
                                                            --------
                        Total                               $311,565
                                                            ========


                                       9
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

DEFERRED REVENUES

      Deferred revenues at March 31, 2004, consist of prepaid software
      maintenance and support charges which are amortized ratably over the
      remaining duration of the underlying maintenance agreements.

LOANS AND NOTES PAYABLE

      At March 31, 2004, Magnitude, Inc. and the Company had borrowings under
      short term loan agreements with the following terms and conditions:

            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 March 31, 2004
            and no demand for payment has been made.                   $  75,000

            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 March 31, 2004 is $25,000. Attempts
            to locate  the  holder  of this  note,  to  settle  this
            liability, have been unsuccessful.                            25,000

                                                                        --------
            Total                                                      $ 100,000
                                                                        ========


                                 10
<PAGE>


LONG TERM DEBT

            Long-term debt as of March 31, 2004, 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.
            During the first  quarter of 2004,  $175,000  was repaid
            and the  maturity  of the unpaid  balance was changed to
            January 1, 2005.  The  obligation  includes an option to
            the holder for conversion of the  outstanding  principal
            into shares of the Company's convertible preferred stock
            and  warrants  at the rate of  $0.06  per  common  share
            equivalent.                                                 $ 99,890

            Discounted  present  value  of  a  non-interest  bearing
            $70,000  settlement with a former investor of Magnitude,
            Inc. to be paid in monthly  payments  commencing July 1,
            1997.  The imputed  interest  rate used to discount  the
            note is 8% per annum. This obligation is in default.          33,529
                                                                        --------
            Total                                                        133,419
            Less current maturities                                      133,419
                                                                        --------
            Long-term debt, net of current maturities                   $      0
                                                                        ========

INCOME TAXES

      At December 31, 2003, the Company had net operating loss carry-forwards
      approximating $22,043,000 for federal income tax purposes which expire
      between the years 2007 and 2023 and are subject to certain annual
      limitations. At December 31, 2003, the Company has available approximately
      $4,905,000 of net operating losses to carry-forward and which may be used
      to reduce future state taxable income which expire December 31, 2010.

      The Company's total deferred tax asset and valuation allowance at December
      31, 2003 are as follows:

      Total deferred tax asset, non-current                         $7,274,000
      Less valuation allowance                                      (7,274,000)
                                                                    ----------
      Net deferred tax asset                                        $       --
                                                                    ==========

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 expires on March 31, 2005
            and requires monthly payments of $6,500 from April 15, 2000 through
            March 31, 2002; of $6,695 thereafter through March 31, 2003; of
            $6,896 thereafter through March 31, 2004; and of $7,103 thereafter
            through March 31, 2005. In August 2002 the Company rented additional
            office space at this location commencing September 1, 2002. The
            add-on rental requires monthly payments of $1,955 throughout the
            remainder of the original lease term.


                                       11
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

COMMITMENTS AND CONTINGENCIES, continued


      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,
            ------------------------
                  2004                                 84,615
                  2005                                 21,309
                                                -------------
                  Total                         $     105,924
                                                =============

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.

RELATED PARTY TRANSACTIONS

      In January 2004, the Company and its President and Chief Executive Officer
      agreed to convert most of his base salary for the remainder of the year
      2004 into 16,667 shares of convertible preferred stock, convertible into
      1,666,667 restricted common shares, and 833,333 warrants, exercisable
      during three years at the price of $0.15 per share, in lieu of $100,000
      cash. The Company also repaid $239,088 notes payable due to this officer.

      During the first quarter in 2004, an outside director of the Company was
      awarded a stock grant for 150,000 restricted common shares, for services
      rendered. The same director exercised an option for 250,000 restricted
      common shares at the price of $0.01 per share which option was acquired by
      him in a private transaction with an unrelated party.


                                       12
<PAGE>

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

Except for historical information, the Company's reports to the Securities and
Exchange Commission on Form 10-KSB and Form 10-QSB and periodic press releases,
as well as other public documents and statements, contain "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934. Forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from those expressed or implied
by the statements. These risks and uncertainties include general economic and
business conditions, development and market acceptance of the Company's
products, and other risks and uncertainties identified in the Company's reports
to the Securities and Exchange Commission, periodic press releases, or other
public documents or statements.

Readers are cautioned not to place undue reliance on forward-looking statements.
The Company undertakes no obligation to republish or revise forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrences of unanticipated events.

RESULTS OF OPERATIONS:

During the first quarter in 2004 our efforts were focused on further refining
our marketing strategy that emphasizes a leveraging of certain characteristics
of our software products for the purpose of providing clients with unique
management tools for operations control and risk management. Negotiations for
company-wide deployment of our software products with several well known large
corporate clients have progressed satisfactorily although at the time of this
report, larger contracts are still in the negotiation stage. These efforts go
hand-in-hand with a program of co-marketing the Company's products together with
selected partners in the insurance and risk management industry. We expect to
conclude such discussions with finalized joint venture agreements in the very
near future.

For the quarter ended March 31, 2004, the Company had revenues of $44,580,
compared to $35,452 achieved in the first quarter of 2003. Revenues consisted of
$25,910 licensing fees for our software products and $18,670 for maintenance and
support services. Total orders booked during the quarter amounted to $76,218.

Gross profits amounted to $5,625. Gross profits are burdened with 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 $13,000 per month to
cost-of-goods-sold. Owing to the fact that variable cost-of-goods-sold expenses
are less than 5%, the gross margins will increase with larger revenues, as the
portion of fixed expenses decreases relatively. After deducting selling - and
general and administrative expenses of $702,342 which increased by 4% over the
$674,298 recorded in 2003, the Company realized an operating loss of $696,717
compared to an operating loss of $677,833 in 2003. Non-operating expenses
consisted of $5,796 net interest expense. The quarter concluded with a net loss
of $702,513 compared to a loss of $684,416 in the first three months of 2003.

After accounting for dividend accruals on outstanding preferred stock which
totaled $57,380, and an accounting charge to capital for amortization of
discount for warrants issued in connection with the placement of certain
convertible stock, amounting to $716,436, the net loss applicable to common
shareholders was $1,476,329 or $0.02 per share, compared to a loss of $713,233
or $0.01 per share for the same quarter in the previous year.


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<PAGE>

Liquidity and Capital Resources

The Company's liquidity showed a relative improvement during the quarter, as a
result of the successful conclusion of a round of private equity placements. The
Company obtained approximately $880,000 cash from such transactions.

At March 31, 2004, the deficit in working capital amounted to $619,182, compared
to $968,183 at December 31, 2003. Stockholders' equity showed a surplus of
$19,971 at the end of the quarter, compared to an impairment of $377,851 at the
beginning of the year. The negative cash flow from operations totaled
approximately $592,000 and was financed by new equity which was obtained through
the placement of convertible preferred stock with accredited private investors.
Details of such transactions can be found in the "Changes in Securities" section
in this report. In February 2004, the Company had filed a new registration
statement on Form SB-2 and an amendment to a previously filed registration
statement on Form SB-2, both of which covered common shares directly issued as
well as common shares underlying the previously issued convertible preferred
stock and warrants, in connection with these and prior financing transactions.
These filings are currently under review by the Securities and Exchange
Commission.

At the time of this submission, the Company had no bank debt. At March 31, 2004
our short-term liabilities, aside from trade payables and accruals, included
certain notes aggregating $233,419 of which $99,890 was owed to the chairman and
chief executive officer of the Company in form of a demand note (see "Long Term
Debt"). Also included are 416,948 in accrued dividends, most of which on
outstanding series A, C, and D preferred stock which in view of the absence of
surplus funds, management does not plan to liquidate in the immediate future.

Current cash reserves and net cash flow from operations expected during the near
future are inadequate when measured against present and anticipated future
needs. In order to remedy the resulting liquidity constraints and address any
"going-concern" issues, management is continuing negotiations with several
financing sources with the goal of obtaining commitments for further investments
in form of debt or equity capital, to be funded during the upcoming quarter.
There can be no assurance, however, that these negotiations will lead to the
desired outcome.


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<PAGE>


ITEM 3. CONTROLS AND PROCEDURES

      (a) Evaluation of Disclosure Controls and Procedures.

            Within the 90 days prior to the filing date of this Quarterly Report
on Form 10-Q, our Chief Executive Officer and our Chief Financial Officer
evaluated the effectiveness of our disclosure controls and procedures as defined
in Rule 13a-14(c) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Based upon that evaluation, the Chief Executive Officer and the
Chief Financial Officer, have concluded that our current disclosure controls and
procedures are adequate and effective to ensure that information required to be
disclosed in the reports we file under the Exchange Act is recorded, processed,
summarized and reported on a timely basis.

      (b) Changes in Internal Controls.

            There have been no significant changes in our internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of their evaluation by the Chief Executive Officer and the Chief
Financial Officer.


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<PAGE>


PART II - OTHER INFORMATION

Item 1 LEGAL PROCEEDINGS

      The Company is not a party in any legal proceedings.

Item 2 CHANGES IN SECURITIES

      a) - None

      b) - None

      c) Issuance of unregistered securities

            During the quarter  ended  March 31,  2004,  the Company  issued the
following unregistered securities:

      (i)   1,145,000 shares of common stock and 1,900 shares of Series E
            Convertible Preferred Stock convertible into 190,000 common shares,
            accompanied by warrants for the purchase of 95,000 common shares at
            the price of $0.15 per share, to three consultants for investor
            relations and general business consulting services.

      (ii)  673,333 shares of common stock to a financial services firm for
            finder's fees in connection with the private placement of
            convertible preferred stock.

      (iii) 50,000 shares of common stock in lieu of cash, for rent expenses.

      (iv)  150,000 shares of common stock to an outside director of the Company
            for services rendered. The same director was issued 250,000 shares
            pursuant to his exercise of an option at the price of $0.01 per
            share which option was acquired by him in a private transaction with
            an unrelated party.

      (v)   156,993 shares of Series E Convertible Preferred Stock convertible
            into 15,699,333 common shares, accompanied by warrants for the
            purchase of 7,849,667 common shares at the price of $0.15 per share,
            to thirty-nine accredited investors pursuant to private placement
            subscriptions, issued in reliance upon exemptions provided under
            Section 4(2), Rule 506 of Regulation D and Regulation S of the
            Securities Act, altogether resulting in the receipt by the Company
            of approximately $880,000 in cash.

      (vi)  16,667 shares of Series E Convertible Preferred Stock convertible
            into 1,666,667 common shares, accompanied by warrants for the
            purchase of 833,333 common shares, exercisable during three years at
            the price of $0.15 per share, to the Company's chief executive
            officer in lieu of $100,000 salary.


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<PAGE>


Item 3  DEFAULTS ON SENIOR SECURITIES

      The Company, as of the date of this filing, is in arrears on the payment
      of certain dividends on its Series A, C, and D Senior Convertible
      Preferred Stock. Such arrears total approximately $368,000. These
      dividends have been accrued, however, the Company's management has
      refrained from making payments at this time because of the absence of
      positive equity and/or surplus funds.

Item 4  SUBMISSION OF MATTERS TO A VOTE OF
        SECURITIES' HOLDERS

         -  None

Item 5  OTHER INFORMATION

         -  None

Item 6  EXHIBITS AND REPORTS ON FORM 8-K

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

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

      (b)   Reports on Form 8-K:

            On February 6, 2004, the Company filed a report on Form 8-K,
            informing about the completion of a round of private equity
            placement financings.


                                       17
<PAGE>


                                   SIGNATURES

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


                                       MAGNITUDE INFORMATION SYSTEMS, INC.


Date:   May 12, 2004                   By:    /s/  Steven D. Rudnik
                                            ------------------------------------
                                            Steven D. Rudnik
                                            Chairman and Chief Executive Officer


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