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 September 30, 2001

                                       OR

              [ ] TRANSITION REPORT PURSUANT O SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the Transition Period from _______ to _______

                         Commission file number 33-20432

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

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

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

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


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

  The  number  of  shares of  Registrant's  Common  Stock,  $0.0001  par  value,
outstanding as of September 30, 2001, was 25,023,903 shares.

<PAGE>




              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES




                                      INDEX


                                                                         Page
                                                                        Number

PART  1  -  FINANCIAL INFORMATION

Item 1   Financial Statements (unaudited)

         Consolidated Balance Sheet
          - September 30, 2001                                            3

         Consolidated Statements of Operations
          - Three and nine months ended September 30, 2001 and 2000       4

         Consolidated Statements of Cash Flows
          - Nine months ended September 30, 2001 and 2000                 5

         Notes to Consolidated Financial Statements                     6 - 12


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


PART II  -  OTHER INFORMATION                                             15


SIGNATURES                                                                16

                                       2
<PAGE>



PART I  - Item 1
              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                  September 30, 2001
ASSETS
     Current Assets
<S>                                                                                   <C>
     Cash  ....................................................................       $    8,577
     Accounts receivable, net of allowance for
        doubtful accounts of 132,843 ..........................................          353,634
     Miscellaneous receivables.................................................          196,323
     Inventories ..............................................................            2,260
     Deferred tax asset........................................................          122,044
     Prepaid expenses .........................................................           34,679
                                                                                       ----------
        Total Current Assets ..................................................          717,517
     Receivables due for payment after 12 months...............................          125,781
     Property, plant and equipment, net of accumulated
        depreciation of $203,585...............................................           77,051
     Software, net of accumulated amortization of $534,520 ....................          972,770
     Other assets .............................................................           21,829
                                                                                        ---------
TOTAL ASSETS ..................................................................        1,914,948
                                                                                        ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
     Accounts payable and accrued expenses ....................................          698,110
     Deferred revenue..........................................................          231,867
     Dividends payable ........................................................          150,586
     Loans and notes payable ..................................................          617,390
     Current maturities long-term debt ........................................           33,529
     Current maturities lease obligations .....................................            7,440
                                                                                        -----------
        Total Current Liabilities .............................................        1,738,922
     Long-term debt, less current portion .....................................                0
     Lease obligations, less current portion ..................................            6,118
                                                                                        -----------
TOTAL LIABILITIES .............................................................        1,745,040

STOCKHOLDERS' EQUITY
     Preferred Stock, $0.001 par value, non-voting, 3,000,000 shares authorized:
     2,500 shares have been designated Cumulative Preferred Stock,
     of which 1 share is issued and outstanding ...............................                0
     300,000 shares have been designated Series A Convertible Preferred Stock,
     350,000 shares have been designated Series B Convertible Preferred Stock,
     120,000 shares have been designated Series C Convertible Preferred Stock,
     500,000 shares have been designated Series D Convertible Preferred Stock,
     of which a combined total 214,857 shares are issued and outstanding                     215
     Common Stock, $0.0001 par value, 100,000,000 shares authorized,
     25,023,903 shares are issued and outstanding..............................            2,502
     Additional paid-in capital ...............................................       17,900,767
     Accumulated deficit ......................................................      (17,733,576)
                                                                                     ------------
TOTAL STOCKHOLDERS' EQUITY...............................                                169,908

TOTAL LIABILITIES AND EQUITY ....................................                   $  1,914,948
                                                                                       ==========
</TABLE>

                 See notes to consolidated financial statements
                                       3

<PAGE>




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

<TABLE>
<CAPTION>

                                                          Three Months Ended                     Nine Months Ended
                                                              September 30,                         September 30,
                                                           2001              2000             2001            2000
                                                     -------------     -------------    -------------     -------------

<S>                                                 <C>              <C>                    <C>              <C>
Total Revenues....................................  $    34,150      $    253,787           527,083          601,790

     Cost of Goods Sold ..........................       39,311            41,740           120,353          126,394
                                                     -------------    -------------     -------------       ---------
Gross Profit .....................................       (5,161)          212,047           406,730          475,396

     Selling expenses ............................       256,275          441,140         1,005,883        1,046,219
     General & administrative expenses ...........       556,438          641,478         1,762,632        1,774,331
                                                       -----------      ------------      -------------    -----------

Operating Income (Loss) ..........................      (817,874)        (870,571)       (2,361,785)      (2,345,154)

     Miscellaneous income ........................             0               12                 0           14,060
     Interest expense, net........................        (9,670)         (16,091)          (42,901)        (148,934)
     Miscellaneous expenses ......................      (156,789)              (0)         (156,789)          (1,149)
Non-Operating Income (Expense) ...................      (166,459)         (16,079)         (199,690)        (136,023)
                                                       -------------     -------------    -------------     -----------

Net Loss before taxes.............................      (984,333)        (886,650)       (2,561,475)       (2,481,177)

     Provision for income taxes...................             0                0                 0                 0
Net Loss .........................................    $ (984,333)     $  (886,650)      $(2,561,475)   $   (2,481,177)
                                                         =========        ========      ===========            ========

Dividends ........................................        26,354           53,280           157,561           118,128

Net Loss after Dividends .........................   $(1,010,687)     $  (939,930)      $(2,719,036)   $   (2,599,305)

Loss per Common Share ............................   $    (0.04)      $     (0.06)      $     (0.13)   $        (0.18)
                                                          ========         ========        ========           ========
Weighted Average Number of
     Common Shares Outstanding ....................   23,552,842       15,745,597        20,285,553        14,599,500
</TABLE>











                 See notes to consolidated financial statements

                                        4
<PAGE>




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


                                                 Nine Months Ended September 30,
                                                       2001              2000
Cash Flows from Operating Activities
     Net income (loss) ............................ $(2,561,475)   $ (2,481,178)
     Adjustments to net income (loss)
        Depreciation and amortization .............     152,933         149,074
        Stock and debt issued for expenses.........      27,388         251,667
        Disposition of certain assets /liabilities.           0           1,122
        Dividend payments........................       (14,003)        (42,000)
     Decreases (increases) in Assets
        Accounts receivable .....................      (131,943)       (401,277)
        Miscellaneous receivables................      (129,627)         15,227
        Inventories .............................           240             215
        Prepaid expenses ........................       319,138         (38,795)
        Other assets ............................         2,600         (22,750)
     Increases (decreases) in Liabilities
        Prepayments received.....................             0               0
        Deferred revenues........................       204,548               0
        Accounts payable and accrued expenses ...       110,856        (204,486)
                                                    --------------    ---------
Net Cash Provided (Used) by Operating Activities    (2,019,345)      (2,773,181)

Cash Flows from Investing Activities
     Purchases of equipment and fixtures ........         (944)         (52,182)
     Disposition of equipment and other assets ..            0            3,358
                                                    --------------    ---------
Net Cash Provided (Used) by Investing Activities          (944)         (48,824)

Cash Flows from Financing Activities
     Proceeds from notes payable ...............       397,500          250,000
     Repayment of loans and notes ..............       (46,000)        (484,534)
     Reclassification of long-term debt ........      (100,000)              (0)
     Issuance of preferred stock................       145,004        2,937,836
     Issuance of common stock ........... ......     1,594,661          550,000
                                                   -------------        -------
Net Cash Provided (Used) by Financing Activities     1,991,165        3,253,302
Net Increase (Decrease) in Cash ................       (29,124)         431,297
Cash at Beginning of Period ....................        37,701          249,569
                                                    ----------         --------
Cash at End of Period ..........................   $     8,577      $   680,866
                                                   ============       =========








                 See notes to consolidated financial statements


                                       5
<PAGE>



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

DESCRIPTION OF BUSINESS

         Magnitude  Information Systems, Inc. (the "Company" or "Magnitude") was
         incorporated as a Delaware corporation on April 19, 1988 under the name
         Fortunistics  Inc. On March 4, 1993,  the  Company  changed its name to
         Whitestone  Industries,  Inc. On July 14, 1997, the Company changed its
         name to Proformix Systems,  Inc., and on November 18, 1998, the Company
         changed its name to Magnitude Information Systems, Inc.

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

BACKGROUND

On  June  24,  1997,  the  Company,  extended  a  stock  exchange  offer  to the
shareholders  of Proformix,  Inc., a Delaware  corporation  and  manufacturer of
ergonomic keyboarding systems. Proformix, Inc. in November 1998 changed its name
to Magnitude, Inc. and is now referred to as Magnitude, Inc. At the time of this
submission, holders of 99.4% of Magnitude, Inc. common stock have tendered their
shares.  The business  combination which took the form of a reverse  acquisition
has been  accounted for as a purchase.  As a result,  the Company and Magnitude,
Inc. remain as two separate legal entities whereby Magnitude, Inc. operates as a
subsidiary of Magnitude  Information Systems,  Inc.. The operations of the newly
combined entity are currently  comprised  solely of the operations of Magnitude,
Inc.

On February 2, 1998,  the Company  entered into an Agreement  and Plan of Merger
with Rolina  Corporation,  a privately held New Jersey software developing firm,
and on April 30, 1998,  into an Asset Purchase  Agreement  with Vanity  Software
Publishing  Co., a Canadian  developer  of  specialized  software,  whereby  the
Company, in return for payments in form of cash and equity,  acquired the rights
to certain  software  products and related assets,  with such software  products
subsequently forming the basis for the further development, during the
year, of the Company's proprietary ErgoManager(TM) software system.

On November 18, 1998,  the Company and its wholly  owned  subsidiary  Magnitude,
Inc.  entered into an Asset Purchase  Agreement and several  related  agreements
with  1320236  Ontario  Inc.  ("OS"),  a  publicly  traded  Canadian   designer,
manufacturer  and  distributor  of office  furniture  based in Holland  Landing,
Ontario,  Canada,  pursuant  to which OS  acquired  Magnitude,  Inc.'s  hardware
product line comprised of the Company's ergonomic keyboard platform products and
accessories,  all related  inventory  and  production  tooling  and  warehousing
assets,  and all  intellectual  property  rights  including the Proformix  name,
against a cash  consideration  and certain royalty  payments on OS' sales of the
Proformix hardware products.


                                       6
<PAGE>



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

NARRATIVE DESCRIPTION OF INDUSTRY AND MARKET

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

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

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

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

         Repetitive  stress injury (RSI) is a classification  of diseases caused
         by  the  excessive  use  of  joints.  It  is  a  sub-classification  of
         Cumulative Trauma Disorders (CTDs). RSI accounts for a large portion of
         work-related illnesses, and the incidence of RSI is expected to grow as
         the number of people operating keyboards  increases.  The impact of RSI
         is measured not only in the pain and suffering of its victims, but also
         in time  lost from  work and  medical  costs.  The  Company's  software
         products  are  designed  to  help  businesses  deal  with   potentially
         preventable  repetitive  stress  injuries,  by real-time  monitoring of
         keyboarding activities,  pro-active dialog with at-risk employees,  and
         strategic  profiling  and  management  of computer  use  throughout  an
         organization.

         A new  study  released  in  January  2001 by the  National  Academy  of
         Sciences,  originally  commissioned  by  Congress  and  produced by the
         National Research Council, finds that work-related back, hand and wrist
         injuries affect about 1 million U.S. workers every year. The total cost
         of the  resultant  disorders  is between $45 billion and $54 billion in
         compensation, lost wages and lower productivity. Increased awareness of
         the  health  risks and  associated  costs  led the State of  California
         several years ago  implemented  an ergonomic  regulation  which directs
         qualifying  employers to establish  and maintain a program  designed to
         minimize  RSI's.  Such  program  shall  include  work-site  evaluation,
         control of the  exposures  that have  caused  RSI's,  and  training  of
         employees.  State agencies and employers in California face fines of up
         to $25,000 per incident for violating these  regulations.  The State of
         Washington  adopted similar  regulations in 2000, and other states have
         indicated a willingness to follow suit.  The Company  believes that the
         growing  recognition  of  these  trends  will  give  rise to a  rapidly
         expanding market for the Company's products.

                                       7
<PAGE>



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

GOING CONCERN

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


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

     Depreciation and Amortization
         Property,  plant and  equipment are recorded at cost.  Depreciation  on
         equipment,   furniture  and  fixtures  and  leasehold  improvements  is
         computed on the straight-line method over the estimated useful lives of
         such assets between 3-10 years.  Maintenance and repairs are charged to
         operations   as  incurred.   Software   assets  are  amortized  on  the
         straight-line method over 10 years.

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

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

                                       8
<PAGE>



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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

         when necessary to reduce  deferred tax assets to the amount expected to
         be  realized.  The  Company  has  incurred  net  operating  losses  for
         financial-reporting  and  tax-reporting  purposes.   Accordingly,   for
         Federal  income tax  purposes,  the benefit  for income  taxes has been
         offset  entirely by a valuation  allowance  against the related federal
         deferred  tax asset for the year ended  December  31,  2000.  For state
         income tax  purposes,  a partial  valuation  allowance  has been offset
         against  the  related  state  deferred  tax  asset  for the year  ended
         December 31, 2000.

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

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

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

DEFERRED TAX ASSET

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

PREPAID EXPENSES

         Prepaid  expenses  at the end of the  quarter  included a  position  of
         $156,789 resulting from an agreement in February 1998 with BNN Business
         News Network  Inc., a nationwide  media  advertising  and radio network
         company,  whereby the Company purchased advertising time to be utilized
         on stations  associated with Business News Network Inc.,  usable over a
         period of three years, since then extended, and aggregating $900,000 in
         retail value,  against  issuance of 150,000 new and  restricted  common
         shares. The services purchased were capitalized at the then fair market
         value of the stock issued,  for a total of $375,000 and have since been
         amortized as  utilized.  At September  30,  2001,  however,  management
         concluded  that  the  remaining   asset  was  compromised  due  to  the
         likelihood that there would be no further tangible benefits  associated
         with this  position.  The residual  balance of $156,789  was  therefore
         written off.

                                       9

<PAGE>



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


RECEIVABLES DUE AFTER 12 MONTHS

     Two major contracts,  entered into during the second quarter,  provided for
     deferred payment schedules of which portions  amounting to $125,781 are due
     and payable in  installments  during the months  October  through  December
     2002.


PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
     Property,  plant and  equipment  consist of the  following at September 30,
2001:
<S>                                                                                      <C>
              Equipment                                                                  $       164,891
              Furniture and fixtures                                                              69,976
              Leasehold improvements                                                              45,770
                                                                                           --------------

                                                                                                 280,637

              Less accumulated depreciation                                                      203,585
                                                                                           --------------

                                        Total                                            $        77,051
                                                                                           ==============


ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

              Accounts payable                                                           $       434,876

              Accrued interest                                                                    50,139

              Accrued commissions                                                                 41,231

              Accrued salaries and professional fees                                             112,296

              Miscellaneous accruals                                                              70,943
                                                                                            =============

                                    Total                                                $       709,485
                                                                                            =============
</TABLE>



DEFERRED REVENUES

     During the  second  quarter,  the  Company  entered  into a  licensing  and
     distribution  agreement  with a foreign  distributor  which  resulted  in a
     $175,000  receivables  position with extended  payment  terms,  whereby the
     associated  revenue has been deferred  until  management  has received more
     assurance with respect to the collectibility of the receivable






                                       10


<PAGE>




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


LOANS AND NOTES PAYABLE

<TABLE>
<CAPTION>
     At September 30, 2001,  Magnitude,  Inc. and the Company had borrowings
     under short term loan agreements with the following terms and conditions:

<S>                                                                     <C>                                <C>
         Note issued by Magnitude,  Inc.  originally  maturing December 4, 1998 and accruing interest at   $        75,000
         5% per year.  This note is overdue at September  30, 2001;  no demand for payment has been made
         through today's date.
         Note issued by Magnitude,  Inc.  originally maturing June 1996 and accruing interest at 12% per
         year.  This note is overdue at September  30, 2001; no demand for payment has been made through            25,000
         today's date.
         Discounted  present value of a non-interest  bearing $70,000  settlement with a former investor
         of  Magnitude,  Inc.  to be paid in  monthly  payments  commencing  July 1, 1997.  The  imputed            33,529
         interest rate used to discount the note is 8% per annum.
         Cash advances from an officer and director of the Company,  carrying interest at the rate of 7%
         p.a.                                                                                                      142,500

        Pursuant to the  February 2, 1998,  Agreement  and Plan of Merger with Rolina  Corporation  (see
        "Background")  the Company had issued  155,556  shares (the "Shares") of its common stock to the   $       374,890
        principal of Rolina  Corporation  who  currently  serves as the  Company's  President  and Chief
        Executive Officer,  and had issued a Put Option for such Shares at a price of $2.41 per share in
        accordance with the provisions contained therein,  with notice for exercise eligible to be given
        at any time after  February  1, 2000,  and before  5:00 p.m.  on the 90th day  thereafter.  This
        liability was converted into a Company  obligation  maturing July 1, 2002, and carrying interest
        at the  rate  of 7% per  year  payable  monthly,  of  which  a  portion  of  $100,000  has  been
        reclassified  as due on demand.  The obligation  includes an option to the holder for conversion
        of the outstanding  principal into shares of the Company's common stock at the rate of $0.50 per
        share.
               Total                                                                                        $      650,919

  INCOME TAXES

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

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


                                       11

<PAGE>



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

COMMITMENTS AND CONTINGENCIES

   Lease Agreements

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


RELATED PARTY TRANSACTIONS

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

      During the first three quarters in 2001, several officers and directors of
      the Company  extended  cash  advances to the Company of which a balance of
      $142,500  at  September  30, 2001  remains  outstanding  and which  accrue
      interest at the rate of 7% per year.  These  advances are  repayable  upon
      demand.  During the quarter  ended  September  30, 2001, a director of the
      Company converted an aggregate $130,000 of such cash advances into 361,111
      shares of the  Company's  common  stock and warrants for the purchase of a
      further 361,111 common shares, exercisable at $0.60 per share.

      In July 2001,  the board of directors of the Company acted on an earlier
      decision with respect to founder's shares and authorized the grant of a
      stock option for the purchase of 2.5 million common shares to the founder
      and current Chief Executive Officer of the Company, exercisable over ten
      years at a price of $0.50 per share.  The option has a cash-less exercise
      feature.

      In September  2001, a director of the Company  exercised  warrants for the
      purchase of 400,000  shares of the Company's  common stock,  at a price of
      $0.25 per share.




                                       12
<PAGE>



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


Results of Operations:

        A number of major contracts were anticipated to close in September but
were delayed directly due to the events of September 11th, 2001.  These are
building towards closure again, however, the delays resulted in lesser than
expected revenues during the period.  It is worthwhile to note that in the time
since September, management has observed increased attention to cost-
containment at prospects and clients resulting in extraordinary interest in the
Company's products.  Management expects future revenues to reflect this very
positive development in our industry.  No major new contracts were signed
during the period, however, at the time of this writing the Company is in the
process of completing materials due under a purchase by an overseas distributor
with whom we had signed a license and purchase agreement during the second
quarter, which will result in the recognition of $175,000 in previously
deferred revenues when complete.  We are in the process of negotiating similar
agreements with both U.S. distributors and other foreign distributors in the
Far East and Europe.

         Revenues for the quarter  ended  September30,  2001,  totaled  $34,150,
compared to $253,787 for the same period in 2000, all such revenues generated by
the Company's wholly owned subsidiary Magnitude,  Inc. from the licensing of the
Company's  proprietary  ErgoManager(TM)  software  and related  maintenance  and
support services. The terms of two larger purchase contracts received by the
the Company during the second quarter provide for extended payment terms so that
the  Company  will  receive  cash  only  in installments  through  2002
(see  "Receivables  due after 12 months" in Notes to Financial  Statements).
Revenues for the nine months period ended September 30,2001,  totaled
$527,083  compared to $601,790 in the first nine months of 2000.
Gross profits during the quarter totaled negative $5,161.  The gross profits are
burdened with a fixed charge for amortization of software investments.  Software
assets underlying the Company's  products are being amortized on a straight line
over 10 years, resulting in a level charge of approximately $13,000 per month to
cost-of-goods-sold.  Since  variable  product costs are low, the gross margin is
expected to  significantly  increase as revenues grow.  After deducting  selling
expenses and general and  administrative  expenses totaling $812,713 the Company
realized  an  operating  loss of  $817,874,  compared  to an  operating  loss of
$870,571 for the third quarter in 2000. Non-operating expenses totaled $166,459,
primarily  from the  write-off of a  compromised  asset  position  (see "Prepaid
Expenses" in the Notes to Financial Statements). The net result for the quarter,
after  accounting  for dividends  paid and accrued on the Company's  outstanding
preferred stock, was a loss of $1,010,687 or $0.04 per share, compared to a loss
of $939,930  or $0.06 per share for the same  period last year.  The nine month'
result was a loss of $2,719,036 in 2001, and a loss of $2,599,305 in 2000.

         In spite of a fifteen  percent  decrease  in  operating  costs from the
preceding quarter, expenses continue to be high relative to revenues. Management
is striving to further reduce costs,  however, is acutely aware of the necessity
to provide for an adequate  infrastructure to maintain the Company's presence on
the marketplace.  Savings vis-a-vis prior quarters were achieved in both selling
and general and  administrative  expenses  through  staffing  reductions and the
elimination of certain non-critical marketing programs. Management expects to
be able to further reduce costs during the fourth quarter.

         Our primary  marketing focus is on medium to larger size companies that
may be candidates for enterprise-wide  installation of our software. Such larger
contacts,  however,  typically  are  preceded by long and  exhaustive  trial and
evaluation  cycles whose pace of progress are  unpredictable.  The timing of the
finalization of any major contract will  significantly  impact a given quarter's
results.  Management is confident that its current sales approach  remains valid
and will result in tangible revenue improvements during the upcoming quarters.

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

                                       13
<PAGE>

Liquidity and Capital Resources

         The cash  outflow  from  losses  during  the  second  quarter  could be
compensated by new equity investments through equity subscriptions by accredited
investors  who  purchased  the  Company's  common  stock in a series of  private
placements,  and the  exercise of warrants  and options to purchase  such stock.
These transactions  contributed  approximately  $850,000 in cash. These receipts
were not sufficient to reverse the large deficit in the working capital position
which  amounted to negative  $1,021,405  at September  30, 2001,  including  the
effect of a  reclassification  to current  status of certain notes issued to the
Company's chief executive officer, and continues to slow the Company's marketing
efforts.

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

         At the  time of this  submission,  the  Company  had no bank  debt.  At
September 30, 2001,  its short-term  liabilities,  aside from trade payables and
accruals,  consisted  of  certain  notes  and  loans  aggregating  approximately
$650,000  of  which  $520,000  are  owed to the  Company's  chairman  and  chief
executive officer (see "Related Party Transactions"). Owing to present liquidity
constraints,  the Company is currently in arrears with approximately $130,000 in
accrued unpaid dividends.








                                       14
<PAGE>




PART  II  -  OTHER INFORMATION

Item 1   LEGAL PROCEEDINGS

The Company is not a party in any legal proceedings.


Item 2   CHANGES IN SECURITIES      -  None

c)   Issuance of unregistered securities

In addition to the issuance of unregistered  securities  previously noted in the
Company's   report  on  Form  10-QSB  for  the  quarter  ended  June  30,  2001,
incorporated herein by reference, the Company, during the third quarter of 2001,
issued the following unregistered securities:

    (i)  1,124,030  shares of common  stock  accompanied  by  warrants  for the
purchase of 1,118,700 shares of common stock  exercisable at $0.60 per share, to
four accredited investors pursuant to private placement subscriptions, issued in
reliance upon  exemptions  provided under Section 4(2), Rule 506 of Regulation D
and  Regulation S of the  Securities  Act,  which resulted in the receipt by the
Company of approximately $423,000 in cash;

     (ii)  79,403  shares of common  stock to three  creditors  of the  Company,
pursuant to the conversion of $31,800 in miscellaneous payables;

     (iii) 1,000,000  shares of common stock pursuant to the exercise of certain
options  and  warrants  by two  individuals,  one of whom is a  director  of the
Company (see "Related Party  Transactions"  above);  resulting in the receipt by
the Company of $250,000 in cash;

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

Item 3   DEFAULTS ON SENIOR SECURITIES

The  Company,  as of the date of this  filing,  is in arrears on the  payment of
certain  dividends  on its  Series A, B, C, and D Senior  Convertible  Preferred
Stock. Such arrears total approximately $130,000 .


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:      - None






                                       15
<PAGE>






                                   SIGNATURES


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



                                          MAGNITUDE INFORMATION SYSTEMS, INC.




Date:   November 13, 2001                 By: /s/  Steven D. Rudnik
                                          ------------------------------
                                           Steven D. Rudnik
                                           Chairman and Chief Executive Officer