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, 2006

                                       OR

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

                         Commission file number 33-20432

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

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

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

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

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

The number of shares of Registrant's Common Stock, $0.0001 par value,
outstanding as of October 31, 2006, was 192,341,763 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, 2006                                           3

         Consolidated Statements of Operations
          - Three and nine months ended September 30, 2006 and 2005      4

         Consolidated Statements of Cash Flows
          - Nine months ended September 30, 2006 and 2005                5

         Notes to Consolidated Financial Statements                      6 - 12


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

Item 3   Controls and Procedures                                        15


PART II  -  OTHER INFORMATION                                           16 - 17


SIGNATURES                                                              18


                                       2
<PAGE>

                      PART I - Item 1 Financial Statements

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                         September 30, 2006 (Unaudited)

<TABLE>
<S>                                                                                <C>
Assets
  Current Assets
  Cash                                                                             $    314,247
  Accounts receivable, net of allowance for
    doubtful accounts of $0                                                               2,031
  Prepaid expenses                                                                      227,304
                                                                                   ------------
    Total Current Assets                                                                543,582
  Property and equipment, net of accumulated
  depreciation of $105,992                                                               10,187
  Software, net of accumulated amortization of $1,295,951                               211,340
  Deposits                                                                                  596
  Covenant not to compete, net of accumulated
  amortization of $13,750                                                                46,250
                                                                                   ------------
    Total Assets                                                                        811,955
                                                                                   ============
Liabilities and Stockholders' Equity (Impairment)

  Current Liabilities
  Accounts payable and accrued expenses                                                 524,968
  Deferred revenue                                                                      108,758
  Obligations to be settled in stock                                                    568,000
  Derivative liabilities                                                                860,668
  Dividends payable                                                                     309,493
  Loans and notes payable                                                               467,450
  Current maturities of long-term debt                                                  133,419
  Current maturities of capitalized lease obligations                                       256
                                                                                   ------------
     Total Current Liabilities                                                        2,973,012
  Capitalized lease obligations, less current portion                                        --
                                                                                   ------------
     Total Liabilities                                                                2,973,012

Stockholders' Equity (Impairment)
Preferred Stock, $0.001 par value, non-voting, 3,000,000 shares authorized:
  2,500 shares have been designated Cumulative Preferred Stock,
  of which 1 share is issued and outstanding                                                  0
  300,000 shares have been designated Series A Convertible Preferred Stock,
  350,000 shares have been designated Series B Convertible Preferred Stock,
  120,000 shares have been designated Series C Convertible Preferred Stock,
  500,000 shares have been designated Series D Convertible Preferred Stock,
  500,000 shares have been designated Series E Convertible Preferred Stock,
  of which a combined total 109,858 shares are issued and outstanding                       110
  Common Stock, $0.0001 par value, 300,000,000 shares authorized;
  issued and outstanding 191,116,763 shares                                              19,112
  Additional paid-in capital                                                         32,735,699
  Accumulated (deficit)                                                             (34,915,978)
                                                                                   ------------
    Total Stockholders' Equity (Impairment)                                          (2,161,057)

    Total Liabilities and Equity (Impairment)                                      $    811,955
                                                                                   ============
</TABLE>

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


                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                      Three Months Ended                  Nine Months Ended
                                                         September 30,                      September 30,
                                                     2006             2005             2006              2005
                                                 -------------    -------------    -------------    -------------

<S>                                              <C>              <C>              <C>              <C>
Total Revenues                                   $       9,468    $      86,027    $      41,622    $     150,860

  Cost of Goods Sold                                    36,370           36,372          109,119          109,114
                                                 -------------    -------------    -------------    -------------


Gross Profit (Loss)                                    (26,902)          49,655          (67,497)          41,746
  Selling expenses                                      70,984           86,731          381,456          299,349
  Stock-based compensation (see below) .               956,948          188,392        1,478,505          312,367
  Research and development cost                         34,301               --          104,830           14,618
  General and administrative expenses                  178,756          282,444        1,047,607        1,121,257
                                                 -------------    -------------    -------------    -------------

Loss from Operations                                (1,267,891)        (507,912)      (3,079,895)      (1,705,845)

Other Income (Expense)
  Miscellaneous income                                      --            4,846               --           22,383
  Misc. non-operating expenses                            (356)              --           (5,356)              --
  Change in fair value -derivative liabilities          51,560               --           57,763               --
  Interest income                                           --               --               20                6
  Interest expense                                     (43,146)          (8,842)        (192,550)         (16,416)
                                                 -------------    -------------    -------------    -------------
         Total Other Income (Expense)                    8,058           (3,996)        (140,123)           5,973
                                                 -------------    -------------    -------------    -------------

Loss before Provision for Income Taxes              (1,259,833)        (511,908)      (3,220,018)      (1,699,872)

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

Net Loss                                         $  (1,259,833)   $    (511,908)   $  (3,221,018)   $  (1,700,502)
                                                 =============    =============    =============    =============

Dividends on Preferred Stock                           (12,630)         (28,380)        (527,894)         (85,139)
                                                 -------------    -------------    -------------    -------------

Net Loss applicable to Common Shareholders       $  (1,272,463)   $    (540,288)   $  (3,748,912)   $  (1,785,641)
                                                 =============    =============    =============    =============
Net Loss per Common Share                        $      (0.007)   $      (0.004)   $      (0.023)   $      (0.013)
                                                 =============    =============    =============    =============
Weighted Average Number of
  Common Shares Outstanding                        178,947,329      140,771,743      163,134,242      137,511,211
                                                 =============    =============    =============    =============
</TABLE>


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

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


                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                             Nine Months Ended
                                                              September 30,
                                                           2006          2005
                                                       -----------    -----------
<S>                                                    <C>            <C>
Cash Flows from Operating Activities
  Net Loss                                             $(3,221,018)   $(1,700,502)
  Adjustments to Reconcile Net Loss
  to Net Cash Used by Operations
     Depreciation and amortization                         127,158        116,269
     Change in fair value - derivative liabilities         (57,763)            --
     Accretion of beneficial conversion feature              8,000             --
     Loss on disposition of assets                             356             --
     Securities issued for various expenses              1,299,674        363,504
     Recognition of expense - deferred compensation        178,832         88,138
     Recognition of expense - derivative liabilities       102,762             --
Decreases (Increases) in Assets
     Accounts receivable                                    20,267        (68,031)
     Miscellaneous receivables                                  --         11,322
     Inventories                                                --             --
     Prepaid expenses                                     (204,518)        30,855
     Deposits                                               23,400             --
     Obligations to be settled in stock                    568,000             --
Increases (Decreases) in Liabilities
     Deferred revenues                                      83,219         (9,686)
     Accounts payable and accrued expenses                 150,670       (164,194)
                                                       -----------    -----------
Net Cash Used by Operating Activities                     (920,961)    (1,332,625)

Cash Flows from Investing Activities
     Purchases of equipment and fixtures                    (7,438)        (2,160)
                                                       -----------    -----------
Net Cash Used by Investing Activities                       (7,438)        (2,160)

Cash Flows from Financing Activities
     Proceeds from loans and notes payable                 480,700         54,500
     Repayment of loans and notes                          (81,250)       (54,500)
     Payment of dividends                                       --         (1,020)
     Issuance of common and preferred stock                724,500      1,328,000
                                                       -----------    -----------
Net Cash Provided by Financing Activities                1,123,950      1,326,980

Net Decrease in Cash                                       195,551         (7,805)
Cash at Beginning of Period                                118,696         44,144
                                                       -----------    -----------
Cash at End of Period                                  $   314,247    $    36,339
                                                       ===========    ===========
</TABLE>


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

SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

(a)   The  Company  issued  10,250,000  shares of common  stock to the holder of
      100,000  shares of Series C  convertible  preferred  stock  pursuant  to a
      settlement  agreement whereby in exchange against the above common shares,
      the 100,000  preferred  shares were cancelled and $350,895  accrued unpaid
      dividends forfeited.

                                       5
<PAGE>



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


(b)   Pursuant to the terms of certain private placement subscription agreements
      and in  accordance  with the  provisions  of EITF  00-19  "Accounting  for
      Derivative Financial Instruments Indexed to, and Potentially Settled in, a
      Company's Own Stock" the Company reclassified certain outstanding warrants
      and  options  as  derivative  liabilities,  which are marked to fair value
      periodically  pursuant  EITF 00-19.  We valued these  options and warrants
      utilizing  the  Black-Scholes  method of  valuation  as of the date of the
      Stock  Purchase   Agreements,   resulting  in  a   reclassification   from
      stockholders'  equity of  $815,669.  For the three and nine  months  ended
      September 30, 2006, we  recognized  $47,399 in accounting  income based on
      the change in fair value of these liabilities during the periods.

(c)   The Company  issued  2,000,000  shares of common  stock in lieu of $55,000
      payable pursuant to a settlement agreement entered into with the holder of
      the 100,000 shares of Series C convertible  preferred  stock  described in
      (a) above.

(d)   The Company accrued  $50,000 in finder's fees on a $500,000  capital raise
      transaction, which was offset against Additional Paid-in Capital.

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
                                             9 Months ended September 30, 2006
     Interest paid .......................             $    15,354
     Taxes paid ..........................             $     1,000


                                       6
<PAGE>

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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Nature of Organization

      Magnitude  Information Systems, Inc. (the "Company") was incorporated as a
      Delaware  corporation on April 19, 1988 under the name Fortunistics,  Inc.
      On  November  18,  1998,  the  Company   changed  its  name  to  Magnitude
      Information Systems, Inc.

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

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

   Basis of Presentation

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

      In the opinion of the Company's management, all adjustments (consisting of
      normal  recurring  accruals)  necessary  to present  fairly the  Company's
      financial position as of September 30, 2006, the results of operations for
      the three and nine months ended  September 30, 2006 and 2005, and the cash
      flows for the nine months  ended  September  30, 2006 and 2005,  have been
      included.

   Principles of Consolidation

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

   Depreciation and Amortization

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


                                       7
<PAGE>

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

   Evaluation of Long Lived Assets
      Long-lived assets are assessed for  recoverability on an ongoing basis. In
      evaluating the fair value and future benefits of long-lived assets,  their
      carrying  value would be reduced by the excess,  if any, of the long-lived
      asset over management's  estimate of the anticipated  undiscounted  future
      net cash flows of the related long-lived asset.

   Securities Issued for Services

      The Company  accounts for stock,  stock options and stock warrants  issued
      for services and  compensation  by employees  under the fair value method.
      For  non-employees,  the fair market value of the  Company's  stock on the
      date of stock issuance or option/grant is used. The Company determined the
      fair market value of the  warrants/options  issued under the Black-Scholes
      Pricing  Model.  Effective  January  1,  2006,  the  Company  adopted  the
      provisions  of Statement of Financial  Accounting  Standards  (SFAS) 123R,
      SHARE-BASED PAYMENT,  which establishes  accounting for equity instruments
      exchanged  for employee  services.  Under the  provisions  of SFAS 123(R),
      share-based  compensation cost is measured at the grant date, based on the
      fair  value  of the  award,  and is  recognized  as an  expense  over  the
      employee's  requisite  service period (generally the vesting period of the
      equity  grant).  Prior to January  1,  2006,  the  Company  accounted  for
      share-based  compensation  to  employees  in  accordance  with  Accounting
      Principles  Board (APB)  Opinion No. 25,  ACCOUNTING  FOR STOCK  ISSUED TO
      EMPLOYEES,  and related  interpretations.  The Company  also  followed the
      disclosure   requirements   of  SFAS  123,   ACCOUNTING  FOR   STOCK-BASED
      COMPENSATION.  The  Company  elected  to adopt  the  modified  prospective
      transition method as provided by SFAS 123(R) and,  accordingly,  financial
      statement  amounts for the prior periods presented in the Form 10-QSB have
      not  been   restated  to  reflect  the  fair  value  method  of  expensing
      share-based compensation.

   Reclassification of certain securities under EITF 00-19

      Pursuant to Emerging  Issues Task Force (EITF)  Issue 00-19,  if a company
      has  more  than  one   contract   subject  to  this  Issue,   and  partial
      reclassification is required, there may be different methods that could be
      used to determine  which  contracts,  or portions of contracts,  should be
      reclassified.  The Company's method for reclassification of such contracts
      is  reclassification  of contracts  with the latest  maturity  date first.
      During the quarter, the company reclassified  securities with a fair value
      totaling $815,669.  The changes in fair value for all contracts previously
      reclassified during the 2006 amounted in total to a credit of $47,399.

   Income Taxes

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

   Net Loss Per Share

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


                                       8
<PAGE>

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

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

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

2. GOING CONCERN

      The ability of the Company to continue  its  operations  is  dependent  on
      increasing sales and obtaining additional capital and financing.  In their
      report for the fiscal year ended  December  31,  2005,  our  auditors  had
      expressed an opinion that, as a result of the losses  incurred,  there was
      substantial  doubt  regarding our ability to continue as a going  concern.
      The accompanying  financial statements do not include any adjustments that
      might be  necessary  if the  Company  were  unable to  continue as a going
      concern.  Management's  plans are to continue seeking  additional  working
      capital through equity and debt placements with private and  institutional
      investors.

3. CONCENTRATIONS OF BUSINESS AND CREDIT RISK

      The Company  maintains cash balances in a financial  institution  which is
      insured by the  Federal  Deposit  Insurance  Corporation  up to  $100,000.
      Balances in these  accounts may, at times,  exceed the  federally  insured
      limits.  The Company  provides  credit in the normal course of business to
      customers located  throughout the U.S. and overseas.  The Company performs
      ongoing credit  evaluations of its customers and maintains  allowances for
      doubtful accounts based on factors surrounding the credit risk of specific
      customers, historical trends, and other information.

4. PREPAID EXPENSES

      Prepaid Expenses at the end of the quarter  included  $191,510 paid in the
      form of common stock and options to four outside consultants for services,
      which amounts  represent the unearned  portions of such  payments-in-kind.
      The remainder  represents prepaid insurance costs and miscellaneous  other
      expenses.

5. PROPERTY AND EQUIPMENT

      Property and equipment consist of the following at September 30, 2006:
              Equipment                              $        43,949
              Furniture and fixtures                          72,230
                                                      ---------------
                                                             116,179
              Less accumulated depreciation                  105,992
                                                      ---------------
                                        Total        $        10,187
                                                      ==============

Depreciation  expense  charged to operations  was $4,254 and $7,113 in the first
nine months of 2006 and 2005,  respectively.  In preparation for the move of the
Company's main offices to new and less expensive  premises,  an inventory of all
equipment  was  made.  Equipment  with  a  net  book  value  of  $356  (original
capitalized value totaling $52,000) was deemed technologically  obsolete and was
discarded.


                                       9
<PAGE>

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

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

              Accounts payable                       $       217,357

              Accrued interest                                68,343

              Accrued salaries                                35,585

              Accrued commissions                             22,183

              Accrued professional fees                      129,500

              Accrued finder's fees                           50,000

              Miscellaneous accruals                           2,000
                                                      ---------------

                                    Total            $       524,968
                                                      ===============

      Accrued  commissions  are  due to a  consultant  who was  retained  in the
      capacity of Senior Vice President of Business  Development.  In accordance
      with the terms of the consulting  agreement,  one half of such commissions
      are payable in cash and the other half in form of restricted shares of the
      Company's common stock, valued at the market price of the Company's common
      stock on the date payment of such  commissions  are made. At September 30,
      2006,  the price of the stock was $0.04  which  would,  had payment of the
      commission been made that day, require issuance of 277,288 shares.

7. DEFERRED REVENUES

      Deferred  revenues  at  September  30,  2006  consist of prepaid  software
      maintenance  and support  charges  which are  amortized  ratably  over the
      remaining duration of the underlying maintenance agreements.  On April 13,
      2006 the Company  received a deposit of $100,000 from a client who also is
      an investor in the Company.  These funds were paid  pursuant to a contract
      for  the  purchase  of a  customized  version  of the  Company's  software
      products.  At September  30, 2006 the contract had not been filled and the
      revenue has been deferred.


8. LOANS PAYABLE

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

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


      During  March  2006 a  director  of  the  Company   $         75,000
      provided for a cash advance, repayable on demand.             25,000
                                                           ---------------
                                                          $        100,000
            Total                                          ===============


                          10
<PAGE>

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

9. NOTES PAYABLE

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


      In June and July 2006 two shareholders loaned the
      Company  $240,000 and $102,450  pursuant to which
      the  Company  issued   promissory  notes  bearing
      interest  at the rate of 8% per  year.  The notes
      are repayable on demand.                                     342,450
                                                           ---------------
                                                          $        367,450
            Total                                          ===============


10. LONG-TERM DEBT

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

      Pursuant to the February 2, 1998,  Agreement  and
      Plan  of  Merger  with  Rolina  Corporation,  the
      Company had issued  155,556 shares (the "Shares")
      of its common  stock to the  principal  of Rolina
      Corporation who currently serves as the Company's
      Chief Executive  Officer and Board Chairman,  and
      had  issued a Put  Option  for such  Shares  at a
      price of $2.41 per share in  accordance  with the
      provisions  contained  therein,  with  notice for
      exercise  eligible  to be given at any time after
      February  1, 2000,  and before  5:00 p.m.  on the
      90th day thereafter. This liability was converted
      into a Company  obligation for $274,890  maturing
      March  31,  2002 and a demand  loan for  $100,000
      both  carrying  interest  at the  rate  of 7% per
      year,  subsequently  increased  to  10%,  payable
      monthly.  The  demand  portion  of this  note was
      repaid  in  April  2002  and  the  due  date  for
      $274,890 of the remaining balance was extended to
      July 1, 2003.  Subsequently,  the maturity of the
      unpaid  balance  was  changed  to  a  portion  of
      $174,890  payable  on  demand,  and a portion  of
      $100,000  due and  payable  on  January  2, 2005.
      During the first  quarter of 2004,  $175,000  was
      repaid and the maturity of the unpaid balance was
      changed to "due upon  demand".  On August 8, 2006
      the holder and the  Company  agreed to a one-year
      moratorium for repayment, and a provision whereby
      the  holder  has the  option,  after  the  twelve
      months have elapsed,  to convert the  outstanding
      principal into the Company's  securities at rates
      and terms  commensurate  with the best  rates and
      terms  offered to any other  investor  during the
      preceding twelve months.  The conversion  feature
      has been accounted for as a derivative liability.   $         99,890


<PAGE>




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

LONG-TERM DEBT continued


      Discounted   present  value  of  a   non-interest
      bearing $70,000 settlement with a former investor
      of Magnitude, Inc. to be paid in 24 equal monthly
      payments  commencing  July 1, 1997.  The  imputed
      interest rate used to discount the note is 8% per
      annum. This obligation is in default.                         33,529
                                                           ---------------
                                                                   133,419
            Total
              Less current maturities                              133,419
                                                           ---------------
              Long-term debt, net of current maturities   $             --
                                                           ===============




11. CAPITALIZED LEASE OBLIGATIONS

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


12. OBLIGATIONS TO BE SETTLED IN STOCK

      The Company had received payments against stock subscriptions  pursuant to
      private  placements  where the  transactions had not yet been completed at
      September 30, 2006. The subscription  agreements  contain  provisions that
      among others call for potential  penalty shares to be issued if there were
      delays in the  issuance  of  warrants,  or delays in the  registration  of
      underlying  shares (we refer to our related filing on Form 8-K).  Based on
      these provisions, the Stock Purchase Agreements do not limit the number of
      additional  common shares that could be subject to issuance as a result of
      such  defaults  and could  theoretically  result in an infinite  number of
      additional  common  shares being  subject to issuance  for such  defaults.
      These  provisions  require the Company to reclassify  certain  outstanding
      warrants and options as derivative  liabilities,  which are marked to fair
      value  periodically  pursuant to Emerging  Issues Task Force guidance EITF
      00-19  "Accounting for Derivative  Financial  Instruments  Indexed to, and
      Potentially Settled in, A Company's Own Stock" ("EITF 00-19").

13. DERIVATIVE LIABILITIES

      We valued the options and warrants  utilizing the Black-Scholes  method of
      valuation as of the date of the Stock Purchase Agreements,  resulting in a
      reclassification from stockholders' equity of $815,669.  For the three and
      nine months ended September 30, 2006, we recognized  $47,399 in accounting
      income based on the change in fair value of these  liabilities  during the
      periods.   Also  included  in  Derivative   Liabilities  is  a  derivative
      obligation  for $92,398  related to the  conversion  feature and  warrants
      underlying a convertible debt instrument due to a former officer (see Note
      10). We recognized  $4,161 and $10,364 in  accounting  income based on the
      change in fair value of these liabilities during the three and nine months
      ended September 30, 2006, respectively.


                                       11
<PAGE>

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


14. COMMITMENTS AND CONTINGENCIES

     Lease Agreement

     On March 15, 2000,  the Company  entered into a lease  agreement for office
     space which is utilized for the  Company's  principal  offices.  Such lease
     commenced  April 15,  2000 and expired on March 31,  2005.  The Company had
     subsequently  negotiated  a lease  renewal  which  extended the term of the
     lease to March 31, 2007 at a monthly rental of $10,000. The Company vacated
     the premises in October 2006 and is presently negotiating with the landlord
     for an early termination of the lease.

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


            Year Ending December 31,

                     2006                                       $   30,000
                     2007                                           30,000
                                                                 ---------
                                       Total minimum payments   $   60,000
                                                                 =========

      Consulting Agreements

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

      In August 2006 the Company  entered into a one-year  agreement with a firm
      specializing   in  technology  and  IP  transfers,   for  the  purpose  of
      discovering  potential  candidate  firms or  products  that would  enhance
      Magnitude's  own  software  products  and  marketing  stance.   Under  the
      agreement, the Company issued 2,254,151 restricted common shares valued at
      $112,708 which vest at the rate of 187,846 shares per month. The agreement
      may be cancelled by either party with 30 day's notice.


      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.

15. RELATED PARTY TRANSACTIONS

      In September 2005 our officers and directors  surrendered for cancellation
      4,507,709  stock options,  2,283,916  common stock  purchase  warrants and
      11,247,607 common shares in order to provide sufficient  authorized common
      shares to  accommodate  a private  placement  offering.  We  replaced  the
      surrendered  and  cancelled  common  shares  with  shares of our  Series E
      preferred stock which were automatically convertible after six months into
      11,247,607  common shares,  which  conversion  occurred during the quarter
      ended June 30,  2006.  Pursuant to a  settlement  agreement  with a former
      officer,  we granted the  re-issuance  of 2,903,542  options and 1,583,333
      warrants that were  previously  cancelled  (see below).  We also intend to
      reissue the remaining  1,604,167  stock options and 700,583  warrants also
      surrendered  for  cancellation by our officers and directors with an equal
      amount of common shares underlying these securities.


                                       12
<PAGE>

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


      RELATED PARTY TRANSACTIONS continued

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

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

      On August 8, 2006 Steven D. Rudnik  resigned from the position of Chairman
      of  the  Board  of  Directors  of  the  Company.  A  settlement  agreement
      stipulated  among  others that (a) his  current  employment  agreement  be
      terminated,  (b) he resign  the  position  of  chairman,  (c) he receive 6
      million restricted common shares plus cash payments totaling $60,000.00 to
      be paid in installments through November 1, 2006, and (d) that options and
      warrants for an aggregate 4,486,875 share which were previously cancelled,
      be re-issued  upon the earlier  recurrence  of a  recapitalization  of our
      securities that would provide sufficient common shares to accommodate them
      or two years from the date of the agreement. The options and warrants will
      have similar terms as the original  instruments  (exercisable at $0.10 and
      $0.15, respectively), but with expiration dates as of three years from the
      date of re-issuance.  We recognized  stock-based  compensation of $520,522
      for the common stock issued  ($360,000 - at market value) and warrants and
      options granted  ($160,522 - based on the  Black-Scholes  model) under the
      agreement.  In his place, Steven Gray was appointed Chairman of the Board,
      and Edward Marney was named a director of the Company.  On August 17, 2006
      Edward  Marney  vacated the position of President,  however,  continues to
      serve as Chief  Executive  Officer.  Matthew  Scott  assumed the office of
      President of the Company.


16. REDEMPTION OF PREFERRED STOCK

      During the second quarter of 2006, the Company issued 10,250,000 shares of
      common  stock to the  holder of  100,000  shares  of Series C  convertible
      preferred  stock  pursuant to a settlement  agreement  whereby in exchange
      against the above  common  shares,  the 100,000  preferred  shares will be
      cancelled and $350,895 accrued unpaid dividends forfeited.  Since the fair
      value of  shares  issued  to the  holder  in  settlement  of the  dividend
      obligation  and  redemption  of the  preferred  stock  held  exceeded  the
      carrying value of the preferred  stock, the Company recorded the excess as
      a  reduction  in income  available  to common  shareholders,  shown in the
      Statement of Operations as preferred dividends of $469,005.

      The agreement  furthermore  stipulated  that $60,000 would be paid in cash
      over the course of twelve  months for  covenants  in the  agreement by the
      former  holder,  including  a covenant  not to compete for a period of two
      years. This amount has been recorded as an intangible  asset,  amortizable
      over the term of the agreement.  In August 2006 the Company and the former
      shareholder  agreed to settle the then outstanding  amount of $55,000 plus
      additional  settlement  compensation  of $65,000 by issuance of  2,000,000
      restricted common shares.

17. CONTINGENCY

      On September 25, 2006, a former  employee of the Company filed a complaint
      against the Company in the Superior  Court,  Morris  County,  State of New
      Jersey,  stating claims based upon alleged  breech of employment  contract
      and seeking damages of approximately  $150,000 for unpaid salary and wages
      among other claims. The Company intends to vigorously defend this lawsuit


                                       13
<PAGE>

Item 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Company management is continuing the restructuring of Magnitude's operations and
business goals. Management has implemented a multi-pronged plan that has sharply
reduced  cash  outflow  while  exploring   product   acquisitions,   mergers  or
partnership relations with potential suitable candidate enterprises.

In line with these efforts, the Company undertook staff reductions in some areas
and relocated its principal office from Chester,  New Jersey to Branchburg,  New
Jersey.  For  example,  facility  expense was reduced  from $10,000 per month to
$1,750 per month. These measures resulted in significant reductions of operating
expenses.

Company  management  is  in  preliminary   discussions  with  several  potential
strategic  partners whose  businesses  and products would either  compliment our
current  product  offerings or present new product and  business  opportunities.
Management is also  exploring the licensing of its ergonomic  software  products
and customer maintenance contracts to third parties.

Revenues for the quarter totaled $9,468, compared to the $86,027 achieved in the
third  quarter of 2005.  The nine months  figures  were $41,622 and $150,860 for
2006 and 2005, respectively. Period revenues were entirely derived from software
support services; no software license contracts were concluded.

Gross profits for the quarter  amounted to negative  $26,902,  including a fixed
charge for amortization of certain  proprietary  software assets.  Such software
assets  underlie the  Company's  products and are being  amortized on a straight
line over 10 years,  resulting  in a level charge of  approximately  $12,000 per
month  to   cost-of-goods-sold.   After  deducting   selling-  and  general  and
administrative expenses, stock-based compensation and R&D expenses of $1,240,989
which significantly  exceeded the $557,567 recorded in 2005 the Company realized
a loss from operations of $1,267,891,  compared to an operating loss of $507,912
in the third  quarter in 2005.  The  increase in expenses was  primarily  due to
stock-based  compensation  and other non-cash  expenditures  paid for in form of
stock and/or  warrants  and included  $520,522 and $60,000 to be paid in form of
securities and cash,  respectively,  to the former chief executive  officer (see
Note 15).  Aside  from the  before-mentioned,  the  operating  expenses  for the
quarter, however, compare favorably with the second quarter total of $1,076,970,
reflecting  significant  savings  realized as a  consequence  of lower  staffing
levels and expense reductions in other areas.  Non-operating income and expenses
included  $43,146 net interest expense and a credit of $51,560 for the change in
value of derivative liabilities.  The period result was a net loss of $1,259,833
compared to a loss of $511,908  for the same period in 2005.  The  corresponding
nine months result was a net loss of $3,221,018 compared to a loss of $1,700,502
for the nine months ended September 30, 2005.

After  accounting  for dividend  accruals on outstanding  preferred  stock which
totaled $12,630 the net loss for the quarter  applicable to common  shareholders
was $1,272,463 or $0.007 per share, compared to a loss of $540,228 or $0.004 per
share for the same quarter in the previous  year,  and  $3,748,912 or $0.023 per
share and $1,785,641 or $0.013 per share for the nine months ended September 30,
2006 and 2005, respectively.

Liquidity and Capital Resources

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

At September 30, 2006, the deficit in working capital  amounted to $2,429,430 as
compared  to  $1,471,896  at June  30,  2006.  Stockholders'  equity  showed  an
impairment of $2,161,057 at the end of the quarter, compared to an impairment of
$1,134,875 at June 30, 2006. The negative cash flow from operations for the nine
months ended September 30, 2006 totaled $920,961 and was substantially  financed
by new debt and equity which was obtained  through private  placements.  The new
equity  placements were  consummated by issuance of common stock and warrants to
accredited private investors in the United States.  Details of such transactions
can be found in the "Changes and Issuance of Securities"  section of this report
and the reports on Form 10-QSB for the first and second quarters in 2006.


                                       14
<PAGE>

At the time of this  submission,  the Company had no bank debt. At September 30,
2006 its  short-term  liabilities,  aside  from  trade  payables  and  accruals,
consisted of certain notes and loans, details of which can be found in the Notes
to Financial  Statements in this report.  Current  liabilities  include $309,493
unpaid  dividends on outstanding  preferred  stock.  Such dividends will be paid
only if and when capital surplus and cash-flow from operations are sufficient to
cover the outstanding  amounts  without  thereby unduly  impacting the Company's
ability to continue operating and growing its business.

Current cash reserves and net cash flow from operations expected during the near
future are  inadequate  when measured  against  present and  anticipated  future
needs, and the Company's financial  situation remains  precarious.  In addition,
management  does not expect to  realize  significant  revenues  from the sale or
licensing of its proprietary  software  products in the near future. In order to
remedy the current liquidity constraints and improve the market position for the
Company,  management is currently investigating the feasibility of entering into
joint  ventures  with  providers of  complementary  software  products  (see our
comments  above).  Concurrent  with these efforts,  management has embarked on a
program of severe cost  containment  in order to conserve as much  liquidity  as
possible, and is seeking to obtain additional working capital in form of debt or
equity. There can be no assurance, however, that these undertakings will lead to
the desired outcome.


                                       15
<PAGE>

Item 3.    CONTROLS AND PROCEDURES

(a)   Evaluation of Disclosure Controls and Procedures.

      As of the end of the period  covered by this Form  10-QSB for the  quarter
ended  September 30, 2006, an evaluation was  undertaken by the Company's  Chief
Executive Officer and Chief Financial Officer of the effectiveness of the design
and operation of the Company's disclosure controls and procedures, as defined in
Exchange  Act  Rule  13(a)-14(c),  and;  based  upon  that  evaluation,  Company
management,  including  the Chief  Executive  Officer  and the  Chief  Financial
Officer,  has concluded  that the Company's  disclosure  controls and procedures
were  effective  as of the end of the period  covered by the subject Form 10-QSB
and  ensured  that all  material  information  required to be  disclosed  in the
subject Form 10-QSB, was recorded, processed,  summarized and reported as of the
end of the period covered by the subject Form 10-QSB.

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

(b)   Changes in Internal Control over Financial Reporting

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


                                       16
<PAGE>

PART  II  -  OTHER INFORMATION

Item 1   LEGAL PROCEEDINGS

On March 21, 2005, the Company filed a patent infringement lawsuit in the United
States District Court, District of New Jersey,  against Niche Software,  Ltd. of
New Zealand,  alleging that its software product called Workplace(TM)  willfully
infringed on the Company's  patent  underlying  its  ErgoEnterprise(TM)  product
line. On September 13, 2005, defendant filed an answer and counterclaim, denying
the allegations in our complaint and seeking a judgment  declaring our patent to
be invalid.  The Company intends to vigorously prosecute its infringement claims
against this infringer.

On  September  25,  2006,  a former  employee of the  Company  filed a complaint
against the Company in the Superior Court,  Morris County,  State of New Jersey,
entitled,  Steven W. Jagels v.  Magnitude,  Inc.,  d/b/a  Magnitude  Information
Systems,  Inc.  stating claims based upon alleged breech of employment  contract
and seeking damages of approximately  $150,000 for unpaid salary and wages among
other claims. The Company intends to vigorously defend this lawsuit.


Item 2   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
         -----------------------------------------------------------

a)    Issuance of unregistered securities

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

      (i)   5,000,000 shares of common stock to an accredited  investor pursuant
            to  a  private  placement  subscription,  issued  in  reliance  upon
            exemptions  provided  under  Section  4(2)  of the  Securities  Act,
            altogether  resulting  in the  receipt by the Company of $100,000 in
            cash. The  subscription  agreement also  stipulates that the Company
            issue, in March 2007,  warrants for the purchase of 2,500,000 common
            shares,  exercisable  during  three years at $0.05 per share,  if at
            that  time  there  would  exist  a  sufficiently   large  number  of
            authorized  common shares,  failing which  additional  common shares
            would be issuable to this investor (we refer to the Company's filing
            on  August  30,  2006 on Form 8-K  which is  incorporated  herein by
            reference).

      (ii)  2,254,151  shares of common stock to a consulting  firm for services
            to be rendered (see section "Consulting Agreements" in Note 13).

      (iii) 2,000,000  shares of common stock in  settlement  of a liability and
            additional  compensation to a former preferred shareholder (see Note
            15).

      (iv)  6,000,000  shares  of common  stock to the  former  chief  executive
            officer of the Company pursuant to a settlement  agreement (see Note
            14).


(b)   Not applicable

(c)   None


Item 3   DEFAULTS UPON SENIOR SECURITIES

      The Company,  as of the date of this filing,  is in arrears on the payment
      of certain  dividends on its Series A and D Senior  Convertible  Preferred
      Stock.  Such arrears total  approximately  $310,000.  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.


                                       17
<PAGE>

Item 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None


Item 5   OTHER INFORMATION

      On November 17,  2006,  Matthew  Scott  resigned as the  President  and an
      employee of the Company for personal  reasons.  Edward  Marney,  the Chief
      Executive  Officer of the Company,  was  appointed to assume the office of
      President of the Company, effective on that date.


Item 6   EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits

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

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

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

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

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

            (32.2) - Certification of Joerg H. Klaube,  Chief Financial Officer,
            pursuant  to  Sections  906 of the  Sarbanes-Oxley  Act of 2002,  18
            U.S.C. Section 1350

      (b)   Reports on Form 8-K:

            On August 30, 2006 the Company  filed a report on Form 8-K informing
            about  (a) the  resignation  as  chairman  of the board of Steven D.
            Rudnik  and  appointment  of  Steven  Gray to that  office;  (b) the
            appointment  of  Matthew  Scott as  President  of the  Company;  (c)
            certain  restructuring  measures undertaken by the Company;  and (d)
            the impending  consummation of private  placement  transactions with
            three investors.


                                       18
<PAGE>

                                   SIGNATURES


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



                                        MAGNITUDE INFORMATION SYSTEMS, INC.




Date:   November 17, 2006               By: /s/ Edward Marney
                                            ------------------
                                        Edward Marney
                                        Chief Executive Officer


                                       19