FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For Quarter Ended March 31, 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 March 31, 2001, was 18,054,573 shares.

<PAGE>




              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES




                                      INDEX


                                                                     Page
                                                                    Number

PART  1  -  FINANCIAL INFORMATION

Item 1   Financial Statements (unaudited)

         Consolidated Balance Sheet
          - March 31, 2001                                             3

         Consolidated Statements of Operations
          - Three months ended March 31, 2001 and 2000                 4

         Consolidated Statements of Cash Flows
          - Three months ended March 31, 2001 and 2000                 5

         Notes to Consolidated Financial Statements                  6 - 11


Item 2  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                  12 - 13


PART II  -  OTHER INFORMATION                                       14 - 15


SIGNATURES                                                            16

                                       2
<PAGE>



PART I  - Item 1

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                             March 31, 2001
ASSETS
     Current Assets
<S>                                                                                         <C>
     Cash  .....................................................................            $    43,148
     Accounts receivable, net of allowance for
        doubtful accounts of 47,844 ............................................                365,626
     Due from officer ..........................................................                 19,500
     Inventories ...............................................................                  2,500
     Deferred tax asset.........................................................                122,044
     Prepaid expenses ..........................................................                308,135
                                                                                           ------------
        Total Current Assets ...................................................                860,953
     Property, plant and equipment, net of accumulated
        depreciation of $179,624 ...............................................                101,012
     Software, net of accumulated amortization of
         $456,561 ..............................................................              1,050,729
     Other assets ..............................................................                 24,429
                                                                                           -------------
TOTAL ASSETS ...................................................................              2,037,123
                                                                                           =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
     Accounts payable and accrued expenses .....................................                671,729
     Deferred revenue...........................................................                 68,762
     Dividends payable .........................................................                155,102
     Prepayments received ......................................................                      0
     Loans and notes payable ...................................................                295,000
     Current maturities long-term debt .........................................                 33,529
     Current maturities lease obligations ......................................                  7,440
                                                                                            -------------
        Total Current Liabilities ..............................................              1,231,562
     Long-term debt, less current portion ......................................                374,890
     Lease obligations, less current portion ...................................                  6,118
                                                                                            -------------
TOTAL LIABILITIES ..............................................................              1,612,570

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 429,349 shares are issued and outstanding                            429
     Common Stock, $0.0001 par value, 100,000,000 shares authorized,
     18,054,573 shares are issued and outstanding...............................                  1,805
     Additional paid-in capital ................................................             16,354,843
     Accumulated deficit .......................................................            (15,932,524)
                                                                                           ------------
TOTAL STOCKHOLDERS' EQUITY...............................                                       424,553

TOTAL LIABILITIES AND EQUITY ....................................                         $   2,037,123
                                                                                             ==========
</TABLE>

                 See notes to consolidated financial statements

                                       3
<PAGE>




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


                                                       Three Months Ended
                                                           March 31,
                                                      2001             2000
                                                -------------    -------------

Total Revenues...............................   $    202,522    $      100,022

     Cost of Goods Sold .....................         38,831            40,934
                                               -------------     -------------

Gross Profit ................................        163,691            59,088

     Selling expenses .......................        421,482           226,820
     General & administrative expenses ......        568,004           522,286
                                                  ----------       -----------

Operating Income (Loss) .....................       (825,795)         (690,018)

     Miscellaneous income ...................              0            17,222
     Interest expense, net...................        (14,263)         (109,579)
     Miscellaneous expenses .................             (0)           (1,122)
                                                   -----------        ---------
Non-Operating Income (Expense) ..............        (14,263)         (93,479)
                                                   -----------       ----------


Net Loss ....................................    $  (840,058)      $  (783,497)
                                                   ==========         ========

Dividends ...................................          77,927           10,500

Net Loss after Dividends ....................     $  (917,985)     $  (793,997)

Loss per Common Share .......................     $     (0.05)     $     (0.06)
                                                     =========        =========
Weighted Average Number of
     Common Shares Outstanding ..............       15,745,597       12,858,331










                 See notes to consolidated financial statements


                                       4
<PAGE>




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

<TABLE>
<CAPTION>
                                                         Three Months Ended March 31,
                                                             2001              2000
                                                           --------          --------
Cash Flows from Operating Activities
<S>                                                       <C>                   <C>
     Net income (loss) .................................  $  (840,058)          $ (783,497)
     Adjustments to net income (loss)
        Depreciation and amortization ..................       51,013               48,047
        Stock and debt issued for expenses............         18,000              163,306
        Disposition of certain assets /liabilities......            0                1,122
        Dividend payments..............................       (14,003)             (10,500)
     Decreases (increases) in Assets
        Accounts receivable ............................       20,798              (91,885)
        Miscellaneous receivables.......................       19,975               15,227
        Inventories ....................................            0                    0
        Prepaid expenses ...............................       45,682              (30,609)
        Other assets ...................................            0              (26,000)
     Increases (decreases) in Liabilities
        Prepayments received............................            0                5,000
        Accounts payable and accrued expenses ..........      169,980             (115,932)
                                                          -------------    -----------------
Net Cash Provided (Used) by Operating Activities            (528,613)            (825,721)

Cash Flows from Investing Activities
     Purchases of equipment and fixtures ...............        (944)             (18,738)
     Disposition of equipment and other assets .........           0                3,358
                                                          -------------    -----------------
Net Cash Provided (Used) by Investing Activities                (944)             (15,380)

Cash Flows from Financing Activities
     Proceeds from notes payable .......................     120,000                    0
     Repayment of loans and notes ......................          (0)            (106,284)
     Repayment of long-term debt .......................          (0)                  (0)
     Accrual of contingent liability....................           0                    0
     Issuance of preferred stock........................     145,004           01,575,000
     Issuance of common stock ........... ..............     270,000              550,000
                                                           -----------         ------------
Net Cash Provided (Used) by Financing Activities             535,004            2,018,716
Net Increase (Decrease) in Cash ........................       5,447            1,177,615
Cash at Beginning of Period ............................      37,701              249,569
                                                             ----------        ------------
Cash at End of Period .................................   $   43,148          $ 1,427,184
                                                        =================     ===============
</TABLE>





                See notes to consolidated financial statements

                                       5

<PAGE>



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

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

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 99.1% 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
                                 MARCH 31, 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.   The  Company's  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.

         The Company has  received a patent from the U.S.  Patent and  Trademark
         Office on its application  relative to certain core  inventions  within
         its ErgoManager(TM) system AND has applied for several more patents for
         its 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
                                 MARCH 31, 2001

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   intercompany   balances   and   transactions   have  been
         eliminated.

     Inventories
         Inventory  consists of finished  goods which 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 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.

                                       8
<PAGE>



              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

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

     Revenue Recognition
         Revenue  from  the  licensing  of  proprietary   software  products  is
         recognized  at the  time  of  licensing  provided  that  the  resulting
         receivable  is deemed  probable of  collection.  Revenue from  software
         maintenance contracts is 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  include a position  of  $264,789  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.  The resulting  asset is
         being amortized as utilized.  Management believes that the Company will
         derive economic benefits  commensurate with the value of this asset. If
         management  were to determine  that it may not be able to  economically
         utilize the entire amount during the time  allotted,  it will effect an
         accelerated amortization or write-down of this asset position.

                                       9
<PAGE>



              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001

  GOING CONCERN
         The ability of the Company to continue as a going  concern is dependent
         on increasing sales and obtaining additional capital and financing. The
         financial  statements  do not  include  any  adjustments  that might be
         necessary  if the  Company is unable to  continue  as a going  concern.
         Management's  plans are to continue  discussions with several potential
         investors  to  obtain  additional  capital  in order to  alleviate  the
         situation.

PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
     Property, plant and equipment consist of the following at March 31, 2001:
<S>                                                                                      <C>
              Equipment                                                                  $       164,891
              Furniture and fixtures                                                              69,976
              Leasehold improvements                                                              45,770
                                                                                           --------------

                                                                                                 280,637

              Less accumulated depreciation                                                      179,625
                                                                                           --------------

                                        Total                                            $       101,012
                                                                                           ==============

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts  payable and accrued  expenses  consisted of the following at March 31,
2001:

              Accounts payable                                                           $       426,069

              Accrued interest                                                                    57,252

              Accrued commissions                                                                 20,733

              Accrued salaries and professional fees                                              94,154

              Miscellaneous accruals                                                              73,521
                                                                                            =============

                                    Total                                                $       671,729
                                                                                            =============
</TABLE>


LOANS AND NOTES PAYABLE
<TABLE>
<CAPTION>

     At March 31, 2001,  Magnitude,  Inc. and the Company had borrowings  under short term loan
agreements with the following terms and conditions:

<S>                                                                                                        <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 March 31,  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 March 31,  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 by officers and  directors of the Company,  carrying  interest at the rate of 7%
         p.a.
                                                                                                                   195,000


                  Total                                                                                    $       328,529
                                                                                                             ==============
</TABLE>


                                       10

<PAGE>



              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001

<TABLE>
<CAPTION>
LONG-TERM DEBT

<S>                                                                                                        <C>
        Pursuant to the  February 2, 1998,  Agreement  and Plan of Merger with Rolina  Corporation  (see   $       374,890
        "Background")  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  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
        current liability was converted into a Company  obligation  maturing June 30, 2002, and carrying
        interest at the rate of 7% per year payable  monthly.  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.


  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>



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.

                                       11
<PAGE>




              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001



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  maturing June 30, 2002, which among
      others  provides for a right to the holder to convert such obligation into
      common stock of the Company (see "Long-term debt").

      During the first  quarter  2001,  several  officers  and  directors of the
      Company extended cash advances totaling $120,000 to the Company,  accruing
      interest at the rate of 7% per year.  These  advances are  repayable  upon
      demand













                                     12

<PAGE>



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


Results of Operations:

         During the first  quarter in 2001  Magnitude  received its first larger
software contract from a major industrial business concern, a well-known Fortune
100 company. The selection of the Company's  ErgoManager(TM)  software was based
on the results of an extensive  pilot  program at several  locations.  The pilot
study reviewed the effects of using ErgoManager(TM), on the quantity and quality
of computer data input work, and showed a statistically  significant improvement
in  work  accuracy  following  implementation  of the  software.  Pilot  project
installations are designed to impart  credibility and awareness of the product's
unique  potential in the areas of  productivity  enhancement  and risk reduction
with respect to  repetitive  stress  injuries in the office  environment.  Pilot
projects  involving smaller numbers of employees also provide a potential client
with an opportunity to test the software's utility and reliability,  systems and
network  friendliness,  and staff acceptance without incurring the perceived and
sometimes   real  risk   associated   with   installing  a  new  product  on  an
enterprise-wide scale.  Management assigns great importance to this purchase and
expects  other  current  pilot  installations  to  mature  into  enterprise-wide
contracts in the upcoming quarters.

         Revenues for the quarter  ended March 31,  2001,  increased to $202,522
compared to $100,022 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.  Gross profits during the quarter  amounted to $163,691 for a
81%  gross  margin.   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 further increase
as  revenues   grow.   After   deducting   selling   expenses  and  general  and
administrative expenses totaling $989,486 the Company realized an operating loss
of $825,795,  compared to an operating loss of $690,018 for the first quarter in
2000.  Non-operating  expenses  totaled  $14,263  primarily  in form of interest
expense. The net result for the quarter, after accounting for dividends paid and
accrued on the Company's  outstanding preferred stock, was a loss of $917,985 or
$0.05 per share,  compared to a loss of $793,997 or $0.06 per share for the same
period last year.

         The increase in operating  expenses for the quarter,  compared to 2000,
reflects a significant  expansion of the Company's sales  organization that took
place  during the second  half of 2000.  The hiring of new sales  personnel  was
considered necessary for a successful introduction of ErgoManager(TM) into a new
market that received added stimulus from the anticipated passage of federal OSHA
regulations  pertaining  to the  protection of workers in many  industries  from
repetitive  stress  injuries.  These  regulations  - on the federal level - were
revoked in early  2001,  which to some  degree  during the period  affected  the
receptiveness  of the market to new products of the type offered by the Company.
Efforts to promote the protection of employees from RSIs,  however,  continue in
several  States and are expected to resume on the federal level  sometime in the
not too distant future. The Company succeeded in growing its revenue base but at
a slower pace than initially forecasted. As a result, the quarter concluded with
a significant  loss that cut deeply into the Company's  financial  resources.  A
partial replenishment of these resources came in the form of new working capital
provided by private investors.  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  investments  to be
able to operate and pursue its pioneering  efforts of educating future customers
and the business  community at large about the merits of a pro-active  stance in
dealing  with the  growing  level of  health  risks  and  potential  liabilities
associated   with  repetitive   stress   injuries  in  the  computer   workplace
environment.  Management  believes  that  these  efforts  are  justified  by the
potential  rewards  accruing from this "First to Market"  approach  which should
lead to a strong  competitive  advantage  and a sizable  market share during the
years to come.  This  process,  however,  takes  time and  while  management  is
confident  of the  ultimate  success of its  strategy it is not in a position to
predict the timing,  or the  availability of sufficient new working capital with
any degree of certainty.

                                       13
<PAGE>



Liquidity and Capital Resources

         The cash outflow from losses  during the first  quarter could be mostly
compensated by new equity investments through equity subscriptions by accredited
investors who purchased the Company's  common and preferred stock in a series of
private  placements.  Such transactions  contributed  approximately  $415,000 in
cash.  The  remaining  shortfall  was covered by  short-term  cash advances from
related  parties,  in the aggregate of $120,000.  Towards the end of the quarter
and in the aftermath,  however, the market prices for the Company's common stock
have declined  which affects the ability of management to complete new financing
transactions in a timely manner and at sufficient  levels. As a result,  working
capital  declined from a small positive balance at the beginning of the year, to
a negative  $370,000 at March 31, 2001. To augment  working capital the Company,
during 2000, had negotiated an equity  draw-down  facility with Torneaux Ltd., a
private equity fund  specializing in small cap and technology  companies.  Under
this arrangement, the Company may, at its discretion, sell to Torneaux up to 3.6
million  shares of its common stock  accompanied  by warrants,  to be registered
through a filing in Form SB-2, at a small discount to prevailing market,  over a
fourteen months period commencing with the effective date of the registration of
such stock.  This facility is,  however,  not accessible for the Company at this
time because of the depressed price of its common stock.

         At the time of this submission,  the Company had no bank debt. At March
31, 2001,  its short-term  liabilities,  aside from trade payables and accruals,
consisted of certain notes and loans aggregating approximately $340,000 of which
$200,000 are owed to certain  officers  and  directors of the Company in form of
demand notes (see "Related  Party  Transactions").  All of the long-term debt of
approximately  $375,000  was likewise  owed to the chairman and chief  executive
officer and evidenced by a promissory  note  maturing in 2002.  Owing to present
liquidity  constraints,  the Company is currently in arrears with  approximately
$78,000 in accrued unpaid dividends. The cash shortage, if continuing, may force
management to reduce  on-going  expenses by curtailing  specific  aspects of its
operations.  The Company  will,  throughout a major  portion of the fiscal year,
continue to be dependent on outside  funding in order to finance its operations.
Management is currently  negotiating with several  potential  private  investors
with the goal of obtaining commitments for further investments in form of equity
capital,  to be received during the second and third quarters in 2001. There can
be no  assurance,  however,  that these  negotiations  will lead to the  desired
outcome.


                                       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-KSB  for  the  year  ended  December  31,  2000,
incorporated herein by reference, the Company, during the first quarter of 2001,
issued the following unregistered securities:

(i) 570,000  shares of Common Stock  accompanied by warrants for the purchase of
570,000 shares of common stock at a price of $0.90 per share,  to two 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
$270,000 in cash.



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 $78,624 .


Item 4   SUBMISSION OF MATTERS TO A VOTE OF
         SECURITIES' HOLDERS                    -  None



Item 5   OTHER INFORMATION      -  None


Item 6   EXHIBITS AND REPORTS ON FORM 8-K

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

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

         (b)      Reports on Form 8-K:

                  On March 26,  2001,  the  Company  filed a report on Form 8-K,
                  informing about the receipt of a purchase  contract by a major
                  Fortune  100  company,  for  the  licensing  of the  Company's
                  proprietary software.


                                       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:   May 12, 2001                  By: /s/  Steven D. Rudnik
                                         --------------------------------------
                                           Steven D. Rudnik
                                           Chairman and Chief Executive Officer





                                       16