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, 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 March 31, 2006, was 146,931,672 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, 2006                                                     3

         Consolidated Statements of Operations
          - Three months ended March 31, 2006 and 2005                         4

         Consolidated Statements of Cash Flows
          - Three months ended March 31, 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
                           March 31, 2006 (Unaudited)

<TABLE>

<S>                                                                           <C>
Assets
  Current Assets
  Cash ....................................................................   $      9,025
  Accounts receivable, net of allowance for
       doubtful accounts of $0 ............................................         22,056
  Prepaid expenses ........................................................         29,710
                                                                              ------------
     Total Current Assets .................................................         60,791
  Property and equipment, net of accumulated
  depreciation of $154,518 ................................................          6,807
  Software, net of accumulated amortization of $1,223,181 .................        284,109
  Deposits ................................................................         23,996
                                                                              ------------
     Total Assets .........................................................        375,703
                                                                              ============
Liabilities and Stockholders' Equity (Impairment)

  Current Liabilities
  Accounts payable and accrued expenses ...................................        382,550
  Deferred revenue ........................................................         20,763
  Obligations to be settled in stock ......................................         74,000
  Dividends payable .......................................................        629,879
  Loans payable ...........................................................        130,000
  Notes payable ...........................................................         25,000
  Derivative conversion feature ...........................................        122,240
  Current maturities of long-term debt ....................................        133,419
  Current maturities of capitalized lease obligations .....................            256
                                                                              ------------
     Total Current Liabilities ............................................      1,518,107
Capitalized lease obligations, less current portion .......................             --
                                                                              ------------
  Total Liabilities .......................................................      1,518,107

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 322,333 shares are issued and outstanding .......            322
Common Stock, $0.0001 par value, 300,000,000 shares authorized;
issued and outstanding 146,931,672 shares .................................         14,693
Additional paid-in capital
                                                                                31,230,240
Accumulated (deficit) .....................................................    (32,043,629)
Deferred compensation .....................................................       (344,030)
                                                                              ------------
     Total Stockholders' Equity (Impairment) ..............................     (1,142,404)

     Total Liabilities and Equity (Impairment) ............................   $    375,703
                                                                              ============

</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)

                                                  Three Months Ended
                                                       March 31,
                                                2006              2005
                                            --------------   ---------------
Total Revenues ...........................   $      11,075    $      19,264

Cost of Goods Sold .......................          36,365           36,367
                                             -------------    -------------

Gross Profit (Loss) ......................         (25,290)         (17,103)

Selling expenses .........................         140,121           96,219
Stock-based compensation (see below) . ...         112,492           66,123
Research and development cost ............          35,562           53,050
General and administrative expenses ......         406,264          383,190
                                             -------------    -------------

Loss From Operations .....................        (719,729)        (615,685)

Other Income (Expense)
Miscellaneous income .....................              --           17,537
Interest income ..........................              --                2
Change in fair value-derivative liability           19,478               --
Interest expense .........................        (107,977)          (3,182)
                                             -------------    -------------
Total Other Income (Expense) .............        (127,455)          14,357
                                             -------------    -------------

Loss Before Provision for Income Taxes ...        (847,184)        (601,328)

Provision for Income Taxes ...............          (1,000)            (630)
                                             -------------    -------------
Net Loss .................................   $    (876,564)   $    (601,958)
                                             =============    =============

Dividends on Preferred Stock .............         (28,380)         (28,379)
                                             -------------    -------------
Net Loss Applicable to Common Shareholders   $    (875,564)   $    (630,337)
                                             =============    =============
Net Loss per Common Share ................   $      (0.006)   $      (0.005)
                                             =============    =============
Weighted Average Number of
Common Shares Outstanding ................     142,715,005      132,657,612
                                             =============    =============

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)


                                                      Three Months Ended
                                                           March 31,
                                                       2006         2005
                                                     ---------    ---------
Cash Flows from Operating Activities
Net Loss .........................................   $(848,184)   $(601,958)
Adjustments to Reconcile Net Loss
to Net Cash Used by Operations
   Depreciation and amortization .................      37,520       39,126
   Securities issued for various expenses ........      92,384      182,800
   Recognition of expenses - deferred compensation      20,108       21,878
   Recognition of expenses - derivative liabilities    122,240           --
Decreases (Increases) in Assets
   Accounts receivable ...........................         241       21,227
   Miscellaneous receivables .....................          --        6,270
   Prepaid expenses ..............................      (6,924)     (24,912)
Increases (decreases) in Liabilities
   Deferred revenues .............................      (4,776)     (10,429)
   Accounts payable and accrued expenses .........      74,803     (102,632)
                                                     ---------    ---------
Net Cash Used by Operating Activities ............    (512,588)    (468,630)

Cash Flows from Investing Activities
Purchases of equipment and fixtures ..............        (583)      (2,160)
                                                     ---------    ---------
Net Cash Used by Investing Activities ............        (583)      (2,160)

Cash Flows from Financing Activities
Dividends paid ...................................          --       (1,020)
Prepayments on common stock subscriptions ........      74,000           --
Proceeds from loans and notes ....................      85,000           --
Repayment of loans and notes .....................     (30,000)          --
Issuance of common and preferred stock ...........     274,500      670,000
                                                     ---------    ---------
Net Cash Provided by Financing Activities ........     403,500      668,980

Net Increase in Cash .............................    (109,671)     198,190
Cash at Beginning of Period ......................     118,696       44,144
                                                     ---------    ---------
Cash at End of Period ............................   $   9,025    $ 242,334
                                                     =========    =========


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


                                                                               5
<PAGE>



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

         In the opinion of the Company's management, all adjustments (consisting
         of normal recurring accruals) necessary to present fairly the Company's
         financial  position as of March 31, 2006, the results of operations for
         the three months ended March 31, 2006 and 2005,  and the cash flows for
         the three months ended March 31, 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.


                                                                               6
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 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 intrinsic value
         method. For non-employees, the fair market value of the Company's stock
         on the date of stock  issuance  or  option/grant  is used.  The Company
         determined the fair market value of the  warrants/options  issued under
         the Black-Scholes Pricing Model. Effective January 1, 1996, the Company
         adopted  Statement of  Financial  Accounting  Standard  (SFAS) No. 123,
         "Accounting  for  Stock-based  Compensation".  The statement  generally
         suggests,  but  does not  require,  employee  stock-based  compensation
         transactions  to be  accounted  for  based  on the  fair  value  of the
         services rendered or the fair value of the equity  instruments  issued,
         whichever is more reliably  measurable.  As permitted by the statement,
         the  Company has  elected to  continue  to follow the  requirements  of
         Accounting  Principles  Board  Opinion  No. 25,  "Accounting  for Stock
         Issued to Employees'  for employees  under the intrinsic  value method.
         The  adoption  of SFAS No. 123 does not have a  material  impact on the
         financial statements.

   Income Taxes

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

   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.


                                                                               7
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 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  $19,465  prepaid
      insurance costs,  with the remainder  representing  miscellaneous  prepaid
      expenses.

5. PROPERTY AND EQUIPMENT

     Property and equipment consist of the following at March 31, 2006:

              Equipment                                        $        89,095
              Furniture and fixtures                                    72,230
                                                                 --------------
                                                                       161,325
              Less accumulated depreciation                            154,518
                                                                 --------------
                                        Total                  $         6,807
                                                                 ==============

Depreciation  expense  charged to operations  was $1,135 and $2,742 in the first
three months of 2006 and 2005, respectively.


                                                                               8
<PAGE>


               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at March 31,
2006:

              Accounts payable                      $       239,164

              Accrued interest                               60,267

              Accrued salaries                               24,671

              Accrued commissions                            22,183

              Accrued professional fees                      34,265

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

                                    Total           $       382,550
                                                       =============


7. DEFERRED REVENUES

      Deferred   revenues  at  March  31,  2006  consist  of  prepaid   software
      maintenance  and support  charges  which are  amortized  ratably  over the
      remaining duration of the underlying maintenance agreements.

8. LOANS PAYABLE

      The Company  and  Magnitude,  Inc.  had  borrowings  under short term loan
      agreements with the following terms and conditions at March 31, 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,
      2005 and no demand for payment has been made.              $       75,000

      During  March 2006 a  non-affiliated  lender  extended a
      short-term loan bearing  interest at the rate of 10% per
      year.                                                              30,000

      During March 2006 a director of the Company provided for
      a cash advance, repayable on demand.                               25,000
                                                                 ---------------
             Total                                               $      130,000
                                                                 ===============


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 March 31, 2006 is $25,000. Attempts
      to locate  the  holder  of this  note,  to  settle  this
      liability, have been unsuccessful.                         $       25,000
                                                                 ---------------


             Total                                               $       25,000
                                                                 ===============


                                                                               9
<PAGE>

                 MAGNITUDE INFORMATION SYSTEMS, INC. SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

10. LONG-TERM DEBT

      Long-term debt as of March 31, 2006 is comprised of the following:

<TABLE>

<S>                                                                                                    <C>
      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".  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 $0.06 per unit with each unit  consisting  of one common share and one
      warrant, exercisable at $0.08/share.                                                            $         99,890

      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                                            $              -
                                                                                                        ===============
</TABLE>


11. INCOME TAXES

       The Company's total deferred tax asset and valuation allowance are as
follows:

                                                               December 31,
                                                                   2005
                                                              ---------------
          Total deferred tax asset, non-current                $   9,155,000
          Less valuation allowance                                (9,155,000)
                                                              ---------------
          Net deferred tax asset, non-current                  $           -
                                                              ===============

      At December 31, 2005, the Company has available approximately  $26,319,000
      of net operating losses to  carry-forward  and which may be used to reduce
      future federal  taxable  income and expire  between  December 31, 2007 and
      2025.

      At December 31, 2005, the Company has available  approximately  $3,415,000
      of net operating losses to  carry-forward  and which may be used to reduce
      future state taxable income which expire December 31, 2012.

                                                                              10
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

12. 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 March 31,
      2006 amounted to $257 net of accumulated depreciation of $8,252.

13. DEFERRED COMPENSATION

      Deferred  compensation  amounted to $344,030  representing the unamortized
      portions of the value of restricted stock,  options and warrants issued to
      six consultants, for future services.

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.

      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                                           $    90,000
                   2007                                                30,000
                                                                      -------
                                   Total minimum payments         $   120,000
                                                                      =======
  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 the Company's current private placement. We replaced
      the  surrendered  and cancelled  common shares with shares of our Series E
      preferred stock which are automatically  convertible after six months into
      11,247,607  common  shares,  the  amount of common  shares  equal to those
      surrendered.  We also intend to reissue the  4,507,709  stock  options and
      2,283,916  warrants also  surrendered for cancellation by our officers and
      directors  with  an  equal  amount  of  common  shares   underlying  these
      securities  following adoption by the shareholders of a proposed amendment
      to the Company's  certificate of incorporation  which amendment if adopted
      would increase the number of authorized  common shares from 200,000,000 to
      300,000,000.  The  recipients of the Series E preferred  stock have waived
      their right to receive any dividends on these shares.

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


                                                                              11
<PAGE>



               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


16. SUBSEQUENT EVENTS

      On April 10, 2006, the Registrant and a shareholder  who is former officer
      and former  director  entered into a Settlement and Conversion  Agreement.
      Pursuant  to the  principal  terms  of  this  Agreement,  the  shareholder
      converted $900,000 of the stated value of the shares of 7% Series C Senior
      Convertible  Preferred  Stock and  approximately  $331,000  of accrued but
      unpaid  dividends  into  10,250,000  common  shares  of the  Company.  The
      Agreement  obligates the Company to pay the  shareholder a $5,000  monthly
      payment  for one year and  subjects  the common  shares  received  in this
      conversion to certain lock-up  provisions.  As a result of this Agreement,
      approximately  $331,000 in current liabilities were terminated and removed
      from the Company's  balance sheet. The Company issued the common shares in
      reliance  upon the exemption  from the  registration  requirements  of the
      Securities  Act of 1933, as amended (the "1933 Act"),  provided by Section
      4(2) of the 1933 Act and Regulation D promulgated thereunder.



                                                                              12
<PAGE>



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

RESULTS OF OPERATIONS

Our  marketing  efforts  during  the  quarter  were  focused on  broadening  our
cooperative  program  with  our  strategic  partner  Aon Risk  Services  whereby
Magnitude  will  jointly  market our  ErgoEnterprise(TM)  software  solutions to
clients of Aon Risk  Services.  Both parties  expect  these  ventures to produce
tangible  results in terms of software  licensing  contracts  over time. No such
sales were as yet recorded  during the first  quarter ended March 31, 2006 which
yielded  revenues  of $11,075,  compared  to the  $19,264  achieved in the first
quarter of 2005.  Most of these revenues were derived from software  maintenance
and support activities.

Gross  profits  amounted to negative  $25,290 for the quarter  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.  Our expense and cost  structure  was  essentially
unchanged from prior periods,  except that we faced higher compensation costs in
the marketing and general business consultancy  sectors,  reflected primarily in
the "stock-based  compensation" amount. Management is trying to conserve cash by
favoring securities-based  compensation arrangements where possible.  Restricted
stock is priced at market and options and  warrants  grants are valued using the
Black-Scholes   valuation  model.  After  deducting  selling-  and  general  and
administrative  expenses,  stock-based compensation and R&D expenses of totaling
$694,439 the Company  realized a loss from  operations of $719,729 for the three
months period ended March 31, 2006, compared to an operating loss of $615,685 in
the first quarter in 2005. The increase in operating  expenses from last year to
the  current  period  reflects  primarily  an  increase  in  staffing  and other
compensation  costs.  Non-operating  income and  expenses  consisted of $107,977
interest expense and 19,478 for changes in the value of derivative  liabilities.
The period result was a net loss of $848,184 for the quarter, compared to a loss
of $601,958 for the same period in 2005.

After  accounting  for dividend  accruals on outstanding  preferred  stock which
totaled $28,380,  the net loss for the quarter applicable to common shareholders
was  $876,564 or $0.006 per share,  compared to a loss of $630,337 or $0.005 per
share for the same quarter in the previous year.


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,
augmented by short-term  borrowings.  During the quarter,  the Company attracted
$274,500 in new equity funding in the form of cash.

At March 31, 2006,  the deficit in working  capital  amounted to  $1,457,316  as
compared to  $1,142,404  at December 31, 2005.  Stockholders'  equity  showed an
impairment of $1,020,164 at the end of the quarter.  The negative cash flow from
operations  for the three  months  ended  March 31, 2006  totaled  approximately
$512,588 and was substantially financed by new equity which was obtained through
private  placements,  as well as limited  borrowings.  The new equity placements
were  consummated  by issuance of common  stock and stock  purchase  warrants to
accredited private investors in the United States and overseas.  Details of such
transactions can be found in the "Changes and Issuance of Securities" section of
this report. The Company plans to file a new registration statement on Form SB-2
and amendments to certain previously filed registration statements on Form SB-2,
all of which covered  common shares  directly  issued,  as well as common shares
underlying  previously  issued  convertible  preferred  stock and  warrants,  in
connection with these and prior financing  transactions.  These filings are made
on behalf of certain  investors  in the  Company's  equities and proceeds of any
sales of such registered securities will accrue entirely to such investors.


                                                                              13
<PAGE>

At the time of this submission,  the Company had no bank debt. At March 31, 2006
its short-term liabilities, aside from trade payables and accruals, consisted of
certain   notes  and  loans   aggregating   approximately   $288,000   of  which
approximately  $125,000 was owed to the chairman and chief executive  officer of
the Company in form of a demand note (see "Related Party Transactions"). Current
liabilities include $629,879 unpaid dividends on outstanding preferred stock. We
expect that the majority of 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 order to
remedy the liquidity  constraints  management is seeking further  investments in
form of debt or equity capital.  There can be no assurance,  however, that these
efforts will lead to the desired outcome and that the Company will be successful
in obtaining  the working  capital  needed to fund on-going  operations.  If the
Company  failed  to do so,  either by not  acquiring  sufficient  funds,  or not
receiving  such  funds in a timely  manner,  management  may be forced to effect
severe cut-backs in the Company's operations. .





                                                                              14
<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 March 31, 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.





                                                                              15
<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. Except for this infringement lawsuit, the Company is not
a party in any legal proceedings.



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

   a) Issuance of unregistered securities

      During the quarter ended March 31, 2005,  the Company issued the following
      unregistered securities:

      (i)   4,725,000  shares of common stock,  accompanied  by warrants for the
            purchase of 4,725,000 common shares,  exercisable during three years
            at the  price of $0.08  per  share,  to seven  accredited  investors
            pursuant to private placement subscriptions, issued in reliance upon
            exemptions  provided  under  Section  4(2)  of the  Securities  Act,
            altogether  resulting  in the  receipt by the Company of $274,500 in
            cash.

      (ii)  1,600,000  shares of common  stock to six  outside  consultants  for
            services rendered.

      (iii) Options  for  3,250,000  shares of common  stock  and  warrants  for
            1,250,000 shares to two outside  consultants for services  rendered.
            The options and warrants are exercisable at prices between $0.08 and
            $0.15 per share.

   (b) Not applicable

   (c) None

Item 3 DEFAULTS UPON SENIOR SECURITIES
       -------------------------------

   The Company,  as of the date of this filing,  is in arrears on the payment of
   certain  dividends  on its  Series A, C, and D Senior  Convertible  Preferred
   Stock. Such arrears total approximately  $620,000.  These dividends have been
   accrued, however, the Company's management has refrained from making payments
   at this time because of the absence of positive equity and/or surplus funds.

Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
       ---------------------------------------------------

   At a special meeting of the  stockholders  of the Company,  held on March 31,
   2006, the stockholders approved the following:

   1) Election of Steven D. Rudnik, Steven Gray, Joerg Klaube and Joseph Tomasek
   as  Directors  of the  Company  to serve  until the next  annual  meeting  of
   stockholders. Votes were cast as follows:

   Steven D. Rudnik:   71,699,130 FOR,   1,931,670 AGAINST,      351,821 ABSTAIN
   Steven Gray:        73,301,464 FOR,     333,336 AGAINST,      351,821 ABSTAIN
   Joerg H. Klaube     73,468,131 FOR,     166,669 AGAINST,      351,821 ABSTAIN
   Joseph J. Tomasek   73,468,131 FOR,     166,669 AGAINST,    3,018,521 ABSTAIN


                                                                              16
<PAGE>

   2) Approval of an amendment to the Company's Certificate of Incorporation, to
   increase the  authorized  number of shares of common  stock from  200,000,000
   shares to 3000,000,000 shares.

   FOR:  66,078,423       AGAINST:  8,800,197      ABSTAIN:  2,074,201

   3) Approval of an amendment to the employment agreement for Steven D. Rudnik.

   FOR:  29,094,463       AGAINST:  6,930,509      ABSTAIN:    358,169

   4)  Ratification  of the appointment of Rosenberg Rich Baker Berman & Company
   as the Company's  independent auditors for the fiscal year ended December 31,
   2005:

   FOR:  75,696,983       AGAINST:      6,437      ABSTAIN:  1,247,801

   On March 31, 2006, we amended our  Certificate of  Incorporation  to increase
   the authorized  number of shares of common stock from  200,000,000  shares to
   300,000,000 shares.


Item 5 OTHER INFORMATION

       -  None


                                                                              17
<PAGE>



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 Steven D. Rudnik, 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 Steven D. Rudnik, Chief Executive Officer,
            pursuant  to  Sections  906 of the  Sarbanes-Oxley  Act of 2002,  18
            U.S.C. Section 1350

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

      (b)   Reports on Form 8-K:

            On  January  23,  2006,  the  Company  filed a report  on Form  8-K,
            informing  about a press release in connection with the signing of a
            sales contract.

            On  January  25,  2006,  the  Company  filed a report  on Form  8-K,
            informing about a press release in connection with the hiring of two
            sales executives.

            On March 1, 2006, the Company filed a report on Form 8-K,  informing
            about a press release in connection  with the hiring of two business
            development and marketing executives.



                                                                              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:   May 7, 2006                   By: /s/  Steven D. Rudnik
                                          ---------------------
                                            Steven D. Rudnik
                                            Chairman and Chief Executive Officer




                                                                              19