FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                      For Quarter Ended September 30, 2005

                                       OR

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

                         Commission file number 33-20432

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

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

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

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


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

The  number  of  shares  of  Registrant's  Common  Stock,   $0.0001  par  value,
outstanding as of October 31, 2005, was 139,106,672 shares.

<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES

                                      INDEX


                                                                          Page
                                                                         Number
                                                                         -------

PART  1  -  FINANCIAL INFORMATION

Item 1   Financial Statements (unaudited)

         Consolidated Balance Sheet
          - September 30, 2005                                           3

         Consolidated Statements of Operations
          - Three and nine months ended September 30, 2005 and 2004      4

         Consolidated Statements of Cash Flows
          - Nine months ended September 30, 2005 and 2004                5

         Notes to Consolidated Financial Statements                      6 - 12


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

Item 3   Controls and Procedures                                         15


PART II  -  OTHER INFORMATION                                            16 - 17


SIGNATURES                                                               18


                                       2
<PAGE>

PART I  - ITEM 1   FINANCIAL STATEMENTS

                       MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                                   CONSOLIDATED BALANCE SHEET
                                 September 30, 2005 (Unaudited)
<TABLE>
<CAPTION>

Assets
<S>                                                                                <C>
     Current Assets
       Cash ....................................................................   $     36,339
       Accounts receivable, net of allowance for
         doubtful accounts of $0 ...............................................         98,661
       Inventory ...............................................................          6,214
       Prepaid expenses ........................................................         25,138
                                                                                   ------------
           Total Current Assets ................................................        166,352
     Property and equipment, net of accumulated
     depreciation of $152,270 ..................................................          5,044
     Software, net of accumulated amortization of $1,150,411 ...................        356,879
     Deposits ..................................................................         21,829
                                                                                   ------------
         Total Assets ..........................................................        550,104
                                                                                   ============
Liabilities and Stockholders' Equity (Impairment)

     Current Liabilities
       Accounts payable and accrued expenses ...................................        233,837
       Deferred revenue ........................................................         39,687
       Deferred rental obligation ..............................................          1,045
       Dividends payable .......................................................        558,225
       Loans payable ...........................................................         75,000
       Notes payable ...........................................................         25,000
       Current maturities of long-term debt ....................................        133,419
       Current maturities of capitalized lease obligations .....................          2,978
                                                                                   ------------
           Total Current Liabilities ...........................................      1,069,191
     Capitalized lease obligations, less current portion .......................            256
                                                                                   ------------
         Total Liabilities .....................................................      1,069,447

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 305,666 shares are issued and outstanding .......            306
     Common Stock, $0.0001 par value, 200,000,000 shares authorized;
     issued and outstanding 138,023,339 shares .................................         13,802
     Additional paid-in capital ................................................     30,362,823
     Accumulated (deficit) .....................................................    (30,742,500)
     Deferred compensation .....................................................       (153,774)
                                                                                   ------------
         Total Stockholders' Equity (Impairment) ...............................       (519,343)

         Total Liabilities and Equity (Impairment) .............................   $    550,104
                                                                                   ============


     The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


                                               3
<PAGE>

<TABLE>
<CAPTION>
                              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                                  (Unaudited)

                                                    Three Months Ended                Nine Months Ended
                                                        September 30,                     September 30,
                                              ------------------------------    ------------------------------
                                                  2005              2004            2005             2004
                                              -------------    -------------    -------------    -------------
<S>                                           <C>              <C>              <C>              <C>
(see note below)
Total Revenues ............................   $      86,027    $      17,718    $     150,860    $      82,592

     Cost of Goods Sold ...................          36,372           38,974          109,114          116,995
                                              -------------    -------------    -------------    -------------
Gross Profit (Loss) .......................          49,655          (21,256)          41,746          (34,403)

     Selling expenses .....................          86,731          126,369          299,349          356,018
     Stock-based compensation (see below) .         188,392          295,994          312,367          532,027
     Research and development cost ........              --               --           14,618            1,530
     General and administrative expenses ..         282,444          300,836        1,121,257        1,089,768
                                              -------------    -------------    -------------    -------------
Loss from Operations ......................        (507,912)        (744,455)      (1,705,845)      (2,013,746)

Other Income (Expense)
     Miscellaneous income .................           4,846               --           22,383               --
     Misc. non-operating expenses .........              --               --               --          (14,489)
     Interest income ......................              --               --                6              186
     Interest expense .....................          (8,842)          (9,522)         (16,416)         (18,911)
                                              -------------    -------------    -------------    -------------
         Total Other Income (Expense) .....          (3,996)          (9,522)           5,973          (33,214)
                                              -------------    -------------    -------------    -------------
Loss before Provision for Income Taxes ....        (511,908)        (753,977)      (1,699,872)      (2,046,960)

     Provision for income taxes ...........              --               --             (630)              --
                                              -------------    -------------    -------------    -------------
Net Loss ..................................   $    (511,908)   $    (753,977)   $  (1,700,502)   $  (2,046,960)
                                              =============    =============    =============    =============
Dividends on Preferred Stock ..............          28,380          109,363           85,139        1,719,078
                                              -------------    -------------    -------------    -------------
Net Loss applicable to Common Shareholders    $    (540,288)   $    (863,340)   $  (1,785,641)   $  (3,766,038)
                                              =============    =============    =============    =============
Net Loss per Common Share .................   $      (0.004)   $      (0.008)   $      (0.013)   $      (0.041)
                                              =============    =============    =============    =============
Weighted Average Number of
     Common Shares Outstanding ............     140,771,743      111,653,344      137,511,211       91,754,764
                                              =============    =============    =============    =============
</TABLE>

All  of  the   stock-based   compensation   relates  to  selling,   general  and
administrative  expenses.  The results for the nine months ended  September  30,
2004,  have  been  restated.  Refer  to Note  16 in the  Notes  to  Consolidated
Financial Statements.

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


                                                      4
<PAGE>

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

<TABLE>
<CAPTION>
                                                               Nine Months Ended
                                                                 September 30,
                                                         ---------------------------
                                                             2005            2004 (see note below)
                                                         -----------     -----------
<S>                                                      <C>             <C>
Cash Flows from Operating Activities
     Net Loss ........................................   $(1,700,502)    $(2,046,960)
     Adjustments to Reconcile Net Loss
     to Net Cash Used by Operations
        Depreciation and amortization ................       116,269         124,568
        Securities issued for various expenses .......       363,504         518,607
        Recognition of expense - deferred compensation        88,138          39,716
Decreases (Increases) in Assets
        Accounts receivable ..........................       (68,031)         35,022
        Miscellaneous receivables ....................        11,322           1,800
        Inventories ..................................            --          14,489
        Prepaid expenses .............................        30,855
        Other assets .................................            --          24,296
     Increases (Decreases) in Liabilities
        Deferred revenues ............................        (9,686)         22,615
        Accounts payable and accrued expenses ........      (164,194)       (110,493)
                                                         -----------     -----------
Net Cash Used by Operating Activities ................    (1,332,625)     (1,397,204)

Cash Flows from Investing Activities
     Purchases of equipment and fixtures .............        (2,160)         (4,861)
                                                         -----------     -----------
Net Cash Used by Investing Activities ................        (2,160)         (4,861)

Cash Flows from Financing Activities
     Proceeds from loans and notes payable ...........        54,500         165,000
     Repayment of loans and notes ....................       (54,500)       (357,851)
     Payment of dividends ............................        (1,020)        (57,911)
     Issuance of common and preferred stock ..........     1,328,000       1,560,914
                                                         -----------     -----------
Net Cash Provided by Financing Activities ............     1,326,980       1,310,152

Net Decrease in Cash .................................        (7,805)        (91,913)
Cash at Beginning of Period ..........................        44,144          97,978
                                                         -----------     -----------
Cash at End of Period ................................   $    36,339     $     6,065
                                                         ===========     ===========
</TABLE>

The results for the nine months ended  September 30, 2004,  have been  restated.
Refer to Note 16 in the Notes to Consolidated Financial Statements.

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
                               SEPTEMBER 30, 2005

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/A for the year ended  December 31,
      2004, and quarterly  reports on Form 10-QSB/A for the quarters ended March
      31, 2005 and June 30, 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 September 30, 2005,
      the results of  operations  for the three and nine months ended  September
      30, 2005 and 2004, and the cash flows for the nine months ended  September
      30, 2005 and 2004, 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
                               SEPTEMBER 30, 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

      Inventory

      Inventory  is stated at the lower of cost (first in,  first out) or market
      value and consists primarily of packaged software.

      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.

      Advertising Costs

      Advertising  costs are charged to operations  when  incurred.  Advertising
      expense was $811 and $491 for the nine months ended September 30, 2005 and
      2004, respectively.

      Income Taxes

      The  Company  provides  for  income  taxes  based on  enacted  tax law and
      statutory  tax rates at which items of income and expenses are expected to
      be settled in the  Company's  income tax return.  Certain items of revenue
      and expense are  reported  for Federal  income tax  purposes in  different
      periods  than for  financial  reporting  purposes,  thereby  resulting  in
      deferred  income taxes.  Deferred taxes are also  recognized for operating
      losses that are  available  to offset  future  taxable  income.  Valuation
      allowances are established when necessary to reduce deferred tax assets to
      the amount expected to be realized. The Company has incurred net operating
      losses for financial-reporting  and tax-reporting  purposes.  Accordingly,
      for Federal and state  income tax  purposes,  the benefit for income taxes
      has been  offset  entirely by a  valuation  allowance  against the related
      federal and state deferred tax asset for the year ended December 31, 2004.

      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
                               SEPTEMBER 30, 2005

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,  2004,  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

      Two customers accounted for 41% and 46%, respectively, of our revenues for
      the quarter ended September 30, 2005.

      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 $10,000 prepaid rent
      and  $7,830  prepaid  insurance  costs,  with the  remainder  representing
      miscellaneous prepaid expenses.

5.    PROPERTY AND EQUIPMENT

      Property and equipment consist of the following at September 30, 2005:

              Equipment                                  $    85,084
              Furniture and fixtures                          72,230
                                                         -----------
                                                             157,314

              Less accumulated depreciation                  152,270
                                                         -----------
                                        Total            $     5,044
                                                         ===========

      Depreciation  expense  charged to operations  was $7,113 and $7,628 in the
      first nine months of 2005 and 2004, respectively.


                                       8
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005

6.    ACCOUNTS PAYABLE AND ACCRUED EXPENSES

      Accounts  payable and  accrued  expenses  consisted  of the  following  at
      September 30, 2005:

              Accounts payable                           $   118,693
              Accrued interest                                58,092
              Accrued salaries                                12,552
              Accrued professional fees                       39,500
              Miscellaneous accruals                           5,000
                                                         -----------
                                    Total                $   233,837
                                                         ===========

7.    DEFERRED REVENUES

      Deferred  revenues  at  September  30,  2005  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 September 30, 2005:

      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
                                                                     ----------
             Total                                                   $   75,000
                                                                     ==========

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  September  30,  2005 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. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005

10.   LONG-TERM DEBT

      Long-term debt as of September 30, 2005 is comprised of the following:

      Pursuant to the February 2, 1998, Agreement and Plan of Merger
      with Rolina Corporation, the Company had issued 155,556 shares
      (the  "Shares") of its common stock to the principal of Rolina
      Corporation  who  currently  serves  as  the  Company's  Chief
      Executive  Officer  and Board  Chairman,  and had issued a Put
      Option  for  such  Shares  at a price of  $2.41  per  share in
      accordance with the provisions contained therein,  with notice
      for exercise  eligible to be given at any time after  February
      1, 2000, and before 5:00 p.m. on the 90th day thereafter. This
      liability was converted into a Company obligation for $274,890
      maturing  March 31, 2002 and a demand loan for  $100,000  both
      carrying  interest  at the rate of 7% per  year,  subsequently
      increased to 10%, payable monthly.  The demand portion of this
      note was repaid in April 2002 and the due date for $274,890 of
      the   remaining   balance  was   extended  to  July  1,  2003.
      Subsequently,  the maturity of the unpaid  balance was changed
      to a portion of $174,890  payable on demand,  and a portion of
      $100,000 due and payable on January 2, 2005.  During the first
      quarter of 2004,  $175,000  was repaid and the maturity of the
      unpaid   balance  was  changed  to  "due  upon  demand".   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 common share equivalent.        $   99,890

      Discounted  present value of a  non-interest  bearing  $70,000
      settlement  with a former  investor of  Magnitude,  Inc. to be
      paid in 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
                                                                     ----------
             Total                                                      133,419
                  Less current maturities                               133,419
                                                                     ----------
                  Long-term debt, net of current maturities          $       --
                                                                     ==========

11.   INCOME TAXES

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

                                                                    December 31,
                                                                        2004
                                                                    -----------
                   Total deferred tax asset, non-current            $ 7,882,000
                   Less valuation allowance                          (7,882,000)
                                                                    -----------
                   Net deferred tax asset, non-current              $        --
                                                                    ===========

      At December 31, 2004, the Company had available approximately  $24,377,000
      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
      2024.

      At December 31, 2004, the Company had available  approximately  $3,616,000
      of net operating losses to  carry-forward  and which may be used to reduce
      future state taxable income which expire December 31, 2011.


                                       10
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005

12.   CAPITALIZED LEASE OBLIGATIONS

      The Company leases office equipment under a  non-cancelable  capital lease
      agreement  expiring in January 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
      December 31, 2004 amounted to $2,442 net of  accumulated  depreciation  of
      $6,067.

      The  following is a schedule of minimum  lease  payments due under capital
      leases at December 31, 2004:

      Total minimum capital lease payments                           $     3,349
      Less amounts representing interest                                     115
                                                                     -----------
      Present value of net minimum capital lease payments                  3,234
      Less current maturities of capital lease obligations                 2,978
                                                                     -----------
      Obligations under capital leases, excluding current maturities $       256
                                                                     ===========

13.   DEFERRED COMPENSATION

      Deferred   compensation  included  $72,067  representing  the  unamortized
      portions  of the  value of  restricted  stock and  warrants  issued to the
      Company's   president  in  lieu  of  cash  salary  (see   "Related   Party
      Transactions")  with the  balance  attributable  to  securities  issued to
      non-employees 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 has
      recently  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,
                              ------------------------
                                       2005                          $   30,000
                                       2006                          $  120,000
                                       2007                          $   30,000
                                                                     ----------
                             Total minimum payments                  $  180,000
                                                                     ==========

      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  May  2005  the  Company  issued  1,000,000  shares  of  common  stock,
      accompanied  by warrants  for the  purchase of  1,000,000  common  shares,
      exercisable  during  three  years at the price of $0.15 per share,  to the
      Company's  president  and chief  executive  officer,  in lieu of  $100,000
      salary payable in cash.


                                       11
<PAGE>

      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 in March,  2006, 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.

15.   RESTATEMENT OF RESULTS FOR 2004

      The Company  had  restated  its  financial  statements  for the year ended
      December 31, 2004. The restated  financial  results  reflect a revision in
      its accounting  procedures  related to the valuation of securities such as
      restricted  stock and stock options and warrants  issued to  non-employees
      for services  performed.  The impact of these adjustments on the financial
      results of the nine months  period ended  September 30, 2004 as originally
      reported is summarized below:

                                       Nine Months Ended September 30, 2004
                                       ------------------------------------
                                       As Reported              As Restated
                                       -----------              -----------
      Net (loss)                       (2,020,483)               (2,046,960)
      Loss per share                   $   (0.041)               $   (0.041)


                                       12
<PAGE>

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

RESULTS OF OPERATIONS

During the  quarter we were  pleased to note a  relative  increase  in  ordering
activity  among which,  most  importantly,  stands out a contract from our major
strategic  partner Aon Risk Services Division for our software  products,  to be
utilized  in-house by Aon's  staff.  Revenues for the quarter  totaled  $86,027,
compared to the $17,718  achieved in the third  quarter of 2004.  Two  customers
accounted for 41% and 46%,  respectively,  of our revenues for the quarter.  The
nine  months  revenue  totals  were  $150,860  and  $82,592  for 2005 and  2004,
respectively.

Gross  profits  amounted  to $49,655  for the  quarter  and $41,746 for the nine
months,  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,  and, after  deducting
selling- and general and administrative  expenses,  stock-based compensation and
R&D expenses of $557,567 and $1,747,591  for the three and nine months  periods,
respectively,  ended September 30, 2005, which was substantially  lower than the
$723,199  and  $1,979,343  recorded in 2004,  the  Company  realized a loss from
operations of $507,912,  compared to an operating  loss of $744,455 in the third
quarter  in 2004.  The  nine  months  figures  were  losses  of  $1,705,845  and
$2,013,746 in 2005 and 2004.  The decrease in operating  expenses from last year
reflects  primarily  a  reduction  in  staffing  and other  compensation  costs.
Non-operating  income and  expenses  included  $8,842 and $16,416  net  interest
expense for the three and nine months  periods in 2005.  The period results were
net losses of $511,908  for the quarter  and  $1,700,502  for the nine months in
2005,  compared to losses of $753,977  and  $2,046,960  for the same  periods in
2004.

After  accounting  for dividend  accruals on outstanding  preferred  stock which
totaled $28,380,  the net loss for the quarter applicable to common shareholders
was  $540,288 or $0.004 per share,  compared to a loss of $863,340 or $0.008 per
share for the same quarter in the previous  year,  and  $1,785,641 or $0.013 per
share and $3,766,038 or $0.041 per share for the nine months ended September 30,
2005 and 2004, respectively.

LIQUIDITY AND CAPITAL RESOURCES

In the absence of cash flow from operations, required working capital to finance
ongoing operations was supplied almost entirely from new equity capital.  During
the quarter, the Company attracted $458,000 in new equity funding in the form of
cash.

At September 30, 2005,  the deficit in working  capital  amounted to $902,839 as
compared to  $1,010,649  at December 31, 2004.  Stockholders'  equity  showed an
impairment  of $519,343 at the end of the quarter,  compared to an impairment of
$513,046 at the beginning of the year.  The negative  cash flow from  operations
for the nine months ended  September 30, 2005 totaled  approximately  $1,333,000
and was substantially  financed by new equity which was obtained through private
placements.  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 and the  reports on Form
10-QSB for the first and second  quarter in 2005.  In April 2005 the Company had
filed a new  registration  statement  on  Form  SB-2  and  amendments  to  three
previously  filed  registration  statements  on Form SB-2,  all of which covered
common shares directly issued as well as common shares underlying the previously
issued  convertible  preferred stock and warrants,  in connection with these and
prior  financing  transactions.  These  filings  were 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.

At the time of this  submission,  the Company had no bank debt. At September 30,
2005 its  short-term  liabilities,  aside  from  trade  payables  and  accruals,
consisted of certain notes and loans aggregating approximately $233,000 of which
approximately  $100,000 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 $558,225 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.


                                       13
<PAGE>

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 drastically
cut back 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  September 30, 2005, 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 files 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  September  30,  2005,  the  Company  issued the
following unregistered securities:

      (i)   7,833,334  shares of common stock,  accompanied  by warrants for the
            purchase of 7,833,334 common shares,  exercisable during three years
            at the  price of  $0.08  per  share,  to five  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 $458,000 in
            cash.

      (ii)  1,750,000  shares of common  stock to two  outside  consultants  for
            services rendered.

      (iii) 112,476  shares of Series E Senior  Convertible  Preferred  Stock to
            five  officers  and  directors  of the  Company  in  return  for the
            surrender and  cancellation  of  11,247,607  shares of common stock.
            These  preferred  shares  will   automatically   convert  back  into
            11,247,607  common  shares  six months  after  their  issuance  (see
            "Related Party Transactions").

(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   $545,000.   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

      -  None

Item 5   OTHER INFORMATION

      -  None


                                       16
<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 September 15, 2005,  the Company filed a report on Form 8-K,  informing
      about the surrender by certain officers and directors of the Company,  for
      cancellation,  of 4,507,709 stock options, 2,283,916 common stock purchase
      warrants and  11,247,607  common shares and the issue of 112,476 shares of
      our Series E preferred stock (see "Related Party Transactions").

      On October 28, 2005, the Company filed two reports on Form 8-K,  informing
      (i) about the  restatement  of its  financial  results for the years ended
      December 31, 2003 and 2004, and the quarters ended March 31, 2005 and June
      30,  2005,  and (ii)  that Aon Risk  Services  had  purchased  Magnitude's
      ErgoEnterprise(TM)  software for a large  segment of its  employees  using
      computers.


                                       17
<PAGE>

                                   SIGNATURES


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


                                         MAGNITUDE INFORMATION SYSTEMS, INC.


Date:   November 11, 2005                By: /s/  Steven D. Rudnik
                                            ------------------------------------
                                            Steven D. Rudnik
                                            Chairman and Chief Executive Officer


                                       18