FORM 10-QSB/A

                       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, 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 April 30, 2005, was 137,937,612 shares.

Explanatory Note

This Form 10-QSB/A is being filed for the purpose of restating the financial
statements for the quarter ended March 31, 2005 as contained in the Company's
Form 10-QSB filed with the U.S. Securities and Exchange Commission on May 16,
2005. The restatement involves an increase in operating expenses amounting to
$10,939. It also involves the reclassification of certain equity positions in
connection with securities issued between 2003 and 2005 and a reclassification
of deferred compensation which, however, does not affect stockholders' equity.

See Note 14 in the notes to the consolidated financial statements for further
information relating to the restatement. This Form 10-QSB/A has not been updated
for events or information subsequent to the date of filing of the original Form
10-QSB, except in connection with the foregoing.

<PAGE>

              MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES

                                      INDEX

                                                                           Page
                                                                          Number
                                                                          ------

PART 1   - FINANCIAL INFORMATION

Item 1   Financial Statements (unaudited) - as restated

         Consolidated Balance Sheet
          - March 31, 2005                                               3

         Consolidated Statements of Operations
          - Three months ended March 31, 2005 and 2004                   4

         Consolidated Statements of Cash Flows
          - Three months ended March 31, 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

Item 3   Controls and Procedures                                         14

PART II  - OTHER INFORMATION                                             15 - 16

SIGNATURES                                                               17


                                                                               2
<PAGE>

                                 [letterhead of
                      Rosenberg Rich Baker Berman & Company
                   380 Foothill Road, Bridgewater, New Jersey]

To Stockholders and Board of Directors of
Magnitude Information Systems, Inc. and Subsidiaries

We have reviewed the accompanying consolidated balance sheet of Magnitude
Information Systems, Inc. and Subsidiaries as of March 31, 2005, and the related
consolidated statements of operations and statements of cash flows, for the
three months ended March 31, 2005 and 2004. These financial statements are the
responsibility of the Company's Management.

We conducted our review in accordance with standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with the standards of the Public Company Oversight Board, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.

As discussed in the notes to the consolidated financial statements, certain
conditions indicate that the Company may be unable to continue as a
going-concern. The accompanying financial statements do not include any
adjustments to the financial statements that might be necessary should the
Company be able to continue as a going-concern.


                                       /s/ Rosenberg Rich Baker Berman & Company

Bridgewater, New Jersey
May 6, 2005, except as to Note 14,
as to which the date is October 26, 2005

<PAGE>

PART I - Item 1 Financial Statements

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                           March 31, 2005 (Unaudited)
                            As Restated - See Note 14

<TABLE>
<S>                                                                                   <C>
Assets
     Current Assets
       Cash ....................................................................      $      242,334
       Accounts receivable, net of allowance for
         doubtful accounts of $0 ...............................................               9,404
       Inventory ...............................................................               6,214
       Prepaid expenses ........................................................              80,905
       Miscellaneous receivables ...............................................               5,052
                                                                                      --------------
         Total Current Assets ..................................................             343,909
     Property and equipment, net of accumulated
     depreciation of $147,899 ..................................................               9,416
     Software, net of accumulated amortization of $1,077,642 ...................             429,648
     Deposits ..................................................................              21,829
                                                                                      --------------
         Total Assets ..........................................................             804,802
                                                                                      ==============
Liabilities and Stockholders' Equity (Impairment)

     Current Liabilities
       Accounts payable and accrued expenses ...................................             295,397
       Deferred revenue ........................................................              38,944
       Deferred rental obligation ..............................................               1,045
       Dividends payable .......................................................             501,466
       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 .............................................           1,073,249
     Capitalized lease obligations, less current portion .......................                 256
                                                                                      --------------
         Total Liabilities .....................................................           1,073,505

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 193,190 shares are issued and outstanding .......                 193
     Common Stock, $0.0001 par value, 200,000,000 shares authorized;
     issued and outstanding 136,687,612 shares .................................              13,669
     Additional paid-in capital ................................................          29,348,389
     Accumulated deficit .......................................................         (29,587,197)
     Deferred compensation .....................................................             (43,757)
                                                                                      --------------
         Total Stockholders' Equity (Impairment) ...............................            (268,703)

         Total Liabilities and Equity (Impairment) .............................      $      804,802
                                                                                      ==============
</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)
                            As Restated - See Note 14

<TABLE>
<CAPTION>
                                                        Three Months Ended
                                                             March 31,
                                                     2005                2004
                                                ---------------     ---------------
<S>                                             <C>                 <C>
Total Revenues ...........................      $        19,264     $        44,580

     Cost of Goods Sold ..................               36,367              38,955
                                                ---------------     ---------------

Gross Profit (Loss) ......................              (17,103)              5,625

     Selling expenses ....................               96,219             118,237
     Stock-based compensation (see below).               66,123             150,055
     Research and development cost .......                2,500               1,530
     General and administrative expenses .              433,740             445,758
                                                ---------------     ---------------

Loss From Operations .....................             (615,685)           (709,955)

Other Income (Expense)
     Miscellaneous income ................               17,537                  --
     Interest income .....................                    2                 160
     Interest expense ....................               (3,182)             (5,956)
                                                ---------------     ---------------
            Total Other Income (Expense) .               14,357              (5,796)
                                                ---------------     ---------------

Loss Before Provision for Income Taxes ...             (601,328)           (715,751)

     Provision for Income Taxes ..........                 (630)                 --
                                                ---------------     ---------------
Net Loss .................................      $      (601,958)    $      (715,751)
                                                ===============     ===============

Dividends on Preferred Stock .............              (28,379)           (773,816)
                                                ---------------     ---------------
Net Loss Applicable to Common Shareholders      $      (630,337)    $    (1,489,567)
                                                ===============     ===============
Net Loss per Common Share ................      $        (0.005)    $        (0.019)
                                                ===============     ===============
Weighted Average Number of
     Common Shares Outstanding ...........          132,657,612          78,136,586
                                                ===============     ===============
</TABLE>

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

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


                                                                               4
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                            As Restated - See Note 14

<TABLE>
<CAPTION>
                                                                  Three Months Ended
                                                                       March 31,
                                                                 2005            2004
                                                             -----------     -----------
<S>                                                          <C>             <C>
Cash Flows from Operating Activities
     Net Loss .........................................      $  (601,958)    $  (715,751)
     Adjustments to Reconcile Net Loss
     to Net Cash Used by Operations
        Depreciation and amortization .................           39,126          41,453
        Securities issued for various expenses ........          182,800         276,350
        Recognition of expenses - deferred compensation           21,878          26,477
     Decreases (Increases) in Assets
        Accounts receivable ...........................           21,227          14,827
        Miscellaneous receivables .....................            6,270              --
        Prepaid expenses ..............................          (24,912)       (179,419)
        Other assets ..................................               --           5,693
     Increases (decreases) in Liabilities
        Deferred revenues .............................          (10,429)         50,041
        Accounts payable and accrued expenses .........         (102,632)       (111,894)
                                                             -----------     -----------
Net Cash Used by Operating Activities .................         (468,630)       (592,223)

Cash Flows from Investing Activities
     Purchases of equipment and fixtures ..............           (2,160)         (3,443)
                                                             -----------     -----------
Net Cash Used by Investing Activities .................           (2,160)         (3,443)

Cash Flows from Financing Activities
     Dividends paid ...................................           (1,020)             --
     Repayment of loans and notes .....................               --        (282,851)
     Issuance of common and preferred stock ...........          670,000         881,364
                                                             -----------     -----------
Net Cash Provided by Financing Activities .............          668,980         598,513

Net Increase in Cash ..................................          198,190           2,847
Cash at Beginning of Period ...........................           44,144          97,978
                                                             -----------     -----------
Cash at End of Period .................................      $   242,334     $   100,825
                                                             ===========     ===========
</TABLE>

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, 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 for the year ended
            December 31, 2004.

            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, 2005, the
            results of operations for the three months ended March 31, 2005 and
            2004, and the cash flows for the three months ended March 31, 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
                                 MARCH 31, 2005

(1) 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.

      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.

      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


                                                                               7
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

            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

      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 $38,724 for prepaid
      services, and approximately $41,000 prepaid rent and insurance costs.

(5) PROPERTY AND EQUIPMENT

      Property and equipment consist of the following at March 31, 2005:

            Equipment                                                   $ 85,084
            Furniture and fixtures                                        72,231
                                                                        --------

                                                                         157,315

            Less accumulated depreciation                                147,899
                                                                        --------

                                      Total                             $  9,416
                                                                        ========

      Depreciation expense charged to operations was $2,742 in the first three
      months of 2005 and $2,472 in the first three months of 2004.


                                                                               8
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

(6) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at March 31,
2005:

            Accounts payable                                $ 98,283

            Accrued interest                                  56,751

            Accrued salaries                                  14,647

            Accrued professional fees                        120,716

            Miscellaneous accruals                             5,000
                                                            --------

                                  Total                     $295,397
                                                            ========

(7) DEFERRED REVENUES

      Deferred revenues at March 31, 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 March 31, 2005:

<TABLE>
<S>                                                                                   <C>
      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 March 31, 2005 and no demand
      for payment has been made                                                       $    75,000
                                                                                      -----------

            Total                                                                     $    75,000
                                                                                      ===========
</TABLE>

(9) NOTES PAYABLE

<TABLE>
<S>                                                                                   <C>
      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, 2005 is $25,000
      Attempts to locate the holder of this note, to settle this liability, have
      been unsuccessful                                                               $    25,000
                                                                                      -----------

             Total                                                                    $    25,000
                                                                                      ===========
</TABLE>


                                                                               9
<PAGE>

               MAGNITUDE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

(10) LONG-TERM DEBT

            Long-term debt as of March 31, 2005 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 January
            1, 2005, and is currently 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
                                                                                      -----------
                                                                                          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,
                                                                 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
                                 MARCH 31, 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:

<TABLE>
<S>                                                                             <C>
            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
                                                                                ============
</TABLE>

(13) 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                                 $    101,309
                     2006                                      120,000
                     2007                                 $     30,000
                                                          ------------
                              Total minimum payments      $    251,309
                                                          ============

      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.

(14) RESTATEMENT OF RESULTS

            The Company has restated its financial statements for the years
            ended December 31, 2003 and 2004 and the first quarter in 2005. 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. Its original financial statements reflected a
            valuation of such instruments based on the market price for the
            Company's common stock, less a discount of 50% which in the
            Company's opinion compensated for the trading nature of the market
            for the common stock and the liquidity constraints associated with
            these securities. The Company has since reconsidered this valuation
            approach and is restating its financial results, eliminating the 50%
            discount. The major impact of these changes is a decrease in the
            Retained Earnings and an increase in the Additional paid-in Capital
            positions. The adjustments of the Company's financial results as
            originally reported are summarized below:


                                                                              11
<PAGE>

<TABLE>
<CAPTION>
                                                      Three Months Ended March 31, 2005
                                                     As Reported              As Restated
<S>                                                <C>                      <C>
Prepaid expenses                                   $      102,783           $       80,905
Retained earnings (deficit)                           (28,612,395)             (29,587,197)
Additional paid-in capital                             28,351,708               29,348,389
Total stockholders' equity (impairment)                  (246,825)                (268,703)
Deferred compensation                                          --                  (43,757)
Working capital (deficiency)                             (707,462)                (729,340)
Net (loss)                                               (591,019)                (601,958)
Loss per share                                     $       (0.005)          $       (0.005)
</TABLE>


                                                                              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 programs with our strategic partners, Aon Risk Services Division and
U.S. HealthWorks, whereby Magnitude will jointly market our ErgoEnterprise(TM)
software solutions to clients of both firms. We expect these ventures to produce
tangible results in terms of software licensing contracts during the upcoming
quarters in 2005. No such sales were as yet recorded during the first quarter
ended March 31, 2005 which yielded revenues of only $19,264, compared to the
$44,580 achieved in the first quarter of 2004.

Gross profits for the quarter amounted to negative $17,103, as a result of 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 of $598,582 which significantly decreased
from the $702,342 recorded in 2004, the Company realized an operating loss of
$615,685, compared to an operating loss of $709,955 in 2004. The decrease in
expenses was primarily attributable to lesser expenditures in non-cash
transactions for compensation and services. Non-operating income and expenses
consisted of $3,182 interest expense and a credit of $17,537 for cancellation of
accruals for prior year expenses. The period result was a net loss of $601,958,
compared to a loss of $715,751 for the same period in 2004.

After accounting for dividend accruals on outstanding preferred stock which
totaled $28,379, the net loss for the quarter applicable to common shareholders
was $630,337 or less than $0.01 per share, compared to a loss of $1,489,567 or
$0.02 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. The
Company attracted almost $670,000 in new equity funding in the form of cash.

At March 31, 2005, the deficit in working capital amounted to $729,340 as
compared to $1,010,649 at December 31, 2004. Stockholders' equity showed an
impairment of $268,703 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
totaled approximately $469,000 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 convertible preferred stock to
accredited private investors in the United States. Details of such transactions
can be found in the "Changes and Issuance of Securities" section of this report.
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 March 31, 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 $501,466 unpaid dividends on outstanding preferred stock.
Such dividends will be paid only if and when capital surplus and cash-flow from
operations are sufficient to cover the outstanding amounts without thereby
unduly impacting the Company's ability to continue operating and growing its
business.

Current cash reserves and net cash flow from operations expected during the near
future are inadequate when measured against present and anticipated future
needs. In order to remedy the resulting liquidity constraints and address any
"going-concern" issues, management is currently negotiating with several
financing sources with the goal of obtaining commitments for further investments
in form of debt or equity capital, to be funded during the upcoming quarter.
There can be no assurance, however, that these negotiations will lead to the
desired outcome.


                                                                              13
<PAGE>

Item 3. Controls and Procedures

Our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO")
participated in an evaluation by our management of the effectiveness of our
disclosure controls and procedures as of the end of our fiscal quarter that
ended on March 31, 2005. Based on their participation in that evaluation, our
CEO and CFO concluded that our disclosure controls and procedures were effective
as of March 31, 2005 to ensure that required information is disclosed on a
timely basis in our reports filed or furnished under the Securities Exchange Act
of 1934, as amended.

On the date we filed this report, we also reported in a Current Report on Form
8-K that we would be restating our financial statements to reclassify the
beneficial conversion rights of certain convertible securities and of certain
deferred compensation and revalue certain securities issued for services
rendered. We reported in our current report on Form 8-K today that we would be
restating our results for the fiscal year ended December 31, 2004. The
restatements add $315,450 to the net loss in 2003 and $52,954 to the net loss in
2004, whereby both amounts, however, are being offset by similar credits to
Paid-in Capital, as a consequence of which there was no material effect on total
stockholders' equity. In addition, the reclassifications and revaluations give
rise to corrections in the reported dividends positions and per-share earnings
figures in these past periods which again, however, do not materially affect
total stockholders' equity.

The condensed financial statements contained in this Report on Form 10-QSB/A
reflect the carry-forward effect of the restatements of past periods.

The decision to restate our results, comprised principally of reclassifying
beneficial conversion rights accruing to certain equity securities and of
certain deferred compensation and the valuation of equity securities issued for
services rendered, does not cause our management to change its conclusion,
described in its disclosures in Item 8a. Controls and Procedures contained in
our Annual Report on Form 10-KSB for the year ended December 31, 2004, that our
internal control over financial reporting was effective as of December 31, 2004.
The terms of accrued beneficial conversion rights and the number of securities
issued for the services rendered that are subject to the restatement were
visible and disclosed on the face of our financial statements. Although these
beneficial conversion rights were misclassified and the securities issued for
services were not correctly valued, we had employed this classification of these
beneficial conversion rights and valuation of the securities issued for services
rendered for a number of years. We previously received unqualified opinions on
our consolidated financial statements included in our Annual Report on Form
10-KSB.

During the financial closing and reporting process relating to the third quarter
of our 2005 fiscal year, we reviewed the classification of these beneficial
conversion rights and of certain deferred compensation and the valuation of the
securities issued for services rendered, and dialogued with RRBB about the
presentation. Based on these procedures, we reached the conclusion that the
classification of the beneficial conversion rights should be reclassified and
the valuation of the securities rendered for services rendered revalued was
appropriate. Subsequent to our third quarter review, we have reconsidered the
accounting treatment for beneficial conversion rights and valuation of the
securities issued for services rendered, and we now believe that beneficial
conversion rights and certain deferred compensation should be reclassified and
the securities issued for services rendered be revalued. The restatements
conform our financial statements to generally accepted accounting principles.
Under the circumstances, our management does not believe that the restatements
resulted from, or require a finding of, a material weakness in our internal
control over financial reporting.

That conclusion was discussed with, and approved by, the Audit Committee of our
Board of Directors. Our CEO and our CFO reviewed with our management whether our
need to restate our financial statements affected their conclusions, set forth
under the caption Evaluation of Disclosure Controls and Procedures in our Annual
Report on Form 10-KSB for the year ended December 31, 2004 and our Form 10-QSB
for the quarter ended March 31, 2005, that our disclosure controls and
procedures were effective as of those dates to ensure that required information
is disclosed on a timely basis in our reports filed or furnished under the
Securities Exchange Act of 1934, as amended.

In connection with this review, our CEO and CFO noted that our decision to
restate our financial statements did not call into question whether the relevant
information was recorded, processed, summarized or reported within the time
periods specified in the SEC's rules and forms. It also did not involve any
issue about whether information required to be disclosed in the reports we file
under the Exchange Act was accumulated and communicated to our management,
including our principal executive and principal financial officers, as
appropriate to allow timely decisions regarding required disclosure. Rather, the
restatements resulted solely from reconsideration of two decisions made by
management regarding how generally accepted accounting principles required two
particular items of information, that were properly recorded in our financial
records and made available to our management in a timely manner, to be
classified and valued on our financial statements. Our CEO and CFO do not find
that management's subsequent decision, that its prior classification and
valuation were not in accordance with generally accepted accounting principles,
raises any question about whether our disclosure controls and procedures were
effective to ensure that required information was disclosed to them as
appropriate to allow timely decisions regarding required disclosure. Therefore,
based on that review, our CEO and our CFO determined that their prior
conclusions, that our disclosure controls and procedures were effective at
December 31, 2004, had not changed.

Our CEO and CFO also participated in an evaluation by our management of any
changes in our internal control over financial reporting that occurred during
the quarter ended March 31, 2005. That evaluation did not identify any changes
that have materially affected, or are likely to materially affect, our internal
control over financial reporting.


                                                                              14
<PAGE>

PART II - OTHER INFORMATION

Item 1 LEGAL PROCEEDINGS

      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)   7,250,000 shares of common stock, accompanied by warrants for
                  the purchase of 7,810,000 common shares, exercisable during
                  three years at the price of $0.15 per share, to eleven
                  accredited investors pursuant to private placement
                  subscriptions, issued in reliance upon exemptions provided
                  under Section 4(2), Rule 506 of Regulation D of the Securities
                  Act, altogether resulting in the receipt by the Company of
                  $670,000 in cash.

            (ii)  1,600,000 shares of common stock to three consultants for
                  investor relations and general business consulting services.

      (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 $488,000. 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


                                                                              15
<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 March 21, 2005, the Company filed a report on Form 8-K, informing
            about a press release in reference to a patent infringement suit
            filed by the Company.

            On March 24, 2005, the Company filed a report on Form 8-K, informing
            about a press release announcing a marketing and distribution
            agreement with U.S. HealthWorks, GA.


                                                                              16
<PAGE>

                                   SIGNATURES

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

                                        MAGNITUDE INFORMATION SYSTEMS, INC.


Date: October 26, 2005                  By: /s/ Steven D. Rudnik
                                            ------------------------------------
                                            Steven D. Rudnik
                                            Chairman and Chief Executive Officer


                                                                              17