SecProbe.io

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<TYPE>CORRESP
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<FILENAME>filename1.txt
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                             Joseph J. Tomasek, Esq.
                             77 North Bridge Street
                          Somerville, New Jersey 08876

                                 October 7, 2005

                              FOR THE EXCLUSIVE USE
                 OF THE SECURITIES AND EXCHANGE COMMISSION ONLY

VIA EDGAR, TELECOPY AND OVERNIGHT DELIVERY
------------------------------------------
Securities and Exchange Commission
Mail Stop 4561
100 F Street, N.E.
Washington, D.C. 20005

Attention:  Ms. Kathleen Collins
            Accounting Branch Chief

                  RE:      Magnitude Information Systems, Inc.
                           Form 10-KSB for the Fiscal Year Ended
                           December 31, 2004
                           Filed March 30, 2005
                           File No. 000-32485

Dear Ms. Collins:

         I serve as General Counsel to Magnitude Information Systems, Inc. (the
"Company"). After meetings with management of the Company and its auditors, the
Company has prepared responses to the Staff's comment letter to the Company,
dated September 8, 2005. We are filing this correspondence via EDGAR as required
by Rule 101 of Regulation S-T as well as mailing three (3) hard copies together
with the Staff's September 8, 2005 comment letter by overnight delivery and
telecopying one (1) copy for the Staff's convenience. Please note the Company's
following responses, keyed to the Staff's comments in its September 8, 2005
letter:

Consolidated Statements of Operations, page 3
---------------------------------------------

1.       We note your inclusion of stock-based compensation in total operating
         expenses in the Consolidated Statements of Operations. Stock-based
         compensation must be allocated to the appropriate expense category
         to which it relates. For example, stock compensation relating to
         employees whose salaries are otherwise reflected as cost of goods
         sold must be reflected as cost of revenue. The amount may be shown
         parenthetically within the category or as a separate line item of
         the category. Stock-based compensation relating to other operating
         expenses such as research and development or selling, general and
         administrative can continue to be shown as one line item with
         footnote disclosures indicating the breakdown or you can revise to
         include parenthetical disclosures similar to cost of revenues.
         Conforming changes should be made to selected financial data and all

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Ms. Kathleen Collins
October 7, 2005
Page 2

         other relevant sections of the filing. Tell us how you considered
         this guidance when preparing your financial statements..

         Please be advised that the Company did not reflect any stock based
         compensation issued during fiscal year 2004 as costs of goods sold and
         that such compensation was exclusively reflected in selling, general
         and administrative expenses for this period and is shown as a one line
         item in the Consolidated Statements of Operations. Please see the
         Company's response to Staff comment two below in connection with its
         intended revisions to the applicable footnote disclosures. The Company
         believes, therefore, that it has properly reflected the stock based
         compensation paid during fiscal/calendar year 2004 as a one line item
         under selling, general and administrative expense in its Consolidated
         Statements of Operations contained in the audited financial statements
         and filed with the Commission as part of its Form 10-KSB for the fiscal
         year ended December 31, 2004.

Summary of Significant Accounting Policies
------------------------------------------

Securities Issued for Services, page 10
---------------------------------------

2.       We note you apply a 50% discount when determining the fair value of
         options/warrants (using the Black Scholes pricing model) issued to
         non-employees for services due to the trading nature of your stock.
         Tell us why you believe this discount is appropriate and tell us how
         you determined the amount of such discount. Also, provide the specific
         accounting literature that supports your conclusions with regards to
         the discount applied.

         Please be advised that the Company shall undertake to amend its Form
         10-KSB for the fiscal year ended December 31, 2004 and the applicable
         Forms 10-QSB filed thereafter, including the content and disclosures in
         the footnotes relating thereto, including all footnotes covering the
         payment of stock based compensation, within these periods and, in
         connection therewith, the Company shall determine the fair value of
         options/warrants issued to non-employees for services at one hundred
         (100%) percent of the then public market price of the Company's common
         shares.

3.       We also note you use a similar discount in valuing stock issued to
         employees for services. Tell us why you believe this discount is
         appropriate and how you considered paragraph 10 of APB 25 to record an
         expense based on the quoted market price of the stock less any money
         that the company receives in exchange.

         Please be advised that as stated in the Company's response to Staff's
         comment No. 2 above, the Company shall undertake to amend its Form
         10-KSB for the fiscal year ended December 31, 2004 and the applicable
         Forms 10-QSB filed thereafter, and in connection therewith, the Company
         shall determine the fair value of options/warrants issued to employees
         for services at one hundred (100%) percent of the then public market
         price of the Company's common shares.

<PAGE>
Ms. Kathleen Collins
October 7, 2005
Page 3

4.       For each period in which an income statement is presented, including
         the interim period through which the date of your response, provide a
         schedule of options/warrants granted in exchange for services to both
         employees and non-employees that includes (a) the date of grant, (b)
         the number of option granted, (c) the name of the recipient, and (d)
         the fair value of the options/warrants and the assumptions and method
         used to determine such value.

         Please be advised that in response to the Staff's comment, the Company
         shall prepare a schedule of options/warrants granted in exchange for
         services to both employees and non-employees that includes (a) the date
         of grant, (b) the number of options granted, (c) the name of the
         recipient, and (d) the fair value of the options/warrants and the
         assumptions and method used to determine such value and include such
         schedule in the footnotes to the income statements of the financial
         statements to be included in the amended Form 10-KSB for the fiscal
         year ended December 31, 2004 and for the applicable the quarterly
         interim periods thereafter.

         Please be advised that Company management and its auditors are
currently preparing the above identified amendments to the subject Form 10-KSB
for the fiscal year ended December 31, 2004 and for the applicable Forms 10-QSB
filed thereafter. The Company anticipates preparing and filing these amendments
via EDGAR on or before October 31, 2005. Please do not hesitate to contact the
undersigned if you require any further information or documents.

                                                     Very truly yours,

                                                     /s/Joseph J. Tomasek
                                                     Joseph J. Tomasek, Esq.

Encl.
cc:      Patrick Gilmore
         Division of Corporation Finance

         Steve D. Rudnik, President
         Magnitude Information Systems, Inc.

         Joerg Klaube, Chief Financial Officer
         Magnitude Information Systems, Inc.
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