U.S. SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549

FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the quarterly period ended September 30, 2004

Commission file number: 1-13704

PROLOGIC MANAGEMENT SYSTEMS, INC.
(Name of small business issuer in its charter)

Arizona 86-0498857
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

4633 E. Broadway Blvd., #110, Tucson, Arizona 85711
(Address of principal executive offices) (Zip Code)

Issuer's telephone number (520) 955-4748

Securities registered under Section 12(g) of the Exchange Act:

Common Stock

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 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________.

Number of shares of common stock outstanding on September 30, 2004 was
7,275,048.

Transitional Small Business Disclosure Format:
Yes _____; No ___X___

Prologic Management Systems, Inc.

Index

PAGE

Part I. FINANCIAL INFORMATION 3

Item 1. Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets at September 30, 2004
(unaudited) and March 31, 2004 3

Condensed Consolidated Statements of Operations for the
Three and Six Months Ended September 30, 2004 (unaudited)
and September 30, 2003 (unaudited) 4

Condensed Consolidated Statements of Cash Flows for
the Six Months Ended September 30, 2004 (unaudited)
and September 30, 2003 (unaudited) 5

Notes to Condensed Consolidated Financial Statements 6

Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 8

Item 3. Controls and Procedures 12

Part II. OTHER INFORMATION 12

Item 1. Legal Proceedings 12

Item 2. Changes in Securities 13

Item 3. Defaults upon Senior Securities 13

Item 4. Submission of Matters to a Vote by Security Holders 13

Item 5. Other Information 13

Item 6. Exhibits and Reports on Form 8-K 13

SIGNATURES 13

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PROLOGIC MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, MARCH 31,
2004 2004
----------- -----------
ASSETS (unaudited)

Current assets:

Cash $ 943 $ 1,581
Prepaid expenses 8,782
----------- -----------
TOTAL ASSETS $ 943 $ 10,363
=========== ===========
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 1,668,625 $ 1,632,612
Notes payable 1,131,756 1,131,756
Sales tax payable 375,936 375,936
Accrued expenses 609,985 559,987
Accrued dividends 215,376 178,700
----------- -----------
Total liabilities 4,001,678 3,878,991
----------- -----------
Preferred stock:
Series A cumulative convertible preferred stock, no par value, 16,667 shares
authorized, 16,667 shares issued and outstanding 100,000 100,000
Series B cumulative convertible preferred stock, no par value, 100,000
shares authorized, 9,500 shares issued and outstanding 68,588 68,588
Series C cumulative convertible preferred stock, no par, 100,000 shares
authorized, 55,850 shares issued and outstanding 558,500 558,500
----------- -----------
727,088 727,088
----------- -----------
Stockholders' deficit:
Common stock, no par value, 50,000,000 shares authorized, 7,275,048 shares
issued and outstanding at September 30, 2004 and March 31, 2004
10,205,073 10,205,073
Warrants 970,766 970,766
Accumulated deficit (15,903,662) (15,771,555)
----------- -----------
Total stockholders' deficit (4,727,823) (4,595,716)
=========== ===========
TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
$ 943 $ 10,363
=========== ===========

See accompanying notes to condensed consolidated financial statements.

PROLOGIC MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
------------ ------------ ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
REVENUE:

OPERATING EXPENSES:

General and administrative 34,581 31,352 95,431 69,905
Total operating expenses 34,581 31,352 95,431 69,905

OPERATING LOSS (34,581) (31,352) (95,431) (69,905)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense -- (112,162) -- (256,644)
Other income (expense) -- -- -- 25
----------- ----------- ----------- -----------
Total other income (expense) -- (112,162) -- (256,619)

LOSS BEFORE INCOME TAXES AND
DISCONTINUED OPERATIONS (34,581) (143,514) (95,431) (326,524)

INCOME TAX (BENEFIT) PROVISION -- -- -- --

LOSS FROM CONTINUING OPERATIONS (34,581) (143,514) (95,431) (326,524)

LOSS FROM DISCONTINUED OPERATIONS -- (506,181) -- (350,021)
----------- ----------- ----------- -----------
NET LOSS (34,581) (649,695) (95,431) (676,545)
============ =========== =========== ===========

Preferred stock dividend (18,338) (18,338) (36,676) (36,676)

NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS $ (52,919) $ (668,033) $ (132,107) $ (713,221)
============ =========== =========== ===========
Weighted average number of common shares:
Basic and diluted 7,275,048 7,275,048 7,275,048 7,275,048
============ =========== =========== ===========
Loss per common share:
Basic and diluted $ (0.01) $ (0.09) $ (0.02) $ (0.10)
============ =========== =========== ===========

See accompanying notes to condensed consolidated financial statements.

PROLOGIC MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

INCREASE (DECREASE) IN CASH SIX MONTHS ENDED SEPTEMBER 30,
2004 2003
----------- -----------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (95,431) $(676,548)

Adjustments to reconcile net loss to net cash provided
by operating
Activities:
Issuance of warrants for services -- 9,400
Change in assets and liabilities:
Prepaid expenses 8,782 --
Accounts payable 86,011 8,726
--------- ---------
Net cash provided by (used in) continuing operations (638) (658,422)
--------- ---------
Net cash provided by (used in) discontinued operations -- 227,092
--------- ---------
Net cash provided (used in) by operating activities (638) (431,330)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment -- (3,170)
--------- ---------
Net cash used in investing activities -- (3,170)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in line of credit
-- 405,000
Proceeds from debt -- 91,120
--------- ---------
Net cash provided by (used in) financing activities -- 496,120
--------- ---------
Net increase (decrease) in cash (638) 61,620

Cash, beginning of period 1,581 216,904
--------- ---------
Cash, end of period $ 943 $ 278,524
========= =========
SUPPLEMENTAL STATEMENT OF CASH FLOW INFORMATION:
Cash paid during the quarter for interest $ -- $ 45,044
Cash paid during the quarter for taxes -- --

NON-CASH FINANCING AND INVESTING ACTIVITIES:
Warrants issued for services performed $ -- $ 9,400

See accompanying notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation - Interim Periods

The accompanying unaudited condensed consolidated financial statements
include the accounts of Prologic Management Systems, Inc. (the
"Company") and its wholly-owned subsidiary, BASIS, Inc. ("BASIS"). All
significant inter-company balances and transactions have been
eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements
have been prepared by the Company in accordance with generally accepted
accounting principles, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
accompanying condensed consolidated financial statements include all
adjustments (of a normal recurring nature) which are necessary for a
fair presentation of the results for the interim periods presented.
Certain information and footnote disclosures normally included in
financial statements have been condensed or omitted pursuant to such
rules and regulations. Although the Company believes that the
disclosures are adequate to make the information presented not
misleading, these financial statements should be read in conjunction
with the consolidated financial statements and the notes thereto
included in the Company's Report on Form 10-KSB for the fiscal year
ended March 31, 2004. The results of operations for the three-month
periods ended September 30, 2004 and 2003 are not necessarily
indicative of the results to be expected for the full fiscal year.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As
previously reported in its Report on Form 10-KSB for the fiscal year
ended March 31, 2004, as a result of a foreclosure action, the Company
has no business operations and has negative working capital and a
stockholders' deficit. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The Company's
independent auditors qualified their opinion on the Company's March 31,
2004 financial statements by including an explanatory paragraph in
which they expressed substantial doubt about the Company's ability to
continue as a going concern.

2. Foreclosure Action.

As previously reported in its Report on Form 10-KSB, On February 24,
2004, GE Access foreclosed on and took possession of all of the assets
of Prologic Management Systems, Inc. and the Company's BASIS, Inc.
subsidiary, resulting in a consolidated balance sheet on February 29,
2004, showing zero tangible assets. As part of the foreclosure
agreement, GE Access agreed to waive its deficiency claim against the
Company subject to certain terms and conditions placed on the Company.
This included compliance with the conditions of the foreclosure and
representations by the Company as to asset disclosure. As of the date
of this report, the Company believes it is in compliance with these
terms and conditions and that the deficiency claim should be released
under the terms and conditions of the foreclosure agreement.

As of the date of this filing, the Company has no operations and no
sources of revenue. The Company does not have any current agreements or
plan to replace the assets or business units taken under the
foreclosure action. Please note that the financial information
contained herein is historical and should be not taken as any
indication of any future performance.

The Company continues to negotiate its obligations with the individual
creditors. Management is considering a liquidation of its BASIS
subsidiary through Chapter 7 of the United States Bankruptcy Code. The
ultimate settlement of the obligations may result in amounts different
than the carrying values at September 30, 2004.

3. Creditor Legal Proceedings.

As previously reported in its Report on Form 10-KSB for the year ended
March 31, 2004, the Company is currently engaged with four creditors in
legal proceedings. All of these actions were filed prior to February
24, 2004 foreclosure action (SEE PART II, ITEM 1 LEGAL PROCEEDINGS).

4. Earnings Per Share

FASB Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS 128") provides for the calculation of Basic and Diluted
earnings per share. Basic earnings per share includes no dilution and
is computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of the entity. For the
three month periods ended September 30, 2004 and September 30, 2003,
potential common stock, consisting of stock options, warrants and
convertible preferred stock totaling 1,977,111, and 2,167,411,
respectively, are excluded from the computation of diluted earnings per
share because they are antidilutive.

5. Stock-Based Compensation

The Company accounts for employee stock options or similar equity
instruments in accordance with Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation"
(SFAS No. 123). SFAS No. 123 defines a fair-value-based method of
accounting for employee stock options or similar equity instruments.
This statement gives entities a choice to recognize employee related
compensation expense by adopting the new fair-value method or to
measure compensation using the intrinsic value method under Accounting
Principles Board (APB) Opinion No. 25 "Accounting for Stock Issued to
Employees", the former standard. If the former standard for measurement
is elected, SFAS No. 123 requires supplemental disclosure to show the
effect of using fair value measurement criteria. The Company has
elected to account for its stock-based compensation plans under APB No.
25.

6. Recently Issued Accounting Pronouncements

In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - an Amendment to
SFAS No. 123." SFAS No. 148 provides alternative methods of transition
for a voluntary change to the fair value based method on accounting for
stock-based employee compensation. The Company currently does not
intend to adopt SFAS No. 123 and accordingly does not expect the
implementation of SFAS No. 148 to have a material effect on the
Company's consolidated financial position or results of operations.

In June 2003 the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity" SFAS No. 150 requires certain instruments, including
mandatorily redeemable shares, to be classified as liabilities, not as
part of shareholders' equity or redeemable equity. For instruments that
are entered into or modified after May 31, 2003, SFAS No. 150 is
effective immediately upon entering the transaction or modifying the
terms. For other instruments covered by Statement 150 that were entered
into before June 1, 2003, Statement 150 is effective for the first
interim period beginning after June 15, 2003. The Company has evaluated
the provisions of SFAS No. 150. The redeemable preferred stock does not
meet the criteria for classification as liabilities in accordance with
SFAS No. 150. Therefore, all of preferred stock that was previously
presented between liabilities and equity on the balance sheet remains
presented as such.

In November 2002, the FASB issued interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees. Including
indirect Guarantees of Indebtedness of Others," which disclosures are
effective for financial statements for periods ending after December
15, 2002. While the Company has various guarantees included in
contracts in the normal course of business, primarily in the form of
indemnities, these guarantees would only result in immaterial increases
in future costs, but do not represent significant commitments or
contingent liabilities of the indebtedness of others.

In January 2003, the FASB issued interpretation No. 46, "Consolidation
of Variable Interest Entities" (FIN 46) which requires the
consolidation of variable interest entities, as defined. FIN 46 is
applicable immediately for variable interest entities created after
January 1, 2003. For variable interest entities created prior to
January 1, 2003, the provisions of FIN 46 are applicable no later than
July 1, 2003. The Company does not currently believe that any material
entities will be consolidated as a result of FIN 46.

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

Statements contained in this Quarterly Report on Form 10-QSB, which are not
purely historical, are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E of the U.S.
Securities Exchange Act of 1934, as amended and the Securities Litigation Reform
Act of 1995, including but not limited to statements regarding the Company's
expectations, hopes, beliefs, intentions or strategies regarding the future.
Action results could differ materially from the projected in any forward-looking
statements as a result of a number of factors, including those detailed in "Risk
Factors" below and elsewhere in this Report on Form 10-QSB. The forward-looking
statements are made of the date hereof, and the Company assumes no obligation to
update the forward-looking statements, or to update the reasons why actual
results could differ materially from those projected in the forward-looking
statements.

INTRODUCTION

Prior to the foreclosure action in February of 2004, the Company
provided systems integration services, technology products and related services.
The majority of the Company's revenues were generated from systems integration
and related product sales. However, as a result of this foreclosure, the Company
ceased to have business operations. For additional information on the combined
operating results of the Company and its subsidiary for the prior fiscal year,
see the Consolidated Financial Statements of the Company and Notes thereto
contain in the Annual Report on Form 10-KSB for the fiscal year ended March 31,
2004. The discussion should be read in conjunction with and is qualified in its
entirety by the Consolidated Financial Statements of the Company and Notes
thereto.

The Company's securities were delisted from both the NASDAQ Stock
Market and the Boston Stock Exchange in August 1998. Delisting resulted from the
Company's failure to maintain the minimum net tangible asset requirement of the
NASDAQ Stock Market. Trading of the Company's securities may continue to be
conducted on the OTC Electronic Bulletin Board or in the non-NASDAQ
over-the-counter market. As a result, a holder of the Company's securities may
find it more difficult to dispose of, or to obtain accurate quotations as to the
market value of, the Company's securities. In addition, purchases and sales of
the Company's securities may be subject to Rule 15g-9 (the "Rule") promulgated
by the Securities and Exchange Commission (the "SEC"). The Rule imposes various
sales practice requirements on broker-dealers who sell securities governed by
the Rule to persons other than established customers and accredited investors
(generally institutions with assets in excess of $5 million or individuals with
a net worth in excess of $1 million or annual income exceeding $200,000 or
$300,000 jointly with their spouse). For transactions covered by the Rule, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. Consequently, the Rule may have an adverse effect on the ability of
broker-dealers to sell the Company's securities and may affect the salability of
the Company's securities in the secondary market.

The SEC has also adopted rules that regulate broker-dealer practices in
connection with transactions in "penny stocks." Penny stocks generally are
equity securities with a price less than $5.00 per share, other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system. With the Company's securities delisted from the NASDAQ Small Cap Market,
they may come within the definition of penny stocks because the trading price of
the Company's common stock is currently below the $5.00 per share threshold. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not exempt from the rules, to deliver a standardized document prepared by
the SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer must also provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information must be given to the customer prior to
effecting the transaction. These disclosure requirements may have the effect of
reducing the level of trading activity in the secondary market for a stock that
becomes subject to the penny stock rules.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

DEFERRED INCOME TAX ASSETS

Management evaluates the probability of the utilization of the deferred
income tax assets. The Company has estimated a $4,780,000 deferred income tax
asset at September 30, 2004, related primarily to net operating loss
carryforwards at September 30, 2004. Management determined that because the
Company has divested of all of its revenue generating operations, there is a
significant uncertainty relative to the Company's prospective to generate future
taxable income. Therefore, it was not appropriate to recognize a deferred income
tax asset related to the net operating loss carryforward. The full deferred
income tax asset is offset by an equal valuation allowance. If the Company
begins to generate taxable income, Management may determine that some, if not
all of the deferred income tax asset may be recognized. Recognition of the asset
could increase after tax income in the future. Management is required to make
judgments and estimates related to the timing and utilization of net operating
loss carryforwards, utilization of other deferred income tax assets, applicable
tax rates and feasible tax planning strategies.

CARRYING VALUE OF OBLIGATIONS

Management is contemplating a liquidation of its BASIS subsidiary through
Chapter 7 of the United States Bankruptcy Code. The BASIS subsidiary has
obligations of approximately $3,000,000 at September 30, 2004. Should the
settled these obligations in a liquidation or otherwise, the ultimate settlement
amounts could vary significantly from the carrying value of the obligations. The
carrying value of the obligations at September 30, 2004, represent management's
estimate of the obligation amounts considering the original liability and
considers other factors such as potential methods of settling the obligation
based on communications with the creditors. The Company wrote off certain
obligations to the primary creditor in the year ended March 31, 2004. The
creditor has agreed to waive its deficiency claim against the Company subject to
certain terms and conditions placed on the Company. This includes compliance
with the conditions of the foreclosure and representations by the Company as to
asset disclosure. Management believes that the Company has complied with these
terms and conditions. The Company does not have knowledge of an amount of a
potential deficiency claim. However, on the basis of the net book value of
assets and liabilities at the time of the disclosure, the deficiency could be
$6,000,000.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

GENERAL AND ADMINISTRATIVE. General and administrative expenses for the
second quarter ended September 30, 2004 were $34,581, as compared to $31,352 for
the same period of the previous year. The increase in these expenses is
attributable to the expenses related to the reorganization efforts for the
Company.

OPERATING INCOME (LOSS). Operating loss for the quarter ended September
30, 2004 was $34,581, as compared to an operating loss of $31,352 for the same
period of the previous year.

INTEREST EXPENSE AND OTHER INCOME. The interest expense and other
income was $112,162 for the same period of the previous year. Due to the
insolvency of the Company, no interest expense was accrued for the current
quarter ended September 30, 2004. Expenses for the prior year is composed
primarily of interest incurred on the approximately $10 million in notes payable
and advances payable and other short-term obligations.

INCOME (LOSS) FROM CONTINUING OPERATIONS. The loss from continued
operations for the quarter ended September 30, 2004 was $34,581, as compared to
$143,514 for the same period of the prior fiscal year.

INCOME (LOSS) FROM DISCONTINUED OPERATIONS. The operating loss from
discontinued operations was $506,181 for the same period of the prior fiscal
year.

INCOME TAXES. The Company had no income tax expense for the first and
second quarters of fiscal 2005 and 2004. As of September 30, 2004, the Company
had Federal net operating loss carry forwards of approximately $12,210,000. The
utilization of net operating loss carry forwards will be limited pursuant to the
applicable provisions of the Internal Revenue Code and Treasury regulations.

NET LOSS. Net loss for the quarter ended September 30, 2004 was
$34,581, or a loss of approximately $0.01 per share, compared to a loss of
$649,695, or a loss of approximately $0.09 per share, for the same period of the
previous year. The increase in net loss was due to the foreclosure action and
the resultant loss of income from Discontinued Operations.

SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

GENERAL AND ADMINISTRATIVE. General and administrative expenses for the
first six months of fiscal 2005 were $95,431, as compared to $69,905 for the
same period of the previous year. The increase in these expenses is attributable
to the expenses related to the reorganization efforts for the Company.

OPERATING INCOME (LOSS). Operating loss for the first six months of
fiscal 2005 was $95,431, as compared to an operating loss of $69,905 for the
same period of the previous year.

INTEREST EXPENSE AND OTHER INCOME. The interest expense and other
income was $256,619 for the same period of the previous year. Due to the
insolvency of the Company, no interest expense was accrued for the first six
months of fiscal 2005. Expenses for the prior year is composed primarily of
interest incurred on the approximately $10 million in notes payable and advances
payable and other short-term obligations.

INCOME (LOSS) FROM CONTINUING OPERATIONS. The loss from continued
operations for the first six months of fiscal 2005 was $95,431, as compared to
$326,524 for the same period of the prior fiscal year.

INCOME (LOSS) FROM DISCONTINUED OPERATIONS. The operating loss from
discontinued operations was $350,021 for the same period of the prior fiscal
year.

NET LOSS. Net loss for the first six months of fiscal 2005 was $95,431, or a
loss of approximately $0.02 per share, compared to a loss of $676,545, or a loss
of approximately $0.10 per share, for the same period of the previous year. The
increase in net loss was due to the foreclosure action and the resultant loss of
income from Discontinued Operations.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2004 the Company had a working capital deficit of
approximately $4,001,000 versus a deficit of approximately $3,869,000 at March
31, 2004. As a result of the working capital deficit at March 31, 2003 (the
Company's fiscal year end), the Company's independent certified public
accountants have expressed substantial doubt about the Company's ability to
continue as a going concern. The total cash balance at September 30, 2004 was
$943.
Cash used by continuing operations for the six months ended September
30, 2004 was $638 compared to cash used by continuing operations of $658,422 in
the same period of the previous year. Cash provided by discontinued operations
for the six months ended September 30, 2003 was $227,092. Total net cash used in
operating activities for the six months ended September 30, 2004 was $638
compared to cash used by operating activities of $431,330 in the same period of
the previous year. Cash provided by financing activities for the six months
ended September 30, 2003 was $496,120.

During the six months ended September 30, 2003, the Company purchased
$3,170 of capital equipment or software.

Historically the Company has been unable to generate sufficient
internal cash flows to support operations, and has been dependent upon outside
capital sources to supplement cash flow. New equity investments, lines of credit
and other borrowings, and credit granted by its suppliers have enabled the
Company to sustain operations over the past several years. In August 1998, the
Company had failed to meet the "continued listing criteria" established by
NASDAQ and the Company's securities were delisted from the NASDAQ Small Cap
Market. The subsequent lack of shareholder liquidity in the Company's securities
has materially adversely affected the Company's ability to attract equity
capital. Additionally, the lack of capital resources has precluded the Company
from effectively executing its strategic business plan. The ability to raise
capital and maintain credit sources is critical to the continued viability of
the Company.

At September 30, 2004, the Company had current debt obligations, or
debt that will become due within twelve months, of $4,001,000. Of these
obligations, approximately $1,000,000 are specific obligations of Prologic and
the remaining $3,000,000 are related to the Company's operating subsidiary
BASIS, Inc. and its former operating division Solid Systems. The Company will
not be able to service or repay any of this debt. As a result, the Company will
need to renegotiate the terms of these obligations; conversion to equity; and
any other means to eliminate the debt to allow the Company to attract additional
capital. The Company continues to review its strategic alternatives, including
raising capital through debt or equity financing in conjunction with the
conversion of the existing debt.

PLAN OF OPERATIONS

In light of the foreclosure action, the management focus is on trying
to restructure the debt on the balance sheet with the intent of converting a
significant amount of the debt to equity. If this can be accomplished
effectively and in a reasonable period of time, management would then consider
the acquisition or merger with one or more companies, which would be a good
candidate for the public entity. Currently, the board intends to work with
existing shareholders in order to achieve these goals. However, it is likely
that in conjunction with any such suitable acquisition or merger, the Company
would likely need to raise capital to provide the necessary working capital for
the consolidated entity. The Company has no commitments at this time from third
parties for any such financing and/or any acquisitions or mergers.

RISK FACTORS

An investment in the Company should be considered speculative, and to a
high degree of risk. In addition to the other information contained in the
Annual Report on Form 10-KSB for the fiscal year ended March 31, 2004,
prospective investors should carefully consider the following risk and
speculation factors:

UNPROVEN PLAN OF OPERATIONS. As a consequence of the change of control
of the Registrant in March of 2004 and the foreclosure on the business assets
and operations, all efforts that were previously initiated in an attempt to
develop a viable systems integration business have been abandoned at this time.
In place thereof, the Company has adopted as a new plan of operations the
strategy of reorganizing the Company's creditors and then attracting capital
based on a new business operation. To date, the Company has no agreements or
plans to acquire any new business operations. In the near term, the Company is
focusing on continued timely SEC reporting and working with creditors. There can
be no assurance that the intended business and operations of the Company will be
successful. Any future success that the Company might enjoy will depend on many
factors including factors which may be beyond the control of the Company, or
which cannot be predicted at this time. The Company may encounter unforeseen
difficulties or delays in the implementation of its plan of operations. There
can be no assurance that such difficulties or delays will not have a material
adverse effect upon the financial condition, business prospects and operations
of the Company and the value of an investment in the Company. The value of an
investment in the Company can also be adversely affected by a number of external
factors, such as conditions prevailing in the securities markets and/or the
economy generally. Consequently, an investment in the Company is highly
speculative and no assurance can be given that purchasers of the Company's
securities will realize any return on their investment or that purchasers will
not lose their entire investment.

ISSUANCE OF ADDITIONAL SECURITIES. The Company may be required to issue
additional shares of Common Stock to raise capital and/or satisfy existing
creditors. The Company may need to issue additional shares of Common Stock in
connection with a prospective acquisition, in lieu of wages and services
provided to the Company, upon exercise of stock option grants, or for another
corporate purpose. Issuance of additional shares of Common Stock would result in
dilution of the percentage interest in the Company's Common Stock of all
stockholders ratably, and might result in dilution in the book value of a share
of the Company's Common Stock, depending on the price and other terms on which
the additional shares are issued.

LACK OF OPERATING CAPITAL. The Company does not have adequate working
capital to execute it's current short term operating plans and is dependant on
receiving capital and/or assistance from several of the Company's stockholders.
Continued support from the shareholders is critical to the effective
reorganization efforts of the Company and without this support, it is doubtful
the Company would be able to execute its short-term plans. During the first two
fiscal quarters ended September 30, 2004, shareholders have provided
approximately $90,000 in services and payments made on behalf of the Company.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

Management's discussion and analysis should be read in conjunction with
the Consolidated Financial Statements contained elsewhere in this quarterly
report on Form 10-QSB for the quarter ended June 30, 2004. Except for the
historical information contained herein, the matters discussed in this report on
Form 10-QSB are forward-looking statements that involve a number of risks and
uncertainties. There are numerous important factors and risks, including the
rapid change in market conditions, the anticipation of growth of certain market
segments, the volatility inherent in the capital and financial markets, the
Company's ability to manage acquisitions and attract and retain highly skilled
technical, managerial and sales and marketing personnel, and the other risks
detailed from time to time in the Company's SEC reports, including reports on
Form 10-KSB and Form 10-QSB, that could cause results to differ materially from
those anticipated by the forward-looking statements made herein.

Therefore, historical results and percentage relationships will not
necessarily be indicative of the operating results of any future period. This is
especially important given the recent foreclosure action and the fact that the
Company has no operations and no sources of revenue. The Company does not have
any current plans or agreements to replace the assets or business units taken
under the foreclosure action. Please note that the financial information
contained herein is historical and should be not taken as any indication of any
future performance.

ITEM 3. CONTROLS AND PROCEDURES

Within the 90 days prior to the filing of this report, the Company has
carried out an evaluation, under the supervision and with the participation of
our chief executive officer ("CEO") and chief financial officer ("CFO"), of the
effectiveness of the design and operation of our disclosure controls and
procedures as defined in Rule 15d-14(c) under the Securities and Exchange Act of
1934. Based on this evaluation, our CEO and CFO concluded that our disclosure
controls and procedures are effective to ensure that information required to be
disclosed in our reports that we file with or submit to the Securities and
Exchange Commission ("SEC") is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms.

In addition, we reviewed our internal controls, and there have been no
significant changes in our internal controls or in other factors that could
significantly affect those controls subsequent to the date of the last
evaluation.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As previously reported, on August 1, 2000, certain holders of the
Company's Series B Convertible Preferred Stock filed an action in the
Arizona Superior Court, Pima County (PACE INVESTMENT CO., INC., ET AL.
V. PROLOGIC MANAGEMENT SYSTEMS, INC., CV 20003999). The Company filed a
counterclaim against the Plaintiffs, petitioning the court to, amongst
other things, affirm the Company's position and deny the Plaintiffs'
claims. During the prior fiscal year, the parties agreed to dismiss all
claims without prejudice. The parties intend to resolve the dispute
without the aide of the courts.

HOLUALOA BUTTERFIELD INDUSTRIAL LLC V. PROLOGIC MANAGEMENT SYSTEMS,
INC., C20035918, Superior Court for the State of Arizona in and for the
County of Pima, filed October 23, 2003. A complaint was filed by
Holualoa against Prologic to collect approximately $194,000 allegedly
owed by Prologic for the lease of office space in Tucson, Arizona. The
plaintiff requested from the court an Entry of Default and it was
granted on March 11, 2004 for a total amount of $196,028, which
includes costs and legal fees of $5,898.

JONATHAN NEIL & ASSOCIATES, INC. V. BASIS, INC., RG03-120611, Superior
Court, State of California, Alameda County, filed October 7, 2003. A
complaint was filed by Jonathan Neil & Associates against Basis to
collect approximately $265,000 owed by Basis to Pioneer Standard
Electronics, Inc. On December 8, 2003, the plaintiff requested from the
court an Entry of Default. An Entry of Default was granted on January
12, 2004 for a total amount of $373,919 which includes interest of
$83,332, plus costs and legal fees of $25,312.

AVNET COMPUTER MARKETING GROUP V. PROLOGIC MANAGEMENT SYSTEMS, INC.,
C20032814, Superior Court for the State of Arizona in and for the
County of Pima, filed May 19, 2003. A complaint was filed by Avnet
against Prologic to collect approximately $150,000 owed by Prologic to
Avnet. Prologic does not deny this debt and has agreed to a stipulated
judgment for the full debt owed in this matter. An Entry of Default was
granted on January 13, 2004 for a total amount of $150,522, which
includes costs and legal fees of $212.

NEXTERA BUSINESS PERFORMANCE GROUP, INC. V. PROLOGIC MANAGEMENT
SYSTEMS, INC., MICV2003-05209-H, Superior Court, Commonwealth of
Massachusetts, Middlesex County, filed December 23, 2003. A complaint
was filed by Nextera against Prologic to collect approximately $80,000
owed by Prologic under the terms of a promissory note. On April 14,
2004, the plaintiff requested from the court an Entry of Default. An
Entry of Default was granted on May 28, 2004 for a total amount of
$85,340, which includes interest of $17,340.

ITEM 2. CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

See Notes to Condensed Consolidated Financial Statements - Foreclosure
Action.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE BY SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

A. Exhibits filed herewith:

31.1 Certification of Chief Executive Officer pursuant to Item 601(b)(31) of
Regulation S-B. (Filed herewith)

32.1 Certification of Chief Executive Officer pursuant to item 601(b)(32) of
Regulation S-B. (Filed herewith)

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

PROLOGIC MANAGEMENT SYSTEMS, INC.

DATED: November 10, 2004 By: /S/ JAMES M. HEIM
--------------------------------
James M. Heim
Chief Executive Officer