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

                                   FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the fiscal year ended March 31, 2006.

Commission file number: 33-89384-LA

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

           Arizona                                    86-0498857
 (State or other jurisdiction             (I.R.S. Employer Identification No.)
of 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 and Warrants to Purchase 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 [ ].

Check if disclosure of delinquent filers pursuant to Item 405 of Regulations S-B
is not contained in this form, and no disclosure will be contained,  to the best
of the registrant's  knowledge,  in definitive  proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

The Issuer's had no revenue for its most recent fiscal year.

As of June 1, 2006,  the  aggregate  market value of 5,358,514  shares of voting
stock  held by  non-affiliates  of the  issuer  (calculated  using the  reported
closing sale price of the common stock on the OTC Bulletin  Board) was $107,700.
This  calculation  does not reflect a  determination  that  certain  persons are
affiliates of the registrant for any other purposes.

Number of shares of common stock outstanding on March 31, 2006 was 7,301,364.

Transitional Small Business Disclosure Format: Yes [ ]; No [X].

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None


<PAGE>



                                     PART I

RECENT DEVELOPMENTS

Creditor Negotiations.
----------------------

     As  of  March  31,  2006,  the  Company  had  approximately  $1,606,000  of
liabilities and obligations to third parties. The Company continues to negotiate
its  obligations  with the  individual  creditors.  In addition,  the Company is
reviewing  its options for  reorganization  under the United  States  Bankruptcy
Code.  Should these  obligations  be settled in  liquidation  or otherwise,  the
ultimate  settlement amounts could vary significantly from the carrying value of
the  obligations.  The  carrying  value of the  obligations  at March 31,  2006,
represents  management's  estimate of the  obligation  amounts  considering  the
original  liability and other factors such as potential  methods of settling the
obligation  based on  communications  with the  creditors.  (See  Liquidity  and
Capital Resources and Footnotes to Financial Statements).


ITEM 1. BUSINESS

General
-------

     Prologic Management Systems, Inc. (the "Company") is an Arizona corporation
founded in 1984.  The  Company  and its former  subsidiary,  BASIS,  Inc.,  were
subject to  foreclosure  action in  February of 2004.  Prior to the  foreclosure
action, the Company provided systems integration  services,  technology products
and related  services.  As a result of this  foreclosure,  the Company ceased to
have any operating business or sources of revenue.

     Effective  March 24, 2005, the Corporate  Charter of BASIS,  Inc., a wholly
owned subsidiary of the Company,  was dissolved  administratively by the Arizona
Corporation  Commission for the failure to file an annual report. At the time of
dissolution,  BASIS, Inc.  ("BASIS") was not conducting any business and had not
conducted any business for over one year.

     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.

     Management is reviewing  options regarding the solvency and creditor issues
facing the Company, as well as looking at potential business  opportunities that
may be appropriate for the Company's long-term growth strategy.

     The Company's  corporate office is located at 4633 E. Broadway Blvd., Suite
110, Tucson, Arizona 85711 and its telephone number is (520) 955-4748.

     All of the  information  provided  herein  regarding the operations and the
financial  performance  of the Company are provided for historical and financial
reporting purposes. The operations and the respective performance for the fiscal
year ending March 31, 2006, as well as prior fiscal years, will provide no basis
for any future activities.

Employees
---------

     As of March 31, 2006, the Company had one employee serving as President and
Chief Executive Officer.


                                                                               2
<PAGE>


ITEM 2. PROPERTIES

     The Company's  administrative and accounting records are located in Tucson,
Arizona in a storage facility  consisting of approximately 300 square feet under
a month-to-month lease.

     If the Company were to require  additional  or  alternate  space within the
next twelve  months,  the Company  believes  that space  sufficient  to meet its
requirements would be available on commercially reasonable terms.


ITEM 3. LEGAL PROCEEDINGS

     The Company  acknowledges  the possibility  that creditors,  vendors and/or
former employees in the future may file lawsuits as a result of the cessation of
business operations.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SHAREHOLDERS

     No matters  were  submitted to a vote of security  holders  during the year
ended March 31, 2006.



                                                                               3
<PAGE>



                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company  completed its initial  public  offering on March 15, 1996 at a
price of $5.00 per share of Common  Stock and $0.125 per Warrant  (each  warrant
entitling the holder to purchase one share of common stock at an exercise  price
of $6.00). The Company's common stock warrants expired unexercised in the fiscal
year ended March 31, 1999. The Company's  securities  were delisted from trading
on the NASDAQ  Small Cap Market and the Boston  Stock  Exchange in August  1998,
following  which  trading of the  Company's  common  stock has  continued  to be
conducted on the non-NASDAQ  over-the-counter  ("OTC") market,  under the symbol
PRLO.  Trading of the Company's common stock in the OTC market has been sporadic
and generally at very low reported  daily  volumes.  Until the  Company's  stock
began trading on the OTC Bulletin Board, there had been no active market for the
Company's common stock since it was delisted from the NASDAQ Small Cap Market in
August 1998.

     The table below  represents  the high and low bid prices for the  Company's
common stock,  as reported by the National  Quotation  Bureau,  for the quarters
ended June 30, 2004  through  March 31, 2006.  The  quotations  shown  represent
inter-dealer  prices  without  adjustment  for  retail  mark-ups,  mark downs or
commissions, and may not necessarily reflect actual transactions.

                                                        Common Stock
     Quarter Ended                                 High              Low
     -------------                               ---------         --------

     June 30, 2004                                 $0.07            $0.04
     September 30, 2004                            $0.04            $0.025
     December 31, 2004                             $0.03            $0.014
     March 31, 2005                                $0.03            $0.011
     June 30, 2005                                 $0.025           $0.012
     September 30, 2005                            $0.02            $0.010
     December 31, 2005                             $0.03            $0.010
     March 31, 2006                                $0.08            $0.015


     As of March 31, 2006, there were  approximately  200 shareholders of record
of the Company's  common stock.  The Company has neither  declared nor paid cash
dividends on its common stock in the past,  and currently  intends to retain any
earnings  for use in the  business  and  does  not  anticipate  paying  any cash
dividends on its common stock in the foreseeable future.  During the fiscal year
ended March 31, 2006, no dividends were paid to holders of the Company's  Series
A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock.


                                                                               4
<PAGE>




Recent Sales of Unregistered Securities
---------------------------------------

     Fiscal Year Ended March 31, 2006
     --------------------------------

          1.   During the fiscal  year,  the  Company  issued  26,316  shares of
               common  stock in fiscal year ended March 31, 2006 in exchange for
               the conversion of $10,000 in debt. The shares were not registered
               with the  Securities  and Exchange  Commission and are subject to
               the customer restrictions on resale.


     Fiscal Year Ended March 31, 2005
     --------------------------------

          1.   None.





                                                                               5
<PAGE>



ITEM 6. MANAGEMENT'S DISCUSSION & ANALYSIS OR PLAN OF OPERATIONS


General
-------

     Statements  contained in this Annual  Report on Form 10-KSB,  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  those   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 Annual  Report on Form
10-KSB. The  forward-looking  statements are made as 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. 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


                                                                               6
<PAGE>

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.


Plan of Operations
------------------

     In light of the foreclosure  action,  the management  focus is on trying to
restructure  the  remaining  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,  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 in the prior fiscal year, 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

                                                                               7
<PAGE>

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 its 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.


Results of Operations
---------------------

     General  and  Administrative.  General  and  administrative  expenses  were
$185,384 for the fiscal year ended March 31,  2006,  as compared to $173,012 for
the same period of the prior  fiscal  year.  The  increase in these  expenses is
attributable to the foreclosure and subsequent creditor  re-organization efforts
during the current fiscal year. The Company expects  general and  administrative
expenses to increase if it is successful in reorganizing the creditors,  raising
capital and executing a new business plan or  completing  an  acquisition.  (See
Plan of Operations).

     Operating  Income  (Loss).  Operating loss was $185,384 for the fiscal year
ended March 31,  2006,  as compared to a loss of $173,012 for the same period of
the prior fiscal year. The increase in the operating loss is attributable to the
foreclosure and subsequent creditor  re-organization  efforts during the current
fiscal year.

     Interest Expense and Other Expense (Income). Due to the Company's financial
insolvency,  no interest  expense  was  accrued for the current or prior  fiscal
year. For the fiscal year ended March 31, 2006, the Company issued 26,316 shares
of  common  stock in  fiscal  year  ended  March 31,  2006 in  exchange  for the
conversion  of $10,000 in debt.  The trading value of the shares at the time the
agreement was entered into was $394 resulting in a gain of $9,606.

     Income (Loss) from Continuing Operations.  The loss from operations for the
fiscal year ended March 31,  2006 was  $175,778 as compared to $173,012  for the
same period of the prior fiscal year.

     Income  (Loss)  from  Discontinued  Operations.   In  connection  with  the
corporate  dissolution  of Basis,  Inc. in the prior  fiscal  year,  the Company
reported  debt  extinguishment  income of  $2,757,617  for the fiscal year ended
March 31, 2005.

     Income  Taxes.  The Company had no income tax expense for the fiscal  years
ended March 31, 2006 and 2005. As of March 31, 2006, the Company had federal net
operating loss  carryforwards  of  approximately  $9,012,000  (See Note 5 to the
Consolidated   Financial  Statements  for  a  further  discussion  of  the  loss
carryforwards).  The  utilization  of net operating  loss  carryforwards  may be
significantly  limited as determined  pursuant to  applicable  provisions of the
Internal Revenue Code and U.S. Treasury regulations thereunder.

     Net Income  (Loss).  The  Company  had net loss of  $175,778,  or $0.03 per
share,  for the fiscal year ended March 31,  2006,  as compared to net income of
$2,584,605,  or $0.34 per share,  for the same period of the prior  fiscal year.
The income in the prior  fiscal  year was a result of the  one-time  gain on the
reduction in debt related to the dissolution of the Company's former  subsidiary
BASIS, Inc.


                                                                               8
<PAGE>


Liquidity and Capital Resources
-------------------------------

(See Recent Developments -- Creditor Negotiations)

     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
failed to meet the "continued  listing  criteria"  established by NASDAQ and the
Company's  securities  were  delisted  from the  NASDA  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.

     At  March  31,  2006,  the  Company  had  a  working   capital  deficit  of
approximately  $2,333,000 versus a deficit of approximately  $2,084,000 at March
31, 2005.  The cash balance at March 31, 2006 was $12. As a result,  the Company
is evaluating  the  alternatives  of  reorganizing  the creditors on a voluntary
basis and/or  having to place the Company  under the  protection  of the Federal
Bankruptcy Code.

     As a result of the working capital deficit and other factors, the Company's
independent  certified public accountants have expressed substantial doubt about
the Company's ability to continue as a going concern.

     Cash used by  operations  for the  fiscal  year  ended  March 31,  2006 was
approximately $329 compared to cash used by operations of $1,240 in fiscal 2005.
No cash was used in investing activities in the fiscal year ended March 31, 2005
or the fiscal  year ended March 31,  2006.  No cash was  provided  by  financing
activities  for the fiscal  year ended  March 31,  2005 or the fiscal year ended
March 31, 2006.

     During fiscal 2006, the Company purchased no capital equipment or software.

     At March 31, 2006, the Company had current debt  obligations,  or debt that
will become due within  twelve  months,  of  $1,606,000.  Of these  obligations,
approximately  $325,000 were accrued dividends and the remaining  $1,281,000 are
related to other  obligations.  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.


Critical Accounting Estimates
-----------------------------

     The  preparation of our financial  statements in conformity with accounting
principles  generally  accepted  in the United  States of America  requires  our
management to make certain  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.  As such, in accordance with
the use of  accounting  principles  generally  accepted in the United  States of
America,  our actual  realized  results  may differ  from  management's  initial
estimates  as reported.  A summary of our  significant  accounting  policies are
detailed  in the  notes  to  the  financial  statements  which  are an  integral
component of this filing.

Deferred  Income  Tax  Assets.  Management  evaluates  the  probability  of  the
utilization  of the deferred  income tax asset related to the net operating loss


                                                                               9
<PAGE>

carryforwards.  The Company has estimated a $3,070,000 deferred income tax asset
related  to net  operating  loss  carryforwards  at March 31,  2006.  Management
determined  that because of the  uncertainty of the Company to generate  taxable
income and that the generation of taxable income in the short term is uncertain,
it was  appropriate  to provide a  valuation  allowance  for the total  deferred
income tax asset.

Liabilities  Associated  With the Winding Up of  Operations.  As reported in the
annual  report on Form  10-KSB for the fiscal  year ended  March 31,  2004,  the
Company  entered  into a  foreclosure  action  with its primary  creditor.  As a
result,  substantially  all of the  Company's  assets  were  transferred  to the
creditor.  However, the Company has other creditors and commitments for which it
presently  has no  ability to repay.  The  Company is  attempting  to  negotiate
repayment  terms that may  include  conversion  of debt to equity.  The  Company
accrued  approximately  $200,000  at  March  31,  2004  for  lease  settlements.
Obligations  may  ultimately be settled at amounts  different  than the carrying
amounts at March 31, 2006.  However,  Management  believes that such settlements
will not exceed the carrying amounts at March 31, 2006.

Liabilities Associated With the Dissolution of a Subsidiary. Effective March 24,
2005,  the Corporate  Charter of BASIS,  Inc., a wholly owned  subsidiary of the
Company, was dissolved  administratively by the Arizona Corporation  Commission.
At the time of  dissolution  BASIS and Solid Systems,  an operating  division of
BASIS,  were not  conducting any business and had not conducted any business for
over one year. All of the substantive,  tangible and intangible assets of BASIS,
including  those of its Solid  Systems  division had been seized and  foreclosed
upon by a secured  creditor on or about February 24, 2004 leaving  approximately
$3,000,000  of debt  having  been  incurred  by BASIS with no assets  from which
payment  could be  made.  By law,  upon the  dissolution  of a  corporation  the
ownership of any assets of the corporation  pass, in trust, to its  shareholders
to be held and used to pay  creditors  of the  dissolved  corporation.  Upon the
dissolution  of BASIS no  assets  passed  to the  Company  because  BASIS had no
assets.  The Company does not otherwise  hold any assets of BASIS.  BASIS,  Inc.
operated as a  distinctly  separate  entity with Solid  Systems  operating  as a
division of BASIS,  Inc.  The  obligations  of BASIS were based on services  and
products provided directly to BASIS and/or Solid Systems. Further, management is
unaware of any  transfers  of any of these  products  or  services  to  Prologic
Management  System,   Inc.  Management  is  unaware  of  any  agreements  and/or
guarantees that were provided by Prologic Management Systems, Inc. Consequently,
management  does not believe  that a creditor of BASIS  would be  successful  in
asserting  that the  Company is to use any assets  held by the  Company to pay a
claim owed a creditor of BASIS.  The Company will contest any assertion  that it
has liability for the debt obligations of BASIS.  Consequently,  management does
not believe that a creditor of BASIS would be successful  in asserting  that the
Company is to use any assets  held by the Company to pay a claim owed a creditor
of BASIS.  The Company will contest any assertion  that it has liability for the
debt obligations of BASIS.


Recently Issued Accounting Pronouncements
-----------------------------------------

     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 is evaluating  the
provisions  of SFAS No.  150.  The  Company  anticipates  conversion  of all its
redeemable preferred stock into common stock and,  accordingly,  does not expect
SFAS No. 150 to have a material effect on the Company's  consolidated  financial
position or results of operations.

                                                                              10
<PAGE>

     In  December  2004 the FASB  issued a revised  Statement  123 (SFAS  123R),
"Accounting for Stock-Based  Compensation"  requiring public entities to measure
the cost of  employee  services  received  in  exchange  for an award of  equity
instruments based on grant date fair value. The cost will be recognized over the
period  during which an employee is required to provide  service in exchange for
the award -- usually the vesting period. The Company is evaluating the impact of
this new  pronouncement  and does not expect the effect of  implementation  will
have a significant impact on the Company's financial statements.

     In May 2005,  the FASB issued SFAS No. 154,  "Accounting  Changes and Error
Corrections a replacement  of APB Opinion No. 20 and FASB Statement No. 3." This
Statement  changes the  requirements  for the  accounting for and reporting of a
change in accounting  principle.  This Statement applies to voluntary changes as
well  as  those  changes  required  by  an  accounting   pronouncement  if  that
pronouncement does not include specific  transition  provisions.  This Statement
requires  retrospective  application to prior periods'  financial  statements of
changes  in  accounting  principle  as opposed  to being  shown as a  cumulative
adjustment  in the period of change.  The Statement is effective for all changes
and  corrections  of errors made in fiscal years  beginning  after  December 15,
2005.  The adoption of this  standard is not expected to  materially  impact 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
audited  Consolidated  Financial  Statements  contained elsewhere in this annual
report on Form 10-KSB for the fiscal year ended March 31,  2006.  Except for the
historical information contained herein, the matters discussed in this report on
Form 10-KSB 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.


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.

                                                                              11
<PAGE>

     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.


ITEM 7. FINANCIAL STATEMENTS

     The  financial  statements  attached to this Report on Form 10-KSB as pages
F-2 to F-19 are incorporated herein by reference.


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES

     There were no  disagreements  with the  accountants  on any  accounting and
financial disclosures.


                                                                              12
<PAGE>



                                    PART III.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     Information,  as of March 31, 2006,  concerning the names,  ages, terms and
positions with the members of the Company's Board of Directors and its executive
officers and their  respective  business  experience  is set forth  below.  Each
director  has  served  continuously  with the  Company  since  his  election  as
indicated below.

<TABLE>
<CAPTION>

Name                            Age     Position                                    Term of Office
----                            ---     --------                                    ---------------
<S>                             <C>     <C>                                         <C>
James M. Heim (1)(2)            54      Chief Executive Officer and Director        2004 - Present
John W. Schauweker(1)(2)        45      Director                                    2004 - Present
James S. Nichols (2)            48      Director                                    2004 - Present

(1) Member of Audit Committee.
(2) Appointed to serve as Directors on March 19, 2004.
</TABLE>


     JAMES M. HEIM,  Chief  Executive  Officer and Director.  Mr. Heim, 54, is a
co-founder  of  Prologic  and had  served as a  Director  from 1984 to 2003.  In
addition,  Mr. Heim served as Prologic's  President from 1984 to 1999 and as its
Chief  Financial  Officer  from  1984 to  1995.  Mr.  Heim  has over 20 years of
business management experience and was responsible for capital raising,  mergers
and acquisitions,  and other corporate  activities.  Mr. Heim holds both a Juris
Doctor  degree and a B.S.  in Business  Administration  from the  University  of
Arizona.  In March of this year,  Mr.  Heim was  appointed  to the board and was
elected to serve as the Company's President and Chief Executive Officer.

     JOHN W.  SCHAUWEKER,  Director.  Mr.  Schauweker,  45,  who has served as a
director since March of 2004 has worked in public accounting and in a variety of
executive  roles within the  information  technology and financial field for the
past 20 years.  Mr.  Schauweker  brings a depth of turn  around  experience  and
merger and  acquisition  experience  to the Board.  Mr.  Schauweker is a CPA and
currently is the General  Partner for the venture fund Argus  Partners,  LP. Mr.
Schauweker  received a B.S. in Finance from the  University  of Houston at Clear
Lake with  Honors  and is a member  of the Texas  Society  of  Certified  Public
Accountants.

     JAMES S. NICHOLS,  Director.  Mr. Nichols, 48, who has served as a Director
since 2004 is a Senior Systems Engineering  Executive with over twenty two years
of experience in multiple areas of computer engineering and management including
sales, support and service, business development,  market area design, financial
planning,  re-engineering  and team  leadership  with  such  companies  as Texas
Instruments,  Vector  Companies  USA,  Solid  Systems and Kintera.  Mr.  Nichols
received his B.S. in Mechanical Engineering from the University of Wyoming.


                                                                              13
<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

     Information  below  sets  forth  certain  information   regarding  business
experience  and  compensation  paid or awarded by the Company  during the fiscal
year ended March 31, 2006 to Mr. James M. Heim,  the Company's  Chief  Executive
Officer.

<TABLE>
<CAPTION>
Summary Compensation Table

                                    Annual Compensation      Long-term and Other Compensation
                                    -------------------      --------------------------------
Name and Other
                           Year     Salary        Bonus      Stock Options/SARs(#)        All Other
                           ----     ------        -----      ---------------------        ---------

<S>                        <C>      <C>           <C>                  <C>                <C>
James M. Heim(1),          2006     $120,000(2)   $0                   0                  $0
 President                 2005     $120,000(2)   $0                   0                  $10,000(3)
                           2004     $ 20,651      $0                   0                  $37,500(4)
</TABLE>


(1)  On April 22, 2003, Mr. James M. Heim resigned his Officer and Board
     positions with Prologic Management Systems, Inc. and its BASIS, Inc.
     subsidiary. In March of 2004, Mr. Heim was appointed to the Board of
     Directors and was elected as President.

(2)  During the fiscal year ended March 31, 2005 and fiscal year ended March 31,
     2006, Mr. Heim deferred all of his wages under his employment agreement. As
     of the date of this report these obligations remain as payable to Mr. Heim.

(3)  During the fiscal year ended March 31, 2005, Mr. Heim received $10,000 of
     payments that were due from the prior fiscal year under his prior
     employment agreement.

(4)  During the fiscal year ended March 31, 2004, Mr. Heim received a $37,500
     severance payment as approved by the Company's Board of Directors.


Option Exercises and Holdings

The following table sets forth information concerning each exercise of a stock
option during the fiscal year ended March 31, 2006 by each of the Named
Executive Officers and the number and value of unexercised options at March 31,
2006.

<TABLE>
<CAPTION>
                                                                                         Value of Unexercised
                   Number of                          Number of Shares Underlying        In-the-Money Options
                   Shares                             Unexercised Options at 03/31/06    at 03/31/06
Name               on Exercise   Value Realized       Exercisable/Unexercisable          Exercisable/Unexercisable
----               -----------   --------------       -------------------------------    -------------------------

<S>                     <C>            <C>              <C>                                <C>
James M. Heim           0              $0               250,000 / 0                        $0 / $0
John W. Schauweker      0              $0                10,000 / 0                        $0 / $0
James S. Nichols        0              $0               110,000 / 0                        $0 / $0
</TABLE>

No Director or executive officer exercised any options during the fiscal year
ended March 31, 2006.


                                                                              14
<PAGE>




Option Exercises

During the fiscal year, none of the executive officers identified in the Summary
Compensation Table exercised any stock options,  and, as of March 31, 2006, none
held any in-the-money options.


Board Compensation

The Company  compensates its outside  directors for attendance at board meetings
at the rate of $500 per meeting and $150 per hour for  committee  participation.
Additionally,  directors  receive 10,000  options to purchase  common stock at a
price not less than 100% of the  current  market  price per share at the time of
grant,  exercisable  upon  completion  of their  elected  term.  The options are
exercisable at the price determined by the board at the time of grant and expire
5 years  from the date of  issuance.  Directors  who are also  employees  of the
Company  receive no  additional  compensation  for  serving as a  Director.  The
Company  reimburses  its  Directors  for travel and  out-of-pocket  expenses  in
connection with their attendance at meetings of the Board of Directors.


                                                                              15
<PAGE>



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Principal Shareholders and Shareholders of Management
-----------------------------------------------------

The following table sets forth information, as of March 31, 2006, concerning the
Common  Stock  beneficially  owned by (i) each  director of the Company (ii) the
Company's Chief Executive Officer and its other executive  officers,  (iii) each
person known to the Company to own beneficially  more than 5% of the outstanding
Common Stock, and (iv) all of the Company's  directors and executive officers as
a group.

Except as otherwise noted, the named individual beneficial owner has sole
investment and voting power.

<TABLE>
<CAPTION>
                                                                           Shares
                                                  Title of Class         Beneficially         Percent
                                                     of Stock             Owned (1)           of Class
Name of Beneficial Owner                          --------------        --------------        --------
------------------------
<S>                                                   <C>                 <C>                   <C>
James M. Heim & Marlene Heim (2)                      Common              1,900,122             26.02%
John A. Schauweker (3) *                              Common                 10,000              0.14%
James S. Nichols (4)                                  Common                110,000              1.51%
Martin A. Diamond (5)                                 Common                292,728              4.01%
John R. Jordon and Billie S. Jordan (6)               Common                476,300              6.54%
HFG Properties Ltd. (7)                               Common                909,349             12.45%
All Directors and Executive
      Officers as a group (4 persons) (8)             Common              2,312,850             31.68%

*      Less than 1%
</TABLE>

(1)  The inclusion  herein of any shares of common stock does not  constitute an
     admission  of  beneficial  ownership  of such  shares,  but are included in
     accordance  with rules of the Securities and Exchange  Commission  ("SEC").
     The shareholdings  include,  pursuant to rules of the SEC, shares of common
     stock  subject to options or warrants  which are presently  exercisable  or
     which may  become  exercisable  within  60 days  following  March 31,  2006
     ("exercisable options").

(2)  Comprised  of a total of  1,650,122  shares and 250,000  shares  subject to
     exercisable  options.  This includes 909,349 shares owned by HFG Properties
     Ltd.,  an  Arizona  limited  partnership  of which  Mr.  Heim is a  general
     partner,  and 81,561 shares owned by Sonoita Resources,  an Arizona limited
     liability company of which Mr. Heim is a member.  James M. Heim and Marlene
     Heim directly own an aggregate of 659,212 shares of common stock.  Mr. Heim
     is an Executive Officer and Director.

(3)  Comprised of 10,000 shares subject to exercisable options.

(4)  Comprised of 110,000 shares subject to exercisable options.

(5)  Comprised of 292,728 shares. Mr. Diamond is an Executive Officer.

(6)  Comprised of 441,300 shares.

(7)  HFG Properties Ltd. is an Arizona limited partnership of which Mr. James M.
     Heim is a general partner.

(8)  Comprised of 1,942,850  shares and 370,000  shares  subject to  exercisable
     options.

                                                                              16
<PAGE>

<TABLE>
<CAPTION>
Equity Compensation Plan Information
------------------------------------
                                                                                      Number of securities remaining
                              Number of securities to       Weighted average          available for future issuance
                              be issued upon exercise       exercise price of         under equity compensation
                              of outstanding options,       outstanding options,      plans (excluding securities
                              warrants and rights           warrants and rights       reflected in column (a))

Plan Category                           (a)                          (b)                             (c)
--------------------------    -------------------------     ---------------------     ------------------------------
<S>                                 <C>                             <C>                           <C>
Equity compensation
plans approved by                     655,000                       $0.47                         2,845,000
security holders

Equity compensation
plans not approved by
security holders                      700,000 (1)                   $0.75                               ---
                              -------------------------     ----------------------    ------------------------------

                    TOTAL           1,355,000                                                     2,845,000
</TABLE>

(1)  include  warrants  issued as  consideration  for  consulting  and  advisory
     services,  as well as warrants issued as  consideration  in connection with
     the  renegotiation  of a note. The exercise price for the warrants is $0.75
     per share of common stock, and bear expiration dates ranging from September
     2006 through March 2007.



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On December 30, 1999,  the Company  authorized the sale of 75,000 shares of
the Series C Preferred Stock,  including 37,500 shares to HFG Properties,  Ltd.,
an Arizona  limited  partnership  of which Mr.  Heim is a general  partner,  and
37,500 shares to Sonoita  Resources,  an Arizona  limited  liability  company of
which Mr.  Heim is a member,  for an  aggregate  of  $750,000,  pursuant  to two
subscription agreements.  In conjunction with a dispute involving holders of the
Series B Preferred Stock, the Board of Directors  indefinitely  suspended one of
the subscription agreements, which had an amount outstanding of $191,500. During
the fiscal year ending March 31, 2004, the outstanding subscription agreement in
the amount of  $191,500  was  canceled.  Total  amount of shares of the Series C
Preferred  Stock issued after the  cancellation  of the  remaining  subscription
agreement was 55,850 shares for an aggregate  consideration of $558,500.  During
the fiscal year ending March 31, 2006, Mr. Heim purchased the interest of one of
the other members of Sonoita  Resources  increasing  his  ownership  interest to
15,000 shares of the Series C Preferred Stock.

     During the fiscal years ended March 31, 2005 and March 31,  2006,  Mr. Heim
and  Mr.  Diamond,   who  are  executive  officers  of  the  Company,   provided
approximately  $40,000 and $55,000  respectively,  in capital  financing  to the
Company  in  the  form  of  payments  of  current  operating   expenses.   These
expenditures  were critical to the ongoing  operations.  These expenses included
accounting,  auditing,  SEC reporting and general  operating and  administrative
expenditures  related to the efforts to re-organize the creditors and efforts to
secure  capital.  In  addition,  Mr.  Heim  deferred  all  of  the  $240,000  of
compensation  due  under  his  employment  agreement  with  the  Company.  These
obligations  which have been incurred since the foreclosure  action in the prior
fiscal year will be treated as priority obligations by the Company.


                                                                              17
<PAGE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section  16(a)  of the  Securities  Exchange  Act  of  1934,  requires  the
Company's officers and directors, and persons who beneficially own more than ten
percent  of a  registered  class of the  Company's  equity  securities,  to file
reports of ownership and change in ownership  with the  Securities  and Exchange
Commission.  Such  reports  are  filed on Form 3,  Form 4, and Form 5 under  the
Exchange Act. Officers,  directors and greater than ten-percent shareholders are
required by Exchange Act  regulations  to furnish the Company with copies of all
Section 16(a) forms they file.

     Based  solely on its review of the copies of such forms  received by it, or
written  representations from certain reporting persons that no Forms 3, 4, or 5
were  required  for those  persons,  the  Company  believes  that all  officers,
directors,  and greater than  ten-percent  beneficial  owners  complied with the
applicable Section 16(a) filing requirements.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

A.   Documents filed as part of this report:

     1. Financial  Statements.  The following financial statements filed as part
of this report are listed on pages F-2 to F-19 and herein by reference:

<TABLE>
<CAPTION>
     Financial Statements                                                                    Page
     --------------------                                                                    ----

     <S>                                                                                    <C>
     Report of Independent Public Accountants (March 31, 2006)                               F-3

     Financial Statements
              Balance Sheet                                                                  F-4
              Statements of Operations                                                       F-5
              Statements of Changes in Stockholders' Equity (Deficit)                        F-6
              Statements of Cash Flows                                                       F-7

     Notes to Financial Statements                                                           F-8
</TABLE>

<TABLE>
<CAPTION>
     2. Exhibit:

     Exhibit Number     Document                                                             Page
     --------------     --------                                                             ----
     <S>                <C>
     3.1                Articles of Incorporation by the Company*
     3.1.1              Specimen of Series A 8% Cumulative Convertible
                        Preferred Stock**
     3.1.2              Specimen of Series B 10% Cumulative Convertible
                        Preferred Stock***
     3.1.3              Specimen of Series C 10% Cumulative Convertible
                        Preferred Stock****
     3.2                Bylaws of the Company*
     4.2                Specimen of Common Stock Certificate*
     10.15              1994 Stock Option Plan, Form of Incentive Agreement*
     10.16              Employment Agreement of  James M. Heim*****
     10.20              Form of Stock Purchase Agreement, Promissory
                        Note and Escrow Agreement for July 31, 1994
                        Issuance of Common Stock*
     31                 Certification Pursuant to 18 U.S.C. SECTION 1350 of James M. Heim,
                        Chief Executive Officer
     32                 Certification Pursuant to 18 U.S.C. SECTION 1350 of James M. Heim,
                        Chief Executive Officer
     99.1               Consolidated Financial Statements
</TABLE>

                                                                              18
<PAGE>

* Incorporated by reference to the corresponding exhibit number in the Company's
Registration Statement on Form SB-2 (Commission file no. 33-89384-LA).

**  Incorporated  by  reference  to  the  corresponding  exhibit  number  in the
Company's  Form 8-K filed on August 23, 1996.

***   Incorporated  by  reference  to the  corresponding  exhibit number  in the
Company's Form 10-KSB filed on July 14, 1999.

****   Incorporated  by reference to exhibit  number 3.1 in the  Company's  Form
10-QSB filed on February 22, 2000.

*****  Incorporated by reference to the corresponding  exhibit number on the
Company's Form 10-QSB filed on August 12, 2004.


B. Report on Form 8-K.

         No Reports on Form 8-K have been filed by the Company during the fiscal
year ended March 31, 2005 or for the fiscal year ended March 31, 2006


                                                                              19
<PAGE>

              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:  July 26, 2006             By: /s/  James M. Heim
        -------------                 --------------------------------
                                           James M. Heim
                                           President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS,  that each person whose signature  appears below
constitutes and appoint James M. Heim, as his true and lawful  attorneys-in-fact
and agents, with full power of substitution and re-substitution,  for him and in
his  name,  place  and  stead,  in any and all  capacities,  to sign any and all
amendments  to this annual  report on Form 10-KSB and any  documents  related to
this report and filed  pursuant to the  Securities and Exchange Act of 1934, and
to file the same, with all exhibits  thereto,  and other documents in connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorneys-in-fact  and agents,  full power and  authority to do and perform each
and  every  act and  thing  requisite  and  necessary  to be done in  connection
therewith  as  fully  to all  intents  and  purposes  as he might or could do in
person,  hereby  ratifying and  confirming all that said  attorneys-in-fact  and
agents,  or their  substitute or substitutes may lawfully do or cause to be done
by virtue hereof.

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.


Signature                    Capacity                      Date
---------                    --------                      ----

/s/  James M. Heim           James M. Heim                 July 26, 2006
------------------           Chief Executive Officer
                             President and Director

/s/ John W. Schauweker       John W. Schauweker,           July 26, 2006
----------------------       Director

/s/  James S. Nichols        James S. Nichols,             July 26, 2006
---------------------        Director


                                                                              20