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

                                   FORM 10QSB


[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934

      For the quarterly period ended December 31, 2001.



Commission file number: 1-13704



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



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


3708 E. Columbia Street, #110, Tucson, Arizona             85714
(Address of principal executive offices)                 (Zip Code)


                    Issuer's telephone number (520) 747-4100.



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 December 31, 2001 was 7,013,853.


Transitional Small Business Disclosure Format:
                                                   Yes ______ ; No ___X___ .


<PAGE>

                        Prologic Management Systems, Inc.
                                      Index

<TABLE>
<CAPTION>
                                                                                                   Page
<S>                                                                                                 <C>
Part I.    FINANCIAL INFORMATION                                                                    3

Item 1.    Condensed Consolidated Financial Statements

           Condensed Consolidated Balance Sheets at December 31, 2001 (unaudited) and               3
           March 31, 2001

           Condensed Consolidated Statements of Operations for the Three and
           Nine Months 4 Ended December 31, 2001 (unaudited) and December 31,
           2000 (unaudited)                                                                         4

           Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
           December 31, 2001 (unaudited) and December 31, 2000 (unaudited)                          5

           Notes to Condensed Consolidated Financial Statements                                     6


Item 2.    Management's Discussion and Analysis of Results of Operations and                        9
           Financial Condition

Part II.   OTHER INFORMATION                                                                       16

Item 1.    Legal Proceedings                                                                       16

Item 2.    Changes in Securities                                                                   16

Item 3.    Defaults upon Senior Securities                                                         16

Item 4.    Submission of Matters to a Vote by Security Holders                                     16

Item 5.    Other Information                                                                       16

Item 6.    Exhibits and Reports on Form 8-K                                                        16

SIGNATURES                                                                                         17
</TABLE>
<PAGE>

PART I.  Financial Information
Item 1.  Condensed Consolidated Financial Statements

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

<TABLE>
<CAPTION>

                                                                                      December 31, 2001         March 31, 2001
                                                                                    ----------------------    -------------------
ASSETS                                                                                   (unaudited)
Current assets:
<S>                                                                             <C>                        <C>
    Cash                                                                        $                  31,069  $             310,305
    Restricted cash                                                                                    --                300,000
    Accounts receivable, less allowance for doubtful accounts of
       $426,000 at December 31, 2001 and March 31, 2001                                         2,125,918              3,375,590
    Inventory                                                                                     196,590                369,241
    Prepaid expense                                                                                88,273                 72,543
                                                                                    ----------------------    -------------------
Total current assets                                                                            2,441,850              4,427,679

Property and equipment, net                                                                       271,708                343,214
Goodwill, net                                                                                     408,942                408,942
Deferred financing costs, net                                                                     189,677                     --
Other assets                                                                                      146,554                201,631
                                                                                    ----------------------    -------------------
Total assets                                                                    $               3,458,731  $           5,381,466
                                                                                    ----------------------    -------------------

Liabilities, Preferred Stock AND Stockholders' Deficit
Current Liabilities
    Current portion of long-term debt and notes payable                         $               1,333,569  $           1,753,377
    Line of credit                                                                                     --                699,150
    Notes payable - related parties                                                                35,000                     --
    Accounts payable                                                                            1,696,856              2,800,003
    Accrued expenses                                                                              970,563                910,086
    Deferred revenue                                                                              121,309                141,516
                                                                                    ----------------------    -------------------

Total current liabilities                                                                       4,157,297              6,304,132

Long term debt and notes payable, excluding current portion                                     6,094,120              4,506,855
                                                                                    ----------------------    -------------------
Total liabilities                                                                              10,251,417             10,810,987

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 value,
        100,000 shares authorized, 75,000 shares issued and outstanding                           750,000                750,000

    Stock subscription receivable                                                               (191,500)              (191,500)
                                                                                    ----------------------    -------------------
                                                                                                  727,088                727,088
                                                                                    ----------------------    -------------------
Stockholders deficit
    Common stock, no par value, 50,000,000 shares authorized,
        7,013,853 and 6,858,058 shares issued and outstanding at                               10,145,168             10,077,219
        December 31, 2001 and March 31, 2001, respectively
    Warrants                                                                                      951,367                741,367
    Accumulated deficit                                                                      (18,616,309)           (16,975,195)
                                                                                    ----------------------    -------------------

Total stockholders' deficit                                                                   (7,519,774)            (6,156,609)
                                                                                    ----------------------    -------------------
Total liabilities and stockholders' deficit                                     $               3,458,731  $           5,381,466
                                                                                    ----------------------    -------------------
See accompanying notes to condensed consolidated financial statements.
</TABLE>

<PAGE>

               PROLOGIC MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
               CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                              Three Months Ended                  Nine Months Ended
                                                                 December 31,                       December 31,
                                                            2001              2000             2001              2000
                                                        --------------    -------------    --------------    --------------
                                                         (unaudited)      (unaudited)       (unaudited)       (unaudited)
Net Sales
<S>                                                  <C>               <C>              <C>               <C>
    Hardware                                         $      1,172,495  $     4,182,445  $     10,437,450  $     19,582,063
    Licenses                                                  353,319        1,008,975         2,557,903         7,214,532
    Services                                                  851,339        1,062,486         3,081,566         3,500,546
                                                        --------------    -------------    --------------    --------------
Total revenue                                               2,377,153        6,253,906        16,076,919        30,297,141

Cost of Sales
    Hardware                                                  832,733        3,647,109         9,001,813        17,124,655
    Licenses                                                  296,024          879,047         2,218,257         6,121,313
    Services                                                  193,913          569,728         1,082,582         1,259,685
                                                        --------------    -------------    --------------    --------------
Total cost of sales                                         1,322,670        5,095,884        12,302,652        24,505,653
                                                        --------------    -------------    --------------    --------------

        Gross profit                                        1,054,483        1,158,022         3,774,267         5,791,488
                                                        --------------    -------------    --------------    --------------

Operating expenses
    General and administrative                                999,005        1,282,648         3,201,972         3,807,130
    Selling and marketing                                     640,780          732,930         1,632,530         2,118,433
    Research and development                                   33,449           45,200           120,768           149,329
                                                        --------------    -------------    --------------    --------------
        Total operating expenses                            1,673,234        2,060,778         4,955,270         6,074,892
                                                        --------------    -------------    --------------    --------------

        Operating income (loss)                             (618,751)        (902,756)       (1,181,003)         (283,404)
                                                        --------------    -------------    --------------    --------------

Interest expense                                            (220,220)         (91,777)         (460,111)         (431,118)
Other income (expense)                                             --            4,929                --            18,785
                                                        --------------    -------------    --------------    --------------
        Total interest and other income (expense)           (220,220)         (86,848)         (460,111)         (412,333)
                                                        --------------    -------------    --------------    --------------

Income (loss) from continuing operations                    (838,971)        (989,604)       (1,641,114)         (695,737)
Income (loss) from discontinued operations                         --               --                --           (1,208)
                                                        --------------    -------------    --------------    --------------
Net income (loss)                                           (838,971)        (989,604)       (1,641,114)         (696,945)

Cumulative preferred stock dividend                          (22,465)         (38,750)          (67,395)         (116,250)
                                                        --------------    -------------    --------------    --------------

Net income (loss) available to common
    stockholders                                     $      (861,436)  $   (1,028,354)  $    (1,708,509)  $      (813,195)
                                                        --------------    -------------    --------------    --------------

Weighted average number of common shares:
    basic and diluted                                       7,013,853        8,439,577         6,913,451         8,438,756
                                                        --------------    -------------    --------------    --------------

Loss per common share:
    Basic and diluted earnings (loss) per common
        share from continuing operations             $         (0.12)  $        (0.12)  $         (0.25)  $         (0.10)
    Basic and diluted earnings (loss) per common
        share from discontinued operations           $             --  $            --  $             --  $             --
    Net earnings (loss) per common share             $         (0.12)  $        (0.12)  $         (0.25)  $         (0.10)


See accompanying notes to condensed consolidated financial statements.
</TABLE>

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                 Nine months ended December 31,
INCREASE (DECREASE) IN CASH                                                           2001                  2000
                                                                                ------------------     ---------------
                                                                                   (unaudited)          (unaudited)
Cash flows from operating activities:
<S>                                                                         <C>                    <C>
    Net income (loss)                                                       $         (1,641,114)  $        (696,943)
    Adjustments to reconcile net income (loss) to net cash
      provided by (used in) operating activities:
          Depreciation and amortization                                                   129,989             251,017
          Issuance of warrants for services and interest incurred                              --              12,596
          Issuance of common stock for services rendered                                   35,700                  --
          Changes in:
                Restricted cash                                                           300,000                  --
                Accounts receivable                                                     1,249,672           4,149,414
                Inventory                                                                 172,651           (272,953)
                Prepaid expenses                                                         (15,730)            (77,723)
                Other assets                                                               55,077             255,675
                Accounts payable                                                      (1,103,147)           1,079,228
                Accrued expenses                                                           92,726           (292,830)
                Deferred revenue                                                         (20,207)           (369,339)
                                                                                ------------------     ---------------
                           Total adjustments                                              964,126           4,735,085
                                                                                ------------------     ---------------

Net cash provided by (used in) continuing operations                                    (744,383)           4,038,142
Net cash provided by (used in) discontinued operations                                         --            (27,922)
                                                                                ------------------     ---------------
Net cash provided by (used in ) operating activities                                    (744,383)           4,010,220
                                                                                ------------------     ---------------

Cash flows from investing activities
    Purchase of equipment                                                                (38,160)             (1,928)
                                                                                ------------------     ---------------

Net cash provided by (used in ) investing activities                                     (38,160)             (1,928)
                                                                                ------------------     ---------------

Cash flows from financing activities:
    Net change in lines of credit                                                       (699,150)         (3,752,797)
    Issuance of common stock                                                                   --               5,000
    Issuance of new debt                                                                1,598,240                  --
    Repayment of debt                                                                   (395,783)           (322,556)
                                                                                ------------------     ---------------

Net cash provided by (used in) financing activities                                       503,307         (4,070,353)
                                                                                ------------------     ---------------

Net increase (decrease) in cash                                                         (279,236)            (62,061)

Cash, beginning of period                                                                 310,305             447,910
                                                                                ------------------     ---------------

Cash, end of period                                                         $              31,069  $          385,849
                                                                                ------------------     ---------------

Supplemental statement of cash flow information:
    Cash paid during the period for interest                                $              14,426  $          423,137
    Cash paid during the period for taxes                                                      --                  --

Supplemental disclosure of non-cash activity:
    Warrants issued as deferred financing cost                              $             210,000  $               --
    Issuance of common stock for dividends                                                 32,249                  --

See accompanying notes to condensed consolidated financial statements.
</TABLE>

<PAGE>

Notes to Condensed Consolidated Financial Statements

1.  Interim Periods

       The accompanying 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, 2001. The results of operations for the three and
       nine-month periods ended December 31, 2001 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, the Company has suffered recurring losses from
       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.

2.   Discontinued Operations
       As reported in the Company's Report on Form 10-KSB for the fiscal year
       ended March 31, 2000, the Board of Directors authorized the closure of
       the Company's Great River Systems, Inc. ("GRSI") subsidiary at March
       31, 2000, and its subsequent dissolution. As a result, the Company
       recognized a one-time restructuring charge and a nonrecurring asset
       impairment charge to goodwill at fiscal year end March 31, 2000. The
       nonrecurring charges, together with GRSI results of operations, were
       presented in the Form 10-KSB as "Net Income (Loss) from Discontinued
       Operations".

3.   Change in Methods of Procurement and Sales
       In the quarter ended September 30, 2000, the Company elected to
       transition its method of obtaining certain third party vendor product
       lines and service contracts, which impacts the presentation of the
       financial statements. Under this procurement method, the Company
       records only its markup on third party products and services, the costs
       of the products and the equivalent gross sale prices are not
       recognized. The resulting effect is a reduction in net sales and cost
       of sales. Gross profit and operating income will remain unaffected. The
       Company has not transitioned any other sales to the procurement method
       and does not anticipate doing so in the upcoming quarters.

4.   Line of Credit
       During the quarter ended June 30, 2001, the Company signed a $3,000,000
       financing agreement with KBK Financial, Inc. for a line of credit to
       finance accounts receivable. This credit facility replaced a $5,000,000
       credit facility with Coast Business Credit, which matured at March 31,
       2001. This new facility provides working capital to support the
       Company's systems integration operations. The financing agreement with
       KBK Financial, Inc. contains certain operating and other covenants,
       including a covenant that requires that the Company's BASIS, Inc.
       subsidiary maintain a net worth of at least $400,000. At December 31,
       2001, the Company was in compliance with this and the other covenants
       under the agreement. Subsequent to December 31, 2001, the Company
       provided KBK with written notice of its intent to terminate the
       financing agreement effective March 31, 2002. As of the date of this
       filing, there is no outstanding balance or activity under this
       facility.

       During the quarter ended June 30, 2001, the Company also entered into a
       financing agreement with a key lender. This agreement provides the
       Company with an immediate partial advance on all sales and requires the
       Company to immediately assign the related receivables to the lender.
       Upon collection of the related receivables, the lender pays the
       remaining balance to the Company. The receivables are assigned with
       recourse and advances over 90 days outstanding bear interest at a rate
       of 10% per annum. At December 31, 2001, the Company was liable for
       $353,778 under this agreement.
<PAGE>

5.   Goodwill
       In June 2001, the Financial Accounting Standards Board finalized FASB
       Statements No. 141, Business Combinations (SFAS 141), and No. 142,
       Goodwill and Other Intangible Assets (SFAS 142). SFAS 141 requires the
       use of the purchase method of accounting and prohibits the use of the
       pooling-of-interests method of accounting for business combinations
       initiated after June 30, 2001. SFAS 141 also requires that the Company
       recognize acquired intangible assets apart from goodwill if the
       acquired intangible assets meet certain criteria. SFAS 141 applies to
       all business combinations initiated after June 30, 2001 and for
       purchase business combinations completed on or after July 1, 2001. It
       also requires, upon adoption of SFAS 142, that the Company reclassify
       the carrying amounts of intangible assets and goodwill based on the
       criteria in SFAS 141.

       SFAS 142 requires, among other things, that companies no longer
       amortize goodwill, but instead test goodwill for impairment at least
       annually. In addition, SFAS 142 requires that the Company identify
       reporting units for the purposes of assessing potential future
       impairments of goodwill, reassess the useful lives of other existing
       recognized intangible assets, and cease amortization of intangible
       assets with an indefinite useful life. An intangible asset with an
       indefinite useful life should be tested for impairment in accordance
       with the guidance in SFAS 142.

       On April 1, 2001, the Company elected to adopt SFAS 141 and SFAS 142.
       The Company's previous business combination was accounted for using the
       purchase method. As of December 31, 2001, the net carrying amount of
       goodwill was $408,942 and there were no other intangible assets
       acquired in connection with the business combination. Pursuant to the
       terms of SFAS 142, the Company ceased amortizing goodwill effective
       April 1, 2001 and recorded no amortization expense during the
       nine-month period ending December 31, 2001. The Company has completed
       its transitional goodwill impairment test pursuant to the provisions of
       SFAS 142 as of April 1, 2001, and determined that there was no
       impairment of the asset. Accumulated amortization totaled $975,107 at
       March 31, 2001.

       If the Company had accounted for its goodwill according to SFAS 142 for
       all income statement periods presented, the Company's net income (loss)
       and income (loss) per common share and common share equivalent would
       have been as follows:
<TABLE>
<CAPTION>


                                                    For the Three Months Ended December 31,

                                                       2001                        2000
                                                  --------------                ------------

<S>                                                   <C>                       <C>
Reported net income (loss)                            $(861,436)                $(1,028,354)
Add back:  Goodwill amortization                             --                      52,575
                                                  --------------                ------------
Adjusted net income (loss)                            $(861,436)                  $(975,779)
                                                  ==============                ============

Basic and diluted earnings (loss) per share:
 Reported net income (loss)                              $(0.12)                     $(0.12)
 Goodwill amortization                                        --                         --
                                                  --------------                ------------
 Adjusted net income (loss)                              $(0.12)                     $(0.12)
                                                  ==============                ============


                                                      For the Nine Months Ended December 31,
                                                       2001                          2000
                                                  --------------                ------------

 Reported net income (loss)                         $(1,708,509)                  $(813,195)
 Add back:  Goodwill amortization                             --                    157,727
                                                  --------------                ------------
 Adjusted net income (loss)                         $(1,708,509)                  $(655,468)
                                                  ==============                ============

 Basic and diluted earnings (loss) per share:
  Reported net income (loss)                             $(0.25)                     $(0.10)
  Goodwill amortization                                       --                       0.02
                                                  --------------                ------------
  Adjusted net income (loss)                             $(0.25)                     $(0.08)
                                                  ==============                ============
</TABLE>

<PAGE>


6.  Property and Equipment

      Property and equipment consists of the following:

<TABLE>
<CAPTION>

                                                 December 31, 2001            March 31, 2001
                                                 -----------------          ----------------

<S>                                                     <C>                         <C>
 Furniture and leasehold improvements                   $253,480                    $253,481
 Equipment and software                                  949,025                     910,864
                                                 -----------------          ----------------
          Total property and equipment                 1,202,505                   1,164,345
 Less accumulated depreciation                         (930,798)                   (821,131)
                                                 -----------------          ----------------
           Net property and equipment                   $271,707                    $343,214
                                                 =================          ================
</TABLE>

7.  Inventory
       Inventory consists primarily of third-party computer hardware and
       third-party software products, which are typically awaiting transfer to
       a customer, and is stated at the lower of cost (first-in, first-out) or
       market.

8.  Long Term Debt
       In December 2000, the Company signed a $5 million note, converting
       approximately $5 million of its accounts payable, with 10% interest and
       a due date of April 2, 2002. In the second quarter of fiscal 2002, the
       Company renegotiated the balance of the note. The new note bears
       interest at 6% and is due in April 2003. The balance of the new
       promissory note at December 31, 2001 is approximately $5,885,000 with
       approximately $178,500 accrued interest at December 31, 2001. The new
       note requires the Company to make monthly payments of 40% of its
       available operating profits each month. The note further requires that
       the Company direct 50% of any future sums received by, committed to, or
       invested in the Company as an additional equity capital infusion,
       towards repayment of the unpaid balance of the note.

9.   Earnings Per Share
       FASB Statement of Financial Accounting Standard 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 and nine months ended December 31, 2001 and 2000, potential
       common stock, consisting of stock options, warrants and convertible
       preferred stock are excluded from the computation of diluted earnings
       per share because they are antidilutive.

10.  Related Party Transactions
       During the first quarter of fiscal 2002, the Company borrowed $35,000
       from an organization partially owned by an officer and shareholder.

<PAGE>

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

Introduction

         The Company provides systems integration services, software
development, technology products and related services. The majority of the
Company's revenues are generated from systems integration services and related
product sales. The Company's services include systems integration, and national
and regional support in Internet and intranet application and framework design,
enterprise and workgroup client/server design and optimization, relational
database development, LAN/WAN and workgroup solutions, network design and
connectivity, and security and encryption design and deployment. The Company's
software development expertise provides an internal resource for development
needs in integration and custom projects. The Company's proprietary products
include manufacturing, distribution, and resource tracking software for
commercial clients, as well as its e-commerce solutions. The Company's products
are not directed to the retail consumer market. For additional information on
the combined operating results of the Company and its subsidiaries, see the
Consolidated Financial Statements of the Company and Notes thereto, which are
set forth in the Company's Annual Report on Form 10-KSB for the fiscal year
ended March 31, 2001. The discussion herein should be read in conjunction with
and is qualified in its entirety by such 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 continue to be
conducted on the OTC 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.


Results of Operations

Three Months Ended December 31, 2001 and 2000
---------------------------------------------

         Net Sales. Net sales for the third quarter of fiscal 2002 were
$2,377,153 compared to $6,253,906 for the same period of the prior fiscal year,
a decrease of $3,876,753, or approximately 62.0%. The sales decrease was due
primarily to the continuing economic downturn that caused clients to reduce
and/or defer hardware and software purchases during the quarter, and was further
aggravated in response to the terrorist attacks and threats on the United States
in September 2001. Sales of third party hardware for the period were $1,172,495,
a decrease of approximately 72.0% over sales for the same period one year ago of
$4,182,445. Sales of software licenses, which included third party licenses as
well as proprietary software, were $353,319 for the period, a decrease of
approximately 65.0% over sales of $1,008,975 for the third quarter of the
previous fiscal year. Service sales for the period, which were comprised
predominately of integration services, were $851,339 compared to $1,062,486 for
the corresponding period of the previous fiscal year, a decrease of
approximately 19.9%. The Company continues to concentrate on sales of services,
which carry higher margins than hardware and third party software sales.
<PAGE>

         Cost of Sales. Cost of sales was $1,322,670, or 55.6% of total net
sales, for the quarter ended December 31, 2001, compared to approximately
$5,095,884, or 81.5% of net sales, for the same period of the previous fiscal
year. The overall decreased cost of sales was primarily the result of the
decline in sales. Gross profit improved significantly from 18.5% for the quarter
ended December 31, 2000, to 44.4% for the quarter ended December 31, 2001. This
reflects the Company's efforts to offset the overall reduction in sales of third
party products by increasing sales of higher-margin services.

         Selling and Marketing. Selling and marketing expenses were $640,780, or
27.0% of net sales, for the three month period ended December 31, 2001, compared
to $732,930, or 11.7% of net sales for the same period of the previous fiscal
year. The decrease in the amount of expenses is primarily the result of reduced
commission expense related to the decrease in sales. The increase, as a
percentage of net sales, over the prior period was primarily the result of a
decrease in overall sales and the Company's efforts to increase sales by
allocating more funds to marketing activities in the third quarter of fiscal
2002. The Company normally expects sales and marketing expenses to generally
reflect long-range sales trends rather than short-term sales cycles.

         General and Administrative. General and administrative expenses for the
third quarter of fiscal 2002 were $999,004, or 42.0% of net sales, compared to
$1,282,648, or 20.5% of net sales, for the third quarter of the previous fiscal
year. The decrease in these expenses is attributable to the Company's reduction
in operating expenses in response to uncertain economic conditions. The
increase, as a percentage of net sales, was primarily the result of the decrease
in sales. The Company made reductions in general and administrative expense in
the third quarter of fiscal 2002, however, its impact will not be fully
reflected in the financial statements until the fourth quarter of fiscal 2002.
The Company normally expects general and administrative expenses to generally
reflect long-range sales trends rather than short-term sales cycles.

         Research and Development. Research and development expenses were
$33,449, or 1.4% of net sales, for the third quarter of fiscal 2002, as compared
to $45,200, or 0.7% of net sales, for the same period of the previous fiscal
year. Research and development expense is generally related to updates of
proprietary software.

         Operating Income (loss). Operating loss for the third quarter of fiscal
2002 was $618,751, or a loss of 26.0% of net sales, versus a loss of $902,756,
or 14.4% of net sales, for the same period last year. The operating loss
improvement resulted from a decrease in operating expenses in the third quarter
of fiscal 2002.

         Interest Expense and Other Income (expense). Interest expense and other
expense for the quarter was $220,220, compared to $86,848 for the corresponding
period of the prior fiscal year, which was mainly interest related to lines of
credit and borrowings. Interest expense in the third quarter of fiscal 2002 was
primarily attributable to interest accrued on the $5 million note due April
2003.

         Income Taxes. The Company had no income tax expense for the third
quarters of fiscal 2002 and 2001. As of December 31, 2001, the Company had
Federal net operating loss carry forwards of approximately $14,500,000. 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 Income (loss) from Continuing Operations. Net loss for the quarter
ended December 31, 2001 was $838,971, or a loss of approximately $0.12 per
share, versus net loss of $989,604, or a loss of approximately $0.12 per share,
for the same period of the prior fiscal year. The loss was the result of the
decrease in sales resulting from an economic downturn that caused clients to
reduce and/or defer hardware and software purchases during the quarter.

         Net Income (loss) from Discontinued Operations. During the fiscal year
ended March 31, 2000, the Company discontinued operations of Great River
Systems.
<PAGE>

         Net Income (loss) including Discontinued Operations. Including charges
related to the discontinuance of the Great River Systems subsidiary, the Company
had a net loss of $838,971, or a loss of approximately $0.12 per share, for the
third quarter of fiscal 2002, as compared to net loss of $989,604, or a loss of
approximately $0.12 per share, for the same period of the prior fiscal year.


Nine Months Ended December 31, 2001 and 2000
--------------------------------------------

         Net Sales. Net sales for the first nine months of fiscal 2002 were
$16,076,919 compared to $30,297,141 for the same period of the prior fiscal
year, a decrease of $14,220,222, or approximately 46.9%. The sales decrease was
due primarily to the continuing economic downturn that caused clients to reduce
and/or defer hardware and software purchases during the nine-month period. Sales
were also impacted in response to the terrorist attacks and threats on the
United States, which began in September 2001. Sales of third-party hardware for
the period were $10,437,450, a decrease of approximately 46.7% over sales for
the same period one-year ago of $19,582,063. Sales of software licenses, which
included third party licenses as well as proprietary software, were $2,557,903
for the period, a decrease of approximately 64.5% over sales of $7,214,532 for
the first nine months of the previous fiscal year. Service sales for the period,
which were comprised predominately of integration services, were $3,081,566
compared to $3,500,546 for the corresponding period of the previous fiscal year,
a decrease of approximately 12.0%. The Company continues to concentrate on sales
of services, which carry higher margins than hardware and third party software
sales.

         Cost of Sales. Cost of sales was $12,302,652, or 76.5% of total net
sales, for the nine months ended December 31, 2001, compared to approximately
$24,505,653, or 80.9% of net sales, for the same period of the previous fiscal
year. The overall decreased cost of sales was primarily the result of the
decline in sales. Gross profit improved from 19.1% for the nine months ended
December 31, 2000, to 23.5% for the nine months ended December 31, 2001. This
reflects the Company's efforts to offset the increasing cost of third party
products by increasing sales of higher-margin services.

         Selling and Marketing. Selling and marketing expenses were $1,632,530,
or 10.2% of net sales, for the nine months ended December 31, 2001, compared to
$2,118,433, or 7.0% of net sales for the same period of the previous fiscal
year. The decrease in the amount of expenses is primarily the result of
decreased sales. The increase, as a percentage of net sales, over the prior
period was primarily the result of a decrease in overall sales and the Company's
efforts to increase sales by allocating more funds to marketing activities in
the first nine months of fiscal 2002. The Company normally expects sales and
marketing expenses to generally reflect long-range sales trends rather than
short-term sales cycles.

         General and Administrative. General and administrative expenses for the
first nine months of fiscal 2002 were $3,201,972, or 20.0% of net sales,
compared to $3,807,130, or 12.6% of net sales, for the same period of the
previous fiscal year. The decrease in these expenses is attributable to the
Company's reduction in operating expenses in response to uncertain economic
conditions. The increase, as a percentage of net sales, was primarily the result
of the decrease in sales. The Company made reductions in general and
administrative expense in the first nine months of fiscal 2002, with the most
significant reductions made in the last three months of the period. The Company
normally expects general and administrative expenses to generally reflect
long-range sales trends rather than short-term sales cycles.

         Research and Development. Research and development expenses were
$120,768, or 0.8% of net sales, for the nine months ended December 31, 2001, as
compared to $149,329, or 0.5% of net sales, for the same period of the previous
fiscal year. Research and development expense is generally related to updates of
proprietary software.

         Operating Income (loss). Operating loss for the nine months ended
December 31, 2001 was $1,181,003, or a loss of approximately 7.3% of net sales,
versus a loss of $283,404, or 0.9% of net sales, for the same period last year.
The operating loss resulted from the continuing economic downturn that caused
clients to reduce and/or defer hardware and software purchases.

         Interest Expense and Other Income (expense). Interest expense and other
expense for the nine months ended December 31, 2001 was $460,111, compared to
$412,333 for the corresponding period of the prior fiscal year, which was mainly
interest related to lines of credit and borrowings. Interest expense in the nine
months ended December 31, 2001 was comprised of approximately $178,000 in
accrued interest on the $5 million note due April 2003.
<PAGE>

         Income Taxes. The Company had no income tax expense for the first nine
months of fiscal 2002 and 2001. As of December 31, 2001, the Company had Federal
net operating loss carry forwards of approximately $14,500,000. 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 Income (loss) from Continuing Operations. Net loss for the nine
months ended December 31, 2001 was $1,641,114, or a loss of approximately $0.25
per share, versus net loss of $695,737, or a loss of approximately $0.10 per
share, for the same period of the prior fiscal year. The loss was the result of
the decrease in sales resulting from an economic downturn that caused clients to
reduce and/or defer hardware and software purchases during the nine month
period.

         Net Income (loss) from Discontinued Operations. During the fiscal year
ended March 31, 2000, the Company discontinued operations of Great River
Systems. The loss related to the discontinuance of the subsidiary was $0 for the
first nine months of fiscal 2002 as compared to a loss of $1,208 for the same
period of the prior fiscal year.

         Net Income (loss) including Discontinued Operations. Including charges
related to the discontinuance of the Great River Systems subsidiary, the Company
had a net loss of $1,641,114, or a loss of approximately $0.25 per share, for
the first nine months of fiscal 2002, as compared to net loss of $696,945, or a
loss of approximately $0.10 per share, for the same period of the prior fiscal
year.


Liquidity and Capital Resources

         At December 31, 2001, the Company had a working capital deficit of
approximately $1,738,000 versus a deficit of approximately $1,876,000 at March
31, 2001. As a result of the working capital deficit at March 31, 2001 (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 December 31, 2001 was
$31,069.

         Cash used in operations during the nine months ended December 31, 2001
was $744,383, primarily due to operating loss during the period. Cash provided
by operations during the nine months ended December 31, 2000 was $4,010,220,
primarily attributable to increased collections on accounts receivable during
the period. Cash used in investing activities was $38,160 at December 31, 2001
and $1,928 at December 31, 2000. Cash provided by financing activities for the
nine months ended December 31, 2001 was $503,307, which was primarily due to
increased borrowings during the period. Cash used in financing activities for
the nine months ended December 31, 2000 was $4,070,353, primarily attributable
to reductions in the line of credit and repayment of debt during the period.

         Historically the Company has been unable to generate sufficient
internal cash flows to support operations, and has been dependent upon capital
reserves and 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 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.

         During fiscal year 2000, the Company authorized a class of securities
designated Series C 10% Cumulative Convertible Preferred Stock, consisting of
100,000 shares with a Stated Value of $10.00 per share, a dividend rate of 10%
and an Applicable Conversion Value of $2.25. On December 30, 1999, the Company
authorized the sale of 75,000 shares of the Series C Preferred, including 37,500
shares to a related party and 37,500 shares to an entity in which officers of
the Company have an interest, for an aggregate of $750,000, pursuant to two
subscription agreements. Of the $750,000 in proceeds, $220,780 represented
conversion of current debt from a related party, and $529,220 was subscribed to
in cash. Including the conversion of debt and $337,720 in cash payments, the
Company has received $558,500, representing 55,850 shares of the Series C
Preferred Stock, and has extended the due date for the remaining $191,500.
<PAGE>

         During the quarter ended June 30, 2001, the Company signed a $3,000,000
financing agreement with KBK Financial, Inc. for a line of credit to finance
accounts receivable. This credit facility replaced a $5,000,000 credit facility
with Coast Business Credit, which matured at March 31, 2001. This new facility
provides working capital to support the Company's systems integration
operations. The financing agreement with KBK Financial, Inc. contains certain
operating and other covenants, including a covenant that requires that the
Company's BASIS, Inc. subsidiary maintain a net worth of at least $400,000. At
December 31, 2001, the Company was in compliance with this and the other
covenants under the agreement. Subsequent to December 31, 2001, the Company
provided KBK with written notice of its intent to terminate the financing
agreement effective March 31, 2002. As of the date of this filing, there is no
outstanding balance or activity under this facility.

         During the quarter ended June 30, 2001, the Company entered into a
financing agreement with a key lender. The agreement provides the Company with
an immediate partial advance on all sales and requires the Company to
immediately assign the related receivables to the lender. Upon collection of the
related receivables, the lender pays the remaining balance to the Company. The
receivables are assigned with recourse and advances over 90 days outstanding
bear interest at a rate of 10% per annum. At December 31, 2001, the Company was
liable for $353,778 under this agreement.

         During fiscal 2000, the Company and one of its primary vendors agreed
to convert $1,212,000 of the Company's trade payables to the vendor into a
promissory note. The promissory note included interest at 11%, and the Company
is currently negotiating new payment terms. At December 31, 2001, the principal
balance was approximately $723,000.

         During fiscal 2001, the Company signed a settlement agreement with
Sunburst Acquisitions IV, Inc. The settlement agreement resulted in 1,959,972 of
our shares being cancelled, and $100,000 in settlement expense cost
reimbursement to Sunburst, of which, $25,000 was paid in cash and the Company
executed a short-term promissory note for the remaining $75,000, bearing
interest at 10% per annum. As of December 31, 2001, the principle balance of
this note remains $75,000.

         In December 2000, the Company signed a $5 million note, converting
approximately $5 million of its accounts payable, with 10% interest and a due
date of April 2, 2002. In the second quarter of fiscal 2002, the Company
renegotiated the balance of the note. The new note bears interest at 6% and is
due in April 2003. The balance of the new promissory note at December 31, 2001
is approximately $5,885,000 with approximately $178,500 accrued interest at
December 31, 2001. The new note requires the Company to make monthly payments of
40% of its available operating profits each month. The note further requires
that the Company direct 50% of any future sums received by, committed to, or
invested in the Company as an additional equity capital infusion, towards
repayment of the unpaid balance of the note.

         During fiscal 1998 and 1997, the Company borrowed $365,000 in
short-term notes collateralized by its computer equipment and office
furnishings. Subsequently, $170,000 of these notes was exchanged for 288,000
shares of common stock and $65,000 in principle was repaid. The interest rate on
the notes is 2% per month. As of December 31, 2001, the remaining principle
balance on these notes, which is currently due, was $107,000.

         At December 31, 2001, the Company had current debt obligations, or debt
that will become due within twelve months, of $1,333,569. It is unlikely that
the Company will be able to service this debt from funds generated by operations
alone. As a result, the Company will require additional equity, debt financing,
or deferment of debt repayment to maintain current operations and service
current debt. The Company continues to review its strategic alternatives,
including raising capital through debt or equity financing. The Company has no
commitments at this time from third parties for any such financing.

         During the nine months ended December 31, 2001, the Company purchased
approximately $38,000 of capital equipment and software.

<PAGE>

Plan of Operations

         The Company's improved performance in fiscal 2001 began losing momentum
in fiscal 2002 with the general economic downturn, and was further aggravated by
the terrorist attacks and threats that began in September 2001. In response, the
Company's management implemented more aggressive plans to reduce operating
costs, increase service sales, and other strategies to minimize the impact on
revenues as clients took an increasingly conservative position on hardware and
software spending. The Company will continue to reduce expenses wherever
practicable and focus on securing service revenues, which have not been as
susceptible to market conditions as the demand for computer hardware and
software.

         In addition, the Company is considering the acquisition of one or more
systems integration/high technology service companies in other regions of the
United States to increase its market coverage, sales and profitability. In
conjunction with any acquisition(s), the Company would need to raise equity
capital to provide additional working capital for the consolidated entity. The
Company has no commitments at this time from third parties for any such
acquisition(s) or financing.

The Company May Face Interruption Of Production And Services Due To Increased
Security Measures In Response To Terrorism

         Our business depends on the free flow of products and services through
the channels of commerce. Recently, in response to terrorists' activities and
threats aimed at the United States, transportation, mail, financial and other
services have been slowed or stopped altogether. Further delays or stoppages in
transportation, mail, financial or other services could have a material adverse
effect on our business, results of operations and financial condition.
Furthermore, we may experience an increase in operating costs, such as costs for
transportation, insurance and security as a result of the activities and
potential activities. We may also experience delays in receiving payments from
payers that have been affected by the terrorist activities and potential
activities. The U.S. economy in general is being adversely affected by the
terrorist activities and potential activities and any economic downturn could
adversely impact our results of operations, impair our ability to raise capital
or otherwise adversely affect our ability to grow our business.

Recently Issued Accounting Pronouncements

         In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and
Other Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase
method of accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

         SFAS 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least annually.
In addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142.

         On April 1, 2001, the Company elected to adopt SFAS 141 and SFAS 142.
The Company's previous business combination was accounted for using the purchase
method. As of June 30, 2001, the net carrying amount of goodwill was $408,942
and there were no other intangible assets acquired in connection with the
business combination. Pursuant to the terms of SFAS 142, the Company ceased
amortizing goodwill effective April 1, 2001 and recorded no amortization expense
during the nine-month period ending December 31, 2001. The Company has completed
its transitional goodwill impairment test pursuant to the provisions of SFAS 142
and determined that there was no impairment of the asset.

<PAGE>

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995

         Management's discussion and analysis in this Form 10-QSB should be read
in conjunction with the audited Consolidated Financial Statements as filed in
the Company's annual report on Form 10-KSB for the fiscal year ended March 31,
2001. Except for the historical information contained herein, the matters
discussed in this 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 hardware and software technology, market
conditions, the anticipation of growth of certain market segments and the
positioning of the Company's products and services in those segments,
seasonality in the buying cycles of certain of the Company's customers, the
timing of product announcements, the release of new or enhanced products, the
introduction of competitive products and services by existing or new
competitors, and the significant risks associated with the acquisition of new
products, product rights, technologies, businesses, the management of growth,
the Company's ability to 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.

<PAGE>


PART II.  Other Information

Item 1.  Legal Proceedings

         There have been no material developments in the matter, Pace Investment
         Co., Inc., et al. v. Prologic Management Systems, Inc., CV 20003999,
         previously reported in the Company's report on 10-QSB for the quarter
         ended September 30, 2001.

Item 2.  Changes in Securities

         None.

Item 3.  Defaults upon Senior Securities

         None.

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

         None.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 10QSB

         A.  Exhibits:
             None.

         B.  Reports:
             No reports on Form 8-K were filed during the quarter ended
             December 31, 2001.

<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: February 8, 2001                   By: /s/  James M. Heim
                                                --------------------------------
                                                James M. Heim
                                                Chief Executive Officer,
                                                Principal Financial and
                                                Accounting Officer

                                            By: /s/  Richard E. Metz
                                                --------------------------------
                                                Richard E. Metz
                                                Executive Vice President