**UNITED
        STATES SECURITIES AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 FORM
        10-Q
 
 x**QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934**
 For
        the
        quarterly period ended September 30, 2007
  OR
 o******TRANSITION
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934**
   For
        the
        transition period
        from
        to
  Commission
        file number:**1-10768
   **MEDIWARE
        INFORMATION SYSTEMS, INC.**
 (Exact
        name of registrant as specified in its charter)
   **New
                  York**
              
              **11-2209324****(State
                  or other jurisdiction of incorporation or
                  organization)**
              
              **(I.R.S.
                  Employer Identification No.)****11711
                  West 79th Street****Lenexa,
                  Kansas**
              
              **66214****(Address
                  of principal executive offices)**
              
              **(Zip
                  Code)**
  ********
 **(Registrant's
        telephone number,
        including area code):****(913)
        307-1000******
  **(Former
        name, former address and former fiscal year, if changed since last
        report)**
  1
  Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days.  xYes    o No
  Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer or a non-accelerated filer. See definition of “accelerated
        filer” and “large accelerated filer” in Rule 12b-2 of the Exchange
        Act).
  Large
                  accelerated filer o
              Accelerated
                  Filer x
              Non-accelerated
                  filer o
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).     o
        Yes   x No
   APPLICABLE
        ONLY TO CORPORATE ISSUERS:
  As
        of
        October 29, 2007, there were 8,151,000 shares of Common Stock, $0.10 par
        value,
        of the registrant outstanding.
  
 2
  **MEDIWARE
        INFORMATIONSYSTEMS, INC.**
  **INDEX**
  **Page****PART
                  I**
              **Financial
                  Information****ITEM
                  1.**
              **Financial
                  Statements**Condensed
                  Consolidated Balance Sheets as of September 30,
                  2007 (Unaudited) and June 30, 2007
              4Condensed
                  Consolidated Statements of Operations and
                  Comprehensive Income (Unaudited) for the Three Months Ended September
                  30,
                  2007 and 2006
              5Condensed
                  Consolidated Statements of Cash Flows (Unaudited) for
                  the Three Months Ended September 30, 2007 and 2006
              6Notes
                  to Unaudited Condensed Consolidated Financial
                  Statements
              7Review
                  Report of Independent Registered Public Accounting
                  Firm
              16**ITEM
                  2.**
              **Management's
                  Discussion and Analysis of Financial Condition
                  and Results of Operations**
              17**ITEM
                  3.**
              **Quantitative
                  and Qualitative Disclosures About Market
                  Risk**
              24**ITEM
                  4.**
              **Controls
                  and Procedures**
              25**PART
                  II**
              **Other
                  Information****ITEM
                  1.**
              **Legal
                  Proceedings**
              25**ITEM
                  1A.**
              **Risk
                  Factors**
              25**ITEM
                  6.**
              **Exhibits**
              26**Signatures**
              
              27
 
 3
 *Index*
  **PART
        I     FINANCIAL
        INFORMATION**
  **1.      FINANCIAL
        STATEMENTS**
  **MEDIWARE
        INFORMATION SYSTEMS, INC.**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 **(Amounts
        in thousands except shares)**
  September
                      30,2007
                  
                  
                  June
                      30,(Unaudited)
                  
                  
                  2007ASSETSCurrent
                      AssetsCash
                      and cash equivalents
                  
                  $
                  24,822
                  
                  
                  $
                  22,789Accounts
                      receivable (net of allowance of $1,008 and $1,079)
                  
                  
                  12,928
                  
                  
                  
                  11,481Inventories
                  
                  
                  100
                  
                  
                  
                  196Deferred
                      income taxes
                  
                  
                  647
                  
                  
                  
                  957Prepaid
                      expenses and other current assets
                  
                  
                  1,161
                  
                  
                  
                  843Total
                      current assets
                  
                  
                  39,658
                  
                  
                  
                  36,266Fixed
                      assets, net
                  
                  
                  1,235
                  
                  
                  
                  1,210Capitalized
                      software costs, net
                  
                  
                  17,493
                  
                  
                  
                  18,005Goodwill,
                      net
                  
                  
                  3,681
                  
                  
                  
                  3,739Other
                      long-term assets
                  
                  
                  64
                  
                  
                  
                  100Total
                      Assets
                  
                  $
                  62,131
                  
                  
                  $
                  59,320LIABILITIES
                      AND STOCKHOLDERS' EQUITYCurrent
                      LiabilitiesAccounts
                      payable
                  
                  $
                  1,037
                  
                  
                  $
                  1,171Current
                      portion of note payable
                  
                  
                  -
                  
                  
                  
                  4Advances
                      from customers
                  
                  
                  9,243
                  
                  
                  
                  7,246Accrued
                      expenses and other current liabilities
                  
                  
                  3,561
                  
                  
                  
                  3,511Total
                      current liabilities
                  
                  
                  13,841
                  
                  
                  
                  11,932Deferred
                      income taxes
                  
                  
                  5,608
                  
                  
                  
                  5,357Total
                      liabilities
                  
                  
                  19,449
                  
                  
                  
                  17,289Stockholders'
                      EquityPreferred
                      stock, $.01 par value; authorized 10,000,000 shares; none
                      issued
                  
                  
                  -
                  
                  
                  
                  -Common
                      stock, $.10 par value; authorized 25,000,000shares; 8,151,000
                      shares
                      issued and outstanding at September 30, 2007 and June 30,
                      2007
                  
                  
                  815
                  
                  
                  
                  815Additional
                      paid-in capital
                  
                  
                  30,843
                  
                  
                  
                  30,690Retained
                      earnings
                  
                  
                  10,876
                  
                  
                  
                  10,413Accumulated
                      other comprehensive income
                  
                  
                  148
                  
                  
                  
                  113Total
                      stockholders' equity
                  
                  
                  42,682
                  
                  
                  
                  42,031Total
                      Liabilities and Stockholders' Equity
                  
                  $
                  62,131
                  
                  
                  $
                  59,320
 See
        Notes
        to Unaudited Condensed Consolidated Financial Statements.
 
 4
 *Index*
  **MEDIWARE
          INFORMATION SYSTEMS, INC.**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
          INCOME**
 **(Amounts
          in thousands, except earnings per share)**
 
 Three
                    Months Ended
                  September
                    30,
                  (Unaudited)2007
                
                
                2006RevenueSystem
                    sales
                
                $
                4,190
                
                
                $
                2,323Services
                
                
                6,554
                
                
                
                6,152Total
                    revenue
                
                
                10,744
                
                
                
                8,475Cost
                    and ExpensesCost
                    of systems (1)
                
                
                689
                
                
                
                559Cost
                    of services (1)
                
                
                2,216
                
                
                
                1,968Amortization
                    of capitalized software costs
                
                
                1,440
                
                
                
                1,266Software
                    development costs
                
                
                983
                
                
                
                1,043Selling,
                    general and administrative
                
                
                4,584
                
                
                
                3,603Total
                    costs and expenses
                
                
                9,912
                
                
                
                8,439Operating
                    income
                
                
                832
                
                
                
                36Interest
                    and other income
                
                
                290
                
                
                
                235Interest
                    and other expense
                
                
                (27
                )
                
                
                2Income
                    before income taxes
                
                
                1,095
                
                
                
                273Income
                    tax provision
                
                
                (632
                )
                
                
                (109
                )Net
                    income
                
                
                463
                
                
                
                164Other
                    comprehensive incomeForeign
                    currency translation adjustment
                
                
                35
                
                
                
                39Comprehensive
                    income
                
                $
                498
                
                
                $
                203Net
                    income per Common ShareBasic
                
                $
                .06
                
                
                $
                0.02Diluted
                
                $
                .05
                
                
                $
                0.02Weighted
                    Average Common Shares OutstandingBasic
                
                
                8,151
                
                
                
                8,092Diluted
                
                
                8,458
                
                
                
                8,349
  (1)
            Excludes amortization of Capitalized Software Costs
 See
          Notes
          to Unaudited Condensed Consolidated Financial Statements.
  5
 *Index*
 **MEDIWAREINFORMATIONSYSTEMS, INC.**
 **CONDENSED
              CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(Amounts
              in thousands)**
 
 Three
                        Months Ended
                      September
                        30,
                      (Unaudited)2007
                    
                    
                    2006Cash
                        Flows From Operating ActivitiesNet
                        income
                    
                    $
                    463
                    
                    
                    $
                    164Adjustments
                        to reconcile net income, to net
                        cash provided by operating activities:Depreciation
                        and amortization
                    
                    
                    1,600
                    
                    
                    
                    1,432Loss
                        on write-off of fixed assets
                    
                    
                    10
                    
                    
                    
                    -Stock
                        based compensation expense
                    
                    
                    153
                    
                    
                    
                    90Deferred
                        tax provision
                    
                    
                    619
                    
                    
                    
                    119Provision
                        for doubtful accounts
                    
                    
                    179
                    
                    
                    
                    58Changes
                        in operating assets and liabilities:Accounts
                        receivable
                    
                    
                    (1,626
                    )
                    
                    
                    404Inventories
                    
                    
                    96
                    
                    
                    
                    14Prepaid
                        expenses and other assets
                    
                    
                    (282
                    )
                    
                    
                    (285
                    )Accounts
                        payable, accrued expenses and advances from customers
                    
                    
                    1,913
                    
                    
                    
                    626Net
                        cash provided by operating activities
                    
                    
                    3,125
                    
                    
                    
                    2,622Cash
                        Flows From Investing ActivitiesAcquisition
                        of fixed assets
                    
                    
                    (195
                    )
                    
                    
                    (100
                    )Capitalized
                        software costs
                    
                    
                    (928
                    )
                    
                    
                    (883
                    )Net
                        cash used in investing activities
                    
                    
                    (1,123
                    )
                    
                    
                    (983
                    )Cash
                        Flows From Financing ActivitiesProceeds
                        from exercise of stock options
                    
                    
                    -
                    
                    
                    
                    246Excess
                        tax benefit from exercise of stock options
                    
                    
                    -
                    
                    
                    
                    24Principal
                        payments on note payable
                    
                    
                    (4
                    )
                    
                    
                    (5
                    )Net
                        cash provided by (used in) financing activities
                    
                    
                    (4
                    )
                    
                    
                    265Foreign
                        currency translation adjustments
                    
                    
                    35
                    
                    
                    
                    (106
                    )Net
                        increase in cash and cash equivalents
                    
                    
                    2,033
                    
                    
                    
                    1,943Cash
                        at beginning of period
                    
                    
                    22,789
                    
                    
                    
                    18,996Cash
                        at end of period
                    
                    $
                    24,822
                    
                    
                    $
                    20,939Supplemental
                        disclosures of cash flow information:Cash
                        paid during the period for:Interest
                        on notes payable
                    
                    $
                    -
                    
                    
                    $
                    2Income
                        taxes paid (received)
                    
                    $
                    72
                    
                    
                    $
                    (52
                    )
  
 6
 *Index*
  **MEDIWARE
        INFORMATIONSYSTEMS, INC.**
 **NOTES
        TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
  **1.     BASIS
        OF PRESENTATION**
 
 In
        the
        opinion of management, the accompanying unaudited, condensed, consolidated
        financial statements contain all adjustments necessary to present fairly
        the
        financial position of Mediware Information Systems, Inc. (“Mediware” or the
“Company”) and its results of operations and cash flows for the interim periods
        presented. Such financial statements have been condensed in accordance with
        the
        applicable regulations of the Securities and Exchange Commission and, therefore,
        do not include all disclosures required by accounting principles generally
        accepted in the United States of America. These financial statements should
        be
        read in conjunction with Mediware's audited financial statements for the
        fiscal
        year ended June 30, 2007 included in Mediware's Annual Report filed on Form
        10-K
        for such fiscal year.
 
 The
        results of operations for the three months ended September 30, 2007 are not
        necessarily indicative of the results to be expected for the entire fiscal
        year.
 
 
 **2.     EARNINGS
        PER SHARE**
 
 Basic
        earnings per share is computed by dividing net income by the weighted average
        number of shares of common stock outstanding, par value $0.10 (“Common Stock”),
        of Mediware.  For the three months ended September 30, 2007 and 2006,
        the dilutive effect of Common Stock equivalents is included in the calculation
        of diluted earnings per share using the treasury stock method.
 
 **3.     STOCK
        BASED COMPENSATION**
 
 **Stock
        Based Plans**
 
 The
        Company's 2003 Equity Incentive Plan, approved by the shareholders in December
        2003, provides additional compensation incentives to encourage high levels
        of
        performance and employee retention, other key employees of the Company,
        directors, and persons who render services to the Company as consultants,
        advisors or independent contractors.  In February 2005, the
        shareholders approved an increase in the number of shares that may be issued
        under such plan from 500,000 to 1,000,000.  In December 2005, the
        shareholders approved increasing the number of shares that may be issued
        under
        such plan from 1,000,000 to 2,000,000.  Shares may be issued as either
        incentive stock options, nonqualified stock options, or restricted Common
        Stock.  Options may be granted for a period of up to ten
        years.  Restricted Common Stock awards may be subject to vesting
        restrictions and may be forfeited if certain performance factors are not
        maintained.  The plan provides that a maximum of 1,700,000 shares may
        be issued as any combination of restricted stock, options and restricted
        stock
        unit awards.  The additional 300,000 shares of Common Stock can only
        be granted as option awards.  As of September 30, 2007, 1,189,000
        shares were available for issuance under this Plan.
 
 The
        Company's 2001 Stock Option Plan, approved by the shareholders in January
        2002,
        provides additional compensation incentives for high levels of performance
        and
        productivity by management, other key employees of the Company, directors,
        and
        persons who render services to the Company as consultants, advisors or
        independent contractors.  Up to 900,000 shares may be issued and sold
        under such plan and may be issued as either incentive stock options, to eligible
        persons, or nonqualified stock options.  Options may be granted for a
        period of up to ten years, with option prices not less than fair market value
        on
        the date of grant for incentive stock options, not less than 85% of fair
        market
        value for nonqualified stock options, and not less than 110% of fair market
        value for owners of more than 10% of the Company's outstanding voting
        stock.  As of September 30, 2007 no options were available to be
        issued under this Plan.
 
 The
        Company's 1997 Stock Option Plan for Non-Employee Directors, which provided
        compensation to directors for their services without the expenditure of cash,
        was intended to increase ownership interest of the non-employee directors.
        Options granted under this plan were exercisable at 100% of the fair market
        value on the date of grant and were for terms of eight years and vested in
        two
        equal installments during the year issued. Shares granted under this plan
        were
        limited to 500,000. This Plan was terminated effective January 2002, and
        no
        additional options are available to be issued under this Plan.
 
 7
 *Index*
  The
        Company's Equity Incentive Plan, approved by its shareholders in January
        1992
        and amended in March 2000, provided additional compensation incentives for
        high
        levels of performance and productivity by management and other key employees
        of
        the Company. The combined number of shares issued or available for issuance
        under this plan could not exceed thirty percent of the issued and outstanding
        Common Stock of the Company and not more than 700,000 shares could have been
        issued as incentive stock options. Options could have been granted for a
        period
        up to ten years, with option prices not less than fair market value on the
        date
        of grant for incentive stock options, not less than 50% of fair market value
        for
        nonqualified stock options, and not less than 110% of fair market value for
        owners of more than 10% of the Company's outstanding voting stock. This plan
        was
        terminated effective January 2002, and no additional options are available
        to be
        issued under this Plan.
 
 The
        Company accounts for stock-based compensation following the provisions of
        SFAS
        123R, which establishes a fair value-based method of accounting for stock-based
        compensation.  The aggregate noncash stock based compensation expense
        amounted to $153,000 and $90,000 for the three months ended September 30,
        2007
        and 2006, respectively.
 
 **Stock
        Option Awards**
 
 The
        fair
        value of stock options is determined at the date of grant and is charged
        to
        compensation expense over the vesting period of the options.  The fair
        value of options at date of grant was estimated using the Black-Scholes option
        pricing model utilizing the following assumptions:
  For
                    the Three Months Ended September 30, 2007Risk-free
                    interest rates
                4.6%
                    - 4.8%Expected
                    option life in years
                1
                    -
                    5Expected
                    stock price volatility
                34%
                    - 35%Expected
                    dividend yield
                -
 There
        were no options granted during the three months ended September 30,
        2006.  The risk-free rate for periods within the contractual life of
        the option is based on the U.S. Treasury yield curve in effect at the time
        of
        the grant.  The Company uses historical data to estimate option
        exercise and employee and director termination within the valuation model;
        separate groups of employees and directors that have similar historical exercise
        behavior are considered separately for valuation purposes.  The
        expected term of options granted represents the period of time that options
        granted are expected to be outstanding; the range given above results from
        groups of employees and directors exhibiting different
        behavior.  Expected volatilities are based on historical volatility of
        the Company’s stock.  The Company has not paid any dividends in the
        past and does not expect to pay any in the near future.
 
 8
 *Index*
  The
        followingtable sets forth summarized information concerning
        the Company's stock options as of September 30, 2007:
 
 Shares
              
              
              Weighted
                  Average Exercise Price
              
              
              Weighted
                  Average Remaining Contractual Term
              
              
              Aggregate
                  Intrinsic ValueOutstanding
                  at June 30, 2007
              
              
              1,022,000
              
              
              $
              8.97Granted
              
              
              142,000
              
              
              $
              6.97Exercised
              
              
              -
              
              
              
              -Forfeited
                  or expired
              
              
              (170,000
              )
              
              $
              8.84Outstanding
                  at September 30, 2007
              
              
              994,000
              
              
              $
              8.70
              
              
              
              4.3
              
              
              $
              489,000Expected
                  to vest at September 30, 2007
              
              
              994,000
              
              
              $
              8.70
              
              
              
              4.3
              
              
              $
              489,000Options
                  exercisable at September 30, 2007
              
              
              864,000
              
              
              $
              8.97
              
              
              
              3.5
              
              
              $
              425,000
 
 The
        weighted average fair value at date of grant for options granted during the
        three months ended September 30, 2007 was $2.38 per option.  There
        were no options granted during the three months ended September 30,
        2006.  The total intrinsic value of options exercised during the three
        months ended September 30, 2006 was $63,000.  There were no options
        exercised during the three months ended September 30, 2007.
 
 Historically,
        the Company has issued new shares upon the exercise of stock
        options.
 
 Cash
        received from options exercised under all stock-based payment arrangements
        for
        the three months ended September 30, 2006 was $246,000.  The actual
        tax benefit realized for the tax deductions related to option exercises of
        the
        share-based payment arrangements totaled $24,000 for the three months ended
        September 30, 2006.
 
 The
        Company recorded $24,000 and $90,000 of compensation expense for stock option
        plans for the three months ended September 30, 2007 and 2006,
        respectively.
  Estimated
            future stock-based compensation expense to be charged to operations in
            fiscal
            2008, 2009, 2010, 2011 and 2012 is as follows:
 
 Years
                      Ending September 30,
                  
                  Stock****Options2008
                  
                  $
                  138,0002009
                  
                  
                  103,0002010
                  
                  
                  52,0002011
                  
                  
                  20,0002012
                  
                  
                  3,000Total
                      estimated future stock-based compensation expense
                  
                  $
                  316,000
  9
 A
        summary
        of the status of the Company’s nonvested options as of September 30, 2007, and
        changes during the three months ended September 30, 2007, is presented
        below:
 
 **Nonvested
                  Options**
              
              **Shares**
              
              
              **Weighted
                  Average****Grant
                  Date****Fair
                  Value**Nonvested
                  at June 30, 2007
              
              
              -
              
              
              $
              -Granted
              
              
              142,000
              
              
              $
              6.97Canceled
                  or expired
              
              
              -
              
              
              $
              -Vested
              
              
              (12,000
              )
              
              $
              7.50Nonvested
                  at September 30, 2007
              
              
              130,000
              
              
              $
              6.93
 
 As
        of
        September 30, 2007, there was $316,000 of total unrecognized compensation
        cost
        related to nonvested options granted under existing stock option
        plans.  The total fair value of stock options vested during the three
        months ended September 30, 2007 and 2006 was $90,000 and $24,000,
        respectively.
  The
        following table presents information relating to stock options at September
        30,
        2007:
 
 Options
                  Outstanding
              
              
              Options
                  ExercisableRange
                  of Exercise Prices
              
              
              Shares
              
              
              Weighted
                  Average Exercise Price
              
              
              Weighted
                  Average Remaining Life in Years
              
              
              Shares
              
              
              Weighted
                  Average Exercise Price$
              0.00
                  - $ 4.49
              
              
              
              163,000
              
              
              $
              3.61
              
              
              
              2.0
              
              
              
              163,000
              
              
              $
              3.61$
              4.50
                  - $ 7.49
              
              
              
              195,000
              
              
              $
              6.86
              
              
              
              6.8
              
              
              
              65,000
              
              
              $
              6.74$
              7.50
                  - $ 8.99
              
              
              
              134,000
              
              
              $
              8.11
              
              
              
              2.9
              
              
              
              134,000
              
              
              $
              8.11$
              9.00
                  - $ 10.49
              
              
              
              218,000
              
              
              $
              10.07
              
              
              
              4.6
              
              
              
              218,000
              
              
              $
              10.07$
              10.50
                  - $11.99
              
              
              
              112,000
              
              
              $
              10.89
              
              
              
              2.7
              
              
              
              112,000
              
              
              $
              10.89$
              12.00
                  - $13.49
              
              
              
              117,000
              
              
              $
              12.45
              
              
              
              5.7
              
              
              
              117,000
              
              
              $
              12.45$
              13.50
                  - $14.99
              
              
              
              45,000
              
              
              $
              13.74
              
              
              
              6.4
              
              
              
              45,000
              
              
              $
              13.74$
              15.00
              +
              
              
              10,000
              
              
              $
              15.00
              
              
              
              1.1
              
              
              
              10,000
              
              
              $
              15.00994,000
              
              
              
              
              
              
              
              
              
              
              
              864,000
 
 **Restricted
        Common Stock Awards**
 
 During
        fiscal 2006, the Company entered into agreements to provide long-term incentive
        compensation opportunities to certain key employees.  Under the terms
        of these agreements, the Company granted the employees 200,000 restricted
        shares
        of Common Stock (the “Performance Shares”).  The Performance Shares
        vest in fiscal 2007, 2008 and 2009 only if Mediware achieves certain performance
        goals based on revenue and earnings per share.  The Company has not
        recorded any compensation expense related to the Performance Shares because
        it
        is not probable the performance goals will be met.  The Company will
        continue to assess whether or not the achievement of any performance goals
        are
        probable at each reporting period, and will begin recognizing the related
        expense if and when the performance conditions become probable.  The
        Performance Shares may result in compensation expense in future periods of
        up to
        $699,000, representing the fair value on the date of the
        grant.  During the three months ended September 30, 2007, 125,000 of
        these Performance Shares were canceled due to the resignation of certain
        key
        employees.
  10
 
 During
        fiscal 2007, the Company entered into agreements to provide long-term incentive
        compensation opportunities to certain employees.  Under the terms of
        these agreements, the Company granted the employees 25,000 restricted shares
        of
        Common Stock (the “Time-Based Shares”).  The Time-Based Shares vest
        over a three-year period based upon the continued employment of the key
        employee.  For the three-months ended September 30, 2007, the Company
        recorded $70,000 of compensation expense related to the Time-Based
        Shares.  The Time-Based Shares will result in compensation expense in
        future periods of up to $73,000, representing the fair value on the date
        of the
        grant less the amount of compensation expense already recorded.
 
 During
        fiscal 2008, the Company entered into agreements to provide long-term incentive
        compensation opportunities to certain employees.  Under the terms of
        these agreements, the Company granted the employees 160,000 restricted shares
        of
        Common Stock (the “Enhanced Performance Shares”).  The Enhanced
        Performance Shares vest partially upon continued employment of the key employees
        and partially upon the achievement of certain performance goals.  For
        the three-months ended September 30, 2007, the Company recorded $59,000 of
        compensation expense related to the Enhanced Performance Shares.  The
        Company will continue to assess whether or not the achievement of any
        performance goals is probable at each reporting period, and will recognize
        the
        related expense if and when the performance conditions become
        probable.  The Enhanced Performance Shares may result in compensation
        expense in future periods of up to $1,031,000, representing the fair value
        on
        the date of the grant less the amount of compensation expense already
        recorded.  This amount includes $326,000 of unrecognized compensation
        expense related to the continued employment of the key employees.
 Estimated
          future stock-based compensation expense to be charged to operations in
          fiscal
          2008, 2009, 2010 and 2011 is as follows:
 
 Years
                  Ending September 30,
              
              **Time-Based
                  Shares**
              
              
              **Enhanced
                  Performance Shares (Time-Based Portion)**
              
              
              **Total**2008
              
              $
              42,000
              
              
              $
              147,000
              
              
              $
              189,0002009
              
              
              26,000
              
              
              
              119,000
              
              
              
              145,0002010
              
              
              5,000
              
              
              
              54,000
              
              
              
              59,0002011
              
              
              -
              
              
              
              6,000
              
              
              
              6,000Total
                  estimated future stock-based compensation expense
              
              $
              73,000
              
              
              $
              326,000
              
              
              $
              399,000
 
 A
        Summary
        of the status of the Company’s nonvested restricted Common Stock as of September
        30, 2007, and changes during the three months ended September 30, 2007, is
        presented below:
 
 **Nonvested
                  Performance Shares**
              
              
              **Weighted
                  Average**
                **Grant
                  Date**
                **Fair
                  Value**
              
              
              **Nonvested
                  Enhanced Performance Shares**
              
              
              **Weighted
                  Average**
                **Grant
                  Date**
                **Fair
                  Value**
              
              
              **Nonvested
                  Time-Based Shares**
              
              
              **Weighted
                  Average**
                **Grant
                  Date**
                **Fair
                  Value**Nonvested
                  at June 30, 2007
              
              
              200,000
              
              
              $
              8.80
              
              
              
              -
              
              
              $
              -
              
              
              
              22,000
              
              
              $
              8.50Granted
              
              
              -
              
              
              $
              -
              
              
              
              160,000
              
              
              $
              6.81
              
              
              
              -
              
              
              $
              -Canceled
                  or expired
              
              
              (125,000
              )
              
              $
              8.48
              
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -Vested
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              
              
              
              $
              -Nonvested
                  at September 30, 2007
              
              
              75,000
              
              
              $
              9.32
              
              
              
              160,000
              
              
              $
              6.81
              
              
              
              22,000
              
              
              $
              8.50
 
 The
        fair
        value of the nonvested shares is determined based on the average trading
        price
        of the Company’s shares on the grant date.
  11
 
 **4.     INCOME
        TAXES**
 
 The
          Company accounts for income taxes under the asset and liability
          approach.  Deferred tax assets and liabilities are recognized for the
          expected future tax consequences attributed to differences between the
          financial
          statement carrying amounts of existing assets and liabilities and their
          respective tax bases.  Deferred tax assets and liabilities are
          measured using the enacted rates expected to apply to taxable income in
          the
          years in which those temporary differences are expected to reverse.  A
          valuation allowance is provided against net deferred tax assets when it
          is not
          more likely than not that a tax benefit will be realized.  Income
          taxes include U.S. and foreign taxes.  Effective July 1, 2007, the
          Company adopted FASB Interpretation No. 48, *“Accounting for Uncertainties in
          Income Taxes – an interpretation of FASB Statement No. 109*”, (“FIN
          48”).  There was no impact to the Company’s results of operations and
          financial position upon adoption.  At June 30, 2007, the Company had
          unrecognized tax benefits of $100,000, which included estimated interest
          and
          penalties.   The Company intends to classify any future expenses
          for income tax-related interest and penalties as a component of income
          taxes.
 
 The
        Company files income tax returns in the U.S. federal jurisdiction and various
        state and foreign jurisdictions.  In general, the Company’s filed
        income tax returns are no longer subject to examination by taxing authority
        examinations for years ending before June 30, 2003.
 
 During
          the three months ended September 30, 2007, the Company reduced its deferred
          tax
          asset by approximately $225,000 in connection with fully vested non-qualified
          employee stock options which terminated as a result of the departure of
          certain
          employees in connection with the corporate consolidation and the departure
          of
          the former chief executive officer during the period.
  **5.
        SEGMENT INFORMATION**
 
 The
        Company has three distinct product lines:  Medication Management
        systems, Blood Management systems and Perioperative Management
        systems.   Based on similar economic characteristics, as well as
        the nature of products, production processes, customers and distribution
        methods, the Company has aggregated these operating divisions into one reporting
        segment.  Revenue by product line are as follows (in
        thousands):
  For
                    the Three Months Ended September 30,2007
                
                
                2006Medication
                    Management Systems
                
                $
                5,860
                
                
                $
                3,312Blood
                    Management Systems
                
                
                4,675
                
                
                
                4,846Perioperative
                    Management Systems
                
                
                209
                
                
                
                317Total
                
                $
                10,744
                
                
                $
                8,475
 12
  Selected
        financial information by geographic area is as follows (in
        thousands):
 
 For
                  the Three Months Ended September 30,2007
              
              
              2006Revenue
                  from Unaffiliated Customers:United
                  States
              
              $
              9,642
              
              
              $
              7,674United
                  Kingdom
              
              
              1,102
              
              
              
              801Total
              
              $
              10,744
              
              
              $
              8,475Net
                  Income:United
                  States
              
              $
              417
              
              
              $
              279United
                  Kingdom
              
              
              46
              
              
              
              (115
              )Total
              
              $
              463
              
              
              $
              164September
                  30,2007
              
              
              2006Identifiable
                  Assets:United
                  States
              
              $
              57,557
              
              
              $
              54,936United
                  Kingdom
              
              
              4,574
              
              
              
              4,384Total
              
              $
              62,131
              
              
              $
              59,320
  **6.     EXIT
        ACTIVITIES**
 
 On
        July
        20, 2007, the Company announced the consolidation of its three business units
        into a single operating unit.  The consolidation of operations and
        elimination of redundant business functions is intended to reduce costs and
        lower corporate overhead and to accelerate the growth of the Company’s two
        primary businesses, blood and medication management.  In conjunction
        with this restructuring, the Company closed an office and reduced its workforce
        by approximately 20 employees.  In addition, the Company no longer
        intends to invest in the growth of its perioperative management
        systems.
 
 Costs
        to
        be incurred in connection with this exit activity comprise one-time benefits
        to
        employees who are involuntarily terminated, costs related to the early
        termination of certain contracts, and costs of consolidating
        facilities.  As management had not communicated the plan of
        termination associated with the restructuring as of June 30, 2007, the Company
        did not incur an exit activity liability in its June 30, 2007 consolidated
        financial statements.  The following table provides a reconciliation
        of the beginning and ending balances of the exit activity
        liability:
 
 **Employee
                  Termination Benefits**
              
              
              **Contract
                  Termination Costs**
              
              
              **Facilities
                  Consolidation Costs**
              
              
              **Total**Balance,
                  June 30, 2007
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Additional
                  expense incurred
              
              
              273,000
              
              
              
              7,000
              
              
              
              97,000
              
              
              
              377,000Amounts
                  paid
              
              
              (142,000
              )
              
              
              (4,000
              )
              
              
              (97,000
              )
              
              
              (243,000
              )Balance,
                  September 30, 2007
              
              $
              131,000
              
              
              $
              3,000
              
              
              $
              -
              
              
              
              134,000
 
 The
        Company recorded all expenses related to exit activity costs as Selling,
        General
        and Administrative expenses in the accompanying financial statements for
        the
        three months ended September 30, 2007.
  13
  The
        following table provides a reconciliation of beginning and ending balances
        of
        the exit activity liability by business units:
  **Medication
                  Management**
              
              
              **Perioperative
                  Management**
              
              
              **Total**Balance,
                  June 30, 2007
              
              $
              -
              
              
              $
              -
              
              
              $
              -Additional
                  expense incurred
              
              
              268,000
              
              
              
              109,000
              
              
              
              377,000Amounts
                  paid
              
              
              (192,000
              )
              
              
              (51,000
              )
              
              
              (243,000
              )Balance,
                  September 30, 2007
              
              $
              76,000
              
              
              $
              58,000
              
              
              $
              134,000
 
 
 **7.     CONTINGENCIES**
 
 On
        March
        6, 2006, Triad Laboratory Alliance, LLC d/b/a Spectrum Laboratory Network
        (“Spectrum”) filed suit against Mediware in the General Court for Justice,
        Superior Court Division, County of Guilford, North Carolina. The case was
        subsequently removed from North Carolina state court to the United States
        District Court for the Middle District of North Carolina. Spectrum seeks
        an
        unspecified amount of damages (exceeding $300,000) due to, among other things,
        Mediware’s alleged misrepresentations and breaches of warranties under its
        license agreement and the violation of the North Carolina unfair trade practices
        statute.  Mediware counter-sued Spectrum for, among other things,
        breach of contract and misappropriation of Mediware’s intellectual
        property.  In July 2007, the parties agreed to enter into binding
        arbitration.  The lawsuits have been stayed while the case in
        proceeding through the arbitration process.
 
 On
        August
        16, 2006, Mediware filed a lawsuit against Korchek Technologies, LLC (“Korchek”)
        in the United States District Court for the Eastern District of New York
        alleging breach of contract and tortious interference with Mediware's
        contractual relationships with certain customers.  On September 28,
        2006, Korchek filed an answer to Mediware's lawsuit denying any wrongdoing
        and
        filed a counterclaim. The counterclaim seeks unspecified damages and alleges,
        among other things, that Mediware has improperly interfered with Korchek’s
        prospective business relationships; disparaged Korchek, its president and
        its
        products and improperly induced Korchek’s customers to breach their contractual
        relationship with Korchek.
  In
        February 2007, the California Supreme Court denied the petition for a review
        filed by former Mediware employee Donnie L. Jackson, Jr. regarding the decision
        of the Third Appellate District in Sacramento, California to vacate the award
        of
        attorney’s fees previously obtained by Mr. Jackson and to remand the case to
        Superior Court of El Dorado County, California for further
        proceedings.  Mr. Jackson had previously successfully moved for
        summary judgment on claims by GlobalMed Technologies, Inc. (“Global
        Med”)  that he misappropriated trade secrets and breached certain
        contractual covenants.  The trial court had awarded fees, costs and
        interest against Global Med based on Mr. Jackson’s employment contracts. In the
        event that Mr. Jackson ultimately prevails in this case, which was commenced
        on
        September 23, 2002 by Global Med, the Company would be eligible to be reimbursed
        for certain attorneys fees and costs plus interest advanced to Mr. Jackson
        by
        the Company in connection with Global Med’s claims.  If Mr. Jackson
        does not prevail, Mediware could be responsible under an agreement with Mr.
        Jackson for damages and certain fees and costs awarded to Global Med, which
        could be material.
 
 In
        addition to the foregoing, the Company is subject to legal proceedings and
        claims that arise in the ordinary course of business.  The Company
        believes that the outcome of all pending legal proceedings in the aggregate
        will
        not have a material adverse effect on its business, financial condition,
        results
        of operations or cash flows.
  14
 
 **8.     CONCENTRATION
        OF REVENUE**
 
 The
        Company recorded $2,029,000 of revenue related to one contract signed during
        the
        quarter ended September 30, 2007.  The Company had an outstanding
        accounts receivable balance of $1,015,000 at September 30, 2007 related to
        this
        customer.  No other customer represented more than 10% of revenue for
        the three months ended September 30, 2007 or 2006.
 
 
 **9.     SUBSEQUENT
        EVENTS**
 
 On
        October 31, 2007, Mediware acquired substantially all of the business and
        assets
        and assumed certain liabilities of Integrated Marketing Solutions, LLC, a
        Maryland limited liability company (“IMS”).  IMS provides software
        products and services targeting blood and plasma donation centers in North
        America and Europe.  As of October 31, IMS had more than 32 customers
        in the United States and has offices in Baltimore, Maryland and Jacksonville,
        Florida.  With over 70 product installations as of October 31, 2007,
        IMS’s software and services address the competitive nature of the blood supply
        market by enabling blood and plasma collection facilities with automated
        and
        online software to better manage relationships with donors, staff and
        hospitals.
 
 The
        purchase price paid for the assets of  IMS consists of (i) an initial
        purchase price of $5,458,000 (subject to a working capital adjustment) paid
        in
        cash at the closing, and (ii) cash payments of up to $575,000 in the aggregate
        if certain revenue milestones are achieved by the purchased business in the
        twelve months following the closing.
  15
 *Index*
  **REVIEW
        REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
        FIRM**
  To
        The
        Board of Directors and Shareholders of
 Mediware
        Information Systems, Inc.
 
 We
        have
        reviewed the accompanying condensed consolidated balance sheet of Mediware
        Information Systems, Inc. and subsidiaries (the "Company") as of September
        30,
        2007, and the related condensed consolidated statements of operations and
        comprehensive income, and cash flows for the three month periods ended September
        30, 2007 and 2006.  These interim condensed consolidated financial
        statements are the responsibility of the Company's management.
  We
        conducted our reviews in accordance with standards established by the Public
        Company Accounting Oversight Board (United States). A review of interim
        financial information consists principally of applying analytical procedures
        to
        financial data and making inquiries of persons responsible for financial
        and
        accounting matters. It is substantially less in scope than an audit conducted
        in
        accordance with the standards of the Public Company Accounting Oversight
        Board
        (United States), the objective of which is the expression of an opinion
        regarding the financial statements taken as a whole. Accordingly, we do not
        express such an opinion.
  Based
        on
        our reviews, we are not aware of any material modifications that should be
        made
        to the accompanying interim condensed consolidated financial statements in
        order
        for them to be in conformity with accounting principles generally accepted
        in
        the United States of America.
  We
        have
        previously audited, in accordance with the standards of the Public Company
        Accounting Oversight Board (United States), the consolidated balance sheet
        of
        the Company as of June 30, 2007, and the related consolidated statements of
        operations and comprehensive income, shareholders' equity, and cash flows
        for
        the year then ended (not presented herein), and in our report dated September
        11, 2007, we expressed an unqualified opinion on those consolidated financial
        statements. In our opinion, the information set forth in the accompanying
        condensed consolidated balance sheet as of June 30, 2007 is fairly stated
        in all material respects in relation to the consolidated balance sheet from
        which it has been derived.
 
  Eisner
        LLP
 New
        York,
        New York
  November
        2, 2007
  16
 *Index*
  **ITEM
                    2.**
                **MANAGEMENT’S
                    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                    RESULTS OF
                    OPERATIONS**
  **Forward-Looking
        Statements**
 
 *This
        Report on Form 10-Q contains forward-looking statements. Any statements
        contained herein that are not statements of historical fact may be deemed
        to be
        forward-looking statements within the meaning of Section 21E of the Securities
        Exchange Act. The words “believes,” “anticipates,” “plans,” “seeks,” “expects,”
“intends” and similar expressions identify some of the forward-looking
        statements. Forward-looking statements are not guarantees of performance
        or
        future results and involve risks, uncertainties and assumptions. The factors
        discussed elsewhere in this Form 10-Q and in Mediware’s Form 10-K for the year
        ended June 30, 2007, could also cause actual results to differ materially
        from those indicated by the Company’s forward-looking
        statements.  Mediware undertakes no obligation to publicly update or
        revise any forward-looking statements.*
 
 **Overview**
 
 Mediware
        Information Systems, Inc. (including its subsidiaries, “Mediware” or the
“Company”) is a New York corporation incorporated in 1970 with its corporate
        headquarters at 11711 West 79th Street, Lenexa, Kansas.  The Company
        maintains an Internet website at www.mediware.com, at which reports filed
        with
        the Securities Exchange Commission (“SEC”) under the Securities Exchange Act of
        1934, as amended (the “Securities Exchange Act”), can be obtained under
“Investor Relations” without charge as soon as reasonably practicable after
        filed or furnished with the SEC.
 
 Mediware
        develops, markets, licenses, implements and supports clinical management
        information solutions.  The Company's solutions are primarily designed
        to create an automated “closed loop” clinical system for the management of
        medication and blood in hospitals, blood centers, and long-term care and
        behavioral health facilities.  The Company’s
        solutions  typically consist of the Company's proprietary application
        software, third-party licensed software and third-party
        hardware.  Mediware sells implementation, training, and annual
        software support services with software systems.  The Company also
        maintains a perioperative management software product used by hospitals in
        the
        United States.   Mediware provides annual software support
        services to its perioperative software customers, but on July 20, 2007, Mediware
        announced that it stopped actively marketing its perioperative management
        products and does not expect to market these products in fiscal year
        2008.
 
 Mediware
        markets its blood management products primarily in the United
        States.  The Company markets its medication management solutions in
        the United States and in the United Kingdom, with different software systems
        designed for the specific requirements of each market.  The Company
        has operations in the United Kingdom relating to the systems licensed and
        sold
        primarily in that market.  All other operations are in the United
        States.
 
 **Market
        Positioning**
 
 Mediware’s
        products have been designed to address significant clinical issues in the
        healthcare industry.   Traditional healthcare environments
        include collections of disparate information systems and manual processes
        used
        by clinicians throughout the care process.  The result is reduced
        efficiency and increased safety risks due to the potential for human error
        and
        delayed access to patient information and records as patients progress through
        the continuum of care. When dealing with blood or medications, errors and
        delays
        can often result in tragic consequences.   The Company’s products
        address these clinical issues with “suites” of applications that provide
        clinicians one data environment for the information relating to the prescribing,
        preparation, and administration of drug and/or blood therapies.  The
        Company’s two primary product lines, Blood Management and Medication Management
        solutions, manage each step of the therapeutic process, including: ordering,
        fulfillment, administration, and documentation.  Mediware’s products
        provide care providers a “closed loop” process for blood and medication
        therapies.  The Company believes this closed loop process
        differentiates it from the industry’s catalog and “best of breed”
vendors.  The process-centric integrated data environments provided by
        Mediware’s blood and medication management solutions seamlessly extend the
        discipline and controls of the pharmacy and blood bank to patient units,
        operating room suites, and other venues where adverse events occur.
 
 17
 *Index*
  On
        July
        20, 2007, Mediware announced the consolidation of its three business divisions
        into a single operating unit to eliminate redundant business functions, improve
        efficiencies and lower operating costs.  The Company expects the
        consolidation to permit more investment in the blood and medication management
        product lines and to accelerate the growth of the Company's closed loop blood
        and medication management product lines without negatively impacting the
        delivery of its services.  At the same time, the Company also
        announced its intention to stop actively marketing its perioperative management
        products to focus resources on enhancing and expanding its strategic product
        direction.
 
 **The
        Healthcare Information Systems Industry**
 
 The
        healthcare industry in the United States is highly fragmented, complex, and
        inefficient. Comparatively, the healthcare industry has invested less in
        information technology than many other industries. While advances in medical
        technology have provided physicians, nurses and other caregivers leading
        edge
        diagnostic and therapeutic technologies, the information systems supporting
        the
        management of clinical processes in complex healthcare organizations have
        made
        insufficient progress.  A substantial portion of clinical workflow
        still depends upon manual paper-based processes interfaced with various
        automated or semi-automated functionally oriented clinical
        systems.  Examples of functionally oriented clinical systems include
        pharmacy, radiology, blood bank and nursing documentation.
 
 As
        a
        result, the health care industry is generally economically inefficient and
        produces significant variances in medical outcomes.While waste and
        utilization rates are rarely made public, patient safety and the publicity
        surrounding medical errors have focused a tremendous amount of scrutiny on
        hospitals and care providing institutions. Recent news reports and professional
        studies have highlighted patient safety errors and influenced governmental
        activity.
 
 The
        Company anticipates that the continued increase in government regulation,
        public
        and competitive pressure regarding errors occurring in hospitals, and new
        health
        threats, will increase the industry’s expenditures on clinical information
        systems.  Mediware believes that its product strategy and offerings
        provide an alternative to monolithic solutions architectures of disparate
        systems and can play a role in moving healthcare IT standards forward to
        deliver
        significant results for customers.
 
 Competition
        in the market for clinical information systems is intense.  The
        principal competitive factors are the functionality of the system, its design
        and capabilities, site references, ability to install, process redesign
        capabilities, reputation, software platform, the potential for enhancements,
        price, departmental versus enterprise sales and salesmanship.  Also
        key is the strategic position the incumbent, or major healthcare information
        systems vendor, has in the customer site. Different dynamics and competitors,
        however, affect each of the Company's products and each sale.
 
 **Blood
        Management Products**
 
 The
        Company supplies information and management software systems to blood donor
        and
        transfusion centers.  Hospitals and blood centers face pressures to
        manage blood inventory and improve the safety of the blood supply by reducing
        errors, improving screening and increasing throughput and cost
        efficiencies.  These pressures exist despite pressures across the
        healthcare industry to reduce costs and to address ongoing personnel
        shortages.  Mediware's user-friendly blood management software systems
        are intended to help hospitals and blood centers address these
        issues.  The software is designed to reduce costs through automatic
        report production, decreased paperwork, and automated billing.  The
        Company's products are also designed to improve blood supply safety and the
        productivity of blood center personnel through the use of user-defined truth
        tables and automatic linking to donors' historical records, among other
        features.  Donor recruitment programs may also be enhanced though
        Mediware’s donor software by making tele-recruiters more
        productive.
 
 The
          Company’s current blood transfusion product is  HCLLTM.  During
          fiscal 2005, the Company received 510(k) clearance for its complementary
          HCLL
          donor software product for use in hospital-based donor centers.  HCLL
          Transfusion and HCLL Donor are clinical applications that address blood
          donor
          recruitment, blood processing and transfusion activities for hospitals
          and
          medical centers.  These systems are designed to be user intuitive,
          scalable, and support product management, resource management, quality
          control
          and testing.  They include advanced data mining and data management
          intelligence capabilities, which can be utilized by facilities of all sizes,
          including small hospitals, large medical centers, multi-facility enterprises
          and
          central transfusion services.  HCLL software also can address the
          needs of hospitals for operating centralized transfusion services, an area
          identified as a key to controlling the rising cost of blood
          products.  The HCLL software is already in productive use at over 70
          sites.
 
 18
 *Index*
  The
        Company also provides large complex blood centers tools for donor targeting,
        donor recruitment,  donation management, unit testing, blood component
        manufacturing, inventory control and distribution through its LifeTrakâ
        software.  LifeTrak software can operate in multiple operating
        environments enabling each customer to configure hardware according to its
        own
        needs and budgetary constraints.  The Unix-based LifeTrak software
        system is more suitable for larger complex customer donor sites, while the
        HCLL
        Donor system is generally a more cost effective solution for hospitals and
        smaller donor centers.
 
 The
        Company continues to concentrate on increasing the number of users and licensees
        of its HCLL and LifeTrak software, with a focus on large sophisticated
        healthcare institutions that are best positioned to take advantage of the
        robust
        functionality and enterprise-level capabilities in the software.
 
 The
        Company is also looking to new products and markets to continue its
        growth.  In early fiscal year 2008, the Company announced its new
        BloodSafeTM suite of products.  The BloodSafe suite includes hardware
        and software which enable healthcare facilities to securely store, monitor,
        distribute and track blood products from locations removed from the hospital’s
        physical blood bank. Components of the BloodSafe suite include blood tracking
        and monitoring software, computer controlled refrigerators, and handheld
        point
        of care tools to verify accurate patient identification and document transfusion
        activities. BloodSafe can be integrated with Mediware’s HCLL system or operate
        on a stand-alone basis.  Additionally, the Company believes it is
        positioned to benefit from the emerging biologics market, which includes,
        among
        other things, bone, tissue and cord blood stem cells.  The Company
        expects the biologics markets to become subject to regulatory
        scrutiny.  As a result, the Company is developing software products
        that address the management of non-blood biologics.
 
 In
          addition to its sale of software, the Company generates revenue from
          professional services and post-contract support.  These ongoing
          support contracts have recently accounted for over 75% of revenue from
          blood
          management operations and are recurring in nature.
 
 The
        blood
        management products are marketed primarily through the Company’s direct sales
        force.  Additionally, the Company is working to develop complementary
        reseller relationships for products.
 
 The
        blood
        management products compete primarily with vendors of laboratory information
        systems ("LIS") providing a blood bank subsystem as a part of their laboratory
        product, as well as other companies that market stand-alone blood bank systems.
        The LIS vendors are much larger companies with greater technical, marketing,
        financial and other resources than the Company.  The Company believes,
        however, that due to the functionality of the HCLL software, the Company
        is
        well-positioned in the blood bank system market and that it has a good
        reputation with its customers, including many of the most sophisticated
        healthcare systems in the United States.
 
 **Medication
        Management Products**
 
 The
        Company supplies medication management solutions to hospitals, mental health
        facilities, penal institutions and other institutions that require the
        administration and management of medication.  The Company’s medication
        management solutions are designed to help customers improve patient safety
        while
        reducing costs and improving clinical documentation.  Additionally,
        the solutions help medical facilities comply with increasing regulatory and
        governmental requirements.
 
 The
        Company’s principal software product for medication management is WORxâ, a core
        pharmacy
        information system designed to manage inpatient and outpatient pharmacy
        operations.  WORx has features and functions designed to help improve
        patient safety and manage pharmacy operations effectively.  Since its
        introduction, WORx has been licensed for use at approximately 250 customer
        sites.  The product's market acceptance encompasses hospitals of all
        sizes, including multi-facility healthcare systems.
 
 19
 *Index*
  In
        fiscal
        2004, the Company released two new medication management products, MediCOETM and MediMAR®.  These
        products are fully integrated with the WORx software and provide a complete
        closed loop drug therapy management system with a physician order entry module
        (MediCOE) and nurse point of care administration and bedside documentation
        module (MediMAR).  The MediCOE software provides clinicians an
        efficient, effective method to enter medication orders and manage drug
        therapy.  Orders entered in the MediCOE software undergo a prospective
        evaluation based on the patient’s current medical profile to identify potential
        adverse outcomes.  Potential problems can be identified by the
        clinician at order entry and can be corrected or explained at the point of
        care.  The MediMAR software, on the other hand, serves as an
        electronic medication administration and bedside documentation
        record.  It produces a dynamic and complete representation of the
        patient’s medication profile, including clinician orders, medication list,
        allergies and notes or alerts to increase patient safety. The MediMAR software
        uses bar code, wireless, handheld, and other technologies to allow caregivers
        efficient and accurate methods to document patient medication
        administration.  The MediCOE and MediMAR products have been installed
        and are in productive use in two and five separate customer sites,
        respectively.
 
 In
        March
        2007, the Company introduced MediREC, a new medication management
        tool.  This new product assists in achieving compliance with a recent
        mandate by the Joint Commission on Accreditation of Healthcare Organizations
        (“JCAHO”), which requires hospitals to document all of a patient’s home
        medications when a patient is admitted or enters the emergency room, and
        to
        reconcile that list with the medications prescribed in the
        hospital.  That process must be repeated each time the patient is
        transferred within the hospital and again when the patient is
        discharged.
 
 The
        Company continues to target its large WORx software customer base and new
        customers with the MediCOE and MediMAR products and has begun marketing MediREC
        to this customer base and new customers as well.  The Company is also
        beginning to increase its focus on behavioral health and other specialty
        healthcare markets where the integrated features and functionality included
        in
        the WORx, MediMAR, MediCOE and MediREC software products can provide a fully
        integrated medication management solution.
 
 Selling
          the Company’s full suite of medication management products is a complex process
          (WORx, MediMAR, MediCOE and MediREC) involving multiple hospital departments
          and, therefore, results in substantially longer sales cycles compared to
          stand-alone WORx sales.  This has resulted in less predictable
          contract closures and a need to recognize software license revenue over
          multiple
          quarters (in some cases).  The Company generates revenue from
          medication management software sales, professional services and post-contract
          support.  Support contracts currently account for approximately half
          of the revenue from medication management operations.  As the sale of
          MediCOE and MediMAR products increases, the Company expects that license
          fee
          revenue will increase and support revenue will make up a smaller portion
          of the
          Company’s revenue.
 
 The
        Company’s medication management products compete against the products of the
        other niche competitors’ and some of the largest providers of healthcare
        information technology, including Cerner, General Electric, Siemens, Eclipsys
        and others.  These competitors often have significantly greater
        resources than Mediware, but the Company believes that its products are well
        positioned and have functionality that can lead to growth.  The
        medication management products are marketed directly through the Company’s sales
        force and other marketing channels, including reseller agreements with
        distribution partners and focused sales channels.
 
 The
        Company's United Kingdom operating business is JAC Computer Services, Ltd.
        (“JAC”).   JAC markets and provides support for its pharmacy
        management and electronic prescribing systems throughout the U.K., Ireland
        and
        South Africa.  JAC includes an installed base of over 250 customer
        sites, representing over 90 National Health Service (“NHS”) acute hospitals or
        trusts.  JAC’s product offering includes JAC’s Pharmacy Management
        System and Electronic Prescribing module.
  20
 *Index*
  ***Results
          of Operations for the Three Months Ended September 30, 2007 as Compared
          to the
          Three Months Ended September 30, 2006***
 
 Total
          revenue for the first quarter of fiscal 2008 is $10,744,000 compared to
          $8,475,000 in the comparable quarter of fiscal 2007, an increase of $2,269,000,
          or 26.8%, primarily due to increased system sales.  Blood management
          products and services recorded total revenue of $4,675,000 in the first
          quarter
          of fiscal 2008, representing a decrease of $171,000, or 3.5%, compared
          to
          $4,846,000 in the same period of fiscal 2007.  Medication management
          products and services (excluding the United Kingdom operations, JAC Computer
          Services, Ltd., “JAC”) recorded an increase in total revenue of $2,247,000, or
          89.5% from $2,511,000 in the first quarter of fiscal 2007 to $4,758,000
          in the
          same period of fiscal 2008.  JAC recorded total revenues of $1,102,000
          in the first quarter of fiscal 2008, representing an increase of $301,000,
          or
          37.6%, compared to $801,000 in the same period of fiscal
          2007.  Perioperative management products and services recorded
          revenues of $209,000 in the first quarter of fiscal 2008, representing
          a
          decrease of $108,000, or 34.1%, compared to $317,000 in the same quarter
          in
          fiscal 2007.
 System
          sales, which include proprietary software, third party software and hardware
          revenue, amounted to $4,190,000 for the quarter ended September 30, 2007,
          an
          increase of $1,867,000, or 80.4%, from $2,323,000 in the same period in
          fiscal
          2007.  System sales for the medication management products (excluding
          JAC) increased from $507,000 in fiscal 2007 to $2,804,000 in fiscal 2008,
          representing an increase of $2,297,000, or 453.1%.  The increase is a
          result of the signing of a significant MediMAR contract during the first
          quarter.  System sales for the blood management products were
          $1,154,000 for the first quarter of fiscal 2008, a decrease of $557,000,
          or
          32.6%, compared to $1,711,000 in the same quarter of fiscal
          2007.  This decrease is consistent with Mediware’s expected lower
          system sales for blood management products in fiscal 2008 due to the completion
          of the Hemocare and LifeLine sunset program in June 2007.  The
          perioperative management products experienced a decrease in system sales
          of
          $25,000, or 80.6%, from $31,000 in fiscal 2007 to $6,000 in the first quarter
          of
          fiscal 2008.  This decrease was anticipated, since Mediware announced
          in July 2007 that in conjunction with the consolidation of its three business
          divisions into a single operating unit, it no longer intends to invest
          in the
          growth of the perioperative management products.   JAC recorded
          system sales of $226,000 for the first quarter of fiscal 2008, representing
          an
          increase of $152,000, or 205.4%, compared to $74,000 reported for the same
          period in fiscal 2007.  While the Company believes revenue at JAC will
          continue to increase, the ongoing delays and changes to the Connecting
          for
          Health Program in the United Kingdom could adversely impact JAC’s
          revenues.
 
 Service
        revenue, which includes recurring software support, implementation and training
        services, increased $402,000, or 6.5%, to $6,554,000 in the first quarter
        of
        fiscal 2008 compared to $6,152,000 for the same period in fiscal
        2007.  Service revenue for the medication management products
        (excluding JAC) decreased $50,000, or 2.5%, to $1,954,000 in the first quarter
        of fiscal 2008 compared to $2,004,000 for the first quarter of fiscal
        2007.  This decrease is a result of fewer ongoing implementations in
        the first quarter of 2008 as compared to the same period in fiscal
        2007.  Service revenue for the blood management products totaled
        $3,521,000 for the first quarter of fiscal 2008, representing an increase
        of
        $386,000, or 12.3%, compared to $3,135,000 in the first quarter of fiscal
        2007.  This increase primarily reflects an increase in implementation
        activity for the HCLL software systems, which were licensed as part of the
        sunset program.  Mediware anticipates that service revenue will
        continue to increase throughout fiscal 2008 as the Company expands
        implementation activity on HCLL projects.  Service revenue for
        perioperative management products decreased $83,000, or 29.0%, to $203,000
        in
        the first quarter of fiscal 2008 compared to $286,000 in the first quarter
        of
        fiscal 2007.  This decrease is primarily a result of fewer
        implementation projects in the first quarter of fiscal 2008 as compared to
        the
        same period in fiscal 2007.  Mediware expects service revenue for
        perioperative management products to continue to decline throughout fiscal
        2008,
        as the Company no longer intends to invest in the growth of this product
        line.  However, the Company will continue to provide support service
        to its existing perioperative management products and consider other strategic
        alternatives for this product line.  Service revenue for JAC increased
        $149,000, or 20.5%, to $876,000 in the first quarter of fiscal 2008 compared
        to
        $727,000 in the first quarter of fiscal 2007.  This increase is a
        result of increased annual renewal support fees, coupled with an increase
        in the
        size of the overall customer base.
 
 Cost
        of
        systems includes the cost of computer hardware and sublicensed software
        purchased from computer and software manufacturers by Mediware as part of
        its
        complete system offering.  These costs can vary as the mix of revenue
        varies between high margin proprietary software and lower margin computer
        hardware and sublicensed software components.  Cost of systems
        increased $130,000, or 23.3%, to $689,000 in the first quarter of fiscal
        2008 as
        compared to $559,000 in the same period in fiscal 2007.  The gross
        margin, excluding amortization of capitalized software costs, on system sales
        was 83.6% in the first quarter of fiscal 2008 compared to 75.9% in the same
        quarter in fiscal 2007.   The increase in gross margin is
        primarily due to increased MediMAR sales which are higher margin proprietary
        sales.
 
 21
 *Index*
  Cost
        of
        services includes the salaries of client service personnel and direct expenses
        of the client service departments.  Cost of services increased
        $248,000, or 12.6%, to $2,216,000 in the first quarter of 2008 as compared
        to
        $1,968,000 in the same period of fiscal 2007.  The increase in cost of
        services is primarily attributed to increases in customer service personnel
        to
        facilitate the implementation of new HCLL projects.  Gross margin on
        service revenue is 66.2% for the first quarter of fiscal 2008 compared to
        68.0%
        for the first quarter of fiscal 2007.  The Company believes, but
        cannot assure, that cost of services as a percentage of service revenue in
        fiscal 2008 will remain consistent with its rate in fiscal 2007, as the Company
        continues to implement the HCLL software.
 
 Amortization
        of capitalized software increased $174,000, or 13.7%, to $1,440,000 in the
        first
        quarter of fiscal 2008 compared to $1,266,000 in the first quarter of fiscal
        2007.  This increase is primarily due to increased amortization of
        capitalized software costs related to recent releases of the HCLL and MediMAR
        products.  Mediware expects amortization to continue to increase
        during fiscal 2008 as new software releases occur.
 
 Software
        development costs include the non-capitalizable portions of salaries,
        consulting, documentation, office and other direct expenses incurred in product
        development activities.  Software development costs decreased $60,000,
        or 5.8%, to $983,000 in the first quarter of fiscal 2008 compared to $1,043,000
        in the first quarter of fiscal 2007. Expenditures for software development
        include amounts paid for both capitalizable and noncapitalizable development
        projects.  Total expenditures for software development were $1,911,000
        in the first quarter of fiscal 2008 compared to $1,926,000 in the first quarter
        of fiscal 2007, a decrease of $15,000, or 0.8%.  The Company expects
        continued product development investment in the blood management and medication
        management products.
 
 Selling,
          general and administrative (“SG&A”) expenses include marketing and sales
          salaries, commissions, travel and advertising expenses.  Also included
          is bad debt expense; legal, accounting and professional fees; salaries
          and bonus
          expenses for corporate, product line, financial and administrative staffs;
          utilities, rent, communications and other office expenses; incentive-equity
          related expenses and other related direct administrative
          expenses.  SG&A expenses increased $981,000, or 27.2%, from
          $3,603,000 in the first quarter of fiscal 2007 to $4,584,000 in the first
          quarter of fiscal 2008.  This increase includes a one-time cash charge
          of $377,000 related to the consolidation of operations in the first quarter
          of
          fiscal 2008, and sales commissions, which increased $253,000 in the first
          quarter of fiscal 2008 as compared to the same period a year
          ago.  Also contributing were increases in stock-based compensation and
          relocation expenses associated with the hiring of a new chief executive
          officer,
          bad debt expense and legal expenses.  Management believes that overall
          SG&A expenses will decline from its current level in the short term as the
          Company begins to realize the savings associated with its operational
          restructuring.
  Income
          tax expense increased $523,000, or 479.8%, from $109,000 in the first quarter
          of
          fiscal 2007 to $632,000 in the same period of fiscal 2008.  In
          conjunction with this increase, the effective tax rate increased from 40.1%
          for
          the three months ending September 30, 2007 to 57.8% in the same period
          of fiscal
          2008.  The increase in the effective tax rate is primarily
          attributable to a non-cash write-off of $225,000 of certain deferred tax
          assets
          relating to the termination of fully vested non-qualified employee stock
          options
          as a result of the departure of certain employees in connection with the
          corporate consolidation and the departure of the former chief executive
          officer
          during the first quarter of fiscal 2008.
 Net
        income the first quarter of fiscal 2008 was $463,000, an increase of $299,000
        or
        182.3%, compared to a net income of $164,000 the first quarter of fiscal
        2007.
  **Liquidity
        and Capital Resources**
  As
        of
        September 30, 2007, Mediware had cash and cash equivalents of $24,822,000
        compared to $22,789,000 at June 30, 2007.  Working capital was
        $25,817,000 and $24,334,000 at September 30, 2007 and June 30, 2007,
        respectively.  The current ratio was 2.87 to 1 at September 30, 2007
        compared to 3.04 to 1 at June 30, 2007.  Cash provided by operating
        activities was $3,125,000 during the first three months of fiscal year 2008
        compared to $2,622,000 during the same period a year ago.  The
        increase in cash provided by operating activities is primarily due to changes
        in
        net income, accounts receivable, accounts payable, accrued expenses and customer
        advances.
  22
  Accounts
        receivable increased $1,447,000 from $11,481,000 at June 30, 2007 to $12,928,000
        at September 30, 2007.  Days sales outstanding (“DSO”) was 110 and 102
        at September 30, 2007 and June 30, 2007, respectively.  The increase
        in DSO resulted primarily from the signing of a significant MediMAR contract
        during the first quarter of fiscal 2008.  The principal uses of cash
        for investing activities during the quarter ended September 30, 2007 and
        2006
        included purchases of fixed assets and investment in product
        development.  Cash used in investing activities totaled $1,123,000
        during the first three months of fiscal 2008 compared to $983,000 during
        the
        same period a year ago.  The increase primarily relates to higher
        software capitalization rates and increased fixed asset
        acquisitions.  Mediware capitalized $928,000 and $883,000 of product
        development costs during the three months ended September 30, 2007 and 2006,
        respectively.  The investments in product development were related to
        the Company’s ongoing efforts to enhance its products.  The Company
        plans to continue to review market expansion opportunities through internal
        development and/or the acquisition of products/ companies that complement
        or
        augment the existing line of products.
  Cash
        used
        in financing activities was $4,000 during the first three months of fiscal
        year
        2008 compared to cash provided by financing activities of $265,000 during
        the
        same period a year ago, primarily reflecting a reduction in the amount of
        proceeds received from stock option exercises and the decrease in excess
        tax
        benefits related to the exercise of stock options.
  The
        Company’s liquidity is influenced by its ability to perform on a “Best of Suite”
basis in a competitive industry.  Factors that may affect liquidity
        are the Company’s ability to penetrate the market for its products, maintain or
        reduce the length of the selling cycle, and collect cash from clients as
        systems
        are implemented.  Exclusive of activities involving any future
        acquisitions of products or companies that complement or augment the Company’s
        existing line of products, the Company believes that current available funds
        and
        cash generated from operations will provide sufficient liquidity to meet
        operating requirements for the foreseeable future.  The Company
        continues to review its long-term cash needs.  Currently, there are no
        plans for additional outside financing, except that Mediware may consider
        establishing a new line of credit.
 
 **Subsequent
        Event**
 
 On
          October 31, 2007, Mediware acquired
          substantially all of the business and assets and assumed certain liabilities
          of
          Integrated Marketing Solutions,LLC, aMarylandlimited liability company
          (“IMS”).  IMS provides software products and services targeting blood
          and plasma donation centers in North America andEurope.  As
          of October 31, 2007, IMS
          had more than 32 customers in theUnited Statesand offices inBaltimore,MarylandandJacksonville,Florida.  With
          over 70 product
          installations as of October 31, 2007, IMS’s software and services address the
          competitive nature of the blood supply market by enabling blood and plasma
          collection facilities with automated and online software to manage relationships
          with donors, staff and hospitals.
 
 The
        purchase price paid for the assets of IMS consists of (i) $5,458,000 (subject
        to
        a working capital adjustment) paid in cash at the closing, and (ii) cash
        payments of up to $575,000 in the aggregate if certain revenue milestones
        are
        achieved by the purchased business in the twelve months following the
        closing.  Mediware utilized its existing cash and cash reserves to
        fund the portion of the purchase price paid at closing.
  23
  **ITEM
                    3.**
                **QUANTITATIVEAND
                    QUALITATIVE DISCLOSURES ABOUT MARKET
                    RISK**
 
 Mediware
        is subject to market risks from interest rates due to the fluctuating rates
        paid
        on its cash equivalent balances and foreign currency fluctuations due to
        the
        operations of JAC.  To date, Mediware has not entered into any
        derivative financial instruments or engaged in other hedging transactions
        to
        reduce its exposure to such risks.
 
 **Interest
        Rate Risk**
 Mediware
        is exposed to the impact of interest rate changes because of its substantial
        cash equivalent balances.  These balances are not held for trading
        purposes.
 
 **Balance
                  at**
                **September
                  30, 2007**
                **($
                  in 000)**
              
              
              **Effective**
                **Interest
                  Rate at**
                **September
                  30, 2007**
              
              
              **Effect
                  of 1% Change**
                **($
                  in 000)**Cash
                  Equivalents
              
              $
              24,822
              
              
              
              5.2
              %
              
              $
              248
 
 At
        September 30, 2007, a 1% decrease in the current per annum interest rate
        for our
        cash equivalents each would result in $248,000 less interest income during
        the
        next fiscal year.  The foregoing calculation assumes an instantaneous
        one percentage point decrease in the rates of all of our cash equivalents
        and
        that the equivalents balance is the amount outstanding as of September 30,
        2007.  The calculation therefore does not account for any differences
        in the market rates upon which the interest rates of our equivalents is based,
        or other possible actions, such as reinvestment in higher yielding instruments,
        that we might take in response to any rate decrease.
 
 24
 *Index*
  **Foreign
        Currency Exchange Rate Risk**
 
 Operating
        in international markets involves exposure to the possibility of volatile
        movements in foreign exchange rates. The currencies in each of the countries
        in
        which JAC operates affect:
 
 •           
        the results of Mediware’s international operations reported in United States
        dollars; and
 
 •            the
        value of the net assets of JAC reported in United States dollars.
  These
        exposures may impact future earnings or cash flows. Revenue from JAC represented
        approximately 10.3% and 9.5% of Mediware’s consolidated revenue for the three
        months ended September 30, 2007 and 2006, respectively. The economic impact
        of
        foreign exchange rate movements is complex because such changes are often
        linked
        to variability in real growth, inflation, interest rates, governmental actions
        and other factors. These changes, if material, could cause Mediware to adjust
        its financing and operating strategies. Therefore, to isolate the effect
        of
        changes in currency does not accurately portray the effect of these other
        important economic factors. As foreign exchange rates change, translation
        of the
        income statements of JAC into U.S. dollars affects year-over-year comparability
        of operating results.  Assets and liabilities for JAC are matched in
        the local currency, which reduces the need for dollar conversion. Any foreign
        currency impact on translating assets and liabilities into dollars is included
        as a component of stockholders’ equity. Our revenue results for the three months
        ended September 30, 2007 and 2006 were positively impacted by a $35,000 and
        $39,000 foreign currency movement, primarily due to the strengthening of
        the
        British pound against the United States dollar.
   **ITEM
                    4.**
                ****CONTROLS
                    AND
                    PROCEDURES****
  Mediware’s
        management, under the supervision and with the participation of Mediware’s Chief
        Executive Officer and Chief Financial Officer, has reviewed and evaluated
        the
        effectiveness of Mediware’s disclosure controls and procedures as of the end of
        the quarter covered by this report.  Disclosure controls and
        procedures are defined in the Securities Exchange Act as controls and other
        procedures of Mediware designed to ensure that information required to be
        disclosed by Mediware in the reports that it files or submits under the
        Securities Exchange Act is recorded, processed, summarized and reported within
        the time periods specified in the SEC’s rules and forms and include controls and
        procedures designed to ensure that information required to be disclosed by
        Mediware in the reports that it files or submits to the SEC is accumulated
        and
        communicated to Mediware’s management, including the CEO and CFO, to allow
        timely decisions regarding required disclosure.  Based on the
        foregoing review and evaluation, Mediware’s CEO and CFO have concluded that
        Mediware’s disclosure controls and procedures are effective as of September 30,
        2007.
 
 There
        were no material changes in Mediware’s internal controls over financial
        reporting that occurred during the three months ended September 30, 2007
        that
        have materially affected, or are reasonably likely to materially affect,
        its
        internal controls over financial reporting.
  **PART
        II     OTHER****INFO****RMATION**
  **ITEM
                    1.**
                ****LEGAL
                    PROCEEDINGS****
 
 Mediware
        is from time to time involved in routine litigation incidental to the conduct
        of
        its business, including employment disputes and litigation alleging product
        defects, intellectual property infringements, violations of law and breaches
        of
        contract and warranties.  Mediware believes that no such routine
        litigation currently pending against it, if adversely determined, would have
        a
        material adverse effect on its consolidated financial position, results of
        operations or cash flows.
 
 **Item
                  1A.**
              **RISK
                  FACTORS**
  We
        have
        recently consummated a strategic acquisition and may pursue additional strategic
        acquisitions, investments, and relationships in the future, and we may not
        be
        able to successfully manage our operations if we fail to successfully integrate
        acquired businesses and technologies, which could adversely affect our operating
        results.
 
 As
        part
        of our business strategy, we may seek and complete strategic business
        acquisitions that that are complementary to our business. On October 31,
        2007,
        we acquired substantially all of the business and assets and assumed certain
        liabilities of Integrated Marketing Solutions, LLC, a Maryland limited liability
        company (“IMS”), a company that provides software products and services
        targeting blood and plasma donation centers in North America and
        Europe.  Acquisitions, such as our acquisition of the business of IMS,
        have inherent risks which may have a material adverse effect on our business,
        financial condition, operating results or prospects, including, but not limited
        to, the following:
 
 ·
              failure
                  to successfully integrate the business and financial operations,
                  services,
                  intellectual property, solutions or personnel of the acquired
                  business
 
 ·
              diversion
                  of management’s attention from other business
                  concerns
 
 ·
              failure
                  to achieve projected synergies and performance
                  targets
 
 ·
              loss
                  of customers or key personnel of the acquired
                  business
 
 ·
              possibility
                  that the due diligence process in any such acquisition may not
                  completely
                  identify material issues associated with product quality, product
                  architecture, product development, intellectual property issues,
                  key
                  personnel issues or legal and financial contingencies,
                  and
 
 ·
              a
                  possible write-off of software development costs and amortization
                  of
                  expenses related to intangible
                  assets.
 
 In
        the
        case of IMS, we have acquired a business with offices in cities where we
        currently have no offices and with products that rely upon technology which
        is
        different than and may not be compatible with the technology of our other
        products.  If we fail to successfully integrate IMS or other acquired
        businesses or fail to implement our business strategies with respect to these
        acquisitions, we may not be able to achieve projected results or support
        the
        amount of consideration paid for such acquired businesses.
 
 25
 *Index*
  **ITEM
                  6.**
              **EXHIBITS**
  Exhibit
                  11
              Schedule
                  of Computation of Net Earnings Per ShareExhibit
                  15
              Consent
                  of Independent Registered Public Accounting FirmExhibit
                  31.1
              Rule
                  13a-14(a)/15d-14(a) CertificationExhibit
                  31.2
              Rule
                  13a-14(a)/15d-14(a) CertificationExhibit
                  32.1
              Certification
                  Pursuant to 18 U.S.C. 1350
  26
 *Index*
  **SIGNATURES**
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned thereunto
        duly authorized.
   MEDIWARE
                  INFORMATION SYSTEMS, INC.(Registrant)November
                  6, 2007
              
              /s/   T.
                  KELLY MANNDate
              
              T.
                  KELLY MANNPRESIDENT
                  AND CHIEF EXECUTIVE OFFICERNovember
                  6, 2007
              
              /s/   MARK
                  B. WILLIAMSDate
              
              MARK
                  B. WILLIAMSCHIEF
                  FINANCIAL OFFICER






27