**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 December 31, 2006





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.


x Yes 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 filero
            Accelerated
                Filerx
            Non-accelerated
                filero





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
February
      5, 2007, there were 8,125,000 shares of Common Stock, $0.10 par value, of
      the registrant outstanding.


2


**MEDIWARE
      INFORMATION SYSTEMS, INC.**





**INDEX**




**Page****PART
                  I**
              **Financial
                  Information****ITEM
                  1.**
              **Financial
                  Statements**Condensed
                  Consolidated Balance Sheets as of December 31, 2006
                  (Unaudited) and June 30, 2006
              4Condensed
                  Consolidated Statements of Operations and
                  Comprehensive Income (Unaudited) for the Three and Six Months Ended
                  December 31, 2006 and 2005
              5Condensed
                  Consolidated Statements of Cash Flows (Unaudited) for
                  the Six Months Ended December 31, 2006 and 2005
              6Notes
                  to Unaudited Condensed Consolidated Financial
                  Statements
              7Review
                  Report of Independent Registered Public Accounting
                  Firm
              11**ITEM
                  2.**
              **Management's
                  Discussion and Analysis of Financial Condition and
                  Results of Operations**
              12**ITEM
                  3.**
              **Quantitative
                  and Qualitative Disclosures About Market
                  Risk**
              19**ITEM
                  4.**
              **Controls
                  and Procedures**
              19**PART
                  II**
              **Other
                  Information**
              20**ITEM
                  1**
              **Legal
                  Proceedings**
              20**ITEM
                  1A.**
              **Risk
                  Factors**
              20**ITEM
                  4.**
              **Submission
                  of Matters to a Vote of Security
                  Holders**
              20**ITEM
                  6.**
              **Exhibits**
              22**Signatures**
              23




3
 *Index*


**PART
                I**
            **FINANCIAL
                INFORMATION******





**1.**
            **FINANCIAL
                STATEMENTS**





**MEDIWARE
      INFORMATION SYSTEMS, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(Amounts
      in thousands except shares)**





**December
                31,****2006**
            
            **June
                30,****(Unaudited)**
            
            **2006**ASSETSCurrent
                AssetsCash
                and cash equivalents
            
            $
            20,974
            
            $
            18,996Accounts
                receivable (net of allowance of $1,154 and $923)
            
            
            9,916
            
            
            8,748Inventories
            
            
            152
            
            
            160Deferred
                income taxes
            
            
            868
            
            
            481Prepaid
                expenses and other current assets
            
            
            874
            
            
            746Total
                current assets
            
            
            32,784
            
            
            29,131Fixed
                assets, net
            
            
            1,074
            
            
            1,220Capitalized
                software costs, net
            
            
            18,643
            
            
            19,286Goodwill,
                net
            
            
            3,855
            
            
            3,971Other
                long-term assets
            
            
            115
            
            
            115Total
                Assets
            
            $
            56,471
            
            $
            53,723LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                LiabilitiesAccounts
                payable
            
            $
            1,017
            
            $
            1,084Current
                portion of note payable
            
            
            17
            
            
            25Advances
                from customers
            
            
            7,417
            
            
            7,767Accrued
                expenses and other current liabilities
            
            
            2,937
            
            
            2,160Total
                current liabilities
            
            
            11,388
            
            
            11,036Note
                payable
            
            
            -
            
            
            4Deferred
                income taxes
            
            
            5,068
            
            
            4,182Total
                liabilities
            
            
            16,456
            
            
            15,222Stockholders'
                EquityPreferred
                stock, $.01 par value; authorized 10,000,000 shares; none
                issuedCommon
                stock, $.10 par value; authorized 25,000,000 shares; 8,116,000 and
                8,078,000 shares issued and Outstanding at December 31, 2006 and
                June 30,
                2006, respectively
            
            
            811
            
            
            808Additional
                paid-in capital
            
            
            30,031
            
            
            29,617Retained
                earnings
            
            
            9,156
            
            
            8,087Accumulated
                other comprehensive income (loss)
            
            
            17
            
            
            (11
            )Total
                stockholders' equity
            
            
            40,015
            
            
            38,501Total
                Liabilities and Stockholders' Equity
            
            $
            56,471
            
            $
            53,723





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)**





**(Unaudited)**
              **Three
                months ended**
              **December
                31,**
            
            **(Unaudited)**
              **Six
                Months ended**
              **December
                31,****2006**
            
            **2005**
            
            **2006**
            
            **2005****Revenue**System
                sales
            
            $
            4,890
            
            $
            2,967
            
            $
            7,213
            
            $
            6,147Services
            
            
            6,372
            
            
            6,421
            
            
            12,524
            
            
            12,649Total
                revenue
            
            
            11,262
            
            
            9,388
            
            
            19,737
            
            
            18,796**Cost
                and Expenses**Cost
                of systems (1)
            
            
            772
            
            
            629
            
            
            1,331
            
            
            1,160Cost
                of services
            
            
            1,952
            
            
            1,879
            
            
            3,920
            
            
            3,746Amortization
                of capitalized software costs
            
            
            1,362
            
            
            1,210
            
            
            2,628
            
            
            2,351Software
                development costs
            
            
            941
            
            
            1,045
            
            
            1,984
            
            
            2,156Selling
                general and administrative
            
            
            5,076
            
            
            4,242
            
            
            8,679
            
            
            7,931Total
                costs and expenses
            
            
            10,103
            
            
            9,005
            
            
            18,542
            
            
            17,344Operating
                income
            
            
            1,159
            
            
            383
            
            
            1,195
            
            
            1,452Interest
                and other income
            
            
            250
            
            
            158
            
            
            485
            
            
            284Interest
                and other (expense)
            
            
            44
            
            
            (2
            )
            
            46
            
            
            (6
            )Income
                before income taxes
            
            
            1,453
            
            
            539
            
            
            1,726
            
            
            1,730Income
                tax provision
            
            
            (548
            )
            
            (141
            )
            
            (657
            )
            
            (595
            )Net
                income
            
            
            905
            
            
            398
            
            
            1,069
            
            
            1,135**Other
                comprehensive income**Foreign
                currency translation adjustment
            
            
            (11
            )
            
            (5
            )
            
            28
            
            
            (111
            )**Comprehensive
                income**
            
            $
            894
            
            $
            393
            
            $
            1,097
            
            $
            1,024**Net
                income per Common Share**Basic
            
            $
            0.11
            
            $
            0.05
            
            $
            0.13
            
            $
            0.14Diluted
            
            $
            0.11
            
            $
            0.05
            
            $
            0.13
            
            $
            0.14**Weighted
                Average Common Shares Outstanding**Basic
            
            
            8,116
            
            
            7,996
            
            
            8,104
            
            
            7,963Diluted
            
            
            8,384
            
            
            8,183
            
            
            8,367
            
            
            8,160





(1)
            Excludes
                amortization of capitalized software
                costs





See
      Notes
      to Unaudited Condensed Consolidated Financial Statements.




5
 *Index*


**MEDIWARE
      INFORMATION SYSTEMS, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(Amounts
      in thousands)**


**Six
                  Months Ended****December
                  31,****(Unaudited)****2006**
              
              **2005**Cash
                  Flows From Operating ActivitiesNet
                  income
              
              $
              1,069
              
              $
              1,135Adjustments
                  to reconcile net income, to net cash provided by operating
                  activities:Depreciation
                  and amortization
              
              
              2,970
              
              
              2,659Stock
                  Option compensation expense
              
              
              147
              
              
              95Deferred
                  tax provision
              
              
              615
              
              
              351Provision
                  for doubtful accounts
              
              
              278
              
              
              134Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (1,446
              )
              
              (662
              )Inventories
              
              
              8
              
              
              46Prepaid
                  expenses and other assets
              
              
              (128
              )
              
              (99
              )Accounts
                  payable, accrued expenses and advances from customers
              
              
              360
              
              
              254Net
                  cash provided by operating activities
              
              
              3,873
              
              
              3,913Cash
                  Flows From Investing ActivitiesAcquisition
                  of fixed assets
              
              
              (196
              )
              
              (261
              )Capitalized
                  software costs
              
              
              (1,985
              )
              
              (2,380
              )Net
                  cash used in investing activities
              
              
              (2,181
              )
              
              (2,641
              )Cash
                  Flows From Financing ActivitiesProceeds
                  from exercise of stock options
              
              
              246
              
              
              811Excess
                  tax benefit from exercise of stock options
              
              
              24
              
              
              227Principal
                  payments on note payable
              
              
              (12
              )
              
              (12
              )Net
                  cash provided by financing activities
              
              
              258
              
              
              1,026Foreign
                  currency translation adjustments
              
              
              28
              
              
              (111
              )Net
                  increase in cash and cash equivalents
              
              
              1,978
              
              
              2,187Cash
                  at beginning of period
              
              
              18,996
              
              
              14,839Cash
                  at end of period
              
              $
              20,974
              
              $
              17,026Supplemental
                  disclosures of cash flow information:Cash
                  paid during the period for:Interest
                  on notes payable
              
              $
              6
              
              $
              7Income
                  taxes paid (received)
              
              $
              (52
              )
              $
              28Supplemental
                  disclosures of noncash financing activities:Reduction
                  of goodwill recorded for tax benefit of related
                  amortization
              
              $
              116
              
              $
              116




6
 *Index*


**MEDIWARE
      INFORMATION SYSTEMS, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**1.**
            **FINANCIAL
                STATEMENTS**





In
      the
      opinion of management, the accompanying unaudited, condensed, consolidated
      financial statements contain all adjustments necessary to present fairly the
      financial position of Mediware 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 year ended June 30, 2006 included in Mediware's Annual Report
      filed on Form 10-K for such year.





The
      results of operations for the six months ended December 31, 2006 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, par value $0.10 (“Common Stock”), of Mediware
      outstanding. For the six months ended December 31, 2006 and 2005, 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**




The
        Company's 2003 Equity Incentive Plan, approved by the shareholders in December
        2003, 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. In February 2005, the shareholders approved increasing
        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,
        restricted stock units 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 December 31, 2006, 1,239,000 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
      December 31, 2006 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 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 aggregate noncash stock based compensation expense amounted to $57,000
      and
      $147,000 for the three and six month periods ended December 31, 2006,
      respectively.




The
        fair
        value of options at date of grant is estimated using the Black-Scholes option
        pricing model. 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 for each group 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 dividends in the near future.


The
      following table sets forth summarized information concerning the Company's
      stock
      options for the six months ended December 31, 2006:





**Shares**
            
            **Weighted
                Average Exercise Price**
            
            **Weighted
                Average Remaining Contractual Term**
            
            **Aggregate
                Intrinsic Value**Outstanding
                at June 30, 2006
            
            
            1,140,000
            
            $
            9.12Granted
            
            
            35,000
            
            $
            8.42Exercised
            
            
            (38,000
            )
            $
            6.55Forfeited
                or expired
            
            
            (88,000
            )
            $
            11.84Outstanding
                at December 31, 2006
            
            
            1,049,000
            
            $
            8.96
            
            
            4.1
            
            $
            979,000Expected
                to vest at December 31, 2006
            
            
            1,049,000
            
            $
            8.96
            
            
            4.1
            
            $
            979,000Options
                exercisable at December 31, 2006
            
            
            892,000
            
            $
            8.96
            
            
            4.1
            
            $
            942,000





The
      total
      intrinsic value of options exercised during the six months ended December 31,
      2006 and 2005, was $63,000 and $599,000, respectively. The fair value of the
      nonvested shares is determined based on the average trading price of the
      Company’s shares on the grant date.





The
      Company generally issues new shares upon the exercise of stock options.





Cash
      received from options exercised under all share-based payment arrangements
      for
      the six months ended December 31, 2006 and 2005 was $246,000 and $811,000,
      respectively. The excess tax benefit realized for the tax deductions related
      to
      option exercises of the share-based payment arrangements totaled $24,000 and
      $227,000 for the six months ended December 31, 2006 and 2005,
      respectively.


8
 *Index*


A
      Summary
      of the status of the Company’s nonvested options as of December 31, 2006, and
      changes during the six months ended December 31, 2006, is presented
      below:





**Nonvested
                Options**
            
            **Shares**
            
            **Weighted
                Average Grant Date Fair Value**Nonvested
                at June 30, 2006
            
            
            167,000
            
            $
            4.00Granted
            
            
            35,000
            
            
            2.30Canceled
                or expired
            
            
            -
            
            
            -Vested
            
            
            (45,000
            )
            
            3.89Nonvested
                at December 31, 2006
            
            
            157,000
            
            $
            3.66





As
      of
      December 31, 2006, there was $310,000 of total unrecognized compensation cost
      related to nonvested options granted under existing stock option plans. This
      cost is expected to be recognized over a weighted average period of 1.1 years.
      The total fair value of options vested during the six months ended December
      31,
      2006 amounted to $175,000.





The
      following table presents information relating to stock options at December
      31,
      2006:





**Options
                Outstanding**
            
            **Options
                Exercisable****Range
                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
            
            
            2.7
            
            
            163,000
            
            $
            3.61$
                4.50 - $ 7.49
            
            
            69,000
            
            $
            6.75
            
            
            1.2
            
            
            69,000
            
            $
            6.75$
                7.50 - $ 8.99
            
            
            254,000
            
            $
            8.08
            
            
            3.4
            
            
            144,000
            
            $
            8.08$
                9.00 - $ 10.49
            
            
            247,000
            
            $
            9.96
            
            
            5.2
            
            
            220,000
            
            $
            10.02$
                10.50 - $11.99
            
            
            124,000
            
            $
            10.89
            
            
            3.5
            
            
            124,000
            
            $
            10.89$12.50
                - $13.49
            
            
            137,000
            
            $
            12.51
            
            
            6.1
            
            
            117,000
            
            $
            12.45$13.50
                - $14.99
            
            
            45,000
            
            $
            13.74
            
            
            7.2
            
            
            45,000
            
            $
            13.74$15.00
                - $16.50
            
            
            10,000
            
            $
            15.00
            
            
            6.9
            
            
            10,000
            
            $
            15.001,049,000
            
            
            
            
            
            
            
            
            892,000




The
      Company has entered into agreements with certain key employees. Under the terms
      of these agreements, the Company granted the employees, in aggregate, 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 Performance
      Shares may result in compensation expense in future periods of up to $1,759,000,
      the fair value on the date of grant. The probability of achieving these
      performance goals is remote. Accordingly, Mediware has not recognized any
      related compensation expense for previous periods or for the three and six
      months ended December 31, 2006. Mediware will reassess at each reporting period
      whether achievement of any performance condition is probable and will begin
      recognizing the related costs if and when the performance conditions become
      probable.


9
 *Index*


A
      Summary
      of the status of the Company’s nonvested restricted common stock as of December
      31, 2006, and changes during the six months ended December 31, 2006, is
      presented below:





**Nonvested
                Restricted Common Stock**
            
            **Shares**
            
            **Weighted
                Average Grant Date****Fair
                Value**Nonvested
                at June 30, 2006
            
            
            155,000
            
            $
            8.93Granted
            
            
            45,000
            
            
            8.34Canceled
                or expired
            
            
            -
            
            
            -Vested
            
            
            -
            
            
            -Nonvested
                at September 30, 2006
            
            
            200,000
            
            $
            8.79





**4.**
            **NEW
                ACCOUNTING PRONOUNCEMENTS**





In
      September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
      No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and
      132(R),” which requires employers to: (a) recognize in its statement of
      financial position an asset for a plan’s overfunded status or a liability for a
      plan’s underfunded status; (b) measure a plan’s assets and its obligations
      that determine its funded status as of the end of the employer’s fiscal year;
      and (c) recognize changes in the funded status of a defined benefit
      postretirement plan in the year in which the changes occur. Those changes will
      be reported in comprehensive income of a business entity. The requirement to
      recognize the funded status of a benefit plan and the disclosure requirements
      are effective as of the end of the fiscal year ending after December 15,
      2006, for entities with publicly traded equity securities. The requirement
      to
      measure plan assets and benefit obligations as of the date of the employer’s
      fiscal year-end statement of financial position is effective for fiscal years
      ending after December 15, 2008. The adoption of SFAS No. 158 will not
      have any impact on its result of operations or financial position.





Also
      in
      September 2006, FASB issued SFAS No. 157, “ *Fair
      Value Measurements’* ”
which
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles and expands disclosures about fair
      value measurements. This Statement is effective for financial statements issued
      for fiscal years beginning after November 15, 2007 and interim periods
      within those fiscal years. Earlier application is encouraged provided that
      the
      reporting entity has not yet issued financial statements for that fiscal year
      including financial statements for an interim period within that fiscal year.
      The Company is assessing SFAS No. 157 and has not determined yet the impact
      that the adoption of SFAS No. 157 will have on its result of operations or
      financial position.





**5.**
            **CONTINGENCIES**





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.


**6.**
                **CONCENTRATION
                    OF REVENUE**
 The
        Company recorded $1,152,000 of revenue related to one contract signed during
        the
        quarter ended December 31, 2006.


10
 *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 December 31,
      2006, and the related condensed consolidated statements of operations and
      comprehensive income for the three and six-month periods ended December 31,
      2006
      and 2005, and the related condensed consolidated statement of cash flows for
      the
      six-month periods ended December 31, 2006 and 2005. 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, 2006, and the related consolidated statements of
      operations and comprehensive income, stockholders' equity, and cash flows for
      the year then ended (not presented herein), and in our report dated
      August 4, 2006, 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, 2006 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


January
      26, 2007


11
 *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,”  “expects,”
“will,”  “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, 2006, 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 software. The Company's software systems are designed to automate
      three separate clinical operations within the hospital environment: medication
      management, including the hospital pharmacy; blood management, including the
      blood bank; and the perioperative management, including the surgical suite.
      The
      Blood Management Division products are also designed to automate clinical
      operations in free-standing blood centers. Each software system typically
      consists of the Company's proprietary application software, third-party licensed
      software and third-party computer hardware. Mediware sells implementation,
      training, and annual software support services with each software system.





Mediware
      is organized into three operating divisions that correspond with the software
      systems it markets. Each division markets distinct product lines: Medication
      Management Systems, Blood Management Systems and Perioperative Management
      Systems. The Blood Management and Perioperative Management Divisions operate
      primarily in the United States. The Medication Management Division operates
      both
      in the United States and in the United Kingdom with different software systems
      designed for the specific requirements of each market.





The
      Company's products are designed to improve operational efficiency by improving
      the availability, quality and timeliness of clinical information while enabling
      health care facilities to decrease expenses associated with managing these
      clinical processes.  These benefits are of critical importance to
      clinicians and administrators who face increasing financial, regulatory and
      patient safety pressures.





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 with leading
      edge diagnostic and therapeutic technologies, the information systems supporting
      the management and clinical processes of these complex healthcare organizations
      have made insufficient progress. A substantial portion of clinical workflow
      still depend upon manual paper-based systems interfaced with various automated
      or semi-automated systems.





As
      a
      result, the health care industry is often 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.


12
 *Index*


The
      Company anticipates that the continued increase in government regulation, public
      and competitive pressure regarding errors occurring in hospitals, and growing
      concern over clinical outcomes, will cause the industry’s expenditures on
      clinical information systems to continue. Mediware believes that its products
      can play a role in moving healthcare IT standards forward, and can 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 for ongoing support, 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.





The
      Company is developing strategic relationships that are complementary to its
      core
      markets and product set, and that provide a greater value proposition to the
      customer than could be realized without the strategic relationship. During
      the
      second quarter of Fiscal 2007, Mediware entered into two new business
      relationships for that purpose. The Company’s business strategy also includes
      the possibility of growth through acquisitions and other corporate transactions.
      There can be no assurance that the Company will benefit from its new
      relationships or that the Company will be able to identify or reach mutually
      agreeable terms with other strategic partners or transaction candidates.





The
      Blood
      Management Division’s current blood transfusion product is HCLLTM. The Company
      received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”)
      for its HCLL software in fiscal 2003. During fiscal 2005, the Company received
      510(k) clearance for its complementary HCLL donor software product. In October
      2005, the Blood Management Division officially announced the “sunset” of
      Hemocare® and LifeLineTM, its two legacy blood transfusion products, which were
      originally installed in the early 1980s. The two legacy products have a large
      installed base within the transfusion management market and represent an
      important opportunity for new sales for the Blood Management Division. The
      Company has entered into license agreements representing 256 current and new
      customer sites to replace Mediware’s legacy software with the HCLL software.
      The HCLL software is in productive use at approximately 31 sites. The
      Company expects its remaining legacy customers to make a licensing decision
      over
      the next two quarters of fiscal 2007. The final sunset date for the legacy
      blood
      management software products is June 30, 2007.




The
      Medication Management Division’s current WORx® drug therapy software is
      currently licensed to over 107 hospital organizations encompassing approximately
      215 hospital sites. The product’s market acceptance encompasses hospitals of all
      sizes, including strategically important multi-site hospitals. The Medication
      Management Division released two new products, MediCOETM and MediMAR® in fiscal
      2004. These products can be fully integrated with WORx and provide a complete
      drug therapy management system with a clinician order entry module (MediCOE)
      and
      nurse point of care administration module (MediMAR). The MediCOE and MediMAR
      products have been installed and are in productive use in 2 and 6 separate
      customer sites, respectively.





The
      Medication Management Division is now targeting its large WORx software customer
      base for the sale of the MediCOE and MediMAR products, and the new products
      are
      attracting new potential WORx software customers as well. The sales for the
      Medication Management Division’s full suite of products involve developing new
      markets and are significantly larger in size and scope and involve more hospital
      departments and therefore, substantially longer sales and implementation cycles
      compared to stand-alone WORx sales. The impact of these changes has been slower
      than expected, resulting in less predictable contract closures, and the
      recognition of license software revenue (in some cases) over multiple quarters,
      in accordance with the American Institute of Certified Public Accountants
      Statement of Position 97-2, “Software Revenue Recognition.” The Company did
      not sell any of its MediCOE and MediMAR products during the six months ended
      December 31, 2006.


13
 *Index*


For
        the
        six months ended December 31, 2006, system sales in the Blood Management
        Division accounted for nearly 74% of all
        system sales by the Company and service revenues for the Blood Management
        Division accounted for nearly 52% of
        service revenues for the Company. The Blood Management Division has
        significantly benefited from the non-recurring increased revenues associated
        with the sunset program. The Blood Management Division system sales will
        substantially decline after the completion of the legacy product sunset program
        at the end of fiscal 2007. Service revenues in the division are expected
        to
increase
        and somewhat offset the reduction in system sales in fiscal 2008 as
        implementations of HCLL software are completed. The Company believes that
        contract closures for the Medication Management Division’s full suite of
        products will continue to be less predictable over the coming quarters and
        the
        recognition of license software revenue from future sales may be required
        to be recognized over multiple quarters. As a result, the Company expects
        lower
        revenues and net income in fiscal 2008 compared to fiscal 2007 as the Company
        returns to a business cycle that does not include a sunset program.


14
 *Index*


**Results
      of Operations for the Three Months Ended December 31, 2006 as Compared to the
      Three Months Ended December 31, 2005**





Total
      revenue for the second quarter of fiscal 2007 is $11,262,000 compared to
      $9,388,000 in the same quarter of the prior year, reflecting an increase of
      $1,874,000, or 20.0%. This increase is primarily the result of an increase
      in
      revenue in the Blood Management Division. The Blood Management Division recorded
      total revenue of $6,858,000 in the second quarter compared to $5,124,000 in
      the
      same period of fiscal 2006, representing an increase of $1,734,000, or 33.8%.
      The Medication Management Division (excluding the United Kingdom operating
      division, JAC Computer Services, Ltd., “JAC”) recorded total revenue of
      $2,932,000 in the second quarter of fiscal 2007 compared to $2,933,000 in the
      second quarter of fiscal 2006. This represented a decrease of approximately
      $1,000, or less than 1%, compared to the same quarter a year ago. JAC recorded
      total revenues of $1,136,000 in the second quarter of fiscal 2007, representing
      an increase of $165,000, or 17.0%, compared to $971,000 in the same period
      of
      fiscal 2006. The Perioperative Management Division recorded revenues of $336,000
      in the current quarter, representing a decrease of $24,000, or 6.7%, compared
      to
      $360,000 in the same quarter in fiscal 2006.





System
      sales, which include proprietary software, third party software and hardware
      revenue, amounted to $4,890,000 in the second quarter of fiscal 2007, an
      increase of $1,923,000, or 64.8%, from $2,967,000 in the same period in fiscal
      2006. The increase in system sales is primarily attributable to the sunset
      of
      the two legacy products of the Blood Management Division. The end of the second
      quarter of fiscal 2007 marked the first and larger of two key sunset dates
      for
      the legacy products. System sales for the Blood Management Division were
      $3,583,000 for the second quarter of fiscal 2007, an increase of $1,828,000,
      or
      104.2%, compared to $1,755,000 in the same quarter of fiscal 2006. System sales
      in the Medication Management Division (excluding JAC) decreased from $940,000
      in
      the second quarter of fiscal 2006 to $910,000 in the second quarter of fiscal
      2007, representing a decrease of $30,000, or 3.2%. The decrease is due to a
      decline in third party software sales in fiscal 2007, partially offset by
      increased WORx system sales. JAC recorded system sales of $370,000 in the second
      quarter of fiscal 2007, representing an increase of $131,000, or 54.8% compared
      to $239,000 reported for the same period in fiscal 2006. Mediware expects JAC
      system sales to continue as JAC continues to position itself to benefit from
      the
“Connecting for Health” program in the UK. The Perioperative Management Division
      experienced a decrease in system sales of $6,000, or 18.2%, from $33,000 in
      the
      second quarter of fiscal 2006 to $27,000 in the second quarter of fiscal 2007.
      Mediware intends to continue investing in sales and marketing across its
      business and expects that this additional investment will enable the Company
      to
      participate in more sales opportunities and broaden the Company’s potential base
      of customers.





Service
      revenue, which includes recurring software support, implementation and training
      services, amounted to $6,372,000 in the second quarter of fiscal 2007, a
      decrease of $49,000, or 0.8%, from $6,421,000 for the same period in fiscal
      2006. Service revenue for the Blood Management Division totaled $3,275,000
      in
      the second quarter of fiscal 2007, representing a decrease of $94,000, or 2.8%,
      compared to $3,369,000 in the second quarter of fiscal 2006. This decrease
      in
      service revenue is primarily due to decreased support revenues, partially offset
      by increased implementation revenues resulting from an increase of ongoing
      implementation projects. Mediware believes, but cannot assure, that service
      revenue will increase as existing customers continue to migrate from the legacy
      products to the HCLL software. Service revenue in the Medication Management
      Division (excluding JAC) increased $29,000, or 1.5%, to $2,022,000 in the second
      quarter of fiscal 2007 compared to $1,993,000 in the second quarter of fiscal
      2006. The increase is primarily due to increased rates on support services
      provided to existing customers, partially offset by a decrease in implementation
      revenue resulting from a decline in ongoing implementation projects. Service
      revenue for JAC increased 4.6% or $34,000, to $766,000 in the second quarter
      of
      fiscal 2007 compared to $732,000 in the second quarter of fiscal 2006. Service
      revenue in the Perioperative Management Division decreased $18,000, or 5.5%,
      to
      $309,000 in the second quarter of fiscal 2007 compared to $327,000 in the second
      quarter of fiscal 2006. The decrease in service revenue for this division is
      primarily due to a decline in ongoing implementation projects resulting from
      the
      completion of the migration from Mediware’s legacy Surgiware System to its
      Perioperative Solutions product.




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 $143,000, or 22.7%,
      from $629,000 in the second quarter of 2006 to $772,000 in the second quarter
      of
      fiscal 2007. The gross margin, excluding amortization of capitalized software
      costs, on system sales was 84.2% in the second quarter of fiscal 2007 compared
      to 78.8% in the same quarter in fiscal 2006. The increase in gross margin is
      primarily due to the increase in higher margin proprietary software sales in
      the
      Blood Management Division during the second quarter of fiscal
      2007.


15
 *Index*


Cost
      of
      services includes the salaries of client service personnel and communications
      expenses along with direct expenses of the client service departments. Cost
      of
      services increased $73,000, or 3.9%, from $1,879,000 in the second quarter
      of
      2006 to $1,952,000 in the second quarter of 2007. The increase in cost of
      services is primarily attributed to increases in implementation personnel in
      the
      Blood Management Division as the division prepares for an increasing number
      of
      implementation projects. Gross margin on service revenue was 69.4% for the
      second quarter of fiscal 2007 compared to 70.7% for the second quarter of fiscal
      2006. Management believes, but cannot assure, that cost of services as a
      percentage of service revenue will remain consistent with its current
      utilization rates which are defined as the percentage of billed hours to worked
      hours of its service personnel.





Amortization
      of capitalized software increased $152,000, or 12.6%, to $1,362,000 in the
      second quarter of fiscal 2007 compared to $1,210,000 in the second quarter
      of
      fiscal 2006. This increase is primarily due to increased amortization of
      capitalized software costs related to additional product releases of the HCLL
      and MediMAR products within the prior fiscal year. Mediware expects amortization
      to continue to increase during fiscal 2007 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 $104,000, or 10.0%,
      in the second quarter from $1,045,000 in fiscal 2006 to $941,000 in fiscal
      2007.
      Expenditures for software development include amounts paid for both
      capitalizable and noncapitalizable development projects. Total expenditures
      for
      software development were $2,043,000 in the second quarter of fiscal 2007
      compared to $2,249,000 in the second quarter of fiscal 2006, a decrease of
      $206,000, or 9.2%. Mediware believes that its near term total investment in
      product development will remain substantially consistent with current levels
      however the investment among divisions may shift due to normal product
      development life cycles.





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, divisional, financial and administrative staffs;
      utilities, rent, communications and other office expenses; and other related
      direct administrative expenses. SG&A expenses increased $834,000, or 19.7%,
      from $4,242,000 in the second quarter of fiscal 2006 to $5,076,000 in the second
      quarter of fiscal 2007. This
      increase is primarily due to increases in labor costs, bad debt
      expense and sales and marketing initiatives, partially offset by reductions
      in legal and professional fees. The
      Company believes that SG&A costs will decline in the near term but will
      likely increase in the longer term as the Company invests in sales, marketing
      and other infrastructure costs.




Net
      income in the second quarter of fiscal 2007 was $905,000, an increase of
      $507,000, or 127.4%, compared to a net income of $398,000 in the second quarter
      of fiscal 2006.





**Results
      of Operations for the Six Months Ended December 31, 2006 as Compared to the
      Six
      Months Ended December 31, 2005**





Total
      revenue for the six months ended December 31, 2006 is $19,737,000 compared
      to
      $18,796,000 in the comparable period of fiscal 2006, an increase of $941,000,
      or
      5.0%. This increase is primarily the result of an increase in revenue in the
      Blood Management Division. Revenue in the Blood Management Division increased
      $1,467,000, or 14.3%, to $11,704,000 in the six months ended December 31, 2006
      compared to $10,238,000 in the same period in fiscal 2006. The Medication
      Management Division (excluding JAC) recorded a decrease of $504,000, or 8.5%,
      to
      $5,443,000 in the first six months of fiscal 2007 from $5,947,000 in the same
      period in fiscal 2006. JAC recorded an increase of $79,000, or 4.3%, to
      $1,936,000 in the six months ended December 31, 2006 compared to $1,857,000
      in
      the same period in fiscal 2006. The Perioperative Management Division recorded
      a
      decrease of $100,000, or 13.3%, to $654,000 in the six months ended fiscal
      2007
      compared to $754,000 in the same period in fiscal 2006.


16
 *Index*


System
        sales were $7,213,000 for the six months ended December 31, 2006, an increase
        of
        $1,066,000, or 17.3%, from $6,147,000 in the same period in fiscal 2006.
        System
        sales for the Blood Management Division were $5,294,000 for the six months
        ended
        fiscal 2007, an increase of $1,605,000, or 43.5%, from $3,689,000 in the
        comparable period in fiscal 2006. The increase in system sales is primarily
        attributable to the sunset of the division’s two legacy products. System sales
        in the Medication Management Division decreased $581,000, or 29.1%, to
        $1,417,000 for the six months ended December 31, 2006 from $1,998,000 in
        the
        same period in fiscal 2006. The decrease is a result of no MediMAR or MediCOE
        sales during the six months ending December 31, 2006. The decrease in system
        sales also reflects lower sales of third party software as well as the base
        WORx
        system. JAC recorded an increase in system sales of $27,000, or 6.5%, to
        $444,000 for the six months ended December 31, 2006, compared to $417,000
        in the
        same period in fiscal 2006. The increase reflects continued sales activity
        resulting from the United Kingdom’s “Connecting for Health” program. The
        Perioperative Management Division experienced an increase in system sales
        of
        $15,000, or 34.9%, from $43,000 in fiscal 2006 to $58,000 in fiscal 2007.
        The
        increase in revenue was due to additional add-on sales to existing customers.
        Mediware is continuing to make investments in sales and marketing to stimulate
        revenue growth for these products in future quarters.
  Service
        revenue decreased $125,000, or 1.0%, to $12,524,000 in the first six months
        of
        fiscal 2007 from $12,649,000 in the same period in fiscal 2006. Service revenue
        for the Blood Management Division decreased $139,000, or 2.1%, to $6,410,000
        in
        the first six months of fiscal 2007 compared to $6,549,000 in the same period
        of
        fiscal 2006. This decrease in service revenue is primarily due to decreased
        support revenues. This decrease was partially offset by increased implementation
        revenues, resulting from an increase of ongoing implementation projects.
        Service
        revenue in the Medication Management Division (excluding JAC) increased $77,000,
        or 1.9%, to $4,026,000 in the first six months of fiscal 2007 compared to
        $3,949,000 in the same period in fiscal 2006. The increase is primarily due
        to
        increased rates on support services for existing customers, partially offset
        by
        a decrease in implementation revenue resulting from a decline in ongoing
        implementation projects. Service revenue for JAC increased $52,000, or 3.6%,
        to
        $1,492,000 in the six months ended December 31, 2006 compared to $1,440,000
        in
        the same period of fiscal 2006. Service revenue in the Perioperative Management
        Division decreased $115,000, or 16.2%, from $711,000 for the first six months
        of
        fiscal 2006 to $596,000 in the same period for fiscal 2007. The decrease
        in
        service revenue is primarily due to a decline in ongoing implementation projects
        due to the completion of the conversion of legacy customers.
 
 Cost
        of
        systems 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 $171,000, or 14.7%, to $1,331,000 in the six months
        ended December 31, 2006 compared to $1,160,000 in the same period in fiscal
        2006. The increase is due to overall hardware sales increases, primarily
        in the
        Blood Management Division. The gross margin, excluding amortization of
        capitalized software costs, on system sales was 81.5% in the first six months
        of
        fiscal 2007 compared to 81.1% in the same period in fiscal 2006.
 
 Cost
        of
        services increased $174,000, or 4.6%, to $3,920,000 in the six months ended
        December 31, 2006 compared to $3,746,000 in the same period for fiscal 2006.
        The
        increase in cost of services is primarily attributed to increases in
        implementation personnel as Mediware increased staff levels for the rollout
        of
        its MediMAR, MediCOE and HCLL products. Gross margin on service revenue were
        68.7% for the six months ended December 31, 2006 compared to 70.4% for the
        same
        period in fiscal 2006. Mediware believes, but cannot assure, that cost of
        services as a percentage of service revenue will remain consistent with its
        current utilization rates which are defined as the ratio of billed hours
        to
        worked hours of its service personnel.
 
 Amortization
        of capitalized software increased $277,000, or 11.8%, to $2,628,000 in the
        six
        months ended December 31, 2006 compared to $2,351,000 in the same period
        in
        fiscal 2006. This increase is primarily due to increased amortization of
        capitalized software costs related to the Company’s HCLL and MediMAR
        products. Software
        development costs decreased $172,000 or 8.0% in the six months ended December
        31, 2006 to $1,984,000 compared to $2,156,000 in the same period in fiscal
        2006.
        Expenditures for software development include amounts paid for both
        capitalizable and non-capitalizable development projects. Total expenditures
        for
        software development were $3,969,000 the six months ended December 31, 2006,
        compared to $4,536,000 the same period in fiscal 2006, a decrease of $567,000
        or
        12.5%. This decrease primarily reflects decreased expenditures in the Blood
        Management Division and Medication Management Division (excluding JAC). Mediware
        expects continued product development investment in all of its
        Divisions.
  17
 *Index*
  SG&A
        expenses increased $748,000, or 9.4%, from $7,931,000 for the six months
        ended
        December 31, 2005 compared to $8,679,000 in the same period in fiscal 2007.
        This
        increase is primarily due to increases in labor costs, bad debt expense,
        and
        sales and marketing initiatives. These increases were partially offset by
        reductions in legal fees, insurance and rent expense. The
        Company believes that SG&A costs will decline in the near term but will
        likely increase in the longer term as the Company invests in sales, marketing
        and other infrastructure costs.


In
      December 2005, Mediware resolved two separate tax issues related to its JAC
      division in the United Kingdom, resulting in a net refund of $101,000. This
      amount is included in the income tax provision for the six months ended December
      31, 2005, reducing the effective tax rate to 34.4%.





Net
      income for the six months ended December 31, 2006 was $1,069,000, a
      decrease of $66,000 or 5.8%, compared to a net income of $1,135,000 the same
      period of fiscal 2006.





**Liquidity
      and Capital Resources**




As
      of
      December 31, 2006, Mediware had cash and cash equivalents of $20,974,000
      compared to $18,996,000 at June 30, 2006. Working capital was $21,396,000 and
      $18,095,000 at December 31, 2006 and June 30, 2006, respectively. The current
      ratio was 2.9 to 1 at December 31, 2006 compared to 2.6 to 1 at June 30, 2006.
      The Company does not have any material capital lease obligations, purchase
      obligations or long-term liabilities.





Cash
      provided by operating activities was $3,873,000 during the first six months
      of
      fiscal 2007 compared to $3,913,000 during the same period a year ago. The
      decrease in cash provided by operating activities is primarily due to changes
      in
      depreciation and amortization, deferred tax provision, and accounts
      receivable.





Cash
      used
      in investing activities was $2,181,000 during the first six months of fiscal
      year 2007 compared to $2,641,000 during the same period a year ago. The decrease
      primarily relates to less capitalized software development costs in the current
      year. Mediware capitalized $1,985,000 and $2,380,000 of product development
      costs during the six months ended December 31, 2006 and 2005, respectively.




Cash
      provided by financing activities was $258,000 during the first six months of
      fiscal year 2007 compared to $1,026,000 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.




Factors
      that may affect liquidity are Mediware’s ability to penetrate the market for its
      products, maintain or reduce the length of the selling cycle, collect cash
      from
      clients as systems are implemented and replace revenues associated with the
      sunset program. Exclusive of activities involving any future acquisitions of
      products or companies that complement or augment Mediware’s existing line of
      products, Mediware believes that current available funds and cash generated
      from
      operations will provide sufficient liquidity to meet operating requirements
      for
      the foreseeable future. Mediware 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.


18
 *Index*





**ITEM3.**
            **QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK**





Mediware
      does not currently have any material exposure to foreign currency transaction
      gains or losses. However, Mediware does have some exposure to foreign currency
      rate fluctuations arising from sales made to customers in the United Kingdom.
      These transactions are made by JAC which transacts business in the British
      pound. To date, Mediware has not entered into any derivative financial
      instrument to manage foreign currency risk and is currently not evaluating
      the
      future use of any such financial instruments.





**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 December 31, 2006.





There
      were no material changes in Mediware’s internal controls over financial
      reporting that occurred during the three months ended December 31, 2006 that
      have materially affected, or are reasonably likely to materially affect, its
      internal controls over financial reporting.


19
 *Index*


**PARTII**
            **OTHER
                INFORMATION**  **Item
                  1.**
              **LEGAL
                  PROCEEDINGS**
 
 In
        December of 2006 the Court of Appeal for the Third Appellate District in
        Sacramento, California reversed in part a judgment in favor of former Mediware
        employee Donnie L. Jackson, Jr. against Global Med Technologies, Inc. (and
        its
        affiliate). The Court of Appeals vacated the award of attorney's fees previously
        obtained by Mr. Jackson and remanded the case to the El Dorado Superior Court
        for further proceedings.  Mr. Jackson had previously successfully moved for
        summary judgment on claims he misappropriated Global Med's 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.  Mr. Jackson has filed a petition for review in the California
        Supreme Court. In the event that Mr. Jackson ultimately prevails in this
        case, 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.
 
 **Item
                  1A.**
              **RISK
                  FACTORS.**
 
 Risks
        and
        uncertainties that, if they were to occur, could materially adversely affect
        our
        business or that could cause our actual results to differ materially from
        the
        results contemplated by the forward-looking statements contained in this
        report
        and other public statements we make were set forth in the “Item 1A - Risk
        Factors” section of our Annual Report on Form 10-K for the year ended June 30,
        2006. There have been no material changes from the risk factors disclosed
        in
        that Form 10-K except as set forth below.
 
 **Our
        revenue will be adversely affected after June 2007 by the loss of revenue
        derived from the sunset of the Blood Management Division’s legacy
        products.**
 
 Over
        the
        last few years, our Blood Management Division has experienced increased revenue
        as a result of the migration of its customers from our legacy blood bank
        products to our HCLL software product. The first of two key sunset dates
        occurred in the second quarter of fiscal 2007 and the second such date occurs
        in
        the fourth quarter of fiscal 2007. Following fiscal 2007, Mediware expects
        decreased revenue in the Blood Management Division. Mediware does not believe
        that its current strategic efforts will be sufficient to replace these lost
        revenue sources.
 
 **Our
        future success in our Medication Management Division requires customer
        acceptance of the division’s MediMAR and MediCOE products.**
 
 While
        we
        believe that each of our Medication Management products are positioned to
        succeed in the market place, there is no assurance that customers will accept
        our MediMAR and MediCOE products and strategy to the extent that we expect.
        The
        Medication Management Division is now targeting its large WORx software customer
        base for the sale of the MediCOE and MediMAR products, and the new products
        are
        attracting new potential WORx software customers as well. The sales for the
        Medication Management Division’s full suite of products are significantly larger
        in size and scope and involve more hospital departments. We believe that
        the
        foregoing have resulted in substantially longer sales and implementation
        cycles
        for MediCOE and MediMAR compared to stand-alone WORx sales. However, the
        sales
        of MediMAR and MediCOE may instead reflect a lack of market acceptance. In
        the
        event that MediMAR and MediCOE are not accepted in the marketplace, our system
        sales would suffer, our service revenues for these products would be diminished
        and our investment in developing, as well as marketing, these products could
        be
        impaired.
 
 **ITEM
                  4.**
              **SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY
                  HOLDERS**
 
 (a)  We
        held
        our annual stockholders’ meeting on November 2, 2006.
 
 (b)  At
        the
        annual meeting we voted on (1) a proposal to elect Jonathan H. Churchill,
        Dr. John Gorman, and Dr. Clinton G. Weiman for three year terms; (2) a proposal
        to elect Ira Nordlicht for a two year term; and (3) a proposal to elect Lawrence
        Auriana for a one year term. Messrs. Roger Clark, Robert Sanville, James
        Burgess
        and Joseph Delario each had terms of office that continued after the meeting.


20
 *Index*




(c)  We
        voted
        on two proposals at the annual meeting: the election of directors and the
        ratification of Eisner LLP, as independent registered public accounting firm
        for
        the Company for the year ending June 30, 2007.




(1)
      Election of Directors


Jonathan
                H. Churchill
            6,700,696
                for
            49,936
                withheldJohn
                Gorman, M.D.
            6,700,696
                for
            49,936
                withheldClinton
                G. Weiman, M.D.
            6,700,379
                for
            50,203
                withheldIra
                S. Nordlicht
            6,701,429
                for
            49,203
                withheldLawrence
                Auriana
            5,267,573
                for
            1,483,059
                withheld





(2)
      Proposal to ratify selection of Eisner LLP as independent registered public
      accounting firm for the Company for the year ending June 30,
      2007.


6,719,003
                for
            6,746
                against
            24,883
                abstained




21
 *Index*


**ITEM****6.**
            **EXHIBITS**





Exhibit
                11
            Schedule
                of Computation of Net Earnings Per ShareExhibit
                15
            Awareness
                LetterExhibit
                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




22
 *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)February
                6, 2007
            /s/   JAMES
                F. BURGESSDate
            JAMES
                F. BURGESSPRESIDENT
                AND CHIEF EXECUTIVE OFFICERFebruary
                6, 2007
            /s/   MARK
                B. WILLIAMSDate
            MARK
                B. WILLIAMSCHIEF
                FINANCIAL OFFICER






23