FORM 10-Q 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(Mark One)

x

For the quarterly period ended December 31, 2002
OR





|New York                                                        | 11-2209324                          
|--------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of 
incorporation or organization) | (I.R.S. Employer
Identification No.)
|                                                                |                                     
|11711 West 79th StreetLenexa, Kansas                            | 66214                               
|(Address of principal executive offices)                        | (Zip Code)                          

(913) 307-1000



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.  Yes  X   No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes     No  X

As of January 20, 2003, there were 7,304,525 shares of Common Stock, $0.10 par value, of the registrant outstanding.





MEDIWARE INFORMATION SYSTEMS, INC. 
INDEX



|PART I         | Financial Information                                                                                                        |  | Page
|-------------- | ---------------------------------------------------------------------------------------------------------------------------- |  | ----
|ITEM 1.        | Financial Information
Consolidated Balance Sheets as of December 31, 2002
and June 30, 2002                                  |  | 4   
|               | Consolidated Statements of Operations and Comprehensive Income
For the Three and Six Months Ended December 31, 2002 and 2001 |  | 5   
|               | Consolidated Statements of Cash Flows
For the Six Months Ended December 31, 2002 and 2001                                    |  | 6   
|               | Notes to Financial Statements                                                                                                |  | 7   
|               | Independent Accountants' Report                                                                                              |  | 10  
|ITEM 2.        | Management's Discussion and Analysis of Financial
Condition and Results of Operations                                        |  | 11  
|ITEM 3.        | Quantitative and Qualitative Disclosures About Market Risks                                                                  |  | 17  
|ITEM 4.        | Controls and Procedures                                                                                                      |  | 17  
|Part II        | Other Information                                                                                                            |  |     
|ITEM 4.        | Submission of Matters to a Vote of Security Holders                                                                          |  | 18  
|ITEM 5.        | Other Information                                                                                                            |  | 18  
|ITEM 6.        | Exhibits and Reports on Form 8-K                                                                                             |  | 19  
|Signature Page |                                                                                                                              |  | 20  
|Certifications |                                                                                                                              |  |     





PART I  -  FINANCIAL INFORMATION

ITEM 1.    FINANCIAL INFORMATION.



|MEDIWARE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES          
|-------------------------------------------------------------
|CONSOLIDATED BALANCE SHEETS                                  
|(Amounts in thousands except shares)                         
|                                                             
|                                                             
|                                                             
|                                                             
|ASSETS                                                       
|Current Assets                                               
|Cash and cash equivalents                                    
|Accounts receivable (net of allowance of $581 at             
|December 31, 2002 and $694 at June 30, 2002)                 
|Inventories                                                  
|Deferred Tax Asset                                           
|Prepaid expenses and other current assets                    
|Total current assets                                         
|                                                             
|Fixed assets, net                                            
|Capitalized software costs, net                              
|Goodwill, net                                                
|Purchased technology, net                                    
|Deferred tax asset                                           
|Other long term assets                                       
|Total Assets                                                 
|                                                             
|                                                             
|LIABILITIES AND STOCKHOLDERS' EQUITY                         
|Current Liabilities                                          
|Accounts payable                                             
|Advances from customers                                      
|Accrued expenses and other current liabilities               
|Total current liabilities                                    
|                                                             
|Notes payable and accrued interest payable to a related party
|Deferred tax liability                                       
|Total liabilities                                            
|                                                             
|Stockholders' Equity                                         
|Preferred stock, $0.01 par value; authorized 10,000,000      
|shares; none issued or outstanding                           
|Common stock, $0.10 par value; authorized 12,000,000         
|shares; issued and outstanding: 7,305,000 shares at          
|December 31, 2002 and 7,259,000 at June 30, 2002             
|Additional paid-in capital                                   
|Accumulated deficit                                          
|Accumulated other comprehensive (loss)                       
|Total stockholders' equity                                   
|Total Liabilities and Stockholders' Equity                   
|                                                             

See Notes to Consolidated Financial Statements.







|MEDIWARE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES           
|--------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
|(Unaudited)                                                   
|(Amounts in thousands, except per share amounts)              
|                                                              
|                                                              
|                                                              
|Revenues                                                      
|System sales                                                  
|Services                                                      
|Total revenues                                                
|Cost and Expenses                                             
|Cost of systems                                               
|Cost of services                                              
|Software development costs                                    
|Selling, general & administrative                             
|Proceeds from settlement                                      
|Total costs and expenses                                      
|Operating income                                              
|                                                              
|Interest and other income                                     
|Interest (expense)                                            
|Earnings before provision for income   taxes                  
|Provision for income taxes                                    
|Net Income                                                    
|                                                              
|                                                              
|Other Comprehensive Income, net of   tax                      
|Foreign currency translation   adjustment                     
|Comprehensive Income                                          
|                                                              
|                                                              
|Earnings Per Common Share                                     
|Basic                                                         
|                                                              
|Diluted                                                       
|                                                              
|Weighted Average Common Shares   Outstanding                  
|Basic                                                         
|                                                              
|Diluted                                                       
|                                                              

See Notes to Consolidated Financial Statements.







|MEDIWARE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES 
|----------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS               
|Unaudited                                           
|(amounts in thousands)                              
|                                                    
|                                                    
|                                                    
|Cash Flows From Operating Activities                
|Net income                                          
|Adjustments to reconcile net earnings to            
|net cash provided by operating activities:          
|Depreciation and amortization                       
|Net change in deferred tax assets and liabilities   
|Provision for doubtful accounts                     
|Changes in operating assets and liabilities:        
|Accounts receivable                                 
|Inventories                                         
|Prepaid expenses and other assets                   
|Accounts payable, accrued expenses and              
|customer advances                                   
|Net cash provided by operating activities           
|                                                    
|Cash Flows From Investing Activities                
|Acquisition of fixed assets                         
|Capitalized software costs                          
|Acquisition of technology                           
|Net cash used in investing activities               
|                                                    
|Cash Flows From Financing Activities                
|                                                    
|Proceeds from exercise of options                   
|                                                    
|Net cash provided by financing activities           
|                                                    
|Foreign currency translation adjustments            
|                                                    
|Net increase (decrease) in cash and cash equivalents
|Cash and cash equivalents at beginning of period    
|Cash and cash equivalents at end of period          
|                                                    
|                                                    
|Supplemental disclosures of cash flow information:  
|Cash paid during the period for:                    
|                                                    
|Income taxes                                        
|See Notes to Consolidated Financial Statements.     





MEDIWARE INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.     FINANCIAL STATEMENTS

In the opinion of management, the accompanying unaudited, consolidated, condensed financial statements contain all adjustments necessary to present fairly the financial position of 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 ("SEC") 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 the Company's audited financial statements for the year ended June 30, 2002 included in the Company's Annual Report filed on Form 10-K for such year.

The results of operations for the three months and six months ended December 31, 2002 are not necessarily indicative of the results to be expected for the entire fiscal year.

2.     EARNINGS PER SHARE

Basic earnings per share have been computed using the weighted average number of shares of common stock, par value $0.10 ("Common Stock"), of the Company outstanding for each period presented.  For the three and six months ended December 31, 2002 and December 31, 2001, the dilutive effect of stock options and other common stock equivalents is included in the calculation of diluted earnings per share using the treasury stock method.

3.     RELATED PARTY TRANSACTIONS

On October 11, 2000, Fratelli Auriana, an entity controlled by Mr. Lawrence Auriana, the Chairman of the Board of the Company and holder of more than 5% of the Company's outstanding Common Stock, committed to loan the Company up to $2,000,000, in addition to amounts previously loaned to the Company, to be drawn in multiples of $250,000, as needed by the Company.  Conditions were finalized and loan documents were signed on December 1, 2000 between Fratelli Auriana and the Company.  On July 15, 2002, the Company and Fratelli Auriana entered into a Second Amendment to the Loan Agreement between the two parties, extending the date until which the Company may borrow funds to September 30, 2004.  As of January 20, 2003, the Company has not borrowed against this loan facility.

In August 2002, the Company entered into two agreements with Dr. John Gorman and his affiliates pertaining to the Company's HCLL product, which is in development.  Dr. Gorman is a director of the Company.  These agreements modify two earlier agreements that the Company entered into with Dr. Gorman and his affiliates prior to his joining the Board.  In September 1998, Glace, Inc. ("Glace"), an affiliate of Dr. Gorman, entered into a Consulting Agreement with the Company to provide certain development services related to HCLL, which was then known as Hemocare 2000 (the "1998 Consulting Agreement").  In September 1999, Dr. Gorman, on behalf of himself and a then to be formed entity, entered into a Software Agreement with the Company under which Dr. Gorman was granted the right to the Hemocare 2000 software for uses outside of the healthcare field, in exchange for a payment of $200,000 (the "1999 Software Agreement"), and Dr. Gorman and the Company agreed to share certain legal costs associated with seeking patent protection for the Hemocare 2000 software.



In the first of the August 2002 agreements, it was agreed that Glace would accept a payment from the Company of $38,000 as a final payment for all consulting fees due under the 1998 Consulting Agreement.  The Company paid the $38,000 in the first quarter of fiscal 2003 and in turn waived any right to recover consulting fees previously paid by it under that agreement and confirmed its obligation to pay Glace a milestone payment of $250,000 upon the grant by the Food and Drug Administration of 510(k) approval for HCLL.  The Company paid Glace an advance of $100,000 on this milestone during the quarter ended September 30, 2002, which is subject to repayment by Glace in four equal annual installments of $25,000 each if 510(k) approval for HCLL is not granted by December 31, 2004.  The Company also paid $4,000 towards patent costs on an additional provisional patent for the HCLL technology, with the understanding that the Company has no obligation to pay for any further patent work on HCLL undertaken by Dr. Gorman's companies.



The second of the August 2002 agreements was an amendment to the 1999 Software Agreement.  This agreement codified that the Company retains all rights to the Hemocare 2000 technology within the healthcare field, and that Deep Sky Software, Inc. ("Deep Sky"), a company formed by Dr. Gorman, has an exclusive license to the Hemocare 2000 technology outside of the healthcare field.  The amendment clarified that the healthcare field for this purpose includes the provision of any product, information, software, service or activity to healthcare service providers.  In addition, Dr. Gorman, Glace and Deep Sky agreed to release the Company and related parties from any claims that Dr. Gorman, Glace and Deep Sky might have arising out of the 1998 Consulting Agreement, the 1999 Software Agreement and all other agreements relating to the Hemocare 2000 technology, other Company products and services, any product or services provided by Dr. Gorman, Glace or Deep Sky to the Company, and any other aspect of their business relationship.

4.     PROCEEDS FROM SETTLEMENT

On November 7, 2002, the Company received a payment of $614,000 arising out of the class action settlement of In re First Databank Direct Antitrust Litigation (the "Class Action").  This amount excludes taxes, professional, legal fees, and other Company borne expenses associated with this action all of which have been fully expensed.  Class actions had been brought on behalf of persons who purchased electronic drug information databases containing clinical, pricing, or other information on prescription or non-prescription pharmaceutical drugs or services, products or software related thereto (collectively, the "Drug Information Databases") directly from First DataBank, Inc. ("FDB") in the United States. The actions alleged violations of the antitrust laws with respect to the pricing of the Drug Information Databases.



As a purchaser of Drug Information Databases from the defendants in the class actions, the Company was entitled to participate in the court approved settlement.  This settlement represents partial reimbursement of prior period operating costs.





INDEPENDENT ACCOUNTANTS' REPORT

To The Board of Directors and Stockholders of 
Mediware Information Systems, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of Mediware Information Systems, Inc. and subsidiaries as of December 31, 2002, and the related condensed consolidated statements of operations and comprehensive income, and cash flows for the three-month and six-month periods ended December 31, 2002 and 2001.  These condensed consolidated financial statements are the responsibility of the Company's management.

Eisner LLP
New York, New York
January 20, 2003





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

Forward-Looking Statements

Certain statements made in or incorporated into this Quarterly Report on Form 10-Q may constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, as the same may be amended from time to time (the "Act") and in releases made by the SEC from time to time. Such forward-looking statements are not based on historical facts and involve known and unknown risks, uncertainties and other factors, which may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. These risks and uncertainties include: (i) fluctuations in quarterly operating results, (ii) reliance on third-party software, (iii) dependence on third-party marketing relationships, (iv) changes in the healthcare industry, (v) significant competition, (vi) the Company's ability to manage its rapid growth, (vii) the effects of government regulations on the Company, (viii) product related liabilities, (ix) risks associated with system errors and warranties, and (x) risks associated with the development, marketing and sale of new software products. Amplification of such risks may be found in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2002. The Company does not intend to update publicly any forward-looking statements.



Results of Operations for the Three Months Ended December 31, 2002 as Compared to the Three Months Ended December 31, 2001

Total revenues for the quarter ended December 31, 2002 were $8,005,000, an increase of $469,000 or 6.2% from the prior year's first quarter total of $7,536,000.   The Pharmacy and JAC divisions reported increased total revenues of $257,000 or 6.8% and $169,000 or 28.0%, respectively, in the quarter ended December 31, 2002 as compared to the quarter ended December 31, 2001.  Revenues for the Operating Room division increased $96,000 or 19.3% compared to the second quarter of fiscal 2002.  These increases were partially offset by a decline in total revenues in the Blood Bank division of $53,000 or 2.0%.



System sales, which include proprietary software, third party software and hardware sales for the second quarter of fiscal 2003 were $3,169,000, an increase of 10.4% or $298,000 compared to $2,871,000 a year ago.  The Pharmacy division system sales increased by $172,000 or 9.3% as the division continues to report system revenues reflecting market acceptance of the WORxä
 pharmacy system.  The JAC division reported an increase of $86,000 or 32.2% in system sales during the current quarter.  The JAC division system revenue increase is attributable to upgrade sales.  The Operating Room division reported increased system sales of $118,000 or 64.8% in the second quarter of fiscal 2003.  The increase in system sales reflects acceptance of the new features and functionality released in the Perioperative Solutionsä
 system software.  Management believes, but cannot give any assurance, that this increased activity will produce additional service revenues in future quarters.  These increases were offset by a decrease in system sales in the Blood Bank division of $79,000 or 13.6% in the second quarter of fiscal 2003 as compared to the same quarter a year ago.  During the second quarter, the Blood Bank division submitted its new transfusion blood bank software solution to the Food and Drug Administration ("FDA") for 510(k) clearance.  Management believes, but cannot give any assurance, that it will receive 510(k) clearance from the FDA.  Upon clearance of its new product, management believes, but cannot provide any assurance, that the Blood Bank division will begin to report increased systems revenues.



Service revenues, which include recurring software support, implementation and training services, increased by $171,000 to $4,836,000, or 3.7%, compared to prior year service revenues of $4,665,000.  The Pharmacy and JAC divisions reported increases of approximately $85,000 or 4.4% and $82,000 or 24.7%, respectively, primarily reflecting the implementation and training revenues associated with system sales generated in recent quarters.  The Operating Room and Blood Bank divisions experienced slight changes in their respective support revenues reflecting the Company's ability to retain its installed clients.  Management believes, but cannot give any assurance, that as system sales increase in the Operating Room and Blood Bank divisions, corresponding service revenues for those divisions should also increase.



Cost of systems includes the cost of computer hardware and sublicensed software purchased from computer and software manufacturers as part of a 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.  Over the last few quarters, the Company has focused its sales efforts primarily on its proprietary software solutions.  This has resulted in overall higher margins as software revenues have grown in relation to computer hardware revenues.  The resulting gross margins on systems sales for the quarter ended December 31, 2002 were 80.7%, an increase of 7.0% over gross margins of 73.7% in December 2001.  Cost of systems was $610,000, a decrease of $146,000 or 19.3% from $756,000 in the first quarter of 2002, reflecting the overall increase in proprietary software sales and a lower mix of hardware sales for all divisions in the most recent quarter.



Cost of services includes the salaries of client service personnel and communications expenses along with the direct expenses of the client service function.  Cost of services increased 10.6% or $144,000 to $1,503,000 in the second quarter of fiscal 2003 as compared to the same quarter a year ago.  The increase in cost of services was primarily a response to the increased demand for the Company's WORx pharmacy system.  Cost of services was 31.1% of related revenues in the second quarter of fiscal 2003, as compared to 29.1% in the same quarter of fiscal 2002.  Management believes, but cannot give any assurance, that demand for its contracted services will continue in the Pharmacy division with respect to WORx and other new product releases.



Software development costs include salaries, consulting, documentation, office and other related expenses incurred in product development along with amortization of capitalized software development costs. Cash expenditures related to software development include software development costs capitalized during the period and excludes amortization of capitalized software.  Software development costs decreased 8.9% or $125,000 from $1,398,000 to $1,273,000 while total cash expenditures decreased $36,000 or 1.8% from $2,021,000 to $1,985,000 for the quarter ended December 31, 2002 as compared to the same quarter in the prior fiscal year.  The Operating Room divisionexperienced increasedsoftware development costs of $82,000 or 50.8% and corresponding increased cash expenditures of approximately $82,000 or 32.0% in the December 31, 2002 quarter reflecting the shift in development efforts upon release of its new Perioperative Solutions product.  During the second quarter of fiscal 2003, the Pharmacy division reported a decrease of $110,000 or 15.8% in product development expenses while expending $67,000 or 12.2% more on projects in the quarter compared to the second quarter of fiscal 2002.  These changes reflect new investments in two development projects targeted to doctors and nurses at hospitals currently using the WORx pharmacy system.  The Blood Bank division incurred decreases in software development costs of $97,000 or 17.9% and corresponding decreases in cash expenditures of $185,000 or 15.3% in the second quarter of fiscal 2003.  During the quarter ended December 31, 2002, the Blood Bank division completed the initial development stage of its new transfusion product and completed its 510(k) submission to the FDA.  As a result, staffing requirements for the project were reduced compared to the prior year quarter.  Approximately 66% of the net capitalized software costs at December 31, 2002 are not being amortized, and will begin amortization upon the commercialization of related software, the majority of which relates to the Company's Blood Bank transfusion product.  The Company anticipates, but cannot give any assurance, that it will commercialize its new Blood Bank software in calendar 2003, subject to attaining FDA clearance.  While cash expenditures for the Blood Bank division are expected to decline, total expenses may not decline due to the amortization costs.



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 for the quarter ended December 31, 2002 was $3,146,000, an increase of $133,000 or 4.4%, compared to $3,013,000 in the corresponding quarter of fiscal 2002.  These increases reflect higher sales-related travel efforts, and resulting commissions; higher legal expenses due to increased sales activity; federal agency professional guidance including FDA submissions and compliance with the Sarbanes-Oxley Act; and changes in corporate counsel; increases in commercial insurance rates; and other normal business expenditures.



During the quarter ended December 31, 2002, the Company received $614,000 arising out of the class action settlement of In re First DataBank Direct Antitrust Litigation (the "Class Action").  This amount excludes professional, legal fees, and other Company borne expenses associated with this action all of which have been fully expensed.  Class actions had been brought on behalf of persons who purchased electronic drug information databases containing clinical, pricing, or other information on prescription or non-prescription pharmaceutical drugs or services, products or software related thereto (collectively, the "Drug Information Databases") directly from First DataBank, Inc. ("FDB") in the United States. The actions alleged violations of the antitrust laws with respect to the pricing of the Drug Information Databases.



As a purchaser of Drug Information Databases from the defendants in the class actions, the Company was entitled to participate in the court approved settlement.  This settlement represents partial reimbursement of prior period operating costs.



Net income was $1,299,000 for the quarter ended December 31, 2002, an increase of $697,000 or 115.8% as compared to net income of $602,000 in the quarter ended December 31, 2001.  The Company's net income improvement is a result of both increased proprietary software systems revenue and higher utilization of staff providing services to the installed base of clients, as well as the receipt of the Class Action settlement outlined above.



Results of Operations for the Six Months Ended December 31, 2002 as Compared to the Six Months Ended December 31, 2001

Total revenues for the six months ended December 31, 2002 were $15,991,000, an increase of $1,140,000 or 7.7% from the prior year's first six months' total of $14,851,000.  As with the second quarter results, the Pharmacy, JAC, and Operating Room divisions experienced increases in total revenues in the six months ended December 31, 2002 as compared to the six months ended December 31, 2001.  The Blood Bank division experienced a decline in total revenues during the same time period.



System sales for the six months ended December 31, 2002 increased by 16.3% or $922,000 from $5,673,000 to $6,595,000.  As with the results for the quarter ended December 31, 2002, all divisions with the exception of the Blood Bank division reported increased system sales.  System sales in the Blood Bank division decreased $584,000 or 40.7% to a total of $850,000.  The Pharmacy division reported a significant increase in system sales of $1,269,000 or 34.6%, to a total of $4,934,000 in the first six months of fiscal 2003, as compared to the same period in fiscal 2002 primarily due to market acceptance of the WORx pharmacy system.  In addition, the JAC division reported increases in system sales of $119,000, or 30.4%, to $510,000 from the same six months in fiscal 2002 representing the upgrades previously discussed.  For the first six months of fiscal 2003, the Operating Room division reported increased system sales of $117,000 or 64.2% related to product enhancements, discussed above, to Perioperative Solutions.



Service revenues, as described above, increased by $218,000, or 2.4%, as compared to service revenues of $9,178,000 during the first six months of fiscal 2002, to a total of $9,396,000.  As mentioned above, the Pharmacy and JAC divisions represent the majority of the increase in service revenues as implementation and installation services related to recent system sales are performed.  The Blood Bank and Operating Room divisions reported slight decreases in service related activities, as previously mentioned.



Cost of systems, defined previously, was 18.2% of new system sales for the six months ended December 31, 2002 compared to 27.6% in the same period last year.  Cost of systems decreased by $362,000 or 23.1% from $1,564,000 to $1,202,000 in the first six months of fiscal 2003, reflecting the Company's focus on software system sales, as mentioned above, resulting in improved margins in fiscal 2003.  Margins for the first six months of fiscal 2003 were 81.8%, an increase of 9.4% over comparable fiscal 2002 six-month margins of 72.4%.



Cost of services, as previously described and for the reasons mentioned above, increased 8.1%, or $224,000, to $3,002,000 in the first six months of fiscal 2003 as compared to the same period a year ago.  Cost of services was 31.9% of related revenues in the first six months of fiscal 2003, as compared to 30.3% for the same period of fiscal 2002.



Software development costs, as previously described, decreased $250,000 or 9.2% for the six months ended December 31, 2002 as compared to the same period in the prior fiscal year.  Cash expenditures in the six months ending December 31, 2002 were approximately $3,950,000, a decrease of $125,000 or 3.1%, compared to the six months ended December 31, 2001.  The Pharmacy division, for the reasons explained above, experienced a reduction of $100,000 or 7.8% in software development costs while expending $93,000 or 8.9% more in cash related to development efforts for the six months ended December 31, 2002.  As explained above, the Operating Room division experienced increased expenses of $186,000 or 61.2% and increased cash expenditures of $131,000 or 24.7% in the six months ended December 31, 2002.  For the reasons outlined above, the Blood Bank division reported decreased software development costs of $335,000 or 29.2% and decreased corresponding cash expenditures of $348,000 or 14.0% during the first six months of fiscal 2003.



SG&A expenses, for reasons previously discussed, increased $298,000 or 4.9% to $6,353,000 for the six months ended December 31, 2002, compared to $6,055,000 for the same period in the prior fiscal year.



During the six months ended December 31, 2002, the Company received $614,000 related to the Class Action settlement described above.  The Company had no such settlement in the six months ended December 31, 2001.



Net profit was $2,221,000 for the six months ended December 31, 2002, an increase of $1,191,000 or 115.6%, compared to $1,030,000 in the six months ended December 31, 2001.



Liquidity and Capital Resources

As of December 31, 2002, the Company had cash and cash equivalents of $4,614,000.  In addition, the Company had an available loan facility in the amount of  $2,000,000 as of December 31, 2002. The Company's working capital was $1,795,000 and current ratio was 1.15:1 at December 31, 2002, compared to a working capital deficit of $718,000 and a current ratio of 0.94:1 at June 30, 2002.

The Company's net cash generated from operating activities was $3,911,000 for the six months ended December 31, 2002, compared to net cash provided by operations of $2,544,000 during the same period in fiscal year 2002.

The Company invested $2,770,000 and $2,591,000 during the six months ended December 31, 2002 and 2001, respectively.  Primarily, the increase in investments relates to ongoing software development projects in the Blood Bank and Operating Room divisions and the new projects recently started in the Pharmacy division.  Of the amounts invested, the Company capitalized $2,389,000 and $2,226,000 of product development costs during the six months ended December 31, 2002 and 2001, respectively.  Additionally, the Company purchased $381,000 in fixed assets during this period.  This is primarily made up of testing equipment used to prepare the 510(k) filing and upgrading networking systems which began in the December 2002 quarter.

For the six months ended December 31, 2002, the Company received $231,000 related to proceeds from the exercise of options, compared to $27,000 generated in the same period a year ago.

The Company's liquidity is influenced by the Company's ability to successfully compete in an increasingly competitive industry.  The markets that the Company serves continue to be impacted by consolidation among hospital information systems providers.  The Company believes that these providers offer more integrated but less clinical functionality in their software solutions to the same markets.  The Company's ability to successfully compete is dependent upon its ability to provide superior clinical functionality in its targeted hospital departments.   Factors that may affect liquidity include the ability to penetrate the market with its products, maintain or reduce the length of the selling cycle, and the ability to collect cash from clients as implementations progress.  Exclusive of activities involving any future acquisitions of products or companies that complement or augment the existing line of products, management believes that current funds, cash generated from operations, and the loan commitment from Fratelli Auriana, an entity controlled by Lawrence Auriana, the Chairman of the Board of Directors of the Company, described above in Note 3 to the Financial Statements, will be sufficient 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.



New Accounting Pronouncements



ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES
                   ABOUT MARKET RISKS.

The Company does not currently have any material exposure to foreign currency transaction gains or losses. However, the Company does have some exposure to foreign currency rate fluctuations arising from sales made to customers in the United Kingdom. These transactions are made by the Company's U.K. based, wholly owned subsidiary which transacts business in the local functional currency. To date, the Company 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.

The Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") have reviewed and evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 240.13a-14(c) and 15d-14(c) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of a date within ninety days prior to the filing date of this quarterly report.  Based on that review and evaluation, which included inquiries made to certain other employees of the Company, the CEO and CFO have concluded that the Company's current disclosure controls and procedures, as designed and implemented, are reasonably adequate to ensure that they are provided with material information relating to the Company required to be disclosed in the reports the Company files or submits under the Exchange Act.  There have not been any significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.  There were no significant deficiencies or material weaknesses identified, and therefore no corrective actions were taken.



PART II  -  OTHER INFORMATION

ITEM 4.     SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS.

1. Annual Meeting of Shareholders, November 6, 2002
2. Directors elected to serve three year terms:
3. Election of Directors
4. Appointment of Eisner LLP as the Company's auditors for the year ending June 30, 2003



| | 5,549,168  for | 1,996  against | 409  abstained
| | -------------- | -------------- | --------------



ITEM 5.     OTHER INFORMATION.

During the first quarter, the Company, through its professionals, requested the Internal Revenue Service ("IRS") to issue a Compliance Statement with respect to the Company's 401(k) Plan (the "Plan") by filing a VCO Application.  As disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2002, the Company noted technical deficiencies during fiscal 2002 in the Plan subsequent to the 1998 amendment of the Plan.  The Company has voluntarily corrected the deficiencies and believes, but cannot give any assurance, that it will not incur any significant penalties or other costs related to the deficiencies.  The VCO Application process allows the Company to identify and suggest corrections, which the IRS reviews and then makes a determination.  The Company does not anticipate but cannot provide any assurance that, the effect of the determination issued by the IRS will be material.



ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K.

(a)           Exhibits

|Exhibit 10.47 | Employment Agreement dated October 14, 2002 between Mediware Information Systems, Inc. and Jill H. Suppes                                                       
|------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 11.   | Schedule of Computation of Net Earnings Per Share                                                                                                               
|Exhibit 15.   | Letter of awareness from Eisner LLP dated January 20, 2003 concerning unaudited interim financial information                                                   
|Exhibit 99.1  | Certification by George J. Barry, Chief Executive Officer, and Jill H. Suppes, Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



(b)     No Reports on Form 8-K were filed by the Company for the quarter ended 
          December 31, 2002.





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.
DATE  January 27, 2003                 MEDIWARE INFORMATION SYSTEMS, INC.                                                         (Registrant)



/s/  GEORGE J. BARRY                                                           GEORGE J. BARRY
                                                           PRESIDENT AND CHIEF EXECUTIVE OFFICER



/s/  JILL H. SUPPES                                                           JILL H. SUPPES
                                                           CHIEF FINANCIAL OFFICER





CERTIFICATIONS

I, George J. Barry, certify that:



1. I have reviewed this quarterly report on Form 10-Q of Mediware Information Systems, Inc.;



2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;



3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;



4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;



5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):



a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and



6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



Date: January 27, 2003

/s/ George J. Barry
------------------------
     George J. Barry
     Chief Executive Officer





CERTIFICATIONS



I, Jill H. Suppes, certify that:



1. I have reviewed this quarterly report on Form 10-Q of Mediware Information Systems, Inc.;



2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;



3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;



4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;



5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):



a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and



6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



Date: January 27, 2003

/s/ Jill H. Suppes
------------------------
     Jill H. Suppes
     Chief Financial Officer







EXHIBIT INDEX



|Exhibit 10.47 | Employment Agreement dated October 14, 2002 between Mediware Information Systems, Inc. and Jill H. Suppes                                                       
|------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 11.   | Schedule of Computation of Net Earnings Per Share                                                                                                               
|Exhibit 15.   | Letter of awareness from Eisner LLP dated January 20, 2003 concerning unaudited interim financial information                                                   
|Exhibit 99.1  | Certification by George J. Barry, Chief Executive Officer, and Jill H. Suppes, Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





EXHIBIT 10.47

EMPLOYMENT AGREEMENT



THIS EMPLOYMENT AGREEMENT (hereinafter "this Agreement") is made this 14th day of October, 2002 between Mediware Information Systems, Inc., (hereinafter "the Company") and Jill H. Suppes (hereinafter "the Executive").



WHEREAS, the Company desires to employ the Executive as its Chief Financial Officer, and the Executive desires to be so employed by the Company, on the terms and conditions hereinafter set forth;



NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements herein set forth, the Company and the Executive hereby agree as follows:



1.     Employment. The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve as Chief Financial Officer of the Company.  The Executive agrees to perform such services customary to such office as shall from time to time be assigned to her by the President and Chief Executive Officer. The Executive further agrees to use her best efforts to promote the interests of the Company and to devote her full business time and energies to the business and affairs of the Company.



2.     Term of Employment. The employment hereunder shall be for a term of three years, commencing on the date hereof and ending on the third anniversary of the date hereof (the "'Expiration Date"), unless terminated earlier pursuant to Paragraph 4 of this Agreement (the "Term of Employment").  This Agreement shall automatically renew for successive terms of one (1) year (each a "Renewal Term") commencing on the first day immediately following the Expiration Date, unless such renewal is objected to by either the Company or the Executive by giving prior written notice more than ninety (90) days and less than one hundred and twenty (120) days prior to the scheduled Expiration Date.  In the event of such renewal, the last day of each successive Renewal Term shall be deemed the Expiration Date.



3.	Compensation and Other Related Matters.



(a)	Salary. As compensation for services rendered hereunder, the Executive shall receive an Annual Base Salary of one hundred thirty-five thousand dollars ($135,000.00), which salary shall be paid in accordance with the Company's then prevailing payroll practices for its officers and shall be subject to review annually by the Board of Directors.



(b)	Bonus. During the term of this Agreement, and in the Board of Directors' sole discretion, the Executive shall be eligible to receive an Annual Bonus of up to 50% of her Annual Base Salary, payable at the time of the conclusion of the annual audit.  The amount of the Annual Bonus payable to the Executive will be based upon Executive meeting performance criteria established by the President and Chief Executive Officer.  If the Executive leaves the Company for any reason in the middle of a year, the Annual Bonus for that year will be pro-rated in the same manner, except if Executive resigns without Good Reason as described in Paragraph 4(d), below, or is terminated for Cause pursuant to Paragraph 5(c), below, in which case no Annual Bonus will be paid.



(c)	Stock Options. Subject to the approval of the Company's Board of Directors, the Executive shall be granted (0)non-qualified options (the "'Options") to purchase shares of the Company's Common Stock, par value $.10 per share, (the "Stock") under the Company's Equity Incentive Plan. The Options shall be subject to the terms of the Equity Incentive Plan and the Executive's Non-Qualified Stock Option Agreement (the "Option Agreement"), attached hereto as Exhibit "'A". Subject to the Option Agreement (which shall govern the Options in the event of any conflict between this Agreement and the Option Agreement), the Company and the Executive agree as follows:



(i)	Vesting. Subject to continued employment of the Executive, the Options shall vest and become exercisable as follows:  (0) Options shall become exercisable on the first anniversary of the commencement of the Term of Employment; (0) Options shall become exercisable on the second anniversary date of the commencement of the Term of Employment; and (0) Options shall become exercisable on the third anniversary date of the commencement of the Term of Employment. In addition, upon an acquisition or sale of the Company, as defined in Paragraph 5(e), below, any remaining unexercisable Options shall become exercisable immediately.



(ii)	Exercise. The Options shall be exercisable at a price equal to the fair market value of the Stock on the day the Term of Employment commences. The fair market value of the Stock shall equal the average of the high and low market sale prices on such day as reported by NASDAQ. The Options shall be exercisable for five years from the commencement of the Term of Employment.



(d)	Other Benefits. The fringe benefits, perquisites and other benefits of employment, including three (3) weeks vacation, to be provided to the Executive shall be equivalent to such benefits and perquisites as are provided to other senior executives of the Company as amended from time to time.



(e)	Expenses.  The Company shall pay the Executive's reasonable expenses (including legal expenses) incurred in the negotiation of this Agreement upon the submission by the Executive of unpaid invoices for such expenses to the Company.



(f)	Reimbursement.  Subject to policies established from time to time by the Company, the Company shall reimburse Executive for the reasonable expenses incurred by her in connection with the performance of her duties hereunder, including but not limited to, travel expenses and entertainment expenses, for which the Executive shall account to the Company in a manner sufficient to conform to Internal Revenue Service requirements.



4.	Termination.



(a)	Disability. If, as a result of the incapacity of the Executive due to physical or mental illness, the Executive is unable to perform substantially and continuously the duties assigned to her hereunder, with or without a reasonable accommodation, for a period of three (3) consecutive months or for a non-consecutive period of nine (9) months during the Term of Employment, the Company may terminate her employment for "Disability" upon thirty (30) days prior written notice to the Executive.



(b)	Death. The Executive's employment shall terminate immediately upon the death of the Executive.



(c)	Cause. The Company shall be entitled to terminate the Executive's employment for "Cause." Termination by the Company of the employment of the Executive for "Cause" shall mean termination based upon (i) the willful failure by the Executive to follow directions communicated to her by the President and Chief Executive Officer; (ii) the willful engaging by the Executive in conduct which is materially injurious to the Company, monetarily or otherwise; (iii) a conviction of, a plea of nolo contendere,a guilty plea or confession by the Executive to an act of fraud, misappropriation or embezzlement or to a felony; (iv) the Executive's habitual drunkenness or use of illegal substances; (v) a material breach by the Executive of this Agreement; or (vi) an act of gross neglect or gross misconduct which the Company deems in good faith to be good and sufficient cause.



(d)	Termination Without Cause. The Company and the Employee shall each have the right to terminate the Executive's employment without cause at any time upon ninety (90) days prior written notice.



5.	Compensation Upon Termination or During Disability



(a)	Disability. During any period that the Executive fails to perform her full-time duties with the Company for a three month period as a result of incapacity due to physical or mental illness (the "Disability Period"), the Executive shall continue to receive her Annual Base Salary at the rate set forth in Paragraph 3(a) of this Agreement, less any compensation payable to the Executive under the applicable disability insurance plan of the Company during the Disability Period, until this Agreement is terminated pursuant to Paragraph 4(a) hereof. Thereafter, or in the event the Executive's employment shall be terminated by reason of her death, the Executive's benefits shall be determined under the Company's insurance and other compensation programs then in effect in accordance with the terms of such programs and the Company shall have no further obligation to the Executive under this Agreement.



(b)	Death. In the event of the Executive's death, the Executive's beneficiary shall be entitled to receive the Executive's Annual Base Salary at the rate set forth in Paragraph 3(a) of this Agreement until the date of her death.  Thereafter, the Company shall have no further obligation to the Executive or the Executive's beneficiary under this Agreement.



(c)	Cause. If the Executive's employment shall be terminated by the Company for "Cause" as defined in Paragraph 4(c) of this Agreement, the Company shall continue to pay the Executive her Annual Base Salary at the rate set forth in Paragraph 3(a) of this Agreement through the date of termination of the Executive's employment.  Thereafter, the Company shall have no further obligation to the Executive under this Agreement.



(d)	Termination Without Cause by the Company. If the Company voluntarily terminates the Executive's employment with the Company pursuant to Paragraph 4(d) of this Agreement, the Company shall continue to pay the Executive Executive's Annual Salary during the three month notice period provided for in Paragraph 4(d) at the rate in effect as of the day immediately preceding the commencement of the notice period, payable in equal installments consistent with the Company's normal salary payment cycles then in effect. Until the earlier of the end of the three month notice period or the commencement of the provision of health benefits to the Executive by a successor employer, the Executive will continue to receive the same coverage of health insurance as immediately before the date of the termination, at the expense of the Company. Thereafter, the Executive acknowledges that the Company shall have no further obligation to the Executive under this Agreement.



(e)	Acquisition or Sale of Company.  If a third party described in Paragraph 5(f) of this Agreement terminates the Executive due to "an acquisition or sale of the Company", as described in Paragraph 5(f) below, the Company shall pay the Executive an amount equal to six months of Executive's Annual Base Salary at the rate in effect at the date of termination of the Executive's employment during the period of the Executive's employment, payable in six equal monthly installments. Until the earlier of the end of the six month period immediately following the termination of employment, or the commencement of the provision of health benefits to the Executive by a successor employer, the Executive will continue to receive the same coverage of health insurance as immediately before the date of the termination, at the expense of the Company. Thereafter, the Executive acknowledges that the Company shall have no further obligation to the Executive under this Agreement.  Notwithstanding the foregoing, if in conjunction with an acquisition or sale of the Company to a third party, the third party (i) requests that the Executive continue to provide services to the Company or such third party after the closing of the acquisition or sale of the Company and (ii) agrees to pay the Executive compensation for the Executive's services at a rate at least equal to the Executive's compensation in effect as of the date immediately preceding the date on which the acquisition or sale of the Company is consummated, the Executive must provide such services for at least forty-five (45) days, unless the third party terminates Executive's services without Cause prior to the end of such forty-five (45) day period.  If the Executive fails to fulfill the requirement of the preceding sentence for any reason, then the Executive will not be eligible for payments under this Paragraph 5(e).  On the other hand, if the Executive does fulfill such requirement and the Executive's employment is subsequently terminated, then the Executive will be entitled to receive the payments described in this Paragraph 5(e).  Payments under this Paragraph 5(e) are intended to be in lieu of the payments the Executive would otherwise be entitled to under Paragraph 5(d).



(f)	Definition. For purposes hereof, "an acquisition or sale of the Company" to or by "a third party" shall mean the occurrence of any transaction or series of transactions which within a six (6) month period result in (I) greater than fifty percent (50%)of the then outstanding shares of Common Stock of the Company (for cash, property including, without limitation, stock in any corporation or other third party legal entity, indebtedness or any combination thereof) have been redeemed by the Company or purchased by a third party not previously affiliated with the Company, or exchanged for shares in any other corporation or other third party legal entity not previously affiliated with the Company, or any combination of such redemption, purchase or exchange, (II) greater than fifty percent (50%) in book value of the Company's gross assets are acquired by a third party not previously affiliated with the Company (for cash, property including, without limitation, stock in any corporation whether or not unaffiliated with the Company, indebtedness of any person or any combination thereof), or (III) the Company is merged or consolidated with another private or public corporation or other third party legal entity and the former holders of shares of Common Stock of the Company own less than 25% of the voting power of the acquiring, resulting or surviving corporation or other third party legal entity.  For the purposes hereof a director or officer of the Company shall be considered "affiliated with the Company."



(g)	Termination Without Cause by the Executive. If the Employee voluntarily resigns her employment with the Company pursuant to Paragraph 4(d) of this Agreement, the Company shall pay the Executive an amount equal to three (3) months of the Executive's Annual Base Salary at highest rate in effect during the period of the Executive's employment, in three (3) equal monthly installments, and shall provide health insurance for such three month period. After the last of such payments, the Executive acknowledges that the Company shall have no further obligation to the Executive under this Agreement.



6.	Confidentiality and Restrictive Covenants.



(a)	The Executive acknowledges that:



(i)	the business in which the Company is engaged is intensely competitive and her employment by the Company will require that he have continual access to and knowledge of confidential information of the Company, including, but not limited to, the nature and scope of its products, the object and source code offered, marketed or under development by the Company or under consideration by the Company for development, acquisition, or marketing by the Company and the documentation prepared or to be prepared for use by the Company (and the phrase "by the Company" shall include other vendors, licensees or and resellers and value-added resellers of the Company's products or proposed product) and the Company's plans for creation, acquisition, improvement or disposition of products or software, expansion plans, financial status and plans, products, improvements, formulas, designs or styles, method of distribution, lists of remarketing and value-added and other resellers customer lists and contact lists, product development plans, rules and regulations, personnel information and trade secrets of the Company, all of which are of vital importance to the success of the Company's business, provided that Confidential Information will not include information which has become publicly known otherwise than through a breach by Executive of the provisions of this Agreement (collectively, "Confidential Information");



(ii)	the direct or indirect disclosure of any Confidential Information would place the Company at a serious competitive disadvantage and would do serious damage, financial and otherwise, to the Company's business;



(iii)	by her training, experience and expertise, the Executive's services to the Company will be special and unique; and



(iv)	if the Executive leaves the Company's employ to work for a competitive business, in any capacity, it would cause the Company irreparable harm.



(b)	Covenant Against Disclosure. The Executive therefore covenants and agrees that all Confidential Information relating to the business products and services of the Company, any subsidiary, affiliate, seller or reseller, value-added vendor or customer shall be and remain the sole property and confidential business information of the Company, free of any rights of the Executive. The Executive further agrees not to make any use of the confidential information except in the performance of her duties hereunder and not to disclose the information to third parties, without the prior written consent of the Company. The obligations of the Executive under this Paragraph 6 shall survive any termination of this Agreement. The Executive agrees that, upon any termination of her employment with the Company, all Confidential Information in her possession, directly or indirectly, that is in written or other tangible or readable form (together with all duplicates thereof) will forthwith be returned to the Company and will not be retained by the Executive or furnished to any third party, either by sample, facsimile, film, audio or video cassette, electronic data, verbal communication or any other means of communication.



(c)	Non-competition. The Executive agrees that, during the Term of Employment and for a period of one (1) year following the date of termination of the Executive's employment with the Company, the Executive will not, directly or indirectly, own, manage, operate, control or participate in the ownership, management or control of, or be connected asan officer, employee, partner, director, or otherwise with, or have any financial interest in, or aid or assist anyone else in the conduct of, any entity or business which competes with any business conducted by the Company or any of its subsidiaries or affiliates, in the United States, Canada and the UK and any other area where such business is being conducted on the date the Executive's employment is terminated hereunder. Notwithstanding the foregoing the Executive's ownership of securities of a public company engaged in competition with the Company not in excess of five (5%) percent of any class of such securities shall not be considered a breach of the covenants set forth in this Paragraph 6.



(d)	Further Covenant. Until the date which is one (1) year after the date of the termination of the Executive's employment hereunder for any reason, the Executive will not, directly or indirectly, take any of the following actions, and, to the extent the Executive owns, manages, operates, controls, is employed by or participates in the ownership, management, operation or control of, or is connected in any manner with, any business of the type and character engaged in and competitive with that conducted by the Company or any of its subsidiaries or affiliates during the period of the Executive's employment, the Executive will use her best efforts to ensure that such business does not take any of the following actions:



(i)	persuade or attempt to persuade any customer of the Company or any seller, reseller or value-added vendor of the Company or of its products to cease doing business with the Company or any of its subsidiaries or affiliates, or to reduce the amount of business it does with the Company or any of its subsidiaries or affiliates;



(ii)	solicit for herself or any entity the business of (A) any customer of the Company or any of its subsidiaries or affiliates, or (B) any seller, reseller or-value-added vendor of the Company, or of its products, or (C) solicit any business from a customer which was a customer of the Company or any of its subsidiaries or affiliates within six months prior to the termination of the Executive's employment; and



(iii)   persuade or attempt to persuade any employee of the Company or any of its subsidiaries or affiliates or any individual who was an employee of the Company or any of its subsidiaries or affiliates, at any time during the six-month period prior to the Executive's termination of employment, to leave the employ of the Company or any of its subsidiaries or affiliates.



7.	Intellectual Property. The Executive hereby agrees that any and all (i) software, object code, source code, and documentation, (ii) any improvements, inventions, discoveries, formulae, processes, methods, know-how, confidential data, patents, trade secrets, (iii) Food and Drug Administrative ("FDA") applications seeking approval by the FDA, information contained in the Forms 510-k of the FDA and approvals from FDA, and (iv) other proprietary information made, developed or created by the Executive (whether at the request or suggestion of the Company or otherwise, whether alone or in conjunction with others, and whether during regular working hours of work or otherwise) during the period of her employment with the Company, which may be directly or indirectly useful in, or relate to, the business being carried out by the Company or any of its subsidiaries or affiliates, shall be promptly and fully disclosed by the Executive to the Board of Directors and shall be the Company's exclusive property as against the Executive, and the Executive shall promptly deliver to the Board of Directors of the Company all papers, drawings, models, data and other material relating to any invention made, developed or created by her as aforesaid.



The Executive shall, upon the Company's request and without any payment therefor, execute any documents necessary or advisable in the opinion of the Company's counsel to direct issuance of patents, copyrights and FDA applications or approvals of the Company with respect to such inventions or work product or improvements or enhancements as are to be the Company's exclusive property as against the Executive under this Paragraph 7 or to vest in the Company title to such inventions as against the Executive, the expense of securing any such patent or copyright, to be borne by the Company.



8.	Breach by Employee. Both parties recognize that the services to be rendered under this Agreement by the Executive are special, unique and extraordinary in character, and that in the event of a breach by Employee of the terms and conditions of the Agreement to be performed by her, then the Company shall be entitled, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either in law or in equity, to enforce the specific performance thereof by the Executive. Without limiting the generality of the foregoing, the parties acknowledge that a breach by the Executive of her obligations under Paragraph 6 or 7 would cause the Company irreparable harm, that no adequate remedy at law would be available in respect thereof and that therefore the Company would be entitled to injunctive relief with respect thereto.



9     Arbitration. Without precluding acting to obtain specific performance and/or injunctive relief pursuant to Paragraph 8 above, in the event of any dispute between the parties hereto arising out of or relating to this Agreement or the employment relationship, including, without limitation, any statutory claims of discrimination, between the Company and the Executive (except any dispute with respect to Paragraphs 6 and 7 hereof), such dispute shall be settled by arbitration in Nassau County or New York County, State of New York, or in Wyandotte County or the City of Kansas City, State of Kansas, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association. The parties hereto agree that the arbitral panel shall also be empowered to grant injunctive relief to a party, which may be included in any award. Judgment upon the award rendered, including injunctive relief, may be entered in any court having jurisdiction thereof. Notwithstanding anything herein to the contrary, if any dispute arises between the parties under Paragraphs 6 or 7, neither the Executive nor the Company shall be required to arbitrate such dispute or claim, but each party shall have the right to institute judicial proceedings in any court of competent jurisdiction with respect to such dispute or claim. If such judicial proceedings are instituted, the parties agree that such proceedings shall not be stayed or delayed pending the outcome of any arbitration proceeding hereunder.



10.	Miscellaneous.



(a)	Successors; Binding Agreement. This Agreement and the obligations of the Company hereunder and all rights of the Executive hereunder shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns, provided, however, that the duties of the Executive hereunder are personal to the Executive and may not be delegated or assigned by her.



(b)	Notice. All notices of termination and other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, delivered by an express delivery (one day service), delivered by telefax and confirmed by express mail or one day express delivery service, or mailed by United States registered mail, return receipt requested, addressed as follows:



If to the Company:



Mediware Information Systems, Inc.
11711 W. 79th Street
Lenexa, Kansas 66214
Attn:  Chief Executive Officer and President

If to the Executive:



Jill H. Suppes
1225 Southwest Creekside Drive
Lee's Summit, Missouri 64081



or to such other address as either party may designate by notice to the other, which notice shall be deemed to have been given upon receipt.



(c)	Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of law rules thereof.



(d)	Waivers. The waiver of either party hereto of any right hereunder or of any failure to perform or breach by the other party hereto shall not be deemed a waiver of any other right hereunder or of any other failure or breach by the other party hereto, whether of the same or a similar nature or otherwise. No waiver shall be deemed to have occurred unless set forth in writing executed by or on behalf of the waiving party. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.



(e)	Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall otherwise remain in full force and effect. Moreover, if any one or more of the provisions contained in this Agreement is held to be excessively broad as to duration, scope or activity, such provisions shall be construed by limiting and reducing them so as to be enforceable to the maximum extent compatible with applicable law.



(f)	Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.



(g)	Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties in respect of the subject matter contained herein, and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of either party in respect of said subject matter.



(h)	Headings Descriptive. The headings of the several paragraphs of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any of this Agreement.



(i)	Capacity. The Executive represents and warrants that she is not a party to any agreement that would prohibit her from entering into this Agreement or performing fully her obligations hereunder.





IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the date first written above.



|EXECUTIVE          | MEDIWARE INFORMATION SYSTEMS, INC.                                     
|------------------ | -----------------------------------------------------------------------
|                   |                                                                        
|/s/ Jill H. Suppes | By   /s/ George J. Barry                                               
|Jill H. Suppes     | Name:  George J. Barry
Title:     President and Chief Executive Officer





EXHIBIT 11





|                                 |  | Three Months Ended
December 31, | Three Months Ended 
December 31, | Six Months Ended 
December 31, | Six Months Ended 
December 31,
|-------------------------------- |  | ------------------------------- | -------------------------------- | ------------------------------ | ------------------------------
|                                 |  | 2002                            | 2001                             | 2002                           | 2001                          
|                                 |  |                                 |                                  |                                |                               
|Basic Earnings Per Share         |  |                                 |                                  |                                |                               
|                                 |  |                                 |                                  |                                |                               
|Net income                       |  | $    1,299,000                  | $    602,000                     | $    2,221,000                 | $    1,030,000                
|                                 |  |                                 |                                  |                                |                               
|Weighted-average Common Shares:  |  |                                 |                                  |                                |                               
|Outstanding                      |  | 7,290,000                       | 7,224,000                        | 7,283,000                      | 7,217,000                     
|                                 |  |                                 |                                  |                                |                               
|Basic Earnings Per Share         |  | $        0.18                   | $        0.08                    | $        0.30                  | $        0.14                 
|                                 |  |                                 |                                  |                                |                               
|                                 |  |                                 |                                  |                                |                               
|Diluted Earnings Per Share       |  |                                 |                                  |                                |                               
|                                 |  |                                 |                                  |                                |                               
|Net income                       |  | $    1,299,000                  | $    602,000                     | $    2,221,000                 | $    1,030,000                
|                                 |  |                                 |                                  |                                |                               
|Weighted-average Common Shares:  |  |                                 |                                  |                                |                               
|Outstanding                      |  | 7,290,000                       | 7,224,000                        | 7,283,000                      | 7,217,000                     
|                                 |  |                                 |                                  |                                |                               
|Dilutive effect of Stock Options |  | 498,000                         | 256,000                          | 508,000                        | 184,000                       
|                                 |  |                                 |                                  |                                |                               
|                                 |  | 7,788,000                       | 7,480,000                        | 7,791,000                      | 7,401,000                     
|                                 |  |                                 |                                  |                                |                               
|Diluted Earnings Per Share       |  | $        0.17                   | $        0.08                    | $        0.29                  | $        0.14                 





EXHIBIT 15



To the Board of Directors and Stockholders of 
Mediware Information Systems, Inc.
We have reviewed, in accordance with standards established by the American Institute of Certified Public Accountants, the unaudited interim condensed consolidated financial statements of Mediware Information Systems, Inc. and subsidiaries as of December 31, 2002 and for the three and six month periods ended December 31, 2002 and 2001, as indicated in our review report dated January 20, 2003; because we did not perform an audit, we expressed no opinion on those financial statements.

We are aware that our review report, which is included in your Quarterly Report on Form 10-Q for the quarter ended December 31, 2002, is incorporated by reference in the Registration Statement on Form S-8 (No. 333-07591).
We are also aware that our review report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Section 7 and 11 of that Act.

Eisner  LLP

New York, New York
January 20, 2003





EXHIBIT 99.1



CERTIFICATION

PURSUANT TO 18 U.S.C. 1350

(AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)



In connection with the Quarterly Report on Form 10-Q of Mediware Information Systems, Inc. for the quarter ended December 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his or her respective knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

|Dated:  January 27, 2003 | /s/ George J. Barry                          
|------------------------ | ---------------------------------------------
|                         | George J. Barry 
     Chief Executive Officer
|                         |                                              
|Dated:  January 27, 2003 | /s/ Jill H. Suppes                           
|                         | Jill H. Suppes
     Chief Financial Officer  
|                         |