Page numbered in accordance with Rule 0-3(b). Page 1 of 34.
                   The Exhibit Index can be found on Page 13.

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                  For the quarterly period ended June 30, 1997

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                          OF THE SECURITIES ACT OF 1934

                        For the transition period from to

                         Commission File Number 0-10329

                            AW COMPUTER SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

        New Jersey                                         22-1991981
(State or other jurisdiction of               (IRS Employer Identification No.)
 incorporation or organization)

              9000A Commerce Parkway, Mt. Laurel, New Jersey 08054
                    (Address of principal executive offices)

                                  609-234-3939
                         (Registrant's telephone number)

                                       N/A
   (Former name, address and former fiscal year, if changed since last report)

Check mark whether the issuer (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes X No

As of August 13, 1997 there were issued and outstanding 6,680,567 Class A Common
Shares of the Company.

<PAGE>

           Page numbered in accordance with Rule 0-3(b). Page 2 of 34.

                                     PART I

                              FINANCIAL INFORMATION

Item 1.    Interim Financial Statements - (Unaudited)

           Contents:

                   Consolidated  Statements of Operations  for the three and six
                   month periods ended June 30, 1997 and June 30, 1996.

                   Consolidated  Balance Sheets as of June 30, 1997 and December
                   31, 1996.

                   Consolidated  Statements  of Cash  Flows  for  the six  month
                   periods ended June 30, 1997 and June 30, 1996.

                   Notes to Interim Consolidated Financial Statements.

<PAGE>

           Page numbered in accordance with Rule 0-3(b). Page 3 of 34.


<TABLE>
<CAPTION>


                            AW COMPUTER SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

    FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1997 AND JUNE 30, 1996
                                   (UNAUDITED)

           Three Months                                                    Six Months
           ------------                                                    ----------

     1997                1996                                       1997              1996
     ----                ----                                       ----              ----
<S>                 <C>                                        <C>              <C>

$   241,938         $   130,119    Revenues                    $   430,792      $   475,992

    370,652             592,202    Cost of revenues                680,258          988,099
  ---------           ---------                                  ---------        ---------

 (  128,714)         (  462,083)   Gross profit (loss)          (  249,466)      (  512,107)
  ---------           ---------                                  ---------        --------- 
                                   Selling, general and 
    640,871             583,809    administrative expenses       1,454,757        1,349,643

     11,123              15,140    Development expense              29,480           83,472

     13,402              20,016    Interest expense                 26,519           38,431

 (    2,326)         (    9,804)   Other (income) - net         (    7,521)      (   16,891)
  ---------           ---------                                  ---------        --------- 

    663,070             609,161                                  1,503,235        1,454,655
  ---------           ---------                                  ---------        ---------
                                   Income (loss) before
 (  791,784)         (1,071,244)   income tax                   (1,752,701)      (1,966,762)
  ---------           ----------                                 ----------       ---------- 
       --                 --       Income tax (benefit)              --               --

$(  791,784)        $(1,071,244)    Net (loss)                 $(1,752,701)     $(1,966,762)
  =========           =========                                  =========        ========= 

                                   Per share statistics:
   $(.12)              $(.22)        Net loss per share            $(.26)            $(.42)
     ===                 ===                                         ===               === 

  6,649,031           4,840,869      Average shares outstanding  6,654,271        4,666,294


<FN>

               The accompanying notes are an integral part of the
                       consolidated financial statements.
</FN>
</TABLE>

<PAGE>
           Page numbered in accordance with Rule 0-3(b). Page 4 of 34.

<TABLE>
<CAPTION>

                            AW COMPUTER SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
                    AS OF JUNE 30, 1997 AND DECEMBER 31, 1996
                                   (UNAUDITED)

                                     ASSETS
                                                                                1997                    1996
<S>                                                                             <C>                 <C>

Current assets:                                                                                   
     Cash and cash equivalents                                                  $   292,696         $   919,621
     Accounts and contract receivables, less allowance for doubtful
       accounts of $41,831 in 1997 and $39,697 in 1996                               72,178              78,380
     Costs and estimated earnings in excess of billings on
       uncompleted contracts                                                        258,220             200,015
     Inventories                                                                     51,589              56,589
     Prepaid and other current assets                                                40,224              36,854
                                                                                  ---------           ---------
       Total current assets                                                         714,907           1,291,459
Property and equipment, net                                                         408,477             511,579
Computer software, net                                                              669,351             669,351
Due from related parties                                                               --                  --
Other assets                                                                         27,308              27,308
                                                                                  ---------           ---------
       Total assets                                                             $ 1,820,043         $ 2,499,697
                                                                                  =========           =========


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Note payable                                                               $   750,000         $   570,368
     Current portion of long-term debt                                               95,448                --
     Current portion of lease obligations                                              --                  --
     Accounts payable                                                                93,613             147,195
     Accrued liabilities                                                            324,901             269,371
     Accrued compensation                                                           238,288             177,362
     Accrued contract costs                                                         358,406             408,406
     Other current liabilities                                                       26,663              41,755
                                                                                  ---------           ---------
       Total current liabilities                                                  1,887,319           1,614,457
Deferred compensation payable                                                       216,508             162,508
                                                                                  ---------           ---------
       Total liabilities                                                          2,103,827           1,776,965
Commitments and contingent liabilities
Shareholders' equity
     Preferred Stock - No Par Value:
       Authorized 4,950,000 shares in 1997 and 5,000,000 in 1996
and zero issued and outstanding in 1997 and 1996.                                      --                  --
     Preferred Stock - Series A 10% Redeemable
       Authorized 50,000 and zero shares; 6,356 and zero shares
       issued and outstanding in 1997 and 1996, respectively                        635,600                --
     Common shares:
       Class A, $.01 par; authorized 25,000,000 and 10,000,000
        shares; 6,680,567 and 6,638,067 issued and outstanding in
        1997 and 1996, respectively                                                  66,806              66,381
     Additional paid-in capital                                                   4,546,205           4,431,860
     Retained earnings (Deficit)                                                 (5,437,395)         (3,680,509)
     Stock subscription - related party                                          (   95,000)         (   95,000)
     Deferred compensation                                                             --                  --
                                                                                  ---------           ---------
     Total shareholders' equity                                                  (  283,784)            722,732
                                                                                  ---------           ---------
     Total liabilities and shareholders' equity                                 $(1,820,043)        $ 2,499,697
                                                                                  =========           =========

<FN>
           
               The accompanying notes are an integral part of the
                       consolidated financial statements.
</FN>
</TABLE>

<PAGE>
           Page numbered in accordance with Rule 0-3(b). Page 5 of 34.
<TABLE>
<CAPTION>

                            AW COMPUTER SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

         FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND JUNE 30, 1996
                                   (UNAUDITED)

                                                               Six Months
                                                               ----------
                                                       1997              1996
                                                       ----              ----
<S>                                               <C>                 <C> 

Cash flows, from operating activities:
   Net income (loss):                             $(1,752,701)        $(1,966,762)
Adjustments to reconcile net
   income to net cash provided
   by/(used in) operating activities:
   Depreciation and amortization                      108,765             152,603
   Amortization of unearned
     compensation                                        --                29,238
compensation
   Decrease (increase) in:
     Accounts receivable                                6,202             409,952
     Costs and estimated earnings
       on uncompleted contracts                    (   58,205)            300,250
     Inventories                                        5,000              57,475
     Income taxes receivable                             --               280,445
     Prepaid expenses                              (    3,370)             39,836
     Other assets                                        --            (      593)
   Increase (decrease) in:
     Accounts payable                              (   53,582)         (   86,241)
     Accrued liabilities                               55,530              33,984
     Accrued cost                                  (   50,000)             75,753
     Other liabilities                                 99,832             108,486
                                                    ---------           ---------
Net cash provided by (used in)
   operating activities                            (1,642,529)         (  565,574)
                                                    ---------           ---------- 
Cash flows, from investing activities:
   Capital (expenditures) disposals                (    5,663)         (   92,819)
   Computer software capitalized                         --            (  219,178)
                                                    ---------           --------- 
Net cash (used in) investing activities            (    5,663)         (  311,997)
                                                    ---------           --------- 
Cash flows, from financing activities:
   Net borrowing (payments):
     Long-term debt and lease
       obligations                                 (  474,920)         (  227,411)
     Net (advances) repayments of
       note payables                                  750,000                --
   Proceeds from issuance of
     common shares                                     45,050             668,261
   Proceeds from issuance of
     preferred shares                                 635,600                --
   Payment of dividend                             (    4,183)               --
   Additional paid in capital from
      debt exchange                                    69,720                --
                                                    ---------           ---------
Net cash provided by (used in)
   financing activities                             1,021,267             440,850
                                                    ---------           ---------
Increase (decrease), cash and
   cash equivalents                                (  626,925)         (  436,721)
Cash and cash equivalents:
   Beginning of period                                919,621             848,560
                                                    ---------           ---------
   End of period                                  $   292,696         $   411,839
                                                   ==========          ==========

<FN>

               The accompanying notes are an integral part of the
                       consolidated financial statements.
</FN>
</TABLE>


<PAGE>
           Page numbered in accordance with Rule 0-3(b). Page 6 of 34.

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 1997
                                   (UNAUDITED)

1.       The  consolidated  financial  statements  include  the  accounts of the
         Company and its wholly-owned  subsidiary.  All significant intercompany
         transactions  and  balances  have  been  eliminated.   All  adjustments
         consisting only of normal recurrent  adjustments  which, in the opinion
         of  management,  are necessary for a fair  statement of the results for
         this interim period have been made.

2.       Prior year  statements  have been  restated to conform to present  year
         presentation.

3.       These  statements  should be read in  conjunction  with the  Summary of
         Significant  Accounting  Policies and other notes included in the Notes
         to  Consolidated  Financial  Statements  in the  Company's  1996 Annual
         Report on Form 10-KSB.

<PAGE>
           Page numbered in accordance with Rule 0-3(b). Page 7 of 34.

Item 2        Management's Discussion and Analysis or Plan of Operation

               AW's future is dependent on the successful completion and receipt
of a  significant  deposit on an  order(s)  for either or both of the  Company's
products,  The  Checker  Productivity  Analyzer  ("CPA")  and/or  the  Wizard of
Point-of-Sale  ("Wizard"),  or on the  Company,s  ability  to  raise  additional
capital to maintain its operations until these products  generate  revenue.  The
Company expects that its existing  capital  resources will enable it to maintain
its  current  operations  through  the third  quarter of 1997.  Thereafter,  the
Company will need to raise substantial additional capital to remain in business.
The Company intends to seek such additional  funding  through  collaborative  or
partnering  arrangements  or through public or private equity or debt financing,
as well as  attempting  to  obtain  deposits  from  customers.  There  can be no
assurance that additional  financing will be available on acceptable terms or at
all.

               Based on the nominal size of firm orders for delivery  within one
year,  the Company  believes  that the volume of  operations  will remain at the
relatively  low level  experienced  in the first six  months of this year  until
market acceptance of either CPA or Wizard. Acceptance of either or both of these
products would generate future revenues, however, there can be no assurance that
the Company will not continue to experience  delays with these  products or that
the Company's marketing efforts will be successful.

               The  development  of  the  Company's  computer  vision-based  CPA
product is  complete.  The Company has  commenced  live  testing of the computer
vision-based products in an actual supermarket environment.  The live testing is
on-going and there can be no  assurances  when testing will be completed or that
the testing  will be  successful.  There can also be no  assurance  that the CPA
product will achieve commercial acceptance.
 
              Operations

               Revenues  for the second  quarter of 1997 were $242  thousand (or
86%) higher than revenues in the second quarter of 1996 due to increased revenue
from  contracts  in  progress,  revenue  software  services  and  from  software
maintenance.

               The Company  experienced  a negative  gross profit of  ($128,714)
compared to $(462,083)  for the same period last year. The negative gross profit
was due to costs related to the  development of the CPA Project.  As of June 30,
1997, $1,558,000 and $3,899,000 have been recognized as revenues and costs under
the CPA  Agreement,  respectively.  The CPA Project has exceeded its  $1,700,000
contractual  budget;  as such, the Company has  established  an additional  loss
provision  representing  the estimated cost to complete the project.  As of June
30, 1997,  the estimated  cost to complete the CPA Project was $350,000.  Due to
uncertainties inherent in the estimation process, it is reasonably possible that
the  completion  costs for the CPA Project  will be further  revised in the near
term.

<PAGE>

           Page numbered in accordance with Rule 0-3(b). Page 8 of 34.


               Selling,  general and  administrative  expenses ("SG&A") were $57
thousand (or 9.8%) higher in the second  quarter of 1997 than in the same period
last year. As a percentage of revenues,  these expenses were 268% versus 447% in
the second quarter of 1996.

               Development expense was $11 thousand (or 26%) lower in the second
quarter of 1997 compared to the second quarter of 1996; this is primarily due to
reduced development activities on the Company's projects until completion of the
CPA project.

               Revenues  for the six  months of 1997 were $431  thousand  versus
$475 thousand for the comparable  period of 1996 because of lower  equipment and
software services revenue.

               The Company  experienced a negative gross profit of $249 thousand
versus $512 thousand for the six month  periods.  The negative  gross profit was
caused by costs  related to  completion  of the CPA  contract  with only minimal
revenue.
               Selling,  general and administrative  expenses (SG&G) were $1.459
thousand in 1997 versus $1.350 thousand in 1996. As percentage of revenue, these
expenses were 337% versus 284% for 1997 and 1996 respectively.

               Development  expense was $29 thousand in 1997 versus $83 thousand
in 1996, a reduction of $54 thousand due to reduced  development  activities  on
projects until the completion of the CPA project.

               In June 1997,  the Company  issued  3,822  shares of Series A 10%
Redeemable   Preferred  Stock  and  two  year  Warrants  to  an  investor  group
representing   $382,200  and  $45,000  in  exchange  for  the   cancellation  of
approximately   $474,900  of  secured  debt  and  $22,000  of  accrued  interest
previously owed to Fleet Bank.

               The  Company  realized a gain on the  exchange  and  recorded  an
increase of $69,720 to Additional Paid-in Capital.

               In the second quarter and six month periods of 1997 and 1996, the
effective income tax benefit was 0% of the Net Loss before income taxes. This is
due to the lack of a net loss carryback provision in New Jersey State Income Tax
Code and the inability to carryback any additional  losses to offset past income
for Federal Income Tax purposes.

               As a result of the factors  discussed  above,  operations  in the
second  quarter of 1997  resulted in a loss of $792 thousand (or $.12 per share)
compared to a net loss of $1.071 thousand (or $.22 per share) in the same period
last year.  Operations  for the six month  period of 1997  resulted in a loss of
$1,753 or $(.26) per share compared to a net loss of $1,967 thousand or $.42 per
share.

<PAGE>

           Page numbered in accordance with Rule 0-3(b). Page 9 of 34.


              Liquidity

               During  the six  months  ended  June 30,  1997,  working  capital
decreased  $850  thousand to ($1.173  million)  compared to ($323  thousand)  at
December 31, 1996.  Current  Assets  decreased $577 thousand due to decreases in
cash of $627 thousand. Current Liabilities increased $273 thousand primarily due
to  increases  in  Notes  Payable  of $750  thousand,  an  increase  in  Accrued
Compensation  of  $61  thousand,  an  increase  in  Accrued  Liabilities  of $56
thousand,  a decrease in Current  Portion of Long Term Debt of $475 thousand,  a
decrease  in  Accounts  Payable  of  $54  thousand,  and  a  decrease  in  Other
Liabilities of $65 thousand.

               During the second quarter of 1997,  the Company  raised  $250,000
from a private  placement of 2,500 Series A 10% Redeemable  Preferred  Stock and
two year Warrants to a limited number of qualified investors,  including certain
officers and directors of the Company.

               The Company  borrowed  $750,000 at 9.5%, per annum, due September
20, 1997, from its largest shareholder.


               In June 1997, the Company  exchanged 3,822 shares of Series A 10%
Redeemable  Preferred  Stock,  two year Warrants to purchase  764,400  shares of
Class A Common  Stock at $.50 per share and $45,000 for $474,900 of secured debt
and $22,000 of accrued interest.  The transaction  resulted in a gain of $69,700
and was recorded as an increase to Additional Paid-in Capital.

               During the first six months of 1996,  working  capital  decreased
$1.431  million to $(286)  thousand  compared to $1.145  million at December 31,
1995.  Current assets decreased $1.406 million resulting from decreases in asset
categories. Current liabilities decreased by less than $100 thousand.

               During  the  first  half  of  1996,  cash  and  cash  equivalents
decreased  $437  thousand.  The  primary  factors in this  decrease  were $1,966
thousand  loss from  operations,  $219  thousand of  investment  in  non-current
assets, $227 thousand in debt reduction offset by $668 thousand in proceeds from
the sale of common stock.

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 10 of 34.


              Financial Resources

               The  Company  expects to require  continued  significant  product
development efforts and capital  expenditures for equipment in 1997. The Company
believes its  competitive  position must be maintained by the development of new
proprietary hardware and software products. Expenditures for these items will be
funded from cash flow and from  potential  future  financing as can be arranged.
Continuation  of  operations  beyond the third  quarter will be dependent on the
successful  completion  and  rollout  of either  the CPA  Project  or the Wizard
Project or on the Company securing external financing to help bring its products
to market. There can be no assurance that additional financing will be available
on acceptable terms or at all.

               During the quarter ending June 30, 1997,  the Company  reduced to
$95,448  the Line of Credit.  The Line of Credit had an  interest  rate of Prime
plus one percent (8.25%). The credit facility is collateralized by substantially
all of the Company's assets.

               The Company  borrowed  $750,000 at 9.5%, per annum, due September
20, 1997, from its largest shareholder.

               During April and May of 1997,  the Company  raised  $250,000 from
the sale of 2,500 shares of Series A 10% Redeemable Preferred Stock and two year
Warrants to purchase  500,000 Class A Common Shares for $.50 per share sold to a
limited number of qualified investors,  including certain officers and directors
of the Company.

               On June 28, 1997,  the Company  consummated  an exchange  with an
investor group,  including  certain  officers and directors of the Company.  The
investor  group  purchased  the Company's  Bank Debt and  exchanged  $474,900 of
secured  debt and $22,000 of accrued  interest  for 3,822 shares of Series A 10%
Redeemable  Preferred  Stock, two year Warrants to 764,400 Class A Common Shares
for $.50 per share and a $45,000 cash payment.  The exchange  resulted in a gain
of $69,700 and was recorded as Additional Paid-in Capital.

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 11 of 34.


                                     PART II

                                OTHER INFORMATION


Item 1.    Legal Proceedings - None.

Item 2.    Changes in Securities - None.

Item 3.    Defaults Upon Senior Securities - None.

Item 4.    Submission of Matters to a Vote of Security Holders - None.

Item 5.    Other Information - None.

Item 6.    Exhibits and Reports on Form 8 - None.

           a.     Exhibits:

                  99a      Loan and Modification Agreement.

                  99B      Note to Mylan Laboratories, Inc.

                  99C      Form of Warrant to purchase Class A Common Shares.

                  27       Financial Data Schedules, electronically filed, as 
                           per Regulation SB.

           b.     Reports on Form 8-K - None.

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 12 of 34.



                                   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.


                                                       AW COMPUTER SYSTEMS, INC.
                                                              (REGISTRANT)




DATE:    August 15, 1997                             /s/Charles Welch
                                                     Charles Welch
                                                     CEO/President




DATE:    August 15, 1997                             /s/Charles F. Trapp
                                                     Charles F. Trapp
                                                     Vice President, Finance
                                                     Principal Financial Officer

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 13 of 34.
<TABLE>
<CAPTION>

                                  EXHIBIT INDEX
                                                               Rule 0-3(b)
                                                              Page Numbered
                                                            Where the Exhibit
                              Description                     can be Found
    <S>             <C>                                          <C> 

    99-A            Loan and Modification Agreement.             Page 11.

    99-B            Note to Mylan Laboratories, Inc.             Page 11.

    99-C            Form of Warrant to purchase Class 
                    A Common Shares.                             Page 11.
</TABLE>

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 14 of 34.

                                                                    EXHIBIT 99-A


                       LOAN & NOTE MODIFICATION AGREEMENT

         THIS LOAN & NOTE MODIFICATION AGREEMENT,  made this Twenty-Sixth day of
June,  1997,  between  AW  COMPUTER  SYSTEMS,  INC.,  having an address at 9000A
Commerce Parkway, Mount Laurel, New Jersey (hereinafter called "Borrower");  and
the  INVESTORS,  set forth on  Schedule A attached  hereto  (hereinafter  called
"Lender").
                                   WITNESSETH:

         WHEREAS,  Borrower  borrowed  from  Fleet Bank N.A.,  as  successor  in
interest to National Westminster Bank USA Five Hundred Fifty Thousand ($550,000)
Dollars  pursuant to a promissory note dated October 25, 1996 (the "First Note")
and Twenty Thousand Three Hundred  Sixty-Eight  ($20,368)  Dollars pursuant to a
promissory note dated October 25, 1996 (the "Second Note");

         WHEREAS,  Lender acquired all rights,  title and interest in and to the
First  and  Second  Notes  as  well  as all  documents  executed  in  connection
therewith,  including but not limited to the Continuing Security Agreement dated
May 13, 1994 (the "Security Agreement") and the financing statements pursuant to
an Assignment Without Recourse from Fleet Bank N.A. dated June 26, 1997, and

         WHEREAS, Borrower has requested that Lender modify the First and Second
Notes in exchange for certain consideration hereinafter set forth.

         NOW,  THEREFORE,  In  consideration  of the  premises and of the mutual
agreements herein  contained,  and upon the express condition that the execution
of this  Agreement  will not impair the lien of said Security  Agreement,  it is
hereby agreed by and among the parties as follows:

         1.       NO IMPAIRMENT OF LIEN. All of the personal property  described
in the Security  Agreement  shall  remain in all  respects  subject to the lien,
charge, or encumbrance of said Security  Agreement and the financing  statements
filed pursuant  thereto,  and nothing herein contained and nothing done pursuant
hereto shall affect or be construed to affect,  the lien, charge, or encumbrance
of, or warranty of title in, or conveyance effected by said security interest or
the priority thereof over other liens, charges, encumbrances, or conveyances or,
except as expressly  provided herein,  to release or affect the liability of any
party or  parties  whomsoever  who may now or  hereafter  be liable  under or on
account of said obligation and/or mortgage.

         2.       MODIFICATION.   The  parties  hereby   acknowledge   that  the
principal balance remaining due to Lender in accordance with the  aforementioned
First and Second Notes are $550,000 and $20,378,  respectively  as of this date.
The Borrower and Lender do hereby agree that:

                                      - 1 -
<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 15 of 34.


                  A.       The First and  Second  Notes are  hereby  reduced  to
$115,900  and $ 0 - in  consideration  of the  transfers  set forth in Section 3
hereof.

                  B.       In all other respects the terms and conditions of the
First Note,  Second Note and Security  Agreement  shall remain in full force and
effect.

                  C.       The accrued and unpaid interest,  late fees and legal
expenses on the First and Second Notes, as of the date hereof, is forgiven.

                  D,       Any  action to be taken in  connection  with the loan
documents shall be made by a decision of the Lenders holding a majority interest
in the First and Second Notes.

         3.       EXCHANGE AGREEMENT.  In consideration for the reduction of the
principal  amount of the First and Second  Notes,  Borrower is  granting  Lender
4,641 shares of Series A 10% Redeemable  Preferred Stock of Borrower and 928,200
warrants to purchase  Borrower's Class A Common Stock at $.50 per share, as more
specifically set forth in the Exchange  Agreement  attached hereto as Exhibit B,
executed contemporaneously herewith and incorporated herein by reference.

         4.       COUNTERPARTS.  This  Agreement  may be  signed  in one or more
counterparts  each of which shall be deemed an  original  but all of which shall
constitute one and the same Agreement.

         IN WITNESS WHEREOF,  the Borrower has hereunto caused these presents to
be duly executed by its  respective  officers and for its  respective  corporate
seals to be hereunto  affixed,  and Lender has set his hand and seal,  as of the
day and year first above written.

  ATTEST:                                            AW COMPUTER SYSTEMS, INC.


-------------------------                    By:  ------------------------------
                                                  Charles W. Welch, President



                                             By:  ------------------------------
                                                                   , Investor


                                      - 2 -

<PAGE>
          Page numbered in accordance with Rule 0-3(b). Page 16 of 34.

                       LOAN & NOTE MODIFICATION AGREEMENT
                                    EXHIBIT B

                                    AGREEMENT

         AGREEMENT,  made as of the day of June,  1997, by and among AW Computer
Systems, Inc. (the "Company") and  -----------------------  (hereinafer referred
to as the "Seller").

                                                     RECITALS:

         A.       The  Seller,  together  with the other  investors,  intends to
acquire  the Bank Debt (as  hereinafter  defined)  from  Fleet  Bank owed by the
Company to Fleet Bank.  Bank Debt shall mean debts and  obligations  owed by the
Company  to Fleet Bank in the  aggregate  amount of  $591,955.73  as at June 26,
1997.

         B.       Upon the  acquisition of the Bank Debt,  the Seller,  together
with the other  investors,  will be the true and lawful  owner of the Bank Debt,
free and clear of all liens, claims and encumbrances whatsoever.

         C.       Contemporaneously  with, and as a concurrent condition of, the
acquisition  of the Bank Debt,  the Seller desires to enter into a loan and note
modification  agreement  with the Company (the "Note  Modification  Agreement'),
pursuant  to which,  among other  things,  the Seller  agrees to a reduction  of
approximately 80% of the face amount of the Bank Debt (the "Reduced Bank Debt"),
and the Company accepts such reduction,  for a combination of shares of Series A
10% Redeemable  Preferred Stock (the "Preferred  Shares"),  related  warrants to
purchase Class A Common Shares (the  "Warrants")  (the  Preferred  Stock and the
Warrants  are  hereinafter  referred  to as the  "Securities")  as set  forth on
Exhibit A hereto and made a part hereof In addition,  the Seller,  together with
the other investors,  shall retain the Secured Notes originally  issued in favor
of the Fleet Bank, which notes shall be reduced in principal amount and in which
the Seller shall retain a proportionate interest.

         NOW,  THEREFORE,  the parties  intending to be legally bound,  agree as
follows:

         1.        Subject   to  the   following   terms  and   conditions,   in
consideration  for the reduction in the principal amount of, and unpaid interest
on, the Secured Notes from  $591,955.73 to $115,900 the Seller shall receive the
Securities of the Company set forth on Exhibit A (the "Transaction").

         2.        The Transaction is conditioned on the acquisition of the Bank
Debt by the Seller by June 30,1997.

         3.        Upon receipt of an executed copy of this  Agreement  from the
Seller,  and an  agreement  between  Fleet Bank and the Seller  relating  to the
acquisition  of the Bank Debt,  a release from Fleet Bank to the Company and the
Note Modification Agreement (all of which are being delivered  contemporaneously
herewith),  the  Company  shall  issue  a  stock  certificate  representing  the
Preferred  Shares and the related Warrant to the Seller at the address set forth
on Exhibit A hereto.

                                      - 1 -
<PAGE>
          Page numbered in accordance with Rule 0-3(b). Page 17 of 34.

         4.        Assuming  the  acquisition  of the  Bank  Debt,  the  Seller,
together with the other investors, represents and warrants that he or she is the
true and  lawful  owner of the Bank Debt in the  amount  set forth on  Exhibit A
hereto,  free and clear of all  liens,  claims,  encumbrances  and  restrictions
whatsoever.

          5.       This Agreement  shall be governed  exclusively by the laws of
the State of New Jersey without giving effect to principles of conflicts of law.
This Agreement  represents the entire  understanding of the parties with respect
to  the  subject  matter  hereof  and   supersedes  all  prior   agreements  and
understandings, whether written or oral.

         IN WITNESS WHEREOF,  parties have executed this Agreement as of the day
first written above.
                                             AW COMPUTER SYSTEMS, INC.


                                              By: ---------------------------
                                                  Charles W. Welch, President



                                             By:  ---------------------------
                                                                   , Investor


















                                      - 2 -

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 18 of 34.


                                                                    EXHIBIT 99-B








$750,000.00                                                         May 23, 1997

Pittsburgh, Pennsylvania

         AW  Computer  Systems,  Inc.  promises  to pay to the  order  of  Mylan

Laboratories   Inc.,   the  sum  of  Seven   Hundred  Fifty   Thousand   Dollars

($750,000.00),  for value  received,  with an interest rate of nine and one-half

percent (9 1/2%) annum,  payable at 781 Chestnut  Ridge Road,  Morgantown,  West

Virginia, or at such other place as Mylan may designate.  Payment in full is due

no later than one hundred twenty (120) days  following the date hereof,  and may

be repaid in cash or in other consideration as may be later agreed to in writing

by both parties.
                                                             
                                                  AW COMPUTER SYSTEMS, INC.



                                                   By: /s/Charles J. McMullin
                                                       Charles J. McMullin
                                                       Chairman

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 19 of 34.


                                                                    EXHIBIT 99-C

THIS  WARRANT  HAS NOT BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933 AND
NEITHER THIS WARRANT NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED,  PLEDGED
OR  OTHERWISE  DISPOSED OF IN THE ABSENCE OF SUCH  REGISTRATION  OR AN EXEMPTION
THEREFROM  UNDER  SAID ACT AND THE  RULES  AND  REGULATIONS  THEREUNDER.  BY ITS
ACCEPTANCE  HEREOF,  THE HOLDER OF THIS WARRANT  REPRESENTS THAT IT IS ACQUIRING
THIS  WARRANT  FOR  INVESTMENT  AND  AGREES TO COMPLY IN ALL  RESPECTS  WITH ANY
APPLICABLE  STATE  SECURITIES  LAWS  COVERING  THE  PURCHASE OF THIS WARRANT AND
RESTRICTING ITS TRANSFER,  COPIES OF WHICH MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST  MADE BY THE HOLDER OF RECORD OF THIS  WARRANT TO THE  SECRETARY OF THIS
COMPANY AT ITS  PRINCIPAL  EXECUTIVE  OFFICE AT 9000A  COMMERCE  PARKWAY,  MOUNT
LAUREL, NEW JERSEY 08054.

                                             Dated:-----------------------------

                                     WARRANT

            To purchase up to ---------------- Class A Common Shares

                            AW COMPUTER SYSTEMS, INC.

                                    Expiring:

                  THIS   IS   TO    CERTIFY    THAT,    for   value    received,
-------------------------,  or registered  assigns (the "Holder"),  is entitled,
subject to certain conditions set forth in Section 1.01 hereof, to purchase from
AW COMPUTER SYSTEMS, INC., a New Jersey corporation (the "Company"), at any time
or  from   time  to  time   after   9:00   a.m.,   New  York   City   time,   on
---------------------------  and  prior to 5:00  p.m.  New York  City  time,  on
-------------------------------, at the Company's principal executive office, at
the Exercise  Price,  up to the number or Class A Common Shares,  $.01 par value
per share (the  "Common  Stock"),  of the Company  shown  above,  all subject to
adjustment  and upon the terms and conditions as  hereinafter  provided,  and is
entitled also to exercise the other  appurtenant  rights,  powers and privileges
hereinafter described.

                  This Warrant is one of one or more warrants  (the  "Warrants")
of the same form and having the same terms as this Warrant,  which warrants were
issued along with shares of Series A 10% Redeemable Preferred Stock (the "Series
A Preferred  Stock") in connection  with the Series A Preferred  Stock Financing
and related
matters.

                  Certain  terms used in this  Warrant are defined in Article IV
hereof.

                                     - 1 -

<PAGE>
          Page numbered in accordance with Rule 0-3(b). Page 20 of 34.


                          ARTICLE I METHOD OF EXERCISE

                  1.01     Method of Exercise. To exercise this Warrant in whole
or in part, the Holder shall deliver to the Company,  at the Company's principal
executive  office  (a) this  Warrant,  (b) a  written  notice  of such  Holder's
election to exercise  this  Warrant,  which notice  shall  specify the number of
share of Common Stock to be purchased, but in no event less than 100 shares, the
denominations of the share  certificate or certificates  desired and the name or
names in which such  certificates  are to be registered,  and (c) payment of the
Exercise  Price with  respect to such shares.  Such payment may be made,  at the
option of the Holder, in cash, by certified or bank cashier's check, money order
or wire transfer, or in any other manner consented to in writing by the Company,
or any combination thereof.

                  The Company shall, as promptly as practicable after receipt of
the items required by the previous paragraph, execute and deliver or cause to be
executed and  delivered,  in  accordance  with such  notice,  a  certificate  or
certificates  representing  the  aggregate  number  of  share  of  Common  Stock
specified in said notice.  The share  certificate or  certificates  so delivered
shall be in such  denominations  as may be  specified in such notice or, if such
notice shall not specify denominations, in denominations of 100 shares each, and
shall  be  issued  in the  name of the  Holder  or such  other  name as shall be
designated in such notice.  Such certificate or certificates  shall be deemed to
have been issued,  and such Holder or Holders or any other person so  designated
to be named  therein shall be deemed for all purposes to have become a Holder of
record of such shares, as of the date the  aforementioned  notice is received by
the Company. If this Warrant shall have been exercised only in part, the Company
shall,  at the time of delivery of the certificate or  certificates,  deliver to
the Holder a new Warrant evidencing the right to purchase the remaining share of
Common  Stock called for by this  Warrant  which new Warrant  shall in all other
respects  be  identical  with this  Warrant,  or, at the  request of the Holder,
appropriate  notations  may be made on this Warrant which shall then be returned
to the  Holder.  The Company  shall pay all  expenses,  taxes and other  charges
payable in  connection  with the  preparation,  issuance  and  delivery of share
certificates  and new  Warrants,  except  that,  if  share  certificates  or new
Warrants  shall  be  registered  in a name or names  other  than the name of the
Holder,  funds sufficient to pay all transfer taxes, if any, payable as a result
of such  transfer  shall be paid by the  Holder  at the time of  delivering  the
aforementioned  notice of exercise or promptly upon receipt of a written request
of the Company for payment.

                  1.02     Shares To Be Fully Paid and Nonassessable. All shares
of Common  Stock  issued  upon the  exercise  of this  Warrant  shall be validly
issued,  fully paid and nonassessable  and, if the Common Stock is then eligible
for listing on any  national  securities  exchanges  (as defined in the Exchange
Act), or quoted on NASDAQ,  shall be duly listed or quoted thereon,  as the case
may be.

                  1.03     No Fractional Shares To Be Issued.  The Company shall
not be required to issue  fractions of shares of Common  Stock upon  exercise of
this  Warrant.  If any  fractions of a share  would,  but for this  Section,  be
issuable upon any exercise of this Warrant, in lieu of such fractional share the
Company  shall pay to the holder,  in cash, an amount equal to the same fraction
of the Market  Price per share of Common  Stock for the Trading Day  immediately
prior to the date of such exercise.

                                     - 2 -

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 21 of 34.


                  1.04     Share Legend.  Each  certificate for shares of Common
Stock issued upon exercise of this Warrant,  unless at the time of exercise such
shares are registered under the Act, shall bear the following legend:

                           THE SHARES OF COMMON STOCK  REPRESENTED  BY THIS
CERTIFICATE  HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933 AND
NEITHER  SUCH SHARES OF THE COMMON  STOCK NOR ANY  INTEREST  THEREIN MAY BE
SOLD, TRANSFERRED,  PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION  OR AN  EXEMPTION  THEREFROM  UNDER SAID ACT AND THE RULES AND
REGULATIONS THEREUNDER. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF SUCH SHARES
OF COMMON STOCK  CERTIFICATE  REPRESENTS  THAT IT IS ACQUIRING  THIS COMMON
STOCK  FOR  INVESTMENT  AND  AGREES  TO  COMPLY  IN ALL  RESPECTS  WITH ANY
APPLICABLE  STATE  SECURITIES LAWS, AND THE WARRANT RELATING TO THIS COMMON
STOCK ISSUED PURSUANT TO SUCH WARRANT, COVERING THE PURCHASE OF THIS COMMON
STOCK AND RESTRICTING THEIR TRANSFER, COPIES OF WHICH MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE  SECRETARY OF THIS COMPANY AT ITS PRINCIPAL  EXECUTIVE  OFFICE AT 9000A
COMMERCE PARKWAY, MOUNT LAUREL, NEW JERSEY 08054.

                           Any  certificate  issued at any time in  exchange  or
substitution  for any certificate  bearing such legend (except a new certificate
issued upon  completion  of a public  distribution  pursuant  to a  registration
statement  under the Act) shall also bear such legend unless,  in the opinion of
counsel reasonably acceptable to the Company, the securities represented thereby
need no longer be subject to restrictions on resale under the Act.

                                   ARTICLE II

                      EXCHANGES, TRANSFERS AND REPLACEMENTS

                  2.01     Exchange  and  Registration  or Transfer of Warrants.
Provided,  in the opinion of counsel reasonably  acceptable to the Company,  the
following  is  permitted  under the Act,  the holder of this Warrant may, at its
option,  surrender this Warrant at the principal executive office of the Company
and receive in exchange  therefor a Warrant or Warrants,  each for 100 shares of
Common Stock or an integral multiple  thereof,  for the same aggregate number of
share of Common Stock as the Warrant or Warrants so surrendered for exchange and
registered to such person or persons as may be designated by such holder.

                                      - 3 -
<PAGE>
          Page numbered in accordance with Rule 0-3(b). Page 22 of 34.


                           This  Warrant may be divided or  combined  with other
Warrants upon presentation hereof and of any Warrant or Warrants with which this
Warrant is to be  combined at the  principal  executive  office of the  Company,
together with a written notice  specifying the names and  denominations in which
the new Warrant or Warrants are to be issued,  signed by the holders  hereof and
thereof or their  respective  duly  authorized  agents or attorneys.  Subject to
compliance  with this Section  2.01 as to any transfer  which may be involved in
the division or combination, the Company shall execute and deliver a new Warrant
or Warrants to be divided or combined in accordance with such notice.

                           The Company shall keep, at said principal  office,  a
register in which,  subject to such reasonable  regulations as it may prescribe,
the Company shall register or cause to be registered Warrants and shall register
or cause to be  registered  the  transfer  of the  Warrants  as provided in this
Section 2.01.  Such register shall be in written form.  Upon due presentment for
registration  of transfer  of any  Warrants at such  office,  the Company  shall
execute and  register or cause to be  registered  and deliver in the name of the
transferee  or  transferees  a new  Warrant or Warrants  for an equal  aggregate
number of Shares.

                           The Company  shall pay any tax or other  governmental
charge that may be imposed in  connection  with any  exchange  of  Warrants  not
involving a transfer, but the Company may require payment of a sum sufficient to
cover any tax or other  governmental  charge  that may be imposed in  connection
with a transfer of Warrants.

                  2.02     Loss,  Theft or Destruction of Warrant  Certificates.
Upon  receipt  of  evidence  satisfactory  to the  Company  of the loss,  theft,
destruction  or  mutilation  of any  Warrant  and, in the case of any such loss,
theft or destruction,  upon receipt of indemnity or security satisfactory to the
Company  (the  original  Warrant  holder's  or any other  institutional  Warrant
holder's  undertaking being satisfactory  indemnity in the event of loss, theft,
destruction  or mutilation of any Warrant owned by such  institutional  holder),
or, in the case of any such  mutilation,  upon surrender and cancellation of the
Warrant,  the  Company  will make and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of shares of Common Stock.

                  2.03     Change of Principal  Executive  Office.  In the event
the Company  shall change the address of its  principal  executive  office,  the
Company  shall give the holder of this  Warrant  notice five (5)  calendar  days
prior to such change.

                                   ARTICLE III

                             ANTIDILUTION PROVISIONS

                  3.01     Adjustments  Generally.  The  Exercise  Price and the
number of shares of Common Stock (or other securities or property) issuable upon
exercise of this Warrant shall be subject to  adjustment  from time to time upon
the occurrence of certain events, as provided in this Article III.

                                     - 4 -
<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 23 of 34.


                  3.02     Common  Stock  Reorganization.  If the Company  shall
subdivide its outstanding shares of Common stock into a greater number of shares
or consolidate its  outstanding  shares of Common Stock into a smaller number of
shares (any such event being called a "Common Stock  Reorganization"),  then (a)
the Exercise  Price shall be adjusted,  effective  immediately  after the record
date at which the holders of shares of Common Stock are  determined for purposes
of such Common Stock  Reorganization,  to a price  determined by multiplying the
Exercise  Price in effect  immediately  prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such record date before giving effect to such Common Stock Reorganization and
the  denominator  of  which  shall be the  number  of  shares  of  Common  Stock
outstanding after giving effect to such Common Stock Reorganization, and (b) the
number of shares of Common  Stock  subject to  purchase  upon  exercise  of this
Warrant  shall be adjusted,  effective at such time,  to a number  determined by
multiplying the number of shares of Common Stock subject to purchase immediately
before such Common Stock  Reorganization  by a fraction,  the numerator of which
shall be the  number of shares  then  outstanding  after  giving  effect to such
Common Stock  Reorganization and the denominator of which shall be the number of
shares  of  Common  Stock  outstanding  immediately  before  such  Common  Stock
Reorganization.

                  3.03     Special  Dividends.  If the  Company  shall  issue or
distribute  to all or  substantially  all  holders  of shares  of  Common  Stock
evidences of  indebtedness,  any other  securities of the Company,  or any cash,
property  or  other  assets,  and if such  issuance  or  distribution  does  not
constitute a cash dividend or distribution out of surplus or net profits legally
available therefor, or a Common Stock Reorganization (any such nonexcluded event
being herein called a "Special Dividend"), the Exercise Price shall be adjusted,
effective  immediately  after the record  date at which the holders of shares of
Common Stock are  determined for purposes of such Special  Dividend,  to a price
determined by multiplying  the Exercise Price then in effect by a fraction,  the
numerator  of which shall be the Market  Price per share of Common Stock on such
record date less the then fair market value (as  reasonably  determined  in good
faith  by  the  Board  of  Directors  of  the  Company)  of  the   evidences  of
indebtedness,  securities or property or other assets issued or  distributed  in
such  Special  Dividend  with  respect  to one  share of Common  Stock,  and the
denominator of which shall be the Market Price per share of Common Stock on such
record date.
                 
                  3.04     Capital  Reorganizations.   If  there  shall  be  any
consolidation  or  merger  to  which  the  Company  is a  party,  other  than  a
consolidation  or a merger in which the Company is a continuing  corporation and
which does not result in any reclassification of, or change (other than a Common
Stock  Reorganization or a change in par value) in, outstanding shares of Common
Stock, or any sale or conveyance of the property of the Company as a entirety or
substantially   a  an  entirety   (any  such  event  being   called  a  "Capital
Reorganization"),  then  effective  upon  the  effective  date of  such  Capital
Reorganization,  the Holder shall have the right to purchase,  upon  exercise of
this Warrant,  the kind and amount of shares of stock and other  securities  and
property  (including  in cash)  which the  Holder  would have owned or have been
entitled to receive after such Capital  Reorganization  if this Warrant had been
exercised  immediately prior to such Capital  Reorganization.  As a condition to
effecting any Capital Reorganization,  the Company or the successor or surviving
corporation,  as the case may be,  shall  execute  and  deliver to each  Warrant
holder an agreement as to the Warrant  holder's  rights in accordance  with this
Section 3.04,  providing for subsequent  adjustments as nearly equivalent as may
be  practicable  to the  adjustments  provided  for in  this  Article  III.  The
provisions  of this Section 3.04 shall  similarly  apply to  successive  Capital
Reorganizations.

                                      - 5-
<PAGE>
          Page numbered in accordance with Rule 0-3(b). Page 24 of 34.


                  3.05     Certain Other Events. If any event occurs as to which
the foregoing  provisions of this Article III are not strictly applicable or, if
strictly  applicable,  would  not,  in the good faith  judgment  of the Board of
Directors of the Company,  fairly protect the purchase rights of the Warrants in
accordance  with the essential  intent and principles of such  provisions,  then
such Board shall make such adjustments in the application of such provisions, in
accordance  with such essential  intent and  principles,  as shall be reasonably
necessary,  in the good faith  opinion of such Board,  to protect such  purchase
rights as aforesaid,  but in no event shall any such  adjustment have the effect
of increasing  the Exercise  Price or decreasing  the number of shares of Common
Stock subject to purchase upon exercise of this Warrant.

                  3.06     Adjustment  Rules.  (a) Any  adjustments  pursuant to
this  Article  III shall be made  successively  whenever  an event  referred  to
therein shall occur.

                  (b)      If the Company  shall set a record date to  determine
the  holders  of  shares  of  Common  Stock  for  purposes  of  a  Common  Stock
Reorganization or Capital Reorganization,  and shall legally abandon such action
prior to effecting  such action,  then no  adjustment  shall be made pursuant to
this Article III in respect
of such action.

                  (c)      All calculations under this Article III shall be made
to the nearest cent or to the nearest one hundredth (1/100th) of a share, as the
case may be. Notwithstanding any provisions of this Article III to the contrary,
no  adjustment  in the  Exercise  Price  shall  be  made if the  amount  of such
adjustment  would be less  than  $0.05,  but any such  amount  shall be  carried
forward and an adjustment  with respect thereto shall be made at the time of and
together with any subsequent adjustment which, together with such amount and any
other amount or amounts so carried forward, shall aggregate $0.05 or more.

                  (d)      In any case in which the  provisions  of this Article
III shall require that an adjustment shall become effective  immediately after a
record date for an event,  the Company  may defer until the  occurrence  of such
event (i) issuing to the holder of any Warrant  exercised after such record date
and before the  occurrence of such event the  additional  shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such  conversion  before
giving  effect to such  adjustment  and (ii) paying to such holder any amount of
cash in lieu of a  fractional  share of Common Stock  pursuant to Section  1.03;
provided  that the Company upon request  shall deliver to such holder a due bill
or other appropriate  instrument evidencing such holder's rights to receive such
additional  shares,  and such cash,  upon the occurrence of the event  requiring
such adjustment.

                                     - 6 -
<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 25 of 34.


                  3.07     Proceedings Prior to Any Action Requiring Adjustment.
As a condition  precedent  to the taking of any action  which  would  require an
adjustment pursuant to this Article III, the Company shall take any action which
may be  necessary in order that the Company may  thereafter  validly and legally
issue as fully  paid and  nonassessable  all  shares of Common  Stock  which the
holders of Warrants are entitled to receive upon exercise thereof.

                  3.08     Statement Regarding Adjustment. Whenever the Exercise
Price or the number of shares  received upon  exercise of the Warrants  shall be
adjusted a provided in Article III, the Company  shall  forthwith  file,  at the
office of any transfer agent for the Warrants and at the principal office of the
Company,  a statement  showing in detail the facts requiring such adjustment and
the  Exercise  Price and the  number of shares  received  upon  exercise  of the
Warrants  that shall be in effect after such  adjustment,  and the Company shall
also cause a copy of such  statement  to be sent by mail,  first  class  postage
prepaid,  to each holder of Warrants,  at its address appearing on the Company's
records. Each such statement shall be signed by the Company's independent public
accountants.  Where  appropriate,  such copy may be given in advance  and may be
included  as part of a notice  required  to be mailed  under the  provisions  of
Section  3.08.  Failure to give such notice,  or any defect  therein,  shall not
affect the legality or validity of any such action.

                  3.09     Notice to  Holders.  In the event the  Company  shall
propose to take any action of the type described in Article III (but only if the
action of the type described in Article III would result in an adjustment in the
Exercise Price or the number of shares  received upon exercise of the Warrants),
or to declare any cash dividends or  distribution  out of surplus or net profits
legally available therefor, the Company shall give notice to each Warrant holder
in the manner set forth in Section  3.09,  which notice shall specify the record
date, if any, with respect to any such action and the approximate  date on which
such action is to take place.  Such notice  shall also set forth such facts with
respect thereto as shall be reasonably  necessary to indicate the effect of such
action (to the extent  such  effect may be known at the date of such  notice) on
the Exercise Price and the number,  kind or class of shares or other  securities
or property which shall be  deliverable  or  purchasable  upon the occurrence of
such action or  deliverable  upon exercise of the  Warrants.  In the case of any
action  which would  require the fixing of a record  date,  such notice shall be
given at least 15 days  prior  to the date so  fixed,  and in case of all  other
action,  such notice shall be given at least 20 days prior to the taking of such
proposed action.  Failure to give such notice, or any defect therein,  shall not
affect the legality or validity of any such action.

                                   ARTICLE IV

                                   DEFINITIONS

                           The following  terms,  as used in this Warrant,  have
the following respective meanings:

                           "Act" means the  Securities  Act of 1933, as amended,
and any similar or successor  Federal statute,  and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as the
same shall be in effect at the time.

                                     - 7 -
<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 26 of 34.



                           "Series A Preferred Stock  Financing"  shall mean the
financing  as of April 15, 1997  whereby  the Company  offered up to 1,000 Units
consisting of Series A Preferred Stock and related warrants for an investment of
up to $1,000,000.

                           "Capital  Reorganization"  shall have the meaning set
forth in Section 3.04 hereof.

                           "Closing  Price" on any day  means (a) if the  Common
Stock is listed or admitted for trading on a national securities  exchange,  the
reported  last sales price  regular way or, if no such  reported  sale occurs on
such day,  the average of the closing bid and asked  prices  regular way on such
day, in each case on the  principal  national  securities  exchange on which the
Common  Stock is listed or admitted to trading,  (b) if the Common  Stock is not
listed or admitted to trading on any national securities  exchange,  the average
of the closing bid and asked prices in the  over-the-counter  market on such day
as  reported  by NASDAQ or any  comparable  system  or, if not so  reported,  as
reported by any New York Stock Exchange  member firm selected by the Company for
such purpose or (c) if no such  quotations  are  available on such day, the fair
market  value of one share of  Common  Stock on such day as  determined  in good
faith by the Board of Directors of the Company.

                           "Common  Stock"  shall have the  meaning set forth in
the first paragraph of this Warrant,  subject to adjustment  pursuant to Article
III.

                           "Common Stock  Reorganization" shall have the meaning
set forth in Section 3.02 hereof.

                           "Company"  shall  have the  meaning  set forth in the
first paragraph of this Warrant.

                           "Exchange Act" means the  Securities  Exchange Act of
1934, as amended,  and any similar or successor  Federal statute,  and the rules
and  regulations of the  Securities  and Exchange  Commission (or its successor)
thereunder, all as the same shall be in effect a the time.

                           "Exercise Price" means U.S. $0.50 per share of Common
Stock, subject to adjustment pursuant to Article III hereof.

                           "Holder"  shall  have the  meaning  set  forth in the
first paragraph of this Warrant.

                           "Market  Price" on any day means the  average  of the
daily Closing Prices of a share of Common Stock for the 20  consecutive  Trading
Day ending on the most recent Trading Day for which a closing price is available
and if the  Common  Stock is not then  publicly  traded  Market  Price  shall be
determined in good faith by the Board of Directors of the Company.

                           "NASD" means the National  Association  of Securities
Dealers, Inc.

                           "NASDAQ" means The National Association of Securities
Dealer, Inc. Automated Quotation System.

                                     - 8 -
<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 27 of 34.


                           "Registrable  Securities" means 100% of the number of
shares of the  Company's  Common Stock  issuable  upon  exercise of this Warrant
issued as part of the Units pursuant to the Series A Preferred Stock Financing.

                           "Securities Act" means the Securities Act of 1933.

                           "Total Warrant  Shares" means the number of shares of
Common  Stock  set  forth on the face of this  Warrant,  subject  to  adjustment
pursuant to Article III.

                           "Trading Day" means (a) if the Common Stock is listed
or admitted  to trading on a national  securities  exchange,  a day on which the
principal  national  securities  exchange on which the Common Stock is listed or
admitted to trading is open for  business  or (b) if the Common  Stock is not so
listed or admitted to trading, a day on which any New York Stock Exchange member
firm is open for business.

                           "Warrant holder" means a holder of a Warrant.

                           "Warrants"  shall have the  meaning  set forth in the
second paragraph of this Warrant.

                           "Warrant  Common  Stock" means the  resulting  Common
Stock from the exercise of the warrant.

                                    ARTICLE V

                     REDEMPTION AND CANCELLATION OF WARRANTS

                  5.01     Redemption   of   Warrants.   The  Warrants  are  not
redeemable by the Company and the Company has no rights to purchase or otherwise
acquire the Warrants.

                  5.02     Cancellation  of Warrants.  The Company  shall cancel
any Warrant surrendered for transfer, exchange or exercise.

                                   ARTICLE VI

                               REGISTRATION RIGHTS

                  6.01     Registration  Rights.  Immediately  upon  the date of
final  closing of the Series A Preferred  Stock  Financing,  the  Company  shall
commence  preparation  of a  registration  statement  with  the  Securities  and
Exchange Commission relating to a rights offering to its holders of Common Stock
and,  within ninety (90) days following the aforesaid  closing date, the Company
shall use its best efforts to file a registration  statement with the Securities
Registration  Statement.  In the  event  that  the  Company  does  not  effect a
registration  of a rights  offering with the Securities and Exchange  Commission
within one year from the aforesaid  closing date,  the Company shall be required
to file a registration  statement  covering the Registrable  Securities with the
Securities and Exchange  Commission  within one year from the aforesaid  closing
date. In connection with any such registration, the Company shall:

                                     - 9 -

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 28 of 34.



                  (a)      promptly (but not less than thirty (30) days prior to
the filing of any  registration  statement)  give written  notice thereof (which
shall include a list of the jurisdictions,  if any, in which the Company intends
to register or qualify such  securities  under the applicable  blue sky or other
state securities laws) to each Holder or holder of Warrant Common Stock;

                  (b)      use its best efforts to effect such  registration and
any  qualification  and  compliance   relating   thereto,   including,   without
limitation,  the execution of an undertaking to file post-effective  amendments,
appropriate  qualification  under  applicable blue sky or other state securities
laws  and  appropriate   compliance  with  the  Securities  Act  and  any  other
governmental requirements or regulations as would permit or facilitate:

                           (i)      the sale  and  distribution  of all  Warrant
Common Stock; and
                           (ii)     the  exercise  of the Warrant (to the extent
not  expired) to the extent  outstanding  and the sale and  distribution  of all
Warrant Common Stock issued upon such exercise.

                  6.02     Blue Sky  Qualification.  The  Company  shall only be
required to register or qualify the Warrant or the Warrant  Common Stock in such
jurisdictions  as it shall  determine  in its sole  discretion  and each  Holder
agrees only to offer or sell or exercise the Warrant or the Warrant Common Stock
in such jurisdictions as the same shall be so registered or qualified.

                  6.03     Expenses.  The  Company  shall bear all  expenses  in
connection  with such  registration,  qualification  and  compliance  under this
Section 6,  including,  without  limitation,  all  registration  and filing fee,
printing  expenses,  fees and  disbursements  of the Company's  counsel and of a
single  firm of legal  counsel  retained  by the  Holders  or holders of Warrant
Common  Stock and  expenses  of any audits  incident  to or required by any such
registration,  qualification  and compliance,  provided,  that the Company shall
not,  in any  event,  be  required  to  bear  the  cost of any  commissions  and
compensation  paid,  and  concessions  and discounts  allowed to,  underwriters,
dealers or others  performing  similar functions in connection with the sale and
distribution of the Warrant or Warrant Common Stock sold by any holders thereof.

                  6.04     Indemnification.  (a) If  Registrable  Securities are
included in a  Registration  Statement,  the Company will  indemnify  the Holder
against  all claims,  losses,  damages  and  liabilities  (or actions in respect
thereof)  arising out of or based on (A) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus,  offering circular or
other document (including any related  registration  statement,  notification or
the like) incident to any such registration, qualification or compliance, or (B)
any omission (or alleged  omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
(C) any violation by the Company of any rule or regulation promulgated under the
Act applicable to the Company and relating to action or inaction required of the
Company in connection with any  registration,  qualification or compliance,  and
will  reimburse  the  Holder  for any legal and any  other  expenses  reasonably
incurred in connection  with  investigating  or defending any such claim,  loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim,  loss,  damage or liability  arises
out of or is based on any  untrue  statement  or  omission  based  upon  written
information furnished to the Company by the Holder specifically for use therein.

                                     - 10 -

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 29 of 34.


                  (b)      Each party  entitled  to  indemnification  under this
Section  6.04  (sometimes  referred to as the  "Indemnified  Party")  shall give
notice to the party  required  to  provide  indemnification  (the  "Indemnifying
Party") promptly after such Indemnified  Party has actual knowledge of any claim
as to which indemnity may be sought,  and shall permit the Indemnifying Party to
assume  the  defense of any such claim or any  litigation  resulting  therefrom,
provided that counsel for the Indemnifying  Party, who shall conduct the defense
of such claim or litigation,  shall be approved by the Indemnified  Party (whose
approval shall not be  unreasonably  withheld),  and the  Indemnified  Party may
participate in such defense at such party's  expense,  and provided further that
unless such failure  materially and adversely affects the rights or abilities of
the  Indemnifying  Party to defend such action,  the failure of any  Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its  obligations  under this Section  6.04.  No  Indemnifying  Party,  in the
defense of any such claim or litigation,  shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which  does not  include  as an  unconditional  term  thereof  the giving by the
claimant or plaintiff to such Indemnified  Party of a release from all liability
with respect to such claim or litigation.  If any such  Indemnified  Party shall
have reasonably concluded that there may be one or more legal defenses available
to such  Indemnified  Party  which  is  different  from or  additional  to those
available to the Indemnifying  Party, or that such claim or litigation  involves
or could have an effect upon matters beyond the scope of the indemnity agreement
provided in this Section 6.04, the  Indemnifying  Party shall not have the right
to assume the  defense of such  action on behalf of such  Indemnified  Party and
such Indemnifying  Party shall reimburse such Indemnified Party for that portion
of the fees and expenses of any counsel retained by the Indemnified  Party which
is reasonably related to the matters covered by the indemnity agreement provided
in this Section 6.04.

                  (c)      If the  indemnification  provided for in this Section
6.04 shall for any reason be  unenforceable  by an indemnified  party,  although
otherwise  available in accordance with its terms, then each indemnifying  party
shall, in lieu of indemnifying such indemnified party,  contribute to the amount
paid or payable by such  indemnified  party as a result of the  losses,  claims,
damages,  liabilities or expenses with respect to which such  indemnified  party
has claimed indemnification, in such proportion as is appropriate to reflect the
relative  fault of the  indemnified  party on the one hand and the  indemnifying
party on the other in connection with the statements or omissions which resulted
in such losses, claims,  damages,  liabilities or expenses, as well as any other
relevant  equitable  considerations.  The Company and each Holder  agree that it
would not be just and  equitable  if  contribution  pursuant  hereto  were to be
determined by pro rata  allocation  or by any other method of  allocation  which
does not take into account  such  equitable  considerations.  The amount paid or
payable by an  indemnified  party as a result of the  losses,  claims,  damages,
liabilities or expenses  referred to herein shall be deemed to include any legal
or other expenses  reasonably  incurred by such indemnified  party in connection
with investigating or defending against any action or claim which is the subject
hereof.  No person guilty of fraudulent  misrepresentation  shall be entitled to
contribution   from  any   person   who  is  not   guilty  of  such   fraudulent
misrepresentation.

                  6.05     Information by the Investor. The Holder shall furnish
in  writing  to the  Company  such  information  regarding  the  Holder  and the
distribution proposed by the Holder as the Company may request in writing and as
shall  be  required  in  connection  with  any  registration,  qualification  or
compliance referred to in this Article VI.

                                     - 11 -

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 30 of 34.


                  6.06     Notification;  Continuation of Effectiveness.  In the
case of each registration, qualification and compliance pursuant to this Section
6, the Company  will keep all Holders  and all holders of Warrant  Common  Stock
promptly  advised  in  writing  as to the  initiation  of  proceedings  for such
registration, qualification and compliance and as to the completion thereof, and
will advise,  upon  request,  of the progress of such  proceedings.  The Company
will,  at its expense,  keep such  registration,  qualification  and  compliance
effective,  unless otherwise noted herein,  for a period of twelve months, or in
each case for such  longer  period as may be required by the Act, by such action
as  may be  necessary  or  appropriate  to  permit  the  exercise  or  sale  and
distribution during such period of any Warrant not theretofore exercised or sold
and  distributed  and the sale or  distribution  of  Warrant  Common  Stock  not
theretofore sold or distributed  including,  without  limitation,  the filing of
post-effective  amendments  and  supplements  to any  registration  statement or
prospectus necessary to keep the registration current and further  qualification
under any applicable blue sky or other state securities law, all as requested by
any  Holder or  holder of  Warrant  Common  Stock  with  respect  to which  such
registration is being effected.

                  6.07     Transfer of Registration  Rights. The rights to cause
the Company to register  securities granted by the Company under this Article VI
may be  assigned by the Holder to a  transferee  or assignee of all or less than
all the  Registrable  Securities,  provided  that such transfer may otherwise be
effected in accordance with  applicable  securities laws and that the Company is
given written notice, as provided in Article VI.

                  6.08     Prospectuses,  etc. The Company will, at its expense,
furnish to each Holder or holder of Warrant  Common  Stock with respect to which
registration has been effected, such number of prospectuses,  offering circulars
and other documents  incident to such registration and related  qualification or
compliance as such holder from time to time may reasonably request.

                  6.09     Listing on  Securities  Exchanges,  etc.  The Company
will, at its expense,  promptly list on each national  securities  exchange,  or
NASDAQ,  on which Common Stock is at the time listed,  upon  official  notice of
issuance  upon the  exercise of the Warrant,  and maintain  such listing of, all
shares of Common  Stock  from time to time  issuable  upon the  exercise  of the
Warrant, and when and if required by the Securities Exchange Act of 1934 (or any
similar  statute then in effect) will register  thereunder  all shares of Common
Stock from time to time so issuable.

                  6.10     Underwritten Offerings. In the event any registration
under this Article VI is underwritten and the managing underwriter determines in
writing that the inclusion of all Registrable Securities that are to be included
would  materially  interfere  with  the  successful  completion  thereof  in the
reasonable judgment of such managing underwriter, then the number of Registrable
Securities  to be  included  may be reduced  on the same basis as other  selling
stockholders in such registration.

                                     - 12 -

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 31 of 34.



                                   ARTICLE VII

                                  MISCELLANEOUS

                  7.01     Notices.    All    notices,    requests   and   other
communications  provided for herein shall be in writing,  and shall be deemed to
have been made or given when delivered or mailed,  first class, postage prepaid,
or sent by telex or other telegraphic communications equipment. Such notices and
communications shall be addressed:

                  (a)      if to the Company, to
                           9000A Commerce Parkway
                           Mount Laurel, New Jersey 08054
                           Attention:  Michael P. Lutze, Secretary; or

                  (b)      if  the  Holder,  to  its  address  as  shown  on the
                           registry books  maintained  pursuant to Section 2.01;
                           or in  any of  the  foregoing  cases  at  such  other
                           address as such Person may hereafter specify for such
                           purpose by notice to the other  Persons  referred  to
                           above.

                   7.02    Waivers;  Amendments.  No  failure  or  delay  of the
Holder in exercising any right, power or privilege, hereunder shall operate as a
waiver  thereof,  nor  shall any  single or  partial  exercise  thereof,  or any
abandonment  or  discontinuance  of steps  to  enforce  such a  right,  power or
privilege, preclude any other or further exercise thereof or the exercise of any
other  right,  power or  privilege.  The rights and  remedies  of the Holder are
cumulative and not exclusive of any rights or remedies which it would  otherwise
have. The provisions of this Warrant may be amended,  modified or waived if, but
only if, such amendment, modification or waiver is in writing and is signed by a
majority  of  the  holders  of  the   Warrants;   provided  that  no  amendment,
modification  or waiver may  change the  exercise  price of  (including  without
limitation any adjustments or any provisions  with respect to  adjustments,  the
expiration of or the manner of exercising  the Warrants)  without the consent in
writing of all of the holders of the Warrants outstanding.

                                     - 13 -

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 32 of 34.



                  7.03     Governing  Law.  This  Warrant  shall be construed in
accordance  with and governed by the laws of the State of New York applicable to
contracts made and to be fully performed therein.

                  7.04     Survival   of   Agreements;    Representations    and
Warranties,  etc. All  warranties,  representations  and  covenants  made by the
Company  herein or in any  certificate  or other  instrument  delivered by or on
behalf of it in  connection  herewith or the Notes shall be  considered  to have
been relied upon by the Holder and shall  survive the  issuance  and delivery of
the  Warrants  and the shares of Common  Stock  issuable  upon  exercise of this
Warrant,  and shall continue in full force and effect so long as this Warrant is
outstanding.  All statements in any such  certificate or other  instrument shall
constitute representations and warranties hereunder.

                  7.05     Covenants  to Bind  Successor  and  Assigns.  All the
covenants, stipulations, promises and agreements in this Warrant contained by or
on behalf of the Company shall bind its successors  and assigns,  whether or not
so expressed.

                  7.06    Severability.   In  case  any  one  or  more  of  the
provisions contained in this Warrant shall be invalid,  illegal or unenforceable
in any jurisdiction,  the validity, legality and enforceability of the remaining
provisions  contained  herein and  therein  shall not in any way be  affected or
impaired in such  jurisdiction  and shall not  invalidate  or render  illegal or
unenforceable such provision in any other jurisdiction.

                  7.07     Headings.   The   headings   used   herein   are  for
convenience  of  reference  only and  shall  not be  deemed to be a part of this
Warrant.

                  7.08     No  Rights as  Stockholder.  This  Warrant  shall not
entitle the Holder to any rights as a stockholder of the Company.

                  7.09     Pronouns. The pronouns "it" and "its" herein shall be
deemed to mean "he" or "his", as the context requires.

                           IN WITNESS  WHEREOF,  AW Computer  Systems,  Inc. has
caused this Warrant to be executed in its corporate  name by one of its officers
thereunto  duly  authorized,  and its  corporate  seal to be  hereunto  affixed,
attested by its Secretary or an Assistant Secretary,  all as of the day and year
first above written.

                                                   AW COMPUTER SYSTEMS, INC.

                                                   By: ------------------------
                                                       Charles Welch, President
Attest:


----------------------------
Secretary

                                     - 14 -
<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 33 of 34.


                                SUBSCRIPTION FORM

                     To be Executed by the Registered Holder

                          in Order to Exercise Warrants

The  undersigned   Registered  Holder  hereby  irrevocably  elects  to  exercise
--------------------  Warrants represented by this Warrant  Certificate,  and to
purchase  the  securities  issuable  upon the  exercise  of such  Warrants,  and
requests that certificates for such securities shall be issued in the name of

           PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER:

                -------------------------------------------------
                -------------------------------------------------
                -------------------------------------------------
                -------------------------------------------------
                     (please print or type name and address)

and be delivered to

                -------------------------------------------------
                -------------------------------------------------
                -------------------------------------------------
                -------------------------------------------------
                     (please print or type name and address)


and if such number of Warrants  shall not be all the Warrants  evidenced by this
Warrant  Certificate,  that a new  Warrant  Certificate  for the balance of such
Warrants be registered in the name of, and delivered to, the  Registered  Holder
at the address stated below.

               -------------------------------------------------
               -------------------------------------------------
               -------------------------------------------------
               -------------------------------------------------
                                     Address

               -------------------------------------------------
                          Taxpayer Identification Number

               -------------------------------------------------
                              Signature Guaranteed

               -------------------------------------------------


                                     - 15 -

<PAGE>

          Page numbered in accordance with Rule 0-3(b). Page 34 of 34.


                                   ASSIGNMENT


To Be Executed by the Registered Holder
in order to Assign Warrants

FOR VALUE RECEIVED,  --------------------------------------------  hereby sells,
assigns and transfers unto


            PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

                -------------------------------------------------
                -------------------------------------------------
                -------------------------------------------------
                -------------------------------------------------
                     (please print or type name and address)
       

------------------------------------------------  of the Warrants represented by
this  Warrant  Certificate,  and hereby  irrevocably  constitutes  and  appoints
-----------------------------------------  Attorney  to  transfer  this  Warrant
Certificate on the books of the Company,  with full power of substitution in the
premises.


----------------------------                 -----------------------------------
                                                       Signature Guaranteed

THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION  FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT  CERTIFICATE IN EVERY  PARTICULAR,
WITHOUT  ALTERATION  OR  ENLARGEMENT  OR ANY  CHANGE  WHATSOEVER,  AND  MUST  BE
GUARANTEED  BY A  COMMERCIAL  BANK OR  TRUST  COMPANY  OR A  MEMBER  FIRM OF THE
AMERICAN  STOCK  EXCHANGE,  NEW YORK STOCK  EXCHANGE,  PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.





                                     - 16 -