Page numbered in accordance with Rule 0-3(b). Page 1 of 11.
                             There are no exhibits.

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                  For the quarterly period ended March 31, 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 Identifications No.)
 incorporation or organization)

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

                                  609-234-3939
              (Registrant's telephone number, including area code)

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

Indicate by 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 May 15, 1997,  there were issued and outstanding  6,680,567 Class A Common
Shares of the Company.

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                                     PART I

                              FINANCIAL INFORMATION

Item 1.       Interim Financial Statements

              Contents:

                 Consolidated  Statements of  Operations  for three months ended
                 March 31, 1997 and 1996.

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

                 Consolidated  Statements  of Cash Flow for three  months  ended
                 March 31, 1997 and 1996.

                 Notes to Interim  Consolidated  Financial  Statements for three
                 months ended March 31, 1997.

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

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                            AW COMPUTER SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                 1997                1996
                                                 ----                ----
<S>                                          <C>                 <C>
Revenues                                     $   188,854         $   345,873
Costs of revenues                                309,606             395,897
                                               ---------           ---------
Gross (Loss)                                  (  175,355)         (   50,024)
                                               ---------           --------- 
Selling, general, and 
  administrative expenses                        813,886             765,834
Development expense                               18,357              68,332
Interest expense                                  13,117              18,415
Other (income) - net                          (    5,195)         (    7,087)
                                               ---------           --------- 
                                                 807,288             845,494
                                               ---------           ---------

Loss before income taxes                      (  960,917)         (  895,518)
Income tax (benefit)                                --                  --
Net (loss)                                   $(  960,917)        $(  895,518)
                                               =========           ========= 

Per share statistics:
  Net (loss) per share                          $(0.15)             $(0.19)

Average shares outstanding                     6,680,567           4,642,119
<FN>

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

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                            AW COMPUTER SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 1997 AND DECEMBER 31, 1996
                                     ASSETS
<TABLE>
<CAPTION>

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

Current assets:
     Cash and cash equivalents                                        $    95,489         $   919,621
     Accounts and contract receivable, less allowance for doubtful
       accounts of $41,168 in 1997 and $39,697 in 1996                     70,824              78,380
     Costs and estimated earnings in excess of billings on
       uncompleted contracts                                              212,449             200,015
     Inventories                                                           55,089              56,589
     Income taxes receivable                                                 --                  --
     Prepaid and other current assets                                      42,426              36,854
                                                                       ----------           ---------
       Total current assets                                               476,277           1,291,459
Property and equipment, net                                               478,193             511,579
Computer software, net                                                    669,351             669,351
Due from related parties                                                     --                  --
Other assets                                                               27,484              27,308
                                                                        ---------           ---------
       Total assets                                                   $ 1,651,305         $ 2,499,697
</TABLE>

                      LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S>                                                                   <C>                 <C> 
Current liabilities:
     Line of credit                                                   $   570,368         $   570,368
     Current portion of long-term debt                                       --                  --
     Current portion of lease obligations                                    --                  --
     Accounts payable                                                     174,091             141,195
     Accrued liabilities                                                  235,622             269,371
     Accrued compensation                                                 239,862             177,362
     Accrued contract costs                                               408,406             408,406
     Other current liabilities                                             53,583              41,755
                                                                        ---------           ---------
       Total current liabilities                                        1,681,932           1,614,457
Capitalized lease obligations                                                --                  --
Deferred compensation payable                                             162,508             162,508
                                                                        ---------           ---------
       Total liabilities                                                1,844,440           1,776,965

Commitments and contingent liabilities
Shareholders' equity
     Preferred Stock - No Par Value:
       Authorized 5,000,000 shares in 1997 and in 1996 and
       zero issued and outstanding in 1997 and 1996.                         --                  --
     Common shares:
       Class A, $.01 par; authorized 25,000,000  and 10,000,000
        shares; 6,680,567 and 4,816,694 issued and outstanding in
        1997 and 1996, respectively                                        66,806              66,381
     Additional paid-in capital                                         4,476,485           4,431,860
     Retained earnings (Deficit)                                       (4,641,426)         (3,680,509)
     Stock subscription - related party                                (   95,000)         (   95,000)
     Deferred compensation                                                   --                  --
                                                                        ---------           ---------
     Total shareholders' equity                                        (  193,135)            722,732
                                                                        ---------           ---------
     Total liabilities and shareholders' equity                       $(1,651,305)        $ 2,499,697
                                                                        =========           =========
<FN>

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

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                            AW COMPUTER SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 1997 AND 1996
                                   (UNAUDITED)
<TABLE>
<CAPTION>

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

         Cash flows from operating activities:
              Net (loss):                                            $(  960,917)      $(  895,518)
              Adjustments to reconcile net (loss) to
         net cash provided by (used in) operating
         activities:
                  Depreciation and amortization                           37,777            71,119
                  Amortization of unearned compensation                     --              17,431

                  Decrease (increase) in:
                    Accounts receivable                                    7,556           411,769
                    Costs incurred and estimated earnings
                       on uncompleted contracts                       (   12,434)           47,012
                    Inventories                                            1,500             3,269
                    Income taxes receivable                                 --             280,445
                    Prepaid expenses                                  (    5,748)           55,128
                  Increase (decrease) in:
                    Accounts payable                                      26,896        (  102,241)
                    Accrued liabilities                               (   33,749)           29,859
                    Accrued cost                                                        (   55,876)
                    Accrued compensation                                  62,500            24,591
                    Billing in excess of costs incurred and
                       estimated earnings on uncompleted
                       contracts                                            --                --
                    Other current liabilities                             11,828        (      475)
                                                                       ---------         --------- 
         Net cash (used in) operating activities                      (  864,791)       (  113,487)
                                                                       ---------         --------- 

         Cash flows from investing activities:
              Capital expenditures                                    (    4,391)       (   89,484)
              Computer software capitalized                                 --          (   24,178)
                                                                       ---------         --------- 
         Net cash (used in) investing activities                      (    4,391)       (  113,662)
                                                                       ---------         --------- 

         Cash flows from financing activities:
              Net borrowing (payments):
                Payments on long-term debt                                 --           (  133,333)
                Payments on lease obligations                              --           (    1,469)
                Net (advances) repayments of related party
         loans                                                             --                 --
              Proceeds from issuance of common shares                     45,050           625,559
                                                                       ---------         ---------
         Net cash provided (used) by financing activities                 45,050           490,757
                                                                       ---------         ---------

         Increase (Decrease) in cash and equivalents                  (  824,132)          263,608
         Cash and cash equivalents, beginning of year                    919,621           848,560
                                                                       ---------         ---------
         Cash and cash equivalents, end of period                    $    95,489       $ 1,112,168
                                                                       =========         =========
<FN>

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

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               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1997
                                   (UNAUDITED)

1.       The  consolidated  financial  statements  include  the  accounts of the
         Company and its wholly-owned subsidiary.  All significant inter-company
         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  balance  sheet and cash flow  statements  are  restated  to
         conform to present year presentation.

3.       During the quarter  ending  March 31,  1997,  the Company  maintained a
         $550,000  Line of Credit with  interest at the Bank's prime rate (8.25%
         at March 31, 1997) plus one percent and an additional  credit  facility
         of $20,368  with an interest  rate of prime plus 2%. The Line of Credit
         had an outstanding balance of $570,368 on March 31, 1997.

         The credit  facilities are  collateralized  by substantially all of the
         Company's   assets.   The  carrying  amount  of  the  Company's  credit
         arrangements approximate their fair value.

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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 new
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 are  completed.  The
Company expects that its existing  capital  resources will enable it to maintain
its current  operations  through  the second  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.

              As of May 13,  1997,  AW had a backlog of firm orders for delivery
within one year of $424  thousand  compared to $700  thousand  at May 13,  1996.
Because  of the size of the  backlog  the  Company  believes  that the volume of
operations  will remain at the  relatively  low level  experienced  in the first
quarter of this year until the successful  completion  and 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  substantially  complete  and the Company has  commenced  live  testing 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 first quarter of 1997 were $189 thousand (or 64%)
lower than  revenues in the first quarter of 1996 due primarily to: (i) only $35
thousand in contract  revenue from  contracts  in progress.  Most of the revenue
generated during the quarter was from software  services ($86 thousand) and from
software maintenance ($68 thousand).

              The Company  experienced  a negative  gross  profit of  ($175,355)
compared to ($50,024) for the same period last year.  The negative  gross profit
was due to approximately $241 thousand in cost related to the development of the
CPA contract with corresponding  revenue from the contract of only $28 thousand.
As of March 31, 1997, $1,564,000 and $3,734,000 have been recognized as revenues
and cost under the CPA  Agreement  respectively.  The Project has  exceeded  its
$1,700,000 contractual budget, as such, the Company has recognized an additional
loss  provision  of $400,000  representing  the  estimated  cost to complete the
project.  Due  to  uncertainties  inherent  in  the  estimation  process,  it is
reasonably  possible that the  completion  costs for the Project will be further
revised in the near term.

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              Selling,  general and  administrative  expenses  ("SG&A") were $48
thousand (or 6.2%)  higher in the first  quarter of 1997 than in the same period
last year. As a percentage of revenues,  these expenses were 431% versus 221% in
the first quarter of 1996.

              Development  expense was $18  thousand (or 74%) lower in the March
quarter of 1997 compared to the first quarter of 1996,  this is primarily due to
reduced development activities on the Company's new products until completion of
the CPA project.

              In the first quarter 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
first  quarter of 1997  resulted in a loss of $961 thousand (or $0.15 per share)
compared  to net loss of $896  thousand  (or $0.19 per share) in the same period
last year.

              Liquidity

              During the quarter,  working  capital  decreased  $879 thousand to
($1.202  million)  compared to ($323  thousand) at December  31,  1996.  Current
Assets  decreased  $811  thousand  primarily  due to  decreases  in cash of $824
thousand.  Current Liabilities increased $68 thousand primarily due to increases
in Accrued Compensation of $63 thousand, an increase in Other Liabilities of $12
thousand,  an  increase in Accounts  Payable of $33  thousand  and a decrease in
Accrued Liabilities of $37 thousand.

              During the first quarter of 1996,  working capital  decreased $236
thousand to $846 thousand (or 42 days of costs and expenses)  compared to $1,082
thousand (or 54 days of costs and expenses) at December 31, 1995. Current Assets
decreased  $537 thousand  primarily  due to decreases in Accounts  Receivable of
$412 thousand, Prepaid Assets of $58 thousand, and Costs in Excess of Billing of
$47 thousand.  Current  Liabilities  decreased  $300  thousand  primarily due to
decreases in current debt of $133 thousand, decrease in Accounts Payable of $100
thousand and a decrease in Accrued Contract Costs of $56 thousand.

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              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.
There  can be no  assurance  that  additional  financing  will be  available  on
acceptable terms or at all.

              During the quarter ending March 31, 1997, the Company maintained a
$550,000  Line of Credit with  interest at the Bank's prime rate (8.25% at March
31, 1997) plus one percent and an additional  credit facility of $20,368 with an
interest rate of prime plus 2%. The Line of Credit had an outstanding balance of
$570,368 on March 31, 1997.

              The credit  facilities are  collateralized by substantially all of
the Company's assets.  The carrying amount of the Company's credit  arrangements
approximate their fair value.

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                                     PART II

                                OTHER INFORMATION

Item 1.    Legal Proceedings - No material developments.

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-K

           a.     Exhibits - None.

           b.     Reports on Form 8-K - None.

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                                   Signatures

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                             AW COMPUTER SYSTEMS, INC.
                                             (REGISTRANT)



Date: May 15, 1997                           \s\Charles Welch
                                             Charles Welch
                                             Chief Executive Officer/President

Date: May 15, 1997                           \s\Charles F. Trapp
                                             Charles F. Trapp
                                             Vice President, Finance
                                             (Principal Financial Officer)