Page Numbered in accordance with Rule 0-3(b). Page 1 of 17.
The Exhibit Index can be found on Page 13.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A-1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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)
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 November 11, 1997, there were issued and outstanding 6,670,567 Class A
Common Shares of the Company.
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PART I
FINANCIAL INFORMATION
(UNAUDITED)
Item 1. Interim Financial Statements
Contents:
Consolidated Statements of Operations for three and nine month
periods ended September 30, 1997 and 1996.
Consolidated Balance Sheets as of September 30, 1997 and
December 31, 1996.
Consolidated Statements of Cash Flow for the nine month
periods ended September 30, 1997 and 1996.
Notes to Interim Consolidated Financial Statements.
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AW COMPUTER SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
Three Months Nine Months
1997 1996 1997 1996
$ 385,228 $ 238,470 Revenues $ 816,020 $ 714,462
289,540 587,591 Costs of revenues 969,798 1,575,690
--------- --------- --------- ---------
95,688 ( 349,121) ( 153,778) ( 861,228)
--------- --------- --------- ---------
486,267 590,228 Selling, general and administrative 1,941,024 1,939,871
11,141 1,434 Development 40,621 84,906
28,327 12,780 Interest 54,846 51,211
--------- --------- --------- ---------
525,735 604,442 2,036,491 2,075,988
--------- --------- --------- ---------
1,297 2,987 Interest income 8,818 19,878
( 428,750) ( 950,576) Loss before income taxes (2,181,451) (2,917,338)
-- -- Income tax benefit -- --
--------- --------- --------- ---------
$( 428,750) $( 950,576) Net loss $(2,181,451) $(2,917,338)
========= ========= ========= =========
$(.07) $(.17) Net loss per share $(.33) $(.58)
6,670,567 5,734,306 Average shares outstanding 6,659,703 5,072,448
<FN>
The accompanying notes are an integral part of the
consolidated financial statements.
</FN>
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AW COMPUTER SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
1997 1996
Current assets:
Cash and cash equivalents $ 49,089 $ 919,621
Accounts and contract receivables, less allowance for doubtful
accounts of $42,125 and $112,350 in 1997 and 1996 230,692 78,380
Costs and estimated earnings in excess of billings on
uncompleted contracts -- 200,015
Inventories 51,589 56,589
Prepaid and other current assets 25,367 36,854
--------- ---------
Total current assets 356,737 1,291,459
Property and equipment, net 318,046 511,579
Computer software, net 669,351 669,351
Other assets 27,308 27,308
--------- ---------
Total Assets $ 1,371,442 $ 2,499,697
========== ==========
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities:
Note Payable $ 773,750 $ --
Current portion of long-term debt 95,448 570,368
Accounts payable 104,853 147,195
Accrued contract costs 308,406 408,406
Accrued liabilities 254,949 269,371
Accrued compensation 310,152 177,362
Other current liabilities 46,610 41,755
--------- ---------
Total current liabilities 1,894,168 1,614,457
Deferred compensation payable 216,508 162,608
--------- ---------
Total liabilities 2,110,676 1,776,965
Commitments and Contingencies
Shareholder's Equity
Preferred Stock - No Par Value:
Authorized 4,950,000 shares in 1997 and 5,000,000 shares 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 stock:
Class A, $.01 par; authorized 25,000,000 and 10,000,000
shares; 6,670,567 and 6,638,067 issued and outstanding
in 1997 and 1996, respectively 66,706 66,381
Additional paid-in capital 4,535,495 4,431,860
Retained earnings (Deficit) (5,882,035) (3,680,509)
Stock subscription - related party ( 95,000 ( 95,000)
--------- ---------
Total shareholders' equity ( 739,234) 722,732
--------- ---------
Total liabilities and shareholders' equity $ 1,371,442 $ 2,499,697
========= =========
<FN>
The accompanying notes are an integral part of the
consolidated financial statements.
</FN>
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AW COMPUTER SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
Nine Months
1997 1996
Cash flows, from operating activities:
Net income (loss): $(2,181,451) $(2,917,338)
Adjustments to reconcile net
income to net cash provided
by/(used in) operating activities:
Depreciation and amortization 180,669 227,620
Amortization of unearned compensation -- 35,566
Decrease (increase) in:
Accounts receivable ( 152,312) 411,753
Costs and estimated earnings
on uncompleted contracts 200,015 391,311
Inventories 5,000 310,193
Income taxes receivable -- 280,445
Prepaid expenses 11,487 46,707
Other assets -- ( 98,981)
Increase (decrease) in:
Accounts payable ( 42,342) ( 108,853)
Accrued liabilities ( 14,422) 140,978
Accrued cost ( 100,000) 75,753
Accrued compensation 132,790 --
Other liabilities 58,855 86,467
--------- ---------
Net cash provided by (used in)
operating activities (1,901,711) (1,118,379)
--------- ---------
Cash flows, from investing activities:
Capital expenditures ( 5,663) ( 95,270)
Capital disposals 18,527 --
Computer software capitalized -- ( 261,796)
--------- ---------
Net cash (used in) investing activities 12,864 ( 357,066)
--------- ---------
Cash flows, from financing activities:
Net borrowing (payments):
Proceeds from long term debt -- 20,368
Long-term debt and lease obligations ( 474,920) ( 229,383)
Notes payable 773,750 --
Proceeds from issuance of common shares 34,240 2,407,665
Proceeds from issuance of preferred shares 635,600 --
Payment of dividends ( 20,075) --
Additional paid in capital from debt exchange 69,720 --
--------- ---------
Net cash provided by (used in) financing activities 1,018,315 2,198,650
--------- ---------
Increase (decrease), cash and cash equivalents 870,532 732,205
Cash and cash equivalents:
Beginning of period 919,621 848,560
--------- ---------
End of period $ 49,089 $ 1,571,765
========= =========
<FN>
The accompanying notes are an integral part of the
consolidated financial statements.
</FN>
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AW COMPUTER SYSTEMS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
1. Interim Financial Reporting
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-QSB.
Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations, and cash flows
for the periods presented have been made. The results of operations for
the three month period and nine month period ended September 30, 1997
are not necessarily indicative of the operating results that may be
expected for the entire year ending December 31, 1997. These financial
statements should be read in conjunction with the Company's Form 10-KSB
for the fiscal year ended December 31, 1996.
2. Prior year financial statements have been restated to conform to
present year presentation.
Page numbered in accordance with Rule 0-3(b). Page 7 of 17.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Statement Regarding Forward-Looking Statements
The statements contained in this Report that are not purely historical
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including statements regarding the Company's "expectations", "anticipation",
"intentions", "beliefs", or "strategies" regarding the future. Forward-looking
statements include statements regarding revenue, margins, expenses, and earnings
analysis for fiscal 1998 and thereafter; future products or product development;
future research and development spending and the Company's product development
strategy; and liquidity and anticipated cash needs and availability. All
forward-looking statements included in this Report are based on information
available to the Company on the date of this Report, and the Company assumes no
obligation to update any such forward-looking statement. It is important to note
that the Company's actual results could differ materially from those in such
forward-looking statements. Among the factors that could cause actual results to
differ materially are the factors discussed in the Company's Report on Form
10-KSB, Item 1, "Special Considerations".
As previously reported in the second quarter, the continuation of
operations beyond the third quarter would be dependent on the successful
completion and rollout of either the CPA Project or the Wizard Project and/or
the Company securing external financing to help bring its products to market.
Since the end of the third quarter, the Company has managed the business on a
week-to-week basis with the expectation that if a financing is not completed by
the end of November, the Company will be forced to cease operations. There can
be no assurance that additional financing will be available on acceptable terms
or at all.
The Company does not expect that its existing capital resources will
be sufficient for it to maintain its current operations past November 1997.
Although the Company raised $1,000,000 in debt and equity capital, it expended
in excess of $3,000,000 on development of its products. The Company will need to
raise substantial additional capital in order 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. If the
Company is unable to remain in business, it will have to cease all operations,
including all development work and work on the initial purchase order referred
to above.
AW's future is dependent on the 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.
Page numbered in accordance with Rule 0-3(b). Page 8 of 17.
On October 28, 1997, the Company received its initial purchase order
to install eleven CPA systems. Installation is scheduled to begin in January
1997. The Company is currently negotiating the payment terms including the
amount of the deposit. If the Company is unable to raise substantial additional
capital, it will be unable to complete the installation of the eleven CPA
systems as referred to above.
Operations
Revenues for the third quarter of 1997 were $385 thousand (or 62%)
higher than revenues in the third quarter of 1996 due to increased revenue from
contracts in progress, revenue software services and from equipment sales.
The Company experienced a gross profit of $95 thousand compared to a
negative gross profit of $349 thousand for the same period last year. The 1997
gross profit was due to increased revenue from contracts in progress, software
services, and equipment sales.
Selling, general and administrative expenses ("SG&A") were $486
thousand in the third quarter of 1997 versus $590 thousand than in the same
period last year. As a percentage of revenues, these expenses were 126% versus
248% in the third quarter of 1996.
Development expense was $11 thousand (or 26%) lower in the third
quarter of 1997 compared to the second quarter of 1996; this is primarily due to
reduced development activities on the Company's projects.
Revenues for the nine months of 1997 were $816 thousand versus $714
thousand for the comparable period of 1996 because of increased revenue from
contracts in progress, software services, and equipment sales.
The Company experienced a negative gross profit of $154 thousand
versus a negative gross profit of $861 thousand for the nine 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 $1.941
million in 1997 versus $1.940 million in 1996. As percentage of revenue, these
expenses were 238% versus 272% for 1997 and 1996 respectively.
Development expense was $41 thousand in 1997 versus $85 thousand in
1996; a reduction of $44 thousand due to reduced development activities on
projects.
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 in exchange for cancellation
of approximately $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.
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In the third quarter and nine 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 third
quarter of 1997 resulted in a loss of $429 thousand (or $.07 per share) compared
to a net loss of $951 thousand (or $.17 per share) in the same period last year.
Operations for the nine month period of 1997 resulted in a loss of $2.181
million or $(.33) per share compared to a net loss of $2.917 million or $.58 per
share.
Liquidity
During the nine months ended September 30, 1997, working capital
decreased $1.241 million to ($1.537 million) compared to ($323 thousand) at
December 31, 1996. Current Assets decreased $934 thousand due to decreases in
cash of $870 thousand. Current Liabilities increased $280 thousand primarily due
to increases in Notes Payable of $774 thousand, an increase in Accrued
Compensation of $133 thousand, an decrease in Accrued Liabilities of $14
thousand, a decrease in Current Portion of Long Term Debt of $475 thousand, a
decrease in Accounts Payable of $42 thousand, and a decrease in Other
Liabilities of $27 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. The Note, including interest of $23,750, was
extended until March 19, 1998.
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 in exchange for cancellation
of approximately $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 nine months of 1996, working capital decreased $107
thousand to $1.038 million compared to $1.145 million at December 31, 1995.
Current assets decreased $718 thousand resulting from decreases in all asset
categories except cash and cash equivalents. Current liabilities decreased from
$389 thousand.
During the first nine months of 1996, cash and cash equivalents
increased $723 thousand. The primary factor for this increase was $2,407,665 in
new equity.
Page numbered in accordance with Rule 0-3(b). Page 10 of 17.
Financial Resources
As previously reported in the second quarter, the continuation of
operations beyond the third quarter would be dependent on the successful
completion and rollout of either the CPA Project or the Wizard Project and/or
the Company securing external financing to help bring its products to market.
Since the end of the third quarter, the Company has managed the business on a
week-to-week basis with the expectation that if a financing is not completed by
the end of November, the Company will be forced to cease operations. 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. The Note, including interest of $23,750, was
extended until March 19, 1998.
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 numbered in accordance with Rule 0-3(b). Page 11 of 17.
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-K.
a. Exhibits:
99A Stock Option Agreement.
99B Stock Option Certificate
Page numbered in accordance with Rule 0-3(b). Page 12 of 17.
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: November 21, 1997 /s/Charles Welch
Charles Welch
CEO/President
DATE: November 21, 1997 /s/Charles F. Trapp
Charles F. Trapp
Vice President, Finance
Principal Financial Officer
Page numbered in accordance with Rule 0-3(b). Page 13 of 17.
EXHIBIT INDEX
Rule 0-3(b) Page
Numbered Where the
Exhibit can be
Exhibit Number Description Found
99-A Stock Option Agreement. Page 11.
99-B Stock Option Certificate. Page 11.
Page numbered in accordance with Rule 0-3(b). Page 14 of 17.
EXHIBIT 99-A
AW COMPUTER SYSTEMS, INC.
1997 STOCK OPTION AND STOCK GRANT PLAN
INCENTIVE STOCK OPTION AGREEMENT
This INCENTIVE OPTION AGREEMENT is made this _____ day of ___________,
19___ between AW COMPUTER SYSTEMS, INC., a New Jersey corporation (the
"Company"), and name, address, city, state zip an employee of the Company
("Employee").
BACKGROUND
The Company desires to afford Employee an opportunity to purchase Class A
Common Shares of the Company ("Class A Common Shares") as hereinafter provided,
in accordance with the provisions of the 1997 Stock Option and Stock Grant Plan
of the Company.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto,
intending to be legally bound hereunder, agree as follows:
(1) Grant of Option. The Company hereby grants to Employee the right and
option (hereinafter called the "Option") to purchase the Class A Common Shares
as listed on certificate(s) which may be issued from time to time by the Company
in the form of Exhibit A. The Option is in all respects limited and conditioned
as hereinafter provided, and as provided in the 1997 Stock Option and Stock
Grant Plan (the "Plan"), which is incorporated by reference and made a part
hereof. It is intended that the Option(s) granted hereunder be Incentive Stock
Options ("ISO's") meeting the requirements of the Plan and Section 422 of the
Internal Revenue Code of 1986 as amended (the "Code").
(2) Purchase Price. The purchase price of the Class A Common Shares
covered by the Option(s) shall be stated upon the Certificate(s).
(3) Term. The final day upon which each option may be exercised will be
December _______ unless the Employee is no longer employed by the Company. If
the Employee's employment is terminated by either part prior to December ______
the terminate date shall be three months after such termination of employment.
(4) Exercise of Option. This Option may be exercised, in whole or in parts
in cumulative increments on or after each Exercise Date as shown on the
Certificate(s).
Options that become exercisable in accordance with the foregoing shall
remain exercisable, subject to the provisions contained in the Plan and in this
Agreement, through the close of business on the Expiration Date shown on the
Certificate(s).
Page numbered in accordance with Rule 0-3(b). Page 15 of 17.
(5) Method of Exercising Option. Subject to the terms and conditions of
this Option Agreement and the Plan, the Option(s) may be exercised upon written
notice to the Company, at its principal office, which is now located at 9000A
Commerce Parkway, Mount Laurel, New Jersey 08054. Such notice shall state the
election to exercise the Option and the number of shares with respect to which
it is being exercised, shall be signed by the person or persons so exercising
the Option, shall, unless the Company otherwise notifies Employee, be
accompanied by the investment certificate referred to in Paragraph 6 hereof and
shall be accompanied by payment of the full purchase price of such shares.
The purchase price shall be paid in cash or by certified check, bank
draft or postal or express money order, or in such other manner as may be
permitted under the Plan. Following receipt of such notice and payment, the
Company shall deliver a certificate or certificates representing the shares with
respect to which the Option is so exercised. The certificate or certificates for
the shares as to which the Option shall have been so exercised shall be
registered in the name of the person or persons so exercising the Option (or, if
the Option shall be exercised by Employee and if Employee shall so request in
the notice exercising the Option, shall be registered in the name of Employee
and Employee's spouse, jointly, with right of survivorship) and shall be
delivered as provided above to or upon the written order of the person or
persons exercising the Option. In the event the Option shall be exercised by any
person or persons after the death of Employee, such notice shall be accompanied
by appropriate proof of the right of such person or persons to exercise the
Option. All shares that shall be purchased upon the exercise of the Option as
provided herein shall be fully paid and non-assessable.
(6) Shares to be Purchased for Investment. Unless the Company has
theretofore notified Employee that a registration statement covering the shares
to be acquired upon the exercise of the Option has become effective under the
Securities Act of 1933 and the Company has not thereafter notified Employee that
such registration is no longer effective, it shall be a condition to any
exercise of this Option that the shares acquired upon such exercise be acquired
for investment and not with a view to distribution, and the person effecting
such exercise shall submit to the Company a certificate of such investment
intent, together with such other evidence supporting the same as the Company may
request. The Company shall be entitled to restrict the transferability of the
shares issued upon any such exercise to the extent necessary to avoid risk of
violation of the Securities Act of 1933, any applicable blue sky laws or of any
rules or regulations promulgated thereunder. Such restrictions may, at the
option of the Company, be noted or set forth in full on the share certificates.
Restrictions on Transferability of Option. The Option shall not be
assignable or transferable other than by will or the laws of descent and
distribution and shall be exercisable during Employee's lifetime only by him or
her.
Page numbered in accordance with Rule 0-3(b). Page 16 of 17.
(8) Notice of Sale of Shares. If Employee shall transfer any shares which
he or she receives upon the exercise of the Option within two years from the
date on which the Option was granted to him or within one year from the date on
which he or she exercises the Option, Employee shall promptly give the Company
written notice thereof and shall provide the Company with such other information
about the transfer as the Company shall reasonably request. The obligation of
Employee to give such notice shall survive the exercise of the Option and
delivery of the option shares to Employee by the Company.
(a) Withholding of Taxes. The Company's obligation to deliver Shares
upon the exercise of the Option shall be subject to applicable Federal, state
and local tax withholding requirements.
(b) Governing Law. This Agreement shall, to the maximum extent
possible, be construed in accordance with the Code provisions concerning ISO's,
and its interpretation shall other wise be governed by New Jersey law.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be duly
executed by its officers thereunto duly authorized, and Employee has hereunto
set his or her hand and seal, all on the day and year first-above written.
AW COMPUTER SYSTEMS, INC.
(CORPORATE SEAL) By:________________________________
Typed Name:________________________
Title:_____________________________
Witness: ___________________________________
name
Grantee
Page numbered in accordance with Rule 0-3(b). Page 17 of 17.
EXHIBIT 99-B
[AW LOGO GRAPHIC]
THIS IS TO CERTIFY that on [Date] in accordance with the terms of AW Computer
Systems, Inc. Inc's 1997 Stock Option and Stock Grant Plan, the Compensation
Committee of the Board of Directors of AW Computer Systems, Inc. (the "Company")
awarded an option to purchase [share] Class A Common Shares ("Shares") of the
Company at a price of [price] per share to
[NAME]
("Optionee")
The Stock Option referred to herein is subject to the provisions of the 1997
Stock Option and Stock Grant Plan and the Stock Option Agreement between AW
Computer Systems, Inc. and Optionee dated as of [agreedate] and may be exercised
by Optionee in whole or in partial cumulative increments until the close of
business on [expiredate] as follows:
SHARES AFTER
[shares] [datea]
[shares] [dateb]
In witness whereof, I have hereunto affixed the Seal of AW Computer Systems,
Inc. and the signature of a duly authorized Officer of the Corporation.
Dated this ____________ day of _______, 19___ _________________________
P. Michael Lutze
Secretary