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                  March 31, 2004
--------------------------------------------------------------------------------

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

For the transition period from  ____________________ to _____________________

                          Commission File Number 025449
                                                 ------

                          PCS Research Technology, Inc.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


           Delaware                                      33-0856651
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

3655 Nobel Drive, Suite 540, San Diego, California               92122
--------------------------------------------------------------------------------
 (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code          (858) 623-1600
--------------------------------------------------------------------------------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 15 (d) of the Securities and Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes [X] No [ ]



As of May 14, 2004, there were 23,087,836 shares of common stock issued and
outstanding.

<PAGE>

                          PCS Research Technology, Inc.
                                   FORM 10-QSB
                                QUARTERLY REPORT
                                 March 31, 2004


                                TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION

ITEM 1.    Condensed Consolidated Financial Statements:

           Consolidated Balance Sheets....................................   3

           Consolidated Statements of Operations..........................   4

           Consolidated Statements of Cash Flows..........................   5

           Notes to Consolidated Financial Statements.....................   6


ITEM 2.    Management's Discussion and Analysis
             of Financial Condition and Results of Operations.............  15

ITEM 3.    Controls and Procedures........................................  22

PART II - OTHER INFORMATION

ITEM 1.    Legal Proceedings..............................................  22

ITEM 2.    Changes in Securities and Use of Proceeds......................  22

ITEM 3.    Defaults Upon Senior Securities................................  22

ITEM 4.    Submission of Matters to a Vote of Security Holders............  23

ITEM 5.    Other Information..............................................  23

ITEM 6.    Exhibits and Reports on Form 8-K...............................  23

                                       2

<PAGE>

                          Part I Financial Information

Item 1.           Condensed Consolidated Financial Statements
                  -------------------------------------------

PCS Research Technology, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                   March 31, 2004        December 31, 2003
                                                                      Unaudited               Audited
                                                                  -----------------      -----------------
                            ASSETS
<S>                                                               <C>                    <C>
CURRENT ASSETS
Cash and cash equivalents                                         $         131,083      $          54,348
Accounts receivable                                                          67,167                 20,206
Receivable from related parties                                             125,000                125,000
Prepaid research                                                            296,664                242,885
Other current assets                                                         51,700                 10,472
                                                                  -----------------      -----------------
  Total current assets                                                      671,614                452,911

Property and equipment, net                                                 434,739                493,493
Receivable from related parties                                                  --                 62,500
Other assets                                                                  2,580                  2,835
                                                                  -----------------      -----------------
  Total assets                                                    $       1,108,933      $       1,011,739
                                                                  =================      =================

          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable                                                  $         308,237      $         213,128
Accrued interest expense                                                    160,463                129,082
Revolving credit facility                                                   100,000                100,000
Current portion of convertible debt, net                                    775,228                564,747
Notes payable                                                               300,000                300,000
Notes payable - related parties                                             187,500                187,500
Deferred revenue                                                            977,614                752,797
Other current liabilities                                                   219,484                193,663
                                                                  -----------------      -----------------
  Total current liabilities                                               3,028,526              2,440,917

Convertible debt                                                            624,018                904,244
Minority interest in subsidiary                                                  --                (60,739)
                                                                  -----------------      -----------------
  Total liabilities                                                       3,652,544              3,284,422

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.0001 par value; 10,000,000 authorized
  shares; no shares outstanding                                                  --                     --
Common stock; $.0001 par value, 80,000,000 authorized,
  34,842,052 issued; 23,075,336 outstanding at March 31, 2004
  and 34,557,052 issued and 22,790,336 outstanding
  at December 31, 2003                                                        2,350                  2,321
Additional paid-in capital                                               29,011,744             28,925,921
Treasury stock, 417,866 common shares at cost                               (58,501)               (58,501)
Accumulated deficit                                                     (31,499,204)           (31,142,424)
                                                                  -----------------      -----------------
  Total stockholders' equity (deficit)                                   (2,543,611)            (2,272,683)
                                                                  -----------------      -----------------

  Total liabilities and stockholders' equity (deficit)            $       1,108,933      $       1,011,739
                                                                  =================      =================
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

                                       3
<PAGE>

PCS Research Technology, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
                                                             Three Months        Three Months
                                                            Ended March 31,     Ended March 31,
                                                                 2004                2003
                                                            --------------      --------------
<S>                                                         <C>                 <C>
REVENUES
Research services                                           $      647,119      $      333,525
Consulting services                                                     --              42,000
Interest and other                                                     600                  --
                                                            --------------      --------------
  Total revenue                                                    647,719             375,525
                                                            --------------      --------------

EXPENSES
Compensation and benefits                                          310,325             412,573
General and administrative                                         272,570             287,799
Product research expenses                                          232,281              59,870
Depreciation and amortization                                       70,401              71,579
Minority interest expense                                               --              37,738
                                                            --------------      --------------
  Total expenses                                                   885,577             869,559
                                                            --------------      --------------

Operating loss                                                    (237,858)           (494,034)

OTHER EXPENSE
Interest and other                                                  58,183             467,315
Loss on joint venture                                               60,739
                                                            --------------      --------------

Net loss from continuing operations                               (356,780)           (961,349)

Discontinued operations
Income from discontinued operations                                     --             174,117
                                                            --------------      --------------

Net loss                                                    $     (356,780)     $     (787,232)
                                                            ==============      ==============

Earnings (loss) per share - basic and diluted
  Loss per share - continuing operations                             (0.02)              (0.04)
  Earnings per share - discontinued operations                          --                0.01
                                                            --------------      --------------

    Total loss per share - basic and diluted                $        (0.02)     $        (0.03)
                                                            ==============      ==============

Weighted average number of shares                               22,940,058          24,523,769
                                                            ==============      ==============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       4

<PAGE>

PCS Research Technology, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
                                                                          For The Three Months
                                                                             Ended March 31,
                                                                     ------------------------------
                                                                         2004              2003
                                                                     ------------      ------------
<S>                                                                  <C>               <C>
Cash flows from operating activities
  Net loss                                                           $   (356,780)     $   (787,232)
  Adjustments to reconcile net loss to net cash flows used in
    operating activities
    Depreciation and amortization                                          70,401            71,579
    Amortization of discounts on indebtedness                                  --           417,189
    Stock and stock options issued for services rendered                   85,851            16,000
    Minority interest expense                                                  --            37,738
    Income from discontinued operations                                        --          (174,117)
    Loss on joint venture                                                  60,739                --
  Net changes in assets and liabilities
    Increase in accounts receivable                                       (46,961)         (142,323)
    Decrease in receivables from related parties                           62,500                --
    Increase in prepaid research                                          (53,779)         (279,916)
    (Increase) decrease in other current assets                           (41,228)           11,140
    Decrease in other assets                                                  255            32,936
    Increase in accounts payable and accrued liabilities                  152,311            68,103
    Increase in deferred revenue                                          224,817           575,607
                                                                     ------------      ------------
  Net cash provided by (used in) continuing operations operating
activities                                                                158,126          (153,296)

Cash flows from investing activities

  Additions to property and equipment                                     (11,646)          (14,759)
  Change in net assets of discontinued operations                              --         2,027,475
                                                                     ------------      ------------
  Net cash flows provided by investing activities                         (11,646)        2,012,716

Cash flows from financing activities

  Payments on revolving credit facility                                        --        (2,505,781)
  Net proceeds from convertible debt                                           --           195,686
  Release of restricted cash                                                   --           500,000
  Repayment of notes and convertible debt                                 (69,745)           (8,375)
  Distributions to minority members                                            --          (122,000)
                                                                     ------------      ------------
  Net cash flows used in financing activities                             (69,745)       (1,940,470)
                                                                     ------------      ------------

  Net increase (decrease) in cash and cash equivalents                     76,735           (81,050)

Cash and cash equivalents, beginning of period                             54,348           390,079
                                                                     ------------      ------------

Cash and cash equivalents, end of period                                  131,083           309,029
                                                                     ============      ============

Supplemental disclosures of cash flow information
  Interest paid                                                      $     35,680      $     43,361
                                                                     ============      ============
  Taxes paid                                                         $         --      $         --
                                                                     ============      ============
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

                                       5

<PAGE>

                 PCS Research Technology, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             March 31, 2004 and 2003
                                   (Unaudited)

NOTE A - ORGANIZATION

PCS Research Technology, Inc. and subsidiaries (the "Company" or "PCSR"), was
incorporated in the State of Delaware in May 1999. PCSR is a publisher of
independent research for the institutional investment community that develops,
produces and sells proprietary research products to mutual funds, hedge funds
and investment banks. The Company's offices are located in San Diego,
California. In January 2004, the Company began doing business under the name
Sagient Research Systems, and plans to formally adopt this new name following
its annual shareholder meeting, which is scheduled to be held on May 20, 2004,
where the name change will be submitted for shareholder approval.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
---------------------

The accompanying unaudited condensed consolidated financial statements of PCS
Research Technology, Inc. and subsidiaries (the "Company") have been prepared
pursuant to accounting principles generally accepted in the United States of
America ("US GAAP") for interim financial statements and the rules and
regulations of the Securities and Exchange Commission. Accordingly, certain
information and note disclosures normally included in annual financial
statements prepared in accordance with US GAAP have been condensed or omitted
pursuant to those rules and regulations. These consolidated financial statements
should be read in conjunction with the financial statements and the notes
thereto included in the Company's latest audited financial statements for the
year ended December 31, 2003 filed on Form 10-KSB.

The consolidated financial statements for the 2004 interim period include the
accounts of the Company and its wholly owned broker-dealer subsidiary, DP
Securities, Inc. ("DPS"). The comparative financial statements for the three
months ended March 31, 2003 and for the year ended December 31, 2003, also
include the accounts of PCS Securities, Inc. ("PCS"), its wholly owned
subsidiary that was closed during the second quarter of 2003, and DPBT, LLC
("DPBT"), its majority-owned joint venture, that was terminated during the
fourth quarter of 2003. All material inter-company accounts and transactions
have been eliminated in consolidation.

As discussed more fully in Note C - Discontinued Operations, the Company
discontinued the operations of PCS Securities in 2003, and all revenue and
expense activity and related balance sheet accounts of PCS Securities for the
periods presented have been reclassified and presented as discontinued
operations.

In the opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of the Company's financial
condition, results of operations and cash flows for the periods presented have
been included. The Company's quarterly results presented herein are not
necessarily indicative of results for a full year.

Going Concern and Liquidity
---------------------------

The accompanying unaudited consolidated financial statements have been prepared
using the going concern basis of accounting, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business.
As more fully discussed in the Company's 2003 Form 10-KSB, the Company's
December 31, 2003 audited financial statements included a "going concern"

                                       6
<PAGE>

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

qualification from its independent auditors due to the Company's lack of
profitability and negative working capital.

To address the going concern issue, management has re-focused its efforts and
the Company's resources toward the single objective of providing high-quality,
independent research to the institutional investment community. In conjunction
with these efforts, the Company has aggressively reduced staff and operational
expenses, and is actively pursuing additional equity and/or debt financing to
supplement cash flow from operations.

The Company and its management believe that the independent institutional
research market is a viable area in which the Company can compete, and
ultimately achieve profitability. However, the Company's ability to continue as
a going concern is dependent upon its ability to generate sufficient cash flow
to meet its obligations on a timely basis, and/or to succeed in its efforts to
raise additional capital. Whereas management believes its anticipated cash flow
from operations could be adequate to fund its operating requirements and
contractual commitments, there can be no assurances that the Company will not
require additional financing prior to or after such time, or that any additional
financing will be available to the Company on acceptable terms, or at all.

For the three months ended March 31, 2004, the Company incurred a net loss from
continuing operations of $356,780 and as of March 31, 2004, the Company's
current liabilities exceeded its current assets by $2,356,912. Although this
represents an improvement relative to respective year to date losses during
2003, these factors among others indicate that the Company may be unable to
continue as a going concern.

The accompanying consolidated financial statements do not include any
adjustments that might result from the resolution of these matters.

Use of Estimates
----------------

The preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the periods presented. Actual results
could differ materially from those estimates.

Revenue Recognition
-------------------

Research services revenue represents revenue from providing individual custom
reports or reports on a monthly, quarterly or annual subscription basis. Revenue
from custom reports is recognized when the report is provided, and revenue from
subscriptions is recognized ratably over the contractual period. Deferred
revenue on the consolidated balance sheets consists of subscription revenues
that will be recognized in future periods.

Consulting services revenue represents fees from consulting services performed
by DPBT, LLC. Consulting fees related to services performed by DPBT are based on
customer-determined points awarded at the end of each quarter, and are
recognized in the period in which the determination is made and communicated to
DPBT.

Loss Per Share
--------------

The Company calculates earning per share in accordance with SFAS No. 128,
Earnings Per Share, and SEC Staff Accounting Bulletin No. 98. Accordingly, basic
loss per share is computed using the weighted average number of common shares
and diluted loss per share are computed based on the weighted average number of
common shares and all common equivalent shares outstanding during the period in
which they are dilutive. Common equivalent shares consist of shares issuable
upon the

                                       7
<PAGE>

Loss Per Share (continued)
--------------

exercise of stock options (using the treasury stock method) or warrants; common
equivalent shares are excluded from the calculation if their effect is
anti-dilutive.

Stock-Based Compensation
------------------------

The Company measures compensation expense related to the grant of stock options
and stock-based awards to employees in accordance with the provisions of
Accounting Principles Board ("APB") Opinion No. 25, under which compensation
expense, if any, is generally based on the difference between the exercise price
of an option, or the amount paid for the award and the market price or fair
value of the underlying common stock at the date of the award. Stock-based
compensation arrangements involving non-employees are accounted for under SFAS
No. 123, "Accounting for Stock-Based Compensation," under which such
arrangements are accounted for based on the fair value of the option or award.
The Company adopted the disclosure requirements of SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure," an amendment of SFAS No.
123 as of January 1, 2003, which require certain disclosures about stock-based
employee compensation plans in an entity's accounting policy note.

Those disclosures include a tabular format of pro forma net income and, if
applicable, earnings per share under the fair value method if the intrinsic
value method is used in any period presented. Pro forma information in a tabular
format is also required in the notes to interim financial information if the
intrinsic value method is used in any period presented. The adoption of SFAS No.
148 did not have a material impact to these consolidated financial statements
and the disclosure requirements are included below.

As of May 15, 2001, the Board of Directors of the Company adopted the 2001 Stock
Plan ("2001 Plan"), which was approved by the Company's shareholders in November
2001. The 2001 Plan provides for accelerated vesting provisions in the event of
a change in control and other events, as defined.

During the quarter ended March 31, 2004, the Company issued options to employees
to purchase 50,000 shares of its common stock, at exercise prices ranging from
$0.30 - $0.38, and options to purchase 78,750 shares were forfeited and
cancelled. All options granted during the period have a term of ten years, vest
over three years and were issued at an exercise prices equal to the market value
of the underlying stock at the date of grant. As of March 31, 2004, 3,011,250
options to purchase shares of the Company's common stock were outstanding
pursuant to the 2001 Plan.

SFAS No. 123 requires the Company to provide pro forma information regarding net
income (loss) and income (loss) per share as if compensation cost for the
Company's stock option issuances had been determined in accordance with the fair
value based method prescribed in SFAS No. 123. The Company estimates the fair
value of each stock option at the grant date by using the Black-Scholes
option-pricing model with the following assumptions used for grants in fiscal
2004: dividend yield of zero percent, risk-free interest rates ranging from
2.79% to 3.12%, expected life of five years, and expected volatility of 141%.
For option grants in during the first quarter of 2003, the following assumptions
were used: dividend yield of zero percent, risk-free interest rates ranging from
2.9% to 3.50%, expected lives of five years, and expected volatility of 116%.

                                       8
<PAGE>

Stock-Based Compensation (Continued)
------------------------

Under the accounting provisions of SFAS No. 123, as amended by SFAS No. 148, the
Company's pro forma net loss and loss per share for the three months ended March
31, 2004 and 2003 would have been as follows:

                                            For the Three Months
                                              Ended March 31,
                                      ------------------------------

                                          2004              2003
                                      ------------      ------------
Net Loss
 As reported                          $   (356,780)     $   (787,232)
 SFAS No. 123 effect                      (124,150)         (148,619)
                                      ------------      ------------

 Pro forma net loss                   $   (480,930)     $   (935,851)

Loss per share, basic and diluted
 As reported                          $      (0.02)     $      (0.03)
 Pro forma                            $      (0.02)     $      (0.04)

Basic and diluted weighted
 average common shares
 outstanding                            22,940,058        24,523,769

Segment Information
-------------------

The Company complies with SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information" that requires public business enterprises to
report information regarding reportable operating segments. SFAS No. 131
supersedes SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise."

Based on the closing during the second quarter of 2003 of its PCS Securities
subsidiary (See Note C - Discontinued Operations), which operated as a separate
reportable segment, the Company currently operates as only one reportable
segment. Accordingly, disclosure of separate segment information is not
applicable.

New Accounting Pronouncements
-----------------------------

There are no recent accounting pronouncements that have had, or are expected to
have, a material effect on the Company's financial statements.

Reclassifications
-----------------

Certain amounts from the 2003 consolidated financial statements have been
reclassified to conform to the 2004 presentation.


NOTE C - DISCONTINUED OPERATIONS

Shut down of PCS Securities Subsidiary and Asset Transfer
---------------------------------------------------------

In January 2003, the Board of Directors of the Company decided to wind down the
activities of PCS Securities, Inc. and to close this subsidiary during the first
half of 2003. Based on the subsequent

                                       9
<PAGE>

Shut down of PCS Securities Subsidiary and Asset Transfer (Continued)
---------------------------------------------------------

activities of PCS Securities, the wind down was completed, and PCS Securities
was closed effective April 30, 2003.

In connection with the decision to close the PCS Securities subsidiary, the
Company entered into an agreement with the two former owners of PCS Securities
pursuant to which the Company agreed to transfer ownership of two intangible
assets, the name "PCS" and trademarks related to such name ("Trademarks") as
well as a list of PCS Securities customers to the former owners of PCS
Securities (or their designee) in exchange for consideration including cash, the
relief of certain liabilities and the surrender by them of an aggregate of 10.3
million shares of the Company's common stock for cancellation. Pursuant to the
agreement, each of the former owners of PCS Securities agreed to terminate their
rights under employment and/or consulting agreements between them and the
Company. Furthermore, the former owners of PCS Securities agreed to pay to the
Company an aggregate of $250,000 over a period of two years assuming that
certain conditions are satisfied, to repay the Company's revolving line of
credit with Bear Stearns by June 30, 2003 in the event that there is an
outstanding balance as of such date and to repay or assume all obligations to
customers (i.e. credit balances) existing as of June 30, 2003.

In connection with this agreement, the Company granted a non-exclusive two-year
license to use the Company's customer relationship management software to the
former owners of PCS Securities and agreed to use a new soft dollar brokerage
firm to be formed by the former owners of PCS Securities as the Company's
preferred brokerage firm for soft dollar transactions.

Furthermore, the parties agreed that the Company would transfer the remaining
$500,000 restricted cash balance to pay down the outstanding credit facility
balance, and that all commissions generated by the PCS Securities subsidiary
subsequent to January 1, 2003 that clear through Bear Stearns, would be
automatically applied against the outstanding balance of the credit facility.

As a result of the transfer of the restricted cash balance, commissions
collected by the Company during the first and second quarters and funds paid
directly to Bear Stearns by the former owners from commissions generated by a
new soft dollar brokerage firm controlled by these individuals, all of which was
applied against the credit line balance, the outstanding credit line balance was
fully paid as of April 30, 2003. As of March 31, 2003, PCS Securities was not in
compliance with minimum net capital requirements required by the National
Association of Securities Dealers ("NASD"). In connection with the closing of
the PCS Securities subsidiary, the Company filed with the NASD to withdraw the
PCS Securities broker-dealer license, effective April 30, 2003, and, effective
April 30, 2003, all business activities related to PCS Securities were
terminated.

                                       10

<PAGE>

Results of Discontinued Operations
----------------------------------

Based on the Board of Directors' decision to shut down the PCS Securities
subsidiary in January 2003 together with the execution of the asset transfer
agreement and the full repayment of the line of credit in connection with such
agreement, the Company has accounted for the activities of the subsidiary as
discontinued operations in the current quarter and all periods presented.

Revenues and expenses from PCS Securities for the three months ended March 31,
2004 and 2003 are summarized below:

<TABLE>
<CAPTION>
                                                              2004             2003
                                                          ------------     ------------
<S>                                                       <C>              <C>
Revenues
   Commission and other fees                              $         --     $  1,115,463

Expenses
   Independent research expense                                     --          775,817
   Execution and clearing costs                                     --          146,856
   General and administrative expense                               --              420
                                                          ------------     ------------
     Total expenses                                                 --          923,093

                                                                    --          192,370

Loss on transfer of assets of discontinued operations                           (18,253)
                                                          ------------     ------------

Income (loss) from discontinued operations                $         --     $    174,117
                                                          ============     ============
</TABLE>

                                       11

<PAGE>

Loss on Transfer of Assets
--------------------------

In connection with the Company's agreement to transfer the PCS trademark and
customer list intangibles to the former owners of PCS Securities, in exchange
for cash, the relief of liabilities and the surrendering of 10.3 million shares
of the Company's common stock held by these individuals, the Company recorded a
loss on the transfer, in the first quarter of 2003, totaling $18,253.

The components of the loss are summarized below:

Consideration received:
    Cash                                                   $   250,000(a)
    Credit line repayments                                   1,076,556(b)
    Accrued liabilities relieved:
       Accrued compensation payable to related parties       1,271,281(c)
       Accrued research services - net                         398,723(d)
    Surrender and cancellation of common stock                 721,000(e)
    Other                                                      391,889(f)
                                                           -----------
 Total consideration                                         4,109,449

Carrying amount of intangibles transferred                  (4,127,702)(g)
                                                           -----------

Net loss on transfer                                       $   (18,253)
                                                           ===========

     (a)  Represents a $250,000 receivable from the former owners of PCS
          Securities over 2 years pursuant to the asset transfer agreement
          ($125,000 of which has been received and $125,000 of which is
          classified as current assets as of March 31, 2004), subject to certain
          conditions as defined in the agreement.
     (b)  Represents funds paid directly to Bear Stearns from the soft dollar
          brokerage firm that is controlled by the former owners.
     (c)  Accrued compensation payable as of December 31, 2002 pursuant to
          respective employment and consulting agreements with the former owners
          of PCS Securities forgiven in connection with the wind-down.
     (d)  Net customer credit balances of the PCS Securities subsidiary assumed
          by the former owners.
     (e)  10.3 million shares of the Company's common stock surrendered by the
          former owners of PCS Securities at fair market value. The fair market
          value of the Company's common stock at the date of the transaction was
          $0.07.
     (f)  Additional net assets and collections realized in connection with
          transaction.
     (g)  Represents carrying amount of PCS Securities trademark and customer
          list intangibles at date of transaction.


NOTE D - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                            (Unaudited)
                                          March 31, 2004      December 31, 2003
                                         -----------------    -----------------
Computer equipment and software          $       1,328,929    $       1,317,281
Furniture and fixtures                   $          37,797    $          37,797
Office equipment                         $          76,248    $          76,248
                                         -----------------    -----------------
                                         $       1,442,974    $       1,431,326
Less accumulated depreciation            ($      1,008,234)   ($        937,833)
                                         -----------------    -----------------
                                         $         434,739    $         493,493
                                         =================    =================

                                       12
<PAGE>

NOTE E - REVOLVING LINE OF CREDIT

Bank of America Credit Facility
-------------------------------

On June 12, 2003, the Company entered into a promissory note agreement with Bank
of America, pursuant to which a $100,000 revolving credit line was made
available to the Company through June 10, 2006. During this period, the Company
is obligated to pay interest only, based on the outstanding principal balance,
on a monthly basis. The interest rate on the note is variable and is calculated
based on the published Wall Street Journal prime rate listing plus 4.5%. As of
March 31, 2004 the interest rate on the note was 8.75%.

Following this initial period, the outstanding principal balance, together with
interest based on the applicable interest rate, shall be repaid monthly, on a
fully amortized basis, over the remaining term of the note that runs through
June 12, 2010.

As of March 31, 2004 and December 31, 2003 the outstanding principal balance
under the credit line was $100,000.

The credit line is guaranteed by the United States Small Business
Administration, as well as by the Company's President and CEO.


NOTE F - CONVERTIBLE DEBT

On December 17, 2001, the Company issued convertible debentures in the aggregate
principal amount of $1,600,000. These debentures had a maturity date of December
17, 2003, and bore interest at a rate of 10% per annum, which was due and
payable on the last day of each calendar quarter until they were paid in full or
converted into shares of the Company's common stock.

In February 2003, the Company and the debenture holders restructured certain
terms and provisions of the convertible debentures. At March 31, 2004 and
December 31, 2003 the restructured convertible debt principal totaled $1,399,246
and $1,468,991, respectively. Of these totals, $775,228 is classified as the
current portion at March 31, 2004, and $564,747 was classified as the current
portion at December 31, 2003. Following is a summary of primary terms of the
restructured agreements:

$1,250,000 Original Principal Amount Note
-----------------------------------------

The original debenture was amended pursuant to which the principal balance was
changed to $1,425,000. The amended principal balance includes the original
principal amount plus accrued and unpaid liquidated damages and interest of
$150,000 and $25,000, respectively. The remaining balance of accrued interest at
February 28, 2003, totaling $26,736, was paid by the Company and $125,000 of
accrued liquidated damages were waived by the debenture holder.

The debenture matures on December 28, 2005 and bears interest at an annual rate
of 14%. The debenture requires fixed monthly payments of principal and interest
beginning on March 28, 2003 of $25,000 for the first five (5) months, $50,000
thereafter through November 28, 2005 and a final payment due December 28, 2005
in the amount of $271,100. The outstanding principal balance can be converted
into shares of the Company's common stock at the option of the holder based on a
fixed conversion price of $0.20, and the warrant exercise price is fixed at
$0.086 for the term of the warrants to purchase 160,000 shares of the Company's
common stock that were included in the original debenture. In addition, the
debenture holder agreed to waive all registration requirements with respect to
the convertible debenture, warrants and shares underlying the warrants.

In October 2003, the debenture holder agreed to defer scheduled principal
payments originally due on October 28, 2003, November 28, 2003 and December 28,
2003, and to add the deferred principal

                                       13
<PAGE>

CONVERTIBLE DEBT (Continued)

payments to the amount due with the final payment on December 28, 2005.

$350,000 Original Principal Amount Note
---------------------------------------

The original debenture was amended pursuant to which the principal balance was
changed to $155,000. The amended principal balance includes the original
principal amount, less the partial principal payment in November 2002, of
$215,686 plus accrued and unpaid liquidated damages and interest of $16,656 and
$4,030, respectively. The debenture holder waived accrued liquidated damages in
the amount of $12,844. The debenture matures on February 28, 2005 and bears
interest at an annual rate of 14%. Payment of interest is required quarterly,
beginning March 30, 2003 and the principal balance is payable upon the maturity
date.

The outstanding principal balance can be converted into shares of the Company's
common stock at the option of the holder based on a fixed conversion price of
$0.20, and the warrant exercise price is fixed at $0.086 for the term of the
warrants to purchase 35,000 shares of the Company's common stock that were
included in the original debenture. In addition, the debenture holder agreed to
waive all registration requirements with respect to the convertible debenture,
warrants and shares underlying the warrants.


NOTE G - PROMISSORY NOTE

On November 22, 2001, the Company borrowed $300,000 under a promissory note
payable to an investor. The note is unsecured, bears interest at 15%, and had an
original maturity date in April 2002, which has subsequently been extended to
July 1, 2004. In addition, the Company issued 150,000 detachable warrants to the
lender exercisable for 150,000 shares of the Company's common stock at an
exercise price of $2.30 per share. The warrants are exercisable at the option of
the holder and expire in November 2006. As of March 31, 2004 and December 31,
2003 the outstanding principal balance on this note was $300,000.


NOTE H - NOTES PAYABLE RELATED PARTIES

In January 2002, the Company borrowed $42,500 from a company controlled by an
officer/stockholder. In connection therewith, the Company issued an unsecured
promissory note to the lender, which was due and payable on January 31, 2003 and
bears interest at 12% per annum. In May 2001 and October 2001, the Company
borrowed an aggregate of $145,000 from the same company. These notes are
unsecured, bear interest at 12% and matured on May 14, 2003 and October 31,
2003, respectively. During 2003, the maturity dates for all three notes were
extended to July 1, 2004. At March 31, 2004 and December 31, 2003, the aggregate
outstanding principal balance of these notes was $187,500. During the three
months ended March 31, 2004 the Company recorded interest expense in connection
with these notes totaling $5,625, and as of March 31, 2004 total interest
payable in connection with these loans was $31,885.


NOTE I - LOSS PER SHARE

Stock options, warrants, performance warrants and shares issuable upon
conversion of debt totaling 3,011,250, 663,906, 675,000 and 6,996,232,
respectively, at March 31, 2004 have not been included in the calculation of
loss per share since their inclusion would be anti-dilutive.

                                       14

<PAGE>

NOTE J  - SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION

During the first quarter of 2004, an aggregate of 285,000 shares of the
Company's common stock were issued in connection with services provided to the
Company.

In April 2003, an aggregate of 5,688,750 shares of common stock were issued in
connection with the exercise of 5,765,626 performance warrants.

In April 2003, 293,750 shares of the Company's common stock were cancelled in
connection with a litigation settlement agreement.

In February 2003, 10,300,000 shares of the Company's common stock were cancelled
in connection with an agreement between the Company and the two former owners of
PCS Securities. See Note C.


NOTE K - RELATED PARTY TRANSACTIONS

Consulting Services
-------------------

During the three months ended March 31, 2004, the Company recorded $45,000 in
consulting expense to a corporation controlled by a party related to an
officer/stockholder of the Company.


NOTE L - COMMITMENTS AND CONTINGENCIES

Litigation
----------

The Company's commitment and contingencies include claims and litigation in the
normal course of business. In the opinion of management, there are no matters
pending or threatened that are expected to have a material adverse effect on the
Company's results of operations and financial position.

Operating Leases
----------------

The Company leases approximately 4,400 square feet of office space in San Diego,
California under a lease, which expires December 31, 2007. Total rental expense
for the three months ended March 31, 2004 was approximately $33,359.



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

The following discussion should be read in conjunction with the financial
statements and notes thereto of the Company. Such financial statements and
information have been prepared to reflect the Company's financial position as of
March 31, 2004 and December 31, 2003.

Historical results and trends should not be taken as indicative of future
operations, especially in light of the Company's recent restructuring.
Management's statements contained in this report that are not historical facts
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Actual results may differ materially from those
included in the forward-looking statements. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and is including this statement for purposes of complying with

                                       15
<PAGE>

those safe harbor provisions. Forward-looking statements, which are based on
certain assumptions and describe future plans, strategies and expectations of
the Company, are generally identifiable by use of the words "believe," "expect,"
"intend," "anticipate," "estimate," "project," "prospects" or similar
expressions.

         The Company's ability to predict results or the actual effect of future
plans or strategies is inherently uncertain. Information concerning the Company
and its business, including the risks faced by us described herein and in our
most recent annual report on Form 10-KSB could materially affect the Company's
financial results. The Company disclaims any obligation to update or announce
revisions to any forward-looking statements to reflect actual events or
developments.

GENERAL OVERVIEW

         PCS Research Technology, Inc., based in San Diego, California and
incorporated in Delaware in 1999, is a publisher of independent research for the
institutional investment community. We use proprietary technology platforms to
distribute financial data, research, and analytics to mutual funds, hedge funds,
and investment banks. We operate our business activities through the parent
entity, PCS Research Technology, Inc. ("PCS Research", "we", or the "Company")
and through our wholly owned subsidiary, DP Securities, Inc. ("DPS"), a
broker-dealer incorporated in the State of California.

         During 2002, and through April 30, 2003 we also operated through our
wholly owned subsidiary PCS Securities, Inc. ("PCS Securities" or "PCS"), a
broker-dealer incorporated in the State of Washington. PCS Securities was closed
in 2003, and accordingly, all activities related to PCS Securities have been
accounted for as discontinued operations.


Critical Accounting Policies

         Our discussion and analysis of our financial condition and results of
operations is based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these consolidated financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent liabilities.

         On an on-going basis, we evaluate our estimates, including those
related to credit risk on receivables, recoverability of long lived assets,
identified intangibles, goodwill and the valuation of deferred income taxes. We
base our estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions

Revenue Recognition
-------------------

         Research services revenue represents revenue from providing individual
custom reports or reports on a monthly, quarterly or annual subscription basis.
Revenue from custom reports is recognized when the report is provided, and
revenue from subscriptions is recognized ratably over the contractual period.
Deferred revenue on the consolidated balance sheets consists of subscription
revenues that will be recognized in future periods.

         Consulting services revenue represents fees from consulting services
performed by DPBT, LLC. Consulting fees related to services performed by DPBT
are based on customer-determined points awarded at the end of each quarter, and
are recognized in the period in which the determination is made and communicated
to DPBT. As a result of the decision to terminate the Joint Venture in October
2003, no consulting fee revenues were generated by DPBT during 2004.

                                       16

<PAGE>

RESULTS OF OPERATIONS

Three months ended March 31, 2004 compared to the three months ended March 31,
2003.

         Based on the closing of our PCS Securities subsidiary during 2003, the
consolidated statements of operations presented for the three months ended March
31, 2004 and 2003 have been segregated to reflect continuing and discontinued
operations. As a result, all revenue and expense activity related to PCS
Securities' operations have been excluded from the results of continuing
operations presented herein.

Loss From Continuing Operations
-------------------------------

Revenues
--------

         Total revenues for the three months ended March 31, 2004 increased by
72% to $647,719 compared to $375,525 for the same period in 2003. The increase
in total revenue is due to primarily to higher research services revenue in
2004, which has resulted from increased sales and marketing efforts and greater
awareness of our research product services in the institutional investment
community. For the 2004 period, research services revenues increased by 94%, to
$647,119, from $333,525 in 2003. Partially offsetting this increase, was a
$42,000 decrease in the 2004 period in consulting service revenue, as the
consulting services in 2003 were performed through the Company's DPBT, LLC joint
venture, which was terminated during the fourth quarter of 2003, and,
accordingly, no consulting services revenue was generated during the first
quarter of 2004.

Operating Expenses
------------------

         Total operating expenses for the three months ended March 31, 2004 were
$885,577 compared to $869,559 for the same period in 2003. The primary factors
resulting in the slight overall increase during the 2004 period were an increase
in product research expenses and decreases in compensation and benefits expenses
and minority interest expenses as discussed in more detail below:

Product Research Expenses
-------------------------

         Product research expenses represent internal costs and amounts paid to
third parties associated with research services provided. During the three
months ended March 31, 2004 such costs increased by 289% to $232,281 in 2004
compared to $59,870 in 2003 as a result of higher research services revenues,
and a higher percentage of research services related to products for which
payments to third parties were required in the 2004 period.

Compensation and Benefits
-------------------------

         Compensation and benefits decreased by 25% in 2004 to $310,325 compared
to $412,573 in 2003. This decrease is due primarily to reductions in staff
personnel and related benefits resulting in a net cost savings during the three
months ended March 31, 2004 of $95,062, compared to the 2003 period. In
addition, in 2004, the Company began recording commissions expense ratably over
the subscription period rather than when the commission was paid as it did in
2003, resulting in a decrease in commission expense during the 2004 period of
$7,186.

Minority Interest
-----------------

         Minority interest was $37,738 during the first three months of 2003,
and represents the income attributable to minority member's interest in DPBT,
LLC, a joint venture formed in September 2002 between the Company and Btech

                                       17
<PAGE>

Investor, Inc. Effective October 31, 2003 the Company and Btech Investor agreed
to dissolve the Joint Venture and to phase out the BiotechTracker research
service, and as a result, there was no comparable expense in 2004. The Company
used the intellectual property it had developed as part of the joint venture to
launch the BioMedTracker service.

Interest Expense
----------------

         Interest expense in the first quarter of 2004 decreased 88% to $58,183
from $467,315 for the same period in 2003. The 2003 total includes $417,189 of
non-cash interest charges related to the amortization of discounts recorded in
connection with the Company's convertible debt (issued together with warrants)
entered into during the fourth quarter of 2001, and net interest charges
totaling $51,058 related to convertible debt, notes payable and credit facility
balances. As a result of the restructuring of convertible debt during the first
quarter of 2003, the amount recorded in 2003 related to the amortization of
discounts on convertible debt represented the entire remaining balance of
previously unamortized discount, and as such, there were no similar charges in
2004.

Loss on Joint Venture
---------------------

         Net loss for the three months ended March 31, 2004 includes a non-cash
expense of $60,739 related to the write off during the period of the negative
capital account balance of the minority partner in the DPBT, LLC joint venture.
There was no comparable activity in the 2003 period.

Loss From Continuing Operations
-------------------------------

         As a result of the revenue and expense items mentioned above, the
Company's net loss from continuing operations decreased 63% to $356,780 in the
three months ended March 31, 2004 from $961,348 in the same period a year ago.

Income from Discontinued Operations
-----------------------------------

Income from discontinued operations represents the net revenue and expense
activity from PCS Securities during the 2003 three-month period and includes the
following. As a result of the closing of PCS Securities during 2003, there is no
comparable activity during 2004.
<TABLE>
<CAPTION>
                                                           Three Months Ended March 31,
                                                          -----------------------------
                                                              2004             2003
                                                          ------------     ------------
<S>                                                       <C>              <C>
Revenues
   Commission and other fees                              $         --     $  1,115,463

Expenses
   Independent research expense                                     --          775,817
   Execution and clearing costs                                     --          146,856
   General and administrative expense                               --              420
                                                          ------------     ------------
     Total expenses                                                 --          923,093

                                                                    --          192,370

Loss on transfer of assets of discontinued operations               --          (18,253)
                                                          ------------     ------------

Income (loss) from discontinued operations                $         --     $    174,117
                                                          ============     ============
</TABLE>
                                       18
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Liquidity
---------

         The accompanying consolidated financial statements have been prepared
using the going concern basis of accounting. As more fully discussed in
Company's 2003 Form 10-KSB, the Company's December 31, 2003 audited financial
statements included a "going concern" qualification from its independent
auditors due to the Company's lack of profitability and negative working
capital.

         At March 31, 2004, the Company's current liabilities exceeded its
current assets by $2,356,912, and it had $131,083 of cash and cash equivalents
to meet its immediate short-term liquidity requirements. Whereas management
believes based on expected increases in research services revenues and expected
continued improvement in operating results, our anticipated cash flow from
operations could be adequate to fund operations for the 2004 fiscal year, there
can be no assurance that the Company will not require additional financing
during 2004, or if additional financing is required, any such financing will be
available to the Company on acceptable terms, or at all. If adequate funds are
not available, the Company may be required to delay, scale back or eliminate its
operational plans, and it may not be able to stay in business.

Operating Activities
--------------------

         Cash provided by operating activities increased by $311,422 to $158,126
during the three months ended March 31, 2004 compared to cash used in operating
activities of $153,296 during the three months ended March 31, 2003.

         Cash provided by operating activities during the three months ended
March 31, 2004 included a net loss of $356,780, adjustments for non-cash
activity of $216,991 and net changes in asset and liability accounts totaling
$297,915. This compares with a net loss of $787,232, adjustments for non-cash
activity of $368,389 and net changes in asset and liability accounts of $265,547
during the 2003 period.

Investing Activities
--------------------

         Cash flow from investing activities during the three months ended March
31, 2004 was $11,646 and resulted from cash used by the company related to
additions of property and equipment during the period. This compares to cash
provided by investing activities of $2,012,716 during the three months ended
March 31, 2003 as a result of $2,027,475 of cash received from change in net
assets of discontinued operations and additions of property and equipment of
$14,759 during 2003.

Financing Activities
--------------------

         Cash used in financing activities during the three months ended March
31, 2004 totaled $69,745 as a result of repayments of notes and convertible debt
during the period. This compares to cash used in financing activities of
$1,940,470 during the three months ended March 31, 2003. The greater amount of
cash used during the 2003 period is primarily due to repayments totaling
$2,505,781 during the period on the Company's credit facility with Bear Stearns.
As discussed in Note C to the Financial Statements, this credit facility was
paid in full and terminated as of April 30, 2003 in connection with the closing
of PCS Securities. Partially offsetting this repayment was a transfer of the
$500,000 restricted cash balance that had been held by Bear Stearns as cash
collateral on the credit facility.

                                       19
<PAGE>

Credit Facility-Bank of America
-------------------------------

         On June 12, 2003 the Company entered into a promissory note agreement
with Bank of America, pursuant to which a $100,000 revolving credit line was
made available to the Company through June 10, 2006. During this period, the
Company is obligated to pay interest only, based on the outstanding principal
balance, on a monthly basis. The interest rate on the note is variable and is
calculated based on the published Wall Street Journal prime rate listing plus
4.5%. As of March 31, 2004 the interest rate on the note was 8.75%.

         Following this initial period, the outstanding principal balance,
together with interest based on the applicable interest rate, shall be repaid
monthly, on a fully amortized basis, over the remaining term of the note that
runs through June 12, 2010.

         As of March 31, 2004 the outstanding principal balance under the credit
line was $100,000.

         The credit line is guaranteed by the United States Small Business
Administration, as well as by the Company's President and CEO.

Credit Facility-Bear Stearns
----------------------------

         In December 2001, the Company obtained a $3,000,000 working capital
credit facility from Bear Stearns in connection with the merger with PCS
Securities. The credit facility was originally secured by $1.5 million in
restricted cash of the Company and personal guarantees by the Company's
President and Chief Executive Officer and the two formers owners of PCS
Securities. In July 2002, the Lender released $1,000,000 of the cash collateral
in connection with discussions between the parties to restructure the credit
facility. These discussions were terminated December 2002, when it became clear
that acceptable terms could not be reached.

         In connection with the Company's decision to close PCS Securities
during 2003 and the agreement reached with the former owners of PCS, the parties
agreed that the Company would transfer the remaining $500,000 security deposit
balance to pay down the outstanding credit facility balance, and that all
commissions generated by PCS Securities subsequent to January 1, 2003 that clear
through Bear Stearns will be applied against the outstanding balance of the
credit facility.

         As a result of the security deposit balance transfer in February 2003,
and commissions applied subsequent to January 1, 2003, the outstanding balance
of the credit facility at March 31, 2003 was $386,194. As of April 30, 2003 the
credit facility balance was paid in full, and the credit facility and related
promissory note were cancelled.

Convertible Debt
----------------

         On December 17, 2001, the Company issued convertible debentures in the
aggregate principal amount of $1,600,000. These debentures had a maturity date
of December 17, 2003, and bore interest at a rate of 10% per annum, which was
due and payable on the last day of each calendar quarter until they were paid in
full or converted into shares of the Company's common stock.

         In February 2003, the Company and the debenture holders restructured
certain terms and provisions of the convertible debentures. At March 31, 2004,
the restructured convertible debt principal totaled $1,399,246 of which $775,228
is classified as the current portion.

                                       20

<PAGE>

Following is a summary of primary terms of the restructured agreements:

$1,250,000 Original Principal Amount Note
-----------------------------------------

         The original debenture was amended pursuant to which the principal
balance was changed to $1,425,000. The amended principal balance includes the
original principal amount plus accrued and unpaid liquidated damages and
interest of $150,000 and $25,000, respectively. The remaining balance of accrued
interest at February 28, 2003, totaling $26,736, was paid by the Company and
$125,000 of accrued liquidated damages were waived by the debenture holder. The
debenture matures on December 28, 2005 and bears interest at an annual rate of
14%. The debenture requires fixed monthly payments of principal and interest
beginning on March 28, 2003 of $25,000 for the first five (5) months, $50,000
thereafter through November 28, 2005 and a final payment due December 28, 2005
in the amount of $271,100.

         The outstanding principal balance can be converted into shares of the
Company's common stock at the option of the holder based on a fixed conversion
price of $0.20, and the warrant exercise price is fixed at $0.086 for the term
of the warrants to purchase 160,000 shares of the Company's common stock that
were included in the original debenture. In addition, the debenture holder
agreed to waive all registration requirements with respect to the convertible
debenture, warrants and shares underlying the warrants. As of March 31, 2004 the
outstanding principal balance was $1,244,246, of which $620,228 was a current
liability and $624,018 was a long-term liability.

         In October 2003, the debenture holder agreed to defer scheduled
principal payments originally due on October 28, 2003, November 28, 2003 and
December 28, 2003, and to add the deferred principal payments to the amount due
with the final payment on December 28, 2005.


$350,000 Original Principal Amount Note
---------------------------------------

The original debenture was amended pursuant to which the principal balance was
changed to $155,000. The amended principal balance includes the original
principal amount, less the partial principal payment in November 2002, of
$215,686 plus accrued and unpaid liquidated damages and interest of $16,656 and
$4,030, respectively. The debenture holder waived accrued liquidated damages in
the amount of $12,844 were waived by the debenture holder. The debenture matures
on February 28, 2005 and bears interest at an annual rate of 14%. Payment of
interest is required quarterly, beginning March 30, 2003 and the principal
balance is payable upon the maturity date. The outstanding principal balance can
be converted in shares of the Company's common stock at the option of the holder
based on a fixed conversion price of $0.20, and the warrant exercise price is
fixed at $0.086 for the term of the warrants to purchase 35,000 shares of the
Company's common stock that were included in the original debenture.

In addition, the debenture holder agreed to waive all registration requirements
with respect to the convertible debenture, warrants and shares underlying the
warrants. As of March 31, 2004 the outstanding principal balance was $155,000,
all of which was reflected as a current liability.

Promissory Notes
----------------

         On November 22, 2001, the Company borrowed $300,000 from an unrelated
party. In connection with such loan, the Company issued a note to the lender,
which note is unsecured, bears in interest at 15% per annum and was originally
due in July 2002. In addition, the Company issued 150,000 detachable warrants to
the lender exercisable for 150,000 shares of the Company's common stock at an
exercise price of $2.30 per share. The warrants are exercisable at the option of
the holder and expire in November 2006. In November 2002, the Company paid
interest accrued through October 31, 2002, totaling $42,875 and received and
extension of the maturity date of the note to May 15, 2003. In May 2003, the
Company received an extension the maturity date of the note to July 16, 2003,

                                       21
<PAGE>

and in July 2003, the maturity date was extended to January 1, 2004. In December
2003, the maturity date was extended again to July 1, 2004. During the first
quarter of 2004 the Company recorded interest expense in connection with this
note totaling $11,250, and as of March 31, 2004 total interest payable in
connection with these loans was $63,875.

         On May 14, 2001, October 31 2001 and January 13, 2002, the Company
borrowed an aggregate of $187,500 from an entity controlled by an
officer/stockholder of the Company. In connection with such loans, the Company
issued notes to lender that are unsecured, bear interest at 12% and matured on
May 14, 2003, October 31, 2003 and July 1, 2003 respectively. During 2003, the
maturity dates for all three notes were extended to July 1, 2004. During the
first quarter of 2004 the Company recorded interest expense in connection with
this note totaling $5,625, and as of March 31, 2004 total interest payable in
connection with these loans was $31,885.

New Accounting Pronouncements
-----------------------------

See accompanying notes to the condensed consolidated financial statements for a
description.


Item 3.           Controls and Procedures
                  -----------------------

         An evaluation of the Company's disclosure controls and procedures (as
defined in Section 13(a)-14(c) of the Exchange Act) was carried out under the
supervision and with the participation of the Company's Chief Executive Officer
and Principal Accounting Officer and other members of the Company's senior
management as of the end of the period covered by this Quarterly Report. The
Company's Chief Executive Officer and Principal Accounting Officer concluded
that the Company's disclosure controls and procedures as currently in effect are
effective in ensuring that the information required to be disclosed by the
Company in the reports it files or submits under the Exchange Act is (i)
accumulated and communicated to the Company's management (including the Chief
Executive Officer and Principal Accounting Officer) in a timely manner, and (ii)
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms. There have been no
changes in the Company`s internal control over financial reporting (as defined
in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended
March 31, 2004 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.

         The Company intends to continually review and evaluate the design and
effectiveness of its disclosure controls and procedures and to improve its
controls and procedures over time and to correct any deficiencies that it may
discover in the future. The goal is to ensure that senior management has timely
access to all material financial and non-financial information concerning the
Company's business. While the Company believes the present design of its
disclosure controls and procedures is effective to achieve its goal, future
events affecting its business may cause the Company to modify its disclosure
controls and procedures.


Part II Other Information

Item 1.           Legal Proceedings.
                  ------------------

         There are no material legal proceedings pending or, to the Company's
knowledge, threatened against the Company.

Item 2.           Changes in Securities and Use of Proceeds
                  -----------------------------------------

         None

Item 3.           Default Upon Senior Securities
                  ------------------------------

         None

                                       22
<PAGE>

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
         --------


            31.   Certifications of the Company's Chief Executive Officer and
                  Principal Accounting Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

            32.   Certifications of the Company's Chief Executive Officer and
                  Principal Accounting Officer pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

   (b)   Reports on Form 8-K
         -------------------

            Current Report on Form 8-K filed on January 12, 2004 with respect to
Items 7, 9 and 12.

                                       23
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-QSB to be signed on its behalf
by the undersigned thereunto duly authorized.




                                    PCS RESEARCH TECHNOLOGY, INC.


                                    By: /s/ BRIAN M. OVERSTREET
                                        ----------------------------------------
                                    Name: Brian M. Overstreet
                                    Title: President and Chief Executive Officer

Dated: May 17, 2004

                                       24