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           September 30, 2002
--------------------------------------------------------------------------------

[ ]  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 November 13, 2002, there were 28,300,436 shares of common stock issued and
outstanding.
<PAGE>

                          PCS Research Technology, Inc.
                                   FORM 10-QSB
                                QUARTERLY REPORT
                               September 30, 2002


                                TABLE OF CONTENTS



PART I -  FINANCIAL INFORMATION (UNAUDITED)

ITEM 1.   Condensed Consolidated Financial Statements:

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

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

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

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


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

ITEM 3.   Controls and Procedures...........................................  20

PART II - OTHER INFORMATION

ITEM 1.   Legal Proceedings.................................................  21

ITEM 2.   Changes in Securities and Use of Proceeds.........................  21

ITEM 3.   Defaults Upon Senior Securities...................................  21

ITEM 4.   Submission of Matters to a Vote of Security Holders...............  22

ITEM 6.   Exhibits and Reports on Form 8-K..................................  22


                                        2
<PAGE>

                                           Part I Financial Information

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

     PCS Research Technology, Inc. and Subsidiaries
     CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   September 30,   December 31,
                                                                       2002            2001
                                                                    Unaudited        Restated
                                                                   ------------    ------------

<S>                                                                <C>             <C>
     CURRENT ASSETS
       Cash and cash equivalents                                   $    465,785    $    276,701
       Restricted cash                                                  500,000       1,500,000
       Commissions and other receivables                                403,842          63,389
       Deferred research/services costs                               2,852,529       1,607,714
       Other current assets                                              64,678          33,642
                                                                   ------------    ------------
                                                                      4,286,834       3,481,446


       Property and equipment, net                                      736,729         729,432
       Identifiable intangible assets                                12,508,143      14,802,430
       Goodwill                                                       9,233,007       9,649,574
       Other assets                                                      94,700          96,201
                                                                   ------------    ------------
           Total assets                                            $ 26,859,413    $ 28,759,083
                                                                   ============    ============

        LIABILITIES AND STOCKHOLDERS' EQUITY

     CURRENT LIABILITIES
       Accounts payable and accrued liabilities                    $  1,600,379    $  1,185,835
       Accrued research services                                      1,916,913       1,473,403
       Revolving credit facility                                      2,999,585         250,000
       Notes payable, net of discounts                                  300,000          89,400
       Purchase price consideration due to related parties                   --         700,000
       Deferred revenue                                                 448,251         137,857
                                                                   ------------    ------------
                                                                      7,265,128       3,836,495
     LONG-TERM LIABILITIES
       Convertible debt, net of discount                                     --         813,541
       Note payable - related party                                     187,500         145,000
                                                                   ------------    ------------
                                                                        187,500         958,541
     STOCKHOLDERS' EQUITY
       Preferred stock, $.0001 par value; 10,000,000 authorized
         shares; no shares outstanding                                       --              --
       Common stock; $.0001 par value, 80,000,000 authorized,
         28,718,302 issued and outstanding at September 30, 2002
         and 22,758,856 shares at December 31, 2001                       2,872           2,276
       Additional paid-in capital                                    30,198,078      28,406,397
       Accumulated deficit                                          (10,794,165)     (4,444,626)
                                                                   ------------    ------------
                                                                     19,406,785      23,964,047

          Total liabilities and stockholders' equity               $ 26,859,413    $ 28,759,083
                                                                   ============    ============
</TABLE>


         The accompanying notes are an integral part of these statements


                                        3
<PAGE>

PCS Research Technology, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


<TABLE>
<CAPTION>
                                                           For the Three Months             For the Nine Months
                                                            Ended September 30,             Ended September 30,
                                                       ----------------------------    ----------------------------

                                                           2002            2001            2002            2001
                                                       ------------    ------------    ------------    ------------

<S>                                                    <C>             <C>             <C>             <C>
Revenues
 Data service revenues                                 $    270,378    $    179,808    $    766,505    $    414,282
 Placement fees                                              20,000         125,000         302,875         806,684
 Commissions and other income                             4,158,359              --      12,475,444              --
 Interest and other                                           1,950           2,123          14,006           6,279
                                                       ------------    ------------    ------------    ------------
                                                          4,450,687         306,931      13,558,830       1,227,245
                                                       ------------    ------------    ------------    ------------

Expenses
 Compensation and benefits                                1,097,782         257,323       3,029,400         902,036
 Product research expenses                                2,707,638              --       7,955,307              --
 Clearing and execution costs                               592,960              --       1,999,082              --
 Depreciation & amortization                                612,484          57,045       1,855,795         154,728
 Commissions and finder's fees                               14,679              --         264,018         132,986
 Impairment loss related to intangibles and goodwill             --              --         923,084              --
 General and administrative                                 791,213         498,986       2,315,214         982,267
                                                       ------------    ------------    ------------    ------------

                                                          5,816,756         813,354      18,341,900       2,172,017
                                                       ------------    ------------    ------------    ------------

Operating Loss                                           (1,366,069)       (506,423)     (4,783,070)       (944,772)

 Interest expense                                           582,207           6,527       1,559,036         194,175

Loss Before Income Taxes                                 (1,948,276)       (512,950)     (6,342,106)     (1,138,947)

Income taxes                                                     --              --           7,432              --
                                                       ------------    ------------    ------------    ------------

Net Loss                                               $ (1,948,276)   $   (512,950)   $ (6,349,538)   $ (1,138,947)
                                                       ============    ============    ============    ============

   Loss per share - basic & diluted                          ($0.08)         ($0.04)         ($0.27)         ($0.20)
                                                       ============    ============    ============    ============

   Weighted average number of shares                     25,842,194      11,814,257      23,900,748       5,775,485
                                                       ============    ============    ============    ============
</TABLE>


         The accompanying notes are an integral part of these statements


                                        4
<PAGE>

PCS Research Technology, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


<TABLE>
<CAPTION>
                                                                    For the Nine Months Ended September 30,
                                                                    ---------------------------------------
                                                                           2002                 2001
                                                                       ------------         ------------

<S>                                                                    <C>                  <C>
Cash flows from operating activities
  Net loss                                                             $ (6,349,538)        $ (1,138,947)
  Adjustments to reconcile net loss to net cash used in
    Operating activities
      Depreciation and amortization                                       1,855,795              154,728
      Amortization of discounts on indebtedness                           1,023,461                   --
      Impairment loss related to intangibles and goodwill                   923,084                   --
      Non cash operating expenses                                            21,875              241,680
  Net changes in assets and liabilities
    Increase in commissions and other receivables                          (340,453)                  --
    Increase in deferred research/service costs                          (1,244,815)                  --
    (Increase)  in other current assets                                     (31,036)             (56,700)
    Decrease in other assets                                                  1,501                   --
    Increase  in accounts payable and accrued liabilities                   583,543               61,858
    Increase in accrued research services                                   443,510                   --
    Increase in deferred revenue                                            310,394              136,987
                                                                       ------------         ------------
  Net cash flows used in operating activities                            (2,802,679)            (600,394)

Cash flows from investing activities

  Additions to property and equipment                                      (209,396)            (265,228)
  Decrease in restricted cash                                             1,000,000                   --
  Decrease in purchase price consideration due to related parties          (565,926)                  --
                                                                       ------------         ------------
  Net cash flows provided by (used in) investing activities                 224,678             (265,228)

Cash flows from financing activities

  Borrowings from revolving credit facility                               2,749,585                   --
  Proceeds from issuance of notes payable                                   517,500               50,000
  Repayment of notes payable                                               (500,000)                  --
  Proceeds from issuance of common shares                                        --              650,000
                                                                       ------------         ------------
  Net cash flows provided by financing activities                         2,767,085              700,000

  Net increase (decrease) in cash and cash equivalents                      189,084             (165,622)

Cash and cash equivalents, beginning of period                              276,701              454,291
                                                                       ------------         ------------

Cash and cash equivalents, end of period                               $    465,785         $    288,669
                                                                       ============         ============

Supplemental disclosures of cash flow information
  Interest paid                                                        $    165,546         $         --
                                                                       ============         ============
  Taxes paid                                                           $      7,432         $      1,600
                                                                       ============         ============
</TABLE>

Supplemental disclosures  of non-cash information
  In January 2002, the Company issued 94,731 shares of common stock at market
  value to an officer of the Company as payment of bonus earned in 2001 totaling
  $169,000. See Note F.

  Through September 30, 2002, additional paid in capital associated with
  convertible debt increased by $1,601,392. See Note G


         The accompanying notes are an integral part of these statements


                                        5
<PAGE>

                 PCS Research Technology, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                           September 30, 2002 and 2001
                                   (Unaudited)


Note A - Interim Financial Statements

The accompanying unaudited consolidated financial statements of PCS Research
Technology, Inc. and subsidiaries (the "Company"), formerly known as
DirectPlacement, Inc. ("DPI"), have been prepared pursuant to generally accepted
accounting principles 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 generally accepted accounting principles
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, 2001 filed on Form
10-KSB/A.

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.

Organization
------------

The Company was incorporated in the State of Delaware in May 1999 and restated
its certificate of incorporation in November 2001 and changed its name to PCS
Research Technology, Inc. in October 2002. The Company is a financial technology
business using advanced proprietary technology platforms to distribute financial
data, research, and analytics to investment banks, institutional investors,
private equity funds and government agencies. The Company also provides
independent research products to institutional investors through its broker
dealer subsidiary, PCS Securities, Inc., under soft-dollar arrangements. Soft
dollar arrangements are agreements under which a broker dealer provides research
to a customer in return for a certain volume of trading commission revenue from
that customer. The Company is headquartered in San Diego, California and its
wholly owned subsidiary, PCS Securities, Inc., maintains an office in Seattle,
Washington.

On June 11, 2001, the Company merged with PPI Capital Group, Inc., a Utah
corporation ("PPI"), and became a wholly-owned subsidiary of PPI. The
transaction was reflected as a reverse merger where PPI was the surviving legal
entity after the merger, but the Company remained the accounting acquirer.
Accordingly, the merger was accounted for as a recapitalization as of the
earliest period presented and the historical consolidated financial statements
prior to June 11, 2001 are those of DPI. In November 2001, PPI changed its name
to DirectPlacement, Inc. and its state of incorporation from the State of Utah
to the State of Delaware.

On October 23, 2001, the Company acquired certain assets of PCH Securities, Inc.
("PCH") in exchange for the issuance of 417,866 shares of the Company's common
stock the ("PCH Acquisition").

Effective December 21, 2001, the Company acquired all of the outstanding stock
of PCS Securities, Inc. ("PCS"), a broker dealer registered with the Securities
and Exchange Commission and a member of the National Association of Securities
Dealers, Inc., through the issuance of 10,500,000 shares of the Company's common
stock (valued at $22,275,000) plus $565,926 paid in July 2002. See Note K -
Related Party Transactions.

                                        6
<PAGE>

Principles of Consolidation
---------------------------

The consolidated financial statements include the accounts of PCS Research
Technology, Inc., and its two wholly-owned broker dealer subsidiaries, DP
Securities, Inc. and PCS. All material inter-company accounts and transactions
have been eliminated in consolidation.

Intangibles and Goodwill
------------------------

In connection with the PCH Acquisition and the merger with PCS, the Company
recorded goodwill and intangible assets.

Goodwill is the excess of any purchase price over the estimated fair market
value of net tangible assets acquired not allocated to specific intangible
assets. In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets." Under SFAS No. 142, goodwill and indefinite-lived
intangible assets are no longer amortized but are reviewed annually for
impairment or more frequently if impairment indicators arise.

Separable intangible assets that are not deemed to have an indefinite life are
amortized over their useful lives and evaluated for impairment at each balance
sheet date, or earlier if required. Impairment losses are recorded when
indicators of impairment are present and the assets' carrying amounts are
greater than the undiscounted cash flows estimated to be generated from the
assets.

The adoption of SFAS No 142 as of January 1, 2002 did not have a material
adverse effect on the Company's financial position or results of operations.

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

Data services revenue represents revenue from providing individual custom
reports on a fee per report basis, which is recognized when the report is
provided and from providing reports on a monthly subscription basis. Revenue
from subscriptions is recognized ratably over the contractual period. Deferred
revenue on the consolidated balance sheets consists of subscription revenues
that have been received but not yet earned.

Placement fees include gains, losses and fees, net of syndicate expenses,
arising from private equity and debt offerings in which the Company participates
as an underwriter or an agent. The fees are recorded when the underwriting is
completed and the income is reasonably determinable. Referral fees related to
placement transactions are expensed when the revenue is recognized.

Commissions from security transactions are recorded on a settlement date basis,
generally the third business day following the transaction date, which is not
materially different than on a trade date basis.

Commissions from independent research and directed brokerage arrangements ("soft
dollar") began with the merger with PCS effective December 21, 2001 and are
recorded as revenue when earned. Costs paid to third party research providers
for research reports and analysis made available to customers is charged to
expense over the term of soft dollar arrangements (generally one year or less).
Deferred research/service costs and accrued research/services relating to these
arrangements are accounted for on a customer-by-customer basis and are
separately identified in the consolidated balance sheets.

                                        7
<PAGE>

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

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.

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

In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 143, "Accounting for Asset Retirement Obligations." This statement addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. It applies to all entities and legal obligations associated with the
retirement of long-lived assets that result from the acquisition, construction,
development and/or normal operation of long-lived assets, except for certain
obligations of lessees. This statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. Management has not yet
determined the impact of the adoption of SFAS No. 143 on the Company's financial
position or results of operations. The adoption of SFAS No. 143 is not expected
to have a material impact on the Company's financial position or results of
operations.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. SFAS No. 144
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets,"
and the accounting and reporting provisions of APB Opinion No. 30, "Reporting
the Results of Operations--Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of a business (as previously
defined in that Opinion). The provisions of SFAS No. 144 are effective for
financial statements issued for fiscal years beginning after December 15, 2001,
with early application encouraged and generally are to be applied prospectively.
The adoption of SFAS No. 144 did not have a material impact on the Company's
financial position or results of operations.

In April 2002, the FASB issued SFAS No. 145, "Rescision of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections".
SFAS No. 145 rescinds three existing pronouncements (relating to the intangible
assets of motor carriers and certain debt extinguishments), amends SFAS No. 13
("Accounting for Leases"), and makes technical corrections that are not
substantive in nature to several other pronouncements. The amendment of SFAS No.
13, which is effective for transactions occurring after May 15, 2002, requires
sale-leaseback accounting by lessees for certain lease modifications that are
economically similar to sale-leaseback transactions. SFAS No. 145 did not affect
the accompanying 2002 financial statements, and is not presently expected to
have a significant impact on the Company's future financial statements.

In June, 2002, the FASB approved for issuance SFAS No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities," SFAS No. 146 is effective
for such activities initiated after December 31, 2002. Activities of this type
include restructurings (such as relocation of a business and fundamental
reorganizations of a business itself), which may give rise to costs such as
contract cancellation provisions, employee relocation, and one-time termination
costs. SFAS No. 146 prohibits liability recognition based solely on management's
intent, and requires that liabilities be measured at estimated fair value.
Management has not determined the effect, if any, of SFAS No. 146 on the
Company's future financial statements.

                                        8
<PAGE>

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

Certain reclassifications have been made to the prior year financial statements
in order to conform with the current year presentation.


Note B - Restated Audited Financial Statements

The December 31, 2001 audited financial statements have been restated to accrue
the estimated additional contractual obligation payable to the former owners of
PCS Securities, Inc. which represents additional purchase price consideration
associated with the acquisition of PCS Securities, Inc., completed in December,
2001. The accrual of the contractual obligation increased goodwill related to
the acquisition and total liabilities by $700,000. The accrual of this
additional obligation did not affect loss per share or stockholders' equity
amounts previously reported. (See Note K - Related Party Transactions).


Note C - Property and Equipment

Property and equipment consists of the following:

                                                September 30,      December 31,
                                                    2002               2001
                                                ------------       ------------

Computer equipment and software                 $  1,222,750       $  1,051,825
Furniture and fixtures                                 7,797              5,033
Office equipment                                      81,590             64,483
Leasehold Improvements                                16,007                 --
                                                ------------       ------------
                                                   1,328,144          1,121,341
Less accumulated depreciation                       (591,415)          (391,909)
                                                ------------       ------------
                                                $    736,729       $    729,432
                                                ============       ============


Note D - Intangible Assets and Goodwill

Identifiable intangibles and goodwill consist of the following:

                                                September 30,      December 31,
                                                    2002               2001
                                                ------------       ------------

Trade-name                                      $  1,069,000       $  1,069,000
Customer lists                                     4,710,899          5,351,490
Guaranteed contract with research provider         8,466,000          8,466,000
                                                ------------       ------------
                                                  14,245,899         14,886,490
Less accumulated amortization                     (1,737,756)           (84,060)
                                                ------------       ------------

Identifiable Intangibles                        $ 12,508,143       $ 14,802,430
                                                ============       ============

Goodwill                                        $  9,233,007       $  9,649,574
                                                ============       ============

Identified intangibles and goodwill resulted from the merger with PCS and the
PCH Acquisition in the fourth quarter of 2001. Goodwill associated with these
transactions is not being amortized. Both reporting units are part of the
Company's soft dollar brokerage segment. See Note J.

                                        9
<PAGE>

The Company has evaluated the intangibles and goodwill related to its PCS
reporting unit as of January 1, 2002 in accordance with SFAS No. 142. At January
1, 2002 and September 30, 2002, management believes the fair value of these
assets exceed their carrying amounts.

Included in the goodwill balance for PCS at December 31, 2001 was $700,000 that
represented an estimate of the additional purchase price payable in cash in 2002
pursuant to the merger agreement. In July 2002, the additional purchase
consideration price was agreed upon between the Company and the former owners of
PCS and $565,926 was paid in full settlement of this obligation. The difference
of $134.074 between the amounts paid and the estimated $700,000 of additional
consideration was applied to reduce goodwill related to the acquisition.

On August 6, 2002, the Company's Board of Directors elected to close the trading
desk operations of DP Securities, Inc., a wholly owned subsidiary of the
Company. The trading desk operations were established in connection with the
acquisition of certain assets from PCH. The decision to close the trading desk
represents an indicator of impairment affecting intangible assets and goodwill
recorded during the PCH Acquisition. The carrying amount of intangible assets
and goodwill which management believes have been impaired totaled $640,591 and
$282,493, respectively. Accordingly, the Company recorded an impairment loss of
$923,084 in the second quarter of 2002 representing all of the identifiable
intangibles and goodwill associated with the PCH Acquisition.


Note E - Revolving Credit Facility

In December 2001, the Company obtained a revolving credit facility from a U.S.
brokerage firm (the "Lender") in connection with the merger with PCS. The credit
facility has a $3,000,000 maximum commitment, bears interest at the broker call
rate plus 3% (4.25 % at September 30, 2002), matures on demand, and was secured
by $1,500,000 in restricted cash collateral and a personal guarantee by the
former owners of PCS Securities, Inc. and the Chief Executive Officer of the
Company. At December 31, 2001, borrowings outstanding under this revolving
credit facility totaled $250,000. At September 30, 2002, the outstanding balance
of the revolving credit facility was $2,999,585.

In July 2002, the Lender released $1.0 million of the initial cash collateral
balance in connection with a verbal offer to restructure the credit facility.
The Company intends to finalize a new credit facility in November 2002 with an
affiliate of the Lender. Pursuant to the new agreement, the maximum commitment
will be increased from $3.0 million to $5.0 million, and the cash collateral
requirement will be maintained at $500,000. Other significant terms of the new
agreement remain substantially unchanged from the existing credit facility with
the Lender; provided however, that the Company will be required to pledge
substantially all of its assets, as well as the assets of its subsidiary, PCS
Securities, Inc., as additional collateral under the new agreement.


Note F - Notes Payable

The Company entered into a Securities Purchase Agreement, dated as of March 6,
2002 (the "Securities Purchase Agreement") with an institutional investor (the
"Purchaser"), pursuant to which the Company borrowed $500,000 in exchange for
which the Company issued to the Purchaser a promissory note in the aggregate
principal amount of $500,000 originally due in April 2002 (the "Bridge Note")
and 100,000 shares of the Company's common stock. In May 2002, the Company
received an extension of the Bridge Note in conjunction with a partial repayment
of $200,000, and in July and August 2002, the Company made additional repayments
of $150,000 each, plus accrued interest in the amount of $10,050, in full
payment of its outstanding obligations under the Bridge Note.

The Bridge Note was recorded net of discounts totaling $245,000 comprised of
$220,000 for the fair value of the shares issued and $25,000 original issue
discount. Through September 30, 2002, debt discounts related to the Bridge Note
have been fully amortized resulting in the recognition of $245,000 in interest
expense for the nine months ended September 30, 2002.

                                       10
<PAGE>

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 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 an extension of
the maturity date of the note to May 15, 2003.


Note G - Stockholders' Equity

Common Stock
------------

In January 2002, the Company issued 94,731 shares of common stock at market
value to an officer of the Company as a payment of bonus earned in 2001 totaling
$169,000. In August 2002, the Company issued 5,752,215 shares of common stock in
connection with the exercise of 5,765,634 performance warrants.

The Company is authorized to issue 80,000,000 shares of common stock, par value
$0.0001 per share. As of September 30, 2002, there were 28,718,302 shares of
common stock issued and outstanding.

Stock Options
-------------

During the quarter ended September 30, 2002, the Company issued options to
purchase 1,049,552 shares of its common stock to employees, and options to
purchase 662,500 shares were forfeited and cancelled. All options granted during
the period were at an exercise price equal to the fair market value of the
underlying stock at the date of grant. As of September 30, 2002, stock options
outstanding totaled 2,818,307.

Performance Warrants
--------------------

During the quarter ended September 30, 2002, 5,765,634 performance warrants were
exercised for common stock. These performance warrants were issued in connection
with the reverse merger with PPI and were part of the recapitalization
transactions in 2001. Common stock issued upon the exercise of these warrants
has been accounted for at the shares' par value. As of September 30, 2002, there
were a total of 12,515,626 performance warrants outstanding.


NOTE H- Convertible Debt

On December 17, 2001, the Company issued convertible debentures in the aggregate
principal amount of $1,600,000. The debentures bear interest at a rate of 10%
per annum which interest is due and payable on the last day of each calendar
quarter until they are paid in full or converted into shares of the Company's
common stock. The maturity date of the debentures is December 17, 2003. The
Company recorded interest expense totaling $132,000 during the nine months ended
September 30, 2002, of which $103,125 was paid on September 30, 2002, and
$28,875 was recorded as interest payable at September 30, 2002. The debentures
may be prepaid by the Company for an amount equal to 102% of the outstanding
principal amount plus accrued and unpaid interest during the first year
following the issuance date, and for an amount equal to 101% of the outstanding
principal amount plus accrued and unpaid interest during the second year
following the issuance date.

In November 2002, the Company made a payment to the debenture holders totaling
$251,889 which represented a partial prepayment of principal in the amount of
$215,686, accrued interest of $31,889 and a prepayment premium of $4,314.

                                       11
<PAGE>

The debenture holders have the right at any time to convert the outstanding
amount of the debentures held thereby into shares of the Company's common stock
at a conversion price equal to 85% of the fair market value of the Company's
common stock price, subject to future downward adjustment as defined in the
agreement based on the timing of the effective date of the registration
statement that is to be filed covering the resale of the shares of common stock
issuable upon conversion of the debentures. In addition, in connection with the
issuance of the debentures, the debenture holders received 160,000 warrants to
purchase Company common stock exercisable until December 17, 2003 at an exercise
price of $1.94 per share. Further, the debenture holders were granted certain
demand and piggyback registration rights.

The Company failed to file a registration statement by February 15, 2002, as
required by the convertible debt agreements. As a result, the Company is
obligated to pay to Purchaser, an amount equal to two percent (2%) of the
principal amount of debentures outstanding for each 30-day period (pro rated)
until the registration statement is filed with the Commission. Through September
30, 2002 the Company accrued interest expense in the amount of $240,000 in
connection with these charges. Since the registration statement was not declared
effective by the Commission by April 16, 2002, as required by the agreements
with the lender, the conversion price shall be reduced by ten percent (10%) for
each 30-day period the registration statement is not declared effective by the
Commission through the 360th day following the closing date. Pursuant to these
provisions, at September 30, 2002, the debenture holders may convert at 50% of
the conversion price then in effect, or $0.81 per share.

The debentures, which have an aggregate principal balance of $1,600,000 at
September 30, 2002, are carried net of unamortized discounts of $1,442,928
related to the intrinsic value of the beneficial conversion feature, which is
inclusive of the effect of conversion price resets, and $157,072 related to the
fair value of the warrants.

During the three months ended September 30, 2002, conversion price adjustments
resulted in an increase in the intrinsic value of the beneficial conversion
feature of $1,243,508., This increase has been recorded as an increase to
unamortized discount on the debentures and a corresponding increase to
additional paid in capital. During the three and nine months ended September 30,
2002, interest expense of $367,064 and $1,023,462, respectively were recorded in
connection with the amortization of convertible debt discount.


Note I - Loss Per Share

The Company calculates earnings 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 is computed based on the weighted-average number of
common shares and all common equivalent shares outstanding during the period
that are dilutive. Common equivalent shares consist of shares issuable upon the
exercise of stock options (using the treasury stock method), shares issued upon
conversion of debt, or warrants; common equivalent shares are excluded from the
calculation if their effect is anti-dilutive. Stock options, warrants,
performance warrants and shares issuable upon conversion of debt totaling
2,818,307, 663,906 , 12,515,626, and 1,975,309, respectively, at September 30,
2002 have not been included in the calculation below since their inclusion would
be anti-dilutive.

                                       12
<PAGE>

The following table sets forth the computation of basic and diluted loss per
share for the three and nine months ended September 30, 2002 and 2001:

<TABLE>
<CAPTION>
                                                     2002                            2001
                                         Nine Months     Three Months    Nine Months     Three Months
                                         ------------    ------------    ------------    ------------

<S>                                      <C>             <C>             <C>             <C>
Numerator
     Net loss                            $ (6,349,538)   $ (1,948,276)   $ (1,138,947)   $   (512,950)
Denominator
Denominator for basic and diluted loss
per share-weighted average shares          23,900,748      25,842,194       5,775,485      11,814,257

Basic and diluted loss per share         $      (0.27)   $      (0.08)   $      (0.20)   $      (0.04)
                                         ============    ============    ============    ============
</TABLE>


Note J - Reportable Segments

The Company complies with Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 131, Disclosures About Segments of an
Enterprise and Related Information ("SFAS No. 131") that requires public
business enterprises to report information regarding reportable operating
segments . Statement No. 131 superseded FASB Statement No. 14, Financial
Reporting for Segments of a Business Enterprise.

The Company has two primary business units comprised of (1) the soft dollar
brokerage unit and (2) the independent research unit. Both business units are
involved in the marketing and distribution of research products to institutional
investors. In addition, the soft dollar broker unit provides for collection of
amounts owed from customers through the receipt of commission revenues related
to customer's securities trading activity. Specific financial information
regarding reportable operating segments is not being presented herein as the
aggregation criteria has not been met as required under SFAS No. 131.


Note K - Related Party Transactions

Loans and Advances
------------------

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 is due and payable on January 31, 2003 and
which bears interest at 12 percent 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 mature on May 14, 2003 and October 31, 2003,
respectively. At September 30, 2002, the aggregate outstanding balance of these
notes was $187,500 and during the nine months ended September 30, 2002 a total
of $16,395 was recorded as interest expense in connection with these notes. In
November, 2002, interest accrued through October 31, 2002 in the aggregate
amount of $24,009 was paid in connection with these notes.

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

During the quarter ended September 30, 2002, the Company recorded $61,278 in
consulting expense to a corporation controlled by a party related to an
officer/stockholder of the Company.

PCS Securities, Inc.
--------------------

In connection with the merger with PCS the Company agreed to pay the former
owners of PCS as part of the purchase price a cash adjustment equal to PCS's Net
Tangible Book Value (as defined) at December 31, 2001.

                                       13
<PAGE>

The total estimated additional purchase price of $700,000 was accrued, and
included on the balance sheets at March 31, 2002 and December 31, 2001 as
Purchase Price Consideration Due to Related Parties. Of this total, up to
$500,000 became due and payable on March 29, 2002 and the remaining balance
became due and payable on June 29, 2002. In July 2002, the additional purchase
price consideration was agreed upon between the Company and the former owners of
PCS and $565,926 was paid by the Company to fully settle this obligation.
Accordingly, the estimated accrued liability balance was reduced as of June 30,
2002 by $134,074, with a corresponding reduction to goodwill.

Subsequent to the merger with PCS, the Company has engaged in the following
transactions with a director/stockholder and the former owner of PCS:

An entity owned by the director/stockholder provides research products to PCS
under a guaranteed contract. The research products are then marketed to
institutional investor customers under "soft dollar" arrangements at cost plus
margins. Pursuant to the contract, the entity owned by the director/stockholder
is required to provide PCS with a guaranteed volume of its research per year or
may be subject to penalty. The carrying amount of the guaranteed contract at
September 30, 2002 was $7,573,187 and is included in identifiable intangibles in
the accompanying balance sheet. Additionally, for the nine months ended
September 30, 2002, $2,530,302 was paid to this entity for research products
purchased.

The director/stockholder is a guarantor of the Company's revolving credit
facility, along with other officers/stockholders of the Company.

The director/stockholder provides services under a consulting agreement. The
consulting agreement is for a five year term, and requires payment of a monthly
base fee of approximately $95,833 ($1,150,000 annually). In addition, the
consulting agreement provides for incentive fees payable to the
director/stockholder when certain specified revenue and targets are met. During
the nine months ended September 30, 2002, the Company incurred and expensed
$862,497 in base consulting fees and accrued $333,333 in incentive compensation
to the director/stockholder pursuant to this consulting agreement. Consulting
fees and incentive compensation payable to the director/stockholder at September
30, 2002 totaled $95,833 and $333,333 respectively and are included in accounts
payable and accrued liabilities at September 30, 2002.

Rent expense related to the Seattle office of PCS of $6,292 was paid during the
quarter ended September 30, 2002 on a property co-owned by the
director/stockholder and another stockholder who was also a former owner of PCS.


Note L - Subsequent Events

In October 2002 the Company acquired 417,866 shares of its common stock, from a
former employee, for $58,501 in connection with an Employee Separation
Agreement.

                                       14
<PAGE>

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
September 30, 2002 and December 31, 2001.

Historical results and trends should not be taken as indicative of future
operations. 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
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/A 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., formerly known as DirectPlacement, Inc. is a
financial technology company. We use advanced proprietary technology platforms
to distribute financial research, data, and analytics to the institutional
investment community. Our business strategy is to leverage our technology
expertise to become the leading single-source provider, developer, and marketer
of independent research for the institutional investment community.

The Company's first product, PlacementTracker, a proprietary data-oriented
research product that tracks activity in the PIPE (Private Investment in Public
Entity) market, was introduced in late 1999. From inception through September
30, 2002, the Company also operated an investment banking division through which
it participated as placement agent in PIPE transactions. During the fourth
quarter of 2001, the Company acquired certain assets of PCH Securities, Inc., an
institutional trading firm offering agency execution services, and merged with
PCS Securities, Inc. ("PCS"), a leading provider of independent research
products to the institutional investment community. In conjunction with the PCH
transaction, the Company established its own institutional trading desk
activities through DP Securities, Inc., its wholly owned broker dealer
subsidiary.

In August 2002, the Company elected to close its trading desk operations based
in part on the termination of its head of trading operations and the unit's
failure to meet performance expectations. Future trading desk requirements of
the Company, if any, will be handled by its wholly owned subsidiary, PCS
Securities, Inc. In September 2002, the Company elected to discontinue its
investment banking activities in order to focus its business strategy on the
independent research market. Currently, the majority of the Company's revenues
are derived through PCS from commission income generated in connection with
independent research provided to customers under soft dollar arrangements.

The Company has not generated profits since its inception. The Company requires
substantial capital to pursue its operating strategy and currently has limited
available cash for operations. To achieve and sustain profitability, the Company
must substantially increase its revenue base through new customers and products
and improve operating margins.

                                       15
<PAGE>

If the Company's efforts to increase its revenue base and/or to increase
operating margins are not successful, revenue growth and profitability will be
adversely impacted. Although the Company anticipates that it has available
liquidity to meet its short term needs, there can be no assurance that the
Company will be able to obtain additional capital, if necessary.


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. 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 and identified
intangibles and goodwill and 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.

We believe the critical accounting policies affecting our more significant
judgments and estimates used in the preparation of our consolidated financial
statements are: accounting for intangibles and goodwill, and revenue
recognition. See accompanying interim financial statements for a description of
these policies.

RESULTS OF OPERATIONS

The comparability of the financial information discussed below is impacted by
the merger with PCS and the acquisition of certain assets from PCH (the "PCH
Acqusition") completed in the fourth quarter of 2001 which significantly
impacted the financial position, revenues and expenses and cash flows of the
Company.

Nine months ended September 30, 2002 compared to the nine months ended September
30, 2001.

Revenues
--------

Total revenues for the nine months ended September 30, 2002 increased by 1,005%
to $13,558,829 compared to $1,227,245 for the same period in 2001. This increase
is due primarily to the inclusion during the first nine months of 2002 of
commission fee revenues from our PCS subsidiary in the amount of $11.8 million.
There were no similar revenues during the same period in 2001 as the merger with
PCS was completed in the fourth quarter of 2001.

Also contributing to the increase in total revenues during the 2002 period was
an increase in data services revenue. For the 2002 period, data services revenue
increased by 85% to $766,505 from $414,282 in 2001. The increase in data
services revenues in 2002 was due primarily to upgrades and enhancements to our
proprietary PlacementTracker research product and to increased sales and
marketing efforts that resulted in greater penetration and market acceptance of
the product. Placement fee revenue decreased during the nine months ended
September 30, 2002 by 62% to $302,875 from $806,684 in 2001 primarily as a
result of the Company's decreased focus on it's investment banking activities
during 2002. In September 2002, the Company discontinued its investment banking
activities.

                                       16
<PAGE>

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

Total operating expenses for the nine months ended September 30, 2002 increased
by 744% to $18,341,900 compared to $2,172,017 for the same period in 2001. The
increase in 2002 operating expenses is due primarily to product research costs
totaling $7,836,613 and clearing and execution fees totaling $1,974,885
associated with the commission fee revenues generated by our PCS subsidiary.
There were no similar expenses incurred in the 2001 period as the merger with
PCS was completed in the fourth quarter of 2001.

Also contributing to the increased operating expenses during the nine months
ended September 30, 2002 were non-cash expenses totaling $2,541,809 recorded in
connection with the Company's acquisition of certain assets of PCH, and its
merger with PCS during the fourth quarter of 2001.

Of this total, $1,618,725 resulted from the amortization of acquired
identifiable intangible assets, and $923,084 resulted from an impairment loss
recognized due to the write off of all remaining capitalized goodwill and
identifiable intangible assets related to the PCH Acquisition in connection with
the Company's decision to close its in-house trading desk operations.

In addition, operating expenses for the nine months ended September 30, 2002
related to compensation and benefits, general and administrative expenses and
depreciation and amortization expenses were significantly higher than in the
comparable 2001 period.

Compensation expenses increased by 236% to $3,029,400 in the first nine months
of 2002 from $902,036 in the 2001 period. This increase is due primarily to
salaries and wages paid, and incentive compensation accrued during 2002 related
to personnel added in connection with the Company's acquisitions in the fourth
quarter of 2001.

General and administrative expenses increased by 136% to $2,315,214 in the nine
months of 2002 from $982,267 in 2001. This increase is due primarily to higher
costs in 2002 related to consulting services, legal and accounting fees and
other professional services.

Depreciation and amortization increased by 1099% to $1,855,795 in 2002 from
$154,728 in 2001. The increase is due primarily to amortization expense recorded
during the 2002 period totaling $1,808,520 related to identifiable intangible
assets obtained in connection with the Company's PCH Acquisition and its merger
with PCS during the fourth quarter of 2001.

Other Expense
-------------

Interest expense increased 703% to $1,559,036 in 2002 from $194,175 in 2001.
This increase was primarily due to $1,023,462 of non-cash interest charges
related to the amortization of discounts recorded in connection with convertible
debt and promissory notes (issued together with warrants and/or common shares)
entered into during the fourth quarter of 2001 and the Bridge Note agreement
entered into during the first quarter of 2002. The increase is also due to
interest expense totaling $240,000 for liquidated damages accrued in connection
with registration requirement provisions contained in the convertible debt
agreement, as well as to interest incurred on balances owed on these debt
instruments and on borrowings by the Company on its revolving credit facility
that were not in place during the 2001 period.

Net Loss
--------

As a result of the revenue and expense items mentioned above, the Company's net
loss increased 457% to $6,349,538 in the nine months ended September 30, 2002
from $1,138,947 in the same period a year ago.

                                       17
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

At September 30, 2002, the Company had $465,785 of cash and cash equivalents to
meet its immediate short-term liquidity requirements. Future short-term
liquidity requirements are anticipated to be met through the net cash flow from
operations, existing working capital and, when needed, increased funding from
the Company's revolving credit facility.

Cash used in operating activities increased to $2,802,679 for the nine months
ended September 30, 2002 from $600,394 for the nine months ended September 30,
2001. The increase is due primarily to the increased net loss incurred by the
Company in 2002 and increases in deferred research costs and commissions and
other receivables during the 2002 period.

Partially offsetting these increases were increases in accounts payable and
accrued liabilities, accrued research services and deferred revenue during the
2002 period.

Cash provided by investing activities during the nine months ended September 30,
2002 was $224,678. The positive cash flow from investing activities occurred
primarily as a result the $1.0 million reduction of the cash collateral
requirement on the Company's revolving credit facility. Partially offsetting
this was a payment in July 2002 of additional purchase price consideration
related to the PCS merger totaling $565,926, and additions of property and
equipment during 2002 totaling $209,396. During the comparable 2001 period, cash
used in investing activities was $265,228 was primarily due to additions to
property and equipment.

Cash provided by financing activities increased to $2,767,085 during the nine
months ended September 30, 2002 from $700,000 in the nine months ended September
30, 2001. The increase is due primarily to net borrowings by the Company of
$2,749,585 under its revolving credit facility and net proceeds from note
payable agreements entered into during the first quarter of 2002.

The Company anticipates that adequate cash will be available to fund its
operating and administrative expenses and continuing debt service obligations in
the foreseeable future.

Financing Activities

Credit Facility

In December 2001, the Company obtained a credit facility from Bear Stearns
Securities Corp. (the "Lender") in connection with our merger with PCS. The
credit facility has a $3,000,000 maximum commitment, bears interest at the
broker call rate plus 3% (4.25% at September 30, 2002), matures on demand, and
was secured by $1,500,000 in restricted cash and personal guarantees by the
former owners of PCS and the chief executive officer of the Company. At December
31, 2001, the, borrowings outstanding under this credit facility were $250,000,
and at September 30, 2002, the outstanding balance was $2,999,585.

In July, the Lender released $1.0 million of the $1.5 million cash collateral
balance in connection with a verbal offer to restructure the credit facility.

The Company intends to finalize a new credit facility in November, 2002 with an
affiliate of the Lender. Pursuant to the new agreement, the maximum commitment
will be increased to $5.0 million, and the cash collateral requirement will be
maintained at $500,000. Other significant terms of the new agreement remain
substantially unchanged from the existing credit facility with the Lender;
provided however, that the Company will be required to pledge substantially all
of its assets, as well as the assets of its subsidiary, PCS Securities, Inc., as
additional collateral under the new agreement.

                                       18
<PAGE>

Convertible Debt

On December 17, 2001, the Company issued convertible debentures in the aggregate
principal amount of $1,600,000. The debentures bear interest at a rate of 10%
per annum which interest is due and payable on the last day of each calendar
quarter until they are paid in full or converted into shares of the Company's
common stock. The maturity date of the debentures is December 17, 2003. The
Company recorded interest expense totaling $132,000 during the nine months ended
September 30, 2002, of which $103,125 was paid on September 30, 2002, and
$28,875 was recorded as interest payable at September 30, 2002. The debentures
may be prepaid by the Company for an amount equal to 102% of the outstanding
principal amount plus accrued and unpaid interest during the first year
following the issuance date, and for an amount equal to 101% of the outstanding
principal amount plus accrued and unpaid interest during the second year
following the issuance date.

In November 2002, the Company made a payment to the debenture holders totaling
$251,889 which represented a partial prepayment of principal in the amount of
$215,686, accrued interest of $31,889 and a prepayment premium of $4,314.

The debenture holders have the right at any time to convert the outstanding
amount of the debentures held thereby into shares of the Company's common stock
at a conversion price equal to 85% of the fair market value of the Company's
common stock, subject to future downward adjustment as defined in the agreement
based on the timing of the effective date of registration statement that is to
be filed covering the resale of the shares of common stock issuable upon
conversion of the debentures. In addition, in connection with the issuance of
the debentures, the debenture holders received 160,000 warrants to purchase
Company common stock exercisable until December 2003 at an exercise price of
$1.94 per share. Further, the debenture holders were granted certain demand and
piggyback registration rights.

The Company failed to file a registration statement by February 15, 2002, as
required by the convertible debt agreements. As a result, the Company is
obligated to pay to Purchaser, an amount equal to two percent (2%) of the
principal amount of debentures outstanding for each 30-day period (pro rated)
until the registration statement is filed with the Commission. Through September
30, 2002 the Company accrued interest expense in the amount of $240,000 in
connection with these charges. Since the registration statement was not declared
effective by the Commission by April 16, 2002, as required by the agreements
with the lender, the conversion price shall be reduced by ten percent (10%) for
each 30-day period the registration statement is not declared effective by the
Commission through the 360th day following the closing date. Pursuant to these
provisions, at September 30, 2002, the holders of debentures may convert at 50%
of the conversion price then in effect or $0.81 per share.

The debentures, which have an aggregate principal balance of $1,600,000, are
carried net of unamortized discounts of $1,442,928 related to the intrinsic
value of the beneficial conversion feature, which is inclusive of the effect of
conversion price resets, and $157,072 related to the fair value of the warrants.

During the three months ended September 30, 2002, conversion price adjustments
resulted in an increase in the intrinsic value of the beneficial conversion
feature of $1,243,508., This increase has been recorded as an increase to
unamortized discount on the debentures and a corresponding increase to
additional paid in capital. During the three and nine months ended September 30,
2002, interest expense of $367,064 and $1,023,462, respectively were recorded in
connection with the amortization of convertible debt discount.

                                       19
<PAGE>

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 lender, which note is
unsecured, bears in interest at 15% per annum and was originally due inJuly
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.

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 loan, the Company issued notes to lender which
notes are unsecured, bear interest at 12% and mature on May 14, 2003, October
31, 2003 and January 31, 2003 respectively.

On March 6, 2002, the Company entered into a Securities Purchase Agreement (the
"Securities Purchase Agreement") with a certain institutional investor (the
"Purchaser"), pursuant to which the Company borrowed $500,000 in exchange for
which the Company issued to the Purchaser a promissory note in the aggregate
principal amount of $500,000 originally due in April 2002 (the "Bridge Note")
and 100,000 shares of the Company's Common Stock.

In May 2002, the Company received an extension of the Bridge note in conjunction
with a partial repayment of $200,000 thereby reducing the outstanding balance to
$300,000 at June 30, 2002. In July and August 2002, the Company made additional
repayments of $150,000 each, plus interest in the amount of $10,050 to pay off
the remaining principal and accrued interest balances in full.

Obligations to Former Owners of PCS Securities, Inc.

In connection with the merger with PCS, the Company agreed to pay the former
owners of PCS as part of the purchase price, a cash adjustment equal to PCS's
Tangible Net Book Value (as defined) at December 31, 2001. The total estimated
additional purchase price of $700,000 was accrued, and included on the balance
sheet at December 31, 2001 as Purchase Price Consideration Due to Related
Parties. In July 2002, the final purchase price consideration of $565,926 was
agreed upon and paid by the Company, resulting in a corresponding reduction to
goodwill in the amount of $134,074.

New Accounting Pronouncements

See accompanying notes to interim financial statements for a description.


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

Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's President and Chief Financial Officer, of
the effectiveness of the design and operation of the Company's disclosure
controls and procedures, as defined in Exchange Act Rules 13a-14(c) and
15d-14(c). Based upon that evaluation, the Company's President and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in enabling the Company to record, process, summarize
and report information required to be included in the Company's periodic SEC
filings within the required time period.

There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date the Company carried out its evaluation.

                                       20
<PAGE>

                            Part II Other Information

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

Except as set forth below, no material legal proceedings are pending to which
the Company or any of its property is subject.

On or about August 5, 2002, the Company commenced an action in the Superior
Court of the State of California, County of San Diego entitled, DirectPlacement,
Inc. v. Barry Witz, et. al., Case No. GIC 793647, in which the Company claimed
that one or more of the defendants (i) breached their fiduciary duties, (ii)
were unjustly enriched, (iii) wrongfully converted the Company's property, and
(iv) committed legal malpractice.

The Company is seeking (i) the return of all shares and warrants to purchase
shares of the Company obtained by the defendants, (ii) compensatory damages plus
interest until judgment is entered, (iii) punitive damages, (iv) costs incurred
in connection with the action, including reasonable attorneys' fees, and (v)
such other and further relief as the Court deems just and proper. On October 11,
2002, defendant Witz filed an answer to the complaint in which he denied all
allegations. Other defendants in the case have yet to file a response to the
Company's complaint.

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

On March 6, 2002, the Company entered into a Securities Purchase Agreement (the
"Securities Purchase Agreement") with a certain institutional investor (the
"Purchaser"), pursuant to which the Company borrowed $500,000 in exchange for
which the Company issued to the Purchaser a promissory note in the aggregate
principal amount of $500,000 originally due in April 2002 (the "Bridge Note")
and 100,000 shares of the Company's Common Stock. In May 2002, the Company
received an extension of the Bridge Note in conjunction with a partial repayment
of $200,000 thereby reducing the outstanding balance to $300,000 at June 30,
2002. In July and August 2002, the Company made an additional repayments of
$150,000 each, plus interest in the amount of $10,050 to pay off the remaining
principal and accrued interest balances. The securities were issued pursuant to
Section 4(2) of the Securities Act.

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

On December 17, 2001, the Company issued convertible debentures with an
aggregate principal amount of $1,600,000. The debentures bear interest at a rate
of 10% per annum which interest is due and payable on the last day of each
calendar quarter beginning March 31, 2002 until the debentures are paid in full
or converted into shares of the Company's common stock. The maturity date of the
debentures is December 17, 2003.

In September 2002, the Company made a partial interest payment totaling
$103,125. In November 2002, the Company made a payment to the debenture holders
totaling $251,889 which represented a partial prepayment of principal in the
amount of $215,686, accrued interest of $31,889 and a prepayment premium of
$4,314. Accrued and unpaid interest payable related to the debentures at
November 13, 2002 totaled $15,763.

In addition, the Company granted the debenture holders with certain demand and
piggyback registration rights. The Company failed to file a registration
statement by February 15, 2002 as required by its agreement with the debenture
holder. As a result, the Company is obligated to pay to Purchaser, an amount
equal to two percent (2%) of the principal amount of debentures outstanding for
each 30-day period (pro rated) until the registration statement is filed with
the Commission. Through November 13, 2002 the Company accrued interest expense
in the amount of $288,000 in connection with these charges. The Company is also
obligated to have a registration statement covering the shares of the Company's
common stock issuable upon conversion of the debentures declared effective by
the Securities and Exchange Commission by April 16, 2002.

                                       21
<PAGE>

Given that the Company failed to fulfill this obligation, the debenture holders
may reduce the conversion price by ten percent (10%) for each 30-day period the
registration statement is not declared effective by the Commission through the
360th day following the closing date. Pursuant to these provisions, at September
30, 2002, the holders of debentures may convert at 50% of the conversion price
then in effect or $0.81 per share.


Item 4.           Submission of Matters to a Vote of Security Holders.
                  ----------------------------------------------------

On or about August 28, 2002, the Company received written consents in lieu of a
meeting of stockholders from holders of 20,095,965 shares of the Company's
common stock representing approximately 70% of the total issued and outstanding
shares of voting stock of the Company (the "Majority Stockholders") approving a
Certificate of Amendment to the Certificate of Incorporation of the Company,
pursuant to which the Company's name changed to "PCS Research Technology, Inc."
(the "Stockholder Matter"). On October 4, 2002, the Company changed its name to
"PCS Research Technology, Inc." by amending its Certificate of Incorporation. On
October 7, 2002, the Company's trading symbol on the OTC Bulletin Board was
changed to "PCSR" to reflect the change in the Company's name.


Item 6.           Exhibits and Reports on Form 8-K
                  --------------------------------

     (a) Exhibits
         --------

               99.1 Certifications pursuant to Sarbanes-Oxley Act of 2002.

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

         Current Report on Form 8-K filed with the Commission on October 7, 2002
         with respect to Items 5 and 7.


                                       22
<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

DATE: November 13, 2002

                                       23
<PAGE>

                                  CERTIFICATION
            Pursuant to Section 302 of the Sarbanes Oxley Act of 2002


I, Brian M. Overstreet, certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of PCS Research
         Technology, Inc.;

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

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

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

         a)       designed such internal controls to ensure that material
                  information relating to the registrant, including its
                  consolidated subsidiaries (collectively the "Company"), is
                  made known to the Certifying Officers by others within the
                  Company, particularly during the period in which this
                  quarterly report is being prepared;

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

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

5.       The registrant's Certifying Officers have disclosed, based on our most
         recent evaluation, to the registrant's auditors and the audit committee
         of the registrant's board of directors:

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

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

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

Date: November 13, 2002


/s/ BRIAN M. OVERSTREET
-------------------------------------
Brian M. Overstreet
President and Chief Executive Officer


                                       24
<PAGE>

                                  CERTIFICATION
            Pursuant to Section 302 of the Sarbanes Oxley Act of 2002


I, Michael H. Lorber, certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of PCS Research
         Technology, Inc.;

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

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

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

         a)       designed such internal controls to ensure that material
                  information relating to the registrant, including its
                  consolidated subsidiaries, (collectively the "Company") is
                  made known to the Certifying Officers by others within the
                  Company, particularly during the period in which this
                  quarterly report is being prepared;

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

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

5.       The registrant's Certifying Officers have disclosed, based on our most
         recent evaluation, to the registrant's auditors and the audit committee
         of the registrant's board of directors:

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

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

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

Date: November 13, 2002


/s/ MICHAEL H. LORBER
-------------------------------------
Michael H. Lorber
Chief Financial Officer


                                       25