##### Table of Contents



Securities and Exchange Commission
Washington, D.C. 20549




Form 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2003

Commission file number 000-20699

DATATRAK International, Inc.

---

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Ohio                                                           |  | 34-1685364                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  |                                     
|                                                              
|                                                              
|                                                              
|                                                              
|6150 Parkland Boulevard
Mayfield Heights, Ohio                 |  | 44124                               
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          

(440) 443-0082

(Registrants telephone number, including area code)


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

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

X   Yes
   No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes
X   No

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practical date.

The number of Common Shares, without par value, outstanding as of October 31,
2003 was 5,973,772.





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TABLE OF CONTENTS



|                                                     |                                                                                               |  |  |  |  |  |  | 
|---------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Form 10-Q                                           
|                                                     | Part I. Financial Information                                                                
|                                                     | Item 1  Financial Statements                                                                
|NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                                     | Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
|                                                     | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                                     | Item 4. Controls and Procedures                                                              
|Part II. Other Information                          
|                                                     | Item 1. Legal Proceedings                                                                    
|                                                     | Item 2. Changes in Securities and Use of Proceeds                                            
|                                                     | Item 3. Defaults Upon Senior Securities                                                      
|                                                     | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                                     | Item 5. Other Information                                                                    
|                                                     | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                          
|Exhibit Index                                       
|EX-31.1 Certification of CEO Pursuant to Rule 302   
|EX-31.2 Certification of CFO Pursuant to Rule 302   
|EX-32.1  Certification of CEO Pursuant to Rule 906  
|EX-32.2  Certification of CFO Pursuant to Rule 906  



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##### Table of Contents






Part I. Financial Information




Item 1  Financial Statements

DATATRAK INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |              |            |           |  | 
|--------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------- | ------------------------------------------ | ------------------------------------ | ---------- | ------------- | --------- | ------------ | ---------- | --------- |  | 
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            | (Unaudited)   |           | (Note A)    
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            | September 30, |           | December 31,
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            | 2003          |           | 2002        
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            | ASSETS                               |            |               |           |              |            |           |  | 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Current assets:                                                                   |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Cash and cash equivalents                                                                                                                                                                                                                                                                   |                         | $                                          | 1,916,954                            |            |               | $         | 1,682,642    |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Short-term investments                                                                                                                                                                                                                                                                      |                         |                                            | 2,623,795                            |            |               |           | 785,277      |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Accounts receivable, less allowances                                                                                                                                                                                                                                                        |                         |                                            | 787,054                              |            |               |           | 883,584      |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Prepaid expenses and other current assets                                                                                                                                                                                                                                                   |                         |                                            | 287,375                              |            |               |           | 165,457      |           
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         | Total current assets                       |                                      |            | 5,615,178     |           |              |            | 3,516,960 | 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Property and equipment, at cost,
net of accumulated depreciation and amortization |                                                                                                                                                                                                                                                                                             |                         | 1,098,100                                  |                                      |            |               | 1,749,065 |             
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Other assets                                                                      |                                                                                                                                                                                                                                                                                             |                         | 39,549                                     |                                      |            |               | 39,549    |             
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         | Total assets                               |                                      | $          | 6,752,827     |           |              | $          | 5,305,574 | 
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            | LIABILITIES AND SHAREHOLDERS EQUITY |            |               |           |              |            |           |  | 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Current liabilities:                                                              |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Accounts payable                                                                                                                                                                                                                                                                            |                         | $                                          | 165,223                              |            |               | $         | 97,938       |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Current portion of capital lease obligation                                                                                                                                                                                                                                                 |                         |                                            | 59,451                               |            |               |           | 138,388      |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Accrued expenses                                                                                                                                                                                                                                                                            |                         |                                            | 625,729                              |            |               |           | 913,143      |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Deferred revenue                                                                                                                                                                                                                                                                            |                         |                                            | 1,106,546                            |            |               |           | 901,509      |           
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         | Total current liabilities                  |                                      |            | 1,956,949     |           |              |            | 2,050,978 | 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Capital lease obligation, less current portion                                    |                                                                                                                                                                                                                                                                                             |                         |                                           |                                      |            |               | 23,979    |             
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Shareholders equity:                                                             |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Serial preferred shares, without par value, 1,000,000 shares
authorized, none issued                                                                                                                                                                                                        |                         |                                            |                                     |            |               |           |             |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Common share warrants                                                                                                                                                                                                                                                                       |                         |                                            | 135,424                              |            |               |           | 357,589      |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Common shares, without par value, authorized 25,000,000
shares as of September 30, 2003 and 15,000,000 as of
December 31, 2002; issued 9,273,772 shares as of
September 30, 2003 and 8,563,836 shares as of
December 31, 2002; outstanding 5,973,772 as of September 30, 2003 and 5,263,836 |                         |                                            |                                      |            |               |           |              |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                                                                                                                                                                                                                             | as of December 31, 2002 |                                            |                                      | 56,398,950 |               |           |              | 53,868,303 |          
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Treasury shares, 3,300,000 shares at cost                                                                                                                                                                                                                                                   |                         |                                            | (20,188,308                          | )          |               |           | (20,188,308  | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Accumulated deficit                                                                                                                                                                                                                                                                         |                         |                                            | (31,483,380                          | )          |               |           | (30,732,049  | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Foreign currency translation                                                                                                                                                                                                                                                                |                         |                                            | (66,808                              | )          |               |           | (74,918      | )         
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         | Total shareholders equity                 |                                      |            | 4,795,878     |           |              |            | 3,230,617 | 
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         | Total liabilities and shareholders equity |                                      | $          | 6,752,827     |           |              | $          | 5,305,574 | 
|                                                                                  |                                                                                                                                                                                                                                                                                             |                         |                                            |                                      |            |               |           |             

|        |  |                                                                                                                                                                                                                                                                                                
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note A: |  | The balance sheet at December 31, 2002 has been derived from the audited consolidated financial statements at that date,
but does not include all of the information and footnotes required by accounting principles generally accepted in the
United States for complete financial statements.

See notes to condensed consolidated financial statements.

2



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##### Table of Contents



DATATRAK INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                             |                   |   |                    |        |                   |   |            |        |      |   |           |        |   |   |            |         |  
|-------------------------------------------- | ----------------- | - | ------------------ | ------ | ----------------- | - | ---------- | ------ | ---- | - | --------- | ------ | - | - | ---------- | ------- | -
|                                             |                   |   | Three Months Ended |        | Nine Months Ended
|                                             |                   |   | September 30,      |        | September 30,    
|                                             |                   |   |                    |        |                  
|                                             |                   |   | 2003               |        | 2002              |   | 2003       |        | 2002
|                                             |                   |   |                    |        |                   |   |            |        |     
|Revenue                                      |                   | $ | 1,895,330          |        |                   | $ | 1,504,867  |        |      | $ | 5,086,555 |        |   | $ | 3,466,149  |        
|                                            
|                                            
|                                            
|                                            
|Direct costs                                 |                   |   | 411,332            |        |                   |   | 469,734    |        |      |   | 1,110,557 |        |   |   | 1,410,375  |        
|                                             |                   |   |                    |        |                   |   |            |        |      |   |           |        |   |   |            |        
|Gross profit                                 |                   |   | 1,483,998          |        |                   |   | 1,035,133  |        |      |   | 3,975,998 |        |   |   | 2,055,774  |        
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative expenses |                   |   | 1,336,139          |        |                   |   | 2,176,900  |        |      |   | 4,024,478 |        |   |   | 6,203,816  |        
|                                            
|                                            
|                                            
|                                            
|Special items                                |                   |   |                   |        |                   |   | 363,964    |        |      |   |          |        |   |   | 363,964    |        
|                                            
|                                            
|                                            
|                                            
|Depreciation and amortization                |                   |   | 220,826            |        |                   |   | 294,426    |        |      |   | 713,922   |        |   |   | 845,713    |        
|                                             |                   |   |                    |        |                   |   |            |        |      |   |           |        |   |   |            |        
|Loss from operations                         |                   |   | (72,967            | )      |                   |   | (1,800,157 | )      |      |   | (762,402  | )      |   |   | (5,357,719 | )      
|                                            
|                                            
|                                            
|                                            
|Other income (expense):                      |                   |   |                    |        |                   |   |            |        |      |   |           |        |   |   |            |        
|                                            
|                                            
|                                            
|                                            
|                                             | Interest income   |   |                    | 6,121  |                   |   |            | 18,301 |      |   |           | 16,224 |   |   |            | 79,723  |  
|                                            
|                                            
|                                            
|                                            
|                                             | Interest expense  |   |                    | (1,390 | )                 |   |            | (3,651 | )    |   |           | (5,900 | ) |   |            | (14,246 | )
|                                            
|                                            
|                                            
|                                            
|                                             | Other income, net |   |                    | 231    |                   |   |            | 479    |      |   |           | 747    |   |   |            | 288     |  
|                                             |                   |   |                    |        |                   |   |            |        |      |   |           |        |   |   |            |        
|Net loss                                     |                   | $ | (68,005            | )      |                   | $ | (1,785,028 | )      |      | $ | (751,331  | )      |   | $ | (5,291,954 | )      
|                                             |                   |   |                    |        |                   |   |            |        |      |   |           |        |   |   |            |        
|Basic and diluted net loss per share         |                   | $ | (0.01              | )      |                   | $ | (0.34      | )      |      | $ | (0.14     | )      |   | $ | (1.01      | )      
|                                             |                   |   |                    |        |                   |   |            |        |      |   |           |        |   |   |            |        
|Weighted average common shares outstanding   |                   |   | 5,705,929          |        |                   |   | 5,263,836  |        |      |   | 5,424,785 |        |   |   | 5,228,524  |        
|                                             |                   |   |                    |        |                   |   |            |        |      |   |           |        |   |   |            |        

See notes to condensed consolidated financial statements.

3



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##### Table of Contents



DATATRAK INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                 |                                                                             |                                              |                                           |            |                                 |          |           |            |         |          |  
|------------------------------------------------ | --------------------------------------------------------------------------- | -------------------------------------------- | ----------------------------------------- | ---------- | ------------------------------- | -------- | --------- | ---------- | ------- | -------- | -
|                                                 |                                                                             |                                              |                                           |            | Nine Months Ended September 30,
|                                                 |                                                                             |                                              |                                           |            |                                
|                                                 |                                                                             |                                              |                                           |            | 2003                            |          | 2002     
|                                                 |                                                                             |                                              |                                           |            |                                 |          |          
|Operating Activities                             |                                                                             |                                              |                                           |            |                                 |          |           |           
|                                                
|                                                
|                                                
|                                                
|                                                 | Net loss                                                                    |                                              | $                                         | (751,331   | )                               |          | $         | (5,291,954 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Adjustments to reconcile net loss to net cash
used in operating activities: |                                              |                                           |            |                                 |          |           |            |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             | Depreciation and amortization                |                                           |            | 713,922                         |          |           |            | 845,713 |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             | Stock compensation                           |                                           |            | 60,331                          |          |           |            | 11,079  |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             | Other                                        |                                           |            | 5,639                           |          |           |            | (42,960 | )       
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             | Changes in operating assets and liabilities: |                                           |            |                                 |          |           |            |         |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                              | Accounts receivable                       |            |                                 | 83,030   |           |            |         | (262,764 | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                              | Prepaid expenses and other current assets |            |                                 | (117,853 | )         |            |         | 9,016    |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                              | Accounts payable and accrued expenses     |            |                                 | (220,129 | )         |            |         | 56,910   |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                              | Deferred revenue                          |            |                                 | 205,037  |           |            |         | 233,089  |  
|                                                 |                                                                             |                                              |                                           |            |                                 |          |           |           
|                                                 | Net cash used in operating activities                                       |                                              |                                           | (21,354    | )                               |          |           | (4,441,871 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                              |                                           |            |                                 |          |           |           
|                                                
|                                                
|                                                
|                                                
|Investing activities                             |                                                                             |                                              |                                           |            |                                 |          |           |           
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchases of property and equipment                                         |                                              |                                           | (44,298    | )                               |          |           | (1,189,522 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from sale of property and equipment                                |                                              |                                           |           |                                 |          |           | 1,095      |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Maturities of short term investments                                        |                                              |                                           | 2,738,000  |                                 |          |           | 10,844,000 |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchases of short term investments                                         |                                              |                                           | (4,568,657 | )                               |          |           | (9,540,572 | )      
|                                                 |                                                                             |                                              |                                           |            |                                 |          |           |           
|                                                 | Net cash (used in) provided by investing activities                         |                                              |                                           | (1,874,955 | )                               |          |           | 115,001    |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                             |                                              |                                           |            |                                 |          |           |           
|                                                
|                                                
|                                                
|                                                
|Financing activities                             |                                                                             |                                              |                                           |            |                                 |          |           |           
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from issuance of common shares                                     |                                              |                                           | 2,239,337  |                                 |          |           | 3,831,381  |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from stock option exercises                                        |                                              |                                           | 8,814      |                                 |          |           | 7,500      |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Payments under capital lease obligation                                     |                                              |                                           | (102,916   | )                               |          |           | (96,245    | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | (Issuance) repayment of notes receivable, net                               |                                              |                                           | (4,065     | )                               |          |           | 58,068     |        
|                                                 |                                                                             |                                              |                                           |            |                                 |          |           |           
|                                                 | Net cash provided by financing activities                                   |                                              |                                           | 2,141,170  |                                 |          |           | 3,800,704  |        
|                                                
|                                                
|                                                
|                                                
|Effect of exchange rate on cash                  |                                                                             |                                              | (10,549                                   | )          |                                 |          | (17,127   | )         
|                                                 |                                                                             |                                              |                                           |            |                                 |          |           |           
|Increase (decrease) in cash and cash equivalents |                                                                             |                                              | 234,312                                   |            |                                 |          | (543,293  | )         
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at beginning of period |                                                                             |                                              | 1,682,642                                 |            |                                 |          | 2,174,445 |           
|                                                 |                                                                             |                                              |                                           |            |                                 |          |           |           
|Cash and cash equivalents at end of period       |                                                                             | $                                            | 1,916,954                                 |            |                                 | $        | 1,631,152 |           
|                                                 |                                                                             |                                              |                                           |            |                                 |          |           |           

See notes to condensed consolidated financial statements.

4



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##### Table of Contents






DATATRAK INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of
DATATRAK International, Inc. and subsidiaries (DATATRAK or the Company)
have been prepared in accordance with accounting principles generally accepted
in the United States for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by accounting
principles generally accepted in the United States for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 2003 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2003. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Companys Form 10-K for the year ended December 31, 2002 (File No. 000-20699).

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that might affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.

2. Net Loss per Share

The following table sets forth the computation of basic and diluted loss
per share.

|                                                                                                                                                                                    |  |                    |           |                   |  |      |            |      |  |   |           |   |  |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | ----------------- |  | ---- | ---------- | ---- |  | - | --------- | - |  | - | ---------- | -
|                                                                                                                                                                                    |  | Three Months Ended |           | Nine Months Ended
|                                                                                                                                                                                    |  | September 30,      |           | September 30,    
|                                                                                                                                                                                    |  |                    |           |                  
|                                                                                                                                                                                    |  | 2003               |           | 2002              |  | 2003 |            | 2002
|                                                                                                                                                                                    |  |                    |           |                   |  |      |            |     
|Net loss used in the calculation of basic and
diluted loss per share                                                                                                                |  | $                  | (68,005   | )                 |  | $    | (1,785,028 | )    |  | $ | (751,331  | ) |  | $ | (5,291,954 | )
|                                                                                                                                                                                    |  |                    |           |                   |  |      |            |      |  |   |           |   |  |   |            |  
|Denominator for basic and diluted net loss
per share  weighted average Common
Shares outstanding                                                                                   |  |                    | 5,705,929 |                   |  |      | 5,263,836  |      |  |   | 5,424,785 |   |  |   | 5,228,524  |  
|                                                                                                                                                                                    |  |                    |           |                   |  |      |            |      |  |   |           |   |  |   |            |  
|Basic and diluted net loss per share                                                                                                                                                |  | $                  | (0.01     | )                 |  | $    | (0.34      | )    |  | $ | (0.14     | ) |  | $ | (1.01      | )
|                                                                                                                                                                                    |  |                    |           |                   |  |      |            |      |  |   |           |   |  |   |            |  
|Weighted average common share options and
warrants excluded from the computation of
diluted net loss per share because they
would have an antidilutive effect on net
loss per share |  |                    | 1,238,580 |                   |  |      | 1,290,868  |      |  |   | 1,232,459 |   |  |   | 1,263,332  |  
|                                                                                                                                                                                    |  |                    |           |                   |  |      |            |      |  |   |           |   |  |   |            |  

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DATATRAK INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)

3. Comprehensive loss

The following table sets forth comprehensive loss.

|                             |  |                                 |          |      |  |   |            |  
|---------------------------- |  | ------------------------------- | -------- | ---- |  | - | ---------- | -
|                             |  | Nine Months Ended September 30,
|                             |  |                                
|                             |  | 2003                            |          | 2002
|                             |  |                                 |          |     
|Net loss                     |  | $                               | (751,331 | )    |  | $ | (5,291,954 | )
|                            
|                            
|                            
|                            
|Foreign currency translation |  |                                 | 8,110    |      |  |   | 90         |  
|                             |  |                                 |          |      |  |   |            |  
|Comprehensive loss           |  | $                               | (743,221 | )    |  | $ | (5,291,864 | )
|                             |  |                                 |          |      |  |   |            |  

4. Shareholders Equity

Effective April 21, 2003, the Company entered into an agreement for
consulting services related to its investor relations program. As compensation
for these services, the Company issued 30,000 restricted common shares to an
outside consultant. During the nine months ended September 30, 2003, a
non-cash charge of $42,000 was recorded as compensation expense for these
common shares.

In addition, the same investor relations consultant was granted an option
to purchase 25,000 common shares on May 27, 2003. The exercise price of the
options is $2.64 per share, the market price of the common shares on the date
of grant. DATATRAK has recorded $7,250 of compensation expense related to
these options during the nine months ended September 30, 2003. The option will
become exercisable in equal amounts over a three-year period and expires on the
tenth anniversary of the date of grant. The option was granted under the
Companys Amended and Restated 1996 Key Employees and Consultants Stock Option
Plan.

In conjunction with its January 2002 private placement, DATATRAK issued
192,252 warrants to purchase common shares at a price of $2.25 per share. The
warrants, which contained a provision for a cashless exercise, were fully
vested as of the grant date. During June 2003, the holders exercised these
warrants and converted them into 59,154 common shares in a non-cash
transaction.

On August 8, 2003, the Company completed a private placement of its common
shares with certain outside investors. The Company sold 602,500 of its common
shares at a price of $4.00 per share. Net of expenses, the Company raised
approximately $2,239,000 in cash. In conjunction with this private placement,
DATATRAK issued 25,125 warrants to purchase common shares at a price of $4.80
per share. The warrants, which were valued at $135,424, are fully vested as of
the grant date and will expire five years from the date of grant.

5. Restricted Cash

The Company is party to an agreement with an unaffiliated third party to
lease certain computer equipment. The lease has been recorded as a capital
lease. Terms of the lease agreement require the Company to maintain a
restricted cash balance equal to the outstanding balance payable on the lease.
The restricted cash balance was $59,451 at September 30, 2003.

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DATATRAK INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)

In addition, the companys wholly-owned subsidiary, DATATRAK GmbH, is
required to provide a bank guarantee to the lessor of its office space equal to
three months rent. The terms of the bank guarantee require DATATRAK GmbH to
maintain a restricted cash balance of 59,082 Euros with the bank. The U.S.
dollar equivalent of this amount was $68,517 at September 30, 2003.

DATATRAKs total restricted cash balance was $127,968 at September 30,
2003.

6. Stock Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB No. 25) and related
interpretations in accounting for its employee and director stock options.
Under APB No. 25 compensation expense has been recognized for all options
granted at less than the fair market value of the common shares on the date of
grant. The alternative fair value accounting provided for under Financial
Accounting Standards Board (FASB) Statement No. 123, Accounting for
Stock-Based Compensation (Statement No. 123), requires use of option
valuation models that were not developed for use in valuing employee stock
options. FASB Statement No. 148, Accounting for Stock-Based Compensation 
Transition and Disclosure (Statement No. 148) requires disclosure of
compensation expense under both APB No. 25 and Statement No. 123.

The following table sets forth stock based compensation for each period
presented.

|                                                                                   |  |                    |         |                   |  |      |        |      |  |   |         |  |  |   |         | 
|---------------------------------------------------------------------------------- |  | ------------------ | ------- | ----------------- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------- | 
|                                                                                   |  | Three Months Ended |         | Nine Months Ended
|                                                                                   |  | September 30,      |         | September 30,    
|                                                                                   |  |                    |         |                  
|                                                                                   |  | 2003               |         | 2002              |  | 2003 |        | 2002
|                                                                                   |  |                    |         |                   |  |      |        |     
|Actual stock compensation expense
recognized under APB No. 25                      |  | $                  | 9,132   |                   |  | $    | 3,693  |      |  | $ | 60,331  |  |  | $ | 11,079  | 
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Stock compensation expense that
would have
been recognized under
Statement No. 123 |  | $                  | 365,481 |                   |  | $    | 92,756 |      |  | $ | 532,872 |  |  | $ | 307,920 | 

Pro forma information regarding net income and earnings per share is
required by Statement No. 123, which also requires that the information be
determined as if the Company has accounted for its stock options granted
subsequent to December 31, 1994 under the fair value method of that Statement.

For purposes of pro forma disclosures, the estimated value of the options
is amortized to expense over the options vesting period. The pro forma
results are not necessarily indicative of what would have occurred had the
Company adopted Statement No. 123. The Companys pro forma information
follows:

|                                           |  |                    |          |                   |  |      |            |      |  |   |            |   |  |   |            |  
|------------------------------------------ |  | ------------------ | -------- | ----------------- |  | ---- | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                           |  | Three Months Ended |          | Nine Months Ended
|                                           |  | September 30,      |          | September 30,    
|                                           |  |                    |          |                  
|                                           |  | 2003               |          | 2002              |  | 2003 |            | 2002
|                                           |  |                    |          |                   |  |      |            |     
|Pro forma net loss                         |  | $                  | (424,354 | )                 |  | $    | (1,874,091 | )    |  | $ | (1,223,872 | ) |  | $ | (5,588,795 | )
|                                          
|                                          
|                                          
|                                          
|Pro forma basic and diluted loss per share |  | $                  | (0.08    | )                 |  | $    | (0.38      | )    |  | $ | (0.23      | ) |  | $ | (1.13      | )

7. Reclassification

Certain prior year amounts have been reclassified to conform to the
current year presentation.

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Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition

The information set forth and discussed below for the three and nine month
periods ended September 30, 2003 is derived from, and should be read in
conjunction with, the condensed consolidated financial statements included
elsewhere herein. The financial information set forth and discussed below is
unaudited, but in the opinion of management, reflects all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
such information. The Companys results of operations for a particular quarter
may not be indicative of results expected during the other quarters or for the
entire year.

General

DATATRAK is a provider of software and other related services, commonly
referred to as an application service provider, or ASP. DATATRAKs customers
use the software known as DATATRAK EDC® to collect and transmit clinical trial
data, commonly referred to as electronic data capture, or EDC. The Companys
services assist companies in the clinical pharmaceutical, biotechnology,
contract research organization (CRO) and medical device research industries,
in accelerating the completion of clinical trials. Approximately 67% of the
Companys assets, or approximately $4,541,000, are held in cash, cash
equivalents and short-term investments. Since commencing EDC operations in
1997, the Company has experienced growth in revenue, but continues to record
net operating losses. The Company is continuing to enhance and commercialize
the DATATRAK EDC® software and anticipates that its operating results will
fluctuate significantly from period to period. There can be no assurance of
the Companys long-term future prospects.

The Companys contracts provide a fixed price for each component or
service to be delivered, and revenue is recognized as these components or
services are delivered. Services provided by DATATRAK that are in addition to
those provided for in its contracts are billed on a fee for service basis as
completed. Generally, these contracts range in duration from one to three
years. The ultimate contract value is dependent upon the length of the
customers use of DATATRAK EDC® and the services provided by DATATRAK. As
services are performed over the life of the contract, revenue is recognized per
the specific terms of each contract. Costs associated with contract revenues
are recognized as incurred. These contracts can be terminated by the customer
with or without cause. DATATRAK is entitled to payment for all work performed
through the date of notice of termination and for recovery of some or all costs
incurred to terminate a contract. The termination of a contract will not
result in a material adjustment to revenue or costs previously recognized.

Since its purchase of the DATATRAK EDC® software in January 1998, DATATRAK
has recorded revenue related to approximately seventy contracts from many
customers. At September 30, 2003, DATATRAKs backlog was $13.1 million.
Backlog reflects the removal of three contracts from one customer totaling $1.7
million. These contracts were canceled for reasons unrelated to the use of
EDC. Due to DATATRAKs early stage of development, there can be no assurance
as to its future levels of revenue.

Critical Accounting Policies

In response to the SECs Release No. 33-8040, Cautionary Advice Regarding
Disclosure About Critical Accounting Policies, the Company has identified the
most critical accounting principles upon which its financial status depends.
Critical principles were determined by considering accounting policies that
involve the most complex or subjective decisions or assessments. The most
critical accounting policies were identified to be those related to revenue
recognition, software development costs and stock based compensation.

A summary of these critical accounting policies can be found in the
Companys Annual Report on Form 10-K, filed on March 27, 2003, under the
heading Critical Accounting Policies in Managements Discussion and Analysis
of Financial Condition and Results of Operations.

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Results of Operations

Three months ended September 30, 2003 compared with three months ended
September 30, 2002

Revenue for the three months ended September 30, 2003 increased 25.9% to
$1,895,000, as compared to $1,505,000 for the three months ended September 30,
2002. The increase was largely due to greater acceptance of the DATATRAK EDC®
software by clinical trial sponsors, resulting in an increase in the number of
clinical trials using the DATATRAK EDC® software.

Direct costs of revenue, mainly personnel costs, were $411,000 and
$470,000 during the three months ended September 30, 2003 and 2002,
respectively. Staff reductions and other payroll cost savings caused direct
personnel costs to decrease by $75,000 during the three months ended September
30, 2003. Other direct costs, including travel and other costs billed directly
to DATATRAKs customers, increased by $16,000 during the three months ended
September 30, 2003. This reduction in direct costs combined with the Companys
increased revenue, resulted in a gross margin of 78.3% for the three months
ended September 30, 2003, compared to 68.8% in the second quarter of 2003.
Based on its anticipated levels of revenue and current cost structure, DATATRAK
anticipates that its gross margin in 2003 will be approximately 75.0%
throughout the remainder of 2003.

Selling general and administrative (SG&A) expenses include all
administrative personnel costs, business and software development costs, and
all other expenses not directly chargeable to a specific contract. SG&A
expenses decreased by 38.6 % to $1,336,000 from $2,177,000 for the three months
ended September 30, 2003 and 2002, respectively. Staff reductions and other
payroll cost savings caused personnel costs to decrease by $535,000 during the
three months ended September, 30, 2003. Cost reductions in other areas
resulted in additional savings of $306,000 during the three months ended
September 30, 2003. The decrease in SG&A expenses is consistent with what the
Company anticipated when staff reductions and other cost-cutting measures were
implemented at the end of 2002.

During the three months ended September 30, 2002, DATATRAK recorded
special charges of $364,000. Included in special items was $126,000 of
expenses associated with the termination of a potential acquisition. Also,
during the three months ended September 30, 2002, $238,000 of expenses related
to the reduction of 20 employees were recorded.

Depreciation and amortization expense decreased to $221,000 during the
three months ended September 30, 2003 from $294,000 during the three months
ended September 30, 2002. The decrease was the result of aging assets not
being replaced as indicated by the low level of capital expenditures during
2003.

Other income decreased to $5,000 during the three months ended September
30, 2003 from $15,000 during the three months ended September 30, 2002. Other
income includes interest income which decreased $12,000 for the three months
ended September 30, 2003, compared to September 30, 2002.

Nine months ended September 30, 2003 compared with nine months ended
September 30, 2002

Revenue for the nine months ended September 30, 2003 increased 46.8% to
$5,087,000, as compared to $3,466,000 for the nine months ended September 30,
2002. Included in revenue for the nine months ended September 30, 2003, is a
one-time fee of $150,000. The $150,000 fee relates to consulting work
performed for a current customer that was outside of a traditional EDC
contract. The remainder of the increase was largely due to greater acceptance
of the DATATRAK EDC® software by clinical trial sponsors, resulting in an
increase in the number of clinical trials using the DATATRAK EDC® software.

Direct costs of revenue, mainly personnel costs, were $1,111,000 and
$1,410,000 during the nine months ended September 30, 2003 and 2002,
respectively. Staff reductions and other payroll cost savings caused direct
personnel costs to decrease by $248,000 during the nine months ended September
30, 2003.

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Other direct costs, including travel and other costs billed directly
to DATATRAKs customers, decreased by $51,000 during the nine months ended
September 30, 2003. This reduction in direct costs combined with the Companys
increased revenue, resulted in a gross margin of 78.2% for the nine months
ended September 30, 2003, compared to 59.3% during the first nine months of
2003. The $150,000 one-time revenue item caused a 0.7% increase in gross
margin during the first nine months of 2003.

SG&A expenses decreased by 35.1% to $4,024,000 from $6,204,000 for the
nine months ended September 30, 2003 and 2002, respectively. Staff reductions
and other payroll cost savings caused personnel costs to decrease by $1,392,000
during the nine months ended September 30, 2003. Cost reductions in other
areas resulted in additional savings of $788,000 during the nine months ended
September 30, 2003. The decrease in SG&A expenses is consistent with what the
Company anticipated when staff reductions and other cost-cutting measures were
implemented at the end of 2002.

Depreciation and amortization expense decreased to $714,000 during the
nine months ended September 30, 2003 from $846,000 during the nine months ended
September 30, 2002. The decrease was the result of aging assets not being
replaced as indicated by the low level of capital expenditures during 2003.

Other income decreased to $11,000 during the nine months ended September
30, 2003 from $66,000 during the nine months ended September 30, 2002.
Interest income decreased $64,000 for the nine months ended September 30, 2003
compared to September 30, 2002, primarily due to the Companys use of cash to
fund its operating losses and other working capital needs.

Liquidity and Capital Resources

Since its inception, the Companys principal sources of cash have been
cash flow from operations and proceeds from the sale of equity securities. The
Companys investing activities primarily reflect capital expenditures and net
purchases of short-term investments. In January 2002, the Company raised, net
of expenses, approximately $3,831,000 in cash through the completion of a
private placement of its common shares. The Company completed a second private
placement of its common shares in August 2003 in which it raised, net of
expenses, approximately $2,239,000 in cash.

The Companys contracts usually require a portion of the contract amount
to be paid at the time the contract is initiated. Additional payments are
generally received upon completion of negotiated performance milestones
throughout the life of the contract. All amounts received are recorded as a
liability (deferred revenue) until work has been completed and revenue is
recognized. Cash receipts do not necessarily correspond to costs incurred or
revenue recognized. The Company typically receives a low volume of
large-dollar receipts. Accounts receivable will fluctuate due to the timing
and size of cash receipts. Accounts receivable (net of allowance for doubtful
accounts) was $787,000 at September 30, 2003 and $884,000 at December 31, 2002.
Deferred revenue was $1,107,000 at September 30, 2003 and $902,000 at December
31, 2002.

Cash and cash equivalents increased $234,000 during the nine months ended
September 30, 2003. This was the result of $21,000 used in operating
activities, $1,875,000 used in investing activities and $2,130,000 provided by
financing activities. Cash used for operating activities resulted primarily
from the Companys net loss exclusive of depreciation expense. Investing
activities included net purchases of short-term investments of $1,831,000 and
$44,000 used to purchase property and equipment. Financing activities include
$2,239,000 received from the Companys private placement of common shares,
which was partially offset by capital lease payments of $103,000.

At September 30, 2003, the Company had working capital of $3,658,000, and
its cash, cash equivalents and short-term investments totaled $4,541,000. The
Companys working capital increased by $2,192,000 since December 31, 2002.
Cash, cash equivalents and short-term investments increased by $2,073,000,
primarily as a result of the private placement of common shares in August 2003,
and current liabilities decreased by $94,000.

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The Company is responsible for funding the future enhancement and testing
of the DATATRAK EDC® software. The Company will continue to invest in the
development of the DATATRAK® process. The Companys operations and the EDC
market are still in a developmental stage. Although DATATRAK has experienced
growth in revenue and has demonstrated improvement in its financial results,
the possibility still exists that the Company will have negative cash flow from
operations for the year ended December 31, 2003 as it continues to build its
customer base, increase its backlog and convert existing backlog into revenue.
The Company anticipates capital and related expenditures of approximately
$150,000 through the end of the current year for continued commercialization
and product development of DATATRAK EDC®, which the Company expects to fund
from existing cash and cash equivalents, maturities of short-term investments
and cash flow from operations. With the completion of its August 2003 private
placement, the Company believes that its cash and cash equivalents, maturities
of short-term investments and cash flow from operations, together with its
existing sources of equity, will be sufficient to meet its working capital and
capital expenditure requirements for the foreseeable future.

Inflation

To date, the Company believes the effects of inflation have not had a
material adverse effect on its results of operations or financial condition.

Information About Forward-Looking Statements

Certain statements made in this Form 10-Q, other SEC filings or written
materials or orally by the Company or its representatives may constitute
forward-looking statements that are based on managements current beliefs,
estimates and assumptions concerning the operations, future results and
prospects of the Company and the clinical pharmaceutical research industry in
general. All statements that address operating performance, events or
developments that management anticipates will occur in the future, including
statements related to future revenue, profits, expenses, income and earnings
per share or statements expressing general optimism about future results, are
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (Exchange Act). In addition, words such as
expects, anticipates, intends, plans, believes, estimates,
variations of such words, and similar expressions are intended to identify
forward-looking statements. Forward-looking statements are subject to the safe
harbors created in the Exchange Act. Factors that may cause actual results to
differ materially from those in the forward-looking statements include the
ability of the Company to absorb corporate overhead and other fixed costs in
order to successfully market the DATATRAK EDC® software; the development of and
fluctuations in the market for electronic data capture technology; the degree
of the Companys success in obtaining new contracts and completing existing
contracts; the timing of payments from customers and the timing of clinical
trial sponsor decisions to conduct new clinical trials or cancel or delay
ongoing trials; governmental regulation; the early stage of the Companys ASP
operations; and general economic conditions such as the rate of employment,
inflation, interest rates and the condition of capital markets. This list of
factors is not all inclusive. In addition, the Companys success depends on
the outcome of various strategic initiatives it has undertaken, all of which
are based on assumptions made by the Company concerning trends in the clinical
research market and the health care industry. The Company undertakes no
obligation to update these forward-looking statements or other information
contained herein.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from changes in interest rates and
foreign currency exchange rates since it funds its operations through
short-term investments and has business transactions in Euros. A summary of
the Companys market risk exposures is presented below.

Interest Rate Risk

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DATATRAK has fixed income investments consisting of cash equivalents and
short-term investments, which may be affected by changes in market interest
rates. The Company does not use derivative financial instruments in its
investment portfolio. The Company places its cash equivalents and short-term
investments with high-quality financial institutions, limits the amount of
credit exposure to any one institution and has established investment
guidelines relative to diversification and maturities designed to maintain
safety and liquidity. Investments are reported at amortized cost, which
approximates fair value. A 1.0% change in interest rates during the nine
months ended September 30, 2003, would have resulted in a $26,000 change in
DATATRAKs interest income during the nine month period.

Foreign Currency Risk

DATATRAKs foreign results of operations are subject to the impact of
foreign currency fluctuations. The Company manages its risk to foreign
currency exchange rates by maintaining foreign currency bank accounts in
currencies in which it regularly transacts business. DATATRAK does not
currently hedge against the risk of exchange rate fluctuations. A 1.0%
fluctuation in the exchange rate between United States dollars and the Euro at
September 30, 2003, would have resulted in a $68,000 change in the foreign
currency translation amount recorded on the Companys balance sheet, and
$73,000 change in the Companys net loss for the nine months ended September
30, 2003 due to foreign currency transactions.




Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, 2003 an evaluation was performed, under the
supervision and with the participation of the Companys management including
the Companys Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Companys disclosure controls
and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that
evaluation such officers concluded that the Companys disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commissions rules and forms.

Changes in Internal Controls

There were no changes in the Companys internal control over financial
reporting that occurred during the Companys most recent fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.




Part II. Other Information







|        |  |                                          
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|Item 1. |  | Legal Proceedings                        
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|Item 2. |  | Changes in Securities and Use of Proceeds

Effective August 6, 2003, the Companys Sixth Amended and Restated
Articles of Incorporation (the Restated Articles) became effective. The
Restated Articles increase the number of authorized Common Shares from
15,000,000 to 25,000,000, and reduces the number of authorized Preferred Shares
from 3,860,000 to 1,000,000.

On August 8, 2003, the Company issued 602,500 common shares in connection
with the consummation of a private placement to a total of thirteen purchasers
at a purchase price of $4.00 per common share. The terms of the private
placement included the issuance of five-year warrants to purchase

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a total of 25,125 common shares at $4.80 per common share to Robert R. Blakely, Scott R.
Griffith and Jesse B. Shelmire (all who are principals of Stonegate Securities,
Inc), Mark Jazwin and Jan Koontz (both who are agents of Scottsdale Capital
Advisors), Scottsdale Capital Advisors, and Cardinal Securities, LLC the
Companys placement agents for the private placement. The aggregate offering
price of the 602,500 common shares was $2,410,000, and Stonegate Securities,
Inc., Scottsdale Capital Advisors, and Cardinal Securities, LLC received
commissions totaling of $100,500 (or 5% of the aggregate offering price
attributable to the placement agents), plus the warrants disclosed above, in
connection with the private placement. The Company expects to use the proceeds
of the private placement to expand its worldwide marketing and sales efforts,
continue investing in software development and for other general working
capital purposes.

The sale of the common shares and the issuance of warrants in connection
with the private placement was deemed to be exempt from registration under the
Securities Act of 1933, as amended (the Securities Act), in reliance on
Section 4(2) of the Securities Act or Regulation D promulgated thereunder. The
Company had reason to believe that each purchaser was familiar with or had
access to information concerning its operations and financial condition, and
each purchaser represented that they were an accredited investor as defined in
the Securities Act. At the time of the issuance, the common shares and the
warrants were deemed to be restricted securities for purposes of the Securities
Act and the instruments representing such securities included legends to that
effect.

Subsequently, on September 2, 2003 and in accordance with the terms and
conditions of that certain Share Purchase Agreement entered into by and between
the above purchasers and the Company, the Company filed a Form S-3 Registration
Statement with the Securities and Exchange Commission (the Commission), to
register the common shares and the common shares underlying the warrants. The
Commission on September 18, 2003 declared effective the registration statement
on Form S-3 (File No. 333-108439).













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|Item 3. |  | Defaults Upon Senior Securities                                                                                                                
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|Item 4. |  | Submission of Matters to a Vote of Security Holders                                                                                            
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|Item 5. |  | Other Information                                                                                                                              
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|Item 6. |  | Exhibits and Reports on Form 8-K                                                                                                               
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|        |  | (a) Exhibits                                                                                                                                   
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|        |  | See the Exhibit Index at page E  1 of this Form 10  Q.                                                                                       
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|        |  | (b) Reports on Form 8-K                                                                                                                        
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|        |  |                                                                                                                                                
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|        |  | The following reports were filed on form 8-K during the three
months ended September 30, 2003:                                                 
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|        |  |                                                                                                                                                
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|        |  | Current Report on Form 8-K, dated August 11, 2003, announcing
under Item 5, the completion of the Companys private placement of
common shares.
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|       
|        |  |                                                                                                                                                
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|        |  | Current Report on Form 8-K, dated August 18, 2003, furnishing
under Item 12, a press release and a conference call transcript.                 

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##### Table of Contents






SIGNATURES

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

|      |  |          |  |                                                                                                                                                                     
|----- |  | -------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |          |  | DATATRAK International, Inc.Registrant                                                                                                                              
|     
|Date: |  | 11/10/03 |  | /s/ Jeffrey A. GreenJeffrey A. Green,
President and Chief Executive Officer and a Director
(Principal Executive Officer)                                            
|     
|Date: |  | 11/10/03 |  | /s/ Terry C. BlackTerry C. Black,
Vice President of Finance, Chief Financial Officer,
Treasurer and Assistant Secretary
(Principal Financial and Accounting Officer)

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##### Table of Contents






Exhibit Index

|            |  |                                                                                                                          |  |      |    |  
|----------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ---- | -- | -
|Exhibit No. |  | Description                                                                                                              |  | Page
|            |  |                                                                                                                          |  |     
|3.1         |  | Sixth Amended and Restated Articles of Incorporation                                                                     |  |      | (1 | )
|           
|           
|           
|           
|            |  |                                                                                                                          |  |      |    |  
|           
|           
|           
|           
|4.1         |  | Share Purchase Agreement, dated August 6, 2003, by and among the Company and the
Purchasers named therein                |  |      | (2 | )
|           
|           
|           
|           
|            |  |                                                                                                                          |  |      |    |  
|           
|           
|           
|           
|4.2         |  | Form of Warrant for the Common Shares of the Company                                                                     |  |      | (2 | )
|           
|           
|           
|           
|            |  |                                                                                                                          |  |      |    |  
|           
|           
|           
|           
|31.1        |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer                                                        |  |      |    |  
|           
|           
|           
|           
|            |  |                                                                                                                          |  |      |    |  
|           
|           
|           
|           
|31.2        |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer                                                        |  |      |    |  
|           
|           
|           
|           
|            |  |                                                                                                                          |  |      |    |  
|           
|           
|           
|           
|32.1        |  | Section 1350 Certification of Chief Executive Officer                                                                    |  |      |    |  
|           
|           
|           
|           
|            |  |                                                                                                                          |  |      |    |  
|           
|           
|           
|           
|32.2        |  | Section 1350 Certification of Chief Financial Officer                                                                    |  |      |    |  
|            |  |                                                                                                                          |  |     
|            |  |                                                                                                                          |  |      |    |  
|           
|           
|           
|           
|(1)         |  | Incorporated herein by reference to the Companys Form 10-Q for the
quarter ended
June 30, 2003 (File No. 000-20699).    |  |      |    |  
|           
|           
|           
|           
|            |  |                                                                                                                          |  |      |    |  
|           
|           
|           
|           
|(2)         |  | Incorporated herein by reference to the Companys Current Report on Form
8-K dated August 11, 2003 (File No. 000-20699). |  |      |    |  

E-1