<PAGE>


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

         [ X ] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. For the quarterly period ended September 30,
2002

                                       or

         [ ] Transitional report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the transitional period from_______________
to__________________


Commission file number  0-29100
                        -------

                            eResearchTechnology, Inc.
                            --------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
                      Delaware                                            22-3264604
-------------------------------------------------         ----------------------------------------
                        <S>                                                  <C>
   (State or other jurisdiction of incorporation             (I.R.S. Employer Identification No.)
                  or organization)

              30 South 17th Street
                Philadelphia, PA                                              19103
-------------------------------------------------         ----------------------------------------
    (Address of principal executive offices)                              (Zip Code)

</TABLE>



                                  215-972-0420
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
              (Former name, former address and formal 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

The number of shares of Common Stock, $.01 par value, outstanding as of October
31, 2002, was 10,559,691.
<PAGE>



                   eResearchTechnology, Inc. and Subsidiaries

                                      INDEX
                                      -----
<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----
<S>          <C>               <C>                                                                              <C>
Part I.  Financial Information

             Item 1.       Consolidated Financial Statements

                           Consolidated balance sheets--September 30, 2002 (unaudited) and
                           December 31, 2001                                                                      3

                           Consolidated statements of operations (unaudited)--Three and
                           Nine Months Ended September 30, 2002 and 2001                                          4

                           Consolidated statements of cash flows (unaudited)--Nine Months
                           Ended September 30, 2002 and 2001                                                      5

                           Notes to consolidated financial statements (unaudited)                              6-11

             Item 2.       Management's Discussion and Analysis of Financial Condition and Results of
                           Operations                                                                         12-20

             Item 3.       Qualitative and Quantitative Disclosures about Market Risk                         20-21

             Item 4.       Controls and Procedures                                                               21

Part II. Other Information

             Item 1.       Legal Proceedings                                                                     22

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

                           a.) Exhibits

                           b.) Reports on Form 8-K

Signatures                                                                                                       24

Certifications                                                                                                25-26
</TABLE>

                                       2

<PAGE>


Part 1. Financial Information
Item 1. Consolidated Financial Statements

                   eResearchTechnology, Inc. and Subsidiaries
                           Consolidated Balance Sheets
               (in thousands, except per share and share amounts)



<TABLE>
<CAPTION>
                                                                       September 30, 2002               December 31, 2001
                                                                       ------------------               -----------------
                                                                           (unaudited)
<S>                                                                             <C>                              <C>
Assets

Current assets:
      Cash and cash equivalents                                           $       13,805                 $        11,364
      Short-term investments                                                       7,604                           7,066
      Marketable securities                                                          338                           2,695
      Accounts receivable, net                                                     7,594                           5,900
      Prepaid expenses and other                                                   3,017                           1,320
      Deferred income taxes                                                          212                             212
                                                                        -----------------              ------------------
            Total current assets                                                  32,570                          28,557

Property and equipment, net                                                       11,968                           8,110
Goodwill, net                                                                      1,212                           1,212
Investments in non-marketable securities                                             509                             509
Other assets                                                                          21                              21
Deferred income taxes                                                              1,165                           2,591
                                                                        -----------------              ------------------

                                                                          $       47,445                 $        41,000
                                                                        =================              ==================
Liabilities and Stockholders' Equity

Current liabilities:
      Accounts payable                                                    $        1,829                 $         1,383
      Accrued expenses                                                             2,306                           2,394
      Income taxes payable                                                            67                             461
      Current portion of capital lease obligations                                   585                             155
      Deferred revenues                                                            5,218                           3,475
                                                                        -----------------              ------------------
             Total current liabilities                                            10,005                           7,868
                                                                        -----------------              ------------------

Capital lease obligations                                                            929                             340
                                                                        -----------------              ------------------

Commitments and contingencies

Stockholders' equity:
      Preferred stock - $10.00 par value, 500,000 shares authorized,
             none issued and outstanding                                               -                               -
      Common stock - $.01 par value, 15,000,000 shares authorized,
            11,451,014 and 11,236,031 shares issued, respectively                    115                             112
      Additional paid-in capital                                                  40,099                          39,031
      Accumulated other comprehensive income                                          72                             665
      Accumulated deficit                                                           (546)                         (3,787)
      Treasury stock, 895,500 shares at cost                                      (3,229)                         (3,229)
                                                                        -----------------              ------------------

             Total stockholders' equity                                           36,511                          32,792
                                                                        -----------------              ------------------

                                                                          $       47,445                 $        41,000
                                                                        =================              ==================
</TABLE>
        The accompanying notes are an integral part of these statements.

                                       3



<PAGE>
                   eResearchTechnology, Inc. and Subsidiaries
                      Consolidated Statements of Operations
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                   Three Months Ended September 30,           Nine Months Ended September 30,
                                                 -------------------------------------      --------------------------------------
                                                      2002                  2001                 2002                  2001
                                                      ----                  ----                 ----                  ----
                                                             (unaudited)                                 (unaudited)
<S>                                                     <C>                   <C>                    <C>                 <C>
Net revenues:
     Licenses and subscriptions                   $          473         $         71        $        1,723        $          332
     Services                                             10,451                7,260                27,666                19,851
                                                 ----------------      ---------------      ----------------      ----------------

           Total net revenues                             10,924                7,331                29,389                20,183
                                                 ----------------      ---------------      ----------------      ----------------

Costs of revenues:
     Cost of licenses and subscriptions                      279                  175                   565                   409
     Cost of services                                      4,773                2,988                12,180                 9,143
                                                 ----------------      ---------------      ----------------      ----------------

           Total costs of revenues                         5,052                3,163                12,745                 9,552
                                                 ----------------      ---------------      ----------------      ----------------

           Gross margin                                    5,872                4,168                16,644                10,631
                                                 ----------------      ---------------      ----------------      ----------------

Operating expenses:
     Selling and marketing                                 1,571                1,370                 4,968                 4,100
     General and administrative                            1,441                1,388                 4,181                 3,989
     Research and development                                915                1,188                 3,166                 3,653
                                                 ----------------      ---------------      ----------------      ----------------

           Total operating expenses                        3,927                3,946                12,315                11,742
                                                 ----------------      ---------------      ----------------      ----------------

Operating income (loss)                                    1,945                  222                 4,329                (1,111)
Other income, net                                             58                  231                   402                   835
Investment impairment charge                                   -                    -                     -                (4,970)
Gain on sale of domestic CRO operations                        -                    -                    35                   232
                                                 ----------------      ---------------      ----------------      ----------------

Income (loss) before income taxes                          2,003                  453                 4,766                (5,014)
Income tax provision (benefit)                               641                  181                 1,525                   (41)
Minority interest dividend                                     -                    -                     -                   116
                                                 ----------------      ---------------      ----------------      ----------------

Net income (loss)                                 $        1,362         $        272        $        3,241        $       (5,089)
                                                 ================      ===============      ================      ================

Basic net income (loss) per share                 $         0.13         $       0.03        $         0.31        $        (0.49)
                                                 ================      ===============      ================      ================

Shares used to calculate basic net
     income (loss) per share                              10,516               10,436                10,454                10,446
                                                 ================      ===============      ================      ================

Diluted net income (loss) per share               $         0.12         $       0.03        $         0.29        $        (0.49)
                                                 ================      ===============      ================      ================

Shares used to calculate diluted net
     income (loss) per share                              11,423               10,562                11,246                10,446
                                                 ================      ===============      ================      ================
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       4

<PAGE>

                   eResearchTechnology, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                        Nine Months Ended September 30,
                                                                                     ---------------------------------------
                                                                                           2002                    2001
                                                                                           ----                    ----
                                                                                                   (unaudited)
<S>                                                                                         <C>                      <C>
Operating activities:
      Net income (loss)                                                              $       3,241           $      (5,089)
      Adjustments to reconcile net income (loss) to net cash
           provided by operating activities:
                 Gain on sale of the domestic CRO operations                                   (35)                   (232)
                 Gain on sale of marketable securities                                         (75)                      -
                 Depreciation and amortization                                               2,058                   1,300
                 Issuance of stock options to non-employees                                      7                      29
                 Deferred income taxes                                                       1,426                       -
                 Investment impairment charge                                                    -                   4,970
                 Changes in operating assets and liabilities:
                      Accounts receivable                                                   (1,694)                  2,329
                      Prepaid expenses and other                                              (958)                  1,091
                      Accounts payable                                                         446                    (429)
                      Accrued expenses                                                         (88)                   (207)
                      Income taxes payable                                                    (394)                   (459)
                      Deferred revenues                                                      1,743                     (58)
                                                                                     --------------          --------------
                            Net cash provided by operating activities                        5,677                   3,245
                                                                                     --------------          --------------

Investing activities:
      Purchases of property and equipment                                                   (4,583)                 (2,142)
      Net purchase of short-term investments                                                  (538)                 (1,254)
      Net proceeds from sale of the domestic CRO operations                                     35                   2,992
      Proceeds from sales of marketable securities                                             720                       -
                                                                                     --------------          --------------
                            Net cash used in investing activities                           (4,366)                   (404)
                                                                                     --------------          --------------


Financing activities:
      Purchase of convertible preferred stock in subsidiary                                      -                  (9,500)
      Repayment of capital lease obligations                                                  (314)                      -
      Minority interest dividend paid                                                            -                    (639)
      Net proceeds from exercise of stock options                                            1,184                      48
      Repurchase of common stock for treasury                                                    -                    (518)
                                                                                     --------------          --------------
                            Net cash provided by (used in) financing activities                870                 (10,609)
                                                                                     --------------          --------------

Effect of exchange rate changes on cash                                                        260                       -
                                                                                     --------------          --------------

Net increase (decrease) in cash and cash equivalents                                         2,441                  (7,768)
Cash and cash equivalents, beginning of period                                              11,364                  21,910
                                                                                     --------------          --------------

Cash and cash equivalents, end of period                                             $      13,805           $      14,142
                                                                                     ==============          ==============

</TABLE>


        The accompanying notes are an integral part of these statements.

                                       5

<PAGE>

                   eResearchTechnology, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

Note 1.  Basis of Presentation

The accompanying unaudited consolidated financial statements, which include the
accounts of eResearchTechnology, Inc. (the "Company") and its wholly owned
subsidiaries, have been prepared in accordance with generally accepted
accounting principles 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 the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the nine month period ended September 30, 2002 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2002. Further information on potential factors that could affect the Company's
financial results can be found in the Company's Reports on Forms 10-K and 10-Q
filed with the Securities and Exchange Commission and in this Form 10-Q.

Note 2.  Summary of Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All inter-company
balances and transactions have been eliminated in consolidation.

Reclassifications. The consolidated financial statements for prior periods have
been reclassified to conform to the current period's presentation.

Management's Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

Property and Equipment. Pursuant to SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," the Company
capitalizes costs associated with internally developed and/or purchased software
systems for new products and enhancements to existing products that have reached
application development stage and meet recoverability tests. These costs are
included in property and equipment. Capitalized costs include external direct
costs of materials and services utilized in developing or obtaining internal-use
software, and payroll and payroll-related expenses for employees who are
directly associated with and devote time to the internal-use software project.

Amortization of capitalized software development costs ($168,000 and $0 for each
of the quarters ended September 30, 2002 and 2001, respectively, and $168,000
and $0 for each of the nine months ended September 30, 2002 and 2001,
respectively) is charged to cost of Diagnostic services. For the nine months
ended September 30, 2002 and 2001, the Company capitalized $1.9 million and $1.1
million, respectively, of software development costs. All other research and
development costs have been expensed as incurred.

When events or circumstances so indicate, the Company assesses the potential
impairment of its intangible assets and other long-lived assets based on
anticipated undiscounted cash flows from operations. Such events and
circumstances include a sale of all or a significant part of the operations
associated with the long-lived asset, or a significant decline in the operating
performance of the asset. If an impairment is indicated, the amount of
impairment charge would be calculated by comparing the anticipated discounted
future cash flows to the carrying value of long-lived asset. At September 30,
2002, no impairment was indicated.

Stock Split. On July 16, 2002, the Company effected a 3-for-2 split of its
common stock. The stock split has been retroactively reflected in the
accompanying consolidated financial statements.

Note 3.  Investment Impairment Charge - Marketable and Non-Marketable Securities

At September 30, 2002, marketable securities consisted of an investment in
142,325 shares of the common stock of Digital Angel Corporation (DAC) (formerly
known as Medical Advisory Systems, Inc.), a publicly traded company, with an
adjusted cost basis of $525,000. The Company purchased 550,000 shares of DAC in
March 2000 for $5,775,000. This investment has been classified as
available-for-sale, pursuant to Statement of Financial Accounting Standards
(SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." Available-for-sale securities are carried at fair value, based on
quoted market prices, with unrealized gains and losses reported as a separate
component of stockholders' equity. In March 2001, in accordance with SFAS No.
115, management determined that an other than temporary decline in the fair
value of DAC common stock existed and, as a result, wrote down the initial cost
basis of the DAC investment from $5,775,000 to $2,029,000, which was the market
value of the DAC common stock held on March 31, 2001. In connection with this
write-down, an investment impairment charge of $3,746,000 was recorded during
the quarter ended March 31, 2001. During the nine months ended September 30,
2002, the Company sold 407,675 shares of its investment in DAC at prices per
share between $3.70 and $6.87 and recorded a realized gain of $75,000 from the
sale of 174,975 shares. The remaining sales of 232,700 shares of DAC common
stock did not settle until October 25, 2002 due to a dispute between the Company
and the transfer agent and DAC. As a result, a gain of $546,000 associated with
such sales has not been recognized in the accompanying consolidated statements
of operations, but will be recorded in the fourth quarter of 2002. See Note 8.
As of September 30, 2002, the carrying value of the Company's investment in DAC
stock was less than its adjusted cost basis by $187,000 and accordingly was
written down with an offsetting adjustment to accumulated other comprehensive
income.


                                       6
<PAGE>

At September 30, 2002, investments in non-marketable securities consist of an
investment in AmericasDoctor.com, Inc., which is accounted for under the cost
method in accordance with Accounting Principles Board (APB) Opinion No. 18, "The
Equity Method of Accounting for Investments in Common Stock." As of March 31,
2001, in accordance with APB No. 18, management determined that a decrease in
value of the investment occurred which was deemed to be other than temporary,
and as a result wrote down the cost basis of the investment from $2,300,000 to
$1,076,000. In connection with this write-down, an investment impairment charge
of $1,224,000 was recorded during the quarter ended March 31, 2001. In December
2001, management determined that an additional decrease in the value of the
investment occurred which was deemed to be other than temporary, and as a result
wrote down the cost basis of the investment from $1,076,000 to $509,000. In
connection with this write-down, an investment impairment charge of $566,000 was
recorded during the quarter ended December 31, 2001.

The Company will continue to assess the fair value of these investments and
whether or not any declines in fair value below the current cost bases are
deemed to be other than temporary. If a decline in the fair value of these
investments is determined to be other than temporary, the cost bases of these
investments would be written down to their estimated fair value, and the amount
of the write-down would be included in the Company's consolidated statement of
operations. Given the current performance and general market conditions for
technology-related companies, additional write-downs of these investments may
occur in the future.

Note 4.  Net Income (Loss) per Share

The Company follows SFAS No. 128 "Earnings per Share." This statement requires
the presentation of basic and diluted earnings per share. Basic net income
(loss) per share is computed by dividing net income (loss) by the weighted
average number of shares of common stock outstanding during the period. Diluted
net income (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the period,
adjusted for the dilutive effect of common stock equivalents, which consist
primarily of stock options, which is calculated using the treasury stock method.

The table below sets forth the reconciliation of the numerators and denominators
of the basic and diluted net income (loss) per share computations (in thousands,
except per share information):
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
                                                                                                                     Per
                                                                                    Net                             Share
2002                                                                               Income           Shares          Amount
----                                                                              --------          ------          ------
<S>                                                                               <C>               <C>             <C>
Basic net income.............................................                     $ 1,362           10,516          $ 0.13
Effect of dilutive shares....................................                          --              907           (0.01)
                                                                                  -------           ------          ------
Diluted net income...........................................                     $ 1,362           11,423          $ 0.12
                                                                                  =======           ======          ======

2001
----
Basic net income.............................................                     $   272           10,436          $ 0.03
Effect of dilutive shares....................................                          --              126              --
                                                                                  -------           ------          ------
Diluted net income...........................................                     $   272           10,562          $ 0.03
                                                                                  =======           ======          ======
</TABLE>

Options to purchase 1,772,979 and 655,500 shares of common stock were
outstanding at September 30, 2002 and 2001, respectively, and were included in
the computation of diluted net income per share. Options to purchase 1,180,500
shares of common stock were outstanding at September 30, 2001, but were not
included in the computation of diluted net income per share because the option
exercise prices were greater than the average market price of the Company's
common stock during the period.


                                       7
<PAGE>

<TABLE>
<CAPTION>

Nine Months Ended September 30,
-------------------------------
                                                                                                               Per
                                                                               Net                            Share
2002                                                                       Income (loss)      Shares          Amount
----                                                                       -------------      ------          ------
<S>                                                                         <C>               <C>             <C>

Basic net income.............................................                $ 3,241           10,454          $ 0.31
Effect of dilutive shares....................................                     --              792           (0.02)
                                                                             -------           ------          ------
Diluted net income...........................................                $ 3,241           11,246          $ 0.29
                                                                             =======           ======          ======

2001
----

Basic net loss...............................................                $(5,089)          10,446          $(0.49)
Effect of dilutive shares....................................                     --               --              --
                                                                             -------           ------          ------
Diluted net loss.............................................                $(5,089)          10,446          $(0.49)
                                                                             =======           ======          ======
</TABLE>

Options to purchase 1,637,379 shares of common stock were outstanding at
September 30, 2002 and were included in the computation of diluted net income
per share. Options to purchase 135,600 shares of common stock were outstanding
at September 30, 2002, but were not included in the computation of diluted net
income per share because the option exercise prices were greater than the
average market price of the Company's common stock during the period.

Options to purchase 1,836,000 shares of common stock were outstanding at
September 30, 2001, but were not included in the diluted computation because the
Company incurred a net loss and the inclusion would have been anti-dilutive.

Note 5.  Comprehensive Income (Loss)

The Company follows SFAS No. 130, "Reporting Comprehensive Income." The
Company's comprehensive income (loss) includes net income (loss) and unrealized
gains and losses from foreign currency translation and marketable securities.
For the nine months ended September 30, 2002, the Company recorded a foreign
currency translation adjustment of $260,000. The foreign currency translation
adjustment was immaterial as of September 30, 2001. For the nine months ended
September 30, 2002 and 2001, the Company recorded an unrealized loss for the
mark to market of $359,000 and $605,000, respectively, from its investment in
marketable securities.

Note 6. Recent Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." It also issued SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets," in August 2001.

SFAS No. 141 requires that all business combinations initiated after June 30,
2001 be accounted for under the purchase method of accounting. SFAS No. 141
supersedes APB Opinion No. 16, "Business Combinations," and SFAS No. 38,
"Accounting for Preacquisition Contingencies of Purchased Enterprises," and is
effective for all business combinations initiated after June 30, 2001. The
Company has adopted SFAS No. 141, which had no impact on its consolidated
financial position or results of operations.

SFAS No. 142 addresses the financial accounting and reporting for acquired
goodwill and other intangible assets. Under the new rules, the Company is no
longer required to amortize goodwill and other intangible assets with indefinite
lives, but such assets will be subject to periodic testing for impairment. SFAS
No. 142 supersedes APB Opinion No. 17, "Intangible Assets." The Company adopted
SFAS No. 142 effective January 1, 2002. During the three months and the nine
months ended September 30, 2001, the Company recorded $79,000 and $237,000,
respectively, of goodwill amortization. The following table reflects the results
of the Company for the three and nine months ended September 30, 2001 assuming
goodwill had not been amortized (in thousands, except per share amounts):



                                       8
<PAGE>
<TABLE>
<CAPTION>

                                                    Three Months Ended September 30,           Nine Months Ended September 30,
                                                  -------------------------------------      -----------------------------------
                                                       2002                  2001                2002                 2001
                                                       ----                  ----                ----                 ----
                                                            (unaudited)                                 (unaudited)

<S>                                                  <C>                   <C>                 <C>                 <C>
Reported net income (loss)                            $ 1,362              $  272               $ 3,241             $ (5,089)
Add back goodwill amortization, net of tax                  -                  54                     -                  161
                                                      -------              ------               -------             --------
           Adjusted net income (loss)                 $ 1,362              $  326               $ 3,241             $ (4,928)
                                                      =======              ======               =======             ========

Income (loss) per share - basic:
     Reported net income (loss)                       $  0.13              $ 0.03               $  0.31             $  (0.49)
     Goodwill amortization, net of tax                      -                   -                     -                 0.02
                                                      -------              ------               -------             --------
           Adjusted net income (loss)                 $  0.13              $ 0.03               $  0.31             $  (0.47)
                                                      =======              ======               =======             ========

Income (loss) per share - diluted:
     Reported net income (loss)                       $  0.12              $ 0.03               $  0.29             $  (0.49)
     Goodwill amortization, net of tax                      -                   -                     -                 0.02
                                                      -------              ------               -------             --------
           Adjusted net income (loss)                 $  0.12              $ 0.03               $  0.29             $  (0.47)
                                                      =======              ======               =======             ========
</TABLE>



During the three months ended June 30, 2002, the Company completed its initial
assessment of impairment of goodwill in accordance with the provisions of SFAS
No. 142. Based upon the initial assessment of impairment, no impairment of
goodwill existed as of January 1, 2002. Goodwill will continue to be tested for
impairment on at least an annual basis.

SFAS No. 144 establishes a single accounting model for the impairment or
disposal of long-lived assets, including discontinued operations. SFAS No. 144
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets to
be Disposed Of," and APB Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions." The provisions of
SFAS No. 144 are effective in fiscal years beginning after December 15, 2001.
The Company adopted SFAS No. 144 on January 1, 2002 and the adoption had no
impact on its consolidated results of operations or financial position.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections,"
which is effective for fiscal years beginning after May 15, 2002 for provisions
related to SFAS No. 4, effective for all transactions occurring after May 15,
2002 for provisions related to SFAS No. 13 and effective for all financial
statements issued on or after May 15, 2002 for all other provisions of this
Statement. The Company adopted SFAS No. 145 on May 16, 2002 and the adoption did
not have a significant impact to the Company.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 addresses the financial
accounting and reporting of expenses related to restructurings initiated after
2002, and applies to costs associated with an exit activity (including a
restructuring) or with a disposal of long-lived assets. Those activities can
include eliminating or reducing product lines, terminating employees and
contracts, and relocating plant facilities or personnel. Under SFAS No. 146, a
company will record a liability for a cost associated with an exit or disposal
activity when the liability is incurred and can be measured at fair value. The
provisions of SFAS No. 146 are effective prospectively for exit or disposal
activities initiated after December 31, 2002.

Note 7.  Operating Segments

The Company's operating segments are strategic business units that offer
different products and services to a common client base. The Company's products
and services are provided both in the United States and internationally through
two reportable business segments: Diagnostics Technology and Services, which
includes centralized electrocardiographic services; and Clinical Research
Technology and Services, which includes software sales and support and
consulting services. Identifiable assets not included in reportable segments are
reported as Other.


                                       9
<PAGE>

The Company evaluates performance based on the net revenues and operating
earnings performance of the respective business segments. Segment information is
as follows (in thousands):
<TABLE>
<CAPTION>

                                                                    Three Months Ended September 30, 2002
                                                -------------------------------------------------------------------------------
                                                  Diagnostics       Clinical Research
                                                  Technology          Technology and
                                                 and Services            Services               Other               Total
                                                ----------------    -------------------    ----------------    ----------------

<S>                                                   <C>                  <C>                   <C>               <C>
License and subscription revenues                 $     -                 $  473               $     -            $    473
Service revenues                                    8,825                  1,626                     -              10,451
                                                  -------                 ------               -------            --------
Net revenues from external customers                8,825                  2,099                     -              10,924
Income (loss) from operations                       2,303                   (358)                    -               1,945
Identifiable assets                                19,458                  4,354                23,633              47,445

</TABLE>
<TABLE>
<CAPTION>
                                                                    Three Months Ended September 30, 2001
                                                -------------------------------------------------------------------------------
                                                  Diagnostics       Clinical Research
                                                  Technology          Technology and
                                                 and Services            Services               Other               Total
                                                ----------------    -------------------    ----------------    ----------------

<S>                                               <C>                   <C>                  <C>                <C>
License and subscription revenues                 $     -                 $   71               $     -            $     71
Service revenues                                    5,427                  1,833                     -               7,260
                                                  -------                 ------               -------            --------
Net revenues from external customers                5,427                  1,904                     -               7,331
Income (loss) from operations                       1,297                 (1,075)                    -                 222
Identifiable assets                                 9,386                  3,923                27,034              40,343

</TABLE>
<TABLE>
<CAPTION>
                                                                     Nine Months Ended September 30, 2002
                                                -------------------------------------------------------------------------------
                                                  Diagnostics       Clinical Research
                                                  Technology          Technology and
                                                 and Services            Services               Other               Total
                                                ----------------    -------------------    ----------------    ----------------

<S>                                               <C>                   <C>                   <C>                <C>
License and subscription revenues                 $     -                 $1,723               $     -             $ 1,723
Service revenues                                   23,162                  4,504                     -              27,666
                                                  -------                 ------               -------            --------
Net revenues from external customers               23,162                  6,227                     -              29,389
Income (loss) from operations                       5,925                 (1,596)                    -               4,329
Identifiable assets                                19,458                  4,354                23,633              47,445

</TABLE>
<TABLE>
<CAPTION>
                                                                    Nine Months Ended September 30, 2001
                                                -------------------------------------------------------------------------------
                                                  Diagnostics       Clinical Research
                                                  Technology          Technology and
                                                 and Services            Services               Other               Total
                                                ----------------    -------------------    ----------------    ----------------

<S>                                               <C>                   <C>                   <C>               <C>
License and subscription revenues                 $     -                 $  332               $     -             $   332
Service revenues                                   14,517                  5,334                     -              19,851
                                                  -------                 ------               -------            --------
Net revenues from external customers               14,517                  5,666                     -              20,183
Income (loss) from operations                       2,431                 (3,542)                    -              (1,111)
Identifiable assets                                 9,386                  3,923                27,034              40,343
</TABLE>

                                       10
<PAGE>

Note 8. Litigation

On or about May 3, 2002, DAC filed an action against the Company. The DAC action
alleges that the Company breached certain agreements executed in 2000 between
Medical Advisory Systems, Inc., the name by which DAC was formerly known, and
the Company, including an Amended and Restated Services, Sales and Co-Marketing
Agreement (the "Services Agreement"), a Master Software Licensing Agreement and
a Stock Purchase Agreement. The action also includes claims for breach of the
covenants of good faith and fair dealing, wrongful conversion and fraudulent
inducement. DAC seeks compensatory, consequential and punitive damages, as well
as fees and costs. On August 2, 2002, the Company filed an answer to this
Complaint denying the allegations of the Complaint and asserting counterclaims
against DAC for DAC's breach of the Services Agreement, seeking compensatory,
consequential and punitive damages, as well as fees and costs.

On or about June 12, 2002, the Company filed an action against U.S. Bank, N.A
(U.S. Bank). The Company's claim against U.S. Bank alleges that U.S. Bank, which
was the transfer agent for the DAC common stock, violated Article 8 of the
Uniform Commercial Code by refusing or unreasonably delaying the registration of
the transfer of certain DAC shares sold, or to be sold, by the Company pursuant
to Rule 144 of the Securities Act of 1933. See Note 3. The Company sought
injunctive relief and money damages against U.S. Bank. The Court permitted DAC
to join in this action as a party defendant and to assert the same claims
against the Company it asserted in the lawsuit referenced above. The Company
also reasserted its claims against DAC and its defenses to DAC's claims in this
action, as it did in the lawsuit referenced above. The Company believes its
claims and defenses are well supported and intends to continue to pursue and
defend the action vigorously. In its action against U.S. Bank, the Company filed
motions for summary judgment against U.S. Bank and DAC seeking to compel them to
register the transfers of the Company's remaining holdings of DAC stock. U.S.
Bank also filed a summary judgment motion asking the Court to dismiss the
Company's claims for injunctive relief and money damages against U.S. Bank,
claiming that U.S. Bank was no longer the transfer agent for DAC. The Court
granted the Company's motion on October 21, 2002, ordering DAC to take all steps
necessary to register the Company's transfers. DAC has since registered the
Company's transfers. Because U.S. Bank is no longer DAC's transfer agent, the
Company's motion against U.S. Bank became moot. The Court denied U.S. Bank's
motion as to the Company's claim for money damages, finding that the Company can
pursue its claim for money damages against U.S. Bank, but granted U.S. Bank's
motion as to the Company's claim for injunctive relief because U.S. Bank is no
longer DAC's transfer agent and, therefore, cannot register the Company's
transfers.






                                       11
<PAGE>


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

Cautionary Statement for Forward-Looking Information

The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and the related notes to the
consolidated financial statements appearing elsewhere in this report. The
following includes a number of forward-looking statements that reflects the
Company's current views with respect to future events and financial performance.
The Company uses words such as anticipates, believes, expects, future, intends
and similar expressions to identify forward-looking statements. You should not
place undue reliance on these forward-looking statements, which apply only as of
the date of this report. These forward-looking statements are subject to risks
and uncertainties such as competitive factors, technology development, market
demand and the Company's ability to obtain new contracts and accurately estimate
net revenues due to variability in size, scope and duration of projects, and
internal issues of the sponsoring client. These and other risk factors have been
further discussed in the Company's Report on Form 10-K dated December 31, 2001.
Such risks and uncertainties could cause actual results to differ materially
from historical results or future predictions. Further information on potential
factors that could affect the Company's financial results can be found
throughout this Form 10-Q and the Company's other reports filed with the
Securities and Exchange Commission.

Overview

eResearchTechnology, Inc. (the "Company") is a provider of technology and
services to the pharmaceutical, biotechnology and medical device industries on a
global basis. The Company is a market leader in providing centralized
core-diagnostic electrocardiographic (ECG) services (Diagnostic services) to
evaluate cardiac safety in clinical development. The Company is also a leader in
providing technology and services to streamline the clinical trials process by
enabling its customers to automate the collection, analysis and distribution of
clinical data in all phases of clinical development.

The Company was founded in 1977 to provide Diagnostic services used to evaluate
the safety of new drugs. In February 1997, the Company completed an initial
public offering of its common stock.

In October 1997, the Company acquired the assets and business of a provider of
clinical research technology and consulting services to the pharmaceutical,
biotechnology and medical device industry.

The Company's solutions improve the accuracy, timeliness and efficiency of trial
set-up, data collection, interpretation and new drug or medical device
application submission. The Company provides its products and services, both in
the United States and internationally, through two business segments:
Diagnostics Technology and Services, which include centralized Diagnostic
services; and Clinical Research Technology and Services, which include the
developing, marketing and support of clinical research technology and services.
The Company's Diagnostic services are utilized by clinical trial sponsors during
their conduct of clinical trials. Such services are generally similar in nature,
have similar production processes, distribution methods and general economics
and, therefore, have been aggregated in the Company's Diagnostics Technology and
Services segment. The Company's Clinical Research Technology and Services
segment includes the licensing of its proprietary software products and the
provision of maintenance and services in support of its proprietary software
products and, therefore, have been aggregated in one segment. See Note 7 to the
Consolidated Financial Statements appearing herein for information pertaining to
the amounts of net revenue, operating income (loss) and identifiable assets
attributable to each of the Company's industry segments as of and for the three
and nine months ended September 30, 2002 and 2001.

The Company's license and subscription revenues consist of license fees for
upfront license sales and monthly and annual subscription license sales. The
Company's service revenues consist of Diagnostic services, technology consulting
and training services and software maintenance services.



                                       12
<PAGE>
The Company recognizes software revenues under the residual method in accordance
with Statement of Position 97-2, "Software Revenue Recognition," as amended by
Statement of Position 98-9. Accordingly, the Company recognizes up-front license
fee revenues when a formal agreement exists, delivery of the software and
related documentation has occurred, collectibility is probable and the license
fee is fixed or determinable. The Company recognizes subscription license fee
revenues over the term of the subscription. Diagnostic service revenues consist
of revenues from services that the Company provides on a fee-for-service basis
and the Company recognizes such revenues as the services are performed. The
Company recognizes revenues from software maintenance contracts on a
straight-line basis over the term of the maintenance contract, which is
typically twelve months. The Company provides consulting and training services
on a time and materials basis and recognizes revenues as the Company performs
the services.

Cost of licenses and subscriptions consists primarily of fees associated with
third-party application service providers, the cost of producing compact disks
and related documentation and royalties paid to third parties in connection with
their contributions to the Company's product development. Cost of services
includes the cost of Diagnostic services and the cost of technology consulting,
training and maintenance services. Cost of Diagnostic services consists
primarily of direct costs related to the Company's centralized Diagnostic
services and includes wages, fees paid to outside consultants, shipping expenses
and other direct operating costs. Cost of technology consulting, training and
maintenance services consists primarily of wages, fees paid to outside
consultants and other direct operating costs related to the Company's consulting
and customer support functions. Selling and marketing expenses consist primarily
of wages and commissions paid to sales and marketing personnel or paid to third
parties under marketing assistance agreements, travel expenses and advertising
and promotional expenditures. General and administrative expenses consist
primarily of wages and direct costs for the Company's finance, administrative,
corporate information technology and executive management functions, in addition
to professional service fees. Research and development expenses consist
primarily of wages paid to the Company's product development staff, costs paid
to outside consultants and direct costs associated with the development of the
Company's technology products.

The Company conducts its operations with offices in the United States and the
United Kingdom (UK). The Company's international net revenue represented 26.6%
and 17.0% of total net revenue for the three months ended September 30, 2002 and
2001, respectively, and 25.5% and 21.9% of total net revenue for the nine months
ended September 30, 2002 and 2001, respectively.





                                       13


<PAGE>

Results of Operations

The following table presents certain financial data as a percentage of total net
revenues:

<TABLE>
<CAPTION>
                                                    Three Months Ended September 30,         Nine Months Ended September 30,
                                                 -----------------------------------      -------------------------------------
                                                      2002                  2001                 2002                 2001
                                                      ----                  ----                 ----                 ----
                                                           (unaudited)                                 (unaudited)
<S>                                                    <C>                   <C>                   <C>                   <C>
Net revenues:
     Licenses and subscriptions                        4.3%                   1.0%                 5.9%                 1.6%
     Services                                         95.7                   99.0                 94.1                 98.4
                                                     -----                  -----                -----                -----

           Total net revenues                        100.0                  100.0                100.0                100.0
                                                     -----                  -----                -----                -----

Costs of revenues:
     Cost of licenses and subscriptions                2.6                    2.4                  1.9                  2.0
     Cost of services                                 43.6                   40.7                 41.5                 45.3
                                                     -----                  -----                -----                -----

           Total costs of revenues                    46.2                   43.1                 43.4                 47.3
                                                     -----                  -----                -----                -----

           Gross margin                               53.8                   56.9                 56.6                 52.7
                                                     -----                  -----                -----                -----

Operating expenses:
     Selling and marketing                            14.4                   18.7                 16.9                 20.3
     General and administrative                       13.2                   19.0                 14.2                 19.8
     Research and development                          8.4                   16.2                 10.8                 18.1
                                                     -----                  -----                -----                -----

           Total operating expenses                   36.0                   53.9                 41.9                 58.2
                                                     -----                  -----                -----                -----

Operating income (loss)                               17.8                    3.0                 14.7                 (5.5)
Other income, net                                      0.5                    3.2                  1.4                  4.1
Investment impairment charge                             -                      -                    -                (24.6)
Gain on sale of domestic CRO operations                  -                      -                  0.1                  1.2
                                                     -----                  -----                -----                -----

Income (loss) before income taxes                     18.3                    6.2                 16.2                (24.8)
Income tax provision (benefit)                         5.8                    2.5                  5.2                 (0.2)
Minority interest dividend                               -                      -                    -                  0.6
                                                     -----                  -----                -----                -----

Net income (loss)                                     12.5%                   3.7%                11.0%               (25.2)%
                                                     =====                  =====                =====                =====

</TABLE>

                                       14

<PAGE>


Three months ended September 30, 2002 compared to three months ended September
30, 2001.

Total net revenues increased 49.3% to $10.9 million for the three months ended
September 30, 2002 compared to $7.3 million for the three months ended September
30, 2001.

License and subscription revenues increased 566.2% to $473,000 for the three
months ended September 30, 2002 compared to $71,000 for the three months ended
September 30, 2001. The increase in license and subscription revenues was
primarily due to an increase in software licensed in the third quarter of 2002.

Total service revenues increased 43.8% to $10.5 million for the three months
ended September 30, 2002 compared to $7.3 million for the three months ended
September 30, 2001.

Diagnostic service revenues increased 63.0% to $8.8 million for the three months
ended September 30, 2002 compared to $5.4 million for the three months ended
September 30, 2001. The increase in Diagnostic service revenues was primarily
due to increased sales volume with both new and existing clients, including an
increase in revenue from the rental of diagnostic equipment, which the Company's
clients use to perform diagnostic procedures.

Technology consulting and training service revenues decreased 21.8% to $656,000
for the three months ended September 30, 2002 compared to $839,000 for the three
months ended September 30, 2001. The decrease in technology consulting and
training service revenues was primarily due to reductions in consulting activity
for the Company's existing clients.

Software maintenance service revenues were approximately $1.0 million for the
three months ended September 30, 2002 and 2001.

Total cost of revenues increased 59.4% to $5.1 million for the three months
ended September 30, 2002 compared to $3.2 million for the three months ended
September 30, 2001. As a percentage of total net revenues, total cost of
revenues increased to 46.2% for the three months ended September 30, 2002 from
43.1% for the three months ended September 30, 2001.

The cost of licenses and subscriptions increased 59.4% to $279,000 for the three
months ended September 30, 2002 from $175,000 for the three months ended
September 30, 2001. The increase in the cost of licenses and subscriptions was
primarily due to an increase in applications service provider (ASP) hosting fees
associated with expanding hosting capabilities to support additional ASP
accounts.

As a percentage of license and subscription revenues, the cost of licenses and
subscriptions decreased to 59.0% for the three months ended September 30, 2002
from 246.5% for the three months ended September 30, 2001. The decrease in the
cost of licenses and subscriptions as a percentage of license and subscription
revenues was due primarily to the increase in license and subscription revenues
without a comparable increase in costs, many of which are fixed in nature.

The cost of services increased 60.0% to $4.8 million for the three months ended
September 30, 2002 from $3.0 million for the three months ended September 30,
2001. As a percentage of service revenues, the cost of services increased to
45.7% for the three months ended September 30, 2002 from 41.1% for the three
months ended September 30, 2001.

The cost of Diagnostic services increased 95.2% to $4.1 million, or 46.6% of
Diagnostic service revenues, for the three months ended September 30, 2002
compared to $2.1 million, or 38.9% of Diagnostics service revenues, for the
three months ended September 30, 2001. The increase in both the cost of
Diagnostic services and the cost of Diagnostic services as a percentage of
Diagnostic service revenues was primarily due to an increase in rental and
depreciation costs associated with diagnostic rental equipment, and increased
labor, facilities and other costs associated with expansion necessary to meet
the growth in Diagnostic service revenues. The Company also began depreciation
of its internal use software costs during the third quarter of 2002. Additional
internal use software costs will be capitalized throughout the remainder of 2002
and depreciation of the additional capitalized costs is expected to begin in
2003.


                                       15
<PAGE>


The cost of technology consulting and training services decreased 26.5% to
$394,000, or 60.1% of technology consulting and training service revenues, for
the three months ended September 30, 2002 compared to $536,000, or 63.9% of
technology consulting and training service revenues, for the three months ended
September 30, 2001. The decrease in both the cost of technology consulting and
training services and the cost of technology consulting and training services as
a percentage of technology consulting and training service revenues was due
primarily to a reduction in consulting and labor costs during the third quarter
of 2002.

The cost of software maintenance services decreased 20.6% to $289,000, or 28.9%
of software maintenance service revenues, for the three months ended September
30, 2002 compared to $364,000, or 36.4% of software maintenance service
revenues, for the three months ended September 30, 2001. The decrease in both
the cost of software maintenance services and the cost of software maintenance
services as a percentage of software maintenance service revenues was due
primarily to a reduction in labor, depreciation and other costs during the third
quarter of 2002.

Selling and marketing expenses increased 14.3% to $1.6 million for the three
months ended September 30, 2002 compared to $1.4 million for the three months
ended September 30, 2001. The increase in selling and marketing expenses was due
primarily to additional personnel and increased commissionable revenue.

As a percentage of total net revenues, selling and marketing expenses decreased
to 14.4% for the three months ended September 30, 2002 from 18.7% for the three
months ended September 30, 2001. The decrease in selling and marketing expenses
as a percentage of total net revenues was due primarily to the increase in total
net revenues with a less than proportional increase in selling and marketing
expenses.

General and administrative expenses were approximately $1.4 million for the
three months ended September 30, 2002 and 2001. Certain components of general
and administrative expenses increased during the three months ended September
30, 2002 in comparison to the three months ended September 30, 2001.
Specifically, these components were facilities expense, insurance, public
relations and labor expense. These increases were offset by a reduction in
expenses as a result of the elimination of the amortization of goodwill. The
Company did not record any goodwill amortization expense for the three months
ended September 30, 2002 due to the January 1, 2002 adoption of SFAS No. 142.
Under SFAS No. 142, the Company is no longer required to amortize goodwill and
other intangible assets with indefinite lives, but such assets will be subject
to testing for impairment at least annually. The Company recorded $79,000 of
goodwill amortization expense for the three months ended September 30, 2001.

As a percentage of total net revenues, general and administrative expenses
decreased to 13.2% for the three months ended September 30, 2002 from 19.0% for
the three months ended September 30, 2001. The decrease in general and
administrative expenses as a percentage of total net revenues was due primarily
to the increase in total net revenues without an increase in general and
administrative expenses, which are primarily fixed in nature.

Research and development expenses decreased 23.8% to $915,000, or 8.4% of total
net revenues, for the three months ended September 30, 2002 from $1.2 million,
or 16.2% of total net revenues, for the three months ended September 30, 2001.
The decrease in both research and development expenses and research and
development expenses as a percentage of total net revenues was due primarily to
a reduction in labor and other related costs during the third quarter of 2002.
This reduction was partially due to the capitalization of expenses associated
with the development of internal use software. The decrease in research and
development expenses as a percentage of total net revenues was also due to the
increase in total net revenues without a corresponding increase in research and
development expenses.

Other income, net, consisted primarily of interest income realized from the
Company's cash, cash equivalents and short-term investments, net of interest
expense related to capital lease obligations. Other income, net decreased to
$58,000 for the three months ended September 30, 2002 from $231,000 for the
three months ended September 30, 2001. The primary reason for the decrease was
lower interest rates and an increase in interest expense related to capital
lease obligations during the third quarter of 2002.

The Company's effective tax rate was 32.0% and 40.0% for the three months ended
September 30, 2002 and 2001, respectively. The decrease in the effective tax
rate was due primarily to the Company's state tax provision, which was offset by
the utilization of state net operating loss carryforwards during the three
months ended September 30, 2002. In July 2002, New Jersey passed new tax
legislation which could increase the Company's 2002 income tax liability to New
Jersey. Based on the Company's preliminary assessment, as well as its review of
other factors affecting its tax liabilities, the Company believes its tax rate
will remain unchanged in 2002, but will increase to approximately 35% in 2003.


                                       16
<PAGE>

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

Total net revenues increased 45.5% to $29.4 million for the nine months ended
September 30, 2002 compared to $20.2 million for the nine months ended September
30, 2001.

License and subscription revenues increased 412.0% to $1.7 million for the nine
months ended September 30, 2002 compared to $332,000 for the nine months ended
September 30, 2001. The increase in license and subscription revenues was
primarily due to an increase in software licensed during the nine months ended
September 30, 2002.

Total service revenues increased 39.2% to $27.7 million for the nine months
ended September 30, 2002 compared to $19.9 million for the nine months ended
September 30, 2001.

Diagnostic service revenues increased 60.0% to $23.2 million for the nine months
ended September 30, 2002 compared to $14.5 million for the nine months ended
September 30, 2001. The increase in Diagnostic service revenues was primarily
due to increased sales volume with both new and existing clients, including an
increase in revenue from the rental of diagnostic equipment, which the Company's
clients use to perform diagnostic procedures.

Technology consulting and training service revenues decreased 30.4% to $1.6
million for the nine months ended September 30, 2002 compared to $2.3 million
for the nine months ended September 30, 2001. The decrease in technology
consulting and training service revenues was primarily due to reductions in
consulting activity for the Company's existing clients.

Software maintenance service revenues decreased 3.3% to $2.9 million for the
nine months ended September 30, 2002 compared to $3.0 million for the nine
months ended September 30, 2001. The decrease in software maintenance service
revenues was primarily due to the suspension of maintenance on one product by
one client during the third quarter of 2001.

Total cost of revenues increased 32.3% to $12.7 million for the nine months
ended September 30, 2002 compared to $9.6 million for the nine months ended
September 30, 2001. As a percentage of total net revenues, total cost of
revenues decreased to 43.4% for the nine months ended September 30, 2002 from
47.3% for the nine months ended September 30, 2001.

The cost of licenses and subscriptions increased 38.1% to $565,000 for the nine
months ended September 30, 2002 from $409,000 for the nine months ended
September 30, 2001. The increase in the cost of licenses and subscriptions was
primarily due to an increase in ASP hosting fees associated with expanding
hosting capabilities to support additional ASP accounts.

As a percentage of license and subscription revenues, the cost of licenses and
subscriptions decreased to 33.2% for the nine months ended September 30, 2002
from 123.2% for the nine months ended September 30, 2001. The decrease in the
cost of licenses and subscriptions as a percentage of license and subscription
revenues was due primarily to the increase in license and subscription revenues
without a comparable increase in costs, many of which are fixed in nature.

The cost of services increased 34.1% to $12.2 million for the nine months ended
September 30, 2002 from $9.1 million for the nine months ended September 30,
2001. As a percentage of service revenues, the cost of services decreased to
44.0% for the nine months ended September 30, 2002 from 45.7% for the nine
months ended September 30, 2001.

The cost of Diagnostic services increased 58.7% to $10.0 million for the nine
months ended September 30, 2002 compared to $6.3 million for the nine months
ended September 30, 2001. The increase in the cost of Diagnostic services was
primarily due to an increase in rental and depreciation costs associated with
diagnostic rental equipment, and increased labor, facilities and other costs
associated with expanding capabilities to meet the growth in Diagnostic service
revenues. The Company also began depreciation of its internal use software costs
during the third quarter of 2002. Additional internal use software costs will be
capitalized throughout the remainder of 2002 and depreciation of the additional
capitalized costs is expected to begin in 2003.

                                       17
<PAGE>


As a percentage of Diagnostic service revenues, the cost of Diagnostic services
decreased to 43.1% for the nine months ended September 30, 2002 from 43.4% for
the nine months ended September 30, 2001. The decrease in the cost of Diagnostic
services as a percentage of Diagnostic service revenues was due primarily to the
increase in Diagnostic service revenues without a comparable increase in costs,
many of which are fixed in nature.

The cost of technology consulting and training services decreased 29.4% to $1.2
million for the nine months ended September 30, 2002 compared to $1.7 million
for the nine months ended September 30, 2001. The decrease in the cost of
technology consulting and training services was due primarily to a reduction in
consulting and labor costs during the nine months ended September 30, 2002 and
the decrease in technology consulting and training service revenues.

As a percentage of technology consulting and training service revenues, the cost
of technology consulting and training services increased to 75.0% for the nine
months ended September 30, 2002 from 73.9% for the nine months ended September
30, 2001. The increase in the cost of technology consulting and training
services as a percentage of technology consulting and training service revenues
was due primarily to the decrease in technology consulting and training service
revenues with a limited decrease in costs, many of which are fixed in nature.

The cost of software maintenance services decreased 14.5% to $941,000, or 32.4%
of software maintenance service revenues, for the nine months ended September
30, 2002 compared to $1.1 million, or 36.7% of software maintenance service
revenues, for the nine months ended September 30, 2001. The decrease in both the
cost of software maintenance services and the cost of software maintenance
services as a percentage of software maintenance service revenues was due
primarily to a reduction in depreciation, travel and other costs during the nine
months ended September 30, 2002.

Selling and marketing expenses increased 22.0% to $5.0 million for the nine
months ended September 30, 2002 compared to $4.1 million for the nine months
ended September 30, 2001. The increase in selling and marketing expenses was due
primarily to increased commissionable revenue, labor and advertising costs
during the nine months ended September 30, 2002. Additionally, the Company held
its users conference in the second quarter of 2002. The Company did not hold a
users conference in 2001.

As a percentage of total net revenues, selling and marketing expenses decreased
to 16.9% for the nine months ended September 30, 2002 from 20.3% for the nine
months ended September 30, 2001. The decrease in selling and marketing expenses
as a percentage of total net revenues was due primarily to the increase in total
net revenues with a less than proportional increase in selling and marketing
expenses.

General and administrative expenses increased 5.0% to $4.2 million for the nine
months ended September 30, 2002 from $4.0 million for the nine months ended
September 30, 2001. The increase in general and administrative expenses was due
primarily to an increase in facilities expense, insurance, public relations and
labor expense during the nine months ended September 30, 2002. This increase was
partially offset by a reduction in expenses as a result of the elimination of
the amortization of goodwill. The Company did not record any goodwill
amortization expense for the nine months ended September 30, 2002 due to the
January 1, 2002 adoption of SFAS No. 142. Under SFAS No. 142, the Company is no
longer required to amortize goodwill and other intangible assets with indefinite
lives, but such assets will be subject to testing for impairment at least
annually. The Company recorded $237,000 of goodwill amortization expense for the
nine months ended September 30, 2001.

As a percentage of total net revenues, general and administrative expenses
decreased to 14.2% for the nine months ended September 30, 2002 from 19.8% for
the nine months ended September 30, 2001. The decrease in general and
administrative expenses as a percentage of total net revenues was due primarily
to the increase in total net revenues with a less than proportional increase in
general and administrative expenses, many of which are fixed in nature.


                                       18
<PAGE>

Research and development expenses decreased 13.5% to $3.2 million, or 10.8% of
total net revenues, for the nine months ended September 30, 2002 from $3.7
million, or 18.1% of total net revenues, for the nine months ended September 30,
2001. The decrease in both research and development expenses and research and
development expenses as a percentage of total net revenues was due primarily to
a reduction in labor, travel and other related costs during the nine months
ended September 30, 2002. This reduction was partially due to the capitalization
of expenses associated with the development of internal use software. The
decrease in research and development expenses as a percentage of total net
revenues was also due to the increase in total net revenues without a
corresponding increase in research and development expenses.

Other income, net, consisted primarily of interest income realized from the
Company's cash, cash equivalents and short-term investments, net of interest
expense related to capital lease obligations. Additionally, the Company recorded
a net realized gain of $75,000 from the sale of shares of its investment in DAC,
and recorded $47,000 of interest income during the nine months ended September
30, 2002 that was earned on the escrow accounts related to the sale of the
domestic clinical research operations to SCP Communications, Inc. Other income,
net decreased to $402,000 for the nine months ended September 30, 2002 from
$835,000 for the nine months ended September 30, 2001. The primary reason for
the decrease was lower interest rates and an increase in interest expense
related to capital lease obligations during the nine months ended September 30,
2002.

The Company recorded an investment impairment charge of $5.0 million during the
nine months ended September 30, 2001. This charge was the result of continued
negative market conditions affecting the carrying value of the Company's
investments in DAC and AmericasDoctor.com, Inc.

In December 1999, the Company sold its domestic clinical research operations to
SCP Communications, Inc. In the nine months ended September 30, 2002, the
Company recorded $35,000 of additional gain on the sale compared to $232,000
recorded in the nine months ended September 30, 2001. During the first quarter
of 2002, the Company finalized the accounting for the disposition related to
certain earn-outs. The escrow account that was established in connection with
the transaction has been closed effective as of the last income distribution
received by the Company during the first quarter of 2002.

In the first quarter of 2001, the Company accrued $116,000 of dividends on
preferred stock. This preferred stock was redeemed during the second quarter of
2001.

The Company's effective tax rate was 32.0% and 0.8% for the nine months ended
September 30, 2002 and 2001, respectively. The increase in the Company's
effective tax rate was due primarily to the Company fully reserving for the
deferred tax asset during the first quarter of 2001 associated with the
investment impairment charge of $5.0 million recognized during that quarter, due
to the uncertainty of the realization of any tax benefit associated with these
long-term capital losses in future periods. In July 2002, New Jersey passed new
tax legislation which could increase the Company's 2002 income tax liability to
New Jersey. Based on the Company's preliminary assessment, as well as its review
of other factors affecting its tax liabilities, the Company believes its tax
rate will remain unchanged in 2002, but will increase to approximately 35% in
2003.

Liquidity and Capital Resources

At September 30, 2002, the Company had $13.8 million of cash and cash
equivalents and $7.6 million invested in short-term investments. The Company
generally places its investments in money market funds, municipal securities,
bonds of government sponsored agencies, certificates of deposit with maturities
of less than one year, and A1P1 rated commercial bonds and paper.

For the nine months ended September 30, 2002, the Company's operations provided
cash of $5.7 million compared to $3.2 million for the nine months ended
September 30, 2001. The change was primarily the result of improved operating
income partially offset by increased accounts receivable for the nine months
ended September 30, 2002 compared to the nine months ended September 30, 2001.


                                       19
<PAGE>

During the nine months ended September 30, 2002, the Company expended $4.6
million on equipment purchases and costs related to internal use software
compared to $2.1 million during the nine months ended September 30, 2001. The
increase was primarily the result of higher internal use software costs and
purchases of diagnostic rental equipment during the current year. The internal
use software is associated with the development of a new data and communications
management services software product used in connection with the Company's
centralized core-diagnostic electrocardiographic services. The Company
capitalizes its internal use software costs in accordance with Statement of
Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." The Company began depreciation of its internal use
software costs in the third quarter of 2002, which resulted in an additional
depreciation charge to the cost of Diagnostic services of approximately $84,000
per month. Additional internal use software costs will be capitalized throughout
the remainder of 2002 and depreciation of the additional capitalized costs is
expected to begin in 2003.

In October 2002, the Board of Directors terminated a stock buy-back program,
which it had authorized in February 2001, to purchase up to 750,000 shares of
the Company's common stock. The share purchase authorization allowed the Company
to make purchases from time to time on the open market at prevailing prices or
in privately negotiated transactions. Company management made purchase decisions
based upon market conditions and other considerations. During the nine months
ending September 30, 2001, the Company used $518,000 to purchase 137,550 shares
of its common stock on the open market at an average price of $3.77 per share.
The Company did not purchase shares under this program during the nine months
ended September 30, 2002.

During the nine months ended September 30, 2002, the Company received $1.1
million in cash from the exercise of 215,015 stock options at exercise prices
per option of between $1.51 and $11.13. Additional cash of $120,000 was received
in January 2002, which related to options exercised in 2001.

During the nine months ended September 30, 2002, the Company received $720,000
from the sale of 174,975 shares of its investment in DAC, at prices per share
between $3.70 and $5.40. Additionally, the Company sold 232,700 shares, which
did not settle until October 25, 2002 due to a dispute between the Company and
the transfer agent and DAC. A gain of $546,000 on those shares will be
recognized by the Company in the fourth quarter of 2002. See Part II, Item 1 -
Legal Proceedings. The cost basis of $859,000 related to the 232,700 shares are
included in prepaid expenses and other current assets as of September 30, 2002.

The Company has a line of credit arrangement with Wachovia Bank, National
Association totaling $3.0 million. At September 30, 2002, the Company had no
outstanding borrowings under the line.

The Company expects that existing cash and cash equivalents, short-term
investments, marketable securities, cash flows from operations and available
borrowings under its line of credit will be sufficient to meet its foreseeable
cash needs for at least the next year. However, there may be acquisition and
other growth opportunities that require additional external financing and the
Company may from time to time seek to obtain additional funds from the public or
private issuances of equity or debt securities. There can be no assurance that
such financings will be available or available on terms acceptable to the
Company.

Inflation

The Company believes the effects of inflation and changing prices generally do
not have a material adverse effect on its results of operations or financial
condition.

Item 3.  Qualitative and Quantitative Disclosures About Market Risk

The Company's primary financial market risks include fluctuations in interest
rates and currency exchange rates.

Interest Rate Risk

The Company generally places its investments in money market funds, municipal
securities, bonds of government sponsored agencies, certificates of deposit with
fixed rates with maturities of less than one year, and A1P1 rated commercial
bonds and paper. The Company actively manages its portfolio of cash equivalents,
short-term investments and marketable securities, but in order to ensure
liquidity, will only invest in instruments with high credit quality where a
secondary market exists. The Company has not held and does not hold any
derivatives related to its interest rate exposure. Due to the average maturity
and conservative nature of the Company's investment portfolio, a sudden change
in interest rates would not have a material effect on the value of the
portfolio. Management estimates that had the average yield of the Company's


                                       20
<PAGE>



investments decreased by 100 basis points, the Company's interest income for
nine months ended September 30, 2002 would have decreased by less than $150,000.
This estimate assumes that the decrease occurred on the first day of 2002 and
reduced the yield of each investment by 100 basis points. The impact on the
Company's future interest income of future changes in investment yields will
depend largely on the gross amount of the Company's cash, cash equivalents and
short-term investments. See "Liquidity and Capital Resources" as part of
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

Foreign Currency Risk

The Company operates on a global basis from locations in the United States and
the United Kingdom. All international net revenues are billed and expenses are
incurred in either U.S. dollars or pounds sterling. As such, the Company faces
exposure to adverse movements in the exchange rate of the pound sterling. As the
currency rate changes, translation of the income statement of the Company's UK
subsidiary from the local currency to U.S. dollars affects year-to-year
comparability of operating results. The Company does not hedge translation risks
because any cash flows from UK operations are generally reinvested in the UK.

Management estimates that a 10% change in the exchange rate of the pound
sterling would have impacted the reported operating income for international
operations by less than $250,000.

The introduction of the Euro as a common currency for members of the European
Monetary Union took place in January 1999. To date, the introduction of the Euro
has had no impact on the Company's operations in the UK, as all net revenues
have been billed in pounds sterling.

Item 4.  Controls and Procedures

Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's 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 Rule 13a-14 promulgated by the
Securities and Exchange Commission under the Securities and Exchange Act of
1934, as amended. Based upon that evaluation, the Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Company (including its consolidated subsidiaries)
required to be included in the Company's periodic filings with the Securities
and Exchange Commission. There have been no significant changes in the Company's
internal controls or in other factors which could significantly affect internal
controls subsequent to the date the Company carried out its evaluation.

                                       21
<PAGE>


Part II.      Other Information

Item 1.       Legal Proceedings

On or about May 3, 2002, an action entitled Digital Angel Corporation, Inc.
(Digital Angel) f/k/a Medical Advisory Systems, Inc. v. eResearchTechnology,
Inc., f/k/a Premier Research Technology Ltd. (Docket No. ATL-L-1570-02) was
filed against the Company in the Superior Court of New Jersey, Law Division,
Atlantic County. The Digital Angel action alleges that the Company breached
certain agreements executed in 2000 between Medical Advisory Systems, Inc. and
the Company, including an Amended and Restated Services, Sales and Co-Marketing
Agreement (the "Services Agreement"), a Master Software Licensing Agreement and
a Stock Purchase Agreement. The action also includes claims for breach of the
covenants of good faith and fair dealing, wrongful conversion and fraudulent
inducement. Digital Angel seeks compensatory, consequential and punitive
damages, as well as fees and costs. On August 2, 2002, the Company filed an
answer to this Complaint denying the allegations of the Complaint and asserting
counterclaims against Digital Angel for Digital Angel's breach of the Services
Agreement, seeking compensatory, consequential and punitive damages, as well as
fees and costs.

On or about June 12, 2002, the Company filed an action entitled
eResearchTechnology, Inc. f/k/a Premier Research Worldwide, Ltd. v. U.S. Bank,
N.A. (U.S. Bank) in the Superior Court of New Jersey, Chancery Division, Mercer
County. U.S. Bank removed this action to the United States District Court for
the District of New Jersey (Docket No. 02-cv-3347). The Company's claim against
U.S. Bank alleges that U.S. Bank, which was the transfer agent for the Digital
Angel common stock, violated Article 8 of the Uniform Commercial Code by
refusing or unreasonably delaying the registration of the transfer of certain
Digital Angel (f/k/a Medical Advisory Systems, Inc.) shares sold, or to be sold,
by the Company pursuant to Rule 144 of the Securities Act of 1933. See Note 3 to
the Consolidated Financial Statements. The Company sought injunctive relief and
money damages against U.S. Bank. The Court permitted Digital Angel to join in
this action as a party defendant and to assert the same claims against the
Company it asserted in the New Jersey state court lawsuit referenced above. The
Company also reasserted its state court claims against Digital Angel and its
defenses to Digital Angel's claims in this federal court action. The Company
believes its claims and defenses are well supported and intends to continue to
pursue and defend the action vigorously. In the federal court action, the
Company filed motions for summary judgment against U.S. Bank and Digital Angel
seeking to compel them to register the transfers of the Company's remaining
holdings of Digital Angel stock. U.S. Bank also filed a summary judgment motion
asking the Court to dismiss the Company's claims for injunctive relief and money
damages against U.S. Bank, claiming that U.S. Bank was no longer the transfer
agent for Digital Angel. The Court granted the Company's motion on October 21,
2002, ordering Digital Angel to take all steps necessary to register the
Company's transfers. Digital Angel has since registered the Company's transfers.
Because U.S. Bank is no longer Digital Angel's transfer agent, the Company's
motion against U.S. Bank became moot. The Court denied U.S. Bank's motion as to
the Company's claim for money damages, finding that the Company can pursue its
claim for money damages against U.S. Bank, but granted U.S. Bank's motion as to
the Company's claim for injunctive relief because U.S. Bank is no longer Digital
Angel's transfer agent and, therefore, cannot register the Company's transfers.

                                       22

<PAGE>


Item 6.  Exhibits and Reports on Form 8-K

         a.) Exhibits

             99.1  Statement of Chief Executive Officer Pursuant to Section 1350
                   of Title 18 of the United States Code.

             99.2  Statement of Chief Financial Officer Pursuant to Section 1350
                   of Title 18 of the United States Code.

         b.) Reports on Form 8-K

             On July 24, 2002, the Company filed a report on Form 8-K relating
             to financial information for eResearchTechnology, Inc. for the
             quarter ended June 30, 2002 and forward-looking statements relating
             to 2002 as presented in a press release of July 24, 2002.



                                       23

<PAGE>

                                   Signatures


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



                                                 eResearchTechnology, Inc.
                                                 (Registrant)


Date:  November 13, 2002                    By:    /s/      Joseph Esposito
                                                 -------------------------------

                                                    Joseph Esposito
                                                    Chief Executive Officer




Date:  November 13, 2002                    By:    /s/   Bruce Johnson
                                                 -------------------------------

                                                    Bruce Johnson
                                                    Chief Financial Officer
                                                    (Principal Financial and
                                                    Accounting Officer)







                                       24

<PAGE>

                                 Certifications

I, Joseph Esposito, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of eResearchTechnology,
     Inc.;

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

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

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

     a.  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

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

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

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

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

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

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

Date: November 13, 2002                     /s/ Joseph Esposito
                                            ------------------------------------
                                           President and Chief Executive Officer


                                       25
<PAGE>


I, Bruce Johnson, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of eResearchTechnology,
     Inc.;

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

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

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

     a.  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

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

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

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

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

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

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


Date:  November 13, 2002                       /s/ Bruce Johnson
                                               --------------------------
                                               Sr. Vice President and
                                               Chief Financial Officer




                                       26