<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 June 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>
<S>                                                                       <C>
                          Delaware                                                                22-3264604
-------------------------------------------------------------             ----------------------------------------------------------
       (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 July 31,
2002, was 10,510,656.


<PAGE>


                   eResearchTechnology, Inc. and Subsidiaries

                                      INDEX
<TABLE>
<CAPTION>
                                                                                                                       Page
                                                                                                                       ----
<S>      <C>                                                                                                         <C>
Part I.  Financial Information

             Item 1.       Consolidated Financial Statements

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

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

                           Consolidated statements of cash flows (unaudited)--Six Months
                           Ended June 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

Part II. Other Information

             Item 1.       Legal Proceedings                                                                             22

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

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

                           a.)      Exhibits

                           b.)      Reports on Form 8-K

Signatures                                                                                                               24
</TABLE>
                                       2
<PAGE>


Part 1. Financial Information

Item 1. Consolidated Financial Statements

                   eResearchTechnology, Inc. and Subsidiaries
                           Consolidated Balance Sheets
               (in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
                                                                        June 30, 2002           December 31, 2001
                                                                        -------------           -----------------
                                                                         (unaudited)
<S>                                                                    <C>                       <C>
Assets

Current assets:
      Cash and cash equivalents                                           $  12,396                $   11,364
      Short-term investments                                                  7,244                     7,066
      Marketable securities                                                     399                     2,695
      Accounts receivable, net                                                7,024                     5,900
      Prepaid expenses and other                                              2,891                     1,320
      Deferred income taxes                                                     212                       212
                                                                          ---------                ----------
            Total current assets                                             30,166                    28,557

Property and equipment, net                                                  11,184                     8,110
Goodwill, net                                                                 1,212                     1,212
Investments in non-marketable securities                                        509                       509
Other assets                                                                     21                        21
Deferred income taxes                                                         1,707                     2,591
                                                                          ---------                ----------
                                                                          $  44,799                $   41,000
                                                                          =========                ==========
Liabilities and Stockholders' Equity

Current liabilities:
      Accounts payable                                                    $   1,704                $    1,383
      Accrued expenses                                                        2,678                     2,394
      Income taxes payable                                                      346                       461
      Current portion of capital lease obligations                              571                       155
      Deferred revenues                                                       3,811                     3,475
                                                                          ---------                ----------
             Total current liabilities                                        9,110                     7,868
                                                                          ---------                ----------

Capital lease obligations                                                     1,079                       340
                                                                          ---------                ----------

Commitments and contingencies

Stockholders' equity:
      Preferred stock - $10 par value, 500,000 shares authorized,
             none issued and outstanding                                          -                         -
      Common stock - $.01 par value, 15,000,000 shares authorized,
            11,396,951 and 11,236,031 shares issued, respectively               114                       112
      Additional paid-in capital                                             39,760                    39,031
      Unrealized gain (loss) on marketable securities                          (127)                      665
      Treasury stock, 895,500 shares at cost                                 (3,229)                   (3,229)
      Accumulated deficit                                                    (1,908)                   (3,787)
                                                                          ---------                ----------
             Total stockholders' equity                                      34,610                    32,792
                                                                          ---------                ----------
                                                                          $  44,799                $   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 information)
<TABLE>
<CAPTION>
                                                     Three Months Ended June 30,                 Six Months Ended June 30,
                                                  ------------------------------             -------------------------------
                                                     2002                 2001                 2002                  2001
                                                  ---------             --------             ---------             ---------
                                                            (unaudited)                                 (unaudited)
<S>                                              <C>                   <C>                  <C>                   <C>
Net revenues:
     Licenses and subscriptions                   $     496             $    198             $   1,250             $     224
     Services                                         9,608                6,760                17,215                12,628
                                                  ---------             --------             ---------             ---------

           Total net revenues                        10,104                6,958                18,465                12,852
                                                  ---------             --------             ---------             ---------

Costs of revenues:
     Cost of licenses and subscriptions                 152                  128                   286                   234
     Cost of services                                 4,006                3,041                 7,407                 6,155
                                                  ---------             --------             ---------             ---------

           Total costs of revenues                    4,158                3,169                 7,693                 6,389
                                                  ---------             --------             ---------             ---------

           Gross margin                               5,946                3,789                10,772                 6,463
                                                  ---------             --------             ---------             ---------

Operating expenses:
     Selling and marketing                            1,922                1,401                 3,397                 2,730
     General and administrative                       1,398                1,272                 2,740                 2,601
     Research and development                         1,092                1,216                 2,251                 2,465
                                                  ---------             --------             ---------             ---------

           Total operating expenses                   4,412                3,889                 8,388                 7,796
                                                  ---------             --------             ---------             ---------

Operating income (loss)                               1,534                 (100)                2,384                (1,333)
Other income, net                                       186                  243                   344                   604
Investment asset impairment charge                        -                    -                     -                (4,970)
Gain on sale of domestic CRO operations                   -                    -                    35                   232
                                                  ---------             --------             ---------             ---------

Income (loss) before income taxes                     1,720                  143                 2,763                (5,467)
Income tax provision (benefit)                          550                   57                   884                  (222)
Minority interest dividend                                -                    -                     -                   116
                                                  ---------             --------             ---------             ---------

Net income (loss)                                 $   1,170             $     86             $   1,879             $  (5,361)
                                                  =========             ========             =========             =========

Basic net income (loss) per share                 $    0.11             $   0.01             $    0.18             $   (0.51)
                                                  =========             ========             =========             =========

Shares used to calculate basic net
     income (loss) per share                         10,459               10,448                10,423                10,452
                                                  =========             ========             =========             =========

Diluted net income (loss) per share               $    0.10             $   0.01             $    0.17             $   (0.51)
                                                  =========             ========             =========             =========

Shares used to calculate diluted net
     income (loss) per share                         11,229               10,487                11,102                10,452
                                                  =========             ========             =========             =========
</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>
                                                                                                  Six Months Ended June 30,
                                                                                                -----------------------------
                                                                                                  2002                2001
                                                                                                ---------          ----------
                                                                                                         (unaudited)
<S>                                                                                             <C>                <C>
Operating activities:
      Net income (loss)                                                                         $   1,879          $   (5,361)
      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                                                      1,163                 870
                 Issuance of stock options to non-employees                                             7                  29
                 Deferred income taxes                                                                884                (540)
                 Investment asset impairment charge                                                     -               4,970
                 Changes in operating assets and liabilities:
                      Accounts receivable                                                          (1,124)              1,908
                      Prepaid expenses and other                                                     (832)                446
                      Accounts payable                                                                321                (935)
                      Accrued expenses                                                                284                (417)
                      Income taxes payable                                                           (115)                 15
                      Deferred revenues                                                               336                 112
                                                                                                ---------          ----------
                            Net cash provided by operating activities                               2,693                 865
                                                                                                ---------          ----------

Investing activities:
      Purchases of property and equipment                                                          (2,904)             (1,448)
      Net purchase of short-term investments                                                         (178)               (272)
      Net proceeds from sale of the domestic CRO operations                                            35               2,742
      Proceeds from sales of marketable securities                                                    720                   -
                                                                                                ---------          ----------
                            Net cash provided by (used in) investing activities                    (2,327)              1,022
                                                                                                ---------          ----------


Financing activities:
      Purchase of convertible preferred stock in subsidiary                                             -              (9,500)
      Repayment of capital lease obligations                                                         (178)                  -
      Minority interest dividend paid                                                                   -                (639)
      Net proceeds from exercise of stock options                                                     844                   -
      Repurchase of common stock for treasury                                                           -                 (55)
                                                                                                ---------          ----------
                            Net cash provided by (used in) financing activities                       666             (10,194)
                                                                                                ---------          ----------

Net increase (decrease) in cash and cash equivalents                                                1,032              (8,307)
Cash and cash equivalents, beginning of period                                                     11,364              21,910
                                                                                                ---------          ----------
Cash and cash equivalents, end of period                                                        $  12,396          $   13,603
                                                                                                =========          ==========
</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 fair presentation have been included. Operating results
for the six month period ended June 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.

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.  Asset Impairment Charge - Marketable and Non-Marketable Securities

At June 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
asset impairment charge of $3,746,000 was recorded during the quarter ended
March 31, 2001. During the six months ended June 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 have not settled 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. See Note 8. As of June 30,
2002, the carrying value of the Company's investment in DAC stock was less than
its adjusted cost basis by $127,000.

                                       6
<PAGE>

At June 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 asset 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 asset 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 judged 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 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, 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):

Three Months Ended June 30,
                                                                    Per
                                         Net                       Share
2002                                    Income        Shares       Amount
-----------------------------------    -------        -------     -------
Basic net income...................    $ 1,170         10,459     $  0.11
Effect of dilutive shares..........         --            770       (0.01)
                                       -------         ------     -------
Diluted net income.................    $ 1,170         11,229     $  0.10
                                       =======         ======     =======
2001
-----------------------------------
Basic net income...................    $    86         10,448     $  0.01
Effect of dilutive shares..........         --             39          --
                                       -------         ------     -------
Diluted net income.................    $    86         10,487     $  0.01
                                       =======         ======     =======

Options to purchase 1,702,000 and 221,000 shares of common stock were
outstanding at June 30, 2002 and 2001, respectively, and were included in the
computation of diluted net income per share. Options to purchase 1,633,000
shares of common stock were outstanding at June 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>
Six Months Ended June 30,
                                         Net                        Per
                                        Income                     Share
2002                                    (Loss)        Shares       Amount
-----------------------------------    -------        -------     -------

Basic net income...................    $ 1,879         10,423     $  0.18
Effect of dilutive shares..........         --            679       (0.01)
                                       -------         ------     -------
Diluted net income.................    $ 1,879         11,102     $  0.17
                                       =======         ======     =======
2001
-----------------------------------
Basic net loss.....................    $(5,361)        10,452     $ (0.51)
Effect of dilutive shares..........         --             --          --
                                       -------         ------     -------
Diluted net loss...................    $(5,361)        10,452     $ (0.51)
                                       =======         ======     =======

Options to purchase 1,694,000 shares of common stock were outstanding at June
30, 2002 and were included in the computation of diluted net income per share.
Options to purchase 7,500 shares of common stock were outstanding at June 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 1,854,000 shares of common stock were outstanding at June
30, 2001, but were not included in the diluted computation because the Company
incurred a net loss and the inclusion would be 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.
The unrealized gains and losses from foreign currency translation were
immaterial as of June 30, 2002 and 2001. For the six months ended June 30, 2002
and 2001, the Company recorded an unrealized loss for the mark to market of
$299,000 and $409,000, 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" (SFAS 141), and SFAS No. 142, "Goodwill and Other
Intangible Assets" (SFAS 142). It also issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS 144), in August 2001.

SFAS 141 requires that all business combinations initiated after June 30, 2001
be accounted for under the purchase method of accounting. SFAS 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 141, which had no impact on its consolidated financial position or results
of operations.

SFAS 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 142
supersedes APB Opinion No. 17, "Intangible Assets." The Company adopted SFAS 142
effective January 1, 2002. During the three months and the six months ended June
30, 2001, the Company recorded $79,000 and $158,000, respectively, of goodwill
amortization. The following table reflects the results of the Company for the
three and six months ended June 30, 2001 assuming goodwill had not been
amortized (in thousands, except per share amounts):

                                       8
<PAGE>
<TABLE>
<CAPTION>
                                                 Three Months Ended June 30,                 Six Months Ended June 30,
                                               -----------------------------               ----------------------------
                                                 2002                  2001                 2002                2001
                                               -------                ------               -------             --------
                                                         (unaudited)                                (unaudited)
<S>                                            <C>                     <C>                 <C>                 <C>
Reported net income (loss)                     $ 1,170                 $  86               $ 1,879             $ (5,361)
Add back goodwill amortization, net of tax           -                    54                     -                  107
                                               -------                 -----               -------             --------
           Adjusted net income (loss)          $ 1,170                 $ 140               $ 1,879             $ (5,254)
                                               =======                 =====               =======             ========

Income per share - basic:
     Reported net income (loss)                 $ 0.11                $ 0.01                $ 0.18              $ (0.51)
     Goodwill amortization, net of tax               -                     -                     -                 0.01
                                               -------                 -----               -------             --------
           Adjusted net income (loss)          $  0.11                $ 0.01                $ 0.18              $ (0.50)
                                               =======                 =====               =======             ========

Income per share - diluted:
     Reported net income (loss)                $  0.10                $ 0.01                $ 0.17              $ (0.51)
     Goodwill amortization, net of tax               -                     -                     -                 0.01
                                               -------                 -----               -------             --------
           Adjusted net income (loss)          $  0.10                $ 0.01                $ 0.17              $ (0.50)
                                               =======                 =====               =======             ========
</TABLE>
During the three months ended June 30, 2002, the Company completed its adoption
of SFAS 142 by completing its initial assessment of impairment of goodwill in
accordance with the provisions of SFAS 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 144 establishes a single accounting model for the impairment or disposal of
long-lived assets, including discontinued operations. SFAS 144 supersedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed Of"
(SFAS 121), 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 144 are effective in fiscal years beginning after December 15, 2001. The
Company adopted SFAS 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 does not believe the provisions of SFAS 145 will 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 146). This Statement addresses the
financial accounting and reporting of expenses related to restructurings
initiated after 2002, and applies to costs associated with an exit activity
(including 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 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 146 are effective prospectively for exit or
disposal activities initiated after December 31, 2002. The Company has not
determined the impact of the adoption of SFAS 146 in future periods.



                                       9
<PAGE>

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.

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 June 30, 2002
                                                -------------------------------------------------------------------------------
                                                  Diagnostics       Clinical Research
                                                  Technology          Technology and
                                                 and Services            Services               Other               Total
                                                ----------------    -------------------    ----------------    ----------------
<S>                                                <C>                   <C>                 <C>                 <C>
License and subscription revenues                  $      -              $     496           $       -           $     496
Service revenues                                      8,049                  1,559                   -               9,608
                                                   --------              ---------           ---------           ---------
Net revenues from external customers                  8,049                  2,055                   -              10,104
Income (loss) from operations                         2,165                   (631)                  -               1,534
Identifiable assets                                  18,409                  3,924              22,466              44,799


                                                                           Three Months Ended June 30, 2001
                                                -------------------------------------------------------------------------------
                                                  Diagnostics       Clinical Research
                                                  Technology          Technology and
                                                 and Services            Services               Other               Total
                                                ----------------    -------------------    ----------------    ----------------

License and subscription revenues                  $      -              $     198           $       -           $     198
Service revenues                                      4,966                  1,794                   -               6,760
                                                   --------              ---------           ---------           ---------
Net revenues from external customers                  4,966                  1,992                   -               6,958
Income (loss) from operations                           991                 (1,091)                  -                (100)
Identifiable assets                                   9,626                  4,486              26,249              40,361


                                                                        Six Months Ended June 30, 2002
                                                -------------------------------------------------------------------------------
                                                  Diagnostics       Clinical Research
                                                  Technology          Technology and
                                                 and Services            Services               Other               Total
                                                ----------------    -------------------    ----------------    ----------------

License and subscription revenues                  $      -              $   1,250           $       -           $   1,250
Service revenues                                     14,337                  2,878                   -              17,215
                                                   --------              ---------           ---------           ---------
Net revenues from external customers                 14,337                  4,128                   -              18,465
Income (loss) from operations                         3,634                 (1,250)                  -               2,384
Identifiable assets                                  18,409                  3,924              22,466              44,799


                                                                        Six Months Ended June 30, 2001
                                                -------------------------------------------------------------------------------
                                                  Diagnostics       Clinical Research
                                                  Technology          Technology and
                                                 and Services            Services               Other               Total
                                                ----------------    -------------------    ----------------    ----------------

License and subscription revenues                  $      -              $     224           $       -           $     224
Service revenues                                      9,089                  3,539                   -              12,628
                                                   --------              ---------           ---------           ---------
Net revenues from external customers                  9,089                  3,763                   -              12,852
Income (loss) from operations                         1,139                 (2,472)                  -              (1,333)
Identifiable assets                                   9,626                  4,486              26,249              40,361
</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. 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 included 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 for DAC's breach of the Services
Agreement seeking compensatory, consequential and punitive damages, as well as
fees and costs. The Company is also seeking to enforce the provision of the
Services Agreement, which requires arbitration of disputes. The Company believes
that it has substantial defenses to the claims set forth in this complaint, and
intends to vigorously defend this action.

On or about June 12, 2002, the Company filed an action against U.S. Bank, N.A.,
which is the transfer agent for the DAC common stock. The Company's action
alleges that U.S. Bank, N.A. violated Article 8 of the Uniform Commercial Code
as a result of its refusal and/or unreasonable delay in registering 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 seeks an order compelling
U.S. Bank to register the transfer of these shares, as well as compensatory
damages, fees and costs. DAC filed a notice of motion to intervene as a party
defendant and to assume jurisdiction of supplemental claims on July 19, 2002. In
addition, DAC filed an answer of intervening defendant on July 19, 2002 in which
DAC denies the allegations, provides affirmative defenses, demands judgment in
its favor and dismissal of the complaint as well as fees and costs. Further, DAC
asserted counterclaims substantially similar to the claims alleged in the action
it filed against the Company on May 3, 2002. The Company believes its claims are
well supported and intends to pursue the action vigorously. In addition, the
Company intends to vigorously oppose DAC's motion to intervene and, if such
intervention is allowed, the Company intends to vigorously defend DAC's
counterclaims.

The Company believes that it has substantial defenses to these claims and
therefore has not accrued any liability.


                                       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 financial statements and the related notes to the 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 profit (loss) and identifiable assets
attributable to each of the Company's industry segments as of and for the three
and six months ended June 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 26.5%
and 20.1% of total net revenue for the three months ended June 30, 2002 and
2001, respectively, and 24.9% and 24.6% of total net revenue for the six months
ended June 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 June 30,                 Six Months Ended June 30,
                                                 --------------------------                 ---------------------------
                                                  2002                 2001                 2002                  2001
                                                 -----                -----                 -----                 -----
                                                         (unaudited)                                 (unaudited)
<S>                                             <C>                  <C>                   <C>                  <C>
Net revenues:
     Licenses and subscriptions                    4.9%                 2.8%                  6.8%                  1.7%
     Services                                     95.1                 97.2                  93.2                  98.3
                                                 -----                -----                 -----                 -----

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

Costs of revenues:
     Cost of licenses and subscriptions            1.5                  1.8                   1.5                   1.8
     Cost of services                             39.7                 43.7                  40.2                  47.9
                                                 -----                -----                 -----                 -----

           Total costs of revenues                41.2                 45.5                  41.7                  49.7
                                                 -----                -----                 -----                 -----

           Gross margin                           58.8                 54.5                  58.3                  50.3
                                                 -----                -----                 -----                 -----

Operating expenses:
     Selling and marketing                        19.0                 20.1                  18.4                  21.2
     General and administrative                   13.8                 18.3                  14.8                  20.2
     Research and development                     10.8                 17.5                  12.2                  19.2
                                                 -----                -----                 -----                 -----

           Total operating expenses               43.6                 55.9                  45.4                  60.7
                                                 -----                -----                 -----                 -----

Operating income (loss)                           15.2                 (1.4)                 12.9                 (10.4)
Other income, net                                  1.8                  3.5                   1.9                   4.7
Investment asset impairment charge                   -                    -                     -                 (38.7)
Gain on sale of domestic CRO operations              -                    -                   0.2                   1.8
                                                 -----                -----                 -----                 -----

Income (loss) before income taxes                 17.0                  2.1                  15.0                 (42.5)
Income tax provision (benefit)                     5.4                  0.9                   4.8                  (1.7)
Minority interest dividend                           -                    -                     -                   0.9
                                                 -----                -----                 -----                 -----

Net income (loss)                                 11.6%                 1.2%                 10.2%                (41.7)%
                                                 =====                =====                 =====                 =====
</TABLE>

                                       14
<PAGE>

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

Total net revenues increased 44.3% to $10.1 million for the three months ended
June 30, 2002 compared to $7.0 million for the three months ended June 30, 2001.

License and subscription revenues increased 150.5% to $496,000 for the three
months ended June 30, 2002 compared to $198,000 for the three months ended June
30, 2001. The increase in license and subscription revenues was primarily due to
an increase in software deliveries in the second quarter of 2002.

Total service revenues increased 41.2% to $9.6 million for the three months
ended June 30, 2002 compared to $6.8 million for the three months ended June 30,
2001.

Diagnostic service revenues increased 60.0% to $8.0 million for the three months
ended June 30, 2002 compared to $5.0 million for the three months ended June 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 24.1% to $573,000
for the three months ended June 30, 2002 compared to $755,000 for the three
months ended June 30, 2001. The decrease in technology consulting and training
service revenues was primarily due to reductions in support revenues from new
software installations and consulting activity for the Company's existing
clients.

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

Total cost of revenues increased 31.3% to $4.2 million for the three months
ended June 30, 2002 compared to $3.2 million for the three months ended June 30,
2001. As a percentage of total net revenues, total cost of revenues decreased to
41.2% for the three months ended June 30, 2002 from 45.5% for the three months
ended June 30, 2001.

The cost of licenses and subscriptions increased 18.8% to $152,000 for the three
months ended June 30, 2002 from $128,000 for the three months ended June 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 30.6% for the three months ended June 30, 2002 from
64.6% for the three months ended June 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 during
the three months ended June 30, 2002 without a comparable increase in costs,
many of which are fixed in nature.

The cost of services increased 33.3% to $4.0 million for the three months ended
June 30, 2002 from $3.0 million for the three months ended June 30, 2001. As a
percentage of service revenues, the cost of services decreased to 41.7% for the
three months ended June 30, 2002 from 44.1% for the three months ended June 30,
2001. The Company expects to begin depreciation of its internal use software
costs in the third quarter of 2002 which will result in an additional
depreciation charge to the cost of Diagnostic services of $80,000 to $100,000
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.

The cost of Diagnostic services increased 52.4% to $3.2 million for the three
months ended June 30, 2002 compared to $2.1 million for the three months ended
June 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.

                                       15
<PAGE>

As a percentage of Diagnostic service revenues, the cost of Diagnostic services
decreased to 40.0% for the three months ended June 30, 2002 from 42.0% for the
three months ended June 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 26.6% to
$441,000, or 77.0% of technology consulting and training service revenues, for
the three months ended June 30, 2002 compared to $601,000, or 79.6% of
technology consulting and training service revenues, for the three months ended
June 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 second quarter
of 2002.

The cost of software maintenance services decreased 12.8% to $326,000, or 32.6%
of software maintenance service revenues, for the three months ended June 30,
2002 compared to $374,000, or 37.4% of software maintenance service revenues,
for the three months ended June 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 second quarter of
2002.

Selling and marketing expenses increased 35.7% to $1.9 million for the three
months ended June 30, 2002 compared to $1.4 million for the three months ended
June 30, 2001. The increase in selling and marketing expenses was due primarily
to increased commissionable revenue and increased administrative costs due to
additional personnel. 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 19.0% for the three months ended June 30, 2002 from 20.1% for the three
months ended June 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 7.7% to $1.4 million for the three
months ended June 30, 2002 from $1.3 million for the three months ended June 30,
2001. The increase in general and administrative expenses was due primarily to
an increase in insurance, public relations and labor expense during the second
quarter of 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 of goodwill amortization expense for the three months ended June
30, 2002 due to the January 1, 2002 adoption of the Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142).
Under SFAS 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 June 30, 2001.

As a percentage of total net revenues, general and administrative expenses
decreased to 13.8% for the three months ended June 30, 2002 from 18.3% for the
three months ended June 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 which are primarily fixed in nature.

Research and development expenses decreased 8.3% to $1.1 million, or 10.8% of
total net revenues, for the three months ended June 30, 2002 from $1.2 million,
or 17.5% of total net revenues, for the three months ended June 30, 2001. The
decrease in research and development expenses was due primarily to a reduction
in labor, travel and other related costs during the second quarter of 2002. The
decrease in research and development expenses as a percentage of total net
revenues was 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. Additionally, the
Company recorded a net realized gain of $73,000 from the sale of shares of its
investment in Digital Angel Corporation (DAC) (formerly known as Medical
Advisory Systems, Inc.). Other income decreased to $186,000 from $243,000 for
the three months ended June 30, 2002 and 2001, respectively. The primary reason
for the decrease was due to lower cash and short-term investment balances and
lower interest rates during the second quarter of 2002.

                                       16
<PAGE>

The Company's effective tax rate was 32.0% and 39.9% for the three months ended
June 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 state
net operating loss carryforwards during the three months ended June 30, 2002. In
July 2002 New Jersey passed new tax legislation which could increase the
Company's 2002 income tax liability to New Jersey. The Company has not completed
its assessment of the impact of this new legislation. However, based on the
Company's preliminary assessment, the Company does not believe this new tax
legislation will have a significant impact on the Company's results of
operations for 2002.

Six months ended June 30, 2002 compared to six months ended June 30, 2001.

Total net revenues increased 43.4% to $18.5 million for the six months ended
June 30, 2002 compared to $12.9 million for the six months ended June 30, 2001.

License and subscription revenues increased 480.4% to $1.3 million for the six
months ended June 30, 2002 compared to $224,000 for the six months ended June
30, 2001. The increase in license and subscription revenues was primarily due to
an increase in software deliveries during the six months ended June 30, 2002.

Total service revenues increased 36.5% to $17.2 million for the six months ended
June 30, 2002 compared to $12.6 million for the six months ended June 30, 2001.

Diagnostic service revenues increased 57.1% to $14.3 million for the six months
ended June 30, 2002 compared to $9.1 million for the six months ended June 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 37.4% to $939,000
for the six months ended June 30, 2002 compared to $1.5 million for the six
months ended June 30, 2001. The decrease in technology consulting and training
service revenues was primarily due to reduced support revenues from new software
installations and consulting activity in support of the Company's software and
client needs.

Software maintenance service revenues decreased 5.0% to $1.9 million for the six
months ended June 30, 2002 compared to $2.0 million for the six months ended
June 30, 2001. The decrease in software maintenance service revenues was
primarily due to the suspension of maintenance on one product by one client as
of September 2001.

Total cost of revenues increased 20.3% to $7.7 million for the six months ended
June 30, 2002 compared to $6.4 million for the six months ended June 30, 2001.
As a percentage of total net revenues, total cost of revenues decreased to 41.7%
for the six months ended June 30, 2002 from 49.7% for the six months ended June
30, 2001.

The cost of licenses and subscriptions increased 22.2% to $286,000 for the six
months ended June 30, 2002 from $234,000 for the six months ended June 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 22.0% for the six months ended June 30, 2002 from
104.5% for the six months ended June 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 19.4% to $7.4 million for the six months ended
June 30, 2002 from $6.2 million for the six months ended June 30, 2001. As a
percentage of service revenues, the cost of services decreased to 43.0% for the
six months ended June 30, 2002 from 49.2% for the six months ended June 30,
2001. The Company expects to begin depreciation of its internal use software
costs in the third quarter of 2002 which will result in an additional
depreciation charge to the cost of Diagnostic services of $80,000 to $100,000
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.

                                       17
<PAGE>

The cost of Diagnostic services increased 40.5% to $5.9 million for the six
months ended June 30, 2002 compared to $4.2 million for the six months ended
June 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.

As a percentage of Diagnostic service revenues, the cost of Diagnostic services
decreased to 41.3% for the six months ended June 30, 2002 from 46.2% for the six
months ended June 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 31.8% to
$818,000 for the six months ended June 30, 2002 compared to $1.2 million for the
six months ended June 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 second quarter of 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 87.1% for the six
months ended June 30, 2002 from 80.0% for the six months ended June 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 11.7% to $652,000, or 34.3%
of software maintenance service revenues, for the six months ended June 30, 2002
compared to $738,000, or 36.9% of software maintenance service revenues, for the
six months ended June 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 six months ended
June 30, 2002.

Selling and marketing expenses increased 25.9% to $3.4 million for the six
months ended June 30, 2002 compared to $2.7 million for the six months ended
June 30, 2001. The increase in selling and marketing expenses was due primarily
to increased commissionable revenue, labor and advertising costs during the six
months ended June 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 18.4% for the six months ended June 30, 2002 from 21.2% for the six months
ended June 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 3.8% to $2.7 million for the six
months ended June 30, 2002 from $2.6 million for the six months ended June 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 six months ended June 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
six months ended June 30, 2002 due to the January 1, 2002 adoption of SFAS 142.
Under SFAS 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 $158,000 of
goodwill amortization expense for the six months ended June 30, 2001.

                                       18
<PAGE>

As a percentage of total net revenues, general and administrative expenses
decreased to 14.8% for the six months ended June 30, 2002 from 20.2% for the six
months ended June 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 which are largely fixed in nature.

Research and development expenses decreased 8.0% to $2.3 million, or 12.2% of
total net revenues, for the six months ended June 30, 2002 from $2.5 million, or
19.2% of total net revenues, for the six months ended June 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 six months ended June 30,
2002. 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. 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 that was earned on
the escrow accounts related to the sale of the domestic clinical research
operations to SCP Communications, Inc., during the six months ended June 30,
2002. Other income decreased to $344,000 from $604,000 for the six months ended
June 30, 2002 and 2001, respectively. The primary reason for the decrease was
due to lower cash and short-term investment balances and lower interest rates
during the first half of 2002.

The Company recorded an investment asset impairment charge of $5.0 million
during the six months ended June 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 six months ended June 30, 2002, the Company
recorded $35,000 of additional gain on the sale compared to $232,000 recorded in
the six months ended June 30, 2001. During the first quarter of 2002, the
Company finalized the accounting for the disposition related to certain
earn-outs. The Escrow Account has been terminated effective with 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 4.1% for the six months ended
June 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 asset
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. The Company has not completed its assessment of the impact of this
new legislation. However, based on the Company's preliminary assessment, the
Company does not believe this new tax legislation will have a significant impact
on the Company's results of operations for 2002.

Liquidity and Capital Resources

At June 30, 2002, the Company had $12.4 million of cash and cash equivalents and
$7.2 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 six months ended June 30, 2002, the Company's operations provided cash
of $2.7 million compared to $865,000 for the six months ended June 30, 2001. The
change was primarily the result of improved operating income partially offset by
increased accounts receivable for the six months ended June 30, 2002 compared to
the six months ended June 30, 2001.

                                       19
<PAGE>

During the six months ended June 30, 2002, the Company expended $2.9 million on
equipment purchases and costs related to internal use software compared to $1.4
million during the six months ended June 30, 2001. The increase was primarily
the result of higher internal use software costs during the current year
associated with the development of a new data and communications management
services software product to be 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", (SOP 98-1). The Company expects to begin
depreciation of its internal use software costs in the third quarter of 2002
which will result in an additional depreciation charge to the cost of Diagnostic
services of $80,000 to $100,000 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 February 2001, the Board of Directors authorized a stock buy-back program of
up to 750,000 shares of the Company's common stock. The share purchase
authorization allows the Company to make purchases from time to time on the open
market at prevailing prices or in privately negotiated transactions. Company
management will make the purchase decisions based upon market conditions and
other considerations. During the six months ending June 30, 2001, the Company
used $55,000 to purchase 15,000 shares of its common stock on the open market at
an average price of $3.67 per share. The Company did not purchase shares under
this program during the six months ended June 30, 2002.

During the six months ended June 30, 2002, the Company received $724,000 in cash
from the exercise of 161,000 stock options at exercise prices per option of
between $1.51 and $10.67. Additional cash of $120,000 was received in January
2002, which related to options exercised in 2001.

During the six months ended June 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 have not
settled due to a dispute between the Company and the transfer agent and DAC. A
gain of $546,000 on those shares will not be recognized by the Company until the
dispute with the transfer agent is settled. 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.

The Company has a line of credit arrangement with Wachovia Bank, National
Association totaling $3.0 million. At June 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.

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<PAGE>

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
investments decreased by 100 basis points, the Company's interest income for six
months ended June 30, 2002 would have decreased by less than $60,000. 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 international operations are generally reinvested.
To date, the effect of foreign currency fluctuations are reflected in the
Company's operating results and have not been material.

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 $150,000.

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.


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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 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 included 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 for Digital Angel's breach of the Services Agreement, seeking
compensatory, consequential and punitive damages, as well as fees and costs. The
Company is also seeking to enforce the provision of the Services Agreement which
requires arbitration of disputes. The Company believes that it has substantial
defenses to the claims set forth in this complaint, and intends to vigorously
defend this action.

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. in the Superior Court of New Jersey, Chancery Division, Mercer County. This
action was moved to the United States District Court for the District of New
Jersey (Docket No. 02-cv-3347). The Company's action alleges that U.S. Bank,
N.A., which is the transfer agent for the Digital Angel common stock, violated
Article 8 of the Uniform Commercial Code as a result of its refusal and/or
unreasonable delay in registering 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 seeks an order compelling U.S.
Bank to register the transfer of these shares, as well as compensatory damages,
fees and costs. Digital Angel filed a notice of motion to intervene as a party
defendant and to assume jurisdiction of supplemental claims on July 19, 2002. In
addition, Digital Angel filed an answer of intervening defendant on July 19,
2002 in which Digital Angel denies the allegations, provides affirmative
defenses, demands judgment in its favor and dismissal of the complaint as well
as fees and costs. Further, Digital Angel asserted counterclaims substantially
similar to the claims alleged in the action it filed against the Company on May
3, 2002 in Superior Court of New Jersey, Law Division, Atlantic County (Docket
No. ATL-L-1570-02). The Company believes its claims are well supported and
intends to pursue the action vigorously. In addition, the Company intends to
vigorously oppose Digital Angel's motion to intervene and, if such intervention
is allowed, the Company intends to vigorously defend Digital Angel's
counterclaims.

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

The Company held its Annual Meeting of Stockholders on April 23, 2002. The
matter submitted to the stockholders for vote was the election of two directors
to each serve a three-year term until 2005.

At the meeting, the stockholders elected Joel Morganroth, M.D. and James C. Gale
to the Board of Directors. Joel Morganroth, M.D. was elected with 5,807,333
shares voted for the election or 83.5% of the 6,951,812 shares outstanding and
eligible to vote with 17,474 shares withheld. James C. Gale was elected with
5,804,553 shares voted for the election or 83.5 % of the 6,951,812 shares
outstanding and eligible to vote with 20,254 shares withheld. With their
election, they joined Sheldon M. Bonovitz, Joseph A. Esposito, Arthur H. Hayes,
M.D., Howard D. Ross and John M. Ryan, as Directors of the Company. In July
2002, Messrs. Gale and Ross resigned as directors of the Company and Mr. Stephen
Phillips was appointed director of the Company.


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Item 6. Exhibits and Reports on Form 8-K

        a.) Exhibits

            10.60  Promissory Note to Wachovia Bank, National Association.

            10.61  Loan Agreement with Wachovia Bank, National Association.

            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 April 24, 2002, the Company filed a report on Form 8-K relating
            to financial information for eResearchTechnology, Inc. for the
            quarter ended March 31, 2002 and forward-looking statements relating
            to 2002 as presented in a press release of April 24, 2002.

            On July 8, 2002, the Company filed a report on Form 8-K relating to
            eResearchTechnology, Inc.'s dismissal of Arthur Andersen LLP as its
            independent accountant and the appointment of KPMG LLP as its new
            independent accountant, effective July 3, 2002.


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                                   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:  August 13, 2002             By: /s/      Joseph Esposito
                                       -----------------------------------------
                                       Joseph Esposito
                                       President and Chief Executive Officer




Date:  August 13, 2002             By: /s/   Bruce Johnson
                                       -----------------------------------------
                                       Bruce Johnson
                                       Senior Vice President and Chief Financial
                                           Officer (Principal Financial and
                                           Accounting Officer)


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