<PAGE>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

         [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended September 30, 2003.

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

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

The number of shares of Common Stock, $.01 par value, outstanding as of
October 31, 2003, was 22,426,463.



<PAGE>

                   eResearchTechnology, Inc. and Subsidiaries

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

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

         Item 1.     Consolidated Financial Statements

                     Consolidated Balance Sheets--December 31, 2002 and September 30, 2003 (unaudited)                3

                     Consolidated Statements of Operations (unaudited)--Three and
                     Nine months Ended September 30, 2002 and 2003                                                    4

                     Consolidated Statements of Cash Flows (unaudited)--Nine months
                     Ended September 30, 2002 and 2003                                                                5

                     Notes to Consolidated Financial Statements (unaudited)                                        6-11

         Item 2.     Management's Discussion and Analysis of Financial Condition and Results of
                     Operations                                                                                   12-23

         Item 3.     Qualitative and Quantitative Disclosures about Market Risk                                   23-24

         Item 4.     Controls and Procedures                                                                         24

Part II. Other Information

         Item 6.     Exhibits and Reports on Form 8-K                                                                25

                     a.) Exhibits

                     b.) Reports on Form 8-K

Signatures                                                                                                           26

Exhibit Index                                                                                                        27
</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>
                                                                December 31, 2002       September 30, 2003
                                                                -----------------       ------------------
                                                                                           (unaudited)
<S>                                                             <C>                     <C>
Assets

Current assets:
    Cash and cash equivalents                                        $17,443                 $28,527
    Short-term investments                                             9,307                  12,948
    Accounts receivable, net                                           6,954                  12,022
    Prepaid expenses and other                                         2,542                   2,521
    Deferred income taxes                                                485                     485
                                                                     -------                 -------
         Total current assets                                         36,731                  56,503

Property and equipment, net                                           12,587                  13,719
Goodwill                                                               1,212                   1,212
Investments in non-marketable securities                                 509                     509
Other assets                                                              21                      38
Deferred income taxes                                                  2,332                   3,336
                                                                     -------                 -------
                                                                     $53,392                 $75,317
                                                                     =======                 =======
Liabilities and Stockholders' Equity

Current liabilities:
    Accounts payable                                                 $ 2,000                 $ 1,968
    Accrued expenses                                                   3,705                   3,312
    Income taxes payable                                                 960                   1,167
    Current portion of capital lease obligations                         599                     643
    Deferred revenues                                                  4,774                   9,483
                                                                     -------                 -------
         Total current liabilities                                    12,038                  16,573
                                                                     -------                 -------

Capital lease obligations, excluding current portion                     774                     286
                                                                     -------                 -------

Commitments and contingencies

Stockholders' equity:
    Preferred stock - $10.00 par value, 500,000 shares authorized,
         none issued and outstanding                                       -                       -
    Common stock - $.01 par value, 50,000,000 shares authorized,
         22,924,382 and 24,135,736 shares issued, respectively           229                     241
    Additional paid-in capital                                        40,807                  49,440
    Accumulated other comprehensive income                               410                     707
    Retained earnings                                                  2,363                  11,460
    Treasury stock, 1,791,000 and 1,805,564 shares at cost            (3,229)                 (3,390)
                                                                     -------                 -------
         Total stockholders' equity                                   40,580                  58,458
                                                                     -------                 -------
                                                                     $53,392                 $75,317
                                                                     =======                 =======
</TABLE>

        The accompanying notes are an integral part of these statements.

<PAGE>


                   eResearchTechnology, Inc. and Subsidiaries
                      Consolidated Statements of Operations
                    (in thousands, except per share amounts)
                                   (unaudited)
<TABLE>
                                  Three Months Ended September 30,  Nine Months Ended September 30,
                                  --------------------------------  -------------------------------
                                    2002                  2003       2002                   2003
                                   -------               -------    -------                -------
<S>                                <C>                   <C>        <C>                    <C>
Net revenues:
  Licenses                         $   473               $ 2,513    $ 1,723                $ 4,856
  Services                          10,451                14,951     27,666                 40,967
                                   -------               -------    -------                -------

        Total net revenues          10,924                17,464     29,389                 45,823
                                   -------               -------    -------                -------

Costs of revenues:
  Cost of licenses                     279                   185        565                    517
  Cost of services                   4,773                 6,306     12,180                 17,123
                                   -------               -------    -------                -------

        Total costs of revenues      5,052                 6,491     12,745                 17,640
                                   -------               -------    -------                -------

        Gross margin                 5,872                10,973     16,644                 28,183
                                   -------               -------    -------                -------

Operating expenses:
  Selling and marketing              1,571                 1,870      4,968                  5,617
  General and administrative         1,441                 1,818      4,181                  4,896
  Research and development             915                 1,196      3,166                  3,400
                                   -------               -------    -------                -------

        Total operating expenses     3,927                 4,884     12,315                 13,913
                                   -------               -------    -------                -------

Operating income                     1,945                 6,089      4,329                 14,270
Other income, net                       58                    83        437                    227
                                   -------               -------    -------                -------
Income before income taxes           2,003                 6,172      4,766                 14,497
Income tax provision                   641                 2,299      1,525                  5,400
                                   -------               -------    -------                -------
Net income                         $ 1,362               $ 3,873    $ 3,241                $ 9,097
                                   =======               =======    =======                =======

Basic net income per share         $  0.06               $  0.17    $  0.16                $  0.42
                                   =======               =======    =======                =======
Diluted net income per share       $  0.06               $  0.16    $  0.14                $  0.38
                                   =======               =======    =======                =======
Shares used to calculate basic
  net income per share              21,032                22,143     20,908                 21,826
                                   =======               =======    =======                =======
Shares used to calculate diluted
  net income per share              22,846                24,342     22,492                 23,842
                                   =======               =======    =======                =======
</TABLE>




        The accompanying notes are an integral part of these statements.

                                        4
<PAGE>


                   eResearchTechnology, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                 (in thousands)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                         Nine Months Ended September 30,
                                                         -------------------------------
                                                              2002             2003
                                                              ----             ----
<S>                                                         <C>            <C>
Operating activities:
     Net income                                             $ 3,241          $ 9,097
     Adjustments to reconcile net income to net cash
          provided by operating activities:
               Gain on sale of marketable securities            (75)               -
               Depreciation and amortization                  2,058            3,595
               Issuance of stock options to non-employees         7                -
               Stock option income tax benefits                   -            5,320
               Changes in operating assets and liabilities:
                    Accounts receivable                      (1,694)          (4,989)
                    Prepaid expenses and other                 (958)             (13)
                    Accounts payable                            446              (51)
                    Accrued expenses                            (88)            (398)
                    Income taxes                              1,032             (838)
                    Deferred revenues                         1,743            4,681
                                                            -------          -------
                         Net cash provided by
                             operating activities             5,712           16,404
                                                            -------          -------

Investing activities:
     Purchases of property and equipment                     (4,583)          (4,646)
     Purchases of short-term investments                     (2,354)          (8,084)
     Proceeds from sales of short-term investments            1,816            4,443
     Proceeds from sales of marketable securities               720                -
                                                            -------          -------
                         Net cash used in investing
                             activities                      (4,401)          (8,287)
                                                            -------          -------
Financing activities:
     Repayments of capital lease obligations                   (314)            (444)
     Proceeds from exercise of stock options                  1,184            3,164
                                                            -------          -------
                         Net cash provided by
                             financing activities               870            2,720
                                                            -------          -------

Effect of exchange rate changes on cash                         260              247
                                                            -------          -------
Net increase in cash and cash equivalents                     2,441           11,084
Cash and cash equivalents, beginning of period               11,364           17,443
                                                            -------          -------
Cash and cash equivalents, end of period                    $13,805          $28,527
                                                            =======          =======
</TABLE>



        The accompanying notes are an integral part of these statements.





                                       5
<PAGE>



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

Note 1.  Basis of Presentation

The accompanying unaudited consolidated financial statements, which include the
accounts of eResearchTechnology, Inc. (the "Company") and its wholly owned
subsidiaries, have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three or nine month period ended September 30, 2003 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003. 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 intercompany
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 and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

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

Amortization of capitalized software development costs is charged to cost of
revenues. Amortization of capitalized software development costs was $168,000
and $318,000 for the three months ended September 30, 2002 and 2003,
respectively, and $168,000 and $888,000 for the nine months ended September 30,
2002 and 2003, respectively. For the nine months ended September 30, 2002 and
2003, the Company capitalized $1,876,000 and $842,000, respectively, of software
development costs. All research and development costs have been expensed as
incurred.

In accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No, 142, "Goodwill and Other Intangible Assets," and SFAS No. 144,
"Accounting for the Impairment and Disposal of Long-Lived Assets," when events
or circumstances so indicate, the Company assesses the potential impairment of
its intangible assets and other long-lived assets based on anticipated
undiscounted cash flows from the assets. Such events and circumstances include a
sale of all or a significant part of the operations associated with the
long-lived asset, or a significant decline in the operating performance of the
asset. If an impairment is indicated, the amount of the impairment charge would
be calculated by comparing the anticipated discounted future cash flows to the
carrying value of the long-lived asset. At September 30, 2003, no impairment was
indicated.


                                       6
<PAGE>


Stock-Based Compensation. In December 2002, SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure," was issued. SFAS No. 148
amended SFAS No. 123, "Accounting for Stock-Based Compensation," to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, SFAS
No. 148 amends the disclosure requirements of SFAS No. 123 related to the
disclosures about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. The disclosure provisions
of SFAS No. 148 are applicable to interim or annual periods that end after
December 15, 2002, and as such have been incorporated below.

SFAS No. 123, as amended by SFAS No. 148, permits companies to (i) recognize as
expense the fair value of stock-based awards, or (ii) continue to apply the
provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations, and provide pro forma
net income and earnings per share disclosures for employee stock option grants
as if the fair value based method defined in SFAS No. 123 had been applied. The
Company continues to apply the provisions of APB Opinion No. 25 and provide the
pro forma disclosures in accordance with the provisions of SFAS Nos. 123 and
148. Under APB Opinion No. 25, the Company has not recorded any stock-based
employee compensation cost associated with the Company's stock option plans, as
all options granted under the plans had an exercise price equal to the market
value of the underlying common stock on the date of grant.

The following table illustrates the effect on net income and earnings per share
if the Company had applied the fair value recognition provisions of SFAS No. 123
to its stock option plans (in thousands, except per share amounts):
<TABLE>
<CAPTION>
                                               Three Months Ended September 30,    Nine Months Ended September 30,
                                               --------------------------------    -------------------------------
                                                   2002              2003               2002            2003
                                                   ----              ----               ----            ----
<S>                                                 <C>             <C>                  <C>             <C>
Net income, as reported                            $1,362          $ 3,873             $3,241          $9,097
Deduct: Net stock-based employee
 compensation expense determined under
 fair value based method, net of related
 tax effects                                         (250)            (480)              (748)         (1,521)
                                                   ------          -------             ------          ------
Pro forma net income                               $1,112          $ 3,393             $2,493          $7,576
                                                   ======          =======             ======          ======
Earnings per share:
   Basic - as reported                              $0.06          $  0.17              $0.16           $0.42
   Basic - pro forma                                $0.05          $  0.15              $0.12           $0.35

   Diluted - as reported                            $0.06          $  0.16              $0.14           $0.38
   Diluted - pro forma                              $0.05          $  0.14              $0.11           $0.32
</TABLE>

Pro forma net income reflects only options granted through September 30, 2003
and, therefore, may not be representative of the effect for future periods.

Stock Splits. On July 16, 2002, the Company effected a 3-for-2 split of its
common stock. On May 29, 2003 the Company effected a 2-for-1 split of its common
stock. The stock splits have been retroactively reflected in the accompanying
consolidated financial statements.

Note 3.  Investment Impairment Charge - Non-Marketable Securities

At September 30, 2003, investments in non-marketable securities consist of an
investment in AmericasDoctor.com, Inc., which is accounted for under the cost
method in accordance with APB Opinion No. 18, "The Equity Method of Accounting
for Investments in Common Stock." During 2001, in accordance with APB Opinion
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 $509,000. For the three and
nine months ended September 30, 2002 and 2003, no investment impairment charge
was recorded.


                                       7
<PAGE>

The Company will continue to assess the fair value of this investment and
whether or not any decline in fair value below the current cost basis is deemed
to be other than temporary. If a decline in the fair value of this investment is
judged to be other than temporary, the cost basis of this investment would be
written down to fair value, and the amount of the write-down would be included
in the Company's results. Given the current performance and general market
conditions for technology related companies, additional write-downs of this
investment may occur in the future.

Note 4.  Net Income per Common 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 per
share is computed by dividing net income by the weighted average number of
shares of common stock outstanding during the period. Diluted net income per
share is computed by dividing net income 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 of stock options, using the
treasury stock method.

The tables below set forth the reconciliation of the numerators and denominators
of the basic and diluted net income per share computations (in thousands, except
per share amounts):

Three Months Ended September 30,
--------------------------------                                          Per
                                                     Net                 Share
2002                                                Income    Shares     Amount
------------------------------------                ------    ------     ------
Basic net income....................               $  1,362   21,032     $ 0.06
Effect of dilutive shares...........                      -    1,814     $    -
                                                   --------   ------     ------
Diluted net income..................               $  1,362   22,846     $ 0.06
                                                   ========   ======     ======
2003
------------------------------------
Basic net income....................               $  3,873   22,143     $ 0.17
Effect of dilutive shares...........                      -    2,199     $(0.01)
                                                   --------   ------     ------
Diluted net income..................               $  3,873   24,342     $ 0.16
                                                   ========   ======     ======
Options to purchase 3,545,958 shares of common stock were outstanding at
September 30, 2002 and were included in the computation of diluted net income
per share for the three months ended September 30, 2002.

Options to purchase 3,052,675 shares of common stock were outstanding at
September 30, 2003 and were included in the computation of diluted net income
per share for the three months ended September 30, 2003.


                                       8
<PAGE>



Nine Months Ended September 30,
-------------------------------                                       Per
                                            Net                      Share
2002                                       Income       Shares       Amount
-------------------------------            ------       ------       ------
Basic net income...............            $3,241       20,908       $  0.16
Effect of dilutive shares......                 -        1,584       $ (0.02)
                                           ------       ------       -------
Diluted net income.............            $3,241       22,492       $  0.14
                                           ======       ======       =======
2003
-------------------------------
Basic net income...............            $9,097       21,826       $  0.42
Effect of dilutive shares......                 -        2,016       $ (0.04)
                                           ------       ------       -------
Diluted net income.............            $9,097       23,842       $  0.38
                                           ======       ======       =======

Options to purchase 3,274,758 shares of common stock were outstanding at
September 30, 2002 and were included in the computation of diluted net income
per share for the nine months ended September 30, 2002. Options to purchase
271,200 shares of common stock were outstanding at September 30, 2002, but were
not included in the computation of diluted net income per share because the
option exercise prices were greater than the average market price of the
Company's common stock during the period.

Options to purchase 3,052,675 shares of common stock were outstanding at
September 30, 2003 and were included in the computation of diluted net income
per share for the nine months ended September 30, 2003.

Note 5.  Comprehensive Income

The Company follows SFAS No. 130, "Reporting Comprehensive Income." The
Company's comprehensive income includes net income and unrealized gains and
losses from foreign currency translation and marketable securities. For the nine
months ended September 30, 2002, the Company recorded accumulated foreign
currency translation income of $260,000. For the nine months ended September 30,
2003, the Company recorded a foreign currency translation adjustment of $297,000
which increased the accumulated balance to $707,000. For the nine months ended
September 30, 2002, the Company recorded an unrealized loss of $359,000 for the
mark to market of its investment in marketable securities.

Note 6. Recent Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
146, "Accounting for Costs Associated with Exit or Disposal Activities," which
addresses the financial accounting and reporting of expenses related to
restructurings initiated after 2002, and applies to costs associated with an
exit activity (including a restructuring) or with the disposal of long-lived
assets. Those activities can include eliminating or reducing product lines,
terminating employees and contracts, and relocating plant facilities or
personnel. Under SFAS No. 146, a company will record a liability for a cost
associated with an exit or disposal activity when the liability is incurred and
can be measured at fair value. The provisions of SFAS No. 146 are effective
prospectively for exit or disposal activities initiated after December 31, 2002.
The adoption of SFAS No. 146 did not have any impact on the Company's financial
statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others," which elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations
under guarantees issued. The Interpretation also clarifies that a guarantor is
required to recognize, at inception of a guarantee, a liability for the fair
value of the obligation undertaken. The initial recognition and measurement
provisions of the Interpretation are applicable to guarantees issued or modified
after December 31, 2002. The disclosure requirements are effective for financial
statements of interim or annual periods ending after December 15, 2002. The
adoption of FASB Interpretation No. 45 did not have any impact on the Company's
financial statements.



                                       9
<PAGE>

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities," which addresses the consolidation by business
enterprises of variable interest entities as defined in the Interpretation. The
Interpretation applies immediately to variable interests in variable interest
entities created after January 31, 2003, and to variable interests in variable
interest entities obtained after January 31, 2003. The application of this
Interpretation did not have any impact on the Company's financial statements.

The Emerging Issues Task Force (EITF) recently reached a consensus on EITF Issue
No. 00-21, "Revenue Arrangements with Multiple Deliverables," which provides
accounting guidance for customer solutions where delivery or performance of
products, services and/or performance may occur at different points in time or
over different periods of time. Companies are required to adopt this consensus
for fiscal periods beginning after June 15, 2003. The adoption of EITF Issue No.
00-21 did not have any impact on the Company's financial statements.

Note 7.  Operating Segments / Geographic Information

Commencing in 2003, the Company considers its operations to consist of one
segment. The development of the one segment approach corresponds to the
implementation of the Company's refinement in strategic focus in late 2002, and
represents management's view of the Company's operations. Prior to 2003, the
Company's reportable segments were Cardiac Safety and Clinical Research
Technology and Services. All prior periods have been restated to conform to the
current-year presentation.

The Company operates on a worldwide basis with two locations in the United
States and one location in the United Kingdom, which is categorized below as
North America and Europe, respectively.

Geographic information is as follows:

                          Three Months Ended September 30, 2002
                        ------------------------------------------
                          North
                         America         Europe             Total
                       ----------       ---------         --------
License revenues        $    441         $    32           $   473
Service revenues           7,576           2,875            10,451
                        --------         -------           -------
Net revenues from
  external customers    $  8,017         $ 2,907           $10,924
                        ========         =======           =======
Operating income        $    851         $ 1,094           $ 1,945
Identifiable assets     $ 42,058         $ 5,387           $47,445

                          Three Months Ended September 30, 2003
                        ------------------------------------------
                          North
                         America         Europe             Total
                        ---------       --------           -------
License revenues        $  2,259        $    254          $  2,513
Service revenues          11,274           3,677            14,951
                        --------        --------          --------
Net revenues from
  external customers    $ 13,533        $  3,931          $ 17,464
                        ========        ========          ========
Operating income        $  4,474        $  1,615          $  6,089
Identifiable assets     $ 65,295        $ 10,022          $ 75,317



                                       10
<PAGE>

                          Nine Months Ended September 30, 2003
                        ------------------------------------------
                          North
                         America         Europe             Total
                        ---------       --------           -------
License revenues        $  1,660         $    63          $  1,723
Service revenues          20,218           7,448            27,666
                        --------         -------          --------
Net revenues from
  external customers    $ 21,878         $ 7,511          $ 29,389
                        ========         =======          ========
Operating income        $  1,842         $ 2,487          $  4,329
Identifiable assets     $ 42,058         $ 5,387          $ 47,445



                          Nine Months Ended September 30, 2003
                        ------------------------------------------
                          North
                         America          Europe             Total
                        --------         -------           -------
License revenues        $  4,210         $   646           $ 4,856
Service revenues          31,688           9,279            40,967
                        --------         -------           -------
Net revenues from
  external customers    $ 35,898         $ 9,925           $45,823
                        ========         =======           =======
Operating income        $ 10,354         $ 3,916           $14,270
Identifiable assets     $ 65,295         $10,022           $75,317



Note 8.  Subsequent Event

On October 22, 2003, the Company announced that its Board of Directors approved
a 3-for-2 split of its common stock. The shares will be distributed on November
26, 2003 to stockholders of record on November 5, 2003.



                                       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 our
financial statements and the related notes to the financial statements appearing
elsewhere in this report. The following includes a number of forward-looking
statements made pursuant to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995 that reflect our current views with respect to
future events and financial performance. We use words such as anticipate,
believe, expect, intend, 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 our 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 our Report
on Form 10-K for the year ended December 31, 2002. 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
our financial results can be found in our Reports on Form 10-Q for the quarters
ended March 31, 2003 and June 30, 2003 filed with the Securities and Exchange
Commission and throughout this Form 10-Q.

Overview

We are a provider of technology and services that enable the pharmaceutical,
biotechnology and medical device industries to collect, interpret and distribute
cardiac safety and clinical data more efficiently. We are a market leader in
providing centralized electrocardiographic (ECG) services (Cardiac Safety
services) and a leading provider of technology and services that streamline the
clinical trials process by enabling our customers to evolve from traditional,
paper-based methods to electronic processing that leverages the power of the
Internet.

We were founded in 1977 to provide a number of clinical research related
services, including Cardiac Safety services, used to evaluate the safety of new
drugs. In February 1997, we completed an initial public offering of our common
stock. In October 1997, we acquired the assets and business of a provider of
clinical research technology and consulting services to the pharmaceutical,
biotechnology and medical device industry. Starting in 2000, we concentrated our
products and services offerings on providing premier Cardiac Safety services and
clinical research technology and consulting services.

Our solutions improve the collection, analysis and distribution of cardiac
safety and clinical data in order to safely accelerate new drug and device
development processes. We offer the following products and services on a global
basis:

         Cardiac Safety. Cardiac Safety / EXPeRT(TM) ECG services provide
         intelligent, workflow-enabled data handling and distribution of digital
         and paper-based ECG data and images as well as analysis and physician
         electrocardiographer interpretation of ECGs performed on research
         subjects in connection with our customers' clinical trials.

         eResNet(TM). The eResearch Network(TM) (eResNet) technology provides an
         integrated end-to-end clinical research solution that includes trials,
         data and safety management modules.

         eDE(TM). eData Entry(TM) (eDE) technology provides a comprehensive
         electronic data capture (EDC) capability comprised of technology
         formulated to deliver rapid time to market benefit for electronic trial
         initiatives.

         eResCom(TM). eResearch Community(TM) (eResCom) is a central command and
         control Web portal that provides real-time information related to
         monitoring clinical trial activities, data quality and safety.

         Consulting. We provide a full spectrum of consulting services for all
         of our products that augment the implementation and execution efforts
         of customers.

                                       12
<PAGE>

Our license revenues consist of license fees for perpetual license sales and
monthly and annual license sales. Our services revenues consist of Cardiac
Safety services, technology consulting and training services and software
maintenance services. We recognize software revenues in accordance with
Statement of Position 97-2, Software Revenue Recognition, as amended by
Statement of Position 98-9. Accordingly, we recognize up-front license fee
revenues under the residual method when a formal agreement exists, delivery of
the software and related documentation has occurred, collectability is probable
and the license fee is fixed or determinable. We recognize monthly and annual
license fee revenues over the term of the arrangement. Hosting service fees are
recognized evenly over the term of service. Cardiac Safety service revenues
consist of revenues from services that we provide on a fee-for-service basis and
we recognize such revenues as the services are performed. We recognize revenues
from software maintenance contracts on a straight-line basis over the term of
the maintenance contract, which is typically twelve months. We provide
consulting and training services on a time and materials basis and recognize
revenues as we perform the services.

Cost of licenses consists primarily of application service provider (ASP) fees
for those customers that choose hosting, the cost of producing compact disks and
related documentation and royalties paid to third parties in connection with
their contributions to our product development. Cost of services includes the
cost of Cardiac Safety services and the cost of technology consulting, training
and maintenance services. Cost of Cardiac Safety services consists primarily of
direct costs related to our centralized Cardiac Safety services and includes
wages, fees paid to outside consultants, depreciation, 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 our consulting and
customer support functions. Selling and marketing expenses consist primarily of
wages and commissions paid to sales personnel, travel expenses and advertising
and promotional expenditures. General and administrative expenses consist
primarily of wages and direct costs for our finance, administrative, corporate
information technology and executive management functions, in addition to
professional service fees and corporate insurance. Research and development
expenses consist primarily of wages paid to our product development staff, costs
paid to outside consultants and direct costs associated with the development of
our technology products.

We conduct our operations through offices in the United States and the United
Kingdom (UK). Our international net revenues represented 26.6% and 22.5% of
total net revenue for the three months ended September 30, 2002 and 2003,
respectively, and 25.5% and 21.7% of total net revenue for the nine months ended
September 30, 2002 and 2003, respectively.





                                       13
<PAGE>


Results of Operations

The following table presents certain financial data as a percentage of total net
revenues:
<TABLE>
<CAPTION>
                               Three Months Ended September 30,   Nine Months Ended September 30,
                               --------------------------------   -------------------------------
                                         2002       2003               2002            2003
                                         ----       ----               ----            ----
<S>                                  <C>        <C>                 <C>             <C>
Net revenues:
  Licenses                               4.3%       14.4%              5.9%            10.6%
  Services                              95.7%       85.6%             94.1%            89.4%
                                       ------      ------            ------           ------
Total net revenues                     100.0%      100.0%            100.0%           100.0%
                                       ------      ------            ------           ------
Costs of revenues:
  Cost of licenses                       2.6%        1.1%              1.9%             1.1%
  Cost of services                      43.6%       36.1%             41.5%            37.4%
                                       ------      ------            ------           ------
          Total costs of revenues       46.2%       37.2%             43.4%            38.5%
                                       ------      ------            ------           ------
          Gross margin                  53.8%       62.8%             56.6%            61.5%
                                       ------      ------            ------           ------
Operating expenses:
  Selling and marketing                 14.4%       10.7%             16.9%            12.3%
  General and administrative            13.2%       10.4%             14.2%            10.7%
  Research and development               8.4%        6.8%             10.8%             7.4%
                                       ------      ------            ------           ------
          Total operating expenses      36.0%       27.9%             41.9%            30.4%
                                       ------      ------            ------           ------
Operating income                        17.8%       34.9%             14.7%            31.1%
Other income, net                        0.5%        0.5%              1.5%             0.5%
                                       ------      ------            ------           ------
Income before income taxes              18.3%       35.4%             16.2%            31.6%
Income tax provision                     5.8%       13.2%              5.2%            11.7%
                                       ------      ------            ------           ------
Net income                              12.5%       22.2%             11.0%            19.9%
                                       ======      ======            ======           ======
</TABLE>






                                       14
<PAGE>



Three Months Ended September 30, 2003 Compared to Three Months Ended
September 30, 2002.

The following table presents statements of operations with product line detail
(in thousands):
<TABLE>
<CAPTION>

                                      Three Months Ended September 30,
                                      --------------------------------
                                            2002            2003            Increase (Decrease)
                                      ---------------    -------------  ----------------------------
<S>                                  <C>              <C>                <C>              <C>
Licenses:
     Net revenues                          $  473        $  2,513           $ 2,040        431.3%
     Costs of revenues                        279             185               (94)       (33.7%)
                                           ------        --------           -------
     Gross margin                             194           2,328             2,134       1100.0%
Services:
  Cardiac Safety
     Net revenues                           8,824          12,992             4,168         47.2%
     Costs of revenues                      4,090           5,263             1,173         28.7%
                                           ------        --------           -------
     Gross margin                           4,734           7,729             2,995         63.3%
Technology consulting and training
     Net revenues                             656             997               341         52.0%
     Costs of revenues                        394             769               375         95.2%
                                           ------        --------           -------
     Gross margin                             262             228               (34)       (13.0%)
Software maintenance
     Net revenues                             971             962                (9)        (0.9%)
     Costs of revenues                        289             274               (15)        (5.2%)
                                           ------        --------           -------
     Gross margin                             682             688                 6          0.9%
Total services
     Net revenues                          10,451          14,951             4,500         43.1%
     Costs of revenues                      4,773           6,306             1,533         32.1%
                                           ------        --------           -------
     Gross margin                           5,678           8,645             2,967         52.3%
Total
      Net revenues                         10,924          17,464             6,540         59.9%
      Costs of revenues                     5,052           6,491             1,439         28.5%
                                           ------        --------           -------
     Gross margin                           5,872          10,973             5,101         86.9%

Operating expenses:
     Selling and marketing                  1,571           1,870               299         19.0%
     General and administrative             1,441           1,818               377         26.2%
     Research and development                 915           1,196               281         30.7%
                                           ------        --------           -------
Total operating expenses                    3,927           4,884               957         24.4%
                                           ------        --------           -------
Operating income                            1,945           6,089             4,144        213.1%
Other income, net                              58              83                25         43.1%
                                           ------        --------           -------
Income before income taxes                  2,003           6,172             4,169        208.1%
Income tax provision                          641           2,299             1,658        258.7%
                                           ------        --------           -------
Net income                                 $1,362        $  3,873           $ 2,511        184.4%
                                           ======        ========           =======
</TABLE>



                                       15
<PAGE>

The following table presents costs of revenues as a percentage of related net
revenues and operating expenses as a percentage of total net revenues:
<TABLE>
<CAPTION>
                                      Three Months Ended September 30,
                                      --------------------------------      Increase
                                         2002              2003            (Decrease)
                                      --------------------------------  --------------
<S>                                   <C>             <C>               <C>
Cost of licenses                         59.0%             7.4%             (51.6%)
Cost of services:
 Cardiac Safety                          46.4%            40.5%              (5.9%)
 Technology consulting and training      60.1%            77.1%              17.0%
 Software maintenance                    29.8%            28.5%              (1.3%)
    Total cost of services               45.7%            42.2%              (3.5%)
Total costs of revenues                  46.2%            37.2%              (9.0%)

Operating expenses:
 Selling and marketing                   14.4%            10.7%              (3.7%)
 General and administrative              13.2%            10.4%              (2.8%)
 Research and development                 8.4%             6.8%              (1.6%)
</TABLE>





Total net revenues increased 59.9% to $17.5 million for the three months ended
September 30, 2003 compared to $10.9 million for the three months ended
September 30, 2002.

License revenues increased 431.3% to $2.5 million for the three months ended
September 30, 2003 from $473,000 for the three months ended September 30, 2002.
The increase in license revenues was primarily due to the sale of five perpetual
licenses in the three months ended September 30, 2003 versus two perpetual
licenses in the three months ended September 30, 2002 as well as an increase in
software licensed on a monthly and annual basis with new clients.

Total service revenues increased 43.1% to $15.0 million for the three months
ended September 30, 2003 from $10.5 million for the three months ended September
30, 2002.

Cardiac Safety service revenues increased 47.2% to $13.0 million for the three
months ended September 30, 2003 compared to $8.8 million for the three months
ended September 30, 2002. The increase in Cardiac Safety service revenues was
primarily due to increased sales volume with both new and existing clients,
including an increase in revenue from the rental of cardiac safety equipment,
which our clients use to perform cardiac safety procedures. Additionally, the
average revenue per transaction has increased with a shift to digital ECG
processing and the implementation of project assurance fees.

Technology consulting and training service revenues increased 52.0% to $997,000
for the three months ended September 30, 2003 compared to $656,000 for the three
months ended September 30, 2002. The increase in technology consulting and
training service revenues was primarily due to increased consulting activity for
new clients as well as increases in implementation fees from new licenses.

Software maintenance service revenues decreased 0.9% to $962,000 for the three
months ended September 30, 2003 compared to $971,000 for the three months ended
September 30, 2002. Software maintenance service revenues decreased due to a
reduction in users at one client that occurred earlier in 2003. The full
quarterly impact on software maintenance service revenues of perpetual license
sales that occurred in the third quarter of 2003 will not be recognized until
the fourth quarter of 2003. Annual licenses do not contain a separate
maintenance component.

Total cost of revenues increased 28.5% to $6.5 million for the three months
ended September 30, 2003 compared to $5.1 million for the three months ended
September 30, 2002. As a percentage of total net revenues, total cost of
revenues decreased to 37.2% for the three months ended September 30, 2003 from
46.2% for the three months ended September 30, 2002.


                                       16
<PAGE>



The cost of licenses decreased 33.7% to $185,000, or 7.4% of license revenues,
for the three months ended September 30, 2003 from $279,000, or 59.0% of license
revenues, for the three months ended September 30, 2002. The decrease in the
cost of licenses, both in absolute terms and as a percentage of license
revenues, was primarily due to a decrease in ASP hosting fees associated with a
change in ASP hosting providers at the beginning of 2003. Additionally, the cost
of licenses as a percentage of license revenues decreased due to the increase in
revenue from perpetual licenses that have very little incremental cost of sales.

The cost of services increased 32.1% to $6.3 million for the three months ended
September 30, 2003 from $4.8 million for the three months ended September 30,
2002. As a percentage of service revenues, the cost of services decreased to
42.2% for the three months ended September 30, 2003 from 45.7% for the three
months ended September 30, 2002.

The cost of Cardiac Safety services increased 28.7% to $5.3 million for the
three months ended September 30, 2003 compared to $4.1 million for the three
months ended September 30, 2002. The increase in the cost of Cardiac Safety
services was primarily due to an increase in rental and depreciation costs
associated with cardiac safety rental equipment, and increased labor, facilities
and other costs associated with expanding capabilities to meet the growth in
Cardiac Safety service revenues. We also began amortization of our internal use
software costs during the third quarter of 2002. Additional internal use
software costs were capitalized throughout the remainder of 2002 and through the
first quarter of 2003. We began amortizing the additional capitalized costs in
the second quarter of 2003. Amortization expense related to internal use
software costs was $318,000 for the three months ended September 30, 2003
compared with $168,000 for the three months ended September 30, 2002.

As a percentage of Cardiac Safety service revenues, the cost of Cardiac Safety
services decreased to 40.5% for the three months ended September 30, 2003 from
46.4% for the three months ended September 30, 2002. The decrease in the cost of
Cardiac Safety services as a percentage of Cardiac Safety service revenues was
primarily due to the fact that some of the costs are fixed in nature.

The cost of technology consulting and training services increased 95.2% to
$769,000, or 77.1% of technology consulting and training service revenues, for
the three months ended September 30, 2003 from $394,000, or 60.1% of technology
consulting and training service revenues, for the three months ended September
30, 2002. The increase in the cost of technology consulting and training
services, both in absolute terms and as a percentage of consulting and training
service revenues, was due primarily to increased third party consulting and
labor costs associated with the increase in technology consulting and training
service revenues as well as increased bonuses due to improved performance in the
three months ended September 30, 2003 versus the three months ended September
30, 2002.

The cost of software maintenance services decreased 5.2% to $274,000, or 28.5%
of software maintenance service revenues, for the three months ended September
30, 2003, from $289,000, or 29.8% of software maintenance service revenues, for
the three months ended September 30, 2002. The decrease in the cost of software
maintenance services, both in absolute terms and as a percentage of software
maintenance service revenues, was due primarily to employee placement fees that
were incurred in the third quarter of 2002 that did not occur in the third
quarter of 2003.

Selling and marketing expenses increased 19.0% to $1.9 million for the three
months ended September 30, 2003 from $1.6 million for the three months ended
September 30, 2002. The increase in selling and marketing expenses was primarily
due to increases in commissions that resulted from the increase in
commissionable revenue, bonuses and labor that were partially offset by planned
reductions in advertising expenses.

As a percentage of total net revenues, selling and marketing expenses decreased
to 10.7% for the three months ended September 30, 2003 from 14.4% for the three
months ended September 30, 2002. The decrease in selling and marketing expenses
as a percentage of total net revenues was primarily due to the increase in total
net revenues partially offset by the increase in selling and marketing expenses.
Many selling and marketing expenses are discretionary in nature and can be
increased or decreased as deemed necessary by management and do not necessarily
increase or decrease with changes in revenue.


                                       17
<PAGE>


General and administrative expenses increased 26.2% to $1.8 million for the
three months ended September 30, 2003 from $1.4 million for the three months
ended September 30, 2002. The increase in general and administrative expenses
was due primarily to an increase in insurance expense, bonuses, payroll taxes
related to stock option exercises and legal fees during the three months ended
September 30, 2003.

As a percentage of total net revenues, general and administrative expenses
decreased to 10.4% for the three months ended September 30, 2003 from 13.2% for
the three months ended September 30, 2002. The decrease in general and
administrative expenses as a percentage of total net revenues was primarily due
to the fact that many of the general and administrative expenses are fixed in
nature.

Research and development expenses increased by 30.7% to $1.2 million for the
three months ended September 30, 2003 from $915,000 for the three months ended
September 30, 2002. The increase in research and development expenses was due
primarily to an increase in third-party consulting, labor costs and bonuses
offset by lower employee placement fees during the three months ended September
30, 2003.

As a percentage of total net revenues, research and development expenses
decreased to 6.8% for the three months ended September 30, 2003 from 8.4% for
the three months ended September 30, 2002. The decrease in research and
development expenses as a percentage of total net revenues was primarily due to
the fact that many of the research and development expenses are fixed in nature.

Other income, net, consisted primarily of interest income realized from our
cash, cash equivalents and short-term investments, net of interest expense
related to capital lease obligations. Other income, net, increased 43.1% to
$83,000 for the three months ended September 30, 2003 compared to $58,000 for
the three months ended September 30, 2002. The primary reason for the increase
was higher balances of cash and cash equivalents and short-term investments
offset by lower interest rates during the third quarter of 2003.

Our effective tax rate was 32.0% and 37.3% for the three months ended September
30, 2002 and 2003, respectively. The 2003 tax rate increased primarily due to
new tax legislation that increased our 2003 income tax liability to New Jersey
as well as our decision to provide deferred taxes for the repatriation of
foreign earnings, which was made in the fourth quarter of 2002.

                                       18
<PAGE>

Nine Months Ended September 30, 2003 Compared to Nine Months Ended September 30,
2002.

The following table presents statements of operations with product line detail
(in thousands):
<TABLE>
<CAPTION>
                             Nine Months Ended September 30,
                             -------------------------------
                                  2002            2003          Increase (Decrease)
                             --------------  ---------------   --------------------
<S>                             <C>             <C>           <C>          <C>
Licenses:
     Net revenues                  $ 1,723        $  4,856          $ 3,133     181.8%
     Costs of revenues                 565             517              (48)     (8.5%)
                                   -------        --------          -------
     Gross margin                    1,158           4,339            3,181     274.7%
Services:
 Cardiac Safety
     Net revenues                   23,161          35,264           12,103      52.3%
     Costs of revenues              10,027          14,243            4,216      42.0%
                                   -------        --------          -------
     Gross margin                   13,134          21,021            7,887      60.1%
 Technology consulting and training
     Net revenues                    1,595           2,759            1,164      73.0%
     Costs of revenues               1,212           2,081              869      71.7%
                                   -------        --------          -------
     Gross margin                      383             678              295      77.0%
 Software maintenance
     Net revenues                    2,910           2,944               34       1.2%
     Costs of revenues                 941             799             (142)    (15.1%)
                                   -------        --------          -------
     Gross margin                    1,969           2,145              176       8.9%
   Total services
     Net revenues                   27,666          40,967           13,301      48.1%
     Costs of revenues              12,180          17,123            4,943      40.6%
                                   -------        --------          -------
     Gross margin                   15,486          23,844            8,358      54.0%
Total
     Net revenues                   29,389          45,823           16,434      55.9%
     Costs of revenues              12,745          17,640            4,895      38.4%
                                   -------        --------          -------
     Gross margin                   16,644          28,183           11,539      69.3%

Operating expenses:
 Selling and marketing               4,968           5,617              649      13.1%
 General and administrative          4,181           4,896              715      17.1%
 Research and development            3,166           3,400              234       7.4%
                                   -------        --------          -------
Total operating expenses            12,315          13,913            1,598      13.0%
                                   -------        --------          -------
Operating income                     4,329          14,270            9,941     229.6%
Other income, net                      437             227             (210)    (48.1%)
                                   -------        --------          -------
Income before income taxes           4,766          14,497            9,731     204.2%
Income tax provision                 1,525           5,400            3,875     254.1%
                                   -------        --------          -------
Net income                         $ 3,241         $ 9,097         $  5,856     180.7%
                                   =======        ========         ========
</TABLE>




                                       19
<PAGE>






The following table presents costs of revenues as a percentage of related net
revenues and operating expenses as a percentage of total net revenues:
<TABLE>
<CAPTION>
                                    Nine Months Ended September 30,
                                    --------------------------------
                                         2002           2003              Decrease
                                    --------------------------------   ---------------
<S>                                   <C>             <C>             <C>
Cost of licenses                         32.8%          10.6%             (22.2%)
Cost of services:
  Cardiac Safety                         43.3%          40.4%              (2.9%)
  Technology consulting and training     76.0%          75.4%              (0.6%)
  Software maintenance                   32.3%          27.1%              (5.2%)
     Total cost of services              44.0%          41.8%              (2.2%)
Total costs of revenues                  43.4%          38.5%              (4.9%)

Operating expenses:
  Selling and marketing                  16.9%          12.3%              (4.6%)
  General and administrative             14.2%          10.7%              (3.5%)
  Research and development               10.8%           7.4%              (3.4%)
</TABLE>


Total net revenues increased 55.9% to $45.8 million for the nine months ended
September 30, 2003 compared to $29.4 million for the nine months ended September
30, 2002.

License revenues increased 181.8% to $4.9 million for the nine months ended
September 30, 2003 from $1.7 million for the nine months ended September 30,
2002. The increase in license revenues was primarily due an increase in software
licensed on a monthly and annual basis with new clients and the sale of eleven
perpetual licenses in the nine months ended September 30, 2003 versus five
perpetual licenses in the nine months ended September 30, 2002.

Total service revenues increased 48.1% to $41.0 million for the nine months
ended September 30, 2003 from $27.7 million for the nine months ended September
30, 2002.

Cardiac Safety service revenues increased 52.3% to $35.3 million for the nine
months ended September 30, 2003 compared to $23.2 million for the nine months
ended September 30, 2002. The increase in Cardiac Safety service revenues was
primarily due to increased sales volume with both new and existing clients,
including an increase in revenue from the rental of cardiac safety equipment,
which our clients use to perform cardiac safety procedures. Additionally, the
average revenue per transaction has increased with a shift to digital ECG
processing and the implementation of project assurance fees.

Technology consulting and training service revenues increased 73.0% to $2.8
million for the nine months ended September 30, 2003 compared to $1.6 million
for the nine months ended September 30, 2002. The increase in technology
consulting and training service revenues was primarily due to increased
consulting activity for new clients as well as increases in implementation fees
from new licenses.

Software maintenance service revenues remained constant at $2.9 million for the
nine months ended September 30, 2003 and 2002. Software maintenance service
revenues did not increase proportionately with license revenues due to a
reduction in users at one client that occurred in 2003 offset by sales of
perpetual licenses in 2003. The full impact on software maintenance service
revenues of perpetual license sales that occurred in 2003 will not be recognized
until the following year. Annual licenses do not contain a separate maintenance
component.

Total cost of revenues increased 38.4% to $17.6 million for the nine months
ended September 30, 2003 compared to $12.7 million for the nine months ended
September 30, 2002. As a percentage of total net revenues, total cost of
revenues decreased to 38.5% for the nine months ended September 30, 2003 from
43.4% for the nine months ended September 30, 2002.

The cost of licenses decreased 8.5% to $517,000, or 10.6% of license revenues,
for the nine months ended September 30, 2003 from $565,000, or 32.8% of license
revenues, for the nine months ended September 30, 2002. The decrease in the cost
of licenses, both in absolute terms and as a percentage of license revenues, was
primarily due to a decrease in ASP hosting fees associated with a change in ASP
hosting providers at the beginning of 2003. Additionally, the cost of licenses
as a percentage of license revenues decreased due to the increase in revenue
from perpetual licenses that have very little incremental cost of sales.

                                       20
<PAGE>

The cost of services increased 40.6% to $17.1 million for the nine months ended
September 30, 2003 from $12.2 million for the nine months ended September 30,
2002. As a percentage of service revenues, the cost of services decreased to
41.8% for the nine months ended September 30, 2003 from 44.0% for the nine
months ended September 30, 2002.

The cost of Cardiac Safety services increased 42.0% to $14.2 million for the
nine months ended September 30, 2003 compared to $10.0 million for the nine
months ended September 30, 2002. The increase in the cost of Cardiac Safety
services was primarily due to an increase in rental and depreciation costs
associated with cardiac safety rental equipment, and increased labor, facilities
and other costs associated with expanding capabilities to meet the growth in
Cardiac Safety service revenues. We also began amortization of our internal use
software costs during the third quarter of 2002. Additional internal use
software costs were capitalized throughout the remainder of 2002 and through the
first quarter of 2003. We began amortizing the additional capitalized costs in
the second quarter of 2003. Amortization expense related to internal use
software costs was $888,000 for the nine months ended September 30, 2003 and
$168,000 for the nine months ended September 30, 2002.

As a percentage of Cardiac Safety service revenues, the cost of Cardiac Safety
services decreased to 40.4% for the nine months ended September 30, 2003 from
43.3% for the nine months ended September 30, 2002. The decrease in the cost of
Cardiac Safety services as a percentage of Cardiac Safety service revenues was
primarily due to the fact that some of the costs are fixed in nature.

The cost of technology consulting and training services increased 71.7% to $2.1
million for the nine months ended September 30, 2003 from $1.2 million for the
nine months ended September 30, 2002. The increase in the cost of technology
consulting and training services was due primarily to increased third party
consulting and labor costs associated with the increase in technology consulting
and training service revenues as well as increased bonuses due to improved
performance in the nine months ended September 30, 2003 versus the nine months
ended September 30, 2002.

The cost of technology consulting and training services as a percentage of
technology consulting and training service revenues decreased to 75.4% for the
nine months ended September 30, 2003 from 76.0% for the nine months ended
September 30, 2002.

The cost of software maintenance services decreased 15.1% to $799,000, or 27.1%
of software maintenance service revenues, for the nine months ended September
30, 2003, from $941,000, or 32.3% of software maintenance service revenues, for
the nine months ended September 30, 2002. The decrease in the cost of software
maintenance services, both in absolute terms and as a percentage of software
maintenance service revenues, was due primarily to a reduction in labor, office
rent, depreciation and other costs during the nine months ended September 30,
2003.

Selling and marketing expenses increased 13.1% to $5.6 million for the nine
months ended September 30, 2003 from $5.0 million for the nine months ended
September 30, 2002. The increase in selling and marketing expenses was primarily
due to increases in commissions that resulted from the increase in
commissionable revenue, bonuses and labor that were partially offset by planned
reductions in advertising expenses.

As a percentage of total net revenues, selling and marketing expenses decreased
to 12.3% for the nine months ended September 30, 2003 from 16.9% for the nine
months ended September 30, 2002. The decrease in selling and marketing expenses
as a percentage of total net revenues was primarily due to the increase in total
net revenues partially offset by the increase in selling and marketing expenses.
Many selling and marketing expenses are discretionary in nature and can be
increased or decreased as deemed necessary by management and do not necessarily
increase or decrease with changes in revenue.


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<PAGE>

General and administrative expenses increased 17.1% to $4.9 million for the nine
months ended September 30, 2003 from $4.2 million for the nine months ended
September 30, 2002. The increase in general and administrative expenses was due
primarily to an increase in insurance, public relations, bonuses and payroll
taxes related to stock option exercises.

As a percentage of total net revenues, general and administrative expenses
decreased to 10.7% for the nine months ended September 30, 2003 from 14.2% for
the nine months ended September 30, 2002. The decrease in general and
administrative expenses as a percentage of total net revenues was primarily due
to the fact that many of the general and administrative expenses are fixed in
nature.

Research and development expenses increased 7.4% to $3.4 million for the nine
months ended September 30, 2003 from $3.2 million for the nine months ended
September 30, 2002. The increase in research and development expenses was due
primarily to an increase in third-party consulting, labor costs and bonuses.

As a percentage of total net revenues, research and development expenses
decreased to 7.4% for the nine months ended September 30, 2003 from 10.8% for
the nine months ended September 30, 2002. The decrease in research and
development expenses as a percentage of total net revenues was primarily due to
the fact that many of the research and development expenses are fixed in nature.

Other income, net, consisted primarily of interest income realized from our
cash, cash equivalents and short-term investments, net of interest expense
related to capital lease obligations. We also recorded a net realized gain of
$75,000 from the sale of our shares of our investment in Digital Angel
Corporation (DAC) (formerly known as Medical Advisory Systems, Inc.) during the
nine months ended September 30, 2002. Additionally, during the nine months ended
September 30, 2002, a gain of $35,000 was recognized on the sale of the domestic
clinical research operation (CRO) to SCP Communications, Inc. and $47,000 of
interest income was recorded on the escrow accounts related to this sale. Other
income, net, decreased 48.1% to $227,000 for the nine months ended September 30,
2003 compared to $437,000 for the nine months ended September 30, 2002. In
addition to the gain on the sale of the DAC shares, the gain on sale of the
domestic CRO and the interest income earned on the escrow accounts, all of which
were realized during the nine months ended September 30, 2002, the decrease in
other income, net was also due to lower interest rates during the nine months
ended September 30, 2003.

Our effective tax rate was 32.0% and 37.3% for the nine months ended September
30, 2002 and 2003, respectively. The 2003 tax rate increased primarily due to
new tax legislation that increased our 2003 income tax liability to New Jersey
as well as our decision to provide deferred taxes for the repatriation of
foreign earnings, which was made in the fourth quarter of 2002.

Liquidity and Capital Resources

At September 30, 2003, we had $28.5 million of cash and cash equivalents and
$12.9 million invested in short-term investments. We generally place our
investments in money market funds, municipal securities, bonds of
government-sponsored agencies, certificates of deposit with maturities of less
than one year, and A1P1 rated commercial bonds and paper.

For the nine months ended September 30, 2003, our operations provided cash of
$16.4 million compared to $5.7 million for the nine months ended September 30,
2002. The change was primarily the result of improved operating income,
increased deferred revenue, and stock option income tax benefits recognized
during the nine months ended September 30, 2003. These changes were partially
offset by an increase in accounts receivable during the nine months ended
September 30, 2003 compared to the nine months ended September 30, 2002.

For the nine months ended September 30, 2003, our investing activities used cash
of $8.3 million compared to $4.4 million used for the nine months ended
September 30, 2002. The primary cause of the change is the net purchases of
short-term investments which totaled $3.6 million for the nine months ended
September 30, 2003 and $538,000 for the nine months ended September 30, 2002.
Also, there were $720,000 of proceeds from the sales of marketable securities
during the nine months ended September 30, 2002 and none during the nine months
ended September 30, 2003. We capitalized $4.6 million of property and equipment
in each of the nine months ended September 30, 2003 and September 30, 2002.
Included in property and equipment is internal use software associated with the
development of a new data and communications management services software
product used in connection with our centralized core cardiac safety
electrocardiographic services. We capitalize our internal use software costs in
accordance with Statement of Position No. 98-1. We began amortizing $4.0 million
of internal use software costs in August of 2002, which resulted in an
additional amortization charge to the cost of Cardiac Safety services of
approximately $84,000 per month. Additional internal use software costs of $1.1
million were capitalized throughout the remainder of 2002 and through the first
quarter of 2003. We began amortizing the additional capitalized costs in the
second quarter of 2003, which resulted in additional amortization charges of
approximately $22,000 per month. We started a new internal use software project
in the second quarter of 2003 for which we expect to capitalize costs through
the fourth quarter of 2003.

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<PAGE>

We will begin capitalizing costs associated with an upgrade to the data and
communications management services software product used in connection with our
centralized core cardiac safety electrocardiographic services beginning in the
fourth quarter of 2003 and continuing through approximately the first quarter of
2005. As this upgrade will replace many parts of the existing data and
communications management services software product, we will accelerate the
amortization of those parts to fully amortize the associated costs by the end of
the first quarter of 2005 which will result in an increase in depreciation
expense of approximately $76,000 per month beginning in the fourth quarter of
2003.

For the nine months ended September 30, 2003, our financing activities provided
cash of $2.7 million compared to $870,000 for the nine months ended September
30, 2002. During the nine months ended September 30, 2003, we received $3.2
million in cash from the exercise of stock options at exercise prices per option
of between $1.25 and $6.76.

We have a line of credit arrangement with Wachovia Bank, National Association
totaling $3.0 million. At September 30, 2003, we had no outstanding borrowings
under the line.

We expect that existing cash and cash equivalents, short-term investments, cash
flows from operations and available borrowings under our line of credit will be
sufficient to meet our foreseeable cash needs for at least the next year.
However, there may be acquisition and other growth opportunities that require
additional external financing and we 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 any such acquisitions will occur or
that such financings will be available or available on terms acceptable to us.

Inflation

We believe the effects of inflation and changing prices generally do not have a
material adverse effect on our results of operations or financial condition.

Item 3. Qualitative and Quantitative Disclosures About Market Risk

Our primary financial market risks include fluctuations in interest rates and
currency exchange rates.

Interest Rate Risk

We generally place our 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. We actively manage our portfolio of cash equivalents and short-term
investments, but in order to ensure liquidity, will only invest in instruments
with high credit quality where a secondary market exists. We have not held and
do not hold any derivatives related to our interest rate exposure. Due to the
average maturity and conservative nature of our 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 our investments
decreased by 100 basis points, our interest income for the nine months ended
September 30, 2003 would have decreased by less than $260,000. This estimate
assumes that the decrease occurred on the first day of 2003 and reduced the
yield of each investment by 100 basis points. The impact on our future interest
income of future changes in investment yields will depend largely on the gross
amount of our 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.


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<PAGE>


Foreign Currency Risk

We operate on a global basis from locations in the United States and the United
Kingdom. All international net revenues are billed and expenses incurred in
either U.S. dollars or British pound sterling. As such, we face exposure to
adverse movements in the exchange rate of the British pound sterling. As the
currency rate changes, translation of the income statement of our UK subsidiary
from the local currency to U.S. dollars affects year-to-year comparability of
operating results. We do not hedge translation risks because any cash flows from
UK operations are generally reinvested in the UK. Management estimates that a
10% change in the exchange rate of the British pound sterling would have
impacted the reported operating income for the nine months ended September 30,
2003 by less than $400,000.

Item 4. Controls and Procedures

We carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our controls and procedures pursuant to Rule
13a-15 under the Securities Exchange Act of 1934, as amended, as of the end of
the period covered by this report. Based upon that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective to ensure that information required to be
disclosed by our Company (including our consolidated subsidiaries) in our
periodic filings with the Securities and Exchange Commission is recorded,
processed, summarized and reported, within the time periods specified in the
Commission's rules and forms. There has been no change in our internal control
over financial reporting during the quarter covered by this report that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.



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<PAGE>



Part II.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

          a.) Exhibits

               10.25  Amendment to the Sublease Agreement between the Company
                      and 17th Ludlow Property, L.L.C.

               10.30  Promissory Note to Wachovia Bank, National Association

               10.31  Loan Agreement with Wachovia Bank, National Association

                31.1  Certification of Chief Executive Officer

                31.2  Certification of Chief Financial Officer

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

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

          b.) Reports on Form 8-K

               On July 23, 2003, we filed a report on Form 8-K disclosing a
               press release we issued on July 23, 2003, reporting our results
               of operations for the quarter ended June 30, 2003 and providing
               financial guidance for the third quarter and fiscal 2003 and
               fiscal 2004.


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<PAGE>


                                   Signatures


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



                                 eResearchTechnology, Inc.
                                 (Registrant)


Date:  November 7, 2003           By: Joseph A. Esposito
                                      -----------------------
                                  Joseph A. Esposito
                                  President and Chief Executive Officer,
                                          Director (Principal executive officer)



Date:  November 7, 2003           By: Bruce Johnson
                                      -----------------------
                                  Bruce Johnson
                                  Senior Vice President and Chief Financial
                                          Officer  (Principal financial and
                                          accounting officer)



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<PAGE>


                                  EXHIBIT INDEX

Exhibit No.           Exhibit
-----------           -------
10.25                 Amendment to the Sublease Agreement between the Company
                      and 17th Ludlow Property, L.L.C.

10.30                 Promissory Note to Wachovia Bank, National Association

10.31                 Loan Agreement with Wachovia Bank, National Association

31.1                  Certification of Chief Executive Officer

31.2                  Certification of Chief Financial Officer

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

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


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