PREMIER RESEARCH WORLDWIDE LTD - 10-K Annual Report

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Securities and Exchange Commission
Washington, D.C. 20549

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the Fiscal Year ended December 31, 1999

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to _______________

Commission File No. 0-29100

PREMIER RESEARCH WORLDWIDE, LTD.
(Exact name of issuer as specified in its charter)

Delaware 22-3264604
(State of incorporation) (I.R.S. Employer Identification No.)

30 South 17th Street Philadelphia, PA 19103
(Address of Principal Executive Offices - Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value

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. Yes _X_ No ___

The aggregate market value of the registrant's Common Stock, $.01 par value,
held by non-affiliates, computed by reference to the average of the closing bid
and asked prices of the Common Stock as reported by NASDAQ on March 28, 2000 was
$47,038,000.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Number of shares of Common Stock of the registrant issued and outstanding
as of March 15,2000 was 6,952,297

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III (items 10, 11, 12 and 13) is incorporated
by reference from the Registrant's definitive proxy statement for its Annual
Meeting of Stockholders, to be filed with the Commission pursuant to Regulation
14A, or if such proxy statement is not filed with the Commission on or before
120 days after the end of the fiscal year covered by this Report, such
information will be included in an amendment to this Report filed no later than
the end of such 120-day period.

ITEM 1. BUSINESS

General

Premier Research Worldwide, Ltd. (the "Company") is a
business-to-business provider of integrated software applications and technology
consulting services to the pharmaceutical, biotechnology and medical device
industries. We offer Internet and other technonogy-based solutions designed to
streamline the clinical trials process by enabling trial sponsors to migrate
from their current manual, paper-based research methods to electronic forms of
data collection, management and analysis. We are also a leading provider of
centralized collection and interpretation of electrocardiograms, one of the most
frequently used tests in clinical trials. Our products and services use the
Internet and other means of electronic data transfer to improve the accuracy,
timeliness and efficiency of trial set-up, data collection, management and
interpretation and preparation of new drug or device applications. We believe
that our products and services are most effective when implemented as an
electronic research network, (eResNets), that connects important data with the
key clinical trial participants: sponsoring manufacturers, investigating
physicians, patients or subjects and any clinical research organization that a
sponsor may use to help in conducting a clinical trial.

Our products and services have been provided, both in the United States
and internationally, through two business segments: Clinical Operations, which
include centralized diagnostic testing services and, prior to January 1, 2000,
CRO operations, including clinical trial and data management services; and
Technology Operations, which include the developing, marketing and support of
clinical trial and data management software, support and consulting services.
See Note 11 to the Consolidated Financial Statements appearing herein for
information pertaining to the amounts of net revenue, operating profit and
identifiable assets attributable to each of the Company's industry segments for
the Company's last three fiscal years.

In 1977, the Company's predecessor, Cardio Data Systems, began
providing diagnostic testing services used to evaluate the safety and efficacy
of new drugs. Today, we provide these services, which include electrocardiograms
("ECGs"), Holter monitoring, transtelephonic monitoring, pulmonary function
testing, blood and urine sampling, and other tests, on a centralized basis. To
take advantage of the potential synergies and cross-selling opportunities with
its centralized diagnostic testing services, the Company added clinical trial
management capabilities in September 1995 by forming with PREMIER, Inc. (a large
voluntary hospital buying group), a limited liability company, which was owned
65% by the Company and 35% by PREMIER, Inc. Upon the closing of the Company's
initial public offering of its Common Stock in February 1997, PREMIER, Inc.'s
minority interest in this limited liability company, held on behalf of certain
member hospitals, was converted into 330,150 shares of Common Stock of the
Company.

In October 1997, we acquired the assets and business of DLB Systems,
Ltd. ("DLB"), a provider of clinical trial and data management software, support
and information technology consulting services to the pharmaceutical,
biotechnology and device industry. The acquisition of DLB provided the
opportunity to extend the Company's clinical data management expertise
worldwide. The integration of the our rapid data acquisition and review capacity
and DLB's integrated clinical research system allows us to offer technological
advantages facilitating drug and medical device development.

During 1999, we began to transform our operations into a
business-to-business provider of integrated technology-based products and
services to the pharmaceutical, biotechnological and medical device industries.
We formed eResearchTechnology (eRT) in December 1999, as a wholly owned
subsidiary and effective January 1, 2000, we contributed our technology and
operating businesses to eRT in exchange for all of the issued and outstanding
common stock of eRT.

2

The strategy to become a business-to-business technology based service
provider included the divestiture of CRO operations and clinical laboratory
operations. We discontinued our clinical laboratory operations during the second
half of 1999 and transferred all remaining client contractual obligations to a
third party. We curtailed our international CRO operations during the second
half of 1999 and sold our domestic CRO operation to SCP Communications, Inc. in
December 1999 (see Note 3 to Consolidated Financial Statements). Net revenues
from our CRO operations were as follows:

Year Net Revenues ($000)
1999 16,710
1998 12,054
1997 6,468
1996 3,248
1995 4,343

Company Products and Services

We offer the following products and services:

Clinical Operations

Diagnostic tests are employed in clinical trials to measure the effect
of the product on certain body organs and systems, to determine the product's
safety and/or efficacy. Diagnostic testing services provided by the Company
include a variety of diagnostic tests, such as ECGs and Holter monitoring. These
services, which the Company provides on a centralized basis, are part of most
new drug studies. In most cases, the ECG and transtelephonic monitoring strips,
Holter monitoring tapes, imaging and pulmonary function computer disks samples
are delivered to the Company, which the Company then analyzes or interprets. The
Company provides a broad array of centralized diagnostic testing services,
including the following:

12-lead Eletrocardiography. The ECG provides an electronic map of the
heart's rhythm and structure, and typically is performed in most clinical
trials. ECG strips are measured by the Company's analysts utilizing a
digitizing system, and are then interpreted by a Board-certified cardiologist.

Modem ECG. Modem ECG will allow the investigator to telephonically
transmit 12 lead ECG data directly to the Company for interpretation and
immediate return of results back to the investigator.

Holter Monitoring. Holter monitoring is a 24 hour continuous ECG
recording of the heart's rhythm on a cassette tape.

Transtelephonic Monitoring (TTM). TTM measures the electrical activity
of the heart, typically for 5 to 30 seconds. This data is transmitted over
telephone lines by patients carrying a self-activated transmitting device. This
test typically is utilized in trials seeking to identify symptomatic heart
rhythm events.

3

Clinical Laboratory Services. We have performed centralized reference
testing of blood and urine samples for drug trials. During 1999, we discontinued
our clinical laboratory operation and transferred all remaining client
contractual obligations to a third party.

As part of our CRO operations, we offered complete services for the
design, performance and management of clinical trial programs. During 1999, we
decided to divest our CRO operations. We curtailed our international CRO
operations during the second half of 1999 and sold our domestic CRO operation to
SCP Communications, Inc. in December 1999 (see Note 3 to Consolidated Financial
Statements).

Technology Operations

We develop, market and support clinical trial and data management
software and provide software support and information technology consulting
services to pharmaceutical, biotechnology and medical device companies.

We offer a broad range of products and services that our customers can
use as an integrated enterprise solution or on a modular basis. We offer an
electronic research network (eResNet) that integrates our products and provides
a comprehensive solution that links important data with the key participants in
a clinical trial: sponsoring manufacturers, investigating physicians, patients
or subjects and any clinical research organization that a sponsor may use to
help in conducting a clinical trial.

eResNet

We believe that customers will maximize the value of our products by
integrating them as part of an eResNet. An eResNet integrates eResearchDashboard
with any combination of our products and services that includes eDataEntry and
eDataManagement. The value of an eResNet is that it will allow a sponsor or
clinical research organization to establish an infrastructure that connects
multiple participants in the clinical trial process and that can be used
repeatedly for future clinical trials. As an established infrastructure, an
eResNet will allow a sponsor or clinical research organization to improve the
efficiency and speed of the clinical trial by automating the process for
conducting each new clinical trial. As we establish additional eResNets, we
intend to charge monthly user-access fees that our customers will pay per
investigator site and per clinical trial. These fees will be in addition to the
amounts our customers pay for the products and services we integrate into the
eResNet, each of which will be paid for on a transaction basis.

We are implementing one eResNet that utilizes all three modules of our
eTrials product suite and eSafetyNet and that we expect will eventually connect
at least 400 investigator sites in more than 20 countries throughout the world.
We are in the process of negotiating the sale of two other eResNets.

4

Modular Product and Service Offerings

Product/Services Description
- ---------------- -----------
eTrials A comprehensive trials management application
comprised of three modules: eStudyConduct, eDataEntry
and eDataManagement.

eStudyConduct A proprietary solution to set up clinical trials,
establish standards, track study activities, plan
resources, distribute supplies, manage the financials
aspects of a trial and electronically view clinical
trial data on the Internet.

eDataEntry A data capture system permitting investigators to use
standard Internet browser tools to input data
regarding patients into a centralized database in an
online or offline environment. eDataEntry
accommodates traditional manual, paper-based data
entry, data entry using the Internet and other forms
of electronic data transmission. We anticipate that
by mid-2000, eDataEntry will also be able to capture
data in the form of electronic images. This
proprietary product allows efficient access to the
clinical research patient data, permitting the
sponsor or clinical research organization to identify
sites not complying with trial protocols and clinical
trial results requiring further study.

eDataManagement An Internet-enabled proprietary software tool for
collecting, editing and managing clinical trial data
in any computing environment. Customers use this tool
to analyze data, resolve incomplete or erroneous data
entries and support early competition of the database
for a particular trial. This product easily
integrates with a wide variety of third-party
software applications for imaging, workflow and data
analysis.

eSafetyNet An Internet-enabled proprietary adverse event
management system. This application facilitates
compliance by sponsors, clinical research
organizations and investigators with regulatory
reporting requirements regarding adverse events and
with the sponsor's or clinical research
organization's own internal requirements for safety
data analysis. Sponsors or clinical research
organizations can configure this application to match
their own processes and forms.

eECG Analysis and interpretation of electrocardiograms
performed on research subjects by cardiologists in
connection with our customers' clinical trials. This
application permits assessment of the safety and/or
efficacy of therapies by documenting the occurrence
of cardiac electrical change during daily living. We
expect that in mid-2000, eECG will permit
electrocardiogram images to be scanned for
cardiologist interpretation and viewed as
side-by-side images for comparison, supplemented by
the ability to review all prior patient tracings. We
also expect that this upgrade will feature an
electronic signature that will allow a cardiologist
to review the image from a remote location through a
secure web site.

eNDA A set of services and non-proprietary tools to
generate new drug applications electronically using
data collected throughout the clinical trial process.
eNDA categorizes and organizes clinical data to help
complete a new drug application.

eResearchDashboard An Internet-based analytical processing tool using
non-proprietary software. This tool allows
participants in the clinical trial to follow the
progress and conduct of a study based on frequently-
updated data using the Internet. This product allows
the participant to analyze data and generate reports
in a broad variety of formats that permits early
strategic intervention in the clinical trial.

5

ePatient An Internet-based service that assists in recruiting
patients to participate in clinical trials. This
Internet service collects self-referrals from
prospective patients that we forward to investigators
based on geographic proximity. Currently, our patient
referrals are being provided from AmericasDoctor.com,
which forwards to us the referrals that its website
generates.

eTechnologyConsulting Clinical trial implementation and technology process
consulting. These consulting services can augment the
implementation efforts of customers by providing
support in strategic planning, methodology and
technical implementation of our products and
services. The technical implementation support
includes system installation, project planning,
system configuration, network administration and
database set-up. We also provide education and
training services both as part of the initial
installation and on an ongoing basis. Following the
implementation, we provide on-site research and
technology advisory services, support services,
including online support and a 24-hour, seven day
help desk and maintenance.

eHealthEducation Trial-specific educational tool that allows clinical
research professionals to learn about technology
developments, new products, clinical protocols and
other educational matters. This application will also
provide a link to our website, www.eRT.com, where we
intend to provide industry news, therapeutic
information, technology updates and chat rooms for
professionals.

6

Our products use common interfaces, allowing clinical trial
participants to learn how to use additional applications with minimal training.
By establishing common naming standards for data that clinical trial
participants may share across applications, departments and global locations,
sponsors and clinical research organizations can improve data integrity and
accelerate reconciliation of information. Our products and services can work
with and connect to leading third party finance, enterprise resource planning
and research software through a batch load utility that we have developed.

Technology

Our applications use a broad range of technologies. Our eTrials
applications use a Microsoft Windows-based PC platform through a graphical
user interface. The data are stored in an industry-standard Oracle database on a
database server. We developed these applications using Oracle Developer, which
provides rapid access to both the database and an extensive set of underlying
tools. Our philosophy of using industry tools allows us to focus our attention
on the applications and on our customers, who also use those tools to benefit
from our data models.

The user interface of our products is Oracle SQL Forms based. Our
standard reports use Oracle Reports. We use the Oracle database server to
provide data storage and database-level stored procedures and triggers to
maintain consistent processing of data and to minimize network traffic for the
execution of standard operations. By using the application partitioning provided
by Oracle Developer, customers can have greater control over the use of server
and network resources. Our supported client platforms are Windows 95 and Windows
NT.

Customers can use all of our products on the Internet using a Citrix
connection. In addition, eDataEntry and portions of eDataManagement are
currently Internet-based, and we expect to have the rest of our products
Internet-based during 2000. To accomplish this development we are using Java
technology thus enabling the applications to operate under any operating system
supporting the Java platform, including Windows NT, Windows 95, Windows 98 and
Solaris. To allow uniform client application behavior in differing Internet
browsers, we use the Java Plug-In, which is available free from Sun Microsystems
JavaSoft division. We intend to continue to develop our products, which will
have both on-line connectivity and off-line processing capability.

7

Research and Development

We or our predecessors have been developing our products and services
for more than 20 years. Our applications have progressed from manual,
paper-based processing through client-server processing. We have developed or
are developing our software to take advantage of the power of the Internet. We
continue to advance our products by enhancing the human interface of some of the
modules.

We are also developing or partnering with other companies to obtain a
variety of other products, including eVitalSigns, a product that will allow
patients to measure blood pressure, heart rate, temperature, weight and other
important metrics at home and then transmit such information electronically to
our clinical data base. We expect to provide this product using technology and
equipment developed by one of our strategic partners.

Research and development expenses were $357,000 for 1997, $3.1 million
for 1998 and $2.5 million for 1999.

Strategic Investments and Relationships

The Company has sought and continues to seek strategic investments and
relationships to leverage its position in the market place by attracting new
technologies and/or services to increase its capabilities and ability to
provide value added products and services.

We work with our strategic partners to develop and enhance many of our
products and services. We are embedding into our eDataManagement product a
proprietary technology developed by one of our strategic partners, Winthrop
Stuart Associates. This technology will collect data electronically from case
report form images and automatically route the data, using proprietary work flow
technology, to the clinical data base for management action. Medical Advisory
Systems is assisting eRT in the development of our application service provider
capability and will help us provide 24-hour, seven-day coverage for our
eSafetyNet service and make cardiologists available to support our eECG
application. Currently, we obtain our patient referrals through
AmericasDoctor.com, Inc. which forwards to us the referrals that its website
generates.

We have entered into marketing assistance agreements with a number of
our strategic partners, including systems integrators and clinical research
organizations, that provide collaborative resources to supplement our own
marketing efforts. These marketing assistance agreements typically have terms of
one year and automatically renew for one-year terms. In addition, these
agreements typically require us to make commission payments to the other party
based on the license fee or the license and maintenance fee generated by sales
for which the other party has provided assistance. The commissions range from
two to twenty percent depending on the agreement. We have entered into marketing
assistance agreements with clinical research organizations operating in Canada,
Sweden and Spain, which provide co-branding and co-marketing services. We also
maintain strategic alliances with providers of complementary technologies for
co-marketing services and to assist our customers.

In July, 1998, we paid $1 million for a minority equity position in
AmericasDoctor.com, Inc. an internet company, which provides real-time physician
chat, referrals and healthcare events on America Online's Health web page.
AmericasDoctor.com, Inc. became fully operational in September 1998 and is
providing one-on-one doctor chat service using a state-of-the-art, 24 hour
physician staffed call center. In 1999, in connection with the merger of
AmericasDoctor.com, Inc. with Affiliated Research Centers, Inc., the Company
invested an additional $1.5 million under the terms of a convertible note which
will automatically convert into equity securities on or before March 31, 2000.
We have a contract with AmericasDoctor.com, Inc. to provide us with information
on individuals who have expressed an interest in participating in future
clinical trials. Since patient recruitment remains the single largest cause of
delayed clinical trials, such a potentially large source of referrals may be
advantageous in the future to us through our ePatient product offering. In 1999,
we entered into a two-year, $4.6 million consulting contract with
AmericasDoctor.com, Inc. Under the terms of the contract, we will provide
consulting services to enhance AmericasDodtor.com, Inc.'s ability to effectively
support patient identification, recruitment and referral to clinical
investigational sites for both our ePatient service offering and other companies
in the pharmaceutical, biotechnology and medical device industriess.

In 1999, we entered into an agreement with Winthrop Stuart Associates,
Inc. (WSA) to invest up to $300,000 under the terms of a convertible note. The
investment is to fund the development and integration of WSA's software into the
Company's software products. (see Footnote 1 to Consolidated Financial
Statements)

8

On March 21, 2000, we invested $5.775 million for a 10% equity position
in Medical Advisory Systems (MAS) as part of our overall strategic relationship
with MAS described above.

Recent Events

On March 29, 2000, the Company's subsidiary eRearchTechnology, Inc.
("eRT") filed with the Securities and Exchange Commission a Registration
Statement on Form S-1 pertaining to a proposed offering of its shares of Common
Stock. There is no assurance that any shares of the eRT Common Stock will be
sold pursuant to the Registration Statement.

In March 2000, eRT sold 95,000 shares of preferred stock and agreed to
issue at the closing of eRT's offering a warrant to purchase a number of shares
of common stock equal to 2.5% of the common stock then outstanding to an
investor for an aggregate of $9.5 million. At the closing of eRT's offering, the
preferred stock will automatically convert into a number of shares of eRT common
stock equal to $9.5 million divided by the initial public offering price per
share net of underwriting discounts and commissions. The per share exercise
price of the warrant will be equal to 200% of the initial public offering price
per share net of underwriting discounts and commissions.

9

Our Customers

We target pharmaceutical, biotechnology and medical device companies as
well as clinical research organizations. We have provided our Technology
solutions to 17 of the 20 pharmaceutical companies that had the highest sales in
1999. We have undertaken more than 120 installations of our products at 64 sites
worldwide. During 1999, we provided our diagnostic services to over 37 clients
worldwide, including 10 of the top pharmaceutical companies in the world. During
1997 and 1998, no single client accounted for more than 10% of our net revenues.
During 1999, one client accounted for 11.1% of our net revenues.

In August 1999, we signed agreements with Breast Cancer International
Research Group Limited, a clinical research organization based in Alberta,
Canada. Under our agreements, we are providing all three modules of our eTrials
product suite and eSafetyNet through an eResNet we are implementing and that we
expect will eventually connect at least 400 investigator sites in more than 20
countries throughout the world. In addition, we are providing eECG services
for another customer in support of a pharmaceutical clinical trial being
conducted at more than 1,000 sites in 33 countries throughout the world.

Sales and Marketing

We market and sell products and service primarily through our
international direct sales, sales support and professional services
organization.

We focus our marketing efforts toward educating our target market,
generating new sales opportunities and increasing awareness of our solutions. We
conduct a variety of marketing programs internationally including business
seminars, trade shows, press relations and industry analyst programs and
advisory councils.

Our marketing organization also serves an integral role in managing
customer and industry feedback in order to help provide direction to our product
development organization. We implemented this customer-driven approach by
establishing advisory council meetings, made up of numerous industry experts, to
provide forums for discussing customer needs and requirements. In addition to
providing information to prospective customers, advisory council meetings
provide a useful forum in which to share information, test product concepts and
collect data on customer and industry needs.

Our sales cycle generally begins with our response to a request from a
sponsor or clinical research organization for a proposal to address a
customer-specific research requirement. We ask prospective customers to complete
a survey to allow us to provide a comprehensive response. We then engage in a
series of consultations, workshops, implementation reviews, final proposals and
contract negotiations. During this process, we involve our sales, consulting and
senior management personnel in a collaborative approach. Our sales cycle can
vary from a few weeks to as long as nine months depending upon the scope of the
products and services being discussed and the scope of the clinical trial.

Competition

The market for our products and services is extremely fragmented, with
hundreds of companies providing niche solutions to satisfy small parts of the
clinical research process. We believe we are the only provider of
technology-based solutions in the clinical research industry that offers
end-to-end research solutions that take advantage of the power of the Internet
while also addressing manual, paper-based processes used in clinical research.

The market for our solution is intensely competitive, continuously
evolving and subject to rapid technological change. The intensity of competition
has increased and is expected to further increase in the future. This increased
competition could result in price reductions, reduced gross margins and loss of
market share, any one of which could seriously harm our business. Competitors
vary in size and in the scope and breadth of the products and services offered.

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We believe that the principal competitive factors affecting our market
include:

o customer service

o a significant base of reference customers

o breadth and depth of solution, including the ability to accommodate both
manual, paper-based research methods and electronic forms of data
collection, management and analysis

o product quality and performance

o core technology and product features

o ability to implement solutions

o price

Although we believe that our solutions currently compete favorably with
respect to these factors, our market is relatively new and is evolving rapidly.
We may not be able to maintain our competitive position against current and
potential competitors, especially those with significantly greater financial,
marketing, service, support, technical and other resources.

Forward Load Backlog

Our forward load backlog (also commonly referred to as backlog)
consists of anticipated net revenues from work under letters of intent and
contracts that have been signed but not yet completed. Once work under a
contract or letter of intent commences, revenues are generally recognized over
the life of the contract, which generally lasts from one month to two years.

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Forward load backlog excludes anticipated net revenues from projects
for which the Company has commenced work but for which a definitive contract or
letter agreement has not been executed.

We believe that our forward load backlog as of any date is not
necessarily a meaningful predictor of future results. Clinical studies under
contracts included in the forward load backlog are subject to termination or
delay. Clients terminate or delay contracts for a variety of reasons including,
among others, the failure of products being tested to satisfy safety
requirements, unexpected or undesirable clinical results of the product, the
client's decision to forego a particular study, insufficient patient enrollment
or investigator recruitment or production problems resulting in shortages of the
drug. Most of our contracts are terminable without cause upon 30 to 90 days
notice by the client. We frequently are entitled to keep any portion of any
advance payment and receive certain fees for winding down a study that is
terminated or delayed.

12

Government Regulation

Human and animal pharmaceutical products, biological products and blood
derivatives, and medical devices are subject to rigorous government regulation.
In the United States, the principal Federal regulatory agency is the Food and
Drug Administration and there are some similar state agencies. Foreign
governments also regulate these products when they are tested or marketed
abroad. In the United States, the Food and Drug Administration has established
standards for conducting clinical trials leading to the approval for new
products. Under these standards, sponsors are responsible for:

o selecting qualified investigators

o providing investigators with protocols and other information

o monitoring the trial

o reporting changes in trial protocol to the Food and Drug Administration

o providing the Food and Drug Administration and the investigator reports of
serious and unexpected adverse experiences associated with the use of a drug

o maintaining records concerning the study

Because our products and services assist the sponsor or clinical
research organization in conducting the trial and preparing the new drug or
device application, we must comply with these requirements. We also must comply
with corresponding foreign regulatory requirements that vary from country to
country but generally address similar issues.

If the Food and Drug Administration concludes that studies were not
conducted in accordance with minimum agency requirements, it may take a variety
of enforcement action depending on the nature of the violation. These measures
may range from issuing a warning letter or seeking injunctive relief or civil
penalties to recommending criminal prosecution. If we are convicted of criminal
conduct relating to the approval of a new drug or device application or are
found to have otherwise violated Food and Drug Administration requirements, the
Food and Drug Administration could prohibit us from being involved in future
clinical trials. Where the agency finds irregularities during ongoing studies,
it may require changes to the study or may request termination of the study. In
the case of clinical trials submitted as part of a new drug or similar
application, the agency may require that additional clinical work be performed
before granting the application. The agency may require that entire studies be
rerun, resulting in substantial delay in final approval. In extreme cases, such
as submission of fraudulent test data or giving of offering bribes, the agency
can refuse to approve a pending application.

In April 1999, the Food and Drug Administration published guidelines
regarding the use of computerized systems to create, modify, maintain, archive,
retrieve or transmit clinical data intended for use in submissions to the
agency. The guidelines recommend that those who use computerized systems in
clinical trials design them so that they can satisfy applicable regulatory
requirements for recordkeeping and retention with the same degree of confidence
as exists with paper-based systems. The guidelines specifically address a broad
range of matters such as:

o confirming the authority of those with access to the data

o attributing edits to the data to the person making the edits

o providing quality control prompts to ensure the consistency of data and to
alert the person inputting the data if the data is outside expected ranges

o facilitating inspection and review of data

o ensuring the adequacy of system security, dependability and controls

We believe that we have designed our products and services to be
consistent with the agency's recommendations and to comply with applicable
regulatory requirements.

The Health Insurance Portability and Accountability Act of 1996
established certain requirements relating to confidentiality and data security
for personal health information. These requirements were established under that
act to prevent unauthorized access to electronically transmit patient records
and the misuse of personal health information. These laws affect almost every
organization or individual that comes into contact with patient information,
including health plans, health care clearinghouses and entities that
electronically maintain or transmit individually identifiable health
information. In addition, there are laws in numerous states that relate to the
protection of personal health information.

13

As enacted, the act had required the Secretary of Health and Human
Services to issue regulations by February 1998, and then give the health care
industry 24 months to comply with those regulatory requirements. A proposed rule
on privacy standards for individually identifiable health information was
released by the Health Care Financing Administration in November 1999, with a
comment period that was in effect until February 2000. Given the complexity of
the proposed rule, it is likely that a significant number of comments were
received by the adminstration. Based on these factors, we do not believe that
final rules are expected to be issued for at least 12 months. Therefore, there
are no final regulations with which we must comply at this time with regard to
confidentially and data security for medical records. In anticipation of the
issuance of the final rules, we have undertaken efforts to review and document
our health information privacy policies and procedures, and we intend to
continue to monitor these regulatory developments.

Potential Liability and Insurance

We attempt to manage our risk of liability for personal injury or death
to patients from administration of products under study through contractual
indemnification provisions with clients and through insurance maintained by the
Company and its clients. Contractual indemnification generally does not protect
the Company against certain of its own actions, such as negligence. The terms
and scope of such indemnification vary from client to client and from trial to
trial. Although most of our clients are large, well capitalized companies, the
financial viability of these indemnification provisions cannot be assured.
Therefore, we bear the risk that the indemnifying party may not have the
financial ability to fulfill its indemnification obligations. We also maintains
professional liability insurance in the amount of $1 million per claim and in
the aggregate and an umbrella policy of $5 million. Our operating results could
be materially and adversely affected if it were required to pay damages or incur
defense costs in connection with a claim that is beyond the scope of an
indemnity provision or beyond the scope or level of insurance coverage
maintained by it or the client or where the indemnifying party does not fulfill
its indemnification obligations.

Intellectual Property

Our services have been enhanced by significant investment in
information technology. The Company's information services group is committed to
achieving operating efficiencies through technical advances. The Company has
developed certain computer software and technically derived procedures that it
seeks to protect through a combination of contract law, trademarks, and trade
secrets. Although we do not believe that our intellectual property rights are as
important to our results of operations as are such factors as technical
expertise, knowledge, ability and experience of our professionals, we believe
that our technical capabilities provide significant benefits to our clients.

Employees

At December 31, 1999, we had 150 employees. At our US locations, we had
117 employees (109 full-time, 8 part-time). At our UK locations, we had 33
employees (all full-time). We had 99 employees performing services directly for
our clients, 18 employees in research and development, 14 employees in sales and
marketing and 19 employees involved in general and administrative activities.

We are not a party to any collective bargaining agreements covering any
of our employees, have never experienced any material labor disruption and are
unaware of any current efforts or plans to unionize our employees. We consider
our relationships with our employees to be good.

ITEM 2. PROPERTIES

We lease all of our facilities. Our principal offices are located in
Philadelphia, PA. On January 3, 1999, we moved into new Philadelphia facilities,
comprised of approximately 58,000 square feet under a lease expiring in 2005.
Effective December 31, 1999, approximately 38,000 square feet of this facility
was sublet to SCP Communications, Inc. as part of the purchase of our domestic
CRO operation. We also maintains offices of approximately 9,000 square feet in
Peterborough, UK and 6,875 square feet in Maidenhead, UK. The Peterborough and
Maidenhead leases expire in 2009 and 2004, respectively

We also maintain operations in Bridgewater, New Jersey, where we
lease approximately 14,100 square feet. The Bridgewater lease expires in 2006.
We believe that the leases generally reflect market rates in their respective
geographic areas.

14

ITEM 3. LEGAL PROCEEDINGS

We are involved in legal proceedings from time to time in the ordinary
course of its business. Management believes that none of these legal proceedings
will have a material adverse effect on our financial condition or results of
operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We did not submit any matters during the fourth quarter of the year
covered by this Report to a vote of the security holders through the
solicitation of proxies or otherwise.

15

SPECIAL ITEM. EXECUTIVE OFFICERS OF REGISTRANT

Officers are elected by the Board of Directors and serve at the
pleasure of the Board. The executive officers of the Company are as follows:

Name Age Position
---- --- --------
Joel Morganroth, MD 54 Chairman and Chief Executive Officer
Joseph A. Esposito 47 President, Chief Operating Officer and a
Director
Bruce Johnson 49 Senior Vice President and Chief Financial
Officer-eResearch Technology
John R. Bauer 51 Vice President and Chief Financial Officer-
Premier Research Worldwide, Ltd.
Vincent Renz 43 Senior Vice President, Technology and
Consulting
Robert S. Brown 44 Senior Vice President, Core Diagnostics

Dr. Morganroth has served as the Chairman of the Company since 1999,
its Chief Executive Officer since 1993 and as a Director of the Company since
1997. Dr. Morganroth has consulted for the Company since 1976. Dr. Morganroth
was a Professor of Medicine and Pharmacology at Hahnemann University from 1982
to 1992. Currently, Dr, Morganroth is an Adjunct Professor of Medicine
(Pharmacology) at Jefferson Medical College of Thomas Jefferson University and
Clinical Professor of Medicine at the University of Pennsylvania School of
Medicine. Dr. Morganroth is an internationally recognized cardiologist and
clinical researcher. Dr. Morganroth served for over ten years as a Medical
Review Officer/Expert for the Food and Drug Administration and since 1995 has
served in a similar capacity for the Health Protection Branch of Canada.

Mr. Esposito had served as President and Chief Operating Officer of the
Company since April 1998 and has served on its Board of Directors since 1999. He
joined the Company as President and CEO of DLB Systems in October 1997 upon the
acquisition of that business by the Company from Safeguard Scientifics. In
addition, Mr. Esposito served as President, Worldwide Operations for Computron
(1994-1997) and held various senior management positions at Ross Systems, Inc.
(1991-1994). From 1979 to 1991, Mr. Esposito held various senior management
positions with Wang Laboratories, Inc., which produced computing equipment
related to peripheral devices and workflow/image management software.

Mr. Johnson has been the Senior Vice President and Chief Financial
Officer-eResearchTechnology since February 2000. Mr. Johnson has over
twenty-five years of previous experience in public accounting and financial
management positions. From March 1999 to November 1999, Mr. Johnson served as
Chief Operating Officer and Chief Financial Officer of HealthAxis.com. From
February 1988 to March 1999, Mr. Johnson was employed by N2K Inc., most recently
as Senior Vice President, Chief Financial Officer and director. Mr. Johnson
holds a degree in accounting from St. Joseph's University and a MBA in Finance
from Drexel University and is a certified public accountant.

Mr. Bauer has been the Vice President and Chief Financial Officer of
the Company since July 1999. From February 1998 to July 1999, Mr. Bauer was
Director of Financial Reporting and Investor Relations and served as Controller
of the Company's CRO operations. From October 1996 until February 1998, Mr.
Bauer was a consultant for QED Technologies, a suburban Philadelphia based
pharmaceutical and biotechnology consulting firm. From May 1990 until October
1996, he was Chief Financial Officer, Secretary and Treasurer of ICG, Inc. Mr.
Bauer holds a degree in pre-law from LaSalle University and a MBA in Finance
from the Philadelphia College.

Vincent Renz has been Senior Vice President, Technology and Consulting
and Chief Technology Officer of eResearchTechnology since January 2000. Mr. Renz
served the Company as the Senior Vice President and General Manager of the DLB
Systems division from May 1998 to December 1999. Prior to joining Premier
Research Worldwide, he worked in a consultative capacity in defining the Client
Services infrastructure for the DLB Systems division. Mr. Renz was Vice
President, Client Services for Computron Software Inc. from May 1988 to November
1997. Prior to that time, Mr. Renz worked as an information technology
consultant for Deloitte, Haskins and Sells from 1984 to 1988 and Arthur Andersen
from 1981 to 1984, serving a wide range of industries in the design and
implementation of large-scale information systems.

16

Robert S. Brown has been Senior Vice President, Diagnostics Technology
and Services of eResearchTechnology since January 2000. From December 1997 to
December 1999, Mr. Brown was Vice President, Business Development for Premier
Research Worldwide. Mr. Brown was Senior Director, Research and Regulatory
Services for Premier Research Worldwide from November 1993 to December 1997.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our Common Stock has been traded on The Nasdaq National Market System
since February 4, 1997, under the symbol "PRWW". Below is the range of high and
low sales information for the Common Stock for the following quarters as quoted
on The Nasdaq National Market System:

Calendar Period High Low
- --------------- ---- ---
1999
First Quarter $9.1250 $4.500
Second Quarter 8.7188 5.6250
Third Quarter 6.875 5.5000
Fourth Quarter 11.7500 5.4350

1998
First Quarter $13.000 $4.5000
Second Quarter 6.3750 4.5000
Third Quarter 5.5000 3.7500
Fourth Quarter 6.1250 2.7500

We has never declared or paid any cash dividend on our common stock. We
do not anticipate paying any cash dividends in the foreseeable future, and we
intend to retain future earnings for the development and expansion of our
business.

During 1999, we issued 167,432 shares of its Common Stock upon exercise
of outstanding options pursuant to its 1993 Non-Qualified Stock Option Plan, for
which we received $380,071. The issuance of such shares was exempt from the
registration requirements of the Securities Act of 1933, as amended, pursuant to
Rule 701 promulgated under said Act.

As of March 14, 2000, there were approximately 1,500 holders of record
of our Common Stock.

In our initial public offering, we sold 2,206,250 shares of Common
Stock (including over-allotments), pursuant to its Registration Statement on
Form S-1, File No. 333-17001 (the "Registration Statement"), which was declared
effective by the Securities and Exchange Commission on February 3, 1997 (the
"Effective Date"). The gross proceeds from the IPO were approximately
$37,506,000, and, after underwriting discounts and commissions, expenses paid to
or for the benefit of underwriters, and other costs of the IPO, net proceeds
were approximately $34,182,000.

From the Effective Date to December 31, 1999, we purchased
approximately $7,178,000 of property and equipment, $4,300,000 for short-term
investments, $8,655,000 for the purchase of DLB, $2,711,000 for the repurchase
of Common Stock under the Company's share repurchase program, $2,500,000 for an
equity investment in AmericasDoctor.com, Inc. and $125,000 for an investment in
Winthrop Stewart Associates.

17

None of the foregoing payments resulted in direct or indirect payments
(i) to directors or officers of the Company, nor their associates, (ii) to
persons owning 10% or more of the Common Stock of the Company, nor (iii) to
affiliates of the Company.

The Company's use of proceeds does not represent a material change in
the use of proceeds described in the Prospectus contained within the
Registration Statement.

18

ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data of the Company is
qualified by reference to, and should be read in conjunction with, the
consolidated financial statements, including the notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this report.

Consolidated Statements of Operations Data
(in thousands, except per share data)

Year Ended December 31
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----

Net revenues:
License ............................................... $ 4,381 $ 5,142 $ 210 $ -- $ --
Services .............................................. 21,694 14,611 7,485 12,035 7,721
CRO operations ........................................ 16,710 12,054 6,468 3,248 4,343
-------- -------- -------- -------- --------
Total net revenues ..................................... 42,785 31,807 14,163 15,283 12,064
-------- -------- -------- -------- --------
Cost of revenues:
Cost of licenses ...................................... 319 138 20 -- --
Cost of services ...................................... 12,578 9,131 5,250 6,440 4,881
Cost of CRO operations ................................ 12,512 10,488 6,806 3,815 3,564
-------- -------- -------- -------- --------
Total cost of revenues ................................. 25,409 19,757 12,076 10,255 8,445
-------- -------- -------- -------- --------
Gross margin ........................................... 17,376 12,050 2,087 5,028 3,619
-------- -------- -------- -------- --------
Operating expenses:
Selling & marketing ................................... 5,124 3,764 2,492 1,163 1,057
General & administrative .............................. 6,565 4,966 2,873 2,365 2,010
Research and development .............................. 2,472 3,131 357 -- --
Write-off of acquired in-process research
and development(2) ................................... -- -- 7,883 -- --
-------- -------- -------- -------- --------
Total operating expenses ............................... 14,161 11,861 13,605 3,528 3,067
-------- -------- -------- -------- --------
Operating income (loss) ................................ 3,215 189 (11,518) 1,500 552
Other income, net ...................................... 735 1,012 1,250 11 --
Gain on sale of CRO business(1) ........................ 4,850 -- -- -- --
-------- -------- -------- -------- --------
Income (loss) before income taxes and
minority interest ..................................... 8,800 1,201 (10,268) 1,511 552
Minority interest in limited liability company ......... -- -- -- 332 48
-------- -------- -------- -------- --------
Income (loss) before income taxes ...................... 8,800 1,201 (10,268) 1,843 600
Income tax provision (benefit)(3) ...................... 3,520 480 (4,037) 773 259
-------- -------- -------- -------- --------
Net income (loss)(4) ................................... $ 5,280 $ 721 $ (6,231) $ 1,070 $ 341
======== ======== ======== ======== ========
Basic net income (loss) per share ...................... $ 0.75(1) $ 0.10 $ (0.93)(2) $ 0.24 $ 0.08
Diluted net income (loss) per share .................... $ 0.74(1) $ 0.10 $ (0.93)(2) $ 0.23 $ 0.08

19

Consolidated Balance Sheet Data
(in thousands)

December 31
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----

Cash and cash equivalents and short-term
investments ........................................... $ 21,065 $ 16,490 $ 21,763 $ 1,498 $ 33
Working capital ........................................ 25,266 20,017 21,661 1,595 1,729
Total assets ........................................... 45,212 40,172 36,774 5,748 4,400
Total stockholders' equity ............................. 35,377 30,941 30,467 2,516 2,658

(1) Represents a one-time gain from the sale of the domestic CRO business of
$4.9 million or basic earnings per share of $0.41.

(2) Represents a one-time charge of $7.9 million ($0.71 per share) for the
write-off of acquired in-process research and development in connection
with the acquisition of DLB Systems, Inc.

(3) For periods prior to February 3, 1997, the Company was included in the
consolidated income tax returns of UM Holdings Ltd. ("UM"). The financial
statements reflect income taxes calculated on a separate company basis for
all periods presented.

(4) Net income (loss) for all periods presented includes various transactions
with related parties, including administrative services and a facility
lease from UM and consulting fees paid to the Company's Chief Executive
Officer, who is a stockholder. See Note 8 of Notes to Consolidated
Financial Statements.

20

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Overview

We provide a broad range of integrated clinical trials software products and
technology and clinical services on a global basis to our clients in the
pharmaceutical, biotechnology and medical device industries. Historically, our
products and services have been provided, both in the United States and
internationally, through two business segments: Clinical Operations and
Technology Operations. Clinical Operations include centralized diagnostic
services, which consists primarily of electrocardiogram services, and CRO
operations which consist primarily of clinical trial and data management in
addition to biostatistical analysis and regulatory affairs services. Technology
Operations include the development, marketing and support of clinical trial and
data management software and consulting services. The Company closed its
international CRO operation during the second half of 1999 and sold its
domestic CRO operation in December 1999. The Company's Phase I clinical
research unit was closed in the first quarter of 1998.

The Company's centralized diagnostic services are on a fee-for-service basis
and primarily relate to the collection and analysis of electrocardiograms.
Contracts with customers generally have terms of one month to two years. A
portion of the Company's fee frequently is paid upon contract execution as a
non-refundable up-front payment, with the balance billed in accordance with the
contract terms. The Company's contracts generally may be terminated with or
without cause on 30 to 90 days notice. Clients terminate or delay contracts for
a variety of reasons, including, among others, the failure of the product(s)
being tested to satisfy safety or efficacy requirements; unexpected or
undesired clinical results of the product; the client's decision to forego a
particular study; insufficient patient enrollment or investigator recruitment,
and production problems resulting in shortages of required supplies. Revenues
from centralized diagnostic services are recognized as the services are
performed.

CRO services are generally fixed priced contracts, with certain variable
components, and range in duration from a few months to two years. A portion of
the Company's fee frequently is paid upon contract execution as a
non-refundable up-front payment, with the balance billed in accordance with the
contract terms. The Company's contracts generally may be terminated with or
without cause on 30 to 90 days notice. Clients terminate or delay contracts for
a variety of reasons, including, among others, the failure of the product(s)
being tested to satisfy safety or efficacy requirements; unexpected or
undesired clinical results of the product; the client's decision to forego a
particular study; insufficient patient enrollment or investigator recruitment,
and production problems resulting in shortages of required supplies. Revenues
from CRO operations are generally recognized on a percentage of completion
basis as work is performed. The Company regularly subcontracts with third-party
investigators in connection with clinical trials and with other third-party
providers for specialized services. These and other reimbursable costs are paid
by the Company and reimbursed by clients and, in accordance with industry
practice, are included in revenues. Since reimbursed costs may vary
significantly from contract to contract and are not meaningful for analyzing
trends in revenues, they are included in gross revenues but excluded from net
revenues.

Revenues from technology software licenses are recognized upon delivery of the
software and related documentation when collectibility is deemed probable and
the license fee is deemed fixed or determinable. Revenues from software
maintenance and continuing support contracts are recognized on a straight-line
basis over the period in which the maintenance and support is provided,
generally twelve months. Revenues from consulting and training services are
recognized when the services are performed.

The Company conducts operations on a global basis, with offices in the United
States and United Kingdom. For the years ended December 31, 1997, 1998 and
1999, the Company's international net revenues represented 6.9%, 14.5% and
12.6%, respectively, of total net revenues.

21

RESULTS OF OPERATIONS

Year ended December 31, 1999, compared to the year ended December 31, 1998

Total net revenues increased 34.5% or $11.0 million to $42.8 million for the
year ended December 31, 1999 compared to $31.8 million for the year ended
December 31, 1998.

Clinical Operations net revenues increased 41.7% or $9.0 million to $30.7
million for the year ended December 31, 1999 compared to $21.7 million for the
year ended December 31, 1998. Contributing to this increase was centralized
diagnostics, which increased 42.7% to $14.0 million for the year ended December
31, 1999 from $9.8 million for the year ended December 31, 1998. The
year-to-year increase was due entirely to increased electrocardiogram contract
signings during 1999. Included in centralized diagnostics are net revenues from
the Company's clinical blood laboratory. During the third quarter of 1999,
management elected to close the blood laboratory and outsource the Company's
remaining contractual commitments to a third party. Blood laboratory net
revenues were $0.7 and $1.6 million for the years ended December 31, 1999 and
1998, respectively.

Net revenues from CRO operations, which are included in the Clinical Operations
segment, increased 38.6% to $16.7 million for the year ended December 31, 1999
from $12.1 million for the year ended December 31, 1998. This increase was
primarily due to new contracts signed in 1999 and additional services under
existing contracts. During 1999, the Company chose to divest its CRO
operations. In the third quarter of 1999, the Company closed its international
CRO operations, moving the remaining open client contracts to the domestic
operation for completion. In December 1999, the Company sold its domestic CRO
operations in an asset purchase transaction for consideration that could total
$18 million subject to adjustments and earnouts.

Technology Operations net revenues increased 21.5% to $12.1 million for the
year ended December 31, 1999 from $9.9 million for the year ended December 31,
1998. Within Technology Operations, net revenues from software licenses
declined 14.8% to $4.4 million for the year ended December 31, 1999 from $5.1
million for the year ended December 31, 1998. The Company's selling focus on
enterprise wide software applications, which takes longer to consummate, is the
major reason for the year-to-year decline in license revenues. Technology
service net revenues increased 60.4% to $7.7 million for the year ended
December 31, 1999 from $4.8 million for the year ended December 31, 1998.
During 1999, the Company signed a two-year consulting contract with
AmericasDoctor.com, Inc. (AmDoc) to enhance AmDocs capabilities to effectively
identify and recruit patients for clinical trials. The Company recognized net
revenues of $2.3 million from this contract during the year ended December 31,
1999.

Total cost of revenues increased 28.6% to $25.4 million for the twelve months
ended December 31, 1999 compared to $19.8 million for the twelve months ended
December 31, 1998. Cost of licenses increased to $319,000 during the year ended
December 31, 1999 from $138,000 for the 1998 period. The increase in license
costs is primarily due to third party royalties paid in 1999. Cost of service
revenues increased 37.8% to $12.6 million for the year ended December 31, 1999
compared to $9.1 million for the year ended December 31, 1998. Included in the
cost of service revenues is the cost of technology services which increased
59.2% to $3.8 million for the year ended December 31, 1999 from $2.4 million for
the same period in 1998 and reflects the increased expense to provide client
license support and consulting services. Also included in the cost of service
revenues is the cost of diagnostic revenues, which increased 30.2% to $8.8
million in 1999 from $6.7 million in 1998. The year-to-year increase is
primarily due to additional personnel and material cost needed to support the
42.7% increase in 1999 net revenues. The cost of CRO services increased 19.3% to
$12.5 million for the year ended December 31, 1999 from $10.5 million for the
year ended December 31, 1998, primarily due to CRO revenue growth.

Research and development expenses, which are entirely related to the Company's
Technology Operations, declined 21.0% to $2.5 million in the 1999 period from
$3.1 million in the 1998 period. The year-to-year decrease in expenses was due
primarily to the use of third-party contractors to expedite the 1998 product
development effort.

22

Selling and marketing expenses increased 36.1% to $5.1 million for the year
ended December 31, 1999 from $3.8 million for the year ended December 31, 1998.
The increase in 1999 from 1998 was due primarily to commissions paid on a large
enterprise-wide software license in 1999 along with increased direct selling
expenses associated with the overall increase in the Company's revenues.
General and administrative expenses increased 32.2% to $6.6 million for the
1999 period from $5.0 million for the 1998 period. The year-to-year increase
was due primarily to increased compensation expense to support present and
planned growth.

Other income of $0.7 million during the year ended December 31, 1999 declined
from the $1.0 million reported for the year ended December 31, 1998. Other
income resulted primarily from income earned on cash, cash equivalents and
short-term investments.

In December 1999, the Company sold its domestic CRO business to SCP
Communications, Inc. The asset purchase transaction provided for consideration
up to $18 million, subject to offsets and earnouts. The Company recognized $9.0
million of the purchase price which was not subject to contingencies in 1999
and reported a $4.9 million pre-tax gain on the transaction.

The Company had an income tax provision of $3.5 million for the year ended
December 31, 1999 compared to a tax provision of $0.5 million for the year
ended December 31, 1998. The Company's effective income tax rate was 40.0% for
the years ended December 31, 1999 and 1998, respectively.

Year ended December 31, 1998, compared to the year ended December 31, 1997

Net revenues increased 124.6% or $17.6 million to $31.8 million for the year
ended December 31, 1998 compared to $14.2 million for the year ended December
31, 1997. The Company experienced increased net revenues in all ongoing product
and service lines.

Clinical Operations net revenues increased 91.7% or $10.4 million to $21.7
million for the year ended December 31, 1998 compared to $11.3 million for the
year ended December 31, 1997. Contributing to this increase was centralized
diagnostic service revenues, which increased 42.4% to $9.8 million for the
twelve months ended December 31, 1998 compared to $6.9 million for the same
period in 1997. The increase in centralized diagnostic service revenues
resulted from increased contract signings in 1998, which resulted in an
increase of more than 50% in the number of diagnostic procedures performed. In
addition, 1998 net revenues include the recognition of $0.8 million for work
completed under a contract which was cancelled before completion.

CRO operations net revenues increased 86.4% or $5.6 million to $12.1 million
for the year ended December 31, 1998 compared to $6.5 million in 1997. The
increase in CRO operations net revenues is attributable to recognition of part
of the 1997 backlog and new contracts signed in 1998. The increase in CRO
operations net revenues includes $0.6 million generated from the Company's UK
operation, which did not offer such services until late 1997. Included in CRO
operations net revenues was the Company's Phase I clinical research unit, which
was closed during the first quarter of 1998. Phase I net revenues for the year
ended December 31, 1998 were $200,000 compared to $2.1 million for the year
ended December 31, 1997. While the Phase I net revenues are included in CRO
operations, the net revenues are included in other for segment reporting.

Technology Operations net revenues for 1998 reflect the full year effect of the
acquisition of DLB Systems, which occurred in October 1997. Technology net
revenues for the year ended December 31, 1998 were $9.9 million compared to
$0.8 million for the year ended December 31, 1997. Included in Technology
Operations are license revenues which increased to $5.1 million in 1998 from
$0.2 million in 1997. Also included are Technology service revenues which
increased to $4.8 million in the 1998 period from $0.6 million in the 1997
period.

23

Total cost of revenues increased 63.6% to $19.8 million for the year ended
December 31, 1998 compared to $12.1 million for the year ended December 31,
1997. Cost of license revenues increased to $138,000 for the year ended
December 31, 1998 from $ 20,000 for the same period in 1997, reflecting the
full year impact of the DLB acquisition in October 1997. The cost of service
revenues increased 73.9% to $9.1 million for the year ended December 31, 1998
compared to $5.3 million for the year ended December 31, 1997. Included in the
cost of service revenues is the cost of technology service revenues, which
increased to $2.4 million for the 1998 period from $0.4 million for the 1997
period. The increase is due primarily to the full year impact in 1998 of the
DLB acquisition in October 1997. Also included in the cost of service revenues
is the cost of diagnostic revenues, which increased 39.6% to $6.7 million in
the 1998 period from $4.9 million for the 1997 period. The increase in the cost
of diagnostic revenues was due to increased direct labor and related expenses
to support the growth in diagnostic revenues in 1998 and to support future
revenue growth. The cost of CRO operations increased 54.1% to $10.5 million for
the year ended December 31, 1998 compared to $6.8 million for the year ended
December 31, 1997. The year-to-year increase was due to direct labor increases
to support the 86.4% increase in CRO revenues and the Company's increases to
the domestic and international CRO infrastructure to support future growth.

Research and development expenses increased to $3.1 million for the year ended
December 31, 1998 compared to $0.4 million in 1997. Research and development
expenses reflect the full year effect of the acquisition of DLB Systems, which
occurred in October 1997.

Sales and marketing expenses increased 51.0% to $3.8 million for the year ended
December 31, 1998 compared to $2.5 million for the year ended December 31,
1997. The increase in sales and marketing expenses was due primarily to the
Company's building of its sales and marketing infrastructure and from the full
year 1998 impact of the DLB acquisition, which occurred in October 1997.
General and administrative expenses increased 72.9% to $5.0 million for the
year ended December 31, 1998 from $2.9 million for the year ended December 31,
1997. The year-to-year increase resulted primarily for the Company building its
domestic and international infrastructure and from the full year 1998 impact of
the DLB acquisition, which occurred in October 1997.

Other income of $1.0 million during the year ended December 31, 1998 declined
from the $1.3 million reported for the year ended December 31, 1997. Other
income resulted primarily from income earned on investment of the net proceeds
of the Company's initial public offering in February 1997.

The Company had an income tax provision of $0.5 million for the year ended
December 31, 1998 compared to a tax benefit of $4.0 million for the year ended
December 31, 1997. The Company's effective income tax rate for the year ended
December 31, 1998, was 40.0%, compared to 39.3% for the year ended December 31,
1997.

Liquidity and Capital Resources

The clinical research and technology industries generally are not very capital
intensive. The Company's principal cash needs relate to funding Clinical
Operations receivables as client payments generally lag up to 90 days after the
invoice date.

In February 1997, the Company completed its initial public offering, which
resulted in proceeds from the offering, net of expenses, of $34.2 million.

For the year ended December 31, 1999, the Company generated cash from operating
activities of $9.0 million compared to cash used by operations of $0.8 million
during the year ended December 31, 1998. The increase in operating cash was due
primarily to the Company's increased income, before depreciation and
amortization, in 1999, along with the utilization of deferred tax assets and
changes in working capital accounts.

24

During the year ended December 31, 1999, the Company purchased $2.3 million of
property and equipment compared to $3.4 million purchased in 1998. The decrease
in the purchase of property and equipment reflects the Company's higher level
of spending in 1998 to accommodate future business needs and the planned move
to new facilities in early 1999.

In December 1999, the Company made an additional investment of $1.5 million in
AmDoc under the terms of a convertible bridge note bearing interest of 5.73%.
In addition, during 1999, the Company entered into an agreement with Winthrop
Stewart Associates, Inc. (WSA) to invest up to $300,000 under the terms of a
convertible note bearing interest at the prime rate on the date of each
investment. As of December 31, 1999, the Company had invested $125,000 in WSA
under the terms of the agreement.

In August 1999, PRWW used $1,932,000 to repurchase 322,000 shares of PRWW
common stock at a price of $6 per share. PRWW's share repurchase program is now
complete, having repurchased 499,800 shares of the 500,000 authorized by the
Board of Directors on July 20, 1998. In total, PRWW used $2,711,000 to
repurchase the shares at an average price of $5.42 per share.

During the year ended December 31, 1999, the Company received $0.4 million in
cash from the exercise of 172,632 employee stock options at exercise prices per
option of between $2.27 and $6.63.

The Company has a line of credit arrangement with First Union National Bank
totaling $3.0 million. At December 31, 1999, the Company had no outstanding
borrowings under the line.

In 2000, the Company plans to expand their position in the eResearch Technology
field. Such plans include aggressive spending in the areas of product
development and sales and marketing, in addition to possible significant cash
outlays to develop key strategic relationships. The execution of our plan may
have a significant, negative impact on our revenues and profitability in 2000
and 2001, and may require cash resources.

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

YEAR 2000

The Company has completed implementation of its Year 2000 remediation plan on a
timely basis and such remediation plan as implemented addressed all mission
critical systems. The Company is not aware of any adverse effects of Year 2000
issues on the Company, including its systems and operations. The Company has no
information that indicates that a significant vendor may be unable to sell to
the Company; a significant customer may be unable to purchase from the Company;
or a significant service provider may be unable to provide services to the
Company, because of Year 2000 compliance problems.

The Company estimates that the costs associated with its Year 2000 program was
approximately $ 0.3 million and future costs associated with its Year 2000
program will not be material.

Inflation

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

CAUTIONARY STATEMENT FOR FORWARD-LOOKING INFORMATION

Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations set forth above may constitute forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements involve a number of risks and uncertainties
such as competitive factors, technology development, market demand and the
Company's ability to obtain new contracts and accurately estimate net revenues
due to variability in size, scope and duration of projects, and internal issues
of the sponsoring client. Further, information on potential factors that could
affect the Company's financial results can be found in the Company's
Registration Statement on Form S-1 and its Reports on Forms 10-K and 10-Q filed
with the Securities and Exchange Commission.

25

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Interest Rate Risk

The Company generally places its investments in A1P1 rated commercial bonds and
paper, municipal securities and certificates of deposit with fixed rates with
maturities of less than one year. The Company actively manages its portfolio of
cash equivalents and marketable securities but in order to ensure liquidity
will only invest in instruments with high credit quality where a secondary
market exists. The Company has not and does not hold any derivatives related to
its interest rate exposure. Due to the average maturity and conservative nature
of the Company's investment portfolio, a sudden change in interest rates would
not have a material effect of the value of the portfolio. Management estimates
that had the average yield of the Company's investments decreased by 100 basis
points, the Company's interest income for the year ended December 31, 1999
would have decreased by less than $200,000. This estimate assumes that the
decrease occurred on the first day of 1999 and reduced the yield of each
investment by 100 basis points. The impact on the Company's future interest
income of future changes in investment yields will depend largely on the gross
amount of the Company's cash, cash equivalents and short-term investments. See
"Liquidity and Capital Resources".

Foreign Currency Risk

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

Management estimates that a 10% change in the exchange rate of the pound
sterling would have impacted the reported operating loss for international
operations by less than $100,000.

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

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information called for by this Item is set forth on Pages F-1
through F-18.

ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information relating to Directors of the Company is incorporated by
reference from the "Election of Directors" section of the Proxy Statement for
the Company's 2000 Annual Meeting of Shareholders (the "Proxy Statement"). For
information concerning the executive officers of the Company, see "Executive
Officers of Registrant" in Part 1 of this Report.

ITEM 11. EXECUTIVE COMPENSATION

"Executive Compensation" in the Proxy Statement is incorporated by
reference.

26

ITEM 12. SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

"Security Ownership of Certain Beneficial Owners and Management" in the
Proxy Statement is incorporated herein.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

"Certain Relationships and Related Party Transactions" in the Proxy
Statement is incorporated herein.

27

PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

Report of Independent Public Accountants F-2

Consolidated Balance Sheets F-3

Consolidated Statements of Operations F-4

Consolidated Statements of Stockholders' Equity F-5

Consolidated Statements of Cash Flows F-6

Notes to Consolidated Financial Statements F-7

Consolidated Financial Statement Schedule:

II. Valuation and Qualifying Accounts F-18

F-1

Report of Independent Public Accountants

To Premier Research Worldwide, Ltd.:

We have audited the accompanying consolidated balance sheets of Premier Research
Worldwide, Ltd. and subsidiaries as of December 31, 1998 and 1999, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements and the schedule referred to below are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Premier Research Worldwide,
Ltd. and subsidiaries, as of December 31, 1998 and 1999, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1999, in conformity with generally accepted accounting
principles in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and in our opinion, fairly states
in all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP

Philadelphia, PA
January 31, 2000

F-2

Premier Research Worldwide, Ltd. and Subsidiaries

Consolidated Balance Sheets

December 31
-----------------------------------
1998 1999
---------------- ----------------

Assets
Current Assets:
Cash and cash equivalents ...................................... $ 10,822,000 $ 16,765,000
Short-term investments ......................................... 5,668,000 4,300,000
Accounts receivable, net ....................................... 10,423,000 4,537,000
Note receivable ................................................ -- 8,000,000
Prepaid expenses and other ..................................... 2,176,000 1,177,000
Deferred income taxes .......................................... 159,000 322,000
------------ ------------
Total current assets .......................................... 29,248,000 35,101,000

Property and equipment, net ....................................... 4,110,000 2,705,000
Goodwill, net ..................................................... 2,160,000 1,844,000
Other assets ...................................................... 1,023,000 2,648,000
Deferred income taxes ............................................. 3,631,000 2,914,000
------------ ------------
$ 40,172,000 $ 45,212,000
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable ............................................... $ 2,519,000 $ 1,761,000
Accrued expenses ............................................... 1,099,000 3,322,000
Income taxes payable ........................................... 57,000 2,348,000
Deferred revenues .............................................. 5,556,000 2,404,000
------------ ------------
Total current liabilities ..................................... 9,231,000 9,835,000
------------ ------------
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock - $10 par value, 500,000 shares authorized, none
issued and outstanding ........................................ -- --
Common stock - $.01 par value, 15,000,000 shares authorized,
7,217,520 and 7,390,152 shares issued ......................... 72,000 74,000
Additional paid-in capital ..................................... 37,061,000 38,147,000
Treasury stock, 177,800 and 499,800 shares at cost ............. (779,000) (2,711,000)
Accumulated deficit ............................................ (5,413,000) (133,000)
------------ ------------
Total stockholders' equity .................................... 30,941,000 35,377,000
------------ ------------
$ 40,172,000 $ 45,212,000
============ ============

The accompanying notes are an integral part of these statements.

F-3

Premier Research Worldwide, Ltd. and Subsidiaries

Consolidated Statements of Operations

Year Ended December 31
------------------------------------------------------
1997 1998 1999
---------------- ---------------- ----------------

Net revenues:
Licenses .................................... $ 210,000 $ 5,142,000 $ 4,381,000
Services .................................... 7,485,000 14,611,000 21,694,000
CRO operations .............................. 6,468,000 12,054,000 16,710,000
------------- ------------ ------------
Total net revenues ............................. 14,163,000 31,807,000 42,785,000
------------- ------------ ------------
Cost of revenues:
Cost of licenses ............................ 20,000 138,000 319,000
Cost of services ............................ 5,250,000 9,131,000 12,578,000
Cost of CRO operations ...................... 6,806,000 10,488,000 12,512,000
------------- ------------ ------------
Total cost of revenues ......................... 12,076,000 19,757,000 25,409,000
------------- ------------ ------------
Gross margin ................................... 2,087,000 12,050,000 17,376,000
------------- ------------ ------------
Operating expenses:
Selling and marketing ....................... 2,492,000 3,764,000 5,124,000
General and administrative .................. 2,873,000 4,966,000 6,565,000
Research and development .................... 357,000 3,131,000 2,472,000
Write-off of acquired in-process research and
development ................................ 7,883,000 -- --
------------- ------------ ------------
Total operating expenses ....................... 13,605,000 11,861,000 14,161,000
------------- ------------ ------------
Operating income (loss) ........................ (11,518,000) 189,000 3,215,000
Other income, net .............................. 1,250,000 1,012,000 735,000
Gain on sale of domestic CRO business .......... -- -- 4,850,000
------------- ------------ ------------
Income (loss) before income taxes .............. (10,268,000) 1,201,000 8,800,000
Income tax provision (benefit) ................. (4,037,000) 480,000 3,520,000
------------- ------------ ------------
Net income (loss) .............................. $ (6,231,000) $ 721,000 $ 5,280,000
============= ============ ============
Basic net income (loss) per share .............. $ (0.93) $ 0.10 $ 0.75
Diluted net income (loss) per share ............ $ (0.93) $ 0.10 $ 0.74

The accompanying notes are an integral part of these statements.

F-4

Premier Research Worldwide, Ltd. and Subsidiaries

Consolidated Statements of Stockholders' Equity

Retained
Common Stock Additional Earnings
----------------------- Paid-in Treasury (Accumulated
Shares Amount Capital Stock Deficit) Total
--------- -------- ------------ ------------ ------------ ------------

Balance, December 31, 1996 ............ 4,402,000 $ 44,000 $ 2,273,000 $ -- $ 199,000 $ 2,516,000
Net proceeds from issuance of
common stock ........................ 2,206,250 22,000 34,160,000 -- -- 34,182,000
Conversion of minority interest
into common stock ................... 330,150 3,000 (3,000) -- -- --
Net loss ............................. -- -- -- -- (6,231,000) (6,231,000)
--------- -------- ------------ ------------ ------------ ------------
Balance, December 31, 1997 ............ 6,938,400 69,000 36,430,000 -- (6,032,000) 30,467,000
Net income ........................... -- -- -- -- 721,000 721,000
Deemed distribution for income
taxes ............................... -- -- -- -- (102,000) (102,000)
Purchase of treasury stock ........... -- -- -- (779,000) -- (779,000)
Exercise of stock options ............ 279,120 3,000 631,000 -- -- 634,000
--------- -------- ------------ ------------ ------------ ------------
Balance, December 31, 1998 ............ 7,217,520 72,000 37,061,000 (779,000) (5,413,000) 30,941,000
Net income ........................... -- -- -- -- 5,280,000 5,280,000
Purchase of treasury stock ........... -- -- -- (1,932,000) -- (1,932,000)
Tax benefit from exercise of
non-qualified stock options ......... -- -- 644,000 -- -- 644,000
Issuance of common stock
options to non-employee ............. -- -- 30,000 -- -- 30,000
Exercise of stock options ............ 172,632 2,000 412,000 -- -- 414,000
--------- -------- ------------ ------------ ------------ ------------
Balance, December 31, 1999 ............ 7,390,152 $ 74,000 $ 38,147,000 $ (2,711,000) $ (133,000) $ 35,377,000
========= ======== ============ ============ ============ ============

The accompanying notes are an integral part of these statements.

F-5

Premier Research Worldwide, Ltd. and Subsidiaries

Consolidated Statements of Cash Flows

Year Ended December 31
----------------------------------------------------
1997 1998 1999
----------------- --------------- --------------

Operating activities:
Net income (loss) ................................... $ (6,231,000) $ 721,000 $ 5,280,000
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities--
Gain on sale of the domestic CRO operation ....... -- -- (4,850,000)
Depreciation and amortization .................... 709,000 1,606,000 2,167,000
Provision for losses on accounts receivable ...... -- -- 399,000
Issuance of stock options to non-employee ........ -- -- 30,000
Write-off of acquired in-process research and
development ..................................... 7,883,000 -- --
Deferred income taxes ............................ (4,149,000) 411,000 1,198,000
Loss on sales of property and equipment .......... 36,000 -- 20,000
Changes in operating assets and liabilities,
excluding effects of business acquisition and
disposition:
Accounts receivable ........................... (1,277,000) (5,254,000) 1,320,000
Prepaid expenses and other .................... (524,000) (1,231,000) 999,000
Accounts payable .............................. (295,000) 774,000 (550,000)
Accrued expenses .............................. 21,000 11,000 2,128,000
Income taxes payable .......................... (512,000) (22,000) 2,291,000
Deferred revenues ............................. 586,000 2,208,000 (1,470,000)
------------- ------------ -----------
Net cash provided by (used in)
operating activities ..................... (3,753,000) (776,000) 8,962,000
------------- ------------ -----------
Investing activities:
Purchases of property and equipment ................. (1,509,000) (3,352,000) (2,317,000)
Proceeds from sales of property and equipment ....... -- -- 73,000
Net (purchases) sales of short-term investments ..... (17,084,000) 11,416,000 1,368,000
Net cash paid for business acquisition .............. (8,655,000) -- --
Net proceeds from sale of the domestic CRO
operation .......................................... -- -- 1,000,000
Investment in non-marketable securities ............. -- (1,000,000) (1,625,000)
------------- ------------ -----------
Net cash provided by (used in)
investing activities ..................... (27,248,000) 7,064,000 (1,501,000)
------------- ------------ -----------
Financing activities:
Net proceeds from the issuance of common stock ...... 34,182,000 -- --
Net proceeds from exercise of stock options ......... -- 634,000 414,000
Repurchase of common stock for treasury ............. -- (779,000) (1,932,000)
------------- ------------ -----------
Net cash provided by (used in)
financing activities ..................... 34,182,000 (145,000) (1,518,000)
------------- ------------ -----------
Net increase in cash and cash equivalents .............. 3,181,000 6,143,000 5,943,000
Cash and cash equivalents, beginning of year ........... 1,498,000 4,679,000 10,822,000
------------- ------------ -----------
Cash and cash equivalents, end of year ................. $ 4,679,000 $ 10,822,000 $16,765,000
============= ============ ===========

The accompanying notes are an integral part of these statements.

F-6

Notes To Consolidated Financial Statements

1. Background and Summary of Significant Accounting Policies:

BACKGROUND

Premier Research Worldwide, Ltd. (the "Company"), a Delaware corporation, is a
clinical research organization providing a broad range of integrated product
development services on a global basis to its clients in the pharmaceutical,
biotechnology and medical device industries. The Company operates in two
reportable business segments: Clinical Operations, which includes centralized
diagnostic testing and CRO operations; and Technology Operations, which
includes developing, marketing and support of software products used in the
management of clinical trials. The Company also has a wholly-owned operating
subsidiary in the United Kingdom (UK). During 1999, the Company curtailed
operations of its international CRO and, on December 31, 1999, the Company sold
its domestic CRO operation (see Note 3).

INITIAL PUBLIC OFFERING

The Company completed an initial public offering of its common stock effective
February 3, 1997. The Company sold 2,750,000 shares of common stock at an
initial public offering price of $17.00, of which 2,000,000 shares were issued
and sold by the Company and 750,000 shares were sold by UM Holdings, Ltd. (UM).
Additionally, 412,500 shares of common stock were purchased at $17.00 per share
by the underwriters, upon the exercise of an over-allotment option, of which
206,250 shares were purchased from the Company and 206,250 shares were
purchased from UM. The net proceeds to the Company, after deducting
underwriting discounts and expenses, were approximately $34.2 million.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

USE OF ESTIMATES

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported assets and liabilities and contingency disclosures at
the date of the financial statements and the reported revenues and expenses
during the reporting period. Actual results could differ from those estimates.

REVENUES

Clinical Operations revenues are generally recorded when services are rendered.
Revenues under certain clinical research service contracts are recognized under
the percentage-of-completion method and include a proportion of the revenues
expected to be realized on the contract in the ratio of costs incurred to
estimated total costs. Such contracts are generally completed within a few
months to two years. A provision for the loss on a contract is made when
current estimates indicate a total contract loss. The Company often receives
non-refundable deposits from its customers that are recorded as deferred
revenues in the accompanying consolidated balance sheets. Clinical Operations
revenues for twelve months ended December 31, 1998 include $0.8 million for
work completed under a contract which was cancelled before completion.
Technology Operations include software license revenues, which are recognized
upon delivery of the software and related documentation when collectibility is
deemed probable and the license fee is deemed fixed or determinable. Revenues
from software maintenance and support contracts are recognized on a
straight-line basis over the term of the contract, generally 12 months.
Revenues from related training and consulting services are recognized as
services are performed. Technology Operations revenues for the year ended
December 31, 1997 include $0.4 million recognized in connection with an
agreement termination.

CASH AND CASH EQUIVALENTS

The Company considers cash on deposit with financial institutions and all
highly liquid investments purchased with an original maturity of three months
or less to be cash equivalents. At the balance sheet dates, cash equivalents
consisted primarily of investments in money market funds, municipal securities
and bonds of government sponsored agencies.

F-7

SHORT-TERM INVESTMENTS

At December 31, 1999, short-term investments consisted of commercial bonds and
paper, municipal securities, certificates of deposit and bonds of government
sponsored agencies with maturities of less than one year. Pursuant to Statement
of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", available-for-sale securities are
carried at fair value, based on quoted market prices, with unrealized gains and
losses, net of tax, reported as a separate component of stockholders' equity.
The Company has classified all of its short-term investments at December 31,
1999 as available-for-sale and at December 31, 1999, unrealized gains and
losses were immaterial. Realized gains and losses during 1999 were also
immaterial. For the purpose of determining realized gains and losses, the costs
of the securities sold is based upon specific identification.

INVESTMENT IN NON-MARKETABLE SECURITIES

In July 1998, the Company paid $1.0 million for a minority equity position in
AmericasDoctor.com, Inc., an Internet company that provides physician referrals
and healthcare events on America Online's Health web page. This investment was
accounted for under the cost method as of December 31, 1998. In 1999, in
connection with the merger of AmericasDoctor.com, Inc. with Affiliated Research
Centers, Inc. ("Affiliated Research"), the Company invested an additional $1.5
million in Affiliated Research. In return, the Company received a 5.73%
convertible note. The note is to be automatically converted into equity
securities of Affiliated Research on or before March 31, 2000, under conditions
prescribed in the note agreement. The Company believes that the cost of its
aggregate investment is less than or equal to fair value at December 31, 1999.
The $2.5 million investment is included in other assets in the accompanying
consolidated balance sheets.

In 1999, the Company entered into a two-year, $4.6 million consulting contract
with AmericasDoctor.com, Inc. Under the terms of the contract, the Company
provides consulting services to enhance AmericasDoctor.com, Inc.'s ability to
effectively support patient identification, recruitment and referral to
clinical investigational sites for both the Company and other companies in the
pharmaceutical, biotechnology and medical device industries. The Company's
consulting fees are due in eight equal quarterly installments through December
2000. During the year ended December 31, 1999, the Company recognized net
revenue of $2.3 million under this consulting agreement and as of December 31,
1999, $575,000 was included in accounts receivable, which is included in other
assets in the accompanying consolidated balance sheets. The Company believes
that the cost of its investment is less than or equal to the fair value as of
December 31, 1999.

In 1999, the Company entered into an agreement with Winthrop Stewart
Associates, Inc. (WSA) to invest up to $300,000 under the terms of a
convertible note bearing interest at the prime rate on the date of each
investment. The investment is to fund the development and integration of WSA's
software into the Company's software products. As of December 31, 1999, the
Company had invested $125,000 in WSA under the terms of the agreement.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets ranging from
three to five years. Leasehold improvements are amortized using the
straight-line method over the shorter of the estimated useful life of the asset
or the remaining lease term. Repair and maintenance costs are expensed as
incurred. Improvements and betterments are capitalized. Gains or losses on the
disposition of property and equipment are included in other income.
Depreciation expense was $605,000, $1,228,000 and $1,851,000 for the years
ended December 31, 1997, 1998 and 1999, respectively.

GOODWILL

Goodwill is amortized using the straight-line method over eight years and is
net of accumulated amortization of $704,000 and $1,020,000 as of December 31,
1998 and 1999, respectively. The related amortization expense was $104,000,
$378,000 and $316,000 for the years ended December 31, 1997, 1998, and 1999,
respectively.

LONG-LIVED ASSETS

The Company continually evaluates whether later events and circumstances have
occurred that indicate the remaining estimated useful life may warrant revision
or that the remaining balance of long-lived assets

F-8

may not be recoverable. If factors indicate that long-lived assets should be
evaluated for possible impairment, the Company would use an estimate of the
related undiscounted cash flows in measuring whether long-lived assets should
be written down to their fair value, in accordance with SFAS No. 121
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of ". Management believes that there has been no impairment of
long-lived assets as of December 31, 1999.

ACCRUED EXPENSES

Included in accrued expenses at December 31, 1998 and 1999 is accrued payroll
of $515,000 and $358,000, respectively.

SOFTWARE DEVELOPMENT COSTS

Research and development expenditures are charged to operations as incurred.
SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased
or Otherwise Marketed," requires the capitalization of certain software
development costs subsequent to the establishment of technological feasibility.
The Company has determined that technological feasibility for its products is
generally achieved upon completion of a working model. Since software
development costs have not been significant after the completion of a working
model, all such costs have been charged to expense as incurred.

ADVERTISING COSTS

The Company expenses advertising costs as incurred. Advertising expense for the
years ended December 31, 1997, 1998 and 1999 was $310,000, $473,000, and
$481,000 and respectively.

INCOME TAXES

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
The Company was included in the consolidated federal tax return of UM until
February 1997 and files separate state, local and foreign income tax returns.
The accompanying financial statements reflect income tax expense calculated on
a separate-company basis for all periods presented.

SUPPLEMENTAL CASH FLOW INFORMATION

The Company paid approximately $819,000, $128,000, and $60,000 for income taxes
in the years ended December 31, 1997, 1998 and 1999, respectively, of which
$575,000 was paid to UM in 1997 in accordance with the tax sharing agreement.

The following table displays the net non-cash assets that were consolidated
(deconsolidated) as a result of the Company's 1997 business acquisition (see
Note 2) and 1999 business divestiture (see Note 3):

Year Ended December 31,
---------------------------------
1997 1999
--------------- ---------------

Non-cash assets (liabilities):
Accounts receivable ............................................. $ 1,055,000 (4,167,000)
Note receivable ................................................. -- 8,000,000
Prepaid expenses and other ...................................... 35,000 --
Property and equipment .......................................... 386,000 (1,778,000)
Other assets .................................................... 23,000 --
In-process research and development ............................. 7,883,000 --
Goodwill ........................................................ 2,548,000 --
Accounts payable ................................................ (1,209,000) 208,000
Accrued expenses ................................................ (450,000) (95,000)
Deferred revenues ............................................... (1,616,000) 1,682,000
------------ ------------
8,655,000 3,850,000
Less gain on sale of the domestic CRO operations ................ -- (4,850,000)
------------ ------------
Net cash paid for acquisition (received in divestiture) ......... $ 8,655,000 $ (1,000,000)
============ ============

F-9

OTHER INCOME

Other income consists primarily of earnings on cash, cash equivalents and
short-term investments.

CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

Financial instruments that potentially subject the Company to concentration of
credit risk consist primarily of trade accounts receivable from companies
operating in the pharmaceutical industry. For the years ended December 31, 1997
and 1998, no single client accounted for greater than 10% of net revenues. For
the year ended December 31, 1999, one client accounted for 11.1% of net
revenues. The loss of any such client could have a material adverse effect on
the Company's operations. In addition, the Company maintains reserves for
potential credit losses and such losses, in the aggregate, have not
historically exceeded management expectations.

TRANSLATION OF FOREIGN FINANCIAL STATEMENTS

Assets and liabilities of the Company's UK subsidiary are translated at the
exchange rate as of the end of each reporting period. The income statement is
translated at the average exchange rate for the period. Cumulative adjustments
from translating the UK financial statements are immaterial.

NET INCOME (LOSS) 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
(loss) per share is computed by dividing net income (loss) by the weighted
average number of shares of common stock outstanding during the year. Diluted
net income (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the year,
adjusted for the dilutive effect of common stock equivalents, which consist
primarily of stock options, using the treasury stock method.

The table below sets forth the reconciliation of the numerators and
denominators of the basic and diluted net income (loss) per share computations.

Year Ended December 31,
- ----------------------- Net Per Share
1997 Income (Loss) Shares Amount
- ----------------------------------- --------------- ----------- ----------

Basic net loss .................... $ (6,231,000) 6,702,000 $(0.93)
Effect of dilutive shares ......... -- -- --
------------ --------- ------
Diluted net loss .................. $ (6,231,000) 6,702,000 $(0.93)
============ ========= ======
1998
- -----------------------------------
Basic net income .................. $ 721,000 7,102,000 $ 0.10
Effect of dilutive shares ......... -- 102,000 --
------------ --------- ------
Diluted net income ................ $ 721,000 7,204,000 $ 0.10
============ ========= ======
1999
- -----------------------------------
Basic net income .................. $ 5,280,000 7,007,000 $ 0.75
Effect of dilutive shares ......... -- 108,000 (0.01)
------------ --------- ------
Diluted net income ................ $ 5,280,000 7,115,000 $ 0.74
============ ========= ======

In computing diluted net income (loss) per share, 851,620, 435,385 and 210,102
options to purchase shares of common stock were excluded from the computation
for the years ended December 31, 1997, 1998 and 1999, respectively.

The options were excluded from the 1998 and 1999 computations because the
exercise prices of such options were greater than the average market price of
the Company's Common Stock during the respective periods. The options were
excluded from the 1997 computation because their effect would be anti-dilutive.

COMPREHENSIVE INCOME

FASB Statement No. 130, "Reporting Comprehensive Income" requires companies to
classify items of other comprehensive income by their nature in the financial
statements and display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in-capital in the

F-10

equity section of a statement of financial position. The Company's
comprehensive income includes net income and unrealized gains on short-term
investments and foreign currency translation. These unrealized gains and losses
and currency translation adjustments were immaterial for all periods presented.

RECLASSIFICATIONS

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

2. Acquisition of DLB Systems, Inc.

Effective October 31, 1997, the Company acquired substantially all of the
assets of DLB Systems, Inc. ("DLB") for $6,500,000 in cash, its prior $1.0
million investment and the assumption of certain liabilities. The acquisition
was accounted for under the purchase method of accounting, whereby the purchase
price was allocated to the assets acquired and the liabilities assumed, based
on their fair market values at the acquisition date. The excess of the purchase
price over the estimated fair market value of the net assets acquired was
assigned to identifiable intangibles. The Company assigned $7,883,000 to
in-process research and development and such amount was charged to operations
in the accompanying consolidated statement of operations. The Company also
recorded goodwill of $2,548,000, which is being amortized on a straight-line
basis over eight years.

DLB's results of operations have been included in the Company's consolidated
financial statements from the effective date of the acquisition. The following
table summarizes the unaudited pro forma results of operations of the Company
as if the acquisition of DLB had occurred on January 1, 1996. The pro forma
information does not purport to be indicative of the results that would have
been attained if the operations had actually been combined during the periods
presented.

Year Ended December 31,
-------------------------------
1996 1997
-------------- --------------

Net revenues ................................. $21,615,000 $19,461,000
Operating loss ............................... (1,751,000) (5,105,000)
Net loss ..................................... (1,477,000) (2,631,000)
Basic and diluted net loss per share ......... (0.34) (0.39)

The pro forma amounts do not include the one-time charge of $7,883,000 related
to the write-off of in-process research and development.

3. Sale of the Domestic CRO Operation

On December 31, 1999, the Company sold the business and certain of the assets
of its domestic CRO operation (the "Division"). The consideration for such sale
could total $18,000,000, of which $1,000,000 was paid in cash on December 31,
1999 and $8,000,000 was received on January 31, 2000, with the balance payable
over time, subject to adjustments and earn-outs. In addition, certain specific
liabilities of the Division were assumed as part of the transaction. After
recognizing related professional fees, a pre-tax gain of $4,850,000 was
included in the statement of operations for the year ended December 31, 1999 as
a result of this disposition. The gain recognized excluded the amount of
consideration subject to adjustments and earn-outs. Any future proceeds from
the sale will be included in the Company's statement of operations when due and
payable.

4. Accounts Receivable
December 31
------------------------------
1998 1999
-------------- -------------
Billed ................................. $10,307,000 $4,962,000
Unbilled ............................... 359,000 --
Allowance for doubtful account ......... (243,000) (425,000)
----------- ----------
$10,423,000 $4,537,000
=========== ==========

F-11

5. Property and Equipment
December 31
---------------------------------
1998 1999
--------------- ---------------
Computer and other equipment .......... $ 9,466,000 $ 9,230,000
Furniture and fixtures ................ 1,436,000 1,154,000
Leasehold improvements ................ 808,000 480,000
------------ ------------
11,710,000 10,864,000
Less-Accumulated depreciation ......... (7,600,000) (8,159,000)
------------ ------------
$ 4,110,000 $ 2,705,000
============ ============

6. Line of Credit

The Company has a line of credit with a bank, through June 30, 2000, that
provides for borrowings up to $3 million at an interest rate of prime minus 35
basis points. The line of credit agreement includes certain covenants, the most
restrictive of which limit future indebtedness and require compliance with a
liabilities-to-tangible net worth ratio. To date, the Company has not borrowed
any amounts under its line of credit.

7. Income Taxes

The income tax provision (benefit) consists of the following:

Year Ended December 31
---------------------------------------------
1997 1998 1999
--------------- ----------- -------------

Current provision:
Federal .................. $ -- $ -- $1,523,000
State and local .......... 112,000 69,000 671,000
Foreign .................. -- -- 128,000
------------ -------- ----------
112,000 69,000 2,322,000
------------ -------- ----------
Deferred provision (benefit):
Federal .................. (3,103,000) 146,000 955,000
State and local .......... (617,000) 34,000 243,000
Foreign .................. (429,000) 231,000 --
------------ -------- ----------
(4,149,000) 411,000 1,198,000
------------ -------- ----------
$ (4,037,000) $480,000 $3,520,000
============ ======== ==========

Foreign income (loss) before income taxes was $(1,300,000), $676,000 and
$414,000 for the years ended December 31, 1997, 1998 and 1999, respectively.

The reconciliation between income taxes at the federal statutory rate and the
amount recorded in the accompanying financial statements is as follows:

Year Ended December 31
----------------------------------------------
1997 1998 1999
---------------- ----------- -------------

Tax at federal statutory rate ................. $ (3,491,000) $ 408,000 $2,992,000
State and local taxes, net of federal ......... (505,000) 70,000 581,000
Amortization of goodwill ...................... 16,000 16,000 --
Other ......................................... (57,000) (14,000) (53,000)
------------ --------- ----------
$ (4,037,000) $ 480,000 $3,520,000
============ ========= ==========

The Company was included in the consolidated federal income tax returns of UM
until February 1997 under a tax-sharing agreement pursuant to which the Company
would pay to UM amounts equal to the taxes that the Company would have paid had
it filed separate federal income tax returns. The agreement did not provide for
UM to pay the Company for tax losses that UM may utilize. Upon finalizing the
Company's 1997 tax return in 1998, the Company recorded a deemed distribution
of $102,000 for tax losses attributable to the Company but included in UM's
consolidated tax return.

F-12

The components of the Company's net deferred tax asset are as follows:

Year Ended December 31
-----------------------------
1998 1999
------------- -------------
Goodwill amortization ..................... $2,986,000 $2,876,000
Net operating loss carry-forwards ......... 652,000 145,000
Depreciation .............................. (7,000) (86,000)
Reserves and accruals ..................... 159,000 301,000
---------- ----------
$3,790,000 $3,236,000
========== ==========

At December 31, 1999, the Company had net operating loss carry-forwards for
state tax purposes of approximately $2.4 million, which will begin to expire in
2007. Management has determined that it is more likely than not that future
taxable income will be sufficient to realize all of the Company's deferred tax
assets.

8. Related Party Transactions:

TRANSACTIONS WITH UM

The Company leased its primary operating facility from UM (see Note 10) in 1997
and 1998 and participated in UM's 401(k) profit sharing plan in 1997. The
Company was charged $349,000 for rent under the facility lease for the years
ended December 31, 1997 and 1998, and $ 47,000 for profit sharing plan
contributions for the year ended December 31, 1997. The Company believes that
all amounts charged by UM were reasonable.

In 1997, the Company paid UM $485,000 for 1996 income taxes and $90,000 for
estimated 1997 income taxes due under the tax sharing agreement (see Note 7).

In August 1999, PRWW, pursuant to its share repurchase program, used $1,932,000
to repurchase 322,000 shares of PRWW Common Stock from UM at a price of $6 per
share.

TRANSACTIONS WITH THE COMPANY'S CHAIRMAN AND CHIEF EXECUTIVE OFFICER

The Company's Chairman and Chief Executive Officer, who is a stockholder, is a
cardiologist who, in addition to his role as an executive officer of the
Company, provides medical services to the Company as an independent contractor
through his wholly-owned professional corporation (see Note 10). Fees incurred
under this consulting arrangement approximated $144,000, $144,000 and $156,000
for the years ended December 31, 1997, 1998 and 1999, respectively. These
medical service fees are included in costs of services as they relate to
medical interpretations for diagnostic tests. In addition, at December 31, 1998
and 1999 amounts owed to the Company's Chairman and Chief Executive Officer in
connection with the consulting agreement were $48,000 and $52,000,
respectively.

The Company and the Company's Chairman and Chief Executive Officer entered into
new employment and consulting agreements during 1999 (see Note 10).

9. Stock Option Plans

In August 1993, the Company established a nonqualified stock option plan (the
"1993 Plan") authorizing the grant of options to acquire up to 1,100,500 shares
of the Company's common stock. The purpose of the 1993 Plan was to provide an
incentive for key individuals to advance the success of the Company. The
options cover the purchase of common stock of the Company at exercise prices
initially set at or above current fair value as determined by the Board of
Directors. Options granted under the 1993 Plan became fully vested 90 days
after the Company's initial public offering and expire five years from the
initial public offering date. No additional options may be granted under this
plan.

In 1996, the Company adopted a new stock option plan (the "1996 Plan") that
authorizes the grant of both incentive and non-qualified options to acquire up
to 500,000 shares of the Company's common stock. The Company's Board of
Directors determines the exercise price of the options under the 1996 Plan. The
exercise price of incentive stock options may not be below fair value on the
grant date. Incentive stock options under the 1996 Plan expire ten years from
the grant date and are exercisable in accordance with vesting provisions set by
the Board.

F-13

During September 1998, the Company offered a stock option exchange program to
its employees for options granted under the 1996 Plan. Under the program, stock
options could be exchanged, on a one for two basis with the new exercise price
set at the greater of 50% of the original exercise price or the closing price
on September 30, 1998, the final day of the exchange program. A total of 77,350
stock options were exchanged and 38,675 were reissued in the exchange program
at an average exercise price of $6.50.

In May 1999, the shareholders approved an amendment to the 1996 Stock Option
Plan and increased the number of shares which could be granted under to Plan by
600,000 to 1,100,000 and provided for an annual option grant of 5,000 shares to
each outside director.

Information with respect to outstanding options under the plans is as follows:

Outstanding Option Price
Shares Per Share
------------- ----------------
Balance, December 31, 1996 ......... 530,441 $ 2.27-17.00
Granted ........................... 330,679 8.25-17.00
Cancelled ......................... (9,500) 13.00-17.00
------- -------------
Balance, December 31, 1997 ......... 851,620 2.27-13.125
Granted ........................... 252,675 3.75-9.00
Exercised ......................... (279,120) 2.27
Cancelled ......................... (151,675) 8.25-13.125
-------- --------------
Balance, December 31, 1998 ......... 673,500 2.27-13.125
Granted ........................... 181,500 5.50-9.38
Exercised ......................... (172,632) 2.27-6.625
Cancelled ......................... (134,745) 3.75-13.125
-------- --------------
Balance, December 31, 1999 ......... 547,623 $ 2.27-13.125
======== =============

As of December 31, 1999, 249,163 options with a weighted average exercise price
of $6.82 per share were exercisable and 636,266 options were available for
future grants under the 1996 Plan.

The Company accounts for its option grants under Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees", and the related
interpretations. In 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-based Compensation". SFAS No. 123 established a fair value based method
of accounting for stock-based compensation plans. Had compensation cost for the
Company's stock option plans been determined based upon the fair value of the
options at the date of grant, as prescribed under SFAS No. 123, the Company's
net income (loss) and basic and diluted net income (loss) per share would have
been adjusted to the following pro forma amounts:

Year Ended December 31
--------------------------------------------------
1997 1998 1999
---------------- ------------- ---------------

Net income (loss):
As reported ...................... $ (6,231,000) $ 721,000 $ 5,280,000
Pro forma ........................ (6,342,000) 571,000 5,137,000
Basic net income (loss) per share:
As reported ...................... (0.93) 0.10 0.75
Pro forma ........................ (0.95) 0.08 0.73
Diluted net income (loss) per share:
As reported ..................... (0.93) 0.10 0.74
Pro forma ....................... (0.95) 0.08 0.72

F-14

The weighted average fair value per share of the options granted during 1997,
1998 and 1999 was estimated as $5.40, $2.12 and $2.56, respectively. The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions:

1997 1998 1999
--------- --------- ---------
Risk-free interest rate .......... 6.1% 5.3% 5.7%
Expected dividend yield .......... 0.0% 0.0% 0.0%
Expected life .................... 3 years 3 years 3 years
Expected volatility .............. 55.0% 55.0% 55.0%

The effects of applying SFAS No. 123 in the pro forma disclosure are not
indicative of future amounts. SFAS No. 123 does not apply to options granted
prior to 1995 and additional option grants are anticipated.

10. Commitments and Contingencies:

LEASES

The Company leases office space and equipment under operating leases, including
its primary operating facility. During the years ended December 31, 1997 and
1998, the Company leased its primary operating facility from UM under a lease
agreement executed in June 1996 that was to expire in September 2003 (see Note
8). The Company terminated the facility lease with UM, without penalty, on
January 3, 1999 and moved into a new facility under a lease agreement that
expires in August 2005. Rent expense for all operating leases for the years
ended December 31, 1997, 1998 and 1999 was $708,000, $1,203,000, and
$1,579,000, respectively.

Future minimum lease payments as of December 31, 1999 are as follows:

2000 ........................ $ 1,693,000
2001 ........................ 1,724,000
2002 ........................ 1,733,000
2003 ........................ 1,733,000
2004 ........................ 1,582,000
2005 and thereafter ......... 1,820,000
-----------
$10,285,000
===========
ROYALTIES

In July 1999, the Company entered into a royalty agreement with a customer that
provides for a 5% royalty payable on net license revenues from one of the
Company's software products. The term of the agreement is the earlier of three
years or total royalties paid of $775,000. During 1999, the Company incurred
royalty expense of $131,000 and paid $75,000 under this agreement.

AGREEMENTS WITH THE COMPANY'S MANAGEMENT

The Company entered into employment and consulting agreements with its Chairman
and Chief Executive Officer for one-year periods that commenced in September
1999 and July 1999, respectively. Either the Company or the Chairman may
terminate the employment agreement at any time, with or without cause. However,
if the Company terminates the employment agreement without cause, the Company
must continue to pay the Chairman's salary for a one-year period subsequent to
the termination. The consulting agreement relates to the Chairman's capacity as
a medical doctor and cardiologist and, among other things, requires the
Chairman to serve as Medical Director and/or principal investigator for the
Company in addition to providing medical interpretations of diagnostic tests
from time to time, as required. Compensation under the consulting agreement is
$156,000 per year. The consulting agreement commenced on July 29, 1999 and
continues on a year to year basis unless terminated.

The Company entered into an employment agreement with its President and Chief
Operating Officer and its Chief Financial Officer for one-year periods that
commenced in September 1999. Either the Company or the employee may terminate
the employment agreement at any time, with or without cause. However,

F-15

if the Company terminates either of the employment agreements without cause,
the Company must continue to pay the President and Chief Operating Officer's
salary for a one-year period subsequent to termination and the Chief Financial
Officer's salary for a six-month period subsequent to termination.

CONTINGENCIES

The Company is involved in legal proceedings from time to time in the ordinary
course of its business. Management believes that none of these legal
proceedings will have a material adverse effect on the financial condition or
results of operations of the Company.

The Company believes it has adequate insurance coverage against possible
liabilities that may be incurred in connection with the conduct of its business
primarily as it relates to the testing of new drugs or medical devices. While
the Company believes it operates safely and prudently, in addition to managing
liability risks through contractual indemnification, the Company could be
materially and adversely affected if it were required to pay damages or incur
defense costs in connection with a claim that is beyond the scope of an
indemnity provision or insurance coverage, or if an indemnity is not upheld or
if the claim exceeds the insurance policy limits.

11. Operating Segments and Geographic Information

In June 1997, SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information," was issued, effective for fiscal years ending after
December 15, 1998. The Company adopted this statement for the year ended
December 31, 1998. The Company's reportable segments are strategic business
units that offer different products and services to a common client base.

The Company's products and services are provided through two business segments,
both in the United States and internationally: Clinical Operations, which
includes centralized diagnostic testing services, clinical trial management
services and clinical data management services; and Technology Operations,
which includes clinical trial and data management software, support and
consulting services. The Company's discontinued Phase I Clinical Research Unit
and income and expense not allocated to reportable segments are reported as
Other.

During 1997 and 1998, no single client accounted for more than 10% of a
segment's net revenues. In 1999, one client accounted for 15.5% of Clinical
Operations net revenues and three clients accounted for 25.9%. 19.1% and 11.7%,
respectively, of the Technology Operations net revenues.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies (see Note 1). The Company evaluates
performance based on the net revenues and operating earnings performance of the
respective business segments.

Year Ended December 31, 1997
-------------------------------------------------------------------
Clinical
Operations Technology Other Total
-------------- --------------- ------------- ----------------

Net revenues from external customers ......... $11,315,000 $ 795,000 $2,053,000 $ 14,163,000
Loss from operations ......................... (2,525,000) (8,311,000) (682,000) (11,518,000)
Identifiable assets .......................... 6,263,000 3,573,000 26,938,000 36,774,000
Depreciation and amortization ................ 547,000 75,000 87,000 709,000
Capital expenditures ......................... 1,437,000 30,000 42,000 1,509,000

Year Ended December 31, 1998
--------------------------------------------------------------
Clinical
Operations Technology Other Total
-------------- ------------ ------------- --------------

Net revenues from external customers ......... $21,688,000 $9,930,000 $ 189,000 $31,807,000
Income (loss) from operations ................ (1,565,000) 1,689,000 65,000 189,000
Identifiable assets .......................... 14,189,000 4,588,000 21,395,000 40,172,000
Depreciation and amortization ................ 1,097,000 509,000 -- 1,606,000
Capital expenditures ......................... 2,864,000 488,000 -- 3,352,000

F-16

Year Ended December 31, 1999
----------------------------------------------------------------
Clinical
Operations Technology Other Total
-------------- -------------- ------------- --------------

Net revenues from external customers ......... $30,723,000 $12,062,000 $ -- $42,785,000
Income (loss) from operations ................ (755,000) 3,970,000 -- 3,215,000
Identifiable assets .......................... 5,318,000 4,884,000 35,010,000 45,212,000
Depreciation and amortization ................ 1,585,000 582,000 -- 2,167,000
Capital expenditures ......................... 1,654,000 663,000 -- 2,317,000

The Company operates on a worldwide basis with two locations in the United
States and two locations in the United Kingdom.

Geographic information is as follows:

Year Ended December 31, 1997
-----------------------------------------------------
North
America Europe Total
---------------- --------------- ----------------

Net revenues from external customers ......... $ 13,188,000 $ 975,000 $ 14,163,000
Loss from operations ......................... (10,218,000) (1,300,000) (11,518,000)
Identifiable assets .......................... 36,226,000 548,000 36,774,000

Year Ended December 31, 1998
-------------------------------------------------
North
America Europe Total
-------------- --------------- --------------

Net revenues from external customers ......... $27,187,000 $ 4,620,000 $31,807,000
Income (loss) from operations ................ 2,037,000 (1,848,000) 189,000
Identifiable assets .......................... 38,033,000 2,139,000 40,172,000

Year Ended December 31, 1999
-----------------------------------------------
North
America Europe Total
-------------- ------------- --------------

Net revenues from external customers ......... $37,378,000 $5,407,000 $42,785,000
Income (loss) from operations ................ 3,718,000 (593,000) 3,215,000
Identifiable assets .......................... 44,811,000 401,000 45,212,000

F-17

SCHEDULE II

PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Allowance for Doubtful Accounts
(in thousands)

Balance Balance
Beginning of Charges to Deductions End
Period Expense from Reserve Other of Period
-------------- ------------ ------------ ------- ---------

December 31, 1999 $243 $399 $217 -- $425

December 31, 1998 $178 -- -- $65 $243

December 31, 1997 $140 -- $3 $41 $178

F-18

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. The financial statements of the Company filed as a part of this
Report are listed on the attached Index to Consolidated Financial
Statements and Financial Schedule at [F-1]

2. The Schedules to the financial statements of the Company filed as a
part of this Report are listed in the attached Index to
Consolidated Financial Statements and Financial Statement Schedule
at [F-1]

3. Exhibits.

The following exhibits are filed herewith, unless otherwise marked:

3.1 Amended and Restated Certificate of Incorporation(6)

3.2 Bylaws(2)

3.3 Amendment to Bylaws (6)

4.1 Form of Stock Certificate(2)

10.3 Stock Option Agreement - Jerry Lee(2)(4)

10.4 Stock Option Agreement - Arthur Hayes(2)(4)

10.5 Stock Option Agreement - Connie Woodburn(4) (5)

10.6 Amended and Restated 1993 Stock Option Plan(2)(4)

10.7 1996 Stock Option Plan(2)(4)

10.10 Tax Sharing Agreement with UM Holdings, Inc.(2)

10.12 Revolving Credit Agreement with First Union National Bank(2)

10.13 Promissory Note to First Union National Bank(2)

10.15 Restated Stock Option Agreement to Jerry Lee(2)(4)

10.16 Restated Option Agreement to Arthur Hays(2)(4)

10.17 Tax Indemnity Agreement with UM Holdings, Ltd.(2)

10.19 Strategic Alliance Agreement by and between Premier Research
Worlwide and en Vision Sciences, Inc.(5)

10.21 Common Stock Purchase Agreement among AmericasDoctor.com, Inc.,
Inc., Medical Advisory Systems, Inc. and Premier Research
Worldwide (6)

10.22 Support and Service Agreement between AmericasDoctor.com, Inc.
and Premier Research Worldwide (6)

10.23 Sublease Agreement between Premier Research Worldwide and
Raytheon Engineers & Constructors, Inc. (6)

10.24 Consulting Agreement between AmericasDoctor.com, Inc. and
Premier Research Worldwide (7)

10.25 Registration Rights Agreement dated August 27, 1999.
Incorporated by reference to Exhibit 10.1, filed in connection
with the Company's Form 8-K dated August 27, 1999.

10.26 Put Option Agreement dated August 27, 1999. Incorporated by
reference to Exhibit 10.1, filed in connection with the
Company's Form 8-K dated August 27, 1999.

10.27 Employment Agreement with Joel Morganroth, M.D. (8)

10.28 Management Consulting Agreement with Joel Morganroth, M.D. (8)

10.29 Employment Agreement with Joseph Esposito. (8)

10.30 Employment Agreement with John R. Bauer. (8)

10.31 Amendment No. 1 to Premier Research Worldwide 1996 Stock Option
Plan (Incorporated by reference to Exhibit 4.2 to the
Registration Statement on Form S-8, File No. 333-80121).

10.32 Asset Purchase Agreement dated December 31, 1999 between
Premier Research Worldwide, Ltd. and SCP Communications, Inc.
Incorporated by reference to Exhibit 10.1, filed in connection
with the Company's Form 8-K dated December 31, 1999.

21.1 Subsidiaries of the Registrant (filed herewith)

23.1 Consent of Arthur Andersen, LLP (filed herewith)

24.1 Powers of Attorneys of certain signatories

27.0 Financial Data Schedule (filed herewith)

(1) Incorporated by reference to the exhibit with the same number, filed in
connection with the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 12, 1997.

(2) Incorporated by reference to the exhibit with the same number, filed in
connection with the Company's Registration Statement on Form S-1, File No.
333-17001, declared effective by the Securities and Exchange Commission on
February 3, 1997.

(3) Incorporated by reference to Exhibit 4.1, filed in connection with the
Company's Form 10-Q on August 14, 1997, and as amended by the Company's Form
10-Q/A filed on October 7, 1997.

(4) Management contract or compensatory plan or arrangement

(5) Incorporated by reference to the exhibit with the same number, filed in
connection with the Company's Form 10K on March 30, 1998.

(6) Incorporated by reference to the exhibit filed in connection with the
Company's Form 10-K on March 31, 1999.

(7) Incorporated by reference to the exhibit filed in connection with the
Company's Form 10-Q on April 14, 1999.

(8) Incorporated by reference to the exhibit filed in connection with the
Company's Form 10-Q on November 14, 1999.

b) Reports on Form 8-K

On January 18, 2000 the Registrant filed a Report on Form 8-K dated
December 31, 1999, reporting on the sale of the Registrants Clinical Research
business. The Report included Pro Forma Financial Information for the Registrant
and its subsidiaries.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on this 30th day of March,
2000.

PREMIER RESEARCH WORLDWIDE, LTD.

By:
/s/ Joel Morganroth
- -------------------------------------
Joel Morganroth,
Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Signature Title Date
- --------- ----- ----

Chairman and
/s/ Joel Morganroth Chief Executive Officer, Director March 30, 2000
- -------------------------------- (Principal executive officer)
Joel Morganroth, M.D.

/s/ Joseph Esposito President and Chief Operating Officer, March 30, 2000
- -------------------------------- Director
Joseph Esposito

/s/ John R. Bauer Vice President and Chief Financial Officer
- -------------------------------- (Principal financial and accounting officer) March 30, 2000
John R. Bauer

/s/ Howard D. Ross Director March 30, 2000
- --------------------------------
Howard D. Ross

/s/ Sheldon M. Bonovitz Director March 30, 2000
- --------------------------------
Sheldon M. Bonovitz

/s/ Arthur Hull Hayes, Jr. Director March 30, 2000
- --------------------------------
Arthur Hull Hayes, Jr., M.D.

/s/ John Ryan Director March 30, 2000
- --------------------------------
John Ryan

/s/ James C. Gale Director March 30, 2000
- --------------------------------
James C. Gale

/s/ Jerry D. Lee Director March 30, 2000
- --------------------------------
Jerry D. Lee

/s/ Philip J. Whitcome Director March 30, 2000
- --------------------------------
Philip J. Whitcome, Ph.D.

/s/ Connie Woodburn Director March 30, 2000
- --------------------------------
Connie Woodburn