UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  FORM 10-QSB/A
                                (AMENDMENT NO. 1)

(Mark one)

|X| Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
    1934.

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2003

|_| Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
    of 1934

    For the transition period from ______________ to _____________

                         Commission File Number: 0-28717

                              ADZONE RESEARCH, INC.

(Exact name of small business issuer as specified in its charter)

       Delaware                                       88-0420405
(State of incorporation)                       (IRS Employer ID Number)

              4062-80 Grumman Boulevard, Calverton, New York 11933
                    (Address of principal executive offices)

                                 (631) 369-1100
                           (Issuer's telephone number)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 |_|

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: January 31, 2004: 77,305,382

Transitional Small Business Disclosure Format (check one): YES |_|  NO |X|


                                       1
<PAGE>

                                EXPLANATORY NOTE

This  Amendment on Form  10-QSB/A  (Amendment  No. 1) amends and restates in its
entirety  the  following  items of the  Quarterly  Report on Form 10-QSB for the
quarterly period ended December 31, 2003 of Adzone  Research,  Inc. as initially
filed with the  Securities and Exchange  Commission  (the "SEC") on February 12,
2004 (the "original 2003 10-QSB"):

Part I CONDENSED FINANCIAL INFORMATION

Item 1. Financial Statements

Item 2. Management's Discussion and Analysis or Plan of Operation

Item 3. Controls and Procedures

This  Amendment  is being  filed to reflect  the  restatement  of the  Company's
results for the three and nine month periods  ended  December 30, 2003 and 2002,
as discussed in Note B to the Company's  condensed  financial  statements  filed
herewith.  By way of  background,  the  Company  has had  discussions  with  the
accounting  staff (the "Staff") of the SEC with respect to, among other matters,
(1) the valuation of equity securities issued to employees and non-employees and
(2) the accounting and reporting for preferred  stock that had also included the
issuance of warrants and  beneficial  conversion  features.  After the Company's
discussions with the Staff, and after the Company consulted with its independent
registered  public  accounting firm, the Company  determined the need to restate
its annual and quarterly financial statements for fiscal 2004, and its first two
quarterly financial  statements for fiscal 2005. The effects of the restatement,
in  management's  view,  rises to the level of a material  weakness  in internal
control, which is further discussed in Item 3, as amended.

This  Amendment  speaks  as of the end of the  Company's  fiscal  quarter  ended
December  31, 2003 as required by Form 10-QSB or as of the date of the filing of
the  original  2003 10-QSB.  Except for the  restatement  of certain  historical
financial  information  as  described  above,  it  does  not  update  any of the
statements  contained  in the  original  2003 10-QSB.  This  Amendment  contains
forward-looking  statements  that were made at the time the original 2003 10-QSB
was filed on February 12, 2004. It must be considered in light of any subsequent
statements,  including  forward looking  statements,  in any reports made by the
Company  subsequent  to  the  filing  of the  original  2003  10-QSB,  including
statements made in filings on Form 8-K.


                                       2
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

              Form 10-QSB/A for the Quarter ended December 31, 2003
                                (Amendment No. 1)

                                Table of Contents


                                                                   Page
                                                                   ----
PART I - FINANCIAL INFORMATION

   Item 1  Financial Statements                                       4

   Item 2  Management's Discussion and Analysis or Plan of Operation 38

   Item 3  Controls and Procedures                                   40

PART II - OTHER INFORMATION

   Item 1  Legal Proceedings                                         37

   Item 2  Unregistered Sales of Equity Securities                   37

   Item 3  Defaults Upon Senior Securities                           38

   Item 4  Submission of Matters to a Vote of Security Holders       38

   Item 5  Other Information                                         38

   Item 6  Exhibits and Reports on Form 8-K                          38

SIGNATURES                                                           39


                                       3
<PAGE>

ITEM 1 - FINANCIAL STATEMENTS

                              ADZONE RESEARCH, INC.
                          (a development stage company)
                       UNAUDITED CONDENSED BALANCE SHEETS

                                                   December 31,    March 31,
                                                      2003           2003
                                                   -----------    -----------
                                                   (Unaudited)
                                                    (Restated)     (Restated)
CURRENT ASSETS
   Cash                                            $    44,704    $     8,084
   Accounts receivable - trade                           3,063             --
   Prepaid expenses and other                            8,750         35,375
                                                   -----------    -----------

     TOTAL CURRENT ASSETS                               56,517         43,459
                                                   -----------    -----------
NET PROPERTY AND EQUIPMENT                               7,776         11,605
OTHER ASSETS
   Restricted cash - Dividend payment escrow            58,365             --
   Restricted cash - Series A retirement escrow        122,250             --
   Other                                                48,090            390
                                                   -----------    -----------
TOTAL ASSETS                                       $   292,998    $    55,454
                                                   ===========    ===========

LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
   Notes payable                                   $   206,175    $    65,958
   Accounts payable - trade                            182,405        167,629
   Accrued officer compensation                        484,537        570,360
                                                   -----------    -----------
TOTAL LIABILITIES                                      873,117        803,947
                                                   -----------    -----------

COMMITMENTS AND CONTINGENCIES (NOTE M)                      --             --

SHAREHOLDERS' DEFICIT
Preferred stock                                        382,796             --
Common stock - $0.001 par value
   100,000,000 shares authorized
   67,912,267 and 50,096,462 shares
   issued and outstanding, respectively                 67,912         50,096
Additional paid-in capital                           4,363,024      2,477,735
Deficit accumulated during the development stage    (5,361,086)    (3,261,524)
Other shareholders'deficit                             (32,765)       (14,800)
                                                   -----------    -----------
TOTAL SHAREHOLDERS' DEFICIT                           (580,119)      (748,493)
                                                   -----------    -----------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT        $   292,998    $    55,454
                                                   ===========    ===========

                             See accompanying notes.


                                       4
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
                  UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
           Nine and Three months ended December 31, 2003 and 2002 and
   Period from February 28, 2000 (date of inception) through December 31, 2003

<TABLE>
<CAPTION>
                                                                                                                Period from
                                                                                                              February 28, 2000
                                                Nine months     Nine months     Three months    Three months  (date of inception)
                                                   ended           ended            ended          ended          through
                                                December 31,    December 31,    December 31,     December 31,   December 31,
                                                    2003           2002             2003            2002           2003
                                                ------------    ------------    ------------    ------------    ------------
                                                 (Restated)      (Restated)      (Restated)      (Restated)      (Restated)
<S>                                             <C>             <C>             <C>             <C>             <C>
REVENUES                                        $     74,844    $         --    $     10,750    $         --    $    158,850
                                                ------------    ------------    ------------    ------------    ------------
OPERATING EXPENSES
Production costs                                       2,196          80,650         (58,290)         26,804         276,982
Consulting and professional                          115,456              --         (46,095)             --         298,708
Salaries and wages                                 1,461,833         192,515          98,609          63,320       3,099,714
General and administrative                           226,353         385,542          29,091         140,378       1,407,941
Depreciation                                           1,633           1,963             545             654          13,597
                                                ------------    ------------    ------------    ------------    ------------
Total operating expenses                           1,807,471         660,670          23,860         231,156       5,096,942
                                                ------------    ------------    ------------    ------------    ------------
LOSS FROM OPERATIONS                              (1,732,627)       (660,670)        (13,110)       (231,156)     (4,938,092)

OTHER INCOME (EXPENSE)                               (23,226)         (8,077)        (10,957)         (2,357)        (79,284)
                                                ------------    ------------    ------------    ------------    ------------

NET LOSS (restated)                             $ (1,755,853)   $   (668,747)   $    (24,067)   $   (233,513)   $ (5,017,376)
                                                ============    ============    ============    ============    ============

RECONCILIATION OF NET LOSS TO LOSS APPLICABLE
TO COMMON SHAREHOLDERS:

NET LOSS                                        $ (1,755,853)   $   (668,747)   $    (24,067)   $   (233,513)   $ (5,017,376)
Preferred Stock:
   Accretions                                       (331,668)             --        (240,476)             --    $   (331,668)
   Dividends paid                                    (12,041)             --          (7,821)             --         (12,041)
                                                ------------    ------------    ------------    ------------    ------------

LOSS APPLICABLE TO COMMON
   SHAREHOLDERS                                 $ (2,099,562)   $   (668,747)   $   (272,364)   $   (233,513)   $ (5,361,085)
                                                ============    ============    ============    ============    ============

Loss per common share--
Basic and diluted                               $      (0.03)   $      (0.02)   $      (0.01)   $      (0.01)   $      (0.17)
                                                ============    ============    ============    ============    ============

Weighted average shares--
Basic and diluted                                 60,162,995      33,470,610      67,600,291      39,650,205      31,446,158
                                                ============    ============    ============    ============    ============
</TABLE>

                             See accompanying notes.


                                       5
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
        UNAUDITED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
                       Nine Months Ended December 31, 2003
                                   (RESTATED)

<TABLE>
<CAPTION>
                                       Common Stock           Paid-in
                                   Shares        Amount       Capital       Deficit
                                -----------   -----------   -----------   -----------
<S>                              <C>          <C>           <C>           <C>
Balances at March 31, 2003       50,096,462   $    50,096   $ 2,477,735   $(3,261,524)
Sales of common stock               727,333           727        45,873            --
Exercise of stock options           925,000           925        55,075            --
Stock based compensation         15,913,572        15,914     1,167,219            --
Issuance of Preferred Stock:
  Series A unit offering (1)             --            --       296,972            --
  Series B unit offering (1)             --            --       300,000            --
Preferred stock dividends                --            --            --       (12,041)
Accretion of preferred stock             --            --            --      (331,668)
Directors fees                      250,000           250        19,750            00
Sale of treasury stock                   --            --            --            --
Net loss (restated)                      --            --            --    (1,755,853)
                                -----------   -----------   -----------   -----------
Balances at December 31, 2003    67,912,367   $    67,912   $ 4,362,624   $(5,361,086)
                                ===========   ===========   ===========   ===========

<CAPTION>
                                 Treasury                                        Stock
                                   Stock           Preferred Stock            Subscription
                                  At Cost        Shares        Amount          Receivable     Total
                               ----------     -----------   ------------      ----------  ------------
<S>                             <C>                  <C>     <C>           <C>            <C>
Balances at March 31, 2003               --             --            --   $   (14,800)   $  (748,493)
Sales of common stock                    --             --            --            --         46,600
Exercise of stock options                --             --            --       (15,750)        40,250
Stock based compensation                 --             --            --            --      1,183,133
Issuance of Preferred Stock:
  Series A unit offering (1)             --          34.85        51,528            --        348,500
  Series B unit offering (1)             --          30.00            --            --        300,000
Preferred stock dividends                --             --            --            --        (12,041)
Accretion of preferred stock             --             --       331,668            --             --
Directors fees                           --             --            --            --         20,000
Sale of treasury stock               (2,215)            --            --            --         (2,215)
Net loss (restated)                      --             --            --            --     (1,755,853)
                                -----------    -----------   -----------   -----------    -----------
Balances at December 31, 2003   $    (2,215)         64.85   $   383,196   $   (30,550)   $  (580,119)
                                ===========    ===========   ===========   ===========    ===========
</TABLE>

(1) Series A Unit Offering proceeds were allocated $51,528 to Series A Preferred
Stock,  $147,884 to warrants  and $149,088 to a  beneficial  conversion  feature
embedded in the Series A Preferred Stock.  Series B Unit Offering  proceeds were
allocated $-0- to Series B Preferred Stock, $167,817 to warrants and $132,183 to
a beneficial conversion feature embedded in the Series B Preferred Stock.

                             See accompanying notes.


                                       6
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
                       UNAUDITED STATEMENTS OF CASH FLOWS
                Nine months ended December 31, 2003 and 2002 and
   Period from February 28, 2000 (date of inception) through December 31, 2003

<TABLE>
<CAPTION>
                                                                           February 28, 2000
                                               Nine months    Nine months  (date of inception)
                                                  ended          ended          through
                                               December 31,   December 31,    December 31,
                                                   2003           2002            2003
                                               -----------    -----------    -----------
                                                (Restated)                    (Restated)
<S>                                            <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss for the period                     $(1,755,853)   $  (668,747)   $(5,017,376)
   Adjustments to reconcile net loss to
    net cash used in operating activities
      Depreciation                                   3,829         12,589         57,110
      Loss on disposition of equipment                  --             --         15,816
      Stock compensation:
       Salaries, wages & bonus                   1,316,060        379,324      1,596,948
       Professional services                       250,918             --        864,361
       Directors fees                                   --             --          8,300
       Lawsuit settlememt                               --             --         20,000
      Changes in assets and liabilities:
        Accounts receivable - trade                 (3,063)            --         (3,063)
        Prepaid expenses and other                  26,625             --         22,500
        Deposits and other assets                 (228,315)         1,800       (228,705)
        Accounts payable                            15,020         37,639        177,161
        Accrued officers compensation              (85,823)       156,428        484,537
        Accrued interest payable                        --            320             --
                                               -----------    -----------    -----------
NET CASH USED IN OPERATING ACTIVITIES             (460,602)       (80,647)    (2,002,411)
                                               -----------    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of property and equipment                  --           (607)       (86,601)
   Cash received on disposition of equipment            --             --          5,900
                                               -----------    -----------    -----------
NET CASH USED IN INVESTING ACTIVITIES                   --           (607)       (80,701)
                                               -----------    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   Sale of Preferred Stock                         413,500             --        413,500
   Principal received from notes payable           140,217             --        233,411
   Financing costs                                (113,339)            --       (138,339)
   Sales of common stock                            71,100        107,893      1,633,500
   Net cash activity on officer advances                --        (12,270)            --
   Preferred stock dividends paid                  (12,041)            --        (12,041)
   Cash paid to acquire treasury stock              (2,215)            --         (2,215)
                                               -----------    -----------    -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES          497,222         95,623      2,127,816
                                               -----------    -----------    -----------
INCREASE (DECREASE) IN CASH                         36,620         14,369         44,704
Cash at beginning of period                          8,084             --             --
                                               -----------    -----------    -----------
CASH AT END OF PERIOD                          $    44,704    $    14,369    $    44,704
                                               ===========    ===========    ===========
</TABLE>

                             See accompanying notes.


                                       7
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
                       UNAUDITED STATEMENTS OF CASH FLOWS
                Nine months ended December 31, 2003 and 2002 and
   Period from February 28, 2000 (date of inception) through December 31, 2003

<TABLE>
<CAPTION>
                                                                    February 28, 2000
                                       Nine months     Nine months  (date of inception)
                                          ended         ended          through
                                       December 31,   December 31,   December 31,
                                          2003           2002           2003
                                      ============   ============   ============
                                        (Restated)                   (Restated)
<S>                                   <C>            <C>            <C>
SUPPLEMENTAL DISCLOSURE OF
INTEREST AND INCOME TAXES PAID
   Interest paid for the period       $      2,239   $      2,132   $      4,766
                                      ============   ============   ============
   Income taxes paid for the period   $         --   $         --   $         --
                                      ============   ============   ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
   Common stock issued for interest   $         --   $         --   $     31,250
                                      ============   ============   ============
   Common stock issued in
    repayment of short-term debt      $         --   $         --   $     21,600
                                      ============   ============   ============
</TABLE>

                             See accompanying notes.


                                       8
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION

During interim periods, the Company follows the accounting policies set forth in
its annual  audited  financial  statements  filed with the U. S.  Securities and
Exchange Commission on its Annual Report on Form 10-KSB for the year ended March
31, 2003. The information  presented within these interim  financial  statements
may not  include  all  disclosures  required by  generally  accepted  accounting
principles and the users of financial  information  provided for interim periods
should refer to the annual  financial  information  and footnotes when reviewing
the interim financial results presented herein.

In the opinion of management,  the accompanying  interim  financial  statements,
prepared in  accordance  with the U. S.  Securities  and  Exchange  Commission's
instructions   for  Form  10-QSB,   are   unaudited  and  contain  all  material
adjustments,  consisting  only of  normal  recurring  adjustments  necessary  to
present fairly the financial condition,  results of operations and cash flows of
the Company for the respective  interim  periods  presented.  The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full fiscal year ending March 31, 2004.

NOTE B - RESTATEMENTS

During the fiscal year ended March 31,  2004,  the  Company  estimated  the fair
market value of equity securities issued to employees and non-employees, using a
discount to trading market values of the Company's common stock. The Company has
reevaluated  the use of such  discounts and  determined  that the trading market
value  of the  Company's  common  stock  on the  date  of  award  was  the  more
appropriate value of the securities.  Additionally, certain common stock options
and warrants were not recognized in the financial statements. Compensation costs
associated  with these  issuances  have now been  adjusted.  In  addition,  this
adjustment, as reflected in the tables below, reflects the allocation of certain
stock-based compensation awards to the quarters in which the award occurred. All
stock based  compensation  awards  since the  beginning of the fiscal year ended
March 31, 2005 have been  recorded  based upon the trading  market  price of the
Company's  common stock,  which practice became the Company's  policy  effective
with the first fiscal quarter of the current fiscal year.

During fiscal year ended March 31, 2004, the Company sold Preferred Stock,  with
Warrants to acquire the Company's common stock, in two separate  offerings.  The
adjustment in the tables below reflects the effect on loss  applicable to common
shareholders  and loss per common share of the allocation of proceeds from these
unit  offerings  to (i) the  warrants and (ii)  beneficial  conversion  features
underlying the convertible preferred stock. As a result of this allocation,  the
discount to the carrying value of the preferred stock has been accreted  through
charges to  retained  earnings  over a period of 180 days  following  the offer,
which  was the  first  contractual  date that the  preferred  shareholders  were
entitled to convert the preferred stock into common stock.

During  fiscal year ended March 31, 2004,  the Company  granted stock options to
employees  in  association  with  compensation  expense and also  granted  stock
options and warrants to  non-employees  in association with consulting and legal
expense. The expense associated with the granting of the options and


                                       9
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE B - RESTATEMENTS (CONTINUED)

warrants was not properly  accounted for at the issuance date.  The  adjustments
are reflected in the tables below.

The aforementioned  adjustments did not affect any major classification of asset
or liability. Rather, the adjustments only affect the components of shareholders
equity.  As a result,  the balance sheet effects of these  adjustments have been
omitted.

The Company is currently in the process of responding to questions  posed by the
Staff of the Securities and Exchange Commission regarding,  among other matters,
the subject adjustments.  The Company intends to resolve all remaining questions
of the Staff and file necessary amendments as soon as practicable.

The effects of the above  adjustments on the Company's  quarterly filings during
the year ended March 31, 2004, are as follows, for each quarterly period:

<TABLE>
<CAPTION>
                                                     Quarterly Period Ended
                                    --------------------------------------------------------
                                     June 30,     September 30,   December 31,     March 31,
                                       2003           2003           2003            2004
                                    -----------    -----------    -----------    -----------
<S>                                 <C>            <C>            <C>            <C>
Net loss, as reported               $   (77,042)   $  (362,579)   $  (240,080)   $(1,055,404)
Adjustment to increase the value
of stock-based compensation to
market values on dates issued or
granted and to recognize stock
options and warrants issued             (46,495)    (1,245,670)       216,013       (440,564)
                                    -----------    -----------    -----------    -----------
Net loss, as restated               $  (123,537)   $(1,608,249)   $ ( 24,067)    $(1,495,968)
                                    ===========    ===========    ===========    ===========

Loss applicable to common shares,
  as reported                       $   (77,042)   $  (362,579)   $  (240,080)   $(1,055,404)
Adjustment to increase the value
of stock-based compensation to
market values on dates issued or
granted and to recognize stock
options and warrants issued             (46,495)    (1,245,670)       216,013       (440,564)
Preferred stock dividends and
   accretions                                --        (95,412)      (248,297)      (272,481)
                                    -----------    -----------    -----------    -----------
Loss applicable to common shares,
  as restated                       $  (123,537)   $(1,703,661)   $  (272,364)   $(1,768,449)
                                    ===========    ===========    ===========    ===========

Loss applicable to common
  shareholders, as reported         $     (0.00)   $     (0.01)   $     (0.00)   $     (0.02)
                                    ===========    ===========    ===========    ===========
Loss applicable to common
  shareholders, as restated         $     (0.00)   $     (0.03)   $     (0.00)   $     (0.03)
                                    ===========    ===========    ===========    ===========
</TABLE>


                                       10
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE C - GOING CONCERN UNCERTAINTY

The Company is engaged in the  extraction of various data  elements  through the
monitoring  and  review  of  internet  websites   developed  and  maintained  by
independent third parties worldwide. These extracted data elements are then used
to provide various market research  statistics and other focused  information as
guided by the Company's clientele.

The events  which  occurred on  September  11,  2001,  and  subsequent  thereto,
generated,  and  continue to  generate,  additional  interest  in the  Company's
internet data mining  research  capabilities  for  potential  private and public
sector  clients.  Management  continues  to maintain the belief that the Company
will be able to acquire various  contracts to provide  research  information for
various private and public sector purposes.

On May 27, 2003, the Company  received an initial $50,000  contract from a major
United States defense  contractor to provide  support  services  related to that
entity's provision of services for Homeland Security issues.

Subsequent thereto, the Company has received additional  supplemental  increases
to this  contract;  however,  as of December 31, 2003,  the Company has only one
source of revenue.

The Company remains in the  development  stage,  has focused  principally on the
refinement and  maintenance of its proprietary  software and providing  services
pursuant to the May 27, 2003 contract.  Due to cash flow shortages,  the Company
continues to pursue various revenue and capital sources.

The Company is principally on additional private placements of equity securities
to provide sufficient working capital to maintain the integrity of the corporate
entity.

Because of the Company's lack of operations,  the Company's future  continuance,
for the  foreseeable  future,  will be fully dependent on either future sales of
equity  securities  and/or  advances or loans from  significant  stockholders or
corporate  officers  to  provide  sufficient  working  capital to  preserve  the
integrity of the corporate entity during the development phase.

There is no assurance that the Company will be able to obtain additional funding
through the sales of additional  securities or, that such funding, if available,
will be obtained on terms favorable to or affordable by the Company.

It  is  the  intent  of  management  and  significant  stockholders  to  provide
sufficient  working  capital  necessary to support and preserve the integrity of
the  corporate  entity.  However,  there  is  no  legal  obligation  for  either
management or significant stockholders to provide additional future funding.


                                       11
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE D - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                     December 31,    March 31,
                                        2003           2003       Estimated life
                                      --------       --------     --------------
Computer equipment                    $ 50,856       $ 50,856         3 years
Office furniture and other equipment    10,004         10,004         7 years
                                      --------       --------
                                        60,860         60,860
Less accumulated depreciation          (53,084)       (49,255)
                                      --------       --------

Net property and equipment            $  7,776       $ 11,605
                                      ========       ========

NOTE E - NOTES PAYABLE

Notes payable consists of the following:

                                                 December 31,       March 31,
                                                    2003              2003
                                                 -----------       -----------
Unsecured:
$50,000  installment  note  payable  to  an
 individual.  Interest  imputed at 15.0% and
 paid  in  advance   with  the  issuance  of
 250,000 shares of restricted,  unregistered
 common  stock  to the  lender.  Payable  in
 monthly  installments of $1,000  commencing
 September 1, 2001 and each successive month
 until paid in full.  Scheduled payments are
 in default  at  December  31,  2003 and the
 entire amount is classified as "current" in
 the  accompanying   financial   statements.
                                                  $ 50,000           $50,000
Secured:
$15,958  promissory  note  payable  to a law
 firm.  Interest at 9.0%. Payable in full on
 June 30,  2001.  Scheduled  payments are in
 default  at March 31,  2002 and the  entire
 amount is  classified  as  "current" in the
 accompanying financial statements.  Secured
 by 150,000  shares of common stock owned by
 the Company's Chief Operating Officer.             15,958            15,958


                                       12
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE E - NOTES PAYABLE (CONTINUED)

Various loan agreements aggregating $140,217
payable  to  a   non-financial   institution
investment  corporation.   Interest  payable
quarterly  in  arrears at the Prime Rate (as
defined) plus 1.0% plus an  origination  fee
equal  to  1.0% of the  advanced  principal.
Principal  payable  in  full  in  May  2006.
Collateralized  by shares  of the  Company's
common stock  (aggregating  7,958,121 shares
at  September  30,  2003),  placed in escrow
with the lender's  brokerage firm,  owned by
the  Company's  Chief  Executive  and  Chief
Operating officers.                                140,217                --
                                                  --------           -------
                                                  $206,175           $65,958
                                                  ========           =======

NOTE F - ADVANCES FROM OFFICERS

The Company's officers, in prior periods, advanced various monies to the Company
under formal  unsecured note documents  bearing  interest at 10.0%. The advances
were repayable in aggregate  monthly amounts of  approximately  $370. Due to the
nature of the debt and irregular payment history, these advances were classified
as "current" in the accompanying financial statements.  During the quarter ended
June 30, 2003, all open advances were repaid in full.

NOTE G - OFFICER COMPENSATION

In August  2001,  the Company  entered  into an  employment  agreement  with Mr.
Charles Cardona  (CCardona),  which  superseded a prior  agreement,  under which
CCardona will serve as the Company's Chief Executive  Officer through August 31,
2004.  Under his agreement,  CCardona was/is entitled to base salary at the rate
of $141,000 during the balance of the 2001 calendar year;  $151,000 for the 2002
calendar year;  $161,000 for the 2003 calendar year; and at the rate of $208,000
for the 2004 calendar  year. In addition,  CCardona may be awarded,  at the sole
discretion of the Board of Directors of the Company,  a bonus of $15,000  during
each quarter of his  employment  and a bonus of $25,000 at the conclusion of the
2002 calendar year.  CCardona may also receive a $100,000 cash bonus and 250,000
shares  of  common  stock  of  the  Company  if  the  Company   reaches   annual
profitability. Under his employment agreement, CCardona will also receive 10% of
sales revenues generated through his efforts.  Additional bonuses are payable as
follows:  (i) 0.5% of prior year's revenues;  (ii) 3.5% of prior year's profits;
(iii)  3.75% of the first $3 million in growth in market  capitalization  during
any year; and (iv) 1.75% of any growth in market  capitalization over $3 million
during any year. CCardona was also granted an option to purchase 1,000,000


                                       13
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE G - OFFICER COMPENSATION (CONTINUED)

shares of the Company's common stock  exercisable at $0.10 per share for 5 years
after the date of grant.  In the event  CCardona's  employment is  involuntarily
terminated,  he will be entitled  to receive an amount  equal to three times his
annual salary in effect during the year in which such termination occurred.

In August 2001, the Company  entered into an employment  agreement with Mr. John
Cardona (JCARDONA), which superseded a prior agreement, JCARDONA agreed to serve
as the Company's  President  through August 31, 2004.  Under his agreement,  the
Company  agreed to pay JCARDONA  base salary at the rate of $141,000  during the
balance of the 2001 calendar year; $151,000 for the 2002 calendar year; $161,000
for the 2003  calendar  year;  and at the rate of $208,000 for the 2004 calendar
year. In addition,  the agreement provided that Mr. Cardona could be awarded, at
the sole discretion of the Board of Directors of the Company, a bonus of $15,000
during each quarter of his  employment  and a bonus of $25,000 at the conclusion
of the 2002 calendar  year.  JCARDONA was also entitled to a $100,000 cash bonus
and 250,000 shares of common stock of the Company if the Company achieved annual
profitability. Under his agreement, JCARDONA was also entitled to receive 10% of
sales revenues generated through his efforts. Additional bonuses were payable as
follows:  (i) 0.5% of prior year's revenues;  (ii) 3.5% of prior year's profits;
(iii) 3.75% of the first $3 million in growth in market  capitalization during a
previous  year;  and (iv) 1.75% of any growth in market  capitalization  over $3
million during a previous year.

JCARDONA  was also  granted  an  option  to  purchase  1,000,000  shares  of the
Company's common stock exercisable at $0.10 per share for 5 years after the date
of grant.  JCARDONA  terminated his employment with the Company in June 2002 but
has remained as a consultant to the Company.

In March 2003,  the Company  entered into an  employment  agreement  with Daniel
Wasserman to serve as its  Executive  Vice  President  and Managing  Director of
Global Defense Group for a 12-month period.  Under his agreement,  Mr. Wasserman
received a salary of $175,000 per year,  commencing  upon closing of a paid sale
or completed financing of $1,000,000 or more. Until such time, the Company shall
pay  Employee  an interim  salary  beginning  at $550 per week.  The salary will
increase  by $1000 per month upon the first paid sale of $50,000 or more made by
the employee.  The salary will then  increase by an  additional  $1500 per month
upon each paid sale of $100,000 or more made by the  employee.  These  increases
will  continue  until the standard  base salary of $175,000 per year is reached.
This  salary is  independent  of any  commission,  which may be earned and paid.
Should the  employee  reach  $1,200,000  in paid  sales by the end of 2003,  the
employee will be entitled to full base salary of $175,000 for the entire year of
2003,  any back  portion  of which is  unpaid  at that  time will be paid to the
employee within 30 days. This provision is in addition to any commission,  which
is due. Mr.  Wasserman also received a contract signing bonus of 450,000 shares.
The  Company  shall  pay the  employee  a  bonus  of  100,000  shares  upon  the
contracting of a sale of $1,000,000 or more. The employee shall be entitled to 4
weeks paid vacation,  plus 10 holiday days off per year. Unused vacation will be
paid at the end of the year.  Medical  benefits will be paid by the Company once
the board begins coverage for the employee. The Company shall pay the employee a
cash bonus of $175,000 should sales exceed $3,000,000 for the calendar year of


                                       14
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE G - OFFICER COMPENSATION (CONTINUED)

2003.  This bonus shall be paid  proportionally  as sales revenues are received.
The employee  shall receive 1.5 % of the first  $1,000,000 of contract  value as
paid on each contract brought in by employee. The employee shall receive 2.5% of
contract  values  above  $1,000,000  as  paid  on each  contract  brought  in by
employee.  Additional  compensation for consulting  contracts brought in will be
negotiated on a case by case basis.  This commission shall be payable when funds
are received by the Company and shall be paid to the employee  regardless of the
salary status.  There shall be an additional sales commission bonus of 1% on any
$ 500,000 plus sale closed prior to July 4, 2003.  Should a multi year  contract
be closed,  this bonus  shall apply to first year value  only.  This  commission
bonus shall be paid as the money is received by AdZone.

As of December 31, 2003 and 2002,  total  cumulative  amounts unpaid under these
agreements are as follows:

                                                  December 31,      December 31,
                                                     2003              2002
                                                   --------          --------
     Officer compensation                          $484,537          $570,360
                                                   ========          ========

Future amounts due under employment agreements are approximately:

                                                  Year ending
                                                   March 31,          Amount

                                                     2004            $172,750
                                                     2005             156,000
                                                                     --------

                                                                     $328,750
                                                                     ========

NOTE H - COMMON STOCK TRANSACTIONS

On August 10, 2001, the Company executed an Agreement and Plan of Share Exchange
with AdZone Interactive,  Inc. (a privately-owned New York corporation) (AdZone)
whereby the Company  exchanged  18,000,022  shares of  restricted,  unregistered
common stock for 100.0% of the issued and outstanding common stock of AdZone and
effected a merger of the two entities with the Company being the surviving legal
entity. Concurrent with this transaction, the Company changed its corporate name
to AdZone Research, Inc.

During the nine month period  through  December 31, 2003 and each of Fiscal 2003
and 2002, respectively, the Company issued approximately 17,815,805,  25,364,332
and  3,136,108  shares of  common  stock,  in both  registered  and  restricted,
unregistered form.

On January 28,  2002,  February  21, 2002 and March 26, 2003 (as  amended),  the
Company filed separate Registration  Statements on Form S-8 registering 538,665,
303,000 and 17,100,000 shares of common stock respectively.


                                       15
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE H - COMMON STOCK TRANSACTIONS (CONTINUED)

The  following  table  recaps the status of each of the  Company's  Registration
Statements on Form S-8:

                                    Cumulative      Cumulative      Eligible to
                                     number of       number of      be issued at
                                      shares          shares        December 31,
                                    registered        issued            2003
                                    ----------      ----------       ---------
Filing dated 12/13/01                  420,000         420,000              --
Filing dated 1/28/02                   538,665         459,998          78,667
Filing dated 2/21/02                   303,000         171,000         132,000
Filing dated 3/26/03 (as amended)   17,100,000      12,964,000       4,136,000

Subsequent to December 31, 2003, the Company issued an aggregate  300,000 shares
of common stock pursuant to the March 26, 2003 Registration Statement in January
2004.

The following table presents the various  categories for stock issuances  during
Fiscal 2002 and 2003:

                                         Total
                                      -----------
Balances at March 31, 2001             23,346,022
  Cash                                    744,442
  Conversion of short-term loans          360,000
  Consulting and Legal services           706,666
  Lawsuit settlement                      500,000
  Legal services                          170,000
  Operating expenses                      405,000
  Personnel compensation                  250,000
                                      -----------

Balances at March 31, 2002             26,482,130
  Cash                                  2,413,334
  Consulting and Legal services        15,240,998
  Directors fees                          160,000
  Operating expenses                       10,000
  Personnel compensation                5,790,000
  Reclassifications per Rule 144(k)            --
                                     ------------

Balances at March 31, 2003             50,096,462
                                     ============


                                       16
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE H - COMMON STOCK TRANSACTIONS (CONTINUED)

                                        Total
                                     ----------
Balances at March 31, 2003           50,096,462
  Cash                                1,994,333
  Consulting and Legal services       1,717,000
  Personnel compensation             14,104,472
                                     ----------

Balances at December 31, 2003        67,912,267
                                     ==========

NOTE I - STOCK OPTIONS

In August 2001, pursuant to an employment  agreement which superceded an earlier
agreement  dated January 29, 2001,  with Charles  Cardona,  the Company's  Chief
Executive  Officer,  the Company  granted  options to  purchase up to  1,000,000
shares  of  common  stock at a price of $0.10  per  share.  The  options  vested
immediately  upon  execution of the  employment  agreement  and expire in August
2006.

In August 2001, pursuant to an employment  agreement which superceded an earlier
agreement  dated  February  9,  2001,  with John  Cardona,  the  Company's  then
President and Chief  Operating,  the Company  granted  options to purchase up to
1,000,000  shares of common  stock at a price of $0.10 per  share.  The  options
vested  immediately  upon  execution of the  employment  agreement and expire in
August 2006.

At various  times during Fiscal 2003,  the Company  granted  short-term  options
(generally  with a term of 30 days) to Kyle  Kennedy to assist the Company  with
business  strategy,  business  development  and  mergers and  acquisitions.  Mr.
Kennedy's  compensation was in the form of options to purchase registered freely
trading  securities at various  discounts to the then current Market price.  The
agreement was on a month to month basis  cancellable at 30 days notice by either
party.


                                       17
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE I - STOCK OPTIONS (CONTINUED)

                                                                Weighted average
                                                                price per share
                                                                ---------------
Options outstanding at April 1, 2001             2,000,000          $  0.10
  Issued                                                --
  Exercised                                             --
  Expired/Terminated                                    --
                                                ----------

Options outstanding at March 31, 2002            2,000,000          $  0.10
  Issued                                        13,350,000             0.03
  Exercised                                     (9,350,000)            0.01
  Expired/Terminated                            (2,000,000)            0.08
                                                ----------

Options outstanding at March 31, 2003            4,000,000          $  0.10
  Issued                                           925,000             0.04
  Exercised                                       (925,000)            0.04
  Expired/Terminated                            (2,000,000)            0.05
                                                ----------

Options outstanding at December 31, 2003         2,000,000          $  0.10
                                                ==========

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123 (SFAS 123). Accordingly, no compensation cost other
than that required to be recognized by Accounting Principles Board Statement No.
25 for the  difference  between the fair value of the Company's  common stock at
the grant date and the exercise price of the options.  Had compensation cost for
the Company's  Stock Plan been  determined  based on the fair value at the grant
date for awards  consistent  with SFAS 123, the  Company's net loss and loss per
share for the nine months  ended  December  31, 2003 and 2002 and for the period
from February 28, 2000 (date of inception)  through December 31, 2003 would have
increased to the pro forma amounts indicated below:

                                    December 31,   December 31,    Inception
                                       2003            2002         to-date
                                    -----------    -----------    -----------
Net loss attributable to common
  shareholders, as reported         $(1,755,462)   $  (668,747)   $(5,017,376)
                                    ===========    ===========    ===========
Stock-based employee compensation
 included in net loss               $(1,316,060)   $  (379,324)   $(1,596,948)
                                    ===========    ===========    ===========
Stock-based employee compensation
 using the fair value model         $(1,382,260)   $  (403,324)   $(1,797,089)
                                    ===========    ===========    ===========
Pro forma net loss attributable
  to common shareholders            $(1,821,662)   $  (692,747)   $(5,217,517)
                                    ===========    ===========    ===========


                                       18
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE I - STOCK OPTIONS (CONTINUED)

                                    December 31,   December 31,    Inception
                                       2003            2002         to-date
                                    -----------    -----------    -----------
Loss per common share, as reported  $     (0.03)   $     (0.02)   $     (0.16)
                                    ===========    ===========    ===========
Pro forma net loss per common share $     (0.03)   $     (0.02)   $     (0.17)
                                    ===========    ===========    ===========

For purposes of computing  the pro forma  disclosures  required by SFAS No. 123,
the fair value of each option  granted to employees  and  directors is estimated
using the Black-Scholes option-pricing model with the following weighted-average
assumptions for the nine months ended December, 2003 and 2002: dividend yield of
0%, expected  volatility of 360% (using the Rutters Volatility  Calculator using
the  high/low  price at the last  trading day of each month for the  previous 12
months), a risk-free  interest rate of approximately  3.0%, and an expected life
of five years.

NOTE J - STOCK WARRANTS

Pursuant to an agreement with Thomas Gavin (Gavin) to provide  informational and
educational  news releases and distribute  said releases to the news media,  the
Company  issued 180,000  warrants to purchase an equivalent  number of shares of
the Company's common stock at a price of $0.25 per share and 400,000 warrants to
purchase an equivalent number of shares of the Company's common stock at a price
of $0.10 per share.  The aggregate  580,000  warrants  have an average  exercise
price of  approximately  $0.15 per share.  Each warrant will be for a three year
term from the date of issuance.

No warrants  have been  exercised  during the period ended  December 31, 2003 or
subsequent thereto.

                                Warrants         Warrants
                               originally     outstanding at
                                issued        Dec. 31, 2003     Exercise price
                                ------        -------------     --------------
Gavin warrants                  180,000          180,000       $0.25 per share
Gavin warrants                  400,000          400,000       $0.10 per share
Underwriter's warrants        1,409,047        1,409,047       $0.07 - $0.20
                                -------          -------

Totals at December 31, 2003   1,989,047        1,989,047
                                =======          =======

As  discussed  in Note K, the Company sold 30.85 Class A Units and 30.00 Class B
Units.  Each unit  consisted  of one (1) share of either Class A or Class B 9.0%
Cumulative  Convertible Preferred Stock and Warrants to purchase common stock of
the Company.

The number of Series A  Warrants  to be issued is  calculated  by  dividing  the
purchase price of the A Unit ($10,000) by the average closing bid price of the


                                       19
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE J - STOCK WARRANTS (CONTINUED)

Company's common stock during the 5 trading day period prior to such purchaser's
delivery  of  cleared  funds to the  Company's  escrow  agent  for the  Series A
offering.  The exercise  price of the  Warrants for each  purchaser of the Units
shall be calculated  by  multiplying  the average  closing bid price (as defined
above) by 115.0%. Each warrant shall expire on August 12, 2008.

The number of Series B  Warrants  to be issued is  calculated  by  dividing  the
purchase price of the B Unit  ($10,000) by the average  closing bid price of the
Company's common stock during the two (2) trading days prior to such purchaser's
delivery  of  cleared  funds to the  Company's  escrow  agent  for the  Series B
offering.  The exercise  price of the  Warrants for each  purchaser of the Units
shall be  calculated by deducting  $0.05 from the average  closing bid price (as
defined  above).  Each warrant shall expire on the 5th  Anniversary of the issue
date of each respective warrant.

As of December 31, 2003, the Company's escrow agent on the Series A and Series B
Units has not  provided  the Company with the  appropriate  dates which  cleared
funds were  received by the escrow  agent for the  calculation  of the number of
shares to be purchased  pursuant to each respective  warrant.  It is anticipated
that  this  calculation  will be made by the due  date of the  Company's  Annual
Report on Form 10-KSB for the year ended March 31, 2004.

NOTE K - PREFERRED STOCK

Preferred stock consists of the following:

<TABLE>
<CAPTION>
                                                            December 31, 2003
                                                       -----------------------------
                                                      Shares   Carrying  Redemption
                                                                 Value      Value
                                                       -----   --------   --------
<S>                                                    <C>     <C>        <C>
9.0% Series A Cumulative Convertible Preferred Stock   34.85   $331,668   $400,775
9.0% Series B Cumulative Convertible Preferred Stock   31.00   $ 51,128   $341,000
                                                       -----   --------   --------
                                                       65.85   $382,796   $741,775
                                                       =====   ========   ========
</TABLE>

9.0% Series A Cumulative Preferred Stock

On August 12, 2003, the Company opened a Private Placement Memorandum to sell up
to 50 Units,  consisting of one (1) share of 9.0% Series A Cumulative  Preferred
Stock and Warrants to purchase up to 4,220,459  shares of the  Company's  common
stock at a price of $10,000  per Unit.  The number of  warrants  to be issued to
each  purchaser was determined by dividing the purchase price of the Unit by the
average bid price of the Company's  common stock during the 5 day trading period
prior to such  purchaser's  delivery of cleared  funds to the  Company's  Escrow
Agent for this specific offering.


                                       20
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE K - PREFERRED STOCK (CONTINUED)

Each share of Series A Preferred  Stock may be converted,  at the sole option of
the holder,  into shares of the Company's common stock commencing on the earlier
of (1) 180 days after the date any share of Series A  Preferred  Stock was first
issued or (2) the effective date of a Registration  Statement registering shares
of the Company's Common Stock issuable upon conversion of the Series A Preferred
Stock. The number of shares of common stock that may be received upon conversion
shall be determined by dividing  115.0% of the price of a Unit  ($11,500) by the
average  closing bid price of the  Company's  common  stock during the 5 trading
days immediately prior to receipt by the Company of the Preferred  Shareholder's
notice of intent to  convert.  However,  in no case,  will any share of Series A
Preferred  Stock be  convertible  into more than 500,000 shares of the Company's
common stock.

Additionally,  at the Company's  option,  the Company may elect to redeem all of
the outstanding  shares of Series A Preferred Stock at any time at a price equal
to $11,500 per share, plus all dividends accrued to the date of redemption.  The
Company also has the option,  within 3 business  days of the receipt of a notice
to convert from a Preferred  Shareholder,  to pay such shareholder $11,500, plus
all accrued dividends, in lieu of the conversion.

The Series A Preferred Stock accrues dividends at a rate of 9.0% per annum, from
the date of issue,  and the accrued  dividends  are payable  monthly on the last
business day of each month.  In the event that the accrued  dividends are unpaid
for 12 consecutive  months, the holders of the Series A Preferred Stock,  voting
as a class,  shall have the right to elect one member to the Company's  Board of
Directors to fill such newly-created position as created by the default.

Each  share of  Series A  Preferred  Stock is  entitled  to vote on all  matters
submitted to the Company's  shareholders at a rate of 100,000 votes per share of
Series A Preferred Stock held by each respective shareholder.

The Company is contractually obligated to file a Registration Statement with the
U. S. Securities and Exchange Commission,  and use its best efforts to have said
Registration Statement declared effective within 120 days of the closing date of
this Private Placement Memorandum,  registering a number of shares of its common
stock  issuable  upon the  conversion  of the Series A  Preferred  Stock and the
exercise of the Warrants. This offering was closed by the Company on October 31,
2003.

The Company  initially  sold  approximately  34.85  Units for gross  proceeds of
approximately  $348,500  and  redeemed  approximately  10.63  Units  at a  gross
redemption  price  of  approximately  $122,250  in the  fourth  fiscal  quarter,
inclusive  of the  15.0%  redemption  premium  upon  the  sale of 9.0%  Series B
Cumulative  Preferred  Stock.  The Company  paid a commission  of  approximately
$41,280 to Spartan  Securities  Group,  Ltd.  for the selling of this  offering.
Additionally,  Spartan  Securities Group, Ltd. was the purchaser of one (1) Unit
and received a commission related to the purchase of it's Unit.


                                       21
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE K - PREFERRED STOCK (CONTINUED)

9.0% Series B Cumulative Preferred Stock

On November 17, 2003, the Company opened a Private Placement  Memorandum to sell
up to 100  Units,  consisting  of one (1)  share  of 9.0%  Series  B  Cumulative
Preferred Stock and Warrants to purchase up to 2,091,138 shares of the Company's
common stock at a price of $10,000 per Unit. The number of warrants to be issued
to each  purchaser was  determined by dividing the purchase price of the Unit by
the average bid price of the  Company's  common  stock  during the 5 day trading
period  prior to such  purchaser's  delivery of cleared  funds to the  Company's
Escrow Agent for this specific offering.

Each share of Series B Preferred  Stock may be converted,  at the sole option of
the holder,  into shares of the Company's common stock commencing on the earlier
of (1) 180 days after the date any share of Series B  Preferred  Stock was first
issued or (2) the effective date of a Registration  Statement registering shares
of the Company's Common Stock issuable upon conversion of the Series B Preferred
Stock. The number of shares of common stock that may be received upon conversion
shall be determined by dividing  $11,000 by the average closing bid price of the
Company's common stock during the 2 trading days immediately prior to receipt by
the Company of the Preferred Shareholder's notice of intent to convert. However,
in no case, will any share of Series B Preferred Stock be convertible  into more
than 100,000 shares of the Company's common stock.

Additionally,  at the Company's  option,  the Company may elect to redeem all of
the outstanding  shares of Series B Preferred Stock at any time at a price equal
to $11,000 per share, plus all dividends accrued to the date of redemption.

The Series B Preferred Stock accrues dividends at a rate of 9.0% per annum, from
the date of issue,  and the accrued  dividends  are payable  monthly on the last
business day of each month.  In the event that the accrued  dividends are unpaid
for 12 consecutive  months, the holders of the Series B Preferred Stock,  voting
as a class,  shall have the right to elect one member to the Company's  Board of
Directors to fill such newly-created position as created by the default.

Each  share of  Series B  Preferred  Stock is  entitled  to vote on all  matters
submitted to the Company's  shareholders at a rate of 100,000 votes per share of
Series B Preferred Stock held by each respective shareholder.

The Company is contractually obligated to file a Registration Statement with the
U. S. Securities and Exchange Commission,  and use its best efforts to have said
Registration Statement declared effective within 120 days of the closing date of
this Private Placement Memorandum,  registering a number of shares of its common
stock  issuable  upon the  conversion  of the Series B  Preferred  Stock and the
exercise of the Warrants. This offering was closed by the Company on January 15,
2004. The Company has filed the required Registration Statement; however, it has
not yet become effective.


                                       22
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE K - PREFERRED STOCK (CONTINUED)

The Company sold  approximately  30.00 Units for gross proceeds of approximately
$300,000.  The Company paid a  commission  of  approximately  $36,000 to Spartan
Securities Group,  Ltd. for the selling of this offering.  Subsequent to the end
of the current quarter, the Company sold 1.0 Units for gross proceeds of $10,000
and used approximately  $122,250 of the net proceeds from the B Unit Offering to
repurchase  approximately  10.63 shares of the then issued and outstanding  9.0%
Series A Preferred Stock.

Dividend reserve

In conjunction with the Series A and Series B Preferred Stock transactions,  the
Company  established a contractual  reserve account for the payment of 12 months
of  dividends.  At December 31, 2003,  $180,615 was  maintained by the Company's
Escrow Agent for the payment of monthly dividends.

NOTE L - BENEFICIAL CONVERSION DISCOUNT FEATURE ON PREFERRED STOCK

In conjunction with the Company's August 12, 2003 Private  Placement  Memorandum
to sell up to 50 Units,  consisting of one (1) share of 9.0% Series A Cumulative
Preferred  Stock and  Warrants  and the  Company's  November  17,  2003  Private
Placement  Memorandum  to sell up to 100 Units,  consisting  of one (1) share of
9.0%  Series B  Cumulative  Preferred  Stock  and  Warrants  (collectively  Unit
Offerings),  the  Company  applied  the  tenets of  Emerging  Issues  Task Force
Consensus No. EITF 98-5,  Accounting for Convertible  Securities with Beneficial
Conversion Features or Contingently  Adjustable Conversion Features. The Company
also considered the guidance of Accounting  Principles  Board Opinion Number 14,
Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants and
EITF 00-27 Application of Issue No. 98-5 to Certain Convertible Instruments.  It
is  Management's  opinion that these  standards  apply to the accounting for the
Offerings.

The  following  table  reflects the  allocation  of proceeds  from the offerings
following the application of these accounting standards.

                                            Initial
                                     Allocation of Proceeds
                              ----------------------------------
                       Series A Preferred                  Total
                                  Stock       Warrants    Proceeds
                                ----------   ---------   ---------
Series A Unit Offering          $ 200,616    $ 147,884   $ 348,500
                                             =========   =========
Beneficial conversion feature    (149,088)
                                ---------
Initial carrying value          $  51,528
                                =========


                                       23
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE L - BENEFICIAL CONVERSION DISCOUNT FEATURE ON PREFERRED STOCK

                                             Initial
                                    Allocation of Proceeds
                              ----------------------------------
                       Series B Preferred                  Total
                                  Stock       Warrants    Proceeds
                                ----------   ---------   ---------
Series B Unit Offering          $ 133,853    $ 176,147   $ 310,000
                                             =========   =========
Beneficial conversion feature    (133,853)
                                ---------
Initial carrying value          $      --
                                =========

The above table includes the single unit sold during the fourth fiscal quarter.

The initial  allocation of proceeds between the Preferred Stock and Warrants was
made based upon the relative fair values of the securities  sold. The fair value
of the  Preferred  Stock  was  calculated  as equal to the fair  value of common
shares into which the preferred stock is  convertible,  using the trading market
prices of the common stock on the  respective  dates of sale.  The fair value of
the Warrants was calculated using the Black Scholes Valuation Model.  Underlying
assumptions used included (i) the trading market values of the common stock into
which the  Warrants  are  convertible  on the  dates  sold was used for the fair
value;  (ii) the term of the warrants was used for the term;  (iii) a volatility
factor of 360% and, (iv) a risk-free interest factor of 3%.

The beneficial  conversion  feature for each Unit Offering was calculated  using
that effective  conversion  rate,  following the initial  allocation,  described
above.  The  effective  conversion  rate is  calculated  by dividing  the amount
allocated to the  preferred  stock by the number of common shares into which the
preferred stock is convertible.  A beneficial conversion feature is present when
the  effective  conversion  rate is lower than the trading  market  value of the
underlying  common stock.  In each of the Unit Offerings  beneficial  conversion
features were present, as reflected in the tabular presentation above.

Following  the  allocation  of  proceeds,  the Company will accrete the carrying
values of the preferred  stock to their  respective  redemption  values  through
charges to accumulated earnings over the period up to the earliest date that the
preferred shares can be converted or redeemed. That period is 180 days following
the sale of the securities.

The following  table reflects the details of the amounts of accretions that have
been recorded during the fiscal year ended March 31, 2004 and, also reflects the
preferred stock dividends at the cumulative rate:


                                       24
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE L - BENEFICIAL CONVERSION DISCOUNT FEATURE ON PREFERRED STOCK (CONTINUED)

                                         Accretions      Dividends       Totals
                                          --------       --------       --------
Series A Unit Offering                    $269,696       $  9,290       $278,986
Series B Unit Offering                      61,972          2,751         64,723
                                          --------       --------       --------
                                          $331,668       $ 12,041       $343,709
                                          ========       ========       ========

Cumulative dividends as of December 31, 2003 include $4,446 in arrears.

NOTE M - COMMITMENTS AND CONTINGENCIES

LITIGATION

AdZone  Interactive,  Inc.  was a party to a lawsuit  filed  against it by R. C.
Auletta and Co., Inc. (Auletta) which was filed during 2001. Auletta was seeking
fees in the amount of  approximately  $32,000 for services  which were performed
after the  expiration  of a contract  for  consulting  services  between  AdZone
Interactive, Inc. and Auletta. The Company is of the opinion that the lawsuit is
without merit and has accrued an open unpaid balance due of  approximately  $600
as of the expiration  date of the contract.  A court date was held on October 6,
2002  and a  settlement  was  reached,  pending  completion  of all  appropriate
documentation.  The Company has accrued,  and charged to  operations,  all costs
associated with this transaction.  No further effect on the financial  condition
of the Company should occur on this matter.

Due to the Company's financial position, from time to time, the Company is party
to  either  collection  actions,  litigation  and/or  judgments  related  to the
non-payment of various operating expenses.  Management is of the opinion that an
appropriate  provision for amounts due and other related  expenses has been made
in the accompanying financial statements.

OFFICE FACILITIES

On September  14, 2002,  the Company  executed a new long-term  operating  lease
agreement  for office space to house the Company's  administrative,  development
and marketing  operations  located in Calverton,  New York.  The lease is for an
initial term of 60 months at a rate of  approximately  $1,800 per month for Year
1, approximately $1,850 per month for Year 2; approximately $2,418 per month for
Year 3; approximately  $2,545 per month for Year 4 and approximately  $2,625 per
month for Year 5.

CONSULTING AGREEMENTS

In January 2002, the Company executed a one-year  contract with Communique Media
Services,  Inc. and/or Leonard Braumberger,  an unrelated entity, to provide web
development  services and maintain the Company's corporate internet web site for
a  fee  of  $8,000  per  month  payable  in  shares  registered  on a  Form  S-8
Registration


                                       25
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE M - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Statement.  Through July 1, 2002, the Company issued an aggregate 399,998 shares
under the Form S-8 Registration Statement.  Each monthly issuance was charged to
operations  as  consulting  fees.  As of December 31,  2002,  the Company has no
further obligations under this agreement.

In February 2002, the Company  executed a one-year  contract with  International
Standard  Consulting  Corporation,  and/or Dave Grandy,  an unrelated entity, to
provide strategic business and technology  development consulting services for a
fee of  $4,500  per  month  payable  in  shares  as  registered  on a  Form  S-8
Registration  Statement.  Through July 1, 2002,  the Company issued an aggregate
171,000 shares under the Form S-8 Registration Statement.  Each monthly issuance
is charged to  operations  as  consulting  fees.  As of December 31,  2002,  the
Company has no further obligations under this agreement.

In April 2002,  the Company  entered into a one-year  consulting  agreement with
NuQuest  Consulting,  Inc.  pursuant to which NuQuest agreed to consult with and
assist the Company with respect to the Company's  business  plan,  its financial
statements  and other  materials  prepared for the purpose of  obtaining  equity
financing,  engaging in a public offering, and/or relating to the trading of the
Company's  common  stock in the  public  markets.  NuQuest  also  agreed  to use
reasonable efforts to seek and identify potential  investors for the Company, to
assist the Company in the consummation of any proposed financing, and to provide
the Company with  written  reports of the status of its efforts on behalf of the
Company.  As  compensation  for its  services,  the  Company  agreed to issue to
NuQuest  warrants to purchase 900,000 shares of common stock, on a fully diluted
basis.  The warrants  are  exercisable  at $0.15 per share,  and the Company has
agreed to file an S-8  Registration  Statement  with the Securities and Exchange
Commission  to register the shares  underlying  the warrants.  In addition,  the
Company agreed to pay NuQuest cash  compensation  of $33,000  payable in monthly
installments over the term of the contract. As of March 31, 2003, and subsequent
thereto,  the  Company  has not  completed  the  preparation  and  filing of the
required Form S-8 Registration  Statement and has not made any cash payments. On
July 22, 2003, the Company has issued 200,000 restricted, unregistered shares of
common stock to NuQuest as partial compensation.

On December 2, 2002,  the Company  entered into a one year business  development
agreement with Paul Weaver to provide  assistance in the  acquisition of various
contracts  utilizing  the  Company's  data mining  research  capabilities.  This
agreement  requires  compensation  as follows:  25,000  shares of the  Company's
common stock upon  execution of the  agreement;  a 3.0%  commission on the first
cumulative $3 million in total contract value; an additional 2.0% commission for
total contract value in excess of $3 million, an additional 25,000 shares of the
Company's  common  stock on the first  contract  in excess of  $500,000 in total
contract  value.  Through  December  31,  2003,  the Company has issued  150,000
restricted,  unregistered  shares  of  common  stock  as  compensation  on  this
contract.


                                       26
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE M - COMMITMENTS AND CONTINGENCIES (CONTINUED)

On August 13, 2002,  the Company  entered  into an  agreement  with Thomas Gavin
(Gavin) to provide  informational  and educational  news releases and distribute
said  releases to the news media.  Gavin is required to spend  approximately  40
hours per month 1) developing news release concepts and a news release timeline;
2) drafting  and editing  news  releases  for Company  review and  approval;  3)
issuing these news  releases with a quality wire news service to ensure  highest
possible media distribution; 4) identifying major trade and general daily/weekly
media to expand  coverage;  5)  reconnecting  with reporters  providing  earlier
coverage  to update them and to begin the  building  of a major  media  outreach
effort for the longer term;  and 6) preparing a general  snapshot  report on the
Company and it's operating  history.  As compensation,  the Company issued Gavin
175,000 shares of the Company's  common stock,  as registered on Form S-8, as of
August 1, 2002 and 70,000 shares of the Company's common stock, as registered on
Form S-8, on the first day of each succeeding month.  Additionally,  the Company
will issue Gavin 30,000  warrants per month to purchase an equivalent  number of
shares of the  Company's  common stock at an exercise  price of $0.25 per share.
Each warrant  will be for a three year term from the date of  issuance.  Through
the quarter ended December 31, 2003, the Company has issued an aggregate 110,000
shares of restricted,  unregistered  common stock as compensation  during Fiscal
2004 under this contract.

On October 16, 2002, the Company  entered into a  Multi-Media/Corporate  Imaging
Agreement  with Jason Genet (Genet).  This agreement  contains two (2) phases of
services:  Phase I - Create [a] Multimedia  Website,  Corporate  Imaging and Web
Mercial  ("New  Product")  and Phase II - assist the Company in the marketing of
New Product, make reasonable effort to organize, produce and supervise corporate
imaging and advertising as approved by the Company.  The Company is obligated to
compensate  Genet for both Phase I and Phase II in either  cash of  $370,000  or
common stock of the Company,  as  registered  on Form S-8, in a number of shares
equal to $400,000,  priced at the closing  quoted price of the Company's  common
stock on the day of issuance.  This  agreement is cancellable at any time by the
Company with no further  obligation beyond that which was already earned and due
to be paid. Through December 31, 2002, the Company has issued Genet an aggregate
1,625,000 shares of common stock under this agreement.

On November 11, 2002, the Company entered into a Consulting Agreement with PAW &
Associates  and/or Paul Weaver to provide various  product sales services.  This
Agreement  is for a 12 month term  starting  November  7, 2002.  The  Company is
obligated to issue 25,000 shares of restricted,  unregistered  common stock upon
execution of the Agreement and to pay a 3.0%  commission on the first $3 million
of acquired contract value and 5.0% on all acquired contract values in excess of
$3 million.  Through  December 31, 2003, the Company has issued 50,000 shares of
restricted, unregistered common stock as compensation under this contract.

INVESTMENT BANKING AGREEMENTS

On June 20, 2002, the Company signed a Financial  Services  Agreement with First
American  Financial Group, New York, New York,  pursuant to which First American
Financial  Group  agreed to attempt to complete a private  placement of up to $5
million of the Company's 9% convertible preferred stock. As of the date of this


                                       27
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE M - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Report,  First  American  Financial  Group has not introduced the Company to any
proposed  purchaser(s) of its convertible preferred stock, and management cannot
provide any assurances  that the Company will be able to complete such financing
in the future.  Through  December 31, 2002,  the Company has paid First American
Financial Group approximately $5,000 in conjunction with this Agreement.

On  October  23,  2002,  the  Company  executed  a  Structured  Equity  Purchase
Commitment  with  Cornell  Capital  Partners,   LP  (Cornell).   This  agreement
established  a  commitment  for Cornell to purchase up to  $3,000,000  in common
stock from time to time over the course of the next 24 months from an  effective
registration of the underlying shares,  with the shares to be issued pursuant to
Regulation  D of the U. S.  Securities  and Exchange  Commission.  The price per
share is to be 95% of the  lowest  closing  bid  price  during  the 5  preceding
trading days from the date the Company  receives notice to purchase.  There is a
maximum of $45,000 per  transaction.  The Company is  obligated to pay the first
$15,000 of Cornell's  legal fees - $5,000 upon the execution of this  Agreement,
payable in 100,000 shares of  free-trading  [sic] of the Company's  common stock
and $10,000 from the proceeds of the first  transaction.  Additionally,  Cornell
will retain the first 6.0% of each transaction as compensation for unaccountable
fees and expenses.

On November  27, 2002,  the Company  entered  into an  agreement  (the  "Spartan
Agreement") with Spartan Securities Group, Ltd.  ("Spartan") under which Spartan
agreed to provide,  on an exclusive  basis,  financial  advisory and  investment
banking services to the Company for a period of one (1) year, subject to earlier
termination  by either the  Company or Spartan  upon at least  thirty (30) days'
prior written  notice to the other party.  The services  that Spartan  agreed to
provide  include  rendering  advice  with  regard  to our  internal  operations,
corporate  finance  matters,  mergers  and  acquisitions,  and  capital  raising
activities.  Spartan  also  will act as our  exclusive  Placement  Agent for any
private  offering of the Company's  securities  and as underwriter in any public
offering of equity or debt securities.  The Company has also agreed to appoint a
person nominated by Spartan to our Board of Directors.

In consideration for Spartan's  services,  the Company has agreed to pay Spartan
an initial  non-refundable  retainer of 300,000 shares of our Common Stock and a
monthly  consulting  fee of  $2,500  that will  commence  upon  completion  of a
financing  of not less  than  $350,000,  increasing  to $3,000  per  month  upon
completion  of a financing  of not less than  $500,000.  The  300,000  shares of
restricted,  unregistered  common  stock were issued to Spartan on November  18,
2003.

In addition, upon completion of certain extraordinary transactions,  including a
sale of the Company's assets,  securities or business,  or the purchase by us of
another company or any of such other company's  assets,  securities or business,
Spartan  will be  entitled  to  receive  5% of the first  Five  Million  Dollars
($5,000,000),  4% of the second Five  Million  Dollars  ($5,000,000),  3% of the
third  Five  Million  Dollars  ($5,000,000),  and 2% of any  amount in excess of
Fifteen  Million  Dollars  ($15,000,000)  of  consideration   involved  in  such
transaction. If Spartan is involved in originating a loan or other credit


                                       28
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE M - COMMITMENTS AND CONTINGENCIES (CONTINUED)

facility with any bank or other institutional  lender, the Company has agreed to
pay Spartan a fee of 2% of the maximum amount of the credit facility,  including
of any increases in such facility after the date of the original financing.

The Company  also granted  Spartan a right of first  refusal to act as Placement
Agent  for  any  private  offering  of  our  equity  securities  (or  securities
convertible  into  equity  securities)  except for  private  placements  of such
securities  originating  from our officers and  directors.  Spartan will receive
Placement  Agent  compensation  of 10% of the gross proceeds  raised in any such
private offering and a 2% non-accountable expense allowance, as well as warrants
to  purchase  up to  20% of the  number  of  securities  sold  in the  offering,
exercisable  at 100% of the market  price of the  securities  on the date of the
sale.

If Spartan acts as  underwriter in any public  offering of the Company's  equity
securities,  Spartan  will  receive  7% of  the  gross  proceeds  raised  in the
offering, a 2% non-accountable expense allowance, and warrants to purchase up to
10% of the number of securities sold in the offering, exercisable at 100% of the
closing  market  price  on the  date of the  sale of  securities  in the  public
offering.

Spartan was successful in the placement of 30.85 and 30.00 Series A and Series B
Units,  respectively,   and  was  paid  commissions  of  approximately  $77,820,
including a commission on a Unit bought by Spartan.

BUSINESS DEVELOPMENT AGREEMENT

During Fiscal 2003, the Company has executed multiple Consulting Agreements with
Kyle  Kennedy  to  provide   consulting   services  in  the  areas  of  business
development, mergers and acquisitions and business strategy for the Company. Mr.
Kennedy is affiliated with Spartan  Securities  Group,  Ltd. (see above) and has
represented  to the Company that the  services  provided in this  agreement  are
separate  and unique to  Spartan's  efforts in  capital  raising.  The dates and
consideration related to the various agreements with Mr. Kennedy are as follows:

August 19, 2002        1,000,0000  options to purchase an  equivalent  number of
                       shares of the Company's  common stock at $0.04 per share;
                       666,000  options  to  purchase  an  equivalent  number of
                       shares of the Company's  common stock at $0.06 per share;
                       and 334,000  options to purchase an equivalent  number of
                       shares at $0.08  per  share.  These  options  expired  on
                       February 19, 2003.

October 7, 2002        250,000  options  to  purchase  an  equivalent  number of
                       shares of the Company's  common stock at $0.01 per share.
                       These options expired on November 7, 2002

October 11,  2002      1,000,000  options to  purchase an  equivalent  number of
                       shares of the Company's common stock at $0.015 per share.
                       These options expired on November 10, 2002.


                                       29
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE M - COMMITMENTS AND CONTINGENCIES (CONTINUED)

November 12, 2002      200,000  options  to  purchase  an  equivalent  number of
                       shares of the Company's  common stock at $0.02 per share.
                       These options expired on December 12, 2002.

November 26, 2002      300,000  options  to  purchase  an  equivalent  number of
                       shares of the Company's common stock at $0.016 per share.
                       These options expired on December 26, 2002.

December 11, 2002      2,100,000  options to  purchase an  equivalent  number of
                       shares of the Company's common stock at $0.016 per share.
                       These options expired on January 10, 2003.

January 23, 2003       1,050,000  options to  purchase an  equivalent  number of
                       shares of the Company's  common stock at $0.01 per share.
                       These options expired on February 22, 2003.

January 28, 2003       3,950,000  options to  purchase an  equivalent  number of
                       shares of the Company's  common stock at $0.01 per share.
                       These options expired on February 28, 2003.

May 6, 2003            300,000  options  to  purchase  an  equivalent  number of
                       shares of the Company's  common stock at $0.02 per share.
                       These options expired on June 6, 2003.

May 20, 2003           625,000  options  to  purchase  an  equivalent  number of
                       shares of the Company's  common stock at $0.05 per share.
                       These options expired on June 20, 2003.

As of December 31, 2003, Mr. Kennedy owes the Company  approximately $30,550 for
shares issued under exercised options.

BROKER-DEALER MARKETING AGREEMENT

On October 10, 2002,  the Company  signed a  "Broker-Dealer  Marketing  Program"
agreement with First American  Financial Group of New York, NY (First American).
First  American will contact  broker-dealers  as potential  market makers in the
Company's equity securities;  contact broker-dealers via e-mail and telephone to
review  current  Company  information  and meet with  broker-dealers,  and their
registered  representatives,  to discuss and promote  awareness of the Company's
equity  securities.  As  compensation  to First  Financial,  the Company  issued
500,000  shares of restricted,  unregistered  common stock upon the execution of
this  agreement.  Further,  the Company is  obligated  to pay First  Financial a
non-accountable  expense  allowance  of $10,000 cash payable upon receipt of any
financing  from any  source in a  minimum  amount of  $500,000.  Further,  First
American  is  entitled  to  Bonus   Compensation  equal  to  100,000  shares  of
restricted,  unregistered  common  stock if at any  time  during  the 12  months
following the execution of this  agreement,  the Company's  common stock reaches
$0.10 per share; an additional 100,000 shares of restricted, unregistered common
stock if at any time  during  the 12  months  following  the  execution  of this
agreement,  the Company's  common stock  reaches $0.20 per share;  an additional


                                       30
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
           NOTES TO UNAUDITED CONDENSED QUARTERLY FINANCIAL STATEMENTS

NOTE M - COMMITMENTS AND CONTINGENCIES (CONTINUED)

100,000  shares of restricted,  unregistered  common stock if at any time during
the 12 months  following the execution of this agreement,  the Company's  common
stock reaches $0.40 per share;  and an additional  100,000 shares of restricted,
unregistered  common  stock if at any time  during the 12 months  following  the
execution of this agreement, the Company's common stock reaches $0.60 per share.
This agreement terminated on September 30, 2003.


                                       31
<PAGE>

PART I - ITEM 2

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

(1) CAUTION REGARDING FORWARD-LOOKING INFORMATION

Certain  statements  contained  in this  quarterly  filing,  including,  without
limitation, statements containing the words "believes", "anticipates", "expects"
and  words  of  similar  import,  constitute  forward-looking  statements.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements.

Such factors include, among others, the following:  international,  national and
local general economic and market conditions:  demographic  changes; the ability
of the Company to sustain,  manage or  forecast  its growth;  the ability of the
Company to successfully make and integrate acquisitions;  raw material costs and
availability;  new product  development and  introduction;  existing  government
regulations  and  changes  in,  or  the  failure  to  comply  with,   government
regulations;  adverse publicity;  competition; the loss of significant customers
or suppliers;  fluctuations  and  difficulty in forecasting  operating  results;
changes in business strategy or development  plans;  business  disruptions;  the
ability  to attract  and  retain  qualified  personnel;  the  ability to protect
technology; and other factors referenced in this and previous filings.

Given  these  uncertainties,  readers  of this Form  10-QSB  and  investors  are
cautioned not to place undue reliance on such  forward-looking  statements.  The
Company  disclaims  any  obligation  to update any such  factors or to  publicly
announce the result of any  revisions to any of the  forward-looking  statements
contained herein to reflect future events or developments.

(2) GENERAL COMMENTS

AdZone Research,  Inc. (Company) was incorporated on May 31, 1994 under the laws
of the State of  Delaware  as  Executive  Help  Services,  Inc.  The Company was
initially  formed for the purpose of  developing an internet web site that would
offer  professional  space planning and design,  pricing  information and direct
ordering of modular office furniture systems.

On August 10, 2001, the Company executed an Agreement and Plan of Share Exchange
with AdZone Interactive,  Inc. (a privately-owned New York corporation) (AdZone)
whereby the Company  exchanged  18,000,022  shares of  restricted,  unregistered
common stock for 100.0% of the issued and outstanding common stock of AdZone and
effected a merger of the two entities with the Company being the surviving legal
entity. Concurrent with this transaction, the Company changed its corporate name
to AdZone Research, Inc.

AdZone Interactive,  Inc. (AdZone) was initially  incorporated as Web-AdNet.com.
Inc.  under the laws of the State of New York on February 28, 2000.  The Company
was formed to extract various data elements through the monitoring and review of
internet  websites   developed  and  maintained  by  independent  third  parties
worldwide. These extracted data elements are then used to provide various market
research  statistics  and other focused  information  as guided by the Company's
clientele.


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<PAGE>

The Company's business plan has not been fully implemented and, accordingly, has
not fully commenced operations. The Company has had no substantial operations or
substantial  assets since  inception and is considered to be in the  development
stage.

The Company is engaged in the  extraction of various data  elements  through the
monitoring  and  review  of  internet  websites   developed  and  maintained  by
independent third parties worldwide. These extracted data elements are then used
to provide various market research  statistics and other focused  information as
guided by the Company's clientele.

The events  which  occurred on  September  11,  2001,  and  subsequent  thereto,
generated,  and  continue to  generate,  additional  interest  in the  Company's
internet data mining  research  capabilities  for  potential  private and public
sector  clients.  Management  continues  to maintain the belief that the Company
will be able to acquire various  contracts to provide  research  information for
various private and public sector purposes.

On May 27, 2003, the Company  received an initial $50,000  contract from a major
United States defense  contractor to provide  support  services  related to that
entity's  provision of services for Homeland Security issues. As of December 31,
2003, the Company has billed  approximately  $74,884 against this contract,  and
it's amendments, and received cash collections totaling approximately $71,821.

The Company remains in the  development  stage,  has focused  principally on the
refinement and  maintenance of its proprietary  software and providing  services
pursuant to the May 27, 2003 contract.  Due to cash flow shortages,  the Company
continues to pursue various revenue and capital sources.

The Company will rely  principally  on additional  private  placements of equity
securities to provide  sufficient  working  capital to maintain the integrity of
the corporate entity.

Because of the Company's lack of operations,  the Company's future  continuance,
for the  foreseeable  future,  will be fully dependent on either future sales of
equity  securities  and/or  advances or loans from  significant  stockholders or
corporate  officers  to  provide  sufficient  working  capital to  preserve  the
integrity of the corporate entity during the development phase.

There is no assurance that the Company will be able to obtain additional funding
through the sales of additional  securities or, that such funding, if available,
will be obtained on terms favorable to or affordable by the Company.

It  is  the  intent  of  management  and  significant  stockholders  to  provide
sufficient  working  capital  necessary to support and preserve the integrity of
the  corporate  entity.  However,  there  is  no  legal  obligation  for  either
management or significant stockholders to provide additional future funding.

(3) RESULTS OF OPERATIONS, PLAN OF OPERATION, LIQUIDITY AND CAPITAL RESOURCES

During  the first  quarter of Fiscal  2004 (year  ending  March 31,  2004),  the
Company  obtained an initial $50,000 contract from a major United States defense
contractor.  Through  December  31,  2003,  the  Company  completed  and  billed
approximately  $74,844.  The Company realized cash collections on these billings
of approximately $71,821.


                                       33
<PAGE>

As the Company has not fully commenced operations,  management is of the opinion
that our current financial  results,  as reported in the accompanying  financial
statements, are not meaningful as an indication of future operations.

During the nine months ended December 31, 2003, the Company  realized revenue of
$74,844 from certain government contracts for the Company's NetGet technologies.
There are no additional contracts for this technology.

The Company incurred  operating expenses of $1,807,471 for the nine months ended
December 31, 2003 as compared to $660,670 for the nine months ended December 31,
2002. Production costs include salaries and wages and certain overhead expenses.
Salaries and wages included  $1,316,060 of stock based  compensation  during the
nine months ended December 31, 2003 compared to $379,324  during the nine months
ended  December 31,  2002.  During the current  nine month  period,  the Company
incurred consulting expenses of $115,456 related to business development.  There
was no such expense for the nine months ended  December 31, 2002.  Substantially
all of this expense was recorded based upon  stock-based  compensation.  Overall
salaries and wages paid with cash decreased to preserve cash  reserves.  General
and  administrative  expenses were  curtailed  substantially  during the current
quarter to preserve cash.

For the nine months ended December 31, 2003, the Company  incurred a net loss of
approximately $(1,755,853) as compared to a net loss of approximately $(668,747)
for the nine months ended December 31, 2002 for the matters discussed above.

Preferred stock dividends and accretions relate to the Company's 9% Series A and
Series  B  Convertible  Preferred  Stock  offerings.  The  Company  carries  its
preferred stock based upon amounts  allocated to these  securities in connection
with  certain unit  offerings.  The Company  accretes the carrying  value to its
respective  redemption  values through  periodic  charges to retained  earnings.
Accretions  during the nine months ended December 31, 2003 amounted to $326,894.
Preferred stock dividends,  paid and in arrears, which amounted to $16,487, plus
accretions are reflected as reductions in net loss to arrive at loss  applicable
to common  stockholders for purposes of our loss per common share  computations.
Preferred  stock  dividends  will be recorded so long as the preferred  stock is
outstanding.  Preferred stock accretions will be recorded periodically until the
full redemption values are reflected.

Preferred  stock is carried as an equity  security in accordance  with generally
accepted  accounting  principles.  There are no instances,  irrespective  of how
remote,  that the holders of  preferred  stock can require the Company to redeem
shares for cash.

LIQUIDITY

The Company had approximately  $45,500 in available cash at December 31, 2003 as
compared to $8,100 at March 31, 2003 and  approximately  $14,000 at December 31,
2002.  The Company  attempts to maintain a cash  balance  sufficient  to sustain
corporate  operations  until  such time as  management  can  raise  the  funding
necessary to advance its business plan.

Liquidity  since  inception  has been  principally  through  proceeds from notes
payable  and the sale of  unregistered  equity  securities  and the  exercise of
options  granted under a plan  registered on Form S-8 with the U. S.  Securities
and Exchange Commission.

Additional  funding from either the sale of equity  securities  or advances from
shareholders  will be necessary to support  future  maintenance of the corporate
entity and service future contracts which may be obtained by the Company.


                                       34
<PAGE>

The Company, due to it's lack of working capital, has no definitive capital plan
for future periods. However, the infusion of additional capital and/or increased
immediate demands for the Company's  services will certainly require  additional
investment in computer  hardware to handle the  processing  load required by the
Company's customers. The ultimate amount and timing of this potential investment
is unknown at this time.

PLAN OF OPERATION

The Company's  operations focus on mining of data and other information  through
the  monitoring  and review of internet  websites  developed  and  maintained by
independent third parties worldwide. These extracted data elements are then used
to provide various market research  statistics and other focused  information as
guided by the Company's clientele.  The Company has initially identified two key
consumers of the  Company's  product:  advertising  research  and  Federal/State
governments.

The Company  continues to face  considerable  risk in each of its business  plan
steps, such as being selected as either a prime or subcontractor on governmental
projects  related to defense  and/or  homeland  security  issues;  difficulty of
hiring competent  personnel within its budget;  longer than anticipated web site
decoding; difficulty in completing key business acquisitions; and a shortfall of
funding due to the Company's inability to raise capital in the equity securities
market.

The Company may become  dependent  upon either  funds  advanced or loaned by the
Company's  directors and officers or the sale of additional  equity  securities.
The Company's  officers and directors have no formal commitments or arrangements
to advance or loan funds for the Company  and do not have any legal  requirement
to do so.

If such a restricted  cash flow scenario were to continue,  the Company would be
unable to complete its business plan steps, and would,  instead,  delay all cash
intensive  activities.  Without  necessary cash flow, the Company may be dormant
during the next twelve  months,  or until such time as necessary  funds could be
raised in the equity securities market.

ITEM 3 - CONTROLS AND PROCEDURES

As of the end of the period covered by this report ("the Evaluation  Date"), our
management,  including our chief executive officer and chief financial  officer,
conducted an evaluation  ("Evaluation")  of the  effectiveness of the design and
operation  of our  disclosure  controls  and  procedures,  as  defined  in  Rule
13a-15(e) or Rule 15d-15(e)  under the  Securities  Exchange Act of 1934. In the
course of the Evaluation,  we identified  significant material weaknesses in our
internal disclosure controls and procedures.


                                       35
<PAGE>

The Company has had discussions  with the accounting  staff (the "Staff") of the
SEC with respect to (1) the valuation of equity  securities  issued to employees
and  non-employees and (2) the accounting and reporting for preferred stock that
had also included the issuance of warrants and beneficial  conversion  features.
After the Company's  discussions with the Staff, and after the Company consulted
with its independent  registered public accounting firm, the Company  determined
the need to restate its annual and  quarterly  financial  statements  for fiscal
2004, and the first two quarterly financial statements for fiscal 2005.


                                       36
<PAGE>

Aidman, Piser & Company, P.A. advised AdZone that each of these internal control
deficiencies  constitute a material weakness as defined in Statement of Auditing
Standards  No.  60.  Certain  of  these  internal  control  weaknesses  may also
constitute  material  weaknesses  in our  disclosure  controls.  Management  has
considered the effects of the financial statement restatements on its evaluation
of disclosure  controls and  procedures  and has concluded  that  weaknesses are
present.  Our chief executive  officer and our chief financial officer concluded
that as of the Evaluation  Date our disclosure  controls and procedures were not
effective,  and as of the date of the filing of this amended  report,  our chief
executive  officer  and our chief  financial  officer  concluded  that we do not
maintain  disclosure  controls and  procedures  that are  effective in providing
reasonable  assurance that  information  required to be disclosed in our reports
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported  within the time periods  specified  in the SEC's rules and forms,  and
that  such  information  is  accumulated  and  communicated  to our  management,
including our chief executive officer and our chief financial officer,  to allow
timely decisions regarding required disclosure.

We are committed to improving our financial  organization.  However, the Company
does  not  possess  the  financial  resources  to  address  other  than the most
rudimentary  of accounting  and  reporting  requirements,  and therefore  relies
heavily on outside advisors.  The Company's  inability to independently  prepare
its  financial  reports  to  the  standards  of  Generally  Accepted  Accounting
Principles  and  the  Rules  and  Regulations  of the  Securities  and  Exchange
Commission rise to the level of a material weakness in internal control.

Management of the Company intends to promptly remediate this deficiency by:

(i) acquiring the appropriate level of internal financial support

(ii) access current developments training programs for financial employees and

(iii) provide financial  employees with adequate technical resources to research
financial accounting and reporting requirements.

We currently  believe we will need to take  additional  steps to  remediate  the
above-referenced  material  weaknesses,  and we will  continue to  evaluate  the
effectiveness  of our  design  and  operation  of our  disclosure  controls  and
procedures on an ongoing basis, and will take further action as appropriate.

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

AdZone  Interactive,  Inc.  was a party to a lawsuit  filed  against it by R. C.
Auletta and Co., Inc. (Auletta) which was filed during 2001. Auletta was seeking
fees in the amount of  approximately  $32,000 for services  which were performed
after the  expiration  of a contract  for  consulting  services  between  AdZone
Interactive, Inc. and Auletta. The Company is of the opinion that the lawsuit is
without merit and has accrued an open unpaid balance due of  approximately  $600
as of the expiration  date of the contract.  A court date was held on October 6,
2002  and a  settlement  was  reached,  pending  completion  of all  appropriate
documentation.  The Company has accrued,  and charged to  operations,  all costs
associated with this transaction.  No further effect on the financial  condition
of the Company should occur on this matter.

Due to the Company's financial position, from time to time, the Company is party
to  either  collection  actions,  litigation  and/or  judgments  related  to the
non-payment of various operating expenses.  Management is of the opinion that an
appropriate  provision for amounts due and other related  expenses has been made
in the accompanying financial statements.


                                       37
<PAGE>

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES

The securities  described below represent securities sold by us during the three
month  period  ended  September  30, 2003,  that were not  registered  under the
Securities  Act of 1933, as amended (the  "Securities  Act").  Unless  otherwise
specified,  the below  offerings  and  sales  were  deemed  to be  exempt  under
Regulation D and Section 4(2) of the  Securities  Act. No advertising or general
solicitation  was employed in offering the  securities.  The offerings and sales
were  made to a  limited  number  of  persons,  all of whom  were  our  business
associates or executive  officers and/or directors of our company,  and transfer
was restricted by us in accordance with the requirements of the Securities Act.

We issued 300,000 shares of our common stock to an  organization as compensation
for consulting services performed on our behalf.

We issued an  aggregate  of 260,000  shares of our common  stock to three of our
employees as compensation for services performed on our behalf.

ITEM 3 - DEFAULTS ON SENIOR SECURITIES

None

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

None

ITEM 5 - OTHER INFORMATION

None

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

Exhibits
  31.1   Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  32.1   Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


                                       38
<PAGE>

Reports on Form 8-K

April 1, 2003         Announcement  of execution of Memorandum of Agreement with
                      Boeing Autometric, Inc.
April 4, 2003         Announcement of Board action to reserve  6,000,000  shares
                      of common stock  pursuant to a  Registration  Statement on
                      Form S-8/A filed in March 2003.
April 29, 2003        Announcement of intent to repurchase up to $150,000 of the
                      Company's  outstanding  common  stock  through open market
                      transactions.
May 28, 2003          Announcement  of the  execution  of a contract  previously
                      discussed in the April 1, 2003 Form 8-K filing.
September 3, 2003     Announcement of the execution of a 2nd revenue  generating
                      contract.
December 19, 2003     Shareholder update letter from the Company's President

--------------------------------------------------------------------------------


                                       39
<PAGE>

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                                   ADZONE RESEARCH, INC.
    Date: July 13, 2005                           /s/ Charles A. Cardona III
      -----------------                        ---------------------------------
                                               Charles A. Cardona III
                                               Chairman, Chief Executive Officer
                                               and Chief Financial Officer


                                       40