UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB

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


(Mark one)

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


              For the quarterly period ended June 30, 2002

         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)

                     211 Roanoke Avenue, Riverhead, NY 11901
                    (Address of principal executive offices)

                                 (480) 444-2014
                           (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
                                                             ---   ---

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: August 13, 2002: 30,326,462
                                          ---------------------------

Transitional Small Business Disclosure Format (check one):     YES     NO X
                                                                   ---   ---
<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                 Form 10-QSB for the Quarter ended June 30, 2002

                                Table of Contents


                                                                            Page
                                                                            ----
Part I - Financial Information

   Item 1  Financial Statements                                               3

   Item 2  Management's Discussion and Analysis or Plan of Operation         22


Part II - Other Information

   Item 1  Legal Proceedings                                                 25

   Item 2  Changes in Securities                                             25

   Item 3  Defaults Upon Senior Securities                                   26

   Item 4  Submission of Matters to a Vote of Security Holders               26

   Item 5  Other Information                                                 26

   Item 6  Exhibits and Reports on Form 8-K                                  26


Signatures                                                                   26



                                                                               2
<PAGE>

Item 1 - Part 1 - Financial Statements

                              AdZone Research, Inc.
                          (a development stage company)
                                 Balance Sheets
                             June 30, 2002 and 2001

                                   (Unaudited)

                                                       June 30,       June 30,
ASSETS                                                   2002           2001
------                                               -----------    -----------
Current Assets
   Cash on hand and in bank                          $     2,987    $     1,940
   Prepaid expenses and other                             20,300         46,300
                                                     -----------    -----------
     Total current assets                                 23,197         48,240
                                                     -----------    -----------

Property and Equipment - at cost                          60,752         60,252
   Accumulated depreciation                              (36,529)       (19,351)
                                                     -----------    -----------
     Net property and equipment                           24,223         40,901
                                                     -----------    -----------

Other Assets                                               2,190          2,190
                                                     -----------    -----------

Total Assets                                         $    49,610    $    91,331
                                                     ===========    ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Current Liabilities
   Notes payable                                     $    65,958    $    66,300
   Accounts payable - trade                              173,464        107,730
   Accrued interest payable                                1,398           --
   Advances from officers                                 11,320         17,142
   Accrued officer compensation                          346,719        125,433
                                                     -----------    -----------

Total Liabilities                                        598,859        316,605
                                                     -----------    -----------

Commitments and contingencies

Shareholders' Equity
   Preferred stock - $0.001 par value
     20,000,000 shares authorized
     none issued and outstanding                            --             --
   Common stock - $0.001 par value
     100,000,000 shares authorized
     29,880,129 and 28,018,670 shares
     issued and outstanding, respectively                 29,880         28,019
   Additional paid-in capital                          1,700,340      1,370,501
   Deficit accumulated during the development stage   (2,279,469)    (1,623,794)
                                                     -----------    -----------

Total Shareholders' Equity                              (549,249)      (225,274)
                                                     -----------    -----------

Total Liabilities and Shareholders' Equity           $    49,610    $    91,331
                                                     ===========    ===========

The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               3

<PAGE>
<TABLE>
<CAPTION>

                              AdZone Research, Inc.
                          (a development stage company)
                 Statements of Operations and Comprehensive Loss
                  Three months ended June 30, 2002 and 2001 and
     Period from February 28, 2000 (date of inception) through June 30, 2002

                                   (Unaudited)
                                                                                      Period from
                                                                                   February 28, 2000
                                                  Three months    Three months    (date of inception)
                                                      ended            ended            through
                                                  June 30, 2002    June 30, 2001     June 30, 2002
                                                 --------------    --------------    --------------
<S>                                              <C>               <C>               <C>

Revenues                                         $         --      $         --      $       84,006
                                                 --------------    --------------    --------------

Production Expenses
   Salaries, wages and related costs                       --                 803           535,026
   Direct occupancy and
     operating expenses                                   6,302            16,737           224,805
   Depreciation                                           3,542             3,542            30,554
                                                 --------------    --------------    --------------
     Total production expenses                            9,844            21,082           790,385
                                                 --------------    --------------    --------------

Gross Profit                                             (9,844)          (21,082)         (706,379)
                                                 --------------    --------------    --------------

Operating expenses
   Selling and marketing costs
     Salaries, wages and related costs                     --                  50           326,458
     Direct occupancy and operating expenses             16,265            26,303           353,722
   General and administrative costs
     Officers compensation                               77,787            77,434           466,719
     Consulting and professional fees                    58,394             1,000           325,639
     Other general and  administrative costs              6,836            (3,291)           43,013
   Compensation expense related to common
     stock issuances at less than "fair value"             --                --                 750
   Depreciation                                             654               785            10,000
                                                 --------------    --------------    --------------
     Total operating expenses                           159,936           102,281         1,526,301
                                                 --------------    --------------    --------------

Loss from Operations                                   (169,780)         (123,363)       (2,232,680)

Other Income (Expense)                                   (2,195)           (4,566)          (46,790)
                                                 --------------    --------------    --------------

Net Loss                                               (171,975)         (127,929)       (2,279,470)

Other comprehensive income                                 --                --                --
                                                 --------------    --------------    --------------

Comprehensive Loss                               $     (171,975)   $     (127,929)   $   (2,279,470)
                                                 ==============    ==============    ==============

Net loss per weighted-average share of
   common stock outstanding, computed
   on Net Loss - basic and fully diluted         $        (0.02)   $        (0.06)   $        (0.01)
                                                 ==============    ==============    ==============
Weighted-average number of shares of
   common stock outstanding -
   basic and fully diluted                           24,479,563        23,346,022         5,346,000
                                                 ==============    ==============    ==============
</TABLE>

The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               4

<PAGE>
<TABLE>
<CAPTION>

                              AdZone Research, Inc.
                          (a development stage company)
                  Statement of Changes in Shareholders' Equity
  Period from February 28, 2000 (date of inception of AdZone Interactive, Inc.)
                              through June 30, 2002

                                   (Unaudited)

                                                                                 Deficit
                                                                               accumulated
                                        Common Stock            Additional        in the         Stock
                                   -------------------------      paid-in      development    subscription
                                      Shares        Amount        capital         stage        receivable       Total
                                   -----------   -----------    -----------    -----------    -----------    -----------
<S>                                <C>           <C>             <C>           <C>            <C>            <C>

Initial capitalization
   February 28, 2000                       170   $       150    $      --      $      --      $      --      $       150
   Effect of September 10,
     2000 125,000 for 1
     forward stock split and
     change to $0.001 par value
      from no par value             21,249,830        21,100        (21,100)          --             --             --

February 29, 2000 private
   placement of common stock                30     1,000,000           --             --         (600,000)       400,000
     Effect of September 10,
     2000 125,000 for 1
     forward stock split and
     change to $0.001 par value
     from no par value               3,749,970      (996,250)       996,250           --             --             --
   Less costs of raising capital          --            --          (12,500)          --             --          (12,500)

Net loss for the period                   --            --             --          (35,822)          --          (35,822)
                                   -----------   -----------    -----------    -----------    -----------    -----------

Balances at March 31,2000           25,000,000        25,000        962,650        (35,822)      (600,000)       351,828

Cash received on stock
   subscription receivable                --            --             --             --          600,000        600,000

November 30, 2000 private
   placement of common stock           666,665           667        289,333           --             --          290,000
   Less costs and expenses
     of raising capital                   --            --         (188,500)          --             --         (188,500)

Common stock issued for:
   Costs and expenses of
     raising capital                   400,000           400        175,600           --             --          176,000
   Prepaid interest on loan            250,000           250         31,000           --             --           31,250
   Employee wages and bonuses        1,095,000         1,095         64,605           --             --           65,700
   Officer bonus                       500,000           500         29,500           --             --           30,000
   Professional services               107,000           107          6,313           --             --            6,420

Net loss for the year                     --            --             --       (1,460,043)          --       (1,460,043)
                                   -----------   -----------    -----------    -----------    -----------    -----------

Balances at March 31, 2001
   pre-acquisition                  28,018,665   $    28,019    $ 1,370,501    $(1,495,865)   $      --      $   (97,345)
                                   ===========   ===========    ===========    ===========    ===========    ===========


                                  - Continued -


The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               5

<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)
                  Statement of Changes in Shareholders' Equity
  Period from February 28, 2000 (date of inception of AdZone Interactive, Inc.)
                             through June 30, 2002

                                   (Unaudited)

                                                                                 Deficit
                                                                               accumulated
                                        Common Stock            Additional        in the         Stock
                                   -------------------------      paid-in      development    subscription
                                      Shares        Amount        capital         stage        receivable       Total
                                   -----------   -----------    -----------    -----------    -----------    -----------

Balances at March 31, 2001
   pre acquisition                  28,018,665   $    28,019    $ 1,370,501    $(1,495,865)   $      --      $   (97,345)

Conversion of AdZone
   Interactive, Inc. common
   stock to AdZone Research,
   Inc. common stock               (10,018,643)      (10,019)        10,019           --             --             --

Effect of reverse merger with
   AdZone Research, Inc.             5,346,000         5,346         (5,346)          --             --             --
                                   -----------   -----------    -----------    -----------    -----------    -----------

Balances at March 31, 2001
   post acquisition                 23,346,022        23,346      1,375,174     (1,495,865)          --          (97,345)

Issuance of common stock for
   Conversion of short-term debt       360,000           360         21,240           --             --           21,600
   Cash                                744,442           744         39,656           --             --           40,400
   Lawsuit settlement                  500,000           500         19,500           --             --           20,000
   Consulting and Legal
     fees and services               1,531,666         1,532        115,668           --             --          117,200

Net loss for the year                     --            --             --         (611,630)          --         (611,630)
                                   -----------   -----------    -----------    -----------    -----------    -----------

Balances at March 31, 2002          26,482,130        26,482      1,571,238     (2,107,495)          --         (509,775)

Issuance of common stock for
   Consulting fees and services        247,999           248         37,752           --             --           38,000
   Payment of officer and
     staff salaries                  3,150,000         3,150         91,350           --             --           94,500

Net loss for the period                   --            --             --         (171,974)          --         (171,974)
                                   -----------   -----------    -----------    -----------    -----------    -----------

Balances at June 30, 2002           29,880,129   $    29,880    $ 1,880,340    $(2,279,469)   $      --      $  (549,249)
                                   ===========   ===========    ===========    ===========    ===========    ===========
</TABLE>




The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               6

<PAGE>
<TABLE>
<CAPTION>

                              AdZone Research, Inc.
                          (a development stage company)
                            Statements of Cash Flows
                  Three months ended June 30, 2002 and 2001 and
     Period from February 28, 2000 (date of inception) through June 30, 2002

                                   (Unaudited)

                                                                                          Period from
                                                                                       February 28, 2000
                                                      Three months      Three months  (date of inception)
                                                         ended             ended            through
                                                     June 30, 2002     June 30, 2001     June 30, 2002
                                                     -------------     -------------     -------------
<S>                                                  <C>               <C>               <C>

Cash Flows from Operating Activities
   Net loss for the period                           $    (171,974)    $    (127,929)    $  (2,279,470)
   Adjustments to reconcile net loss to
     net cash provided by operating activities
       Depreciation and amortization                         4,196             4,327            40,554
       Loss on disposition of equipment                       --                --              15,816
       Compensation expense related to common
         stock issuances at less than "fair value"            --                --                 750
       Common stock issued for
         Salaries, wages and bonuses                         4,500              --             100,200
         Professional fees                                  38,000              --             161,370
         Interest expense                                    1,875             1,875            11,250
         Lawsuit settlement                                   --                --              20,000
       (Increase) Decrease in
         Deposits and other assets                            --              17,753            (2,190)
       Increase (Decrease) in
         Accounts payable and
           accrued liabilities                              52,067             5,850           189,423
         Accrued officers
           compensation                                     77,787            77,434           436,719
         Accrued interest payable                              320              --               1,398
                                                     -------------     -------------     -------------

Net cash used in operating activities                        6,771           (20,690)       (1,304,180)
                                                     -------------     -------------     -------------


Cash Flows from Investing Activities
   Cash paid to purchase property and equipment               (500)             --             (86,493)
   Cash received on disposition of equipment                  --                --               5,900
                                                     -------------     -------------     -------------

Net cash used in investing activities                         (500)             --             (80,593)
                                                     -------------     -------------     -------------
</TABLE>


                                  - Continued -

The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               7

<PAGE>
<TABLE>
<CAPTION>

                              AdZone Research, Inc.
                          (a development stage company)
                      Statements of Cash Flows - Continued
                  Three months ended June 30, 2002 and 2001 and
     Period from February 28, 2000 (date of inception) through June 30, 2002

                                   (Unaudited)

                                                                                    Period from
                                                                                 February 28, 2000
                                                 Three months     Three months  (date of inception)
                                                     ended            ended            through
                                                 June 30, 2002    June 30, 2001     June 30, 2002
                                                --------------   --------------    --------------
<S>                                                     <C>               <C>              <C>

Cash Flows from Financing Activities
   Net cash activity on officer advances                (3,374)           2,331            11,020
   Principal received from notes payable                  --             16,300            71,600
   Sale of common stock                                   --               --           1,330,050
   Cash paid for costs and expenses
     related to raising capital                           --               --             (25,000)
                                                --------------   --------------    --------------

Net cash provided by financing activities               (3,374)          18,631         1,387,670
                                                --------------   --------------    --------------

Increase (Decrease) in Cash                              2,897           (2,059)            2,897

Cash at beginning of period                               --              3,999              --
                                                --------------   --------------    --------------

Cash at end of period                           $        2,897   $        1,940    $        2,897
                                                ==============   ==============    ==============

Supplemental Disclosure of
   Interest and Income Taxes Paid
     Interest paid for the period               $         --     $         --      $         --
                                                ==============   ==============    ==============
     Income taxes paid for the period           $         --     $         --      $         --
                                                ==============   ==============    ==============

Supplemental Disclosure of Non-Cash
   Investing and Financing Activities
     Common stock issued for prepaid interest   $         --     $         --      $       31,250
                                                ==============   ==============    ==============
     Common stock issued in
       repayment of short-term debt             $         --     $         --      $       21,600
                                                ==============   ==============    ==============
     Common stock issued to pay
       accrued officer compensation             $       90,000   $         --      $       90,000
                                                ==============   ==============    ==============
</TABLE>


The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               8

<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                          Notes to Financial Statements


Note A - Organization and Description of Business

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 July 17, 2001, the Company amended it's Certificate of Incorporation to allow
for the issuance of up to 20,000,000  shares of $0.001 par value Preferred Stock
and 100,000,000 shares of $0.001 par value Common Stock.

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.

For accounting  purposes,  the acquisition of AdZone, on August 10, 2001, by the
Company  effected  a change  in  control  and was  accounted  for as a"  reverse
acquisition"  whereby AdZone is the accounting  acquiror for financial statement
purposes.  Accordingly,  for all  periods  subsequent  to August 10,  2001,  the
financial  statements of the Company reflect the historical financial statements
of AdZone from its  inception  on February  28, 2000 and the  operations  of the
Company subsequent to the August 10, 2001 transaction date.

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.

The  Company  follows  the  accrual  basis  of  accounting  in  accordance  with
accounting principles generally accepted in the United States of America. AdZone
originally  elected a year-end of December  31.  Concurrent  with the August 10,
2001 business  combination  transaction in August 2001,  the Company's  Board of
Directors  changed  AdZone's  year-end to March 31. The  accompanying  financial
statements reflect the Company's year-end of March 31 as of the first day of the
first period presented.

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.


Note B - Preparation of Financial Statements

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


                                                                               9
<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note B - Preparation of Financial Statements - Continued

Management further acknowledges that it is solely responsible for adopting sound
accounting  practices,   establishing  and  maintaining  a  system  of  internal
accounting  control and preventing and detecting  fraud. The Company's system of
internal  accounting  control is designed to assure,  among other items, that 1)
recorded  transactions  are valid; 2) valid  transactions  are recorded;  and 3)
transactions  are  recorded in the proper  period in a timely  manner to produce
financial  statements which present fairly the financial  condition,  results of
operations  and cash  flows of the  Company  for the  respective  periods  being
presented

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, 2002. 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, 2003.


Note C - Going Concern Uncertainty

During August 2001, the Company entered into a business combination  transaction
with AdZone  Interactive,  Inc., a privately-owned  New York  corporation.  This
transaction  effected  a change in  control  of the  Company.  Accordingly,  the
Company  abandoned it's initial business plan of developing an internet web site
that would offer professional space planning and design, pricing information and
direct ordering of modular office  furniture  systems.  Subsequent to the August
2001 change in control.  Management adopted the existing business plan of AdZone
Interactive,  Inc. as that of the  continuing  operation.  Management  is of the
opinion  that being a publicly-  owned  entity will  enhance  acceptance  of the
Company's products and, potentially, attract additional equity capital.

AdZone  Interactive,  Inc.  and,  subsequently  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,  have
generated  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.

The  Company  is in  the  development  stage,  has  focused  principally  on the
development  of its  proprietary  software and has not fully  initiated  efforts
towards developing a mature revenue base.


                                                                              10

<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note C - Going Concern Uncertainty - Continued

Accordingly,   the  Company  has  been   dependent  on  short-term   loans  from
shareholders,  officers and affiliates and/or 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 continuance is 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.


Note D - Summary of Significant Accounting Policies

1.   Cash and cash equivalents
     -------------------------

     For  Statement of Cash Flows  purposes,  the Company  considers all cash on
     hand  and  in  banks,  including  accounts  in  book  overdraft  positions,
     certificates of deposit and other highly-liquid investments with maturities
     of three months or less, when purchased, to be cash and cash equivalents.

2.   Accounts receivable and revenue recognition
     -------------------------------------------

     In  the  normal  course  of  business,  the  Company  periodically  extends
     unsecured credit to repetitive  customers which are located  throughout the
     United States. Because of the credit risk involved, management will provide
     an  allowance  for  doubtful  accounts  which will  reflect  its opinion of
     amounts  which  will  eventually  become  uncollectible.  In the  event  of
     complete  non-performance,  the  maximum  exposure  to the  Company  is the
     recorded amount of trade accounts  receivable shown on the balance sheet at
     the date of non-performance.

     Revenue  is   recognized   pro-rata   over  the  term  of  the   respective
     corresponding agreement to provide research services and information to the
     Company's customers.

3.   Property, plant and equipment
     -----------------------------

     Property and  equipment are recorded at  historical  cost.  These costs are
     depreciated  over the  estimated  useful  lives of the  individual  assets,
     generally  3  years  for  computer  equipment  and 5 to 7 years  for  other
     tangible   equipment  and  office   furniture   and  fixtures,   using  the
     straight-line method.

     Gains and losses from  disposition of property and equipment are recognized
     as incurred and are included in operations.


                                                                              11
<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note D - Summary of Significant Accounting Policies - Continued

4.   Organization costs
     ------------------

     The Company has adopted the provisions of AICPA Statement of Position 98-5,
     "Reporting on the Costs of Start-Up  Activities"  whereby all  organization
     and   initial   costs   incurred   with  the   incorporation   and  initial
     capitalization of the Company were charged to operations as incurred.

5.   Production, Research and development expenses
     ---------------------------------------------

     Costs  associated  with software  production,  research and development are
     charged to operations as incurred.

6.   Advertising expenses
     --------------------

     Advertising and marketing expenses are charged to operations as incurred.

7.   Income taxes
     ------------

     The Company  utilizes  the asset and  liability  method of  accounting  for
     income  taxes.  At June 30,  2002 and  2001,  the  deferred  tax  asset and
     deferred tax liability  accounts,  as recorded when material,  are entirely
     the result of temporary differences.

     Temporary  differences  represent  differences in the recognition of assets
     and  liabilities  for  tax  and  financial  reporting  purposes,  primarily
     accumulated  depreciation and  amortization.  As of June 30, 2002 and 2001,
     the deferred tax asset is related  solely to the  Company's  net  operating
     loss carryforward and is fully reserved.

8.   Loss per share
     --------------

     Basic  earnings  (loss) per share is computed  by  dividing  the net income
     (loss) by the weighted-average  number of shares of common stock and common
     stock  equivalents  (primarily  outstanding  options and warrants).  Common
     stock equivalents  represent the dilutive effect of the assumed exercise of
     the  outstanding  stock  options and  warrants,  using the  treasury  stock
     method.  The calculation of fully diluted earnings (loss) per share assumes
     the dilutive effect of the exercise of outstanding  options and warrants at
     either the  beginning  of the  respective  period  presented or the date of
     issuance,  whichever is later. As of June 30, 2001 and 2000,  respectively,
     the Company's  outstanding stock options are deemed to be anti-dilutive due
     to the Company's net operating loss position.


Note E - Fair Value of Financial Instruments

The carrying amount of cash,  accounts  receivable,  accounts  payable and notes
payable, as applicable,  approximates fair value due to the short term nature of
these items  and/or the current  interest  rates  payable in relation to current
market conditions.


                                                                              12
<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note F - Property and Equipment

Property and equipment consists of the following at June 30, 2001 and 2000:

                                           June 30,    June 30,
                                             2002       2001      Estimated life
                                           --------    --------   --------------

Computer equipment                         $ 50,748    $ 50,248       3 years
Office furniture and other equipment         10,004      10,004       7 years
                                           --------    --------
                                             60,752      60,252
Less accumulated depreciation               (36,529)    (19,351)
                                           --------    --------

Net property and equipment                 $ 24,223    $ 40,901
                                           --------    --------

Depreciation  expense for the three  months ended June 30, 2002 and 2001 and the
period from  February  28, 2000 (date of  inception)  through  June 30, 2002 was
$4,196, $4,327 and $40,554, respectively.


Note G - Notes Payable
                                                             June 30,   June 30,
                                                               2002       2001
                                                             --------   --------
$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 March 31, 2002 and the entire amount is classified
   as "current" in the accompanying financial statements
   Unsecured                                                 $ 50,000   $ 50,000

$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       --

$16,300 convertible advances to investors
   Non-interest bearing and convertible to
   common stock concurrent with the August 10,
   2001 business combination transaction                         --       16,300
                                                             --------   --------

                                                             $ 65,958   $ 66,300
                                                             ========   ========


                                                                              13
<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note H - Advances from Officers

The Company's  officers have advanced various monies to the Company under formal
unsecured note documents  bearing  interest at 10.0%. The advances are repayable
in aggregate  monthly  amounts of  approximately  $370. Due to the nature of the
debt and irregular  payment history,  these advances are classified as "current"
in the accompanying financial statements.


Note I - Officer Compensation

In August  2001,  the Company  replaced an existing  employment  agreement  with
Charles  Cardona (C. Cardona) under which C. Cardona will serve as the Company's
Chief Executive Officer through August 31, 2004. Under his agreement, C. Cardona
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,  C.  Cardona 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.
C. Cardona 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,  C.  Cardona  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.

C.  Cardona  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.  In  the  event  Mr.  Cardona'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 replaced an existing employment  agreement with John
Cardona (J.  Cardona)  under which J. Cardona  agreed to serve as the  Company's
President  through August 31, 2004.  Under his agreement,  the Company agreed to
pay J. Cardona's  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 J. 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.  J. Cardona 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, J. Cardona 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. J. Cardona 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.  John  Cardona  terminated  his
employment with the Company in June 2002 but has remained as a consultant to the
Company.


                                                                              14

<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note I - Officer Compensation - Continued

In March 2002,  the Company  entered into an  employment  agreement  with Daniel
Wasserman to serve as its Executive Vice President and Managing  Director of the
Company's Global Defense Group for a 12-month period.  Under his agreement,  Mr.
Wasserman  received  50,000  shares of stock as an  incentive  to  execute  such
agreement  and will receive an  additional  50,000  shares for each month of his
employment until he receives a cash salary in accordance with his agreement.  If
the Company's annual revenues reach $1 million or more or it receives funding of
at least $1 million, Mr. Wasserman will receive a cash salary at the annual rate
of  $175,000  plus an expense  allowance  of $2,000 per  month.  If through  Mr.
Wasserman's  efforts the Company realizes  revenues of at least $3 million,  Mr.
Wasserman  will receive a bonus of 300,000 shares of the Company' s common stock
and such  additional  stock and/or  options as may be determined at such time by
the Board of Directors.  Mr. Wasserman is entitled to receive 1% of the value of
any  contract  the  Company  receives  through  Mr.  Wasserman'  s efforts and a
commission of 10% of any investment  capital received by the Company through his
efforts.

In May 2002, the Company  issued  1,500,000  shares of restricted,  unregistered
common  stock,  valued at $45,000,  each to C. Cardona and J. Cardona in partial
payment of accrued officer compensation.

As of June 30, 2002 and 2001, total cumulative amounts unpaid under these
agreements are as follows:

                                                             June 30,   June 30,
                                                               2002       2001
                                                             --------   --------
     Officer compensation                                    $346,719   $125,433
                                                             ========   ========

Future amounts due under the employment agreements are as follows:

                                                       Year ending
                                                        March 31,       Amount
                                                       -----------   -----------
                                                           2003      $   302,000
                                                           2004          322,000
                                                           2005          416,000
                                                                     -----------
                                                          Totals     $ 1,040,000
                                                                     ===========

Note J - Income Taxes

The  components of income tax (benefit)  expense for the three months ended June
30, 2002 and 2001 and for the period from  February 28, 2000 (date of inception)
through June 30, 2002, respectively, are as follows:

                                                                  Period from
                                                              February 28, 2000
                             Three months     Three months   (date of inception)
                                ended             ended            through
                            June 30, 2002     June 30, 2001     June 30, 2002
                            -------------     -------------     -------------
     Federal:
       Current              $        --       $        --       $        --
       Deferred                      --                --                --
                            -------------     -------------     -------------
                                     --                --                --
                            -------------     -------------     -------------
     State:
       Current                       --                --                --
       Deferred                      --                --                --
                            -------------     -------------     -------------
                                     --                --                --
                            -------------     -------------     -------------
     Totals                 $        --       $        --       $        --
                            =============     =============     =============

                                                                              15

<PAGE>
<TABLE>
<CAPTION>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note J - Income Taxes - Continued

As of June 30,  2002,  the  Company has a net  operating  loss  carryforward  of
approximately  $2,300,000 to offset future  taxable  income.  Subject to current
regulations,  this  carryforward  will  begin to expire in 2020.  The amount and
availability  of  the  net  operating  loss  carryforwards  may  be  subject  to
limitations set forth by the Internal  Revenue Code.  Factors such as the number
of shares ultimately issued within a three year look-back period;  whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate;  continuity of historical  business;  and subsequent income of
the  Company  all  enter  into  the  annual   computation  of  allowable  annual
utilization of the carryforwards.

The Company's  income tax expense for each of the three month periods ended June
30, 2002 and 2001 and for the period from  February 28, 2000 (date of inception)
through June 30, 2002, respectively, differed from the statutory federal rate of
34 percent as follows:

                                                                                               Period from
                                                                                            February 28, 2000
                                                         Three months        Three months  (date of inception)
                                                            ended               ended            through
                                                        June 30, 2002       June 30, 2001     June 30, 2002
                                                      ----------------    ----------------    -------------
<S>                                                   <C>                 <C>                 <C>

Statutory rate applied to loss before income taxes    $        (58,000)   $        (43,000)   $    (775,000)
Increase (decrease) in income taxes resulting from:
    State income taxes                                            --                  --               --
    Other, including reserve for deferred tax asset             58,000              43,000          775,000
                                                      ----------------    ----------------    -------------

      Income tax expense                              $           --      $           --      $        --
                                                      ================    ================    =============
</TABLE>

Temporary  differences,  consisting primarily of statutory deferrals of expenses
for organizational costs and statutory  differences in the depreciable lives for
property and equipment, between the financial statement carrying amounts and tax
bases of assets and liabilities give rise to deferred tax assets and liabilities
as of June 30, 2002 and 2001:

                                                 June 30, 2002    June 30, 2001
                                                 -------------    -------------
Deferred tax assets
   Net operating loss carryforwards              $     775,000    $     552,000
   Less valuation allowance                           (775,000)        (552,000)
                                                 -------------    -------------

     Net Deferred Tax Asset                      $        --      $        --
                                                 =============    =============

During  the three  months  ended June 30,  2002 and 2001,  the  reserve  for the
deferred  current tax asset  increased  by  approximately  $58,000 and  $43,000,
respectively.



                (Remainder of this page left blank intentionally)



                                                                              16

<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note K - 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.

Between April 1, 2001 and August 10, 2001, AdZone received approximately $21,600
in cash  proceeds  for the  sale of  restricted,  unregistered  common  stock of
Executive  Help  Services,  Inc.  to be  issued  concurrent  with  the  business
combination date at a rate of $0.06 per share. On August 10, 2001, approximately
360,000  shares of common stock were issued by the Company.  The Company  relied
upon Section 4(2) of The  Securities  Act of 1933, as amended,  for an exemption
from registration on these shares.

In August 2001, the Company  issued  100,000 shares of restricted,  unregistered
common stock to an individual  for $7,000 cash.  The Company relied upon Section
4(2)  of  The  Securities  Act of  1933,  as  amended,  for  an  exemption  from
registration on these shares.

In September 2001, the Company issued 500,000 shares of restricted, unregistered
common stock to an unrelated  company in  settlement of a breach of contract and
non-competition  agreement  between the Company's  President and the President's
former employer. This transaction was valued at approximately $20,000, which was
equal to or in excess of the  discounted  closing price of the Company's  common
stock on the  NASDAQ  Electronic  Bulletin  Board on the date of the  settlement
transaction. The Company relied upon Section 4(2) of The Securities Act of 1933,
as amended, for an exemption from registration on these shares.

In October 2001,  the Company sold an aggregate  541,110  shares of  restricted,
unregistered  common  stock to various  individuals  for  aggregate  proceeds of
approximately  $25,800.  The selling price of the respective shares was equal to
or in excess of the  discounted  closing price of the Company's  common stock on
the NASDAQ Electronic Bulletin Board on the date of each respective transaction.
The Company  relied upon Section 4(2) of The Securities Act of 1933, as amended,
for an exemption from registration on these shares.

In December  2001,  the Company sold 16,667 shares of  restricted,  unregistered
common  stock  to  an  individual  involved  in  the  October  2001  stock  sale
transactions for approximately  $2,000 cash. The selling price of the respective
shares was less than the discounted  closing price of the Company's common stock
on  the  NASDAQ  Electronic  Bulletin  Board  on the  date  of  each  respective
transaction.   Accordingly,  the  Company  recognized  a  non-  cash  charge  to
operations of approximately  $500 for the differential  between the "fair value"
of the securities sold and the cash proceeds  received.  The Company relied upon
Section 4(2) of The  Securities  Act of 1933, as amended,  for an exemption from
registration on these shares.

On December 13, 2001,  pursuant to a Form S-8  Registration  Statement Under The
Securities Act of 1933, the Company issued an aggregate 420,000 shares of common
stock  to  various  professionals,  some of  whom  were  existing  shareholders,
providing legal and accounting services to the Company.  These transactions were
valued at approximately  $30,000,  which was in excess of the discounted closing
price of the Company's common stock on the NASDAQ  Electronic  Bulletin Board on
the date of each respective transaction.


                                                                              17
<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note K - Common Stock Transactions - Continued

In January  2002,  the Company sold 85,000  shares of  restricted,  unregistered
common stock to an  unrelated  individual  for  approximately  $5,000 cash.  The
selling  price  of the  respective  shares  was  equal  to or in  excess  of the
discounted  closing price of the Company's common stock on the NASDAQ Electronic
Bulletin Board on the date of each  respective  transaction.  The Company relied
upon Section 4(2) of The  Securities  Act of 1933, as amended,  for an exemption
from registration on these shares.

Between  November 2001 and March 2002, the Company  issued an aggregate  850,000
shares of restricted, unrestricted common stock to six different individuals, of
which three were existing shareholders,  for various consulting services,  legal
fees,  general operating  expenses paid on behalf of the Company and office rent
late payment fees valued at approximately  $53,950.  For the issuance of 825,000
of the  shares,  the issue  price of the  respective  shares  was equal to or in
excess of the  discounted  closing  price of the  Company's  common stock on the
NASDAQ Electronic Bulletin Board on the date of each respective transaction.  In
one  instance,  the issue  price of 25,000  shares was less than the  discounted
closing price of the Company's  common stock on the NASDAQ  Electronic  Bulletin
Board on the  date of each  respective  transaction.  Accordingly,  the  Company
recognized  a non-  cash  charge to  operations  of  approximately  $250 for the
differential  between  the  "fair  value"  of the  securities  sold and the cash
proceeds received. The Company relied upon Section 4(2) of The Securities Act of
1933, as amended, for an exemption from registration on these shares.

On January 28, 2002, the Company  registered 538,665 shares of common stock on a
Form  S-8  Registration  Statement  Under  The  Securities  Act  of  1933  for a
Consulting  Agreement  with 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 as  registered  on the Form S-8  filing..
Through  August 13,  2002,  the Company has issued an aggregate  399,998  shares
under the Form S-8 Registration  Statement.  Each monthly issuance is charged to
operations as consulting fees.

On February 21, 2002, the Company registered 303,000 shares of common stock on a
Form  S-8  Registration  Statement  Under  The  Securities  Act  of  1933  for a
Consulting  Agreement with 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 the Form S-8 filing..  Through  August 13, 2002,  the
Company has issued an aggregate  171,000 shares under the Form S-8  Registration
Statement. Each monthly issuance is charged to operations as consulting fees.

In May 2002, the Company issued 10,000 shares of restricted, unregistered common
stock to an  individual  for  advisory  services and  membership  on a corporate
advisory  board.  These  shares  were  valued at $500,  which was equal to or in
excess of the  discounted  closing  price of the  Company's  common stock on the
NASDAQ Electronic Bulletin Board on the date of each respective transaction. The
Company relied upon Section 4(2) of The Securities Act of 1933, as amended,  for
an exemption from registration on these shares.

In May 2002,  the Company  issued an aggregate  3,150,000  shares of restricted,
unregistered  shares of common stock to its President,  Chief Executive  Officer
and  office  personnel  in lieu of cash  compensation  and as payment on accrued
officer compensation. These shares were valued at $94,500, which was equal to or
in excess of the discounted  closing price of the Company's  common stock on the
NASDAQ Electronic Bulletin Board on the date of each respective transaction. The
Company relied upon Section 4(2) of The Securities Act of 1933, as amended,  for
an exemption from registration on these shares.


                                                                              18

<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note K - Common Stock Transactions - Continued

In March 2002 and July 2002,  the Company  issued  250,000 and 300,000 shares of
restricted,  unregistered  common  stock to  Daniel  Wasserman  , the  Company's
Executive Vice President and Managing  Director of the Company's  Global Defense
Group in payment of certain employment  contract  obligations.  The transactions
were valued at approximately $15,000 and $9,000,  respectively,  which was equal
to or in excess of the discounted closing price of the Company's common stock on
the NASDAQ Electronic Bulletin Board on the date of the settlement  transaction.
The Company  relied upon Section 4(2) of The Securities Act of 1933, as amended,
for an exemption from registration on these shares.

During June and July 2002,  the Company  received an  aggregate  $80,000 cash in
advance fundings for purchases of approximately  1,658,333 shares of restricted,
unregistered common stock. These stock purchases are anticipated to be completed
and issued in August 2002. As of June 30, 2002, the Company had received $45,000
in proceeds and these amounts are  classified  as working  capital  advances,  a
component  of  accounts  payable,  in  the  accompanying  financial  statements.
Recognition of the equity  transaction will be made at the time the transactions
are completed.

In August 2002,  the Company  issued an aggregate  75,000 shares of  restricted,
unregistered  common stock to three (3) individuals  for various  consulting and
other services.  These transactions were valued at approximately  $6,700,  which
was equal to or in  excess  of the  discounted  closing  price of the  Company's
common  stock  on the  NASDAQ  Electronic  Bulletin  Board  on the  date  of the
settlement  transaction.  The Company relied upon Section 4(2) of The Securities
Act of 1933, as amended, for an exemption from registration on these shares.


Note L - Stock Options

On  January  29,  2001,  as a  component  of an  employment  agreement  with 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 five
(5) years from the agreement execution date.

On  February  9,  2001,  as a  component  of an  employment  agreement  with the
Company's President and Chief Operating 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 five (5) years from the agreement execution date.

There were no exercise of any options from issue  through June 30, 2002,  or any
period  subsequent  thereto.  The following table summarizes all options granted
from January 29, 2001 to June 30, 2002.

                Options     Options      Options       Options    Exercise price
                granted    exercised    terminated   outstanding     per share
             ----------   ----------    ----------   ----------     ----------
CEO options   1,000,000         --            --      1,000,000     $     0.10
COO options   1,000,000         --            --      1,000,000     $     0.10
             ----------   ----------    ----------   ----------     ----------

Totals        2,000,000         --            --      2,000,000
             ==========   ==========    ==========   ==========     ==========

The weighted  average  exercise price of all issued and  outstanding  options at
June 30, 2002 is approximately $0.10.


                                                                              19

<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note L - Stock Options - Continued

These options were initially  issued by AdZone  Interactive,  Inc. and became an
obligation  of the  Company  upon  the  August  10,  2001  business  acquisition
transaction  between AdZone Interactive,  Inc. and AdZone Research,  Inc. At the
date of issue,  the common stock of AdZone  Interactive  was privately held, and
accordingly,  had no posted public market price.  Subsequent to August 10, 2001,
the underlying shares supporting the issued and outstanding options had a public
market for valuation purposes.

The  intrinsic  value of the options  granted was  determined  based on the fair
values at the grant date(s), as prescribed by Statement of Financial  Accounting
Standards  No. 123, the Company's net loss and net loss per share would not have
changed  significantly  as the  exercise  price of the  options  was  relatively
equivalent to the  estimated  fair value of the  underlying  shares at the grant
date..

The  calculations  to estimate the fair value of the options were made using the
Black-Scholes pricing model which required making significant assumptions. These
assumptions  include the  expected  life of the  options,  which was  originally
estimated by management to be one year, the expected volatility, which was based
on  management's  estimates  as  there  was no  quoted  or  listed  price on the
Company's equity securities, the expected dividends, determined to be zero based
on past performance,  and the risk free interest rate, which was estimated using
the bond equivalent yield of 6.0% at the grant date(s).


Note M - Commitments and Contingencies

Litigation
----------

AdZone  Interactive,  Inc.  is a party to a lawsuit  filed  against  it by R. C.
Auletta and Co., Inc.  (Auletta) which was filed during 2001. Auletta is seeking
fees in the  amount of  approximately  $32,000  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 of October 6, 2002 has been set to
hear this case.

Office facilities
-----------------

The Company conducts its administrative, development and marketing operations in
leased facilities,  located in Riverhead, New York, on a month-to-month lease at
a rental rate of approximately $1,200 per month.

In May 2000, the Company  executed a long-term  operating  lease for a marketing
office in the Empire  State  Building  in New York City.  This office was closed
prior to March 2001.  This lease is for a term of five (5) years.  The scheduled
annual  rental amount is  approximately  $65,145 for the period from May 1, 2000
through December 31, 2001;  approximately $68,175 for the period from January 1,
2002 through  August 31,  2003;  and  approximately  $71,205 for the period from
September  1,  2003  through  April  30,  2005.  Additionally,  the  Company  is
responsible for the pro-rata increases in ad valorem taxes, utilities, insurance
and common area  operating  costs over the base year  expenses as defined in the
lease agreement.  In the event of early termination of the lease, the Company is
responsible  for  supplemental  amounts  between the occupancy  period using the
effective annual rental yield of approximately  $68,175 and the amounts actually
paid by the  Company.  As of March 31,  2002,  the Company has  surrendered  all
security  deposits  to the  landlord  and is of the  opinion  that any  residual
liability  will  be  insignificant  to  the  Company's   financial  position  or
operations.


                                                                              20

<PAGE>

                              AdZone Research, Inc.
                          (a development stage company)

                    Notes to Financial Statements - Continued


Note M - Commitments and Contingencies - Continued

Consulting agreements
---------------------

In January  2002,  the Company  executed a one-year  contract  with 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  Statement.  Through  August 13, 2002,  the Company has
issued an aggregate  399,998 shares under the Form S-8  Registration  Statement.
Each monthly issuance is charged to operations as consulting fees.

In February  2002,  the Company  executed a one-year  contract with 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 August 13, 2002, the Company has issued an
aggregate 171,000 shares under the Form S-8 Registration Statement. Each monthly
issuance is charged to operations as consulting fees.

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 June 30, 2002, 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 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
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  June 30,  2002,  the  Company  has paid First  American
Financial Group approximately $5,000 in conjunction with this Agreement.





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                                                                              21

<PAGE>

Part I - Item 2

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

(8)  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.

(9)  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's initial
business  plan was designed 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  18,000,000  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.

For accounting  purposes,  the acquisition of AdZone, on August 10, 2001, by the
Company  effected  a change  in  control  and was  accounted  for as a"  reverse
acquisition"  whereby AdZone is the accounting  acquiror for financial statement
purposes.  Accordingly,  for all  periods  subsequent  to August 10,  2001,  the
financial  statements of the Company reflect the historical financial statements
of AdZone from its  inception  on February  28, 2000 and the  operations  of the
Company subsequent to the August 10, 2001 transaction date.

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  provide  various  market  research   statistics   derived  from
information  obtained from internet  websites  maintained by  independent  third
parties worldwide.

The Company  follows the accrual basis of  accounting  in accordance  accounting
principles generally accepted in the United States of America. AdZone originally
elected a year-end of December 31.  Concurrent with the August 10, 2001 business
combination transaction in August 2001, the Company's Board of Directors changed
AdZone's year-end to March 31. The accompanying financial statements reflect the
Company's  year-end  of  March  31 as of  the  first  day of  the  first  period
presented.


                                                                              22

<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.

(3)  Results of Operations, Plan of Operation, Liquidity and Capital Resources

The  Company,  due  to a  lack  of  working  capital,  virtually  suspended  all
activities  during  Fiscal  2002.  The  Company  engaged  in the  leasing of one
employee  to Owl Data,  Inc.,  an entity  owned by the  Company's  CEO,  Charles
Cardona, at a rate equal to the employee's salary and all related payroll taxes.
Due to the related  party  nature of this  transaction,  no income or expense is
recognized on this transaction in the accompanying financial statements.

As the Company's business plan has not been fully implemented and,  accordingly,
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.

The Company incurred system production and maintenance expenses of approximately
$9,800,  including  depreciation of approximately  $3,500,  for the three months
ended June 30,  2002,  as compared to  approximately  $21,000 for the same three
month period of the prior fiscal year.

The Company incurred operating expenses of approximately  $82,000,  exclusive of
officer's  compensation  for the three months ended June 30, 2002 as compared to
approximately  $25,000 for the same period of the prior fiscal year. The Company
experienced  shifts in categorical  expenses including a decrease in selling and
marketing  expenses by  approximately  $10,000,  an increase in  consulting  and
professional fees of approximately  $57,000 and an increase in other general and
administrative costs of approximately  $10,000. Note that the three month period
ended June 30, 2001 experienced a reduction of other general and  administrative
expenses due to billing adjustments made by vendors in the reporting quarter.

For the three  months ended June 30,  2002,  the Company  incurred a net loss of
approximately  $(172,000) as compared to a net loss of approximately  $(128,000)
for the three months ended June 30, 2001. Based on the  weighted-average  number
of shares of common  stock  issued and  outstanding  at June 30,  2002 and 2001,
respectively, the Company incurred a net loss per share of approximately $(x.xx)
and $(x.xx).

Executive Compensation
----------------------

On January 29, 2001,  the Company  entered  into an  employment  agreement  with
Charles Cardona to serve as the Company's Chief Executive Officer. The agreement
covers the term from January 29, 2001 through  December 31, 2002.  The agreement
requires annual  compensation  payments of 141,000 for the period from execution
through  December  31,  2001  and  $156,000  for  Calendar  2002.  Further,  the
individual   received  a  signing  bonus  of  250,000   shares  of   restricted,
unregistered  common  stock upon  execution  of the  agreement  and will receive
100,000 shares of restricted, unregistered common stock at December 31, 2001 and
2002,  respectively.  This  individual  will also  receive a  commission  of all
self-generated sales equal to 10.0% of the gross billings.

On February 9, 2001, the Company entered into an employment  agreement with John
Cardona to serve as the Company's  President and Chief  Operating  Officer.  The
agreement  covers the term from February 9, 2001 through  December 31, 2002. The
agreement requires annual compensation  payments of $141,000 for the period from
execution  through  December  31, 2001 and  $156,000  for  Calendar  2002.  This
agreement also provides for quarterly  qualitative bonuses of $15,000 in cash; a
second year-end qualitative bonus of $25,000 and a profitability bonus (based on
the Company achieving profitable operations) of $100,000 cash and 250,000 shares
of restricted,  unregistered  common stock.  Further,  the individual received a
signing bonus of 250,000  shares of restricted,  unregistered  common stock upon
execution of this  agreement  and will  receive  100,000  shares of  restricted,
unregistered  common  stock at December  31, 2001 and 2002,  respectively.  This
individual will also receive a commission on all  self-generated  sales equal to
10.0% of the gross billings.

                                                                              23

<PAGE>

In the event that the Company is unable to fund weekly scheduled payroll checks,
the Company is  obligated  to pay a penalty  equal to three (3) times the weekly
gross  earnings in  restricted,  unregistered  common  stock valued at $0.05 per
share.  All unpaid  compensation  will  remain as an accrued  obligation  of the
Company.

In May 2002,  the Company  issued an aggregate  3,150,000  shares of restricted,
unregistered  shares of common stock to its President,  Chief Executive  Officer
and  office  personnel  in lieu of cash  compensation  and as payment on accrued
officer compensation. These shares were valued at $94,500, which was equal to or
in excess of the discounted  closing price of the Company's  common stock on the
NASDAQ Electronic Bulletin Board on the date of each respective transaction. The
Company relied upon Section 4(2) of The Securities Act of 1933, as amended,  for
an exemption from registration on these shares.

Liquidity
---------

The  Company  had  approximately  $3,000 in  available  cash at June 30, 2002 as
compared to $-0- at March 31, 2002 and  approximately  $1,900 at June 30,  2001.
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  during  Fiscal  2001 and 2002 was  provided  principally  through the
unregistered  sales of equity  securities.  Total proceeds from these sales were
approximately  $40,000  during  Fiscal 2002 and  approximately  $890,000  during
Fiscal 2001.

During June and July 2002,  the Company  received an  aggregate  $80,000 cash in
advance fundings for purchases of approximately  1,658,333 shares of restricted,
unregistered common stock. These stock purchases are anticipated to be completed
and issued in August 2002. As of June 30, 2002, the Company had received $45,000
in proceeds and these amounts are  classified  as working  capital  advances,  a
component  of  accounts  payable,  in  the  accompanying  financial  statements.
Recognition of the equity  transaction will be made at the time the transactions
are completed.

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 development of the Company's business plan.

The Company,  due to it's lack of working  capital,  has no  definitive  capital
requirements  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  will face  considerable  risk in each of its future  business  plan
steps,  such as  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 is currently  dependent  upon either funds advanced or loaned by the
Company's directors and officers or the sale of 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.

                                                                              24

<PAGE>

In such a restricted cash flow scenario, 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.


Part II - Other Information

Item 1 - Legal Proceedings

     AdZone Interactive,  Inc. is a party to a lawsuit filed against it by R. C.
     Auletta and Co.,  Inc.  (Auletta)  which was filed during 2001.  Auletta is
     seeking fees in the amount of  approximately  $32,000 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
     of October 6, 2002 has been set to hear this case.

Item 2 - Changes in Securities

     In May 2002, the Company  issued 10,000 shares of restricted,  unregistered
     common stock to John Conley, an unrelated individual, for advisory services
     and membership on a corporate  advisory board.  These shares were valued at
     $500,  which was equal to or in excess of the  discounted  closing price of
     the Company's common stock on the NASDAQ  Electronic  Bulletin Board on the
     date of each respective  transaction.  The Company relied upon Section 4(2)
     of  The  Securities  Act  of  1933,  as  amended,  for  an  exemption  from
     registration on these shares.

     In  May  2002,  the  Company  issued  an  aggregate   3,150,000  shares  of
     restricted,  unregistered  shares  of  common  stock to John  Cardona,  its
     President (1,500,000 shares); Charles Cardona, it's Chief Executive Officer
     (1,500,000  shares) and Valerie  Cardona,  it's  office  administrator  and
     mother  of  John  and  Charles  Cardona  (150,000  shares)  in lieu of cash
     compensation and as payment on accrued officer  compensation.  These shares
     were valued at $94,500,  which was equal to or in excess of the  discounted
     closing  price  of the  Company's  common  stock on the  NASDAQ  Electronic
     Bulletin  Board on the date of each  respective  transaction.  The  Company
     relied upon Section 4(2) of The Securities Act of 1933, as amended,  for an
     exemption from registration on these shares.

     In July 2002, the Company issued 300,000 shares of restricted, unregistered
     common stock to Daniel  Wasserman,  the Company's  Executive Vice President
     and Managing  Director of the Company's  Global Defense Group in payment of
     certain  employment  contract  obligations.  The  transaction was valued at
     approximately  $9,000,  which was  equal to or in excess of the  discounted
     closing  price  of the  Company's  common  stock on the  NASDAQ  Electronic
     Bulletin  Board  on the date of the  settlement  transaction.  The  Company
     relied upon Section 4(2) of The Securities Act of 1933, as amended,  for an
     exemption from registration on these shares.

     On January 28, 2002, the Company  registered 538,665 shares of common stock
     on a Form S-8 Registration Statement Under The Securities Act of 1933 for a
     Consulting  Agreement with Communique  Media Services  International,  Inc.
     and/or Leonard  Braumberger,  of Blaine Washington,  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 as
     registered  on the Form S-8  filing..  During the period from April 1, 2002
     through June 30, 2002, the Company issued 159,999 shares of common stock in
     payment for services rendered pursuant to this Consulting  Agreement.  Each
     monthly issuance is charged to operations as consulting fees.

     On February 21, 2002, the Company registered 303,000 shares of common stock
     on a Form S-8 Registration Statement Under The Securities Act of 1933 for a
     Consulting  Agreement with International  Standard  Consulting  Corporation
     and/or Dave Grandy, of Vancouver,  British  Columbia,  Canada, 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
     the Form S-8 filing.  During the period from April 1, 2002 through June 30,


                                                                              25
<PAGE>

     2002,  the  Company  issued  78,000  shares of common  stock in payment for
     services  rendered  pursuant to this  Consulting  Agreement.  Each  monthly
     issuance is charged to operations as consulting fees.

     During June and July 2002, the Company  received an aggregate  $80,000 cash
     in advance  fundings for  purchases of  approximately  1,658,333  shares of
     restricted,   unregistered   common  stock.   These  stock   purchases  are
     anticipated to be completed and issued in August 2002. As of June 30, 2002,
     the  Company  had  received  $45,000  in  proceeds  and these  amounts  are
     classified as working capital advances, a component of accounts payable, in
     the   accompanying   financial   statements.   Recognition  of  the  equity
     transaction will be made at the time the transactions are completed.

     In  August  2002,  the  Company  issued  an  aggregate   75,000  shares  of
     restricted,  unregistered common stock to Keith Peters, Elizabeth Neese and
     Jack Kratoville,  three (3) unrelated  individuals,  for various consulting
     and other services. These transactions were valued at approximately $6,700,
     which  was equal to or in excess  of the  discounted  closing  price of the
     Company's common stock on the NASDAQ Electronic  Bulletin Board on the date
     of the settlement transaction.  The Company relied upon Section 4(2) of The
     Securities Act of 1933, as amended,  for an exemption from  registration on
     these shares.

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
     99.1      CEO/CFO  Certification  Pursuant  to 18  USC,  Section  1330,  as
               adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


   Reports on Form 8-K
     None

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


                                   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: August 13, 2002                                 /s/ Charles A. Cardona III
      ---------------                          ---------------------------------
                                                          Charles A. Cardona III
                                               Chairman, Chief Executive Officer
                                                     and Chief Financial Officer



                                                                              26