UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDING DECEMBER 31, 2004

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO ____________

                         COMMISSION FILE NUMBER 0-28717

                              ADZONE RESEARCH, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

         DELAWARE                                       88-0420405
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

                            4062-80 GRUMMAN BOULEVARD
                            CALVERTON, NEW YORK 11933
                                 (631) 369-1100

  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required to file such  reports) Yes [x] No [ ], and (2) has been subject to such
filing requirements for the past 90 days Yes [x] No [ ].

          APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                         DURING THE PRECEDING FIVE YEARS

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act for 1934 subsequent to the  distribution of securities under a plan
confirmed under a plan confirmed by a court. Yes [ ] No [ ]

                       APPLICABLE ONY TO CORPORATE ISSUERS

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of the last  practicable  date:  February 10, 2005 -- 95,574,000
common shares, $.001 par value.

Transitional small business disclosure format (check one): Yes [ ] No [x]


                                       1
<PAGE>

                              ADZONE RESEARCH, INC.
                      FORM 10-QSB FOR THE QUARTERLY PERIOD
                             ENDED DECEMBER 31, 2004

                                      INDEX

PART I.  CONDENSED FINANCIAL INFORMATION

ITEM 1.  UNAUDITED CONDENSED FINANCIAL STATEMENTS:

         CONDENSED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND
                  MARCH 31, 2004...............................................3
         CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
                  LOSS FOR THE THREE AND NINE MONTHS ENDED
                  DECEMBER 31, 2004 AND 2003...................................4
         CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE
                  MONTHS ENDED DECEMBER 31, 2004...............................6
         CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS
                  ENDED DECEMBER 31, 2004 AND 2003.............................7
         NOTES TO CONDENSED FINANCIAL STATEMENTS...............................9

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS.................................22
ITEM 3.  CONTROLS AND PROCEDURES..............................................26

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS....................................................27
ITEM 2.  CHANGES IN SECURITIES................................................28
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES......................................29
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................30
ITEM 5.  OTHER INFORMATION....................................................31
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.....................................32

SIGNATURES....................................................................33


                                       2
<PAGE>

PART I. CONDENSED FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                              ADZONE RESEARCH, INC.
                            CONDENSED BALANCE SHEETS
                      DECEMBER 31, 2004 AND MARCH 31, 2004

<TABLE>
<CAPTION>
                                                                            DECEMBER 31,    MARCH 31,
                                                                                2004          2004
                                                                            --------------------------
                                                                            (UNAUDITED)     (RESTATED)
<S>                                                                         <C>            <C>
ASSETS
Current assets:
   Cash                                                                     $   633,535    $   622,797
   Marketable securities                                                        136,370             --
   Prepaid consulting fees and other expenses                                   310,092        134,272
                                                                            --------------------------
Total current assets                                                          1,079,997        757,069

Property and equipment, net                                                      22,738         10,423
Investments                                                                     150,000             --
Other assets                                                                      3,739         38,355
                                                                            --------------------------
Total assets                                                                $ 1,256,473    $   805,847
                                                                            ==========================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                                         $   142,948    $   297,972
   Accrued compensation                                                          53,003        160,926
   Deferred revenue                                                             206,302             --
   Current notes payable                                                         50,507         62,787
                                                                            --------------------------
Total current liabilities                                                       452,759        521,685

Notes payable                                                                   166,783        166,783

Commitments and contingencies (Note 5)                                               --             --

Stockholders' equity:
   Preferred stock                                                               68,147        518,816
   Common stock                                                                  94,169         70,832
   Common stock to be issued                                                     40,000             --
   Additional paid-in capital                                                 9,873,662      5,813,443
   Accumulated deficit                                                       (9,188,780)    (6,252,947)
   Deferred employee stock-based compensation                                  (203,871)            --
   Other stockholders' equity                                                   (46,395)       (32,765)
                                                                            --------------------------
Total stockholders' equity                                                      636,930        117,379
                                                                            --------------------------
Total liabilities and stockholders' equity                                  $ 1,256,473    $   805,847
                                                                            ==========================
</TABLE>

                             See accompanying notes.


                                       3
<PAGE>

                              ADZONE RESEARCH, INC.
                  UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS
                  NINE MONTHS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                       DECEMBER 31,    DECEMBER 31,
                                                           2004            2003
                                                       ----------------------------
                                                       (UNAUDITED)      (RESTATED)
<S>                                                    <C>             <C>
Net revenues                                           $    244,423    $     74,844
                                                       ----------------------------

Operating costs and expenses:
   Cost of contract revenues                                 42,000         299,328
   Consulting and professional services                   1,367,954         103,327
   Salaries and related                                   1,041,161        1,071439
   General and administrative                               520,727         226,353
   Depreciation and amortization                              5,821           1,633
                                                       ----------------------------
                                                          2,977,663       1,702,080
                                                       ----------------------------
Loss from operations                                     (2,733,240)     (1,627,236)

Other income (expense), net                                 (25,320)        (23,226)
                                                       ----------------------------
Net loss                                               $ (2,758,559)   $ (1,650,462)
                                                       ============================

Reconciliation of net loss to loss
applicable to common stockholders:
    Net loss                                           $ (2,758,559)   $ (1,650,462)
    Preferred stock dividends and accretion                (158,491)       (343,381)
                                                       ----------------------------
    Loss applicable to common stockholders             $ (2,917,050)   $ (1,993,843)
                                                       ============================

Loss per common share:
   Basic and diluted loss per common share             $      (0.04)   $      (0.03)
                                                       ============================
Weighted average common shares, basic and diluted        80,123,404      60,162,995
                                                       ============================

COMPREHENSIVE LOSS:
    Net loss, as reported                              $ (2,758,559)   $ (1,650,462)
    Unrealized loss on available for sale securities
                                                            (13,630)             --
                                                       ----------------------------
Comprehensive loss                                     $ (2,772,189)   $ (1,650,462)
                                                       ============================
</TABLE>

                             See accompanying notes.


                                       4
<PAGE>

                              ADZONE RESEARCH, INC.
                  UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS
                  THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                      DECEMBER 31,    DECEMBER 31,
                                                          2004            2003
                                                      ----------------------------
                                                      (UNAUDITED)      (RESTATED)

<S>                                                   <C>             <C>
Net revenues                                          $     94,423    $     10,750
                                                      ----------------------------

Operating costs and expenses:
   Cost of contract revenues                                    --         116,137
   Consulting and professional services                    455,749              --
   Salaries and related                                    283,680          94,100
   General and administrative                              268,665          29,091
   Depreciation and amortization                             1,940             545
                                                      ----------------------------
                                                         1,010,034         239,873
                                                      ----------------------------
Loss from operations                                      (915,611)       (229,123)

Other income (expense), net                                (21,753)        (10,957)
                                                      ----------------------------
Net loss                                              $   (937,363)   $   (240,080)
                                                      ============================

Reconciliation of net loss to loss applicable
to common stockholders:
   Net loss                                           $   (937,363)   $   (240,080)
   Preferred stock dividends and accretion                 (14,092)       (251,163)
                                                      ----------------------------
   Loss applicable to common stockholders             $   (951,455)   $   (491,243)
                                                      ============================

Loss per common share:
   Basic and diluted loss per common share            $      (0.01)   $      (0.01)
                                                      ============================
Shares used in computing basic and diluted loss
per common share                                        85,754,920      67,600,291
                                                      ============================

COMPREHENSIVE LOSS:
   Net loss, as reported                              $   (937,363)   $   (240,080)
   Unrealized loss on available for sale securities        (13,630)             --
                                                      ----------------------------
Comprehensive loss                                    $   (950,993)   $   (240,080)
                                                      ============================
</TABLE>

                             See accompanying notes.


                                       5
<PAGE>

                              ADZONE RESEARCH, INC.
             UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
                       NINE MONTHS ENDED DECEMBER 31, 2004

<TABLE>
<CAPTION>

                                                        Series A Preferred      Series B Preferred             Common Stock
                                                        ------------------      ------------------             ------------
                                                       Shares      Amount      Shares       Amount         Shares         Amount
                                                      ---------------------------------- -------------------------------------------
<S>                                                       <C>       <C>             <C>      <C>           <C>              <C>
BALANCES AT APRIL 1, 2004 (RESTATED)                        24      $278,530         31      $240,286      70,832,255       $70,832

Sales of common stock and warrants for cash, net of
$150,000 of offering expenses                               --            --         --            --       9,167,284         9,167

Issuances of common stock to non-employees for
services                                                    --            --         --            --       4,127,971         4,128

Issuances of common stock upon the exercise of
warrants and stock options                                  --            --         --            --       2,507,201         2,507

Issuances of common stock to employees for services
and compensation                                            --            --         --            --       2,070,000         2,070

Issuances of warrants and options to non-employees
for services                                                --            --         --            --              --            --

Redemption of warrants                                      --            --         --            --              --            --

Employee stock-based compensation applying variable
plan option accounting                                      --            --         --            --              --            --

Amortization of deferred compensation                       --            --         --            --              --            --

Preferred stock dividends                                   --            --         --            --              --            --

Periodic accretions of preferred stock carrying
values to redemption values                                 --            --         --       116,214              --            --

Conversion of preferred stock                              (20)     (221,883)       (30)     (345,000)      5,464,601         5,464

Unrealized loss on marketable securities                    --            --         --            --              --            --

Net loss for the period                                     --            --         --            --              --            --
                                                      ---------------------------------- -------------------------------------------

BALANCES AT DECEMBER 31, 2004                                4       $56,647          1       $11,500      94,169,312       $94,169
                                                      ==============================================================================

<CAPTION>

                                                                   Common
                                                      Paid-In    Stock to be    Deferred        Accumulated      Other       Total
                                                      Capital      Issued     Compensation        Deficit       Equity       Equity
                                                    --------------------------------------------------------------------------------
<S>                                                 <C>            <C>         <C>             <C>            <C>        <C>
BALANCES AT APRIL 1, 2004 (RESTATED)                $5,813,443        $--           $--        $(6,252,947)   $(32,765)    $117,379

Sales of common stock and warrants for cash, net of
$150,000 of offering expenses                        1,042,516     40,000            --                  --          --   1,091,683

Issuances of common stock to non-employees for
services                                             1,043,879         --            --                  --          --   1,048,007

Issuances of common stock upon the exercise of
warrants and stock options                             327,363         --            --                  --          --     329,870

Issuances of common stock to employees for services
and compensation                                       327,530         --      (329,600)                 --          --          --

Issuances of warrants and options to non-employees
for services                                           785,000         --            --                  --          --     785,000

Redemption of warrants                                (76,744)         --            --                  --          --     (76,744)

Employee stock-based compensation applying variable
plan option accounting                                  49,256         --            --                  --          --      49,256

Amortization of deferred compensation                       --         --       125,729                  --          --     125,729

Preferred stock dividends                                   --         --            --            (61,060)          --     (61,060)

Periodic accretions of preferred stock carrying
values to redemption values                                 --         --            --           (116,214)          --          --

Conversion of preferred stock                          561,419         --            --                  --          --          --

Unrealized loss on marketable securities                    --         --            --                  --    (13,630)     (13,630)

Net loss for the period                                     --         --            --         (2,758,559)          --  (2,758,559)
                                                    --------------------------------------------------------------------------------

BALANCES AT DECEMBER 31, 2004                       $9,873,662    $40,000    $(203,871)        $(9,188,780)   $(46,395)     $636,930
                                                    ================================================================================
</TABLE>

                             See accompanying notes.


                                       6
<PAGE>

                              ADZONE RESEARCH, INC.
                       UNAUDITED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,  DECEMBER 31,
                                                                         2004          2003
                                                                     --------------------------
                                                                     (UNAUDITED)    (RESTATED)
<S>                                                                  <C>            <C>
OPERATING ACTIVITIES
Net loss                                                             $(2,758,559)   $(1,650,462)
Adjustments to reconcile net loss to net cash flows from operating
   activities:
     Common stock issued for services                                  1,048,007        103,327
     Warrants issued to non-employees for services                       230,360             --
     Amortization of deferred stock-based consulting expense             310,698             --
     Amortization of deferred employee stock-based compensation          125,729             --
     Amortization of deferred revenue                                    (93,698)            --
     Employee stock-based compensation expense                            49,256      1,358,260
     Depreciation                                                          5,821          3,829
     Changes in operating assets and liabilities:
         Accounts receivable                                                  --         (3,063)
         Prepaid expenses and other current assets                        68,122         26,624
         Other assets                                                     34,616        (47,700)
         Accounts payable and accrued expenses                          (155,024)        14,776
         Accrued compensation                                           (107,923)       (85,823)
                                                                     --------------------------
Net cash flows from operating activities                              (1,242,595)      (280,231)
                                                                     --------------------------

INVESTING ACTIVITIES
Purchases of equipment                                                   (18,136)            --
                                                                     --------------------------
Net cash flows from investing activities                                 (18,136)            --
                                                                     --------------------------

FINANCING ACTIVITIES
Proceeds from sales of common stock, preferred stock and warrants      1,091,683        371,504
Proceeds from the exercise of employee stock options                     329,870             --
Payment for the redemption of warrants                                   (76,744)            --
Payments for preferred stock dividends                                   (61,060)       (12,041)
(Payments) on receipt from notes payable                                 (12,280)       140,217
Escrow deposits made for preferred stock dividends                            --       (180,615)
Payments to acquire treasury stock                                            --         (2,215)
                                                                     --------------------------
Net cash flows from financing activities                               1,271,469        316,850
                                                                     --------------------------

Net increase in cash                                                      10,738         36,620
Cash at beginning of year                                                622,797          8,084
                                                                     --------------------------
Cash at end of year                                                  $   633,535    $    44,704
                                                                     ==========================
</TABLE>

                             See accompanying notes.


                                       7
<PAGE>

                              ADZONE RESEARCH, INC.
                       UNAUDITED STATEMENTS OF CASH FLOWS
                   SIX MONTHS ENDED DECEMBER 31, 2004 AND 2003
                                   (CONTINUED)



SUPPLEMENTAL CASH FLOW DISCLOSURES:

     Cash paid for interest                                      --   $   2,239
                                                          =====================

     Cash paid for income taxes                                  --          --
                                                          =====================


NON-CASH INVESTING AND FINANCING ACTIVITIES:


Marketable securities received in connection with
      revenue arrangement                                 $ 150,000          --
                                                          =====================

Investment securities received in connection with
     revenue arrangement                                  $ 150,000          --
                                                          =====================

Unrealized loss on marketable securities                  $ (13,630)         --
                                                          =====================

Issuance of common stock (at market value) in
     settlement ofaccrued compensation liability                 --   $  85,823
                                                          =====================

                             See accompanying notes.


                                       8
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

1. BASIS OF PRESENTATION

      The  accompanying  unaudited  condensed  financial  statements  have  been
      prepared in accordance with Generally Accepted  Accounting  Principles for
      interim  financial  information  and pursuant to the Regulation S-B of the
      Rules and Regulations of the Securities and Exchange  Commission.  Certain
      financial  information and footnote disclosure normally included in annual
      financial  statements  prepared  in  accordance  with  Generally  Accepted
      Accounting  Principles  have been condensed or omitted.  Accordingly,  the
      accompanying  financial  statements  should  be read in  conjunction  with
      ADZONE's  annual  financial  statements and notes thereto  included in its
      Form 10-KSB/A for the year ended March 31, 2004.

      In the  opinion  of  management,  the  financial  statements  reflect  all
      adjustments   (consisting  of  only  normal  and  recurring   adjustments)
      necessary to present fairly the financial position,  results of operations
      and cash flows for those periods presented. Operating results for the nine
      months  ended  December  31, 2004 are not  necessarily  indicative  of the
      results that may be expected for the year ended March 31, 2005.

      Certain accounting policies:

      Revenue recognition:

      Revenues under contracts with the United States  Department of Defense are
      recorded when earned.  The Company's  derived  $150,725 of revenues during
      nine-month  period ended December 31, 2004 under contracts with the United
      States  Department  of Defense and  related  agencies.  Revenues  from the
      Senticore  Technology  Distribution  Agreement (See Note 5) represent both
      annual  minimum fees,  paid in advance,  and royalty  income.  The Company
      received fees of $300,000  during the quarterly  period ended December 31,
      2004,  which  fees have been  deferred  and  amortized  over the period of
      benefit of one year. Revenues include $93,698 of revenues that were earned
      under this contract during the quarterly period ended December 31, 2004.

      Marketable securities and investments:

      Marketable  securities  at December  31, 2004  consist of  publicly-listed
      common equity securities of Senticore,  Inc. The Company  classified these
      securities as available-for-sale securities and, accordingly, carries them
      at fair market value,  based upon trading market prices.  Unrealized gains
      or  losses  resulting  from  adjustments  to  the  fair  values  of  these
      securities  is  excluded  from  earnings  and  shown  as  a  component  of
      accumulated comprehensive income in the accompanying financial statements.


                                       9
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

1 BASIS OF PRESENTATION (CONTINUED)

      Marketable securities and investments (continued):

      Investments at December 31, 2004 consist of a minority (under 20%) holding
      of  common  equity  securities  of The  Justice  Fund,  a  privately  held
      organization.  This  investment is carried as a  non-current  asset at its
      fair value on the date of receipt and will be accounted for under the cost
      method of accounting. The Company will evaluate the carrying value of this
      non-current  investment  in future  periods  and,  if  necessary,  reflect
      impairments in the fair value, if any, as charges to other expense.

      Comprehensive income (loss):

      Comprehensive  loss for the three and nine month periods  ending  December
      31, 2004 consist of the Company's  net loss for the periods,  adjusted for
      unrealized losses on available-for-sale marketable securities.

      Recent accounting pronouncements:

      In December 2004, the Financial  Accounting  Standards Board (FASB) issued
      FASB  issued  Statements  on  Financial   Accounting  Standards  No.  153,
      Exchanges of Non-monetary Assets - An Amendment of APB Opinion No. 29. APB
      Opinion No. 29, "Accounting For Non-monetary  Transactions," provides that
      exchanges  of  non-monetary  assets  should be measured  based on the fair
      value of the assets exchanged.  Statement No. 153 amends Opinion No. 29 to
      eliminate the exception for non-monetary  exchanges of similar  productive
      assets and  replaces it with a general  exception of  non-monetary  assets
      whose  results are not  expected to  significantly  change the future cash
      flows of the entity.  The adoption of Statement No. 153 is not expected to
      have any impact on the Company's current financial condition or results of
      operations.

      In December 2004, the FASB also issued Statement No. 123R,  Accounting for
      Share  Based  Payments.  Statement  123R  establishes  revised  accounting
      standards for employee-stock based compensation  measurement that requires
      employee  stock-based  compensation  be  measured at the fair value of the
      award,  replacing the intrinsic approach currently  available to companies
      under Statement 123. Compensation cost continues to be recognized over the
      period  during  which the  employee is required  to provide  service.  The
      provisions of the revised statement are effective for financial statements
      issued for the first interim or annual  reporting  period  beginning after
      December 15, 2005, with early adoption  encouraged.  The Company  accounts
      for  options   issued  to   employees   using  the   intrinsic   approach.
      Implementation  of this new  standard is  currently  expected to result in
      increases  in future  compensation  expense.  However,  such effect is not
      currently estimable.


                                       10
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

2. LIQUIDITY AND MANAGEMENT'S PLANS:


      The  preparation  of financial  statements  in accordance  with  Generally
      Accepted Accounting Principles contemplates that the Company will continue
      as a going  concern.  As noted  in the  accompanying  condensed  financial
      statements,  the Company incurred a net loss of ($2,758,559) and used cash
      of ($1,242,595) in conducting its operations  during the nine-month period
      ended December 31, 2004. These recurring negative trends raise substantial
      doubt about the Company's ability to continue as a going concern.

      While operating cash flows for the remaining  periods in fiscal year ended
      March 31, 2005 are not projected to be sufficient to sustain the Company's
      operations,  management  currently believes that existing cash reserves of
      $633,535,  coupled with (i) an outstanding  commitment  for  approximately
      $750,000 in connection with the Nutmeg Subscription Agreement (see Note 4)
      and (ii)  $136,370  of  freely  tradable  marketable  securities,  will be
      sufficient to fund operating deficits for a period of approximately twelve
      months.  Management  considered  the  following  specific  elements of its
      internal  projections  in making  its  conclusions  about its  ability  to
      continue for approximately twelve months:

      a.    Management does not believe that the significant  level of cash used
            in  operations  during  the nine  months  ended  December  31,  2004
            ($1,242,595)  is  indicative of cash flow usage during the next four
            fiscal quarters. Cash flow from operations during the current period
            included two amounts, as follows,  that increased cash usage. First,
            a bonus of  $320,000  was awarded to two  officers by the  Company's
            Board of Directors during the second quarter.  Accordingly,  at this
            time,  no  further  officer  bonuses  are  contemplated.Second,  the
            Company used cash proceeds from the Nutmeg Subscription Agreement to
            pay  certain  current  and past due  accounts  payable  and  accrued
            liabilities  amounting  to  $262,947.  While  payments  on  accounts
            payable and accrued  expenses  will continue in the normal course of
            business,  such  payments  are  not  expected  to  be at  the  level
            reflected in the Company's year to date operations.

      b.    Certain vendors continue to accept the Company's  equity  securities
            for  compensation  for their  services,  which has  helped  and will
            continue to help preserve cash.  While such non-cash  expense is not
            currently expected to be as high in the near term future quarters as
            during the current quarter,  based upon ongoing discussions with the
            vendors,  management believes that they will continue to accept such
            securities in the foreseeable future.

      c.    The  Company  completed  a three  month U.S.  Department  of Defense
            contract  in the second  quarter  and  collected  $150,000  for said
            contract.  Management of the Company is optimistic  that the success
            of  this  contract  will  lead  to  follow  on  contracts  with  the
            government,  although  no such  contracts  have  yet  been  awarded.
            However,  management is actively negotiating three such proposals in
            the Defense Industry arena.


                                       11
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

2. LIQUIDITY AND MANAGEMENT'S PLANS (CONTINUED)

      Recent accounting pronouncements (continued):

      d.    Management does not currently project expending  significant  levels
            of cash to acquire  equipment to support  revenue  growth during the
            next four fiscal  quarters.  Equipment  necessary  for the Company's
            contracts  principally  relates  to  computer  equipment,  which  is
            projected to be sufficient for the foreseeable future.  However, the
            nature of  contracts  awarded in the future,  if any,  may result in
            additional   modifications   and  expenditures  at  the  request  of
            customers.

      e.    Finally,  management believes that, in the event necessary,  certain
            operating expenses can be curtailed.  These expenses are principally
            related to employment and facility costs.

      During the remainder of fiscal year ended March 31, 2005, management plans
      to continue to promote the U.S.  Department of Defense and Commercial uses
      of its  technologies.  There can be no  assurances  that the  Company  can
      execute revenue-producing contracts under acceptable terms and conditions.

      The Company's ability to continue as a going concern is dependent upon the
      preservation  of  existing  cash  reserves,   the  receipt  of  the  final
      conditional traunch of the Nutmeg Subscription Agreement (see Note 4) and,
      ultimately,  the  achievement  of  profitable  operations.  The  financial
      statements do not include any adjustments  that might arise as a result of
      this uncertainty.

3. MARKETABLE SECURITIES AND INVESTMENTS:

Marketable securities consist of the following as of December 31, 2004:

      1,363,700 shares of common stock of Senticore Inc. at the
         original trading price on the date of receipt                $ 150,000

      Less: unrealized loss in fair value                               (13,630)
                                                                      ---------

      Trading value at December 31, 2004                              $ 136,370
                                                                      =========

Investments consist of the following as of December 31, 2004:

      1,500,000 shares of common stock of The Justice Fund at the
         fair value on the date of receipt; cost basis thereafter     $
                                                                         150,000
                                                                      ==========


                                       12
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

4. STOCKHOLDERS' EQUITY:

      Issuances of common stock:

      During the nine month period ended  December 31, 2004,  the Company issued
      shares of common stock, as follows:  9,167,284 shares for cash proceeds of
      $1,091,683 (which is inclusive of $40,000 common stock to be issued and is
      net of $150,000 in  expenses)  and  2,507,201  shares for the  exercise of
      employee  stock  options and  non-employee  warrant  for cash  proceeds of
      329,870.

      During the nine month period ended  December 31, 2004,  the Company issued
      2,070,000 shares of common stock to employees for services rendered, which
      were valued at $329,600  using the trading  market  prices on the dates of
      grant.  Compensation  expense  under these awards is  recognized  over the
      vesting period of these  restricted  awards.  The following table reflects
      the recognition of the cost of this award:

      Total compensation expense of 2,070,000 shares of common stock
         on the date of award                                         $ 329,600

        Less: recognition of compensation expense, as vested           (125,729)
                                                                      ----------

        Deferred compensation at December 31, 2004                    $ 203,871
                                                                      ==========

      During the nine month period ended  December 31, 2004,  the Company issued
      5,464,601  shares of common stock upon the  conversion of a portion of its
      outstanding  Series A  Preferred  Stock and Series B Preferred  Stock,  as
      follows:

      Common shares issued upon conversion of Series A
      Preferred Stock                                                 2,295,261

      Common shares issued upon conversion of Series B
      Preferred Stock                                                 3,169,340
                                                                      ----------

      Total common shares issued                                      5,464,601
                                                                      ==========

      During the nine month period ended  December 31, 2004,  the Company issued
      an aggregate of 4,127,971  shares of common stock for services by vendors,
      valued at  $1,048,007  using the  trading  market  value of the  Company's
      common stock on the date of the respective grants.


                                       13
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

4. STOCKHOLDERS' EQUITY (CONTINUED):

      Issuances of non-employee options and warrants:

      During the nine months ended  December 31, 2004,  the Company issued stock
      options  and  warrants to  non-employees  to acquire  7,086,134  shares of
      common stock for financing  activities,  consulting and other services, as
      follows:  3,786,134  warrants in connection  with the Nutmeg  Subscription
      Agreement  (see  below);  1,000,000  warrants  in  connection  with future
      services the Baltic Ventures  Agreement (see Note 5, below);  3,300,000 to
      advisers for services.  Warrants were valued at fair value using the Black
      Scholes Valuation Model. Such model resulted in an aggregate  valuation of
      $785,000,  of which $554,640  related to future services will be amortized
      over the contractual performance period.  Amortization for the nine months
      ended  December  31,  2004  amounted  to  $310,092  and is included in the
      caption Consulting and Professional Services in the accompanying statement
      of operations. As of December 31, 2004, the balance of deferred consulting
      expense  amounted  to $243,940  and is  included  in the caption  "prepaid
      expenses and other" in the accompanying balance sheet.

      The following tabular presentation  reflects the details of these warrants
      and the amounts  charged to operations  for the nine months ended December
      31, 2004:

<TABLE>
<CAPTION>
                                                  Financings                Compensation
                                           ------------------------   -----------------------
                                              Shares        Value        Shares       Value
                                            ----------   ----------   ----------   ----------
<S>                                          <C>         <C>           <C>         <C>
      Quarter ended June 30, 2004            3,373,337   $  872,894    1,125,000   $  341,000
      Quarter ended September 30, 2004         412,797       99,071    2,175,000      444,000
      Quarter ended December 31, 2004               --           --           --           --
                                            ----------   ----------   ----------   ----------
                                             3,786,134   $  971,945    3,300,000   $  785,000
                                            ==========   ==========   ==========   ==========

         Charged directly to expense                                               $  230,360
         Charged to pre-paid expense                                                  554,640
                                                                                   ----------
                                                                                   $  785,000
         Amortization of pre-paid expense
         during nine months ended
         December 31, 2004                                                         $  310,698
                                                                                   ==========
</TABLE>

      The  Black  Scholes   Valuation  Model  requires  the  use  of  subjective
      estimates.  Management  estimated the future  volatility and the risk free
      rate of return for  issuances  during the nine months  ended  December 31,
      2004 at 942% and 3.0%, respectively.

      Including  these  fiscal 2005  issuances,  the  Company  has  non-employee
      options and warrants  outstanding to acquire  16,411,829  shares of common
      stock at exercise prices ranging from $0.07 to $5.00. The weighted average
      exercise price is $0.31.  These options and warrants  expire,  as follows:
      1,285,000 in 2005;  3,275,000 in 2006; 0 in 2007;  7,990,695 in 2008; and,
      3,861,134 in 2009.  ADZONE  RESEARCH,  INC.  NOTES TO UNAUDITED  CONDENSED
      FINANCIAL STATEMENTS DECEMBER 31, 2004


                                       14
<PAGE>

4. STOCKHOLDERS' EQUITY (CONTINUED):

      Issuances of employee stock options:

      During the nine months ended December 31, 2004, the Company  granted stock
      options to acquire 1,975,000 shares of common stock to employees under the
      Company's 2004 Incentive Stock Plan. The employees  exercised 1,939,000 of
      the options prior to December 31, 2004.  These options are exercisable for
      a period  of one year at 90% of the  closing  market  price on the date of
      exercise. As a result of this provision,  these options while outstanding,
      and any  further  options  issued  under this  particular  Plan (up to the
      5,000,000 shares authorized),  will be accounted for using "variable plan"
      accounting.  Under variable plan accounting,  as applied to these options,
      the initial  intrinsic value, plus future increases in the intrinsic value
      of the options is recorded as  compensation  expense  periodically,  until
      such  options are  exercised.  During the nine months  ended  December 31,
      2004,  the Company  recorded  ($49,256)  as "variable  plan"  compensation
      expense.

      The Company also has 10,000,000 employee stock options outstanding under a
      former plan that provides for "fixed plan"  accounting.  That is, both the
      number of shares and exercise price were known and fixed on the respective
      dates of grant.  Exercise  prices of these  options  range  from  $0.10 to
      $2.00. The weighted average exercise price is $1.06.  These options expire
      as follows: 2,000,000 in 2006; 1,000,000 in 2008; and, 7,000,000 in 2010.

      Pro forma Stock-Based Compensation Information:

      The following table reflects supplemental financial information related to
      stock-based  employee  compensation for the nine months ended December 31,
      2004 and 2003, as required by Statement of Financial  Accounting Standards
      No.  148,  Accounting  for  Stock-Based   Compensation  -  Transition  and
      Disclosure:

<TABLE>
<CAPTION>
                                                                                Nine Months Ended
                                                                                   December 31,
                                                                               2004             2003
                                                                          --------------  --------------
<S>                                                                       <C>             <C>
      Loss applicable to common stockholders, as reported                 $(  2,917,050)  $(  1,993,843)
                                                                          ==============  ==============
      Stock-based compensation, as reported                               $(    174,985)  $(  1,358,260)
                                                                          ==============  ==============
      Stock-based compensation under fair value method                    $(    964,256)  $   1,382,260
                                                                          ==============  ==============
      Pro-forma loss applicable to common stockholders under
          fair value method                                               $(  3,706,321)  $(  2,017,843)
                                                                          ==============  ==============

      Loss applicable to common stockholders per share, as reported       $(       0.04)  $(       0.03)
                                                                          ==============  ==============
      Pro-forma loss applicable to common stockholders per share
        under fair value method                                           $(       0.05)  $(       0.03)
                                                                          ==============  ==============
</TABLE>


                                       15
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

4. STOCKHOLDERS' EQUITY (CONTINUED):

      Nutmeg subscription agreement

      On May 20, 2004, the Company  executed a  Subscription  Agreement with The
      Nutmeg Group, L. L. C., a U. S. Virgin Islands limited liability  company,
      for the sale of common stock and warrants. The aggregate selling price was
      $1,750,000  (increased on July 23, 2004 to  $1,850,000)  to be received in
      four  traunches as follows:  (1) $400,000 by May 20, 2004 (net proceeds of
      $320,000  were  received  for  3,457,217  shares and  warrants  to acquire
      1,728,600  shares  of common  stock);  (2)  $600,000  by June 4, 2004 (net
      proceeds of $530,000 were received for 3,289,474 share of common stock and
      warrants to acquire  1,644,737  shares of common  stock);  (3) $100,000 on
      July 23, 2004 (net proceeds of $100,000  were received for 825,593  shares
      of common stock and warrants to acquire  412,797  shares of common stock);
      and, (4) $750,000,  at the option of the Company,  within five (5) days of
      the date that a Registration  Statement covering the underlying securities
      in this  agreement  is  declared  effective  by the U. S.  Securities  and
      Exchange  Commission.  The number of shares  issued and/or to be issued is
      stated to be equal to the purchase price divided by the lesser of a) $0.20
      per  share;  b) 57% of the  average  closing  bid price for the  Company's
      common  stock  on  the  two  trading  days  prior  to the  closing  of the
      respective  traunche;  or c) 57% of the average  closing bid price for the
      Company's  common  stock on the two (2) trading  days prior to the date on
      which the Registration  Statement  covering the underlying  shares in this
      agreement  is declared  effective  by the U. S.  Securities  and  Exchange
      Commission.

      The  Warrants  will expire on December 31, 2008.  The  Warrant's  exercise
      price will be at 125% of 57% of the  average  closing bid price for Common
      Stock on the two (2)  trading  days  immediately  prior to the filing of a
      Registration  Statement  covering the  underlying  stock in this agreement
      with the U. S. Securities and Exchange Commission.

      The  Company  filed the  Registration  Statement  on July 23,  2004 and an
      Amended  Registration  Statement  on  November 4, 2004.  The  Subscription
      Agreement  imposes a penalty of 1% of the amount invested by Nutmeg if the
      Registration  Statement is not declared  effective  within 120 days of the
      initial filing and an additional  penalty of 1% for each additional 30 day
      period that the  Registration  Statement  is not declared  effective.  The
      Registration  Statement has not been declared  effective as of the date of
      this filing.  As of December  31, 2004,  the Company has accrued a penalty
      equal to 2% of the $1,100,000 invested by Nutmeg, or $22,000, representing
      the penalty.

      There  can be no  assurances  that  the  Registration  Statement  will  be
      declared effective by the Securities and Exchange Commission. There are no
      other funding commitments as of this date.


                                       16
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

4. STOCKHOLDERS' EQUITY (CONTINUED):

      Preferred stock:

      The Company has Series A Preferred Stock ($.001 par value, 4 shares issued
      and  outstanding)  and Series B Preferred  Stock ($.001 par value, 1 share
      issued and  outstanding).  As of  December  31,  2004 the  redemption  and
      carrying  values of the Series A  Preferred  Stock are  $56,647.  Series A
      Preferred  Stock was issued in  connection  with a unit offering in August
      2003. As of December 31, 2004, the  redemption and carrying  values of the
      Series B Preferred Stock are $11,500.  Series B Preferred Stock was issued
      in connection  with a unit offering in three  traunches  between  November
      2003 and January  2004.  Preferred  stock became  convertible  into common
      stock  at the  earlier  of  180  days  following  the  sale  or  upon  the
      effectiveness of the  aforementioned  Registration  Statement.  During the
      quarter ended December 31, 2004, 20 shares of Series A Preferred Stock and
      30 shares of Series B Preferred  Stock were  converted  to  2,295,261  and
      3,169,340 shares common stock, respectively.

      For purposes of classification,  the original proceeds from the respective
      offerings were allocated  between the underlying units offered,  which, in
      each instance were  preferred  stock and warrants to acquire common stock,
      based upon their  relative  fair  values.  Such  allocation  requires  the
      Company  to  compute  an  effective  conversion  price on the  convertible
      security  (the  preferred  stock in this  instance)  using  the  allocated
      proceeds.  Effective conversion prices lower than prevailing market prices
      result in a  beneficial  conversion  feature,  which  requires  accounting
      recognition under Generally Accepted Accounting Principles.  The following
      table reflects the details of these original allocations:

<TABLE>
<CAPTION>
                                                                Allocation
                                                          ----------------------
                                                          Preferred
                                                            Stock        Warrants      Proceeds
                                                          --------------------------------------
<S>                                                       <C>           <C>           <C>
      Series A Preferred Stock:
           Initial allocation                             $  200,616    $  148,884    $  348,500
                                                                        ==========    ==========
           Beneficial conversion feature included in
                additional paid-in capital                  (142,905)
                                                          ----------
           Initial carrying value of the preferred stock  $   57,711
                                                          ==========

      Series B Preferred Stock:
           Initial allocation                             $  133,853    $  176,147    $  310,000
                                                                        ==========    ==========
           Beneficial conversion feature included in
                additional paid-in capital                  (133,853)
                                                          ----------
           Initial carrying value of the preferred stock  $       --
                                                          ==========
</TABLE>


                                       17
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

4. STOCKHOLDERS' EQUITY (CONTINUED):

      Preferred stock:

      Following the initial  allocations,  the preferred stock was accreted over
      the period up to the earliest redemption date (180 days) to its redemption
      amount through periodic charges to accumulated  earnings ($116,214) during
      the nine month period ended  December 31, 2004).  Such  accretions,  along
      with preferred stock dividends are treated as increases to loss per common
      share.

      On March 24, 2004, the Company  executed a Securities  Purchase  Agreement
      with Spartan  Securities Group, Ltd. whereby the Company purchased 232,528
      Warrants  previously  issued to Spartan as compensation on the sale of the
      Company's 9% Series A Preferred  Stock issue.  The Company  completed this
      transaction  with the payment of an aggregate  $76,744 to Spartan in April
      2004 ($50,000) and May 2004 ($26,744). The payment was treated as a charge
      to paid-in capital during the three months ended June 30, 2004.

5. COMMITMENTS AND CONTINGENCIES

      Litigation:

      AdZone 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 for  services  which were  allegedly
      performed  after the  expiration  of a contract  for  consulting  services
      between AdZone and Auletta. A judgment in the amount of $34,692, including
      interest,  was entered against the Company during Fiscal 2004. The Company
      executed a settlement  agreement  whereby the judgment  will be retired as
      follows: $5,000 cash upon execution of the settlement agreement and $1,000
      per month,  commencing  December 15,  2003,  until the judgment is paid in
      full.  In  prior  periods,   the  Company  has  accrued,  and  charged  to
      operations, all costs associated with this transaction.  No further effect
      on the financial  condition of the Company should occur on this matter. As
      of December 31, 2004 the balance accrued on this judgment is $16,692.

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


                                       18
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

5. COMMITMENTS AND CONTINGENCIES (CONTINUED):

      Baltic Ventures Agreement:

      On April 30,  2004,  the Company  executed an  Engagement  Agreement  with
      Baltic Ventures,  LLC, a New York limited liability  company,  (Baltic) to
      provide advice and  representation for strategic  opportunities  including
      Mergers,  Joint Ventures,  Acquisitions  and other business matters and to
      advise  and  represent  the  Company  after  such  assessment  to  close a
      transaction  or  acquisition  after  approval  by the  Company  as soon as
      reasonably possible.  This agreement is valid through January 31, 2005 and
      is renewable at the option of either party. For compensation,  the Company
      issued  25,000  shares of common stock  registered  on Form S-8 to each of
      Baltic's  principals,  Jeffrey Hale and Terry Kent.  Further,  the Company
      issued 200,000 shares of unregistered,  restricted common stock to Baltic.
      In the event that Baltic  terminates the contract during the initial term,
      the 200,000  shares must be returned  to the  Company.  Additionally,  the
      Company  must issue  Warrants to purchase  up to  1,000,000  shares of the
      Company's  common  stock,  exercisable  for a two (2) year  period,  at an
      exercise price of $1.00 per share.  As  compensation  for any  consummated
      transaction,  the Company is liable to pay Baltic a  commission  of 10% of
      the closing  transaction  value and  Warrants to purchase up to  1,000,000
      shares of the  Company's  common stock at the quoted  closing price of the
      Company's common stock on the date of closing with a term of two (2) years
      from the closing date. Further, the Company shall reimburse Baltic for all
      reasonable   out-of-pocket   expenses   upon   approval  by  the  Company.
      Additionally,  the Company  shall  furnish  Baltic a computer  system,  if
      requested, with a value of not more than $2,500.

      The Justice Fund/Senticore Agreement:

      On September 9, 2004, the Company  entered into a  Distribution  Agreement
      (the  "Agreement")  with  Senticore,   Inc.  and  The  Justice  Fund  (the
      "Counterparties") that provides the Counterparties  exclusive distribution
      rights to the Company's  proprietary  Internet monitoring  technologies on
      the  continents of Asia and South America.  The Agreement  provided for an
      initial annual fee to the Company of $300,000  (applicable to the contract
      period September 9, 2004 to September 9, 2005), and subsequent  escalating
      annual  fees  to  the  Company  of  $500,000,  $750,000,  and  $1,000,000,
      respectively,  commencing with the second year following  execution of the
      Agreement. The Agreement also provides for royalty payments to the Company
      ranging  from  25% of  revenues  derived  from  the  use of the  Company's
      technologies up to $1,000,000 to 35% for revenues over $4,000,000.

      On October 13, 2004,  the  Agreement was amended to provide for payment of
      the initial  fee in the form of equity  securities  of the  Counterparties
      (See Note 3). The  Company  has  previously  announced  its  intention  to
      distribute  its shares in The Justice Fund to  shareholders  on a pro rata
      basis.  Such  distribution  will take  place  following  the filing by The
      Justice Fund of all required regularly documents.  If such distribution is
      effected it will be accounted for as a non-reciprocal in-kind distribution
      where the carrying value of the investments  distributed  will be recorded
      as a reduction of stockholders' equity.


                                       19
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

6. RESTATEMENTS

      The  accompanying  quarterly  financial  statements  have been restated to
      reflect   adjustments  related  to  (i)  the  timing  and  measurement  of
      stock-based  compensation  issued to employees and  non-employees and (ii)
      accounting  for the  allocation of unit offering  proceeds to warrants and
      beneficial  conversion features, as further discussed below. The following
      tabular  presentation  reflects the effects of the  adjustments on amounts
      reported  during all quarterly  periods during the fiscal year ended March
      31, 2004:

<TABLE>
<CAPTION>
                                                                                                  Annual
                                                  Quarterly Period Ended (3)                      Period
                                    -----------------------------------------------------------------------
                                      June 30,    September 30,   December 31,    March 31,      March 31,
                                       2003 (4)      2003 (4)       2003 (4)       2004 (4)      2004 (4)
                                    -----------------------------------------------------------------------
<S>                                 <C>            <C>            <C>            <C>            <C>
      Net loss, as reported         $   (77,042)   $  (362,579)   $  (240,080)   $(1,055,404)   $(1,735,105)
      Adjustment for
      stock-compensation (1)            (44,853)      (925,908)            --        141,000       (829,761)
                                    -----------------------------------------------------------------------
      Net loss, as restated         $  (121,895)   $(1,288,487)   $  (240,080)   $  (914,404)   $(2,564,866)
                                    =======================================================================

      Loss applicable to
      common stockholders,
      as reported                   $   (77,042)   $  (362,579)   $  (250,116)   $(1,072,025)   $(1,761,762)
      Adjustment for
      stock-compensation (1)            (44,853)      (925,908)            --        141,000       (829,761)
      Adjustment for preferred
      stock dividend
      and accretions (2)                     --        (92,218)      (241,127)      (256,072)      (589,417)
                                    -----------------------------------------------------------------------
      Loss applicable to
      common stockholders,
      as restated                   $  (121,895)   $(1,380,705)   $  (491,243)   $(1,187,097)   $(3,180,940)
                                    =======================================================================

      Loss per common share,
      as reported                   $     (0.00)   $     (0.01)   $     (0.00)   $     (0.02)   $     (0.03)
                                    =======================================================================
      Loss per common share,
      as restated                   $     (0.00)   $     (0.02)   $     (0.01)   $     (0.02)   $     (0.05)
                                    =======================================================================
</TABLE>


                                       20
<PAGE>

                              ADZONE RESEARCH, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

6. RESTATEMENTS (CONTINUED):

      (1) During the fiscal year ended March 31, 2004, the Company estimated the
      fair  market  value  of  equity   securities   issued  to  employees   and
      non-employees,  using a discount to trading market values of the Company's
      common stock.  The Company has  reevaluated  the use of such discounts and
      determined that the trading market value of the Company's  common stock on
      the date of award was the more  appropriate  value of the  securities.  In
      addition,  this adjustment  reflects the allocation of certain stock-based
      compensation  awards to the  quarters in which the award  occurred.  Total
      stock-based compensation expense, as adjusted,  amounted to $11,000 in Q1;
      $1,082,971  in Q2;  $264,289 in Q3; and,  $81,520 in Q4,  respectively  of
      fiscal year ended March 31,  2004.  All stock  based  compensation  awards
      during the fiscal year ended March 31, 2005,  to date,  have been recorded
      based upon the trading market price of the Company's  common stock,  which
      practice  became the  Company's  policy  effective  with the first  fiscal
      quarter of the current fiscal year.

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

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

      (4) The Company is  currently  in the process of  responding  to questions
      posed by the Staff of the  Securities and Exchange  Commission  regarding,
      among other matters,  the subject  adjustments.  In addition,  the Company
      believes  that the above  adjustments  will  require the  amendment of the
      quarterly and annual financial  filings during fiscal year ended March 31,
      2004. The Company intends to resolve all remaining  questions of the Staff
      and file such amendments as soon as practicable.


                                       21
<PAGE>

PART I. CONDENSED FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The   discussion   in  this   document   contains   trend   analysis  and  other
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, that involve risks and uncertainties,  such as statements concerning
growth and future  operating  results;  developments  in markets  and  strategic
focus; new products and product technologies; and future economic, business, and
regulatory conditions. Such forward-looking statements are generally accompanied
by words such as "plan", "estimate",  "expect",  "believe",  "should",  "would",
"could",  "anticipate",  "may" and other words that convey uncertainty of future
events or outcomes.  These forward-looking  statements and other statements made
elsewhere  in  this  report  are  made in  reliance  on the  Private  Securities
Litigation  Reform Act of 1995. The section below entitled "Certain Factors That
May Affect Future Results,  Financial  Condition and Market Price of Securities"
sets forth material factors that could cause actual results to differ materially
from these statements.

RESULTS OF OPERATIONS
Nine Months Ended DECEMBER 31, 2003 and DECEMBER 31, 2004

Revenues:  Revenues  for the nine months  ended  December  31, 2004  amounted to
$244,423,  compared to $74,844  for the nine months  ended  December  31,  2003.
Current  period  revenues  are  derived  from (i) a $150,725  firm,  fixed-price
contract  (including  a  $50,000  option  that  was  exercised)  with  the  U.S.
Department  of  Defense  for use of our  fully  automated  NetGet  (C)  Internet
decryption  service and (ii) $93,698 from the Senticor  Technology  Distribution
Agreement (See Note 5). The Company has recorded revenue on the firm-fixed price
contract  on  a  straight-line   basis,  as  earned,  based  upon  the  contract
performance  period  of six  months.  The  straight-line  basis  was  considered
appropriate for this contract  because our  deliverables,  consisting  solely of
computer-generated  activity  reports,  are delivered to the customer on a daily
basis over the six month period  contracted.  (While the Company  expects future
revenue  producing  government  contracts,  no  additional  contracts  have been
executed at this date.) The Company  recognized  revenue from annual fees on the
Senticor Technology  Distribution  Agreement ratably over the period of benefit.
Deferred  revenue on this agreement,  which will be recorded as earned in future
periods, amounts to $206,302.

Cost of contract revenue: Cost of revenue for the nine months ended December 31,
2004 was $42,000  compared to $299,328  for the nine months  ended  December 31,
2003.  This trend reflects the nearly fully  automated  process of the Company's
Net  Get  (C)  Decryption  Process.  NetGet  (C) was  deployed  for the  current
Department  of Defense  Contract.  This  technology  was developed to be a fully
automated,  Internet-based technology that monitors customer-provided web-pages,
or URL's,  for  terrorist  or criminal  activities.  The  Department  of Defense
provided the Company with the URL's for this  contract  which are  monitored and
reported to the customer.  Therefore, direct costs associated with this contract
are minimal.  Future  contracts,  if any, will be  contracted to the  customers'
specific requirements and may require production, development, other services or
enhanced scope. As a result,  any future contracts may require additional direct
resources and cost, which will be recorded as the revenues are earned.


                                       22
<PAGE>

Consulting and professional  services:  Consulting and professional services for
the nine months  ended  December  31, 2004  amounted to  1,367,954,  compared to
$103,327  for the  nine  months  ended  December  31,  2003.  The  increase  was
attributable  to the  engagement of firms to raise  capital,  assist in contract
negotiation and acquisition and assist in seeking  strategic  merger/acquisition
candidates.  During the nine months ended December 31, 2004, these expenses were
largely paid with equity securities that were valued at the closing market price
on the date  issued  or,  in the  case of  warrants,  using  the  Black  Scholes
Valuation Model (see Note 4 to the Condensed Financial Statements). There can be
no assurances that equity will be acceptable to the Company's  consultants on an
extended basis.

Salaries  and related:  Salaries and related for the nine months ended  December
31, 2004 amounted to $1,041,161 compared to $1,071,439 for the nine months ended
December  31,  2003.  During 2003,  cost of revenue  also  included  $297,000 of
salaries and wages.  Salaries and related includes  stock-based  compensation of
$504,855 and $1,061,128 during the nine months ended December 31, 2004 and 2003,
respectively.

General  and  administrative  expenses:   General  and  administrative  expenses
amounted to $520,727  for the nine months ended  December 31, 2004,  compared to
$226,353  for the nine months ended  December 31, 2003.  The increase is largely
attributable  to  higher  travel  expenses  necessary  to  access   governmental
customers.  As the Company's  commercial  applications come on line, general and
administrative expenses will increase.

Depreciation and amortization:  Depreciation and amortization amounted to $5,821
for the nine months ended  December  31,  2004,  compared to $1,633 for the nine
months ended December 31, 2003;  during 2003 $2,196 of depreciation  expense was
included in cost of revenues.  The increase was attributable to higher levels of
fixed  assets in the current  period.  While the Company has no  commitments  to
acquire property and equipment,  significant  levels of future revenue producing
contracts,  if any, will require  comparable  significant  investments  in fixed
assets.

Other income  (expense):  Other income  (expense)  amounted to ($25,320) for the
nine months ended  December 31, 2004,  compared to ($23,226) for the nine months
ended December 31, 2003. For the nine month period ended December 31, 2004, such
balance  relates  to  penalties  incurred  related  to the  Nutmeg  subscription
agreement (See Note 4) and interest  expense on note payable,  offset by a small
balance of interest  income,  where in the prior year the balance also  included
other miscellaneous expenses.

Preferred  stock   dividends  and  accretion:   Preferred  stock  dividends  and
accretions  relate to the Company's Series A and Series B Preferred Stock,  each
having cumulative dividend features. For purposes of computing loss attributable
to common  stockholders,  net loss is reduced by preferred  stock  dividends and
accretions to the carrying values of the preferred stock.


                                       23
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

GOING CONCERN CONSIDERATIONS AND MANAGEMENT'S PLANS

The preparation of financial  statements in accordance  with Generally  Accepted
Accounting  Principles  contemplates  that the Company will  continue as a going
concern.  As noted  in the  accompanying  condensed  financial  statements,  the
Company  incurred a net loss of  ($2,758,559)  and used cash of  ($1,242,595) in
conducting its operations  during the nine-month period ended December 31, 2004.
These  recurring  negative  trends raise  substantial  doubt about the Company's
ability to continue as a going concern.

While operating cash flows for the remaining  periods in fiscal year ended March
31, 2005 are not projected to be sufficient to sustain the Company's operations,
management  currently believes that existing cash reserves of $633,535,  coupled
with (i) an outstanding commitment for approximately $750,000 in connection with
the  Nutmeg  Subscription  Agreement  (see Note 4) and (ii)  $136,370  of freely
tradable  marketable  securities,  will be sufficient to fund operating deficits
for a period of approximately twelve months. Management considered the following
specific  elements of its internal  projections in making its conclusions  about
its ability to continue for approximately twelve months:

      f.    Management does not believe that the significant  level of cash used
            in  operations  during  the nine  months  ended  December  31,  2004
            ($1,242,595)  is  indicative of cash flow usage during the next four
            fiscal quarters. Cash flow from operations during the current period
            included two amounts, as follows,  that increased cash usage. First,
            a bonus of  $320,000  was awarded to two  officers by the  Company's
            Board of Directors during the second quarter.  Accordingly,  at this
            time,  no  further  officer  bonuses  are  contemplated.Second,  the
            Company used cash proceeds from the Nutmeg Subscription Agreement to
            pay  certain  current  and past due  accounts  payable  and  accrued
            liabilities  amounting  to  $262,947.  While  payments  on  accounts
            payable and accrued  expenses  will continue in the normal course of
            business,  such  payments  are  not  expected  to  be at  the  level
            reflected in the Company's year to date operations.

      g.    Certain vendors continue to accept the Company's  equity  securities
            for  compensation  for their  services,  which has  helped  and will
            continue to help preserve cash.  While such non-cash  expense is not
            currently expected to be as high in the near term future quarters as
            during the current quarter,  based upon ongoing discussions with the
            vendors,  management believes that they will continue to accept such
            securities in the foreseeable future.

      h.    The  Company  completed  a three  month U.S.  Department  of Defense
            contract  in the second  quarter  and  collected  $150,000  for said
            contract.  Management of the Company is optimistic  that the success
            of  this  contract  will  lead  to  follow  on  contracts  with  the
            government,  although  no such  contracts  have  yet  been  awarded.
            However,  management is actively negotiating three such proposals in
            the Defense Industry arena.

      i.    Management does not currently project expending  significant  levels
            of cash to acquire  equipment to support  revenue  growth during the
            next four fiscal  quarters.  Equipment  necessary  for the Company's
            contracts  principally  relates  to  computer  equipment,  which  is
            projected to be sufficient for the foreseeable future.  However, the
            nature of  contracts  awarded in the future,  if any,  may result in
            additional   modifications   and  expenditures  at  the  request  of
            customers.


                                       24
<PAGE>

      j.    Finally,  management believes that, in the event necessary,  certain
            operating expenses can be curtailed.  These expenses are principally
            related to employment and facility costs.

During the  remainder of fiscal year ended March 31, 2005,  management  plans to
continue to promote the U.S.  Department of Defense and  Commercial  uses of its
technologies.   There  can  be  no  assurances  that  the  Company  can  execute
revenue-producing contracts under acceptable terms and conditions.

The  Company's  ability to continue  as a going  concern is  dependent  upon the
preservation  of existing cash  reserves,  the receipt of the final  conditional
traunch of the Nutmeg Subscription  Agreement (see Note 3) and, ultimately,  the
achievement of profitable  operations.  The financial  statements do not include
any adjustments that might arise as a result of this uncertainty.

LIQUIDITY

December 31, 2004 compared to March 31, 2004

The Company has working  capital of $627,238 as of December 31, 2004 compared to
$235,384 as of March 31,  2004.  Working  capital is net of $206,302 of deferred
revenue which will not require cash to liquidate.  Net cash and working  capital
of $1,271,469  was generated from  financing  activities  during the nine months
ended  December 31, 2004,  consisting of proceeds  from the Nutmeg  Subscription
Agreement,  proceeds from the exercise of employee stock options and the sale of
common  stock to  third  parties.  The  working  capital  generated  from  these
financing activities was diminished by ($1,242,595) and ($18,136) from operating
and investing  activities  respectively.  Operating  activities  during the nine
months  ended  December  31, 2004  reflected  significant  continuing  operating
losses.  In addition,  cash proceeds from the financing  activities were used to
reduce  accounts  payable  and  accrued   liabilities  by  $262,947.   Investing
expenditures related solely to upgrades in the Company's computer network.

As more fully  described in Note 4 to the Condensed  Financial  Statements,  the
Company has received a  commitment  from the Nutmeg Group for funding of a final
Traunch  of  $750,000,  less  applicable  expenses  (expenses  were 15% of total
proceeds on the first two traunches), upon the effectiveness of the Registration
Statement  filed  on  July  23,  2004.  There  can  be no  assurances  that  the
Registration Statement will be declared effective by the Securities and Exchange
Commission. There are no other funding commitments as of this date.

OFF BALANCE SHEET ARRANGEMENTS

The Company has no off balance sheet arrangements of the types described in Item
303 (c) of Regulation SB.


                                       25
<PAGE>

PART I. CONDENSED FINANCIAL INFORMATION
ITEM 3. CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Securities Exchange Act of 1934,  effective
with the filing date of this report,  ADZONE  carried out an  evaluation  of the
effectiveness  of the design and operation of ADZONE's  disclosure  controls and
procedures.  This  evaluation was carried out under the supervision and with the
participation  of  ADZONE's  management,   including  ADZONE's  Chief  Executive
Officer,  who concluded  that ADZONE's  disclosure  controls and  procedures are
effective.  There have been no significant changes in ADZONE's internal controls
or  in  other  factors,  which  could  significantly  affect  internal  controls
subsequent to the date ADZONE carried out its evaluation.

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that information required to be disclosed in ADZONE's reports
filed or submitted  under the Exchange Act is recorded,  processed,  summarized,
and reported,  within the time periods  specified in the Securities and Exchange
Commission's  rules and  forms.  Disclosure  controls  and  procedures  include,
without limitation,  controls and procedures designed to ensure that information
required to be  disclosed  in ADZONE's  reports  filed under the Exchange Act is
accumulated and communicated to management,  including  ADZONE's Chief Executive
Officer as appropriate, to allow timely decisions regarding required disclosure.

During the quarterly  period ended December 31, 2004, there have been no changes
in our internal controls over financial reporting that has materially  affected,
or is  reasonably  likely  to  materially  affect,  our  internal  control  over
financial  reporting,  nor were there any  significant  deficiencies or material
weaknesses in Adzone's internal controls.


                                       26
<PAGE>

PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS

ADZONE is not a party to any pending legal proceedings,  and no such proceedings
are known to be contemplated.


                                       27
<PAGE>

PART II. OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

NONE.


                                       28
<PAGE>

PART II. OTHER INFORMATION
ITEM 3. DEFAULTS ON SENIOR SECURITIES

NONE.


                                       29
<PAGE>

PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

ADZONE has not conducted any meetings of shareholders during the current quarter
or periods subsequent thereto.


                                       30
<PAGE>

PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION

NONE.


                                       31
<PAGE>

PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits

            The exhibits in the accompanying  Exhibit Index are filed as part of
            this Quarterly Report on Form 10-QSB.

      (b)   Reports on Form 8-K:

            ADZONE filed the following one current report on Form 8-K during the
            quarter ended December 31, 2004:

            Form 8-K filed on October 13, 2004 to report that ADZONE's  Board of
            Directors  approved the its first dividend to shareholders of record
            as of next  Wednesday,  October 20, 2004 which was  validated by its
            recently awarded contract directly from the federal government,  and
            its multi-year  commercial division contract which ADZONE previously
            entered into valued at $2.5 million.


                                       32
<PAGE>

                                   SIGNATURES

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

ADZONE RESEARCH, INC.

/s/ Charles Cardona  Chief Executive Officer,                  February 14, 2005
-------------------  Principal Accounting Officer and Director
Charles Cardona


                                       33
<PAGE>


ADZONE RESEARCH, INC.
EXHIBIT INDEX

Exhibit
-------

3.1         Certificate of Incorporation **

3.2         By-Laws **

10.1        Consulting Agreement dated as of October 26, 2001 with Theresa A.
            Kober ***

10.2        Consulting Agreement dated as of November 2, 2001 with Blanchfield,
            King, Kober & Company, P.C. +

10.3        Consulting Agreement with Thomas F. Gavin

10.4        Consulting Agreement dated as of February 5, 2002 with International
            Standard Consulting Corporation +++

10.5        Employment Agreement dated as of February 5, 2004 with Charles
            Cardona

10.6        Employment Agreement dated as of February 5, 2004 with John Cardona

10.7        Systems Integration Agreement dated as of September 21, 2002 with
            Raytheon Company

10.8        A-K Consulting agreements with Kyle Kennedy dated as of August 19,
            2002 - May 22, 2003

10.9        Stipulation of Settlement with Sheldon Katz dated as of September
            2002

10.10       Multimedia Web Site design contract with Jason Genet dated as of
            October 16, 2002

10.11       Investment Banking Agreement with Spartan Securities dated as of
            November 27, 2002

10.12       Agreement to borrow shares for stock loans dated as of March 7, 2003

10.13       Joint Marketing agreement with Sarnoff Corp. dated as of March 3,
            2003

10.14       Warrant agreement with Tom Gavin dated as of March 12, 2003

10.15       Agreement with Boeing Autometric Division dated as of April 2003.

31.1        Certification by Chief Executive Officer and Acting Chief Financial
            Officer pursuant to Sarbanes Oxley Section 302.

32.1        Certification by Chief Executive Officer and Acting Chief Financial
            Officer pursuant to 18 U.S. C. Section 1350

* Incorporated by reference to Exhibit 2 to the Registrant's Report on Form 8-K
filed with the Securities and Exchange Commission on September 21, 2001.

** Incorporated by reference to the same exhibit number in the Registrant's Form
10SB12G filed with the Securities and Exchange Commission on December 30, 1999.

*** Incorporated by reference to Exhibit 101 to the Registrant's Form S-8 filed
with the Securities and Exchange Commission on December 13, 2001.

+ Incorporated by reference to Exhibit 10.2 to the Registrant's Form S-8 filed
with the Securities and Exchange Commission on December 13, 2001.

++ Incorporated by reference to Exhibit 10.1 to the Registrant's Form S-8 filed
with the Securities and Exchange Commission on January 28, 2002.

+++ Incorporated by reference to Exhibit 10.1 to the Registrant's Form S-8 filed
with the Securities and Exchange Commission on February 21, 2002.


                                       34