UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

(Mark one)

|X|   Annual Report Under Section 13 or 15(d) of The Securities Exchange Act of
      1934

                    For the fiscal year ended March 31, 2006

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

         For the transition period from ______________ to _____________

                         Commission File Number: 0-28717


                              ADZONE RESEARCH, INC.
        (Exact name of small business issuer as specified in its charter)


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


                    4062-80 Grumman Blvd. Calverton, NY 11933
                    (Address of principal executive offices)


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


       Securities registered under Section 12(b) of the Exchange Act: None


         Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock $0.001 par value


Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. |_|

Check whether the issuer has (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. |_|

Check whether the registrant is a shell Company (as defined in Rule 12b-2 of the
Exchange Act). Yes |_| No |X|

The issuer's revenues for the fiscal year ended March 31, 2006 were $154,781.

The aggregate market value of voting common equity held by non-affiliates as of
June 30, 2006 was approximately $13,511,288 using the closing price of AdZone's
common stock of $0.07 per share on June 30, 2006. As of July 6, 2006, there were
193,018,402 shares of common stock issued and outstanding.
<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format: Yes |_| No |X|
<PAGE>

                              ADZONE RESEARCH, INC.
                                   FORM 10-KSB

                    FOR THE FISCAL YEAR ENDED MARCH 31, 2006

                                      INDEX

                                     PART I

                                                                            Page

Item 1.   Description of Business                                             1
Item 2.   Description of Property                                             7
Item 3.   Legal Proceedings                                                   7
Item 4.   Submission of Matters to a Vote of Security Holders                 7

                                     PART II

Item 5.   Market for Common Equity and
            Related Stockholder Matters                                       8
Item 6.   Management's Discussion and Analysis or Plan of Operation          10
Item 7.   Financial Statements                                               17
Item 8.   Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosure                              17
Item 8A.  Controls and Procedures                                            19
Item 8B.  Other Information                                                  20

                                    PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
            Compliance with Section 16(A) of the Exchange Act.               20
Item 10.  Executive Compensation                                             22
Item 11.  Security Ownership of Certain Beneficial Owners and Management
            and Related Stockholder Matters                                  26
Item 12.  Certain Relationships and Related Transactions                     27
Item 13.  Exhibits                                                           27

                                     PART IV

Item 14.  Principal Accountant Fees and Services                             29

SIGNATURES                                                                   31
<PAGE>

                  CAUTION REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in this annual report on Form 10-KSB, including,
without limitation, statements containing the words "believes", "anticipates",
"expects" and words of similar import, constitute forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of AdZone, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.

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

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

ITEM 1 - DESCRIPTION OF BUSINESS

GENERAL

We were incorporated in Delaware on May 31, 1994 under the name Executive Help
Services, Inc. for the purpose of developing an Internet web site that would
offer planning of professional office space and design of modular office
furniture with direct ordering capabilities. From our inception until June 1999,
we had no significant operations. In June 1999, we began to offer our products
and services through an e-commerce website, "www.modularoffice.com", which
offered office furnishings to businesses ranging in size from small businesses
operating in home offices to large corporate customers.

Upon a change in management that occurred in January 2001, we abandoned our
previously adopted business plan. From January 2001 until August 2001, we did
not engage in any significant activity other than negotiating a merger with
AdZone Interactive, Inc., also known as AII, a privately held corporation. AII
was founded in March 2000 to engage in Internet advertising research by
extracting various data elements through the monitoring of Internet websites
maintained by independent third parties.

On August 10, 2001, we closed an Agreement and Plan of Share Exchange with AII
whereby we exchanged 18,000,000 shares of our restricted common stock for 100%
of the issued and outstanding common stock of AII. Immediately thereafter, we
effected a merger of the two entities with AII as the surviving entity. At the
time of the merger, we changed our corporate name to AdZone Research, Inc. and
our trading symbol was changed to "ADZR."

Since our merger with AII, we have continued the business of AII as an Internet
advertising research firm engaged in the extraction of data through the
monitoring of Internet websites. The extracted data are then used to provide
various market research statistics and other focused information as requested by
AdZone's clients. There is considerable competition in the internet advertising
business worldwide, and we have not been able to successfully establish a
profitable business.

In June 2002, AdZone concluded a Systems Integrator Agreement with the Raytheon
Company under which Raytheon agreed to use its best efforts to obtain systems
integrator agreements with smaller technology firms to provide software tools
developed by AdZone that would enhance the data analysis capabilities of
Raytheon's software or that would more effectively gather data for analysis by
Raytheon and any of its systems integrator partners. Raytheon's intent is to
demonstrate AdZone's technologies in conjunction with its own technologies to
its prospective governmental customers, which include all agencies and
departments of the United States government and its approved international
allies. This agreement was terminated in August 2005.


                                       1
<PAGE>

In May 2004, AdZone received its first purchase order from a US Defense
contractor in connection with using AdZone's technology to monitor the internet
for specific information on behalf of the US Government. In the summer and fall
of 2004, AdZone delivered data products relating to the May 2004 defense
contract. The Company recorded revenue and was paid approximately $150,000 for
this through fiscal 2005. There have been no additional purchase orders to date
and there are no assurances that this revenue stream will continue.

On September 9, 2004, AdZone Research entered into a Joint Venture/Distribution
agreement with Senticore, Inc. and the Justice Fund. Under the agreement, The
Justice Fund and Senticore, jointly, licensed the exclusive right to market,
service and distribute AdZone's Net Get internet monitoring technology in Asia
and South America. For the first year's distribution rights under this
agreement, The Justice Fund and Senticore were to pay a fee to AdZone Research
of $150,000 each. As a marketing fee in the first year, AdZone was to pay
Senticore a fee of $150,000. For Senticore's database of marketing information,
The Justice Fund was to pay Senticore a $100,000 fee. In October 2004, the Joint
Venture/Distribution agreement was amended to provide for the requirement for
each party to pay their respective fees in-kind, i.e., in the same value of
registered common stock. It was further agreed that each receiving party would
distribute 90% of this stock to their shareholders as a dividend. The payments
of in-kind stock were made in December, 2005_. AdZone distributed 90% of
Senticore's stock, or approximately 1.2 million shares, to their stockholders as
a dividend in August, 2005. AdZone was unable to distribute The Justice Fund
shares to shareholders as a dividend because The Justice Fund remained a private
Company and the shares were not registered. Senticore did not distribute the
AdZone shares to their shareholders as a dividend. AdZone performed under this
agreement for under a year by providing Senticore and The Justice Fund access to
their Net Get technology. At the end of this fiscal year, neither of the parties
were performing under this agreement.

The resulting revenue from this agreement has been deferred and is being
recognized over the term of the Distributorship Agreement. At March 31, 2006 and
March 31,2005, $132,329 and $167,671, respectively, is associated with this
contract and is included in revenue.

At March 31, 2006 the investment in The Justice Fund was written off as a loss,
but the liability for the dividend remains.

In December 2004, AdZone began marketing its Cyber Security products and
services. The Company has generated approximately $6,000 and $13,000 in revenues
for the fiscal years ended March 31, 2006 and March 31, 2005, respectively, from
this venture.

During fiscal 2005, the Company raised more than $1 million from the Nutmeg
Group through the execution of_their financing agreement. These proceeds were
used for working capital, new product development and growth initiatives.

On August 18, 2005, AdZone entered into a Distribution/Subscription agreement
with EWANI, Inc. Under the agreement, AdZone will provide EWANI online
advertising and market research data using its online monitoring technology for
an annual fee of $100,000 in cash or EWANI stock. The payment was not made and
neither party has performed under the agreement.

On August 18, 2005, AdZone entered into a Distribution/Subscription agreement
with Billy Martin's USA. Under the agreement AdZone will provide Billy Martin's
USA online advertising and market research data using its online monitoring
technology for an annual fee of $100,000 in cash or Billy Martin's USA stock.
The payment was not made and neither party performed under the agreement.

On August 18, 2005, AdZone entered into a Distribution/Subscription agreement
with Image Global Solutions, Inc. Under the agreement AdZone will provide Image
Global Solutions, Inc. online advertising and market research data using its
online monitoring technology for an annual fee of $100,000 in cash or Image
Global Solutions, Inc. The payment was not made and neither party performed
under the agreement.


                                       2
<PAGE>

On August 18, 2005, AdZone entered into a Distribution/Subscription agreement
with ICM Telecommunications, Inc. Under the agreement AdZone will provide ICM
Telecommunications, Inc. online advertising and market research data using its
online monitoring technology for an annual fee of $100,000 in cash or ICM
Telecommunications, Inc. The payment was not made and neither party performed
under the agreement.

On October 3, 2005, AdZone entered into an Internet Monitoring agreement with
the Justice Fund. Under the agreement AdZone will monitor the internet using its
Inter-cept internet monitoring technology for pirated copies of the movie "All
In" and 2 planned sequels. The agreement value to AdZone is $100,000 and was
paid in October 2005, but not recognized.

During fiscal 2006 AdZone generated revenues of approximately $157,000.The
Company added new products in the Cyber-Security, Defense, Law Enforcement and
Anti Piracy areas. In the last half of fiscal 2006 the Company's focus shifted
to its new law enforcement product, the Online Predator Profiling System (OPPS)
and its related products.

Business Description

OPPS Product Description

In November 2005, AdZone introduced a new product called OPPS, (Online Predator
Profiling System). This online application is designed to identify and track
online sexual predators as well as assist in finding missing children. The OPPS
database is a continually updated database of Internet chat rooms activity (The
chat rooms were selected with input from law enforcement personnel). The user
interface allows searches by screen name, key word and chat room, then allows
users to track conversations.

The OPPS family of products includes three products from the OPPS main database.
OPPS, the main system is used in house by detectives and is desktop based. OPPS
FAST report is designed for quick identification of predator activity or missing
children activity for field officers. OPPS ALERT is designed to alert officers
when a known predator is chatting, which we anticipate will be released in the
second half of 2006.

AdZone's business model is to market and provide these products to law
enforcement personnel on an annual subscription basis.

AdZone's objective is to build a growing, profitable business based on licensing
the OPPS family of products to help stop sexual predators, to assist in finding
missing children, and to make a contribution to society. The marketing plan
includes providing the opportunity for local and national businesses to sponsor
licenses for law enforcement organizations, and also to sell directly to law
enforcement organizations

Product development

The initial structured programming efforts for OPPS began in April of 2005. This
programming and testing was to develop a data collection system whereby AdZone
could capture and extract information from "chat rooms" leveraging AdZone's
existing internet monitoring technology. By the fall of 2005, a multi-protocol
IM/chat room client manager (GAIM) was utilized as a means to increase the
number of simultaneous chat rooms, which could be monitored. The user interface
was developed specifically for law enforcement by allowing single field and
multiple word searches of the database. The first "user" version of OPPS was
ready for release in July 2005.

OPPS Business Activities and Timeline

o     In mid November 2005, AdZone developed a community based sponsorship
      marketing plan to launch its new Online Predator Profiling System (OPPS)
      product. This marketing plan envisions sponsors paying for OPPS licenses
      for law enforcement organizations. This sales approach requires AdZone to
      match sponsors willing to pay for OPPS licenses with law enforcement
      organizations that want an OPPS license. This approach was launched as a
      nationwide law enforcement awareness marketing program.


                                       3
<PAGE>

      AdZone focuses on attracting sponsors in three areas; local businesses
      that are willing to sponsor local law enforcement organizations, national
      businesses that are willing to sponsor law enforcement organizations in
      the communities they conduct business, and developing relationships with
      non-profit organizations that are committed to supporting and funding
      tools for the safety of children from predators, especially internet
      predators.

      AdZone has begun to approach law enforcement organizations and educate
      them about the value of OPPS. This included a direct mail campaign to
      approximately 13,000 law enforcement organizations that included OPPS
      product literature, an explanation of the sponsorship program, and a
      sponsorship request form.

o     In December 2005, the OPPS product was fully functional and the chat room
      database began to archive chat room activity history. AdZone also received
      its first sponsor, a Virginia based reality group. In December, 2004,
      AdZone received 3 additional OPPS licenses from Northern Virginia county
      police departments. The direct mail sponsorship program to law enforcement
      organizations has been accelerated.

o     From November 2005 through January 2006, AdZone received total OPPS
      sponsorship requests from approximately 86 law enforcement organizations
      requesting approximately 2,714 OPPS sponsored licenses. Because OPPS was
      new to the marketplace and to the law enforcement community, AdZone does
      not know how realistic the number of total OPPS sponsored license requests
      is. However, each sponsor request form was filled out in detail and signed
      by a law enforcement official.

      In addition, in January 2006 AdZone signed a Strategic Alliance agreement
      with Web Wise Kids. Web Wise Kids is a not for profit organization in
      Santa Ana, California that is focused on education and protecting children
      from the dangers of using the internet. Web Wise Kids endorsed the use of
      OPPS by law enforcement organizations and agreed to work with AdZone to
      promote OPPS and their sponsorship program. AdZone agreed to donate $3.00
      to Web Wise Kids for each OPPS license sold.

o     In February 2006, AdZone developed a relationship with Mark Lunsford,
      whose daughter was brutally slain by a child predator. Mark Lunsford
      created the Jessica Marie Lunsford Foundation as a non profit organization
      to lobby for state legislation to protect children from child predators,
      and to engage in other related activities to protect children. Mark
      Lunsford supported the use of OPPS by law enforcement organizations and
      signed an endorsement agreement to actively represent AdZone and OPPS. The
      agreement includes a monthly donation from AdZone of $2,500 to the Jessica
      Maria Lunsford Foundation and also a donation of 1% of OPPS gross license
      proceeds. AdZone also agreed to donate 50,000 AdZone shares to the Jessica
      Maria Lunsford foundation.

      In February 2006, AdZone introduced an OPPS product extension, the Fast
      Report. This product operates on laptops and PDA's and allows law
      enforcement to identify where a missing child's screen name was being used
      on internet chat rooms This allows law enforcement officers to identify
      who the child may have been talking with and what they may have been
      talking about. We believe that this information could help law enforcement
      quickly locate missing children.

      In addition, in February 2006 AdZone signed an agreement with Sunshine
      Network for Youth Safety. This not for profit organization was newly
      formed to raise funds to sponsor OPPS licenses to law enforcement
      organizations nationwide, create and fund educational programs and
      materials to keep kids aware of the dangers online, to fund programs to
      educate kids of the dangers of drugs, and to provide Law Enforcement with
      additional software tools that will assist them in keeping our children
      safe. Also, in February 2006, the requests for sponsored OPPS licenses
      grew in total to approximately 4,857 licenses from approximately 140 law
      enforcement organizations.

o     In March 2006 the requests for sponsored licenses grew to approximately
      6,807 from 195 law enforcement organizations. The requests were
      overwhelming and AdZone did not have the staffing or funds to aggressively
      pursue sponsors. At that time, AdZone had 17 paid licenses. To develop
      direct sales of OPPS to law enforcement organizations, AdZone engaged
      Captain William Murphy. He brought direct experience with law enforcement
      organizations and insight into their procurement practices.


                                       4
<PAGE>

COMPETITION

AdZone has several competitors in the Internet advertising monitoring area, many
of which have financial and other resources that are far greater than its own.
AdZone's limited resources may hinder its ability to compete effectively.
AdZone's principal competitor is Competitive Media Research (CMR), a division of
Taylor Nelson Sofres, which offers advertising expenditure information on close
to 300 web sites as well as an online application for accessing certain of its
data.

AdZone has many competitors in the movie and music piracy business, many of
which have financial and other resources that are far greater than its own.
AdZone's limited resources may hinder its ability to compete effectively.

AdZone has no known competitors to our Online Predator Profiling System.

SALES AND MARKETING

AdZone markets its products and services principally through e-mail
distributions to selected target markets, through direct sales contacts, through
the sales efforts of advisor General Paul Weaver and through its websites,
www.AdZoneinteractive.com, and www.AdZoneresearch.com.

DISTRIBUTION METHODS OF PRODUCTS OR SERVICES

AdZone distributes its products and services electronically through e-mailing
its reports to the client, posting such reports to a private website that is
accessible to the client, distribution of the report on a CD-ROM, or faxing its
reports to the client location. In June 2002, AdZone concluded a Systems
Integrator Agreement with Raytheon Company, whereby Raytheon agreed to
demonstrate and promote sales of AdZone's proprietary software for defense and
security applications. Any such sales of AdZone's software products through
Raytheon, therefore, would be completed through sales of Raytheon's own
technology with which AdZone's products would be integrated. This agreement was
terminated in August 2005.

OPPS is an Online Application. All licensed users gain access to the product,
its application and database through the internet.

STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE

In May 2004, we executed a letter of intent based on a proposal for services
issued to a major United States Governmental agency. The agency subsequently
issued and executed a contract with an initial face value of $100,000 with
provisions for increases based on certain specified performance benchmarks. This
agreement was subsequently extended for an additional $50,000. The Company is
currently engaged in negotiating additional contracts for these products.

AdZone's inter-cept product for monitoring the internet for movie piracy is
active and has one customer agreement valued at $100,000.

AdZone's OPPS product is active and has 17 active paid licensed customers.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

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


                                       5
<PAGE>

DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS

The Company derived substantially all of its revenues from one major customer.

PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS, INCLUDING DURATION

AdZone owns its internet domain names, www.AdZoneinteractive.com,
www.AdZoneresearch.com, and www.AdZonereports.com and holds a common law
copyright on all of its proprietary software.

In addition, AdZone has no plans to enter into franchise, concession or labor
contracts.

NEED FOR GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES

AdZone is not required to apply for or obtain any government approval for its
products or services.

EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS

AdZone is not currently subject to direct federal, state or local regulation in
the United States other than regulations applicable to businesses generally or
directly applicable to electronic commerce. However, it is possible that a
number of laws and regulations may be adopted in the United States with respect
to the Internet. These laws may cover issues such as user privacy, freedom of
expression, pricing, content and quality of products and services, taxation,
advertising, intellectual property rights and information security. In addition,
due to the sensitive nature of the data extracted in its anti-terrorism programs
the US government could prohibit or restrict the markets that AdZone could sell
to. The effect of this restriction if any is unknown. Furthermore, the growth of
electronic commerce may prompt calls for more stringent consumer protection
laws. Several states have proposed and/or enacted legislation to limit the use
of personal user information gathered online or require online services to
establish privacy policies. The adoption of such laws could create uncertainty
in Internet usage and reduce the demand for all products and serves. AdZone is
not certain how its business may be affected by the application of existing laws
governing issues such as property ownership, copyrights, encryption and other
intellectual property issues, taxation, libel, obscenity and export or import
matters. The vast majority of those laws were adopted prior to the advent of the
Internet. As a result, they do not contemplate or address the unique issues of
the Internet and related technologies. Changes in laws intended to address such
issues could create uncertainty in the Internet marketplace. That uncertainty
could reduce demand for AdZone's products or services or increase the cost of
doing business as a result of litigation costs or increased service delivery
costs.

PRODUCTION COSTS

AdZone has expended approximately $491,000 and $498,000 during fiscal 2006 and
2005, respectively, for the maintenance and upgrading of its proprietary
software.

COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS

AdZone has not expended any funds for compliance with environmental laws and
does not anticipate its business plan will require any such compliance.

EMPLOYEES

AdZone has thirteen full time employees. None of AdZone's employees are
represented by a union, and AdZone considers its employee relationships to be
good.


                                       6
<PAGE>

ITEM 2 - DESCRIPTION OF PROPERTY

AdZone conducts its administrative, development and marketing operations in
facilities leased from an unrelated party at 4062-80 Grumman Blvd. Calverton, NY
11933. Management believes that the facilities used by it in the operation of
its business are adequately covered by insurance and are suitable and adequate
for their purposes.

ITEM 3 - LEGAL PROCEEDINGS

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

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

AdZone has not conducted any meetings of shareholders during the preceding
quarter.


                                       7
<PAGE>

                                     PART II

ITEM 5 - MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

In January 2000, AdZone became a publicly reporting Company under the Securities
Exchange Act of 1934, after filing a Form 10-SB with the United States
Securities and Exchange Commission. We also filed a request with the NASD for
clearance of quotations on the OTC Bulletin Board under Rule 15c2-11 of the
Securities Exchange Act of 1934. We were issued the trading symbol, "EHSV."
Concurrently with our merger with AII on August 10, 2001, we changed our
corporate name to AdZone Research, Inc. and changed our trading symbol to
"ADZR."

The following are the high and low closing prices of AdZone's Common Stock for
each quarter during the last two fiscal years. These high and low bid prices
represent prices quoted by broker-dealers on the OTC Bulletin Board. These
prices represent inter-dealer quotations without retail markup, markdown, or
commission and may not necessarily represent actual transactions.

FISCAL YEAR ENDED MARCH 31, 2006

                          High                   Low
                          -----                  -----
First Quarter             $0.17                  $0.12
Second Quarter            $0.16                  $0.12
Third Quarter             $0.09                  $0.04
Fourth Quarter            $0.20                  $0.04

FISCAL YEAR ENDED MARCH 31, 2005

                          High                   Low
                          -----                  -----
First Quarter             $0.56                  $0.20
Second Quarter            $0.32                  $0.16
Third Quarter             $0.24                  $0.09
Fourth Quarter            $0.17                  $0.12

As of March 31, 2006, there were 176,434,965 shares of $0.001 par value common
stock of AdZone outstanding and owned by approximately 213 shareholders of
record, exclusive of shareholders holding their shares in street name. As of
July 6, 2006, there were 193,018,402 shares of $0.001 par value common stock of
AdZone outstanding and owned by approximately 213 shareholders of record,
exclusive of shareholders holding their shares in street name.

Our original Certificate of Incorporation authorized the issuance of 100,000,000
shares of common stock, $0.001 par value per share, and 20,000,000 shares of
$0.001 par value preferred stock. Currently, there are 2.78 shares of Preferred
Class A stock and 1 share of Preferred Class B stock outstanding.

Holders of shares of common stock are entitled to one vote for each share on all
matters to be voted on by the stockholders. Holders of common stock have
cumulative voting rights. Holders of shares of common stock are entitled to
share ratably in dividends, if any, as may be declared, from time to time by the
Board of Directors in its discretion, from funds legally available therefore. In
the event of a liquidation, dissolution, or winding up of AdZone, the holders of
shares of common stock are entitled to share pro rata all assets remaining after
payment in full of all liabilities. Holders of common stock have no preemptive
or other subscription rights, and there are no conversion rights or redemption
or sinking fund provisions with respect to such shares.

On May 27, 2004, pursuant to actions filed on a Schedule 14C, the Company's
Articles of Incorporation were amended to allow for the issuance of up to
200,000,000 shares of $0.001 par value common stock from 100,000,000 shares of
$0.001 par value previously authorized. The effect of this change is reflected
in the accompanying financial statements as of the first day of the first period
presented.


                                       8
<PAGE>

DIVIDEND POLICY

AdZone has never paid or declared a cash dividend on its common stock. The Board
of Directors does not intend to declare or pay cash dividends in the foreseeable
future. It is the current policy of the Board to retain all earnings, if any, to
support future growth and expansion.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth the aggregate number of shares of AdZone's Common
Stock that may be issued upon exercise of outstanding options granted to Mr.
Charles Cardona, our Chairman of the Board of Directors, and Mr. John Cardona,
our Vice Chairman of the Board of Directors of AdZone, and the weighted average
exercise price of such options.

<TABLE>
<CAPTION>
                                           Number of            Weighted-
                                       securities to be          average             Number of
                                          issued upon            exercise       securities remaining
                                          exercise of            price of       available for future
                                          outstanding           outstanding        compensation
                                            options,             options,      (excluding securities
                                          warrants and           warrants         referred to in
                                             rights             and rights            column 1
                                        ----------------     ----------------     ----------------
<S>                                     <C>                  <C>                  <C>
Equity compensation plans approved
  by security holders                                -0-                  -0-                  -0-

Equity compensation plans not
  approved by security holders                 4,000,000                  .98                  -0-

      Total                                    4,000,000                  .98                  -0-
</TABLE>

RECENT SALES OF UNREGISTERED SECURITIES

On January 23, 2006, we issued 1,000,000 shares of common stock to Kyle Kennedy
for a purchase price of $0.05 per share.

On February 28,2006, we issued 4,000 shares of common stock to Thomas Madigan
for a purchase price of $0.05 per share.

* All of the above offerings and sales were deemed to be exempt under rule 506
of Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No
advertising or general solicitation was employed in offering the securities. The
offerings and sales were made to a limited number of persons, all of whom were
accredited investors, business associates of AdZone or executive officers of
AdZone, and transfer was restricted by AdZone in accordance with the
requirements of the Securities Act of 1933. In addition to representations by
the above-referenced persons, we have made independent determinations that all
of the above-referenced persons were accredited or sophisticated investors, and
that they were capable of analyzing the merits and risks of their investment,
and that they understood the speculative nature of their investment.
Furthermore, all of the above-referenced persons were provided with access to
our Securities and Exchange Commission filings.


                                       9
<PAGE>

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Special Note on Forward-Looking Statements. Certain statements in "Management's
Discussion and Analysis or Plan of Operation" below, and elsewhere in this
annual report, are not related to historical results, and are forward-looking
statements. Forward-looking statements present our expectations or forecasts of
future events. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. These statements involve known
and unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements.
Forward-looking statements frequently are accompanied by such words such as
"may," "will," "should," "could," "expects," "plans," "intends," "anticipates,"
"believes," "estimates," "predicts," "potential" or "continue," or the negative
of such terms or other words and terms of similar meaning. Although we believe
that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance,
achievements, or timeliness of such results. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of such
forward-looking statements. We are under no duty to update any of the
forward-looking statements after the date of this annual report. Subsequent
written and oral forward looking statements attributable to us or to persons
acting in our behalf are expressly qualified in their entirety by the cautionary
statements and risk factors set forth below and elsewhere in this annual report,
and in other reports filed by us with the SEC.

You should read the following description of our financial condition and results
of operations in conjunction with the financial statements and accompanying
notes included in this report beginning on page F-1.

AdZone follows the accrual basis of accounting in accordance with U.S. generally
accepted accounting principles.

OVERVIEW

We were incorporated in Delaware on May 31, 1994 under the name Executive Help
Services, Inc. for the purpose of developing an Internet web site that would
offer planning of professional office space and design of modular office
furniture with direct ordering capabilities. From our inception until June 1999,
we had no significant operations. In June 1999, we began to offer our products
and services through an e-commerce website, "www.modularoffice.com", which
offered office furnishings to businesses ranging in size from small businesses
operating in home offices to large corporate customers.

On August 10, 2001, we closed an Agreement and Plan of Share Exchange with AII
whereby we exchanged 18,000,000 shares of our restricted common stock for 100%
of the issued and outstanding common stock of AII. Immediately thereafter, we
effected a merger of the two entities with AII as the surviving entity. At the
time of the merger, we changed our corporate name to AdZone Research, Inc. and
our trading symbol was changed to "ADZR."

Our principal executive offices are located at 4062-80 Grumman Boulevard,
Calverton, New York 11933 and our telephone number is (631) 369-1100.

RESULTS OF OPERATIONS

Years Ended March 31, 2006 and March 31, 2005.

REVENUES:

Revenues for the year ended March 31, 2006 amounted to $154,781 compared to
$332,037 for the same period of the prior fiscal year. This decrease in revenues
is primarily attributable to termination of a Department of Defense contract in
the amount of $150,000.

Current period revenues of $132,329 are derived from licensing arrangements for
commercial applications of the Company's technologies. In addition, the Company
derived $6,343 from its cyber security division and $16,109 from its Online
Predator Profiling System. Revenues for the prior fiscal year were derived from
sales of our Defense Division representing sub-contracting sales to a major
defense supply contractor; licensing arrangements for commercial application of
the Company's technologies and its cyber security division. While the Company
expects similar revenue producing industry contracts in the future, no
additional US Government or defense contracts have been entered into as of this
date. AdZone does have an intercept contract that it has not recognized the
revenue for, and a small and growing number of OPPS licenses.


                                       10
<PAGE>

PRODUCTION EXPENSES:

Salaries, wages and related costs:

For the fiscal year ended March 31, 2006, AdZone incurred wage related costs of
$276,921 compared to $381,267 for the same period of the prior fiscal year. This
decrease was caused by a reduction in bonuses paid in fiscal 2006 compared to
fiscal 2005. The Company has instituted the use of interns to supplement
salaried positions for standard monitoring for future contracts. See salaries,
wages and related costs under the caption OPERATING EXPENSES, below, for
information about stock-based compensation.

Direct occupancy and operating expenses:

For the fiscal year ended March 31, 2006, AdZone incurred operating-related
expenses of $214,422 compared to $116,416 for the same period of the prior
fiscal year. This increase was due to expanded efforts to develop
revenue-producing contracts.

OPERATING EXPENSES:

Salaries and wages and related costs:

For the fiscal year ended March 31, 2006, AdZone incurred wage related costs for
marketing of $4,223,461 compared to $1,171,861 for the prior fiscal year. The
increase relates to the issuance of stock grants and options to employees in
fiscal 2006. In addition, as a result of the adoption of SFAS No. 123r, the
Company is required to recognize greater compensation expense for the options
issued to employees beginning in January 2006.

Salaries and wages included $3,574,922 and $318,059 of stock-based compensation
during the fiscal years ended March 31, 2006 and 2005, respectively. Stock-based
awards were made to Company officers and employees to preserve existing cash
reserves. The Company has measured compensation associated with stock awards to
employees using the closing market price for the Company's trading common stock
on the dates of awards and the Black Scholes method for valuing stock options.

Consulting and professional fees:

For the fiscal year ended March 31, 2006, AdZone incurred consulting and
professional fees of $2,350,487 compared to $1,705,805 for the prior fiscal
year. The increase is due to the greater use of consultants and professionals
during the fiscal year. Consultants have been used by the Company to identify
revenue opportunities and develop business strategies.

The Company compensated certain consultants and professionals with stock-based
compensation. During the fiscal years ended March 31, 2006 and 2005, this
expense category included $2,248,028 and $1,748,853 of stock-based compensation.
The Company measures the compensation associated with stock awards to
consultants and professional service providers using the closing market price
for the Company's trading common stock on the date of the award.

General and administrative expense:

For the fiscal year ended March 31, 2006, AdZone incurred general and
administrative expense of $1,110,301 compared to $633,935 for the prior fiscal
year. General and administrative expenses increased as a result of directors'
fees and expanded efforts to develop revenue-producing contracts.


                                       11
<PAGE>

Depreciation and amortization:

Depreciation and amortization expense amounted to $14,153 for the fiscal year
ended March 31, 2006 compared to $13,981 for the prior fiscal year. Depreciation
increased as a result of certain computer equipment being acquired during the
current year. The Company currently has no commitments to acquire property or
equipment at this time. However, new revenue producing contracts, when and if
awarded, will require the Company to acquire additional computer equipment to
support the contracts.

OTHER INCOME (EXPENSE):

Interest expense:

For the fiscal year ended March 31, 2006, AdZone incurred interest expense of
$42,980 compared to $5,796 for the same period of the prior fiscal year.
Interest has increased due to the addition of debt in fiscal 2006. The increase
is a result of the issuance of debt during the fiscal year ended March 31,2006.

Write down of marketable securities:

During the fiscal year ended March 31, 2005, AdZone took a fair market value
writedown on certain marketable securities that had been declared as property
dividends. The writedown was recorded as of the date of the dividend declaration
in the amount of $36,813.

Loss on investment:

During the fiscal year ended March 31, 2006, AdZone recorded a loss in its
investment in The Justice Fund in the amount of $150,000.

NET LOSS:

Based upon the aforementioned discussion items, AdZone incurred a net loss of
$(12,005,573) for the fiscal year ended March 31, 2006, as compared to a net
loss of $(4,653,464) for the fiscal year ended March 31, 2005. This increase in
net loss is primarily attributable to ; the loss recognized as a result the
extinguishment of the Company's obligation to the Nutmeg Group, increased
compensation costs as a result of increased use of stock grants and options and
the adoption of SFAS 123r in the fourth quarter.

PREFERRED STOCK DIVIDENDS AND ACCRETIONS:

Preferred stock dividends and accretions relate to the Company's 9% Series A and
9% Series B Preferred Stock. The Company carries its preferred stock based upon
amounts allocated to these securities in connection with certain unit offerings
during the year. The Company accretes the carrying value to its respective
redemption values through periodic charges to retained earnings. Accretions
during the years ended March 31, 2006 and 2005 amounted to $-0- and $116,214,
respectively. Preferred stock dividends paid which amounted to $3,348 and
$61,060 for the fiscal years ended March 31, 2006 and 2005, respectively, plus
accretions are reflected as increases in net loss to arrive at loss attributable
to common stockholders for purposes of our loss per common share computations.
Preferred stock dividends will be recorded so long as the preferred stock is
outstanding.

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

LIQUIDITY AND CAPITAL RESOURCES

Conditions raising doubt about the Company's ability to continue as a going
concern and management's plans:

The Company's financial statements have been prepared in accordance with
generally accepted accounting principles and contemplate that the Company will
continue as a going concern for a reasonable period. As noted in the financial
statements, the Company incurred a net loss of ($12,005,573) and used cash of
($1,659,083) in conducting its operations during the year ended March 31, 2006.
These recurring negative trends raise substantial doubt about the Company's
ability to continue as a going concern.


                                       12
<PAGE>

Operating cash flows for fiscal year ended March 31, 2007 are not projected to
be sufficient to sustain the Company's operations. However, management currently
believes that existing cash reserves of $1,068,871 as of March 31, 2006 will be
sufficient to fund operating deficits for a period of approximately twelve
months following March 31, 2006. Management considered the following specific
elements of its internal projections in making its conclusions about its ability
to continue for approximately twelve months following March 31, 2006:

      a.    Management does not believe that the significant level of cash used
            in operations during the year ended March 31, 2006 ($1,659,083) is
            indicative of cash flow usage during the next four fiscal quarters.
            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.    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 and new OPPS licenses, may
            result in additional computer hardware and infrastructure expenses.

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

Management plans to continue to promote contracts with 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 has introduced a new product called Online Predator Profiling System
(OPPS), developed with the help of a number of law enforcement departments for
identifying and tracking online predators as well as finding missing children,
and has started taking orders for same.

The Company's ability to continue as a going concern is dependent upon the
preservation of existing cash reserves and ultimately, the achievement of
profitable operations. The financial statements do not include any adjustments
that might arise as a result of this uncertainty.

The capitalization of AdZone through the sale of equity securities, loans and
the exercise of options has allowed AdZone to maintain a positive cash position.
AdZone has approximately $1,068,871 on hand at March 31, 2006 as compared to
$431,790 at March 31, 2005.

Liquidity during fiscal 2006 and 2005 was provided principally through the sales
of equity securities, loans and the exercise of options under the Company's
stock option plan. There is no guarantee that we will be successful in raising
cash from the sale of unregistered securities or through loans. Total proceeds
from sales of equity securities were $225,200 during Fiscal 2006 and $1,456,863
during Fiscal 2005. Total proceeds from loans during fiscal 2006 and 2005 were
$815,000 and $125,000, respectively.


                                       13
<PAGE>

PLAN OF OPERATION

The Company has initially identified four key potential markets for AdZone's
products: businesses engaged in advertising research; agencies of the federal
and of state governments, the defense and security industries and law
enforcement. The Company's operations will continue to focus on mining of data
and other information through the monitoring of Internet websites developed and
maintained by independent third parties worldwide. Additionally, if the Company
is able to obtain one or more contracts with governmental agencies or other
organizations to provide internet monitoring for possible terrorist, cybercrime
and/or bioterrorist activities, management intends to use its proprietary
software in accordance with the requirements of such respective contracts.
AdZone has been very successful in garnering support from many members of
Congress.

The Company has introduced a new product called Online Predator Profiling System
(OPPS), developed with the help of a number of law enforcement departments for
identifying and tracking online predators as well as finding missing children,
and has started taking orders for same.

This direct effort resulted in AdZone receiving a test contract from the
Department of Defense in early FY 2003 which ran through parts of the first two
quarters of fiscal year end March 31, 2005 (June to the end of September, 2004).
The undertaking was successful enough to 1) receive official "validation" from a
government-owned testing laboratory of AdZone's ability to find and log the
presence of specific information contained in English and other languages
communicated over the Internet in a fashion for which these were not meant to be
used (a process that took over 5 months for the government to complete), and 2)
receipt of a formal commendation to the highest levels of the re-organized U.S.
intelligence establishment. While delays have occurred, AdZone is confident it
will achieve revenues from this.

In September 2004 AdZone signed a contract with Senticore Inc and The Justice
Fund granting rights to distribute its NetGet (TM) Internet monotoring
technology for a period of one year in exhange for $300,000. The contract
contains three one-year renewal options, at the discretion of the distributor,
with a maximum revenue potential of $2.25 million. This contract provides AdZone
with marketing and additional services for distribution of the Company's
products internationally. It also provides access to additional legal services
supporting the Company's anti-piracy efforts. At the end of this fiscal year,
neither of the parties was performing under this agreement.

AdZone will face considerable risks in each of its future business plan steps,
such as difficulty of hiring competent personnel within its budget, longer than
anticipated website decoding, difficulty in completing key business
acquisitions, and a shortfall of funding due to AdZone's inability to raise
capital in the equity securities market. AdZone is currently dependent upon the
sale of equity securities, loans and the exercise of options. AdZone's officers
and directors have no formal commitments or arrangements to advance or loan
funds to AdZone and do not have any legal requirement to do so.


                                       14
<PAGE>

CONTRACTUAL OBLIGATIONS

The table below reflects the Company's contractual obligations for the next five
years.

<TABLE>
<CAPTION>
                              Less than        One to        Three to         After
                               One Year     Three Years     Five Years      Five Years       Total
                              ----------     ----------     -----------     -----------     ----------
<S>                           <C>            <C>            <C>             <C>             <C>
Short-term debt               $  955,385     $       --     $        --     $        --     $  955,385

Employment agreements            575,000      1,937,500              --              --      2,512,500

Operating lease obligations       50,188         25,332              --              --         75,520
                              ----------     ----------                                     ----------
                              $1,580,573     $1,962,832              --              --     $3,543,405
                              ==========     ==========                                     ==========
</TABLE>

OFF-BALANCE SHEET ARRANGEMENTS

We do not currently have any additional off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to our stockholders.

                                  RISK FACTORS

In addition to other information contained in this Form 10-KSB, the following
Risk Factors should be considered when evaluating the forward-looking statements
contained in this Form 10-KSB:

              RISKS RELATED TO OUR FINANCIAL CONDITION AND BUSINESS

WE REQUIRE ADDITIONAL FINANCING IN ORDER TO CONTINUE IN BUSINESS AS A GOING
CONCERN, THE AVAILABILITY OF WHICH IS UNCERTAIN. WE MAY BE FORCED BY BUSINESS
AND ECONOMIC CONDITIONS TO ACCEPT FINANCING TERMS WHICH WILL REQUIRE US TO ISSUE
OUR SECURITIES AT A DISCOUNT, WHICH COULD RESULT IN FURTHER DILUTION TO OUR
EXISTING STOCKHOLDERS.

We require additional financing to fund our operations. There can be no
assurance that additional financing will be available to us when needed or, if
available, that it can be obtained on commercially reasonable terms. In
addition, any additional equity financing may involve substantial dilution to
our stockholders. If we fail to raise sufficient financing to meet our immediate
cash needs, we will be forced to scale down or perhaps even cease the operation
of our business, which may result in the loss of some or all of your investment
in our common stock.

In addition, in seeking debt or equity private placement financing, we may be
forced by business and economic conditions to accept terms which will require us
to issue our securities at a discount from the prevailing market price or face
amount, which could result in further dilution to our existing stockholders.

WE HAVE A HISTORY OF OPERATING LOSSES AND FLUCTUATING OPERATING RESULTS, WHICH
RAISE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

Since inception through March 31, 2006, we have incurred cumulative losses of
$(24,202,380). Our net loss for the fiscal years ended March 31, 2006 and March
31, 2005 were ($12,005,573) and ($4,653,464), respectively. There is no
assurance that we will operate profitably or will generate positive cash flow in
the future. In addition, our operating results in the future may be subject to
significant fluctuations due to many factors not within our control, such as the
unpredictability of when customers will order products, the size of customers'
orders, the demand for our products, and the level of competition and general
economic conditions.

Although we are confident that revenues will increase, we also expect an
increase in development costs and operating costs. Consequently, we expect to
incur operating losses and negative operating cash flow until our products gain
market acceptance sufficient to generate a commercially viable and sustainable
level of sales, and/or additional products are developed and commercially
released and sales of such products made so that we are operating in a
profitable manner.


                                       15
<PAGE>

OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAVE EXPRESSED DOUBT ABOUT OUR
ABILITY TO CONTINUE AS A GOING CONCERN, WHICH MAY HINDER OUR ABILITY TO OBTAIN
FUTURE FINANCING.

In their report dated July 10, 2006, our independent registered public
accounting firm have expressed substantial doubt about our ability to continue
as a going concern. Our ability to continue as a going concern is an issue
raised as a result of recurring losses from operations, a stockholders' deficit,
and requirement for a significant amount of capital financing to proceed with
our business plan. Our ability to continue as a going concern is subject to our
ability to generate a profit and/or obtain necessary funding from outside
sources, including obtaining additional funding from the sale of our securities,
increasing sales or obtaining loans and grants from various financial
institutions where possible. The going concern qualification in the auditor's
report increases the difficulty in meeting such goals and there can be no
assurances that such methods will prove successful.

WE MAY HAVE TO CURTAIL OUR BUSINESS IF WE CANNOT FIND ADEQUATE FUNDING.

We currently have no legally binding commitments with any third parties to
obtain any material amount of additional equity or debt financing. We need
immediate funds and may not be able to obtain any additional financing in the
amounts or at the times that we may require the financing or, if we do obtain
any financing, that it would be on acceptable terms because of the following:

-     We have no assets to pledge as security for the loan

-     We are in poor financial condition

-     We maybe viewed as a high market risk

As a result, we may not have adequate capital to implement future expansions,
maintain our current levels of operation or to pursue strategic acquisitions.
Our failure to obtain sufficient additional financing could result in the delay
or abandonment of some or all of our development, expansion and expenditures,
which could harm our business and the value of our common stock.

WE MAY HAVE TO CURTAIL OR CEASE OUR DEFENSE DIVISION AND MARKETING OF
ANTI-TERRORIST SERVICES TO GOVERNMENT SECURITY AGENCIES IF WE DO NOT ENTER INTO
REVENUE PRODUCING CONTRACTS ON FAVORABLE TERMS.

Our success of our Defense Division and the marketing of our anti-terrorist
services to government security agencies is dependent upon our ability to
execute revenue producing contracts for the sale of such services on terms that
are generally favorable to us. On September 30, 2004, our agreement with the
U.S. Department of Defense was not renewed and terminated. As of the date
hereof, we have not entered into a new agreement with the government agency.

There can be no assurance that additional contracts will be executed by us or on
terms acceptable to us, if at all. The inability to enter into such contracts
may cause us to curtail or cease our Defense Division and the marketing of our
anti-terrorist services to government security agencies and may reduce our
ability to continue to conduct business operations.

                       RISKS RELATING TO OUR COMMON STOCK

THE MARKET PRICE OF OUR COMMON STOCK MAY DECLINE BECAUSE THERE ARE A LARGE
NUMBER OF SHARES UNDERLYING OUR WARRANTS THAT MAY BE AVAILABLE FOR FUTURE SALE
AND THE SALE OF THESE SHARES MAY DEPRESS THE MARKET PRICE.


                                       16
<PAGE>

The market price of our common stock may decline because there are a large
number of shares which we are required to issue pursuant to our May 2004
financing, and shares underlying our warrants that may be available for future
sale, and the sale of these shares may depress the market price. As of July 6,
2006, there were 193,018,402 shares of common stock issued and outstanding and
outstanding options and warrants to purchase up to approximately 61,224,049
shares of common stock. All of the shares included in this prospectus may be
sold without restriction. The sale of these shares may adversely affect the
market price of our common stock.

OUR COMMON STOCK IS SUBJECT TO "PENNY STOCK" RULES.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes
the definition of a "penny stock," for the purposes relevant to us, as any
equity security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules require:

o     that a broker or dealer approve a person's account for transactions in
      penny stocks; and

o     the broker or dealer receive from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be purchased.

In order to approve a person's account for transactions in penny stocks, the
broker or dealer must:

o     obtain financial information and investment experience objectives of the
      person; and

o     make a reasonable determination that the transactions in penny stocks are
      suitable for that person and the person has sufficient knowledge and
      experience in financial matters to be capable of evaluating the risks of
      transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form:

o     sets forth the basis on which the broker or dealer made the suitability
      determination; and

o     that the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.


ITEM 7 - INDEX TO FINANCIAL STATEMENTS

The required accompanying financial statements begin on page F-1 of this Annual
Report.

ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURES

On November 23, 2005, Aidman, Piser & Co. P.A. (the "Former Accountant")
resigned as the auditors for AdZone Research, Inc. (the Company).

On December 9, 2005,the Company engaged Holtz Rubenstein Reminick LLP. (the "New
Accountant"),as its certified public accountant. The Company's decision to
engage the new Accountant was approved by its Board of Directors on December 9,
2005. A form 8K has been filed as a result of the change.

The report of the Former Accountant on the financial statements of the Company
for the fiscal year end March 31, 2005 , did not contain an adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles for the two most recent fiscal years and all
subsequent interim periods, except that the Former Accountant's opinion in its
report on the Company's financial statements expressed substantial doubt with
respect to the Company's ability to continue as a going concern for the last
fiscal year.


                                       17
<PAGE>

During the Company's last recent fiscal year and the subsequent interim period
through the date of resignation, there were no reportable events as the term
described in Item 304(a)(1)(iv) of Regulation S-B, except for the following:

The Former Accountant advised management that they noted deficiencies in
internal controls relating to:

o     the valuation of equity securities issued to employee and non-employees;
      and

o     the accounting and reporting for preferred stock that had also included
      the issuance of warrants and beneficial conversion features.

In addition, the Former Accountant advised management that internal controls
necessary to develop reliable financial statements did not exist for the two
most recent fiscal years ended March 31, 2005 and 2004, respectively.

The Former Accountant advised management that each of these internal control
deficiencies constitute a material weakness as defined in Statement of Auditing
Standards No, 60. Certain of these internal control weaknesses may also
constitute material weaknesses in the Company's disclosure controls.

During the Company's two previous fiscal years and the subsequent period through
the date of resignation, there were no disagreements with the Former Accountant
on any matters of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which, if not resolved to the
satisfaction of the Former Accountant, would have caused it to make reference to
the subject matter of the disagreements in connection with its reports on these
financial statements for those periods.

The Company did not consult with the New Accountant regarding the application of
accounting principles to a specific transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the Company's financial
statements, and no written or oral advice was provided by the New Accountant
that was a factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issues.

On August 4, 2004, AdZone Research, Inc. notified S. W. Hatfield, CPA, ("SWH ")
that it has engaged Aidman, Piser & Company, P.A. as the Company's auditor and
as a consequence SWH was dismissed as the Company's auditors. On August 4, 2004,
the Company engaged Aidman, Piser & Company, P.A. as independent auditor of the
Company for the fiscal year ending March 31, 2005. The action to engage Aidman,
Piser & Company, P.A. was taken upon the unanimous approval of the Board of
Directors of the Company, which performs the function of the Audit Committee.

During the last two fiscal years ended March 31, 2004 and March 31, 2003 and
through August 4, 2004, (i) there were no disagreements between the Company and
SWH on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure which, if not resolved to the
satisfaction of SWH would have caused SWH to make reference to the matter in its
reports on the Company's financial statements, and (ii) SWH's reports did not
contain an adverse opinion or a disclaimer of opinion, or was qualified or
modified as to uncertainty, audit scope, or accounting principles. During the
last two most recent fiscal years ended March 31, 2004 and 2003 and through
August 4, 2004, there were no reportable events as the term described in Item
304(a)(1)(iv) of Regulation S-B. SWH 's opinion in its report on the Company's
financial statements for the year ended March 31, 2004 and 2003, expressed
substantial doubt with respect to the Company's ability to continue as a going
concern.

During the two most recent fiscal years and through August 4, 2004, the Company
has not consulted with S. W. Hatfield, CPA regarding either:

      1. the application of accounting principles to any specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on the Company's financial statements, and neither a written report was
provided to the Company nor oral advice was provided that S. W. Hatfield, CPA
concluded was an important factor considered by the Company in reaching a
decision as to the accounting, auditing or financial reporting issue; or


                                       18
<PAGE>

      2. any matter that was either subject of disagreement or event, as defined
in Item 304(a)(1)(iv)(A) of Regulation S-B and the related instruction to Item
304 of Regulation S-B, or a reportable event, as that term is explained in Item
304(a)(1)(iv)(A) of Regulation S-B.

ITEM 8A - CONTROLS AND PROCEDURES

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

The Company has had discussions with the accounting staff (the "Staff") of the
SEC with respect to (1) the valuation of equity securities, including options,
issued to employees and non-employees and (2) the accounting and reporting for
preferred stock that had also included the issuance of warrants and beneficial
conversion features. After the Company's discussions with the Staff, and after
the Company consulted with its independent registered public accounting firm,
the Company determined the need to restate its annual and quarterly financial
statements for fiscal 2004. Aidman, Piser & Company, P.A. advised AdZone that
each of these internal control deficiencies constitute a material weakness as
defined in Statement of Auditing Standards No. 60. Certain of these internal
control weaknesses may also constitute material weaknesses in our disclosure
controls. Management has considered the effects of the financial statement
restatements on its evaluation of disclosure controls and procedures and has
concluded that weaknesses are present. Our chief executive officer and our
principal accounting officer concluded that as of the Evaluation Date our
disclosure controls and procedures were not effective, and as of the date of the
filing of this report, our chief executive officer and our chief financial
officer concluded that we do not maintain disclosure controls and procedures
that are effective in providing reasonable assurance that information required
to be disclosed in our reports under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to our management, including our chief executive officer and our
principal acconting officer, to allow timely decisions regarding required
disclosure.

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

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

(i)    acquiring the appropriate level of internal financial support

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

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

(iiii) implementing more structured financial controls and reporting.

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

Year ending March 31, 2005

It has come to the attention of the company through an independent due diligence
process that there is an error in the calculation of the stock settlement
liability reported as of March 31, 2005. As a result, the stock settlement
liability and related derivative loss, as originally reported in the March 31,
2005 statement of operations, was understated by $462,512. Net loss and
accumulated deficit were also understated by this amount. The statements of
operations and comprehensive loss, cash flows and changes in the shareholders
deficit for the year ended March 31, 2005, presented in the current year
financial statements have been restated to correct this error.

We are implementing a better system of controls and review process by our
management to avoid similar problems in the future. This is being accomplished
by a periodic review of our day to day financial entries by management to avoid
any improper entries or issues that need to be resolved in accordance with
proper generally accepted accounting principals (GAAP) accounting.

Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our 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 our reports filed under the Exchange Act is
accumulated and communicated to management, including our Chief Executive
Officer, to allow timely decisions regarding required disclosure.


                                       19
<PAGE>

ITEM 8B - OTHER INFORMATION

None.

                                    PART III

ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The directors and executive officers serving AdZone are as follows:

Name                  Position Held and Tenure      Date First Elected/Appointed
----                  ------------------------      ----------------------------
Charles Cardona*      Chairman of the Board of
                        Directors                            August 2001

Jeffrey Hale          Chief Executive Officer                 May 2006
                        and President

John Cardona*         Vice Chairman of the Board
                        of Directors                          May 2006

Terrance Kent         Chief Operating Officer                 May 2006

Warren Hamburger      Director                               August 2001

Russell Ivy           Director                              January 2001

John Conley           Director                               August 2005

*Charles Cardona and John Cardona are brothers.

The directors named above will serve until the next annual meeting of AdZone's
stockholders or until their successors are duly elected and have qualified.
Directors will be elected for one-year terms at the annual stockholders meeting.
Officers hold their positions at the pleasure of the board of directors, absent
any employment agreement. Charles Cardona has entered into an employment
agreement with AdZone that terminates on December 31, 2009, John Cardona has
entered into an employment agreement with AdZone that terminates on December 31,
2009, Jeffrey Hale has entered into an employment agreement that terminates on
May 1, 2009 and Terrance Kent has entered into an employment agreement with
AdZone that terminates on May 1, 2009. There is no arrangement or understanding
between any of the directors or officers of AdZone and any other person pursuant
to which any director or officer was or is to be selected as a director or
officer, and there is no arrangement, plan or understanding as to whether
non-management shareholders will exercise their voting rights to continue to
elect the current directors to AdZone's board. There are also no arrangements,
agreements or understandings between non-management shareholders that may
directly or indirectly participate in or influence the management of AdZone's
affairs.

BIOGRAPHICAL INFORMATION

CHARLES CARDONA

Charles Cardona, age 42, has served as AdZone's Chief Executive Officer and
Chairman of the Board since AdZone's merger with AdZone Interactive, Inc. in
August 2001. From February 2000 to August 2001, Mr. Cardona was President and
Chief Executive Officer of AdZone Interactive, Inc., with which AdZone merged in
August 2001. From 1992 to February 2000, Mr. Cardona was the President of Owl
Data Systems, Inc., a software development Company owned by Mr. Cardona.

On April 28, 2006, Mr. Cardona resigned his position as Chief Executive Officer
of the Company, but shall remain Chairman of the Board of Directors.


                                       20
<PAGE>

JEFFREY HALE

Jeffrey Hale, age 49, was employed as the Chief Executive Officer and President
on May 1, 2006. From 1995 to 2001, Mr. Hale was Group President OF VNU'S Media
Information Group of companies where he developed and implemented growth
strategies across the group of businesses. VNU is a Dutch media and marketing
information Company. Mr. Hale, as a member of VNU USA's Executive Committee from
1989 to 2001, contributed to growing VNU's United States managed businesses.
From 1993 to 2000, Mr. Hale was the President of Competitive Media Reporting, a
wholly owned subsidiary of VNU, which monitored and measured media and
advertising. In 2001, Mr. Hale left VNU and formed Baltic Ventures, LLC, to
develop acquisition strategies with financial backers, provide leadership to
start up companies, and to advise companies on growth strategies.

JOHN CARDONA

John Cardona, age 39, is serving as the Chief Operating Officer of AdZone and
has served as its Homeland Security Defense Advisor with responsibility for
long-term corporate planning and global and operational strategies in the past.
From August, 2001 to June, 2002, Mr. Cardona served as President of AdZone. Mr.
Cardona did serve as a consultant to Competitrack, a market research Company.
Mr. Cardona has also served AdZone as a Director from August 2001 to the present
time. From 1990 through August 2001, Mr. Cardona was a director of sales for
Competitive Media Reporting, an advertising research firm. Mr. Cardona received
a Bachelor of Arts Degree from New York Institute of Technology, Long Island,
New York.

On April 28, 2006, Mr. Cardona resigned his position as President and Chief
Operating Officer of the Company. On the same date, the Board of Directors
appointed him as Vice Chairman of the Board of Directors.

TERRANCE KENT

Terrance Kent, age 54, was employed as the Chief Operating Officer on May 1,
2006. From 1986 to 2001, Mr. Kent was employed at VNU NV a Dutch media and
marketing information Company where he held a variety of executive level
positions. Beginning as a founding member of VNU's original five-person
acquisition team in the United States, Mr. Kent last served as Chief Operating
officer for VNU's Media Information Group. In 2001, Mr. Kent was the co-founder
of Baltic Ventures, LLC, to work with corporations and investors in the business
information and intelligence sector. Mr. Kent received a science and engineering
degree from Lehigh University in 1974.

WARREN HAMBURGER

Warren Hamburger, age 53, has been a director of AdZone from August 2001 to the
present. He has been a practicing attorney for 21 years during which he has
operated his own firm as a sole practitioner. Mr. Hamburger received a Juris
Doctor degree from New England School of Law, Boston Massachusetts, and a
Bachelor of Science degree in business administration from Duquesne University,
Pittsburgh, Pennsylvania.

RUSSELL STOVER IVY

Russell Stover Ivy, age 40, is a Director of AdZone and was President of
Executive Help from January 2001 until the merger with AdZone in August 2001.
Mr. Ivy has been a consultant to small and medium sized companies for over 20
years. He has been involved in the start-up, design and implementation of
numerous business ranging from small financial services corporations to publicly
traded telecommunications companies. In 1998, Mr. Ivy was a consultant to IWL
Communications, which merged with CapRoc Communications, which was later
purchased by McLeod Communications. In 1999 and 2000, Mr. Ivy was a consultant
to First Financial Group of America, where he served as Director of Operations.
Mr. Ivy continues to consult for companies regarding their operational
activities and goals. Mr. Ivy received a Bachelor's degree in international
economics from Texas Tech University in 1991.


                                       21
<PAGE>

JOHN CONLEY

John Conley age 80, is a director of AdZone Research, Inc. From 1999 to the
present, Mr. Conley has been retired from a career in commercial and military
aviation. Prior to his retirement, he was employed by the Department of Military
and Naval Affairs from 1953 to 1984. During such time, he also held command of
the New York National Guard.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Based on the Company's review of copies of all disclosure reports filed by
directors and executive officers of the Company pursuant to Section 16(a) of the
Securities Exchange Act of 1934, as amended, the Company believes that there was
compliance with all filing requirements of Section 16(a) applicable to directors
and executive officers of the Company during fiscal 2004

CODE OF ETHICS

We have adopted a Code of Business Conduct and Ethics that applies to all of our
directors, officers and employees, including our principal executive officer and
principal accounting officer. The Code of Business Conduct and Ethics will be
posted on our website at http://www.AdZoneinteractive.com.

ITEM 10 - EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth all cash and non-cash
compensation paid or accrued for services rendered in all capacities to the
named Executive Officers for the fiscal years ended March 31, 2006, 2005, and
2004:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                          Other Annual         Long-Term
                                                          Compensation        Compensation
                                                         (# of Share of    Awards (# Securities
Name and Positions   Year      Salary ($)      Bonus      Common Stock)     Underlying Options)
===============================================================================================
<S>                  <C>       <C>               <C>      <C>                   <C>
Charles Cardona
                     2006      $153,310
                     2005      $312,624
                     2004      $188,551(2)       0        5,471,151(1)           50,000

John Cardona
                     2006      $153,310
                     2005      $312,624          0
                     2004      $ 83,418(3)       0        5,706,899(1)          100,000
</TABLE>

(1)   These shares were issued and charged against accrued liabilities in the
      amount of $160,000.
(2)   Excludes $98,472 that was charged against accrued liabilities.
(3)   Excludes $41,800 that was charged against accrued liabilities.


                                       22
<PAGE>

DIRECTOR COMPENSATION

From time to time the members of the board of directors receive shares of common
stock at the discretion of the board for their services. The following table is
a list of directors and the amount of shares each one has received as
compensation during the year ended March 31, 2006:

--------------------------------------------------------------------------------
     NAME           TITLE                NUMBER OF SHARES       DATE OF ISSUANCE
--------------------------------------------------------------------------------
Warren Hamburger   Director                 150,000            July 18, 2005
                                            100,000            October 18, 2005
                                              5,000            December 15, 2005
                                            300,000            January 18, 2006
                                            120,000            March 6, 2006

Russell Ivy        Director                 105,000            July 18, 2005
                                            250,000            October 18, 2005
                                              5,000            December 15, 2005
                                            300,000            January 18, 2006
                                            100,000            March 6, 2006

John Conley        Director                 100,000            October 18, 2005
                                              5,000            December 15, 2005
                                            300,000            January 18, 2006
                                            115,000            March 6, 2006
                                          ---------            -----------------
                                          1,955,000
                                          =========

No cash compensation was paid to any member of the Board of Directors during the
year ended March 31, 2006.

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (Individual Grants)

<TABLE>
<CAPTION>
                                             Percent of Total
                  Number of Securities         Options/SAR's
                      Underlying           Granted to Employees       Exercise
Name             Options/SAR's Granted        in Fiscal Year         Price/Share     Expiration
----             ---------------------        --------------         -----------     ----------
<S>              <C>                          <C>                    <C>             <C>
Charles Cardona           -0-                      -0-                   -0-
John Cardona              -0-                      -0-                   -0-
</TABLE>

               AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                   Number of Unexercised
                                                   Securities Underlying         Value of Unexercised
                Shares Acquired       Value        Options/SARs at FY-End      In-The-Money Option/SARs
Name              On Exercise       Realized      Exercisable/Unexercisable     At FY-End Exercisable
----              -----------       --------      -------------------------     ---------------------
<S>               <C>               <C>           <C>                           <C>
Charles Cardona       -0-              $0                4,000,000                    $60,000
John Cardona          -0-              $0                4,000,000                    $60,000
</TABLE>

On February 6, 2006, we entered into an employment agreement with Mr. Charles
Cardona, which superseded all prior agreements. In this agreement, Mr. Cardona
will continue to serve as our Chief Executive Officer, through December 31,
2009. This agreement contains the following terms and conditions:

Position: Chief Executive Officer

Effective Date: February 6, 2006

BASE SALARY:

2006 - $275,000 annual
2007 - $325,000 annual
2008 - $350,000 annual
2009 - $375,000 annual


                                       23
<PAGE>

The initial base salary shall be reduced to $2,000 per week until such time as
the Company reaches a cash flow positive position for at least 1 month, or the
Company raises at least $2 Million within 12 months, or management deems that
the Company's cash position is sufficient to support an increase. No additional
salary above the reduced base shall accrue as back salary during the first 6
months of this contract.

Bonuses: Quarterly Qualitative Bonus of $ 20,000
         Year end Qualitative Bonus oF $ 50,000

Profitability Bonus: If the Company reaches annual profitability employee will
receive a $250,000 bonus plus 250,000 shares in stock.

Mr. Cardona shall receive an annual bonus as follows:

0.5% of the previous years revenues plus 3.5% of the previous years profits plus
0.5% of the transaction price of any acquisition.

The Board of Directors shall at its discretion grant up to an additional
$150,000 in bonus to Mr. Cardona on an annual basis.

The Board of Directors shall at its discretion grant up to an additional
3,000,000 options in bonus to the employee on an annual basis at strike prices
the Board may determine.

The Board of Directors shall at its discretion grant up to an additional
3,000,000 shares in bonus to the employee on an annual basis.

All bonuses shall be net of payroll taxes.

Stock Options: The employee shall receive options to purchase 3,000,000shares as
follows:

      o     Options for 750,000 shares at $.25
      o     Options for 750,000 shares at $.30
      o     Options for 750,000 shares at $.35
      o     Options for 750,000 shares at $.40

Additionally the employee shall receive the following;

3,000,000 options upon the Company achieving $500,000 in total revenues prior to
March 31,2007. Options shall be priced at the closing stock bid price the next
trading date after $500,000 in revenues have been received.

All the options granted above shall be exercisable for 6 years from the date of
granting.

Additionally the Company shall maintain any existing options under previous
contracts and option grants.

Additional Incentives: Charles A. Cardona will receive 5% of all sales he is
involved with.

Other Agreements: Medical and Dental insurance is fully paid for the employee by
the Company during the employment period. Company shall reimburse or pay for
reasonable Company vehicle expenses including lease or purchase payments, gas,
tolls and repairs. AdZone Research agrees to defend employee against any and all
legal claims and litigation. In addition, AdZone Research further agrees to pay
all expenses arising from any and all litigation, including but not limited to
attorney's fee's, legal fee's and miscellaneous expenses. Legal representation
for Charles A. Cardona will continue beyond the term of this contract and will
continue for the remainder of Charles A. Cardona's life.


                                       24
<PAGE>

The employee shall be reimbursed for any and all reasonable business related
expenses upon presentation of an expense report as currently in use as of
February, 2006. Any personal expenses reimbursed may be used to reduce
outstanding compensation due and or unpaid to the employee.

See May 1, 2006 Subsequent Events for modification of this contract.

On February 6, 2006, the Company entered into an Employment Agreement with Mr.
John A. Cardona (Jcardona) which superseded all prior agreements. In this
agreement, JCardona will serve as the Company's Chief Operating Officer, through
December 31, 2009. This agreement contains the following terms and conditions:

Position: Chief Operating Officer

Effective Date: February 5, 2006

BASE SALARY:

2006 - $275,000 annual
2007 - $325,000 annual
2008 - $350,000 annual
2009 - $375,000 annual

The initial base salary shall be reduced to $2,000 per week until such time as
the Company reaches a cash flow positive position for at least 1 month, or the
Company raises at least $2 Million within 12 months, or management deems that
the Company's cash position is sufficient to support an increase. No additional
salary above the reduced base shall accrue as back salary during the first 6
months of this contract.

Bonuses: Quarterly Qualitative Bonus of $ 20,000
         Year end Qualitative Bonus of $ 50,000

Profitability BONUS:

If the Company reaches annual profitability employee will receive a $250,000
bonus plus 250,000 shares in stock.

JCardona shall receive an annual bonus as follows:

0.5% of the previous years revenues plus 3.5% of the previous years profits plus
0.5% of the transaction price of any acquisition.

The Board of Directors shall at its discretion grant up to an additional
$150,000 in bonus to JCardona on an annual basis.

The Board of Directors at its discretion grant up to an additional 3,000,000
options in bonus to the employee on an annual basis at strike prices the Board
may determine.

The Board of Directors shall at its discretion grant up to an additional
3,000,000 shares in bonus to the employee on an annual basis.

All bonuses shall be net of payroll taxes.

Stock Options: The employee shall receive options to purchase 3,000,000 (Three
Million) shares as follows:

      o     Options for 750,000 shares at $.25
      o     Options for 750,000 shares at $.30
      o     Options for 750,000 shares at $.35
      o     Options for 750,000 shares at $.40


                                       25
<PAGE>

Additionally the employee shall receive the following;

3,000,000 options upon the Company achieving $500,000 in total revenues prior to
March 31, 2007. Options shall be priced at the closing stock bid price the next
trading date after $500,000 in revenues have been received.

All the options granted above shall be exercisable for 6 years from the date of
granting.

Additionally the Company shall maintain any existing options under previous
contracts and option grants.

Additional Incentives: John A. Cardona will receive 5% of all sales he is
involved with.

Other Agreements: Medical and Dental insurance is fully paid for the employee by
the Company during the employment period. Company shall reimburse or pay for
reasonable Company vehicle expenses including lease or purchase payments, gas,
tolls and repairs. AdZone Research agrees to defend employee against any and all
legal claims and litigation. In addition, AdZone Research further agrees to pay
all expenses arising from any and all litigation, including but not limited to
attorney's fee's legal fees, and miscellaneous expenses. Legal representation
for John A. Cardona will continue beyond the term of this contract and will
continue for the remainder of John A. Cardona's life.

The employee shall be reimbursed for any and all reasonable business related
expenses upon presentation of an expense report as currently in use as of
February, 2006. Any personal expenses reimbursed may be used to reduce
outstanding compensation due and or unpaid to the employee.

See May 1, 2006 Subsequent Events for modification of this contract.

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of July 6, 2006, the number of shares of
Common Stock owned of record and beneficially by executive officers, directors
and persons who hold 5% or more of the outstanding Common Stock of AdZone. Also
included are the shares held by all executive officers and directors as a group.

                                                                  % of Class
Name and address                     Number of Shares         Beneficially Owned
----------------                     ----------------         ------------------

Charles Cardona                        38,867,422 (1)               15.80%
17 Sunny Line Dr.
Calverton, NY 11933

John Cardona                           35,101,849 (2)               14.27%
118 Overlook Dr.
Aquebogue, NY 11931

Warren Hamburger                        3,318,000                    1.35%
42 Fire Island Ave.
Babylon, NY 11702

Russell Ivy                             2,085,000                    .85%
211 West Sealy Street
Alvin, TX 77511

John Conley                             2,058,000                    .84%
90 Red Creek Road
Hampton Bays, NY 11946

Jeffrey Hale                            4,125,000                    1.68%
128 Bank Street
New York, N.Y. 10014

Terrance Kent                           3,125,000                    1.27%
135 New Jersey Avenue
Lake Hopatcong, N.J. 07849
                                      -----------                 -------
All Executive Officers and
Directors of AdZone as
a Group (7 persons)                    88,680,271                   36.06%
                                      ===========                 =======


                                       26
<PAGE>

The above-referenced percentages are given on a fully-diluted basis for such
owner only. We are not assuming in the number of shares outstanding for purposes
of this table that all options and rights have been exercised.

(1)   Includes 18,1355,000 shares that may be acquired upon exercise of stock
      options granted to Mr. Cardona at exercise prices ranging from $0.05 to
      $3.00 per share. Excludes securities owned by John Cardona, Mr. Cardona's
      brother; 113,500 shares owned by Peter Cardona, Mr. Cardona's brother and
      765,000 shares owned by Valerie Cardona, Mr. Cardona's mother, with
      respect to all of which Mr. Cardona disclaims beneficial ownership. Plus
      4,000,000 shares owed to Mr. Cardona under the agreement which he loaned
      AdZone 4,000,000 shares for the purpose of a stock loan.

(2)   Includes 18,355,000 shares that may be acquired upon exercise of stock
      options granted to Mr. Cardona at exercise prices ranging from $0.05 to
      $3.00 per share. Excludes securities owned by Charles Cardona, Mr.
      Cardona's brother; 113,500 shares owned by Peter Cardona, Mr. Cardona's
      brother and 765,000 shares owned by Valerie Cardona, Mr. Cardona's mother,
      with respect to all of which Mr. Cardona disclaims beneficial ownership.
      Plus 4,000,000 shares owed to Mr. Cardona under the agreement which he
      loaned AdZone 4,000,000 shares for the purpose of a stock loan.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In prior periods, our officers advanced various monies to us under formal
unsecured note documents bearing interest at 10.0%. The advances were repayable
in at least minimum aggregate monthly amounts of approximately $370.

The following table reflects the advances and repayments during each of the two
years in the period ended March 31, 2006:

Year ended March 31,             Advances        Repayments
                              --------------------------------
      2005                         none            none
      2006                         none            none

In the opinion of management, the above-referenced transactions are at least as
fair to us as we would expect to negotiate with unaffiliated third parties.

ITEM 13 - EXHIBITS

EXHIBIT
NUMBER                                 DESCRIPTION
--------------------------------------------------------------------------------

2.1            Plan and Agreement of Merger dated as of 2001 by and between
               Executive Help Services, Inc. and AdZone Research, Inc.&

3.1            Certificate of Incorporation of Executive Help Services, Inc.**

3.2            Certificate of Amendment to Certificate of Incorporation of
               Executive Help Services, Inc.**

3.2            By-Laws of Executive Help Services, Inc.**


                                       27
<PAGE>

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 dates as of January 1, 2002 with Communique
               Media Services International, Inc.&&

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

10.5           Consulting Agreement dated as of April 2002 with NuQuest
               Consulting, Inc.&&&

10.6           Consulting Agreement dated as of August 13, 2002 with Thomas F.
               Gavin.#

10.7           Employment Agreement dated February 5, 2004 with Charles
               Cardona.##

10.8           Employment Agreement dated as of February 5, 2004 with John
               Cardona.##

10.9           Systems Integration Agreement dated as of June 21 2002 with
               Raytheon Company.&&&

10.10          A-K Consulting agreements with Kyle Kennedy Dated Aug. 19, 2002 -
               May 22, 2003.#

10.11          Multimedia Web Site design contract with Jason Genet dated Oct.
               16, 2002.###

10.12          Investment Banking Agreement with Spartan Securities dated Nov.
               27, 2002.###

10.13          Agreement to borrow shares for stock loans dated Mar. 7, 2003.###

10.14          Joint Marketing agreement with Sarnoff Corp. dated Mar. 3,
               2003.###

10.15          Warrant agreement with Tom Gavin dated Mar. 12, 2003.###

10.16          Agreement with Boeing Autometric Division dated April 2003.###

10.17          Amending Agreement - Subscription Agreement dated July 23, 2004 @

10.18          Executed Subscription Agreement dated May20, 2004.@@

10.19          Registration Rights Agreement dated as of May 20, 2004 with The
               Nutmeg Group, LLC.@@

10.20          Class C Stock Purchase Warrant dated as of May 20, 2004 issued to
               The Nutmeg Group, LLC.@@

23.1           Consent of Holtz Rubenstein Reminick LLP.

31.1           Certification by Chief Executive Officer pursuant to
               Sarbanes-Oxley Section 302.

31.2           Certification by Principal Accounting Officer pursuant to
               Sarbanes-Oxley Section 302.

32.1           Certification by Chief Executive Officer pursuant to U.S.C.
               Section 1350

32.2           Certification by Principal Accounting Officer pursuant to 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.


                                       28
<PAGE>

***   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.

&     Incorporated by reference to the Registrant's Preliminary Information
      Statement on Schedule 14C, as amended, filed with the Securities and
      Exchange Commission on April 18, 2001.

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

&&&   Incorporated by reference to the Registrant's annual report on Form 10-KSB
      for the year ended March 31, 2002 filed with the Securities and Exchange
      Commission on July 15, 2002.

#     Incorporated by reference to the Registrant's quarterly report on Form
      10-QSB for the quarter ended December 31, 2002 filed with the Securities
      and Exchange Commission on February 19, 2003.

##    Incorporated by reference to the Registrant's annual report on Form 10-KSB
      for the year ended March 31, 2004 filed with the Securities and Exchange
      Commission on July 9, 2004.

###   Incorporated by reference to the Registrant's annual report on Form
      10-KSB/A for the year ended March 31, 2003 filed with the Securities and
      Exchange Commission on July 21, 2003.

@     Incorporated by reference to the Registrant's registration statement on
      Form S-2 filed with the Securities and Exchange Commission on July 23,
      2004.

@@    Incorporated by reference to the Registrant's current report on Form 8-K
      filed with the Securities and Exchange Commission on May 27, 2004.

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Company paid or accrued the following fees in each of the two fiscal years
to Holtz Rubinstein Reminick LLP of Melville, New York, and Aidman, Piser &
Company, P.A. of Tampa, Florida:

                                       Year ended      Year ended
                                        March 31,       March 31,
                                          2006            2005
                                       ----------      ----------

(1)   Audit fees                       $  202,757      $  148,929
(2)   Audit-related fees                       --              --
(3)   Tax fees                                 --              --
(4)   All other fees                           --              --
                                       ----------      ----------
      Totals                           $  202,757      $  148,929
                                       ==========      ==========

The Company has no formal audit committee. However, as defined in Sarbanes-Oxley
Act of 2002, the entire Board of Directors is the Company's defacto audit
committee.


                                       29
<PAGE>

In discharging its oversight responsibility as to the audit process, the Board
obtained from the independent auditors a formal written statement describing all
relationships between the auditors and the Company that might bear on the
auditors' independence as required by Independence Standards Board Standard No.
1, "Independence Discussions with Audit Committees." The Board discussed with
the auditors any relationships that may impact their objectivity and
independence, including fees for non-audit services, and satisfied itself as to
the auditors' independence. The Board also discussed with management and the
independent auditors the quality and adequacy of the Company's internal
controls. The Board reviewed with the independent auditors their management
letter on internal controls, if one was issued by the Company's auditors.

The Board discussed and reviewed with the independent auditors all matters
required to be discussed by auditing standards generally accepted in the United
States of America, including those described in Statement on Auditing Standards
No. 61, as amended, "Communication with Audit Committees".

The Board reviewed the audited financial statements of the Company as of and for
the year ended March 31, 2006 and 2005 with management and the independent
auditors. Management has the sole ultimate responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for their examination of those statements.

Based on the above-mentioned review and discussions with the independent
auditors and management, the Board of Directors approved the Company's audited
financial statements and recommended that they be included in its Annual Report
on Form 10-KSB for the year ended March 31, 2006, for filing with the Securities
and Exchange Commission.


                                       30
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Act of 1933, as
amended, AdZone caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.

                                    ADZONE RESEARCH, INC.


Dated: July 14, 2006                By: /s/ Jeffrey M. Hale
                                        ----------------------------------------
                                        Jeffrey M. Hale, Chief Executive Officer
                                        (Principal Executive Officer)
                                        and President


Dated: July 14, 2006                By: /s/ Charles Cardona
                                        ----------------------------------------
                                        Charles Cardona, Principal Accounting
                                        Officer

In accordance with the Securities Exchange Act of 1934, as amended, this report
has been signed below by the following persons on behalf of AdZone and in the
capacities and on the date indicated.


Dated: July 14, 2006                By: /s/ Charles A. Cardona
                                        ----------------------------------------
                                        Charles A. Cardona, Chairman of the
                                        Board of Directors


Dated: July 14, 2006                By: /s/ John A. Cardona
                                        ----------------------------------------
                                        John A. Cardona, Vice Chairman of the
                                        Board of Directors


Dated: July 14, 2006                By: /s/ Warren Hamburger
                                        ----------------------------------------
                                        Warren Hamburger, Director


Dated: July 14, 2006                By: /s/ Russell Ivy
                                        ----------------------------------------
                                        Russell Ivy, Director


Dated: July 14, 2006                By: /s/ John B. Conley
                                        ----------------------------------------
                                        John B. Conley, Director


                                       31
<PAGE>

                              ADZONE RESEARCH, INC.
                              FINANCIAL STATEMENTS
                       YEARS ENDED MARCH 31, 2006 AND 2005

                                    CONTENTS

                                                                           Page
                                                                           ----

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS                   F-2

FINANCIAL STATEMENTS
      Balance Sheet as of March 31, 2006                                   F-3
      Statements of Operations and Comprehensive Loss for
        the years ended March 31, 2006 and 2005                            F-4,5
      Statements of Shareholders' Equity (Deficit) for the
        years ended March 31, 2006 and 2005                                F-6,7
      Statements of Cash Flows for the years ended
        March 31, 2006 and 2005                                            F-8,9
      Notes to Financial Statements                                        F-10


                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
AdZone Research, Inc.

We have audited the accompanying balance sheet of AdZone Research, Inc. as of
March 31, 2006, and the related statements of operations and comprehensive loss,
shareholders' (deficit) and cash flows for the year then ended. These financial
statements are the responsibility of AdZone's management. Our responsibility is
to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. We were not engaged
to perform an audit of the Company's internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AdZone Research, Inc. at March
31, 2006, and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.

As more fully discussed in Note C, the Company has incurred substantial losses
and has used significant levels of cash in developing its operations since
inception. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans with respect to this
uncertainty are discussed in Note C to the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


                                               Holtz Rubenstein Reminick LLP

Melville, NY
July 10, 2006


                                      F-2
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Adzone Research, Inc.

We have audited the statements of operations and comprehensive loss,
shareholders' equity (deficit) and cash flows for the year ended March 31, 2005.
These financial statements are the responsibility of Adzone's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. We were not engaged
to perform an audit of the Company's internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of the operations, changes in stockholders'
equity (deficit) and cash flows of Adzone Research, Inc. for the year ended
March 31, 2005, in conformity with accounting principles generally accepted in
the United States of America.

As more fully discussed in Note D, the Company has incurred substantial losses
and has used significant levels of cash in developing its operations since
inception. These conditions raise substantial doubt about the Company's ability
to continue as a going concern for a reasonable period. Management's plans with
respect to this uncertainty are discussed in Note D to the financial statements.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

As discussed in Note C, the accompanying financial statements have been
restated.


                                               /s/ AIDMAN, PISER & COMPANY, P.A.

Tampa, Florida
July 7, 2005, except for Note C, as
to which the date is July 14, 2006
<PAGE>

                              ADZONE RESEARCH, INC.
                                  BALANCE SHEET
                                 March 31, 2006


                                     ASSETS

CURRENT ASSETS
   Cash and cash equivalents                                  $    1,068,871
   Prepaid  expenses                                                  23,716
   Marketable securities                                                 955
   Accounts and loan receivable, net of
     allowance for doubtful accounts of $20,000                        7,349
                                                              --------------

     TOTAL CURRENT ASSETS                                          1,100,891
                                                              --------------

PROPERTY AND EQUIPMENT, net of
  accumulated depreciation of $59,136                                 16,985

LEASEHOLD IMPROVEMENTS, net of
  accumulated amortization of $8,642                                  21,548

Restricted cash - preferred stock dividend reserve
  and convertible debenture interest                                  10,246
                                                              --------------
    TOTAL ASSETS                                              $    1,149,670
                                                              ==============

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
   Accounts payable - trade                                   $       88,542
   Accrued expenses                                                  466,617
   Accrued dividends payable                                         135,000
   Deferred revenue                                                  100,000
   Current maturities of long-term debt                              166,783
   Loan payable-convertible debentures                               788,602
   Due to Stockholder                                              2,000,000
                                                              --------------

     TOTAL CURRENT LIABILITIES                                     3,745,544
                                                              --------------

COMMITMENTS AND CONTINGENCIES (Notes K, M and R)                          --

SHAREHOLDERS' DEFICIT
   Preferred stock - $0.001 par value;
     20,000,000 shares authorized:
       Series A - 50 shares authorized;
         2.78 shares issued and outstanding                           31,969
       Series B - 100 shares authorized;
         .34 share issued and outstanding                             11,500
   Common stock - $0.001 par value; 200,000,000
     shares authorized; 176,434,965 shares issued
     and outstanding                                                 176,435
   Additional paid-in capital                                     21,402,862
   Accumulated deficit                                           (24,202,380)
   Treasury stock - at cost (25,000 shares)                           (2,215)
   Accumulated comprehensive loss                                    (14,045)
                                                              --------------
     TOTAL SHAREHOLDERS' DEFICIT                                  (2,595,874)
                                                              --------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                   $    1,149,670
                                                              ==============

See notes to financial statements.


                                      F-3
<PAGE>

                              ADZONE RESEARCH, INC.
                 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                       YEARS ENDED March 31, 2006 AND 2005


                                                                   (RESTATED)
                                                   2006              2005
                                              --------------    --------------

REVENUES                                      $      154,781    $      332,037
                                              --------------    --------------
PRODUCTION EXPENSES
    Salaries, wages and related costs                276,921           381,267
    Direct occupancy and operating expenses          214,422           116,416
                                              --------------    --------------
      Total production expenses                      491,343           497,683
                                              --------------    --------------

GROSS (LOSS)                                        (336,562)         (165,646)
                                              --------------    --------------

OPERATING EXPENSES
    Salaries, wages and related costs              4,223,461         1,171,861
    Consulting and professional fees               2,547,466         1,705,805
    General and administrative expense             1,110,301           633,935
    Depreciation and amortization                     14,153            13,981
                                              --------------    --------------
      Total operating expenses                     7,895,381         3,525,582
                                              --------------    --------------

LOSS FROM OPERATIONS                              (8,231,943)       (3,691,228)

OTHER INCOME (EXPENSE)
    Interest and other income                          6,068            10,885
    Interest expense                                 (42,980)           (5,796)
    Interest Expense-Debenture Amortization         (861,579)               --
    Extinguishment losses                         (2,725,139)               --
    Write down of marketable securities                  (--)          (36,813)
    Derivative Loss                                       --          (930,512)
    Loss on Investment                              (150,000)               --
                                              --------------    --------------

NET LOSS                                         (12,005,573)       (4,653,464)

OTHER COMPREHENSIVE LOSS                             (14,045)           (7,500)
                                              --------------    --------------

COMPREHENSIVE LOSS                            $  (12,019,618)   $   (4,660,964)
                                              ==============    ==============

(Continued)


                                      F-4
<PAGE>

                              ADZONE RESEARCH, INC.
           STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS - CONTINUED
                       YEARS ENDED MARCH 31, 2006 AND 2005


                                                                   (RESTATED)
                                                   2006              2005
                                              --------------    --------------

RECONCILIATON OF NET LOSS TO LOSS
  ATTRIBUTABLE TO COMMON SHAREHOLDERS:

NET LOSS                                      $  (12,005,573)   $   (4,653,464)
                                              --------------    --------------
PREFERRED STOCK DIVIDENDS
  AND ACCRETIONS:
    Accretions of preferred stock
      carrying values to redemption
      values                                              --          (116,214)
    Preferred dividends paid                          (3,348)          (61,060)
                                              --------------    --------------
TOTAL PREFERRED STOCK DIVIDENDS AND
  ACCRETIONS                                          (3,348)         (177,274)
                                              --------------    --------------
LOSS ATTRIBUTABLE TO COMMON
  SHAREHOLDERS                                $  (12,008,921)   $   (4,830,728)
                                              ==============    ==============
LOSS PER COMMON SHARE:
  BASIC AND DILUTED LOSS PER
    COMMON SHARE                              $        (0.10)   $        (0.06)
                                              ==============    ==============
  WEIGHTED AVERAGE COMMON SHARES
    USED IN BASIC AND DILUTED LOSS
    PER COMMON SHARE                             116,323,499        83,746,186
                                              ==============    ==============

See notes to financial statements.


                                      F-5
<PAGE>

                              ADZONE RESEARCH, INC.
                   STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
                       YEARS ENDED MARCH 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                                                                  (RESTATED)
                                         Preferred Stock                 Common Stock            Additional
                                   ----------------------------    ---------------------------     paid-in       Accumulated
                                      Shares          Amount          Shares         Amount        capital         Deficit
                                   ------------    ------------    ------------   ------------   ------------    ------------
<S>                                <C>             <C>             <C>            <C>            <C>             <C>
BALANCES, MARCH 31, 2004                  55.22    $    518,816      70,832,255   $     70,832   $  6,690,031    $ (7,129,535)

Issuance of common stock for:
   Cash                                      --              --      10,167,284         10,167        170,516              --
   Employee compensation                     --              --       2,570,000          2,570        280,638              --
   Exercise of stock options
     and warrants                            --              --       1,969,000          1,969        324,211              --
   Professional services                     --              --       6,253,232          6,254      1,050,404              --
   Conversion of Preferred Stock
     Series A                            (22.10)       (246,561)      2,614,941          2,615        243,946              --
     Series B                            (30.00)       (345,000)      3,169,340          3,169        341,831              --
   Warrant conversion                        --              --         568,201            568           (568)             --
Accretions of discounts
  on preferred stock                         --         116,214              --             --             --        (116,214)
Redemption of warrants                       --              --              --             --        (76,744)             --
Preferred stock dividends paid               --              --              --             --             --         (61,060)
Common stock dividends declared              --              --              --             --             --        (233,186)
Issuance of stock options
  for services                               --              --              --             --        121,101              --
Issuance of
  warrants for services                      --              --              --             --        605,945              --
Derivative loss                              --              --              --             --             --              --
Unrealized loss on marketable
  securities                                 --              --              --             --             --              --
Net loss, as restated                        --              --              --             --             --      (4,653,464)
                                   ------------    ------------    ------------   ------------   ------------    ------------
BALANCES, MARCH 31, 2005,
  as restated                              3.12    $     43,469      98,144,253   $     98,144   $  9,751,311    $(12,193,459)
                                   ============    ============    ============   ============   ============    ============

<CAPTION>
                                            Stock         Treasury     Accumulated
                                         subscription      Stock      Comprehensive
                                          receivable      at cost          Loss           Total
                                         ------------   ------------   ------------   ------------
<S>                                      <C>            <C>            <C>            <C>
BALANCES, MARCH 31, 2004                 $    (30,550)  $     (2,215)  $         --   $    117,379

Issuance of common stock for:
   Cash                                            --             --        180,683
   Employee compensation                           --             --        283,208
   Exercise of stock options
     and warrants                                  --             --             --        326,180
   Professional services                           --             --             --      1,056,658
   Conversion of Preferred Stock
     Series A                                      --             --             --             --
     Series B                                      --             --             --             --
   Warrant conversion                              --             --             --             --
Accretions of discounts
  on preferred stock                               --             --             --             --
Redemption of warrants                             --             --             --        (76,744)
Preferred stock dividends paid                     --             --             --        (61,060)
Common stock dividends declared                    --             --             --       (233,186)
Issuance of stock options for services             --             --             --        121,101
Issuance of warrants for services                  --             --             --        605,945
Unrealized loss on marketable
  securities                                       --             --         (7,500)        (7,500)
Net loss, as restated                              --             --             --     (4,653,464)
                                         ------------   ------------   ------------   ------------
BALANCES, MARCH 31, 2005, as restated    $    (30,550)  $     (2,215)  $     (7,500)  $ (2,340,800)
                                         ============   ============   ============   ============
</TABLE>

See notes to financial statements.


                                      F-6
<PAGE>

                              ADZONE RESEARCH, INC.
                   STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
                       YEARS ENDED MARCH 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                                                                       (RESTATED)
                                                 Preferred Stock                Common Stock           Additional
                                           ---------------------------   ---------------------------     paid-in       Accumulated
                                              Shares         Amount         Shares         Amount        capital         Deficit
                                           ------------   ------------   ------------   ------------   ------------    ------------
<S>                                        <C>            <C>            <C>            <C>            <C>             <C>
BALANCES, APRIL 1, 2005, as restated               3.12   $     43,469     98,144,253   $     98,144   $  9,751,311    $(12,193,459)

Preferred stock dividends paid                       --             --             --             --             --          (3,348)
 Issuance of common stock for:
 Cash                                                --             --      4,118,286          4,118        221,082              --
   Exercise of stock options and warrants            --             --     22,541,500         22,541      1,754,977              --
   Employee compensation                             --             --     14,216,000         14,216        924,906              --
   Professional services                             --             --     22,060,356         22,061      1,588,166              --
   Debt extinguishments                              --             --     11,550,000         11,550      2,036,655              --
   Warrant conversion                                --             --      3,804,570          3,805         (3,805)             --

Issuance of stock options for employee
  compensation                                       --             --             --             --      2,635,800              --
Issuance of options to directors                     --             --             --             --        660,000              --
Issuance of warrants for services                    --             --             --             --         76,829              --
Debt issued with warrants and
  beneficial conversion features                     --             --             --             --        953,214              --
Warrants issued in connection with
  debt extinguishment                                --             --             --             --        214,858              --
Amortization of deferred compensation
  and consulting fees                                --             --             --             --        588,869              --
Net loss for the year                                --             --             --             --             --     (12,005,573)
                                           ------------   ------------   ------------   ------------   ------------    ------------
BALANCES, MARCH 31, 2006                           3.12   $     43,469    176,434,965   $    176,435   $ 21,402,862    $(24,202,380)

<CAPTION>
                                               Stock         Treasury       Accumulated
                                            subscription       Stock       Comprehensive
                                             receivable       at cost           Loss           Total
                                            ------------    ------------    ------------    ------------
<S>                                         <C>             <C>             <C>             <C>
BALANCES, APRIL 1, 2005, as restated        $    (30,550)   $     (2,215)   $     (7,500)   $ (2,340,800)

Issuance of warrants:

Preferred stock dividends paid                        --              --              --          (3,348)
 Issuance of common stock for:
   Cash                                               --              --              --         225,200
   Exercise of stock options and warrants             --              --              --       1,777,518
   Employee compensation                              --              --              --         939,122
   Professional services                          30,550              --              --       1,614,927
   Debt extinguishments                               --              --              --       2,074,055
   Warrant conversion                                 --              --              --              --

Issuance of stock options for employee
  compensation                                        --              --              --       2,635,800
Issuance of options to directors                      --              --              --         660,000
Issuance of warrants for services                     --              --              --          76,829
Debt issued with warrants and
  beneficial conversion features                      --              --              --         953,214
Warrants issued in connection with
  debt extinguishments                                --              --              --         214,858
Amortization of deferred compensation
  and consulting fees                                 --              --              --         588,869
Unrealized loss on marketable
  securities                                          --              --          (6,545)         (6,545)
Net loss for the year                                 --              --              --     (12,005,573)
                                            ------------    ------------    ------------    ------------
BALANCES, MARCH 31, 2006                    $        (--)   $     (2,215)   $    (14,045)   $ (2,595,874)
                                            ============    ============    ============    ============
</TABLE>

See notes to financial statements.


                                      F-7
<PAGE>

                              ADZONE RESEARCH, INC.
                            STATEMENTS OF CASH FLOWS
                       YEARS ENDED MARCH 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                       (RESTATED)
                                                          2006            2005
                                                      ------------    ------------
<S>                                                   <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                           $(12,005,573)   $ (4,653,464)
   Adjustments to reconcile net loss
     to net cash flows used in operating activities
       Depreciation                                         14,153          13,981
       Derivative loss                                          --         930,512
       Amortization of debt discount                       861,579              --
       Bad debts                                            20,000              --
       Write down of investments                           150,000          36,813
       Securities received in exchange for services             --        (300,000)
       Stock-compensation:
         Salaries, wages and bonuses                     3,574,922         318,059
         Professional services                           2,274,078       1,748,853
         Warrants issued for services                       76,829              --
         Extinguishment losses                           2,725,139              --
         Amortization of deferred compensation             588,869              --
       Changes in operating assets and liabilities:
         Prepaid expenses and other                         13,284          97,272
         Accounts receivable                               (18,594)         (8,755)
         Deposits and other assets                              --          38,179
         Accounts payable and accrued liabilities          196,805         115,382
         Accrued officers compensation                     (98,244)        (62,682)
         Deferred revenue                                  (32,329)        132,329
                                                      ------------    ------------
NET CASH USED IN OPERATING ACTIVITIES                   (1,659,083)     (1,593,521)
                                                      ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Cash paid to purchase property and equipment             (8,136)        (28,758)
                                                      ------------    ------------
NET CASH USED IN INVESTING ACTIVITIES                       (8,136)        (28,758)
                                                      ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Sale of common stock, including $950,000
     stock settlement liability in 2005                  2,002,718       1,456,863
   Proceeds from issuance of debt                          815,000         125,000
   Payment for stock settlement                           (500,000)             --
   Increase in restricted cash                             (10,070)             --
   Cash paid to redeem preferred stock                          --         (76,744)
   Cash paid for preferred stock dividends                  (3,348)        (61,060)
   Principal paid on notes payable                              --         (12,787)
                                                      ------------    ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                2,304,300       1,431,272
                                                      ------------    ------------
INCREASE (DECREASE) IN CASH                                637,081        (191,007)
Cash and cash equivalents, beginning of year               431,790         622,797
                                                      ------------    ------------
Cash and cash equivalents, end of year                $  1,068,871    $    431,790
                                                      ============    ============
</TABLE>

See notes to financial statements.


                                      F-8
<PAGE>

                              ADZONE RESEARCH, INC.
                      STATEMENTS OF CASH FLOWS - CONTINUED
                       YEARS ENDED MARCH 31 2006 AND 2005


                                                                   (RESTATED)
                                                     2006             2005
                                                --------------   --------------

SUPPLEMENTAL DISCLOSURE OF INTEREST AND
  INCOME TAXES PAID

     Interest paid during the period            $       32,825   $        5,796
                                                ==============   ==============
     Income taxes paid during the period        $           --   $           --
                                                ==============   ==============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
  AND FINANCING ACTIVITIES

     Stock investment declared as
       a property dividend                      $           --   $      233,186
                                                ==============   ==============

     Reduction in value of property
       declared as dividends                    $           --   $       30,683
                                                ==============   ==============

     Purchase of leasehold improvements
       through issuance of stock                $       19,350   $           --
                                                ==============   ==============
     Consulting services acquired
       through issuance of debt                 $       18,500   $           --
                                                ==============   ==============

See notes to financial statements.


                                      F-9
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

AdZone Research, Inc. (Company) was incorporated on May 31, 1994 under the laws
of the State of Delaware as Executive Help Services, Inc.

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

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

NOTE B - PREPARATION OF FINANCIAL STATEMENTS

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

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

NOTE C - RESTATEMENT

In July 2006, the Company discovered an error in the calculation of it's stock
settlement liability as of March 31, 2005. As a result, the stock settlement
liability and related derivative loss, as originally reported in the March 31,
2005 statement of operations, was understated by $462,512. Net loss and
accumulated deficit were also understated by this amount. The accompanying
statements of operations and comprehensive loss, cash flows and changes in
shareholders equity for the year ended March 31, 2006, have been restated to
correct this error.


                                      F-10
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE D - GOING CONCERN UNCERTAINTY

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 financial statements, the Company incurred
a net loss of ($12,468,085) and used cash of ($1,659,083) in conducting its
operations during the year ended March 31, 2006. These recurring negative trends
raise substantial doubt about the Company's ability to continue as a going
concern.

Operating cash flows for the fiscal year ended March 31, 2007 are not projected
to be sufficient to sustain the Company's operations. However, management
currently believes that existing cash reserves of $1,068,0871 as of March 31,
2006 will be sufficient to fund operating deficits for a period of twelve months
following March 31, 2006. Management considered the following specific elements
of its internal projections in making its conclusions about its ability to
continue for approximately twelve months following March 31, 2006:

      a.    Management does not believe that the significant level of cash used
            in operations during the year ended March 31, 2006 ($1,659,083) is
            indicative of cash flow usage during the next four fiscal quarters.
            S While payments on accounts payable and accrued expenses will
            continue in the normal course of business, such payments are
            expected to be at the level, or at an increased level, than that
            reflected in the Company's current 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 year ended March 31, 2006, based upon ongoing discussions
            with the vendors, management believes that they will continue to
            accept such securities in the foreseeable future.

      c.    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 necessary to enhance the
            Company' infrastructure to support the needs of increased client
            usage.

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

Management plans to continue to promote contracts with the U.S. Department of
Defense and Commercial uses of its technologies. There can be no assurances that
the Company can execute revenue-producing licenses or 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, its ability to raise capital, and
ultimately, the achievement of profitable operations. The financial statements
do not include any adjustments that might arise as a result of this uncertainty.
The Company is currently negotiating additional financing with several financial
institutions in order to fulfill the Company's acquisition strategy. However,
there can be no assurance that such negotiations will be successful.


                                      F-11
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE E - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.    Cash and cash equivalents

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

2.    Marketable securities

      The Company's investments consist of marketable equity securities
      classified as available for sale and recorded at fair value. Unrealized
      holding gains and losses are recorded, net of any tax effect, as a
      separate component of accumulated other comprehensive income.

3.    Assets restricted for dividend payments

      Consists of 1,500,000 shares of the Justice Fund valued at $-0- at March
      31, 2006.

4.    Accounts receivable and revenue recognition

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

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

5.    Property and equipment

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

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

6.    Leasehold improvements

      Leasehold improvements are recorded at historical cost. These costs are
      amortized over the life of the lease which terminates on September 30,
      2007.


                                      F-12
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE E - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

7.    Income taxes

      Deferred income tax assets and liabilities are computed annually for
      differences between the financial statement and federal income tax bases
      of assets and liabilities that will result in taxable or deductible
      amounts in the future, based on enacted tax laws and rates applicable to
      the periods in which the differences are expected to affect taxable
      income. Valuation allowances are established when necessary to reduce
      deferred tax assets to the amount expected to be realized.

8.    Loss per common share

      Basic earnings (loss) per common share is computed by dividing the net
      income (loss) available to common shareholders by the weighted-average
      number of common shares outstanding during the respective period presented
      in our acCompanying financial statements. Fully diluted earnings (loss)
      per share is computed similar to basic income (loss) per share except that
      the denominator is increased to include the number of common stock
      equivalents (primarily outstanding options and warrants). Common stock
      equivalents represent the dilutive effect of the assumed exercise of the
      outstanding stock options and warrants, using the treasury stock method,
      at either the beginning of the respective period presented or the date of
      issuance, whichever is later, and only if the common stock equivalents are
      considered dilutive based upon the Company's net income (loss) position at
      the calculation date.

      As of March 31, 2006 and 2005, the Company's outstanding stock options and
      warrants (shown in the following table) are deemed to be anti-dilutive due
      to the Company's net loss position.

                                                   March 31,         March 31
                                                     2006              2005
                                                  ----------        ----------
      Options and warrants outstanding to
        purchase common stock                     61,224,049        26,152,699
      Preferred stock convertible to
        common stock                                 282,273           282,273

      In July 2006, 6 option holders have agreed to relinquish stock options
      amounting to 41,995,000 shares, if the authorized number of shares of the
      Company is not increased to at least 300,000,000 authorized shares.


                                      F-13
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE E - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

9.    Stock-based compensation

      The Company uses stock-based compensation arrangements to compensate
      employees and professional service providers and consultants.

      Through December 31, 2005, the Company used the intrinsic method outlined
      in Accounting Principles Board Opinion No. 25 Accounting for Stock Issued
      to Employees and related interpretation. As of January 1, 2006, the
      Company implemented Statement of Financial Accounting Standards No, 123R
      Accounting for Stock-Based Compensation Share Based Payment (SFAS 123R).
      As a result, the Company recognizes compensation expense based on the
      estimated fair value of employee stock options. In all instances involving
      stock grants, with respect to employee and non-employee compensation, the
      Company uses the trading market value of the common stock on the date of
      the award. The related expense is recognized on a straight line basis over
      the underlying service period.

      The following tabular presentation reflects supplemental financial
      information related to stock-based employee compensation as if the fair
      value method was used to value employees stock options prior to the
      adoption of SFAS 123R.

                                                               (RESTATED)
                                                 March 31,      March 31,
                                                   2006           2005
                                               ------------   ------------
       Net loss attributable to common
         stockholders, as reported             $(12,468,085)  $  4,653,464
                                               ============   ============
       Stock-based employee compensation
         included in net loss                  $  3,588,115   $    318,059
                                               ============   ============
       Stock-based employee compensation
         using the fair value model            $ (5,335,615)  $ (1,954,917)
                                               ============   ============
       Pro forma net loss attributable to
         common stockholders, using
         the fair value method                 $(14,215,585)  $  6,290,322
                                               ============   ============


                                      F-14
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE E - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

9.    Stock-based compensation (continued)

      Loss per share attributable to common
        shareholders, as reported                  $      (0.11)  $      (0.06)
                                                   ============   ============

      Pro forma net loss per share attributable
        to common shareholders                     $      (0.12)  $      (0.08)
                                                   ============   ============

      The Black Scholes Valuation Model is used to estimate fair values of
      employee stock options. Significant assumptions included an average
      expected term of sixty months; a volatility factor of 154%; and, a risk
      free interest rate of 4.25%.

10.   Accumulated Other Comprehensive Loss

      Accumulated other comprehensive loss consists of unrealized losses on
      marketable equity securities. Accumulated other comprehensive income has
      no applicable income tax.

11.   Derivative financial instruments

      The Company accounts for derivative financial instruments indexed to and
      potentially settled in, its own stock in accordance with Emerging Issues
      Task Force 00-19, which provides that if the number of shares deliverable
      in a transaction be indeterminable, that said shares be presented as a
      liability in the balance sheet. Further, the liability is to be measured
      at fair value until such time as the obligation is settled. The shares
      issued in connection with the Nutmeg Subscription Agreement discussed in
      Item 6 "Management's Discussion and Analysis", under the heading Liquidity
      and Capital Resources and Note O to the financial statements are
      derivative transactions and as such have been presented in the
      accompanying balance sheets as liabilities. The difference in the fair
      value of this liability at each financial reporting date is charged to
      operations.

NOTE F - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses, stock settlement liability, notes payable and
long-term debt, as applicable, approximates fair value due to the short term
nature of these items and/or the current interest rates payable in relation to
current market conditions.

Interest rate risk is the risk that the Company's earnings are subject to
fluctuations in interest rates on either investments or on debt and is fully
dependent upon the volatility of these rates. The Company does not use
derivative instruments to moderate its exposure to interest rate risk, if any.

Financial risk is the risk that the Company's earnings are subject to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the volatility of these rates. The Company does not use derivative
instruments to moderate its exposure to financial risk, if any.


                                      F-15
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE F - CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMER INFORMATION

The Company maintains its cash accounts in various financial institutions
subject to insurance coverage issued by the Federal Deposit Insurance
Corporation (FDIC). Under FDIC rules, the Company is entitled to aggregate
coverage of $100,000 per account type per separate legal entity per financial
institution. During the year ended March 31, 2006 the Company had deposits in
these financial institutions at various times for varying lengths of time with
credit risk exposures in excess of statutory FDIC coverage. The Company has
incurred no losses to date as a result of any of these unsecured situations.

During the year ended March 31, 2006 the Company generated revenues from 1
customer representing 84% of total revenues. During the year ended March 31,
2005, the Company generated revenues from 2 customers which represented 50% and
45% of total revenues, respectively.


                                      F-16
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE G - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at March 31, 2006:

         Computer equipment                     $   63,623
         Office furniture and other equipment       12,498
                                                ----------
                                                    76,121
         Less accumulated depreciation             (59,136)
                                                ----------

         Net property and equipment             $   16.985
                                                ==========

Depreciation expense for the years ended March 31, 2006 and 2005 was $8,221 and
$11,271, respectively.

Leasehold improvements consist of the following at March 31, 2006:

         Leasehold improvements                 $   30,190
         Less accumulated amortization              (8,642)
                                                ----------
         Net leasehold improvements             $   21,548
                                                ==========

Amortization expense for the years ended March 31, 2006 and 2005 was $ 5,932 and
$2,710, respectively.

NOTE H - ACCRUED EXPENSES

Accrued expenses consist of the following at March 31, 2006:

         Accrued bonuses                        $   52,051

         Accrued payroll                           143,579

         Accrued professional services             190,400

         Other accrued expenses                     80,587
                                                ----------
                                                $  466,617
                                                ==========


                                      F-17
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE I - LONG-TERM DEBT

Long-term debt consists of the following at March 31, 2006:

Face value $290,000, 10% Series A Convertible Debentures (a)        $   254,285

Face Value $100,000, 10% Series A Convertible Debenture  (b)             65,817

Face value $400,000, 8% Convertible Promissory Notes   (c)              400,000

Face Value $50,000 10% Series A Convertible Debenture (d)                50,000

Face Value $18,500 9% Convertible Promissory Note (e)                    18,500
                                                                    -----------
                                                                    $   788,602
                                                                    ===========

      (a) During May 2005, the Company issued $290,000 face value of 10% Series
      A Redeemable Convertible Debentures, due May 2006 (the "Series A
      Debentures"). $125,000 was converted into common stock of the Company. The
      Company has not been notified by the remaining note holders as to their
      intentions. The Series A Debentures are convertible at the option of the
      holder into shares of Common Stock at a rate of $0.07 per share. The
      trading market price on the date of issuance of the Series A Debentures
      was $0.12, resulting in an embedded beneficial conversion feature. Series
      A Debenture holders were also issued an aggregate of 4,142,858 warrants to
      purchase Common Stock at $0.07 per share, over a five year term. The
      Series A Debentures and warrants were issued for cash of $165,000 and the
      extinguishment of the unsecured notes amounting to $125,000 in the table
      above. Accounting for each of these issuances was as follows:

      Cash Purchase: The proceeds of $165,000 were allocated between the Series
      A Debentures and the warrants based upon relative fair values. The fair
      value of the warrants was determined using the Black Scholes Valuation
      Model. As a result of this allocation, $104,211 of proceeds were allocated
      to the warrants and recorded as paid in capital. The resulting debt
      discount was amortized to the earliest date the debenture was Convertible,
      which was during the nine months ended December 31, 2005. The remaining
      $36,842 applies to the beneficial conversion feature which is amortized
      using the effective interest method over the remaining term of the debt.
      The amortization of the debt discount from the warrants and beneficial
      conversion feature charged to interest expense for the fiscal year ended
      March 31, 2006 was $169,000.

      Debt Extinguishment: The excess of the aggregate fair value of the Series
      A Debentures and warrants issued (amounting to $339,858) over the carrying
      value of the debt extinguished was recorded as an extinguishment charge of
      $214,858. As noted above, the Series A Debentures contained a beneficial
      conversion feature. The amount of the beneficial conversion feature
      associated with the $125,000 face value of the Series A Debentures
      amounted to $89,857 and was recorded as additional paid in capital. The
      discount will be amortized over the debt term using the effective interest
      method. The amortization of the debt discount associated with the
      beneficial conversion feature was $ 89,285 for the fiscal year ended March
      31, 2006.


                                      F-18
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE I - LONG-TERM DEBT (continued)

      (b) During July 2005, the Company issued $100,000 face value of 10%
      convertible debentures due July 7, 2006. The Company has not been notified
      by the note holders as to their intentions. The debentures are convertible
      into shares of the Company's common stock based on certain beneficial
      ownership percentages as defined. In addition, the debenture holders
      received 1,428,572 warrants to purchase the Company's stock at $0.07 per
      share. The market price on the date of issuance was $0.12. The warrants
      expire five years from the date of issuance.

      The proceeds of $100,000 were allocated to the debentures and warrants
      based upon the relative fair values. The warrants were valued at $63,158
      and were amortized to the earliest date the debenture was convertible,
      which was during the quarter ended September 30, 2005. The fair value of
      the warrants was determined using the Black Scholes Valuation Model. The
      remaining $36,842 applies to the beneficial conversion feature which is
      amortized using the effective interest method over the debt term. The
      relative fair value of the warrants and the beneficial conversion feature
      is greater than the fair value of the debt, resulting in a debt discount
      of $100,000. Amortization for the fiscal year ended March 31, 2006 was
      $65,817.

      (c) During fiscal year 2006, the Company issued $400,000 of convertible
      promissory notes for cash. The notes are convertible into shares of the
      Company's common stock at 50% of the market value on the date of
      conversion.

      The fair value of the beneficial conversion feature is greater than the
      fair value of the debt resulting in a debt discount of $400,000. The debt
      discount is amortized over the debt term. Amortization for the fiscal year
      ended March 31, 2006 was $400,000.

      (d) During July 2005, the Company issued $100,000 face value of 10%
      convertible debentures due July 7, 2006. The debentures are convertible
      into shares of the Company's common stock based on certain beneficial
      ownership percentages as defined. In addition, the debenture holders
      received 714,286 warrants to purchase the Company's stock at $0.07 per
      share. The market price on the date of issuance was $0.12. The warrants
      expire five years from the date of issuance.

      The proceeds of $50,000 was allocated to the debentures and warrants based
      upon the relative fair values. The relative fair value of the warrants and
      the beneficial conversion feature is greater than the fair value of the
      debt, resulting in a debt discount of $50,000. Amortization for the fiscal
      year ended March 31, 2006 was $50,000.

      (e) The Company issued a convertible promissory note with a face amount of
      $18,500 in exchange for services. The note is convertible into shares of
      common stock at $0.07 per share. The relative fair value of the beneficial
      conversion feature is greater than the fair value of the debt, resulting
      in a debt discount of $18,500. Amortization for the fiscal year ended
      March 31, 2006 was $18,500.


                                      F-19
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE J - OFFICERS' COMPENSATION

On February 6, 2006, the Company entered into an Employment Agreement with Mr.
Charles Cardona (CCardona), which superseded all prior agreements. In this
agreement, CCardona will continue to serve as the Company's Chief Executive
Officer through December 31, 2009. This agreement contains the following terms
and conditions:

Position:                  Chief Executive Officer
Effective Date:            February 6, 2006
Base Salary:               2006 - $275,000 annual
                           2007 - $325,000 annual
                           2008 - $350,000 annual
                           2009 - $375,000 annual

The initial base salary shall be reduced to $2,000 per week until such time as
the Company reaches a cash flow positive position for at least 1 month, or the
Company raises at least $2 Million within 12 months, or management deems that
the Company's cash position is sufficient to support an increase. No additional
salary above the reduced base shall accrue as back salary during the first 6
months of this contract.

Bonuses:                   Quarterly Qualitative Bonus of $ 20,000
                           Year End Qualitative Bonus of $ 50,000
Profitability Bonus:       If the Company reaches annual profitability,
                           employee will receive a $250,000 bonus plus
                           250,000 shares in stock.

CCardona shall receive an annual bonus as follows: 0.5% of the previous year's
revenues plus 3.5% of the previous year's profits plus 0.5% of the transaction
price of any acquisition.

The Board of Directors shall at its discretion grant up to an additional
$150,000 in bonus to CCardona on an annual basis.

The Board of Directors shall at its discretion grant up to an additional
3,000,000 options in bonus to the employee on an annual basis at strike prices
the Board may determine.

The Board of Directors shall at its discretion grant up to an additional
3,000,000 shares in bonus to the employee on an annual basis.

All bonuses shall be net of payroll taxes.

Stock Options:             The employee shall receive options to purchase
                           3,000,000 (three million) shares as follows:

                                 Options for 750,000 shares at $.25
                                 Options for 750,000 shares at $.30
                                 Options for 750,000 shares at $.35
                                 Options for 750,000 shares at $.40

                           Additionally, the employee shall receive the
                           following; 3,000,000 options upon the Company
                           achieving $500,000 in total. revenues prior to March
                           31, 2007.  Options shall be priced at the stock bid
                           price the next trading date after $500,000 in
                           revenues have been received.

All the options granted above shall be exercisable for 6 years from the date of
granting. Additionally the Company shall maintain any existing options under
previous contracts and option grants.


                                      F-20
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE J - OFFICERS' COMPENSATION

Additional Incentives:     Charles A. Cardona will receive 5% of all sales he is
                           involved with.

Other Agreements:          Medical and Dental insurance is fully
                           paid for the employee by the Company during the
                           employment period. Company shall reimburse or pay
                           for reasonable Company vehicle expenses including
                           lease or purchase payments, gas, tolls and repairs.

Legal Representation:      AdZone Research agrees to defend employee against any
                           and all legal claims and litigation. In addition,
                           AdZone Research further agrees to pay all expenses
                           arising from any and all litigation, including but
                           not limited to attorney's fee's legal fees, misc.
                           expenses. Legal representation for Charles A.
                           Cardona will continue beyond the term of this
                           contract and will continue for the remainder of
                           Charles A. Cardona's life.

Expense Reimbursement
Clause:                    The employee shall be reimbursed for any and all
                           reasonable business related expenses upon
                           presentation of an expense report as currently in use
                           as of February, 2006. Any personal expenses
                           reimbursed may be used to reduce outstanding
                           compensation due and or unpaid to the employee.

See May 1, 2006 Subsequent Events for modification of this contract.

On February 6, 2006, the Company entered into an Employment Agreement with Mr.
John A. Cardona (JCardona), which superseded all prior agreements. In this
agreement, JCardona will serve as the Company's Chief Operating Officer through
December 31, 2009. This agreement contains the following terms and conditions:

Position:                  Chief Operating Officer
Effective Date:            February 6, 2006
Base Salary:               2006 - $275,000 annual
                           2007 - $325,000 annual
                           2008 - $350,000 annual
                           2009 - $375,000 annual

The initial base salary shall be reduced to $2,000 per week until such time as
the Company reaches a cash flow positive position for at least 1 month, or the
Company raises at least $2 Million within 12 months, or management deems that
the Company's cash position is sufficient to support an increase. No additional
salary above the reduced base shall accrue as back salary during the first 6
months of this contract.

Bonuses:                   Quarterly Qualitative Bonus of $ 20,000
                           Year End Qualitative Bonus of $ 50,000
Profitability Bonus:       If the Company reaches annual profitability,
                           employee will receive a $150,000 bonus plus
                           250,000 shares in stock.

JCardona shall receive an annual bonus as follows: 0.5% of the previous year's
revenues plus 3.5% of the previous year's profits plus 0.5% of the transaction
price of any acquisition.


                                      F-21
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE J - OFFICERS' COMPENSATION (continued)

The Board of Directors shall at its discretion grant up to an additional
$150,000 in bonus to JCardona on an annual basis.

The Board of Directors shall at its discretion grant up to an additional
3,000,000 options in bonus to the employee on an annual basis at strike prices
the Board may determine.

The Board of Directors shall at its discretion grant up to an additional
3,000,000 shares in bonus to the employee on an annual basis.

All bonuses shall be net of payroll taxes.

Stock Options:             The employee shall receive options to purchase
                           3,000,000 (three million) shares as follows:
                                 Options for 750,000 shares at $.25
                                 Options for 750,000 shares at $.30
                                 Options for 750,000 shares at $.35
                                 Options for 750,000 shares at $.40

                           Additionally the employee shall receive the
                           following; 3,000,0000 options upon the Company
                           achieving $500,000 in total revenues prior to March
                           31, 2007.  Options shall be priced at the closing
                           stock bid price the next trading date after $500,000
                           in revenues have been received.

All the options granted above shall be exercisable for 6 years from the date of
granting. Additionally the Company shall maintain any existing options under
previous contracts and option grants.

Additional Incentives:     John A. Cardona will receive 5% of all sales he is
                           Involved with.

Other Agreements:          Medical and Dental insurance is fully
                           paid for the employee by the Company during the
                           employment period. Company shall reimburse or pay
                           for reasonable Company vehicle expenses including
                           lease or purchase payments, gas, tolls and
                           repairs.

Legal Representation:      AdZone Research agrees to defend
                           employee against any and all legal claims and
                           litigation. In addition, AdZone Research further
                           agrees to pay all expenses arising from any and
                           all litigation, including but not limited to
                           attorney's fee's legal fees, misc. expenses.
                           Legal representation for John A. Cardona
                           will continue beyond the term of this contract
                           and will continue for the remainder of John A.
                           Cardona's life.

Expense Reimbursement
Clause:                    The employee shall be reimbursed for any and all
                           business related expenses upon presentation of an
                           expense report as currently in use as of February,
                           2006. Any personal expenses reimbursed may be used to
                           reduce outstanding compensation due and or unpaid to
                           the employee.

See May 1, 2006 Subsequent Events for modification of this contract.


                                      F-22
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE J - OFFICERS COMPENSATION (continued)

As of March 31, 2006, there was $242,968 unpaid under the agreements with
CCardona and JCardona. However in June, 2006, CCardona and Jcardona forgave this
debt from AdZone.

Future minimum amounts payable under the Cardona contracts are as follows:

Year ending
 March 31,                 Amount

   2007               $   575,000
   2008                   662,500
   2009                   712,500
   2010                   562,500
                      -----------
   Totals             $ 2,512,500
                      ===========

NOTE K - INCOME TAXES

The components of income tax benefit (expense) for the years ended March 31,
2006 and 2005, respectively, are as follows:

                                     2006            2005
                                   --------        --------
                Federal:
                   Current         $     --        $     --
                   Deferred              --              --
                                   --------        --------
                State:
                   Current               --              --
                   Deferred              --              --
                                   --------        --------
                Totals             $     --        $     --
                                   ========        ========

As of March 31, 2006, the Company has a net operating loss carryforward of
approximately $20,000,000 to offset future taxable income. Subject to current
regulations, this carryforward will begin to expire in 2025. The amount and
availability of the net operating loss carryforwards may be subject to
limitations set forth by the Internal Revenue Code. Factors such as the number
of shares ultimately issued within a three year look-back period; whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate; continuity of historical business; and subsequent income of
the Company all enter into the annual computation of allowable annual
utilization of the carryforwards and the possible permanent loss of a portion of
the carryforwards.


                                      F-23
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE K - INCOME TAXES (CONTINUED)

The Company's income tax expense for the years ended March 31, 2006 and 2005,
respectively, differed from the statutory federal rate of 34 percent as follows:


                                                          2006          2005
                                                      -----------   -----------

Statutory rate applied to loss before income taxes    $ 4,239,000   $ 1,425,000
Increase (decrease) in income taxes resulting from:
    Non-deductible charges:
    Expenses not deductible for income taxes                  (--)     (135,000)
    Change in deferred tax valuation allowance         (4,346,000)   (1,360,000)
    Other                                                 107,000        70,000
                                                      -----------   -----------
      Income tax expense                              $        --   $        --
                                                      ===========   ===========


                                                        March 31,    March 31,
                                                          2006         2005
                                                      -----------   -----------
Deferred tax assets
   Net operating loss carryforwards                   $ 7,637,000   $ 3,000,000
   Deferred compensation                                   19,000       260,000
   Deferred revenue                                            --        50,000
   Less valuation allowance                            (7,656,000)   (3,310,000)
                                                      -----------   -----------
     Net Deferred Tax Asset                           $        --   $        --
                                                      ===========   ===========

During the years ended March 31, 2006 and 2005, the deferred tax asset valuation
allowance increased by approximately $4,346,000 and $1,360,000, respectively.

NOTE L - LOSS ON EXTINGUISHMENT

At March 31, 2006, extinguishments loss consists of the following:

         Nutmeg Group (see (1) above)                     $2,494,281 (a)
         Convertible debenture                               214,858 (b)
         Note payable                                         16,000 (c)
                                                          ----------
                                                          $2,725,139
                                                          ==========

(a) On May 24, 2004, AdZone entered into a Subscription Agreement with the
Nutmeg Group, LLC for a private placement up to $1,750,000. On July 23, 2004 the
agreement was amended to increase the private placement upo to $1,850,000. The
agreement provided four traunches: The first traunch of $400,000 on May 20,
2004; the second traunch of $600,000 on July 2, 2004; the third traunch of
$100,000 on September 17, 2004 and the fourth traunch option for $750,000 within
5 days of effective registration.


                                      F-24
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE L - LOSS ON EXTINGUISHMENT (continued)

The first two traunches were executed as agreed. On October 5, 2005 the
agreement for the third traunche was renegotiated to increase the shares
provided to the Nutmeg Group. The fourth traunch was never exercised.

In February 2006, the entire agreement was renegotiated. The new agreement
requires payment of $1,400,000 in cash, the issuance of 11,000,000 shares of
common stock and 11,000,000 warrants to purchase common stock at $0.10. In
addition, the Company is required to issue an additional 5,000,000 shares of
common stock and 5,000,000 warrants. The additional shares and warrants could be
reduced to 4,000,000 depending on the stock price, as defined.

The new agreement cancels debentures in the amount of $100,000 and warrants; a
liability that was to be settled with the Company's stock valued at $2,610,000
and penalty accruals amounting to $154,000. As a result, the Company has
recognized an extinguishment loss in the amount of $2,494,281.

The agreement has reset clauses c, d and e as below;

c. The 11,000,000 shares will be subject to a mutual reset. In the event that
the stock price declines to below $0.125 per share and remains so at either the
time such shares become registered or at the one-year anniversary of the October
2005 investment date (a "Nutmeg/Arbus Reset"), then AdZone shall issue an
additional 5,000,000 shares. On the other hand, if there is no Nutmeg/Arbus
Reset, at any time after such shares are tradable, without any selling
restriction, and the closing bid price exceeds $0.30 per share and remains at
least at such level for 3 days thereafter, and such shares have not been sold,
the number of shares shall be reduced by 1,000,000, which then must be returned,
to the extent not sold by that time (an "AdZone Reset").

d. AdZone shall issue at this time to Nutmeg/Arbus, 11,000,000 warrants
exercisable at $0.10 per share, provided that in the event of a Nutmeg/Arbus
Reset, then AdZone shall issue an additional 5,000,000 warrants; in the event of
an AdZone Reset, and such warrants have not been exercised, the number of
warrants shall be reduced by 1,000,000, which then must be returned, to the
extent not exercised by that time; and in the event of an AdZone Reset, and such
warrants have not been exercised, then the exercise price shall increase to
$0.15 per share. The Common Stock into which the Warrants are exercisable will
have piggyback registration rights, and the Warrants will be transferable. If
within 360 days of Closing, the Company does not register the shares of Common
Stock into which the Warrants are exercisable, or the shares of Common Stock
into which the Warrants are exercisable are not otherwise freely tradable, then,
at Nutmeg/Arbus' option, the Warrant exercise may be cashless.

e. Once the shares of Common Stock into which the Warrants are exercisable are
registered, AdZone shall have the ability to cause Nutmeg/Arbus to exercise the
warrants if the AdZone's Common Stock is trading above $.30 for twenty (20)
consecutive trading days, to the extent of 10% of the Total Dollar Trading
Volume for such period. For purposes of the preceding sentence, Total Dollar
Trading Volume shall mean the number of shares traded on such exchange for such
twenty (20) consecutive trading days, times the average price of such trades (a
"Mandatory Exercise"). To cause a Mandatory Exercise, the AdZone shall issue
twenty (20) day prior Notice. The exercise shall occur and be effective,
immediately following such twenty (20) days of Notice.

Amounts due under the new agreement of $2,000,000, which consists of $900,000 in
cash and $1,100,000 in stock amd warrants valued at the market price at March
31, 2006. The amount of $500,000 was paid in April, 2006 and the balance was due
June 12, 2006. The Company is currently negotiating the last payment.

(b) The Company issued $125,000 face amount of convertible debentures and
warrants to satisfy a note payable. (See Note I(a).

(c) The Company issued 550,000 shares of common stock valued at $66,000 to
satisfy a note payable of $50,000.


                                      F-25
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE M - PREFERRED STOCK

Preferred stock consists of the following at March 31, 2006:

                                                       March 31, 2006
                                           ------------------------------------
                                                         Carrying    Redemption
                                             Shares       Value        Value
                                           ----------   ----------   ----------

9.0% Series A Cumulative Convertible Stock       2.78       31,969   $   31,969
9.0% Series B Cumulative Convertible Stock        .34       11,500       11,500
                                           ----------   ----------   ----------
     Totals                                      3.12   $   43,469   $   43,469
                                           ==========   ==========   ==========

9.0% Series A Cumulative Preferred Stock

On August 12, 2003, the Company opened a Private Placement Memorandum to sell up
to 50 Units, consisting of one (1) share of 9.0% Series A Cumulative Preferred
Stock and Warrants to purchase up to 4,376,094 shares of the Company's common
stock at a price of $10,000 per Unit. The number of warrants to be issued to
each purchaser was determined by dividing the purchase price of the Unit by the
average bid price of the Company's common stock during the 5 day trading period
prior to such purchaser's delivery of cleared funds to the Company's Escrow
Agent for this specific offering.

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

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

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

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


                                      F-26
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE M - PREFERRED STOCK (CONTINUED)

The Company is contractually obligated to file a Registration Statement with the
U. S. Securities and Exchange Commission, and use its best efforts to have said
Registration Statement declared effective within 120 days of the closing date of
this Private Placement Memorandum, registering a number of shares of its common
stock issuable upon the conversion of the Series A Preferred Stock and the
exercise of the Warrants. This offering was closed by the Company on October 31,
2003. As of March 31, 2006, and subsequent thereto, the Company has not filed
the required Registration Statement.

The Company initially sold approximately 34.85 Units for gross proceeds of
approximately $348,500 and redeemed approximately 10.63 Units during fiscal 2004
at a gross redemption price of approximately $122,245, inclusive of the 15.0%
redemption premium upon the sale of 9.0% Series B Cumulative Preferred Stock.
The Company paid a commission of approximately $41,280 to Spartan Securities
Group, Ltd. for the selling of this offering. Additionally, Spartan Securities
Group, Ltd. was the purchaser of one (1) Unit and received a commission related
to the purchase of its Unit.

9.0% Series B Cumulative Preferred Stock

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

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

Additionally, at the Company's option, the Company may elect to redeem all of
the outstanding shares of Series B Preferred Stock at any time at a price equal
to $11,500 per share, plus all dividends accrued to the date of redemption.

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

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


                                      F-27
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE M - PREFERRED STOCK (CONTINUED)

The Company is contractually obligated to file a Registration Statement with the
U. S. Securities and Exchange Commission, and use its best efforts to have said
Registration Statement declared effective within 120 days of the closing date of
this Private Placement Memorandum, registering a number of shares of its common
stock issuable upon the conversion of the Series B Preferred Stock and the
exercise of the Warrants. This offering was closed by the Company on January 15,
2004. As of March 31, 2006, and subsequent thereto, the Company has not filed
the required Registration Statement.

The Company initially sold approximately 31.00 Units for gross proceeds of
approximately $310,000. The Company paid a commission of approximately $36,000
to Spartan Securities Group, Ltd. for the selling of this offering.
Additionally, approximately $122,245 of the net proceeds were used to repurchase
approximately 10.63 shares of the then issued and outstanding 9.0% Series A
Preferred Stock.

During the twelve months ended March 31, 2005, 22.10 shares of Series A
Preferred Stock and 30 shares of Series B Preferred Stock were converted to
2,614,941 and 3,169,340 shares of common stock, respectively.

Dividend reserve

In conjunction with the Series A and Series B Preferred Stock transactions, the
Company established a contractual reserve account for the payment of 12 months
of dividends. At March 31, 2006, approximately $5,285 was in a bank account
maintained by the Company's Escrow Agent for the payment of monthly dividends.

NOTE N - BENEFICIAL CONVERSION DISCOUNT FEATURE ON PREFERRED STOCK

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

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

                                                Initial
                                         Allocation of Proceeds
                                       -------------------------
                                        Series A
                                        Preferred                      Total
                                         Stock         Warrants      Proceeds
                                       -----------   -----------   -----------
Series A Unit Offering                 $   197,525   $   150,975   $   348,500
                                                     ===========   ===========
Beneficial conversion feature             (145,997)
                                       -----------
Initial carrying value                 $    51,528
                                       ===========


                                      F-28
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

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

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

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

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

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


                                      F-29
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE O - COMMON STOCK TRANSACTIONS

During Fiscal 2006 and 2005, the Company issued 84,270,902 and 27,311,998
shares, respectively, of common stock, in both registered and restricted,
unregistered form.

On September 1, 2005, December 6, 2005, February 3, 2006 and February 24, 2006,
the Company filed separate Registration Statements on Form S-8 registering
4,000,000, 20,950,000, 17,700,000 and 20,900,000 shares of common stock,
respectively.

On July 20, 2004, November 5, 2004 and February 23, 2005, the Company filed
separate Registration Statements on Form S-8 registering 5,000,000, 12,400,000
and 3,500,000 shares of common stock, respectively.

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

                                 Cumulative        Cumulative
                                  number of         number of        Remaining
                                   shares            shares            to be
                                 registered          issued           issued
                              --------------    --------------    --------------
      Filing dated 7/20/04         5,000,000         4,995,964             4,036
      Filing dated 11/5/04        12,400,000         2,500,000         9,900,000
      Filing dated 2/23/05         3,500,000         3,500,000                --
      Filing dated 9/1/05          4,000,000         4,000,000                --
      Filing dated 12/6/05        20,950,000        14,074,800         6,875,200
      Filing dated 2/3/06         17,700,000        11,928,257         5,771,743
      Filing dated 2/24/06        20,900,000         4,001,500        16,898,500


                                      F-30
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE O - COMMON STOCK TRANSACTIONS (CONTINUED)

The following table presents stock issuances during Fiscal 2006 and 2005:

                                                  Total
                                              -------------
       Balance at March 31, 2004                 70,832,255
         Cash (a)                                12,136,284
         Conversion of preferred stock
               Series A                           2,614,941
               Series B                           3,169,340
         Consulting and legal services            6,253,232
         Conversion of warrants                     568,201
         Personnel compensation                   2,570,000
                                              -------------
       Balance at March 31, 2005                 98,144,253
         Cash                                     4,118,286
         Consulting and legal services           19,920,546
         Conversion of warrants                   3,804,570
         Personnel compensation                  14,216,000
         Non-employee compensation                2,139,810
         Exercise of options                     22,541,500
         Liquidation of note payable                550,000
         Extinguishment of debt                  11,000,000
                                              -------------
       Balance at March 31, 2006                176,434,965
                                              =============


                                      F-31
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE P - STOCK OPTIONS

2004 Stock Option Plan

The Company has adopted a stock option plan (the "2004 Plan") covering
12,400,000 shares of the Company's Class A common stock, pursuant to which
employees are eligible to receive qualified incentive as well as non-qualified
stock options. Incentive stock options granted under the 2004 Plan are
exercisable up to ten years from the date of grant at an exercise price of not
less than the fair market value of the common stock on the date of grant.
Options shall vest over a period of no longer than 5 years.

Notwithstanding, the term of an incentive stock option granted under the 2004
Plan to a shareholder owning more than 10% of the voting rights may not exceed 5
years, and the exercise price of an incentive stock option granted to such
shareholder may not be less than 110% of the fair market value of the common
stock on the date of grant.

2005 Incentive Stock Option Plan

The Company has adopted a stock option plan (the "2005 Plan") covering 3,500,000
shares of the Company's Class A common stock, pursuant to which employees are
eligible to receive qualified incentive as well as non-qualified stock options.
Incentive stock options granted under the 2005 Plan are exercisable up to ten
years from the date of grant at an exercise price of not less than the fair
market value of the common stock on the date of grant. Options shall vest over a
period of no longer than 5 years.

Notwithstanding, the term of an incentive stock option granted under the 2005
Plan to a shareholder owning more than 10% of the voting rights may not exceed 5
years, and the exercise price of an incentive stock option granted to such
shareholder may not be less than 110% of the fair market value of the common
stock on the date of grant.

2006 Incentive Stock Option Plan

The Company has adopted a stock option plan (the "2006 Plan") covering
17,700,000 shares of the Company's Class A common stock, pursuant to which
employees are eligible to receive qualified incentive as well as non-qualified
stock options. Incentive stock options granted under the 2006 Plan are
exercisable up to ten years from the date of grant at an exercise price of not
less than the fair market value of the common stock on date of grant. Options
shall vest over a period of no longer than five years.

Notwithstanding, the term of an incentive stock option granted under the 2006
Plan to a shareholder owning more than 10% of the voting rights may not exceed 5
years, and the exercise price of an incentive stock option granted to such
shareholder may not be less than 110% of the fair market value of the common
stock on the date of grant.

Pursuant to replacement employment contracts, executed in February 2006, the
Company has granted options to purchase up to 3,000,000 shares of common stock
each to Charles Cardona and John Cardona at exercise prices ranging from $0.25
to $0.40 per share. These

Options vested immediately upon execution of each respective employment
agreement and expire in February 2012.

At various times during Fiscal 2005, the Company granted short-term options
(generally with a term of 30 days) to Kyle Kennedy, a consultant to assist the
Company with business strategy, business development and mergers and
acquisitions. Mr. Kennedy's compensation was in the form of options to purchase
registered freely trading securities at various discounts to the then current
Market price. The agreement was on a month to month basis cancelable at 30 days
notice by either party.


                                      F-32
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE P - STOCK OPTIONS (CONTINUED)

                                                                Weighted average
                                                                    exercise
                                                                 price per share
                                                                ----------------

     Options outstanding at April 1, 2004          10,200,000       $  1.04
       Issued                                       2,350,000          0.21
       Exercised                                   (1,969,000)         0.22
                                                -------------       -------
     Options outstanding at March 31, 2005         10,581,000       $  0.86
       Issued                                      61,660,000          0.30
       Exercised                                  (22,541,500)         0.10
       Expired/Terminated                            (581,000)         0.21
                                                -------------       -------
     Options outstanding at March 31, 2006         49,118,500       $  0.54
                                                =============       =======

The weighted-average remaining contractual life of the options outstanding at
March 31, 2006 was 5.11 years. The following table summarizes the outstanding
options at March 31, 2006:

                                                     Weighted         Weighted
                                                      Average         Average
Range of                   Stock Options             Remaining        Exercise
 Prices             Outstanding    Exercisable         Life            Price

$0.00 to $0.10       10,618,500     10,618,500        5.34 yrs          $0.05
$0.11 to $0.20       17,250,000     17,250,000        5.29 yrs.         $0.15
$0.21 to $0.40        7,350,000      7,350,000        6.39 yrs.         $0.33
$0.41 to $1.00        6,950,000      6,950,000        4.25 yrs          $0.82
$1.01 to $2.00        4,100,000      4,100,000        3.63 yrs          $1.66
$2.01 to $3.00        2,850,000      2,850,000        5.06 yrs          $3.00

                     49,118,500     49,118,500
                    ===========    ===========

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options, which do not have vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions, including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.


                                      F-33
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE Q - STOCK WARRANTS

During April, 2005 and February 2006, Preferred Stockholders exercised 6,640,018
warrants which were converted to 3,804,570 shares of common stock.

As additional compensation for investment banking services, Spartan Securities
Group, Inc. received warrants in fiscal 2004 and 2003 to purchase up to an
aggregate 1,523,463 shares of common stock at a price of either $0.0874 per
share (114,416 shares), $0.07 per share (995,714 shares) or $0.20 per share
(413,333 shares). On October 7, 2004, Spartan Securities exercised 877,572
warrants which were converted to 568,201 shares of common stock. On April 7,
2005, Spartan Securities exercised 413,333 warrants which were converted to
220,444 shares of common stock. On May 25, 2004, AdZone redeemed 232,558
warrants for $76,744.

During the year ended March 31, 2006, the Company entered into various contracts
for professional services and in consideration thereof granted warrants to
purchase up to 1,174,286 shares of the Company's common stock at exercise prices
ranging from $0.07 to $1.00. These warrants expire in 2007 through 2010.

During the year ended March 31, 2006, the Company granted warrants to investors
for financing thru convertible debentures and in consideration thereof granted
warrants to purchase up to 6,285,716 shares of the Company's common stock at the
exercise price of $0.07. These warrants expire in 2007 through 2010.


                                      F-34
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE Q - STOCK WARRANTS (CONTINUED)

The following table summarizes the outstanding warrants as of March 31, 2006:

                                          Warrants
                                         originally      Exercise price
                                           issued           per share
                                        -------------     -------------

Outstanding, April 1, 2004                  9,070,695     $0.07 - $0.85
  Warrants issued                           7,611,143     $0.12 - $5.00
  Warrants exercised                         (877,572)    $0.07 - $0.80
  Warrants expired                                 --                --
  Warrants redeemed                          (232,558)    $0.07
                                        -------------
Outstanding, March 31, 2005                15,571,708     $0.07 - $5.00
  Warrants issued                           7,460,002     $0.05 - $1.00
  Warrants exercised                       (6,640,018)    $0.07 - $0.80
  Warrants expired                           (500,000)    $0.15 - $1.00
  Warrants cancelled                       (3,786,144)    $0.14 - $0.39
                                        -------------
Outstanding, March 31, 2006                12,105,548     $0.05 - $5.00
                                        =============

The weighted-average exercise price of the Company's outstanding warrants at
March 31, 2006 is approximately $0.35 per share.

NOTE R - COMMITMENTS AND CONTINGENCIES

Legal matters

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

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

Office facilities

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

On August 1, 2004, the Company leased additional space at its office location in
Calverton, N.Y. The term of this agreement will run concurrently with their
existing lease. The new agreement requires the payment of approximately $4,016
per month for year 3; approximately $4,143 per month for year 4; and
approximately $4,222 per month for year 5.


                                      F-35
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

Future minimum non-cancellable lease payments under this lease agreement are as
follows:

                      Year ending
                       March 31,                 Amount

                         2007                 $    50,188
                         2008                      25,332
                                              -----------
                         Total                $    75,520
                                              ===========

Rent expense for the years ended March 31, 2006 and 2005 was $48,190 and
$36,642, respectively.

NOTE R - COMMITMENTS AND CONTINGENCIES

Consulting Agreement

On March 21, 2005, the Company entered into a twelve month Consulting Agreement
with PAW & Associates and/or Paul Weaver to provide various product sales
services. In conjunction with the terms of the agreement, the Company has issued
warrants to purchase up to 250,000 shares of AdZone common stock at a strike
price of $1.00. These warrants expire March 21, 2007. AdZone agrees to pay a
2.0% commission on the first $1 million of acquired contract value and 5.0% on
all acquired contract values in excess of $1 million. AdZone will also issue an
additional 200,000 warrants with a strike price of $1.00 and a three year
exercise period upon the first $1 million in contract value. This agreement has
not been renewed as of March 31, 2006.

During the current fiscal year, the Company has entered into agreements with
several individuals and companies for consulting services. The agreements call
for payment in common stock and warrants for services rendered.

Several of the agreements are with related parties, namely Mr. Frank Pinizzotto,
Blue Diamond Consulting LLC and Diamond Trust , LLC. These parties have also
loaned the Company $620,000 thru convertible promissory notes.

During the year ended March 31, 2006, the Company paid an accounting firm
$30,000 in stock for accounting services.

NOTE S - SUBSEQUENT EVENTS

On July 5, 2006, the Securities and Exchange Commission announced the temporary
suspension, pursuant to Section 12(k) of the Securities act of 1934(the
"Exchange Act"), of trading in the securities of AdZone Research, Inc.
terminating on July 18, 2006.

Departure of Directors or Principal Officers; Election of Directors; Appointment
of Principal Officers;

On April 28, 2006, Charles Cardona resigned as our Chief Executive Officer and
John Cardona resigned as our Chief Operating Officer. Charles Cardona shall
remain Chairman of our Board of Directors. There was no disagreement or dispute
between Charles Cardona and John Cardona and our Company which led to their
resignations.

In addition, on April 28,2006, our Board of Directors appointed John Cardona as
Vice Chairman of our Board of Directors, Jeffrey Hale as our Chief Executive
Officer and President and Terrance Kent as our Chief Operating Officer. There
are no understandings or arrangements between Messrs. Cardona, Hale and Kent and
any other person pursuant to which Messrs. Cardona, Hale and Kent were selected
as a director and officers of our Company. John Cardona is the brother of
Charles Cardona. Messrs. Hale and Kent do not have any family relationship with
any director, executive officer or person nominated or chosen by us to become a
director or executive officer.


                                      F-36
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

On May 1, 2006, the Company signed new employment agreements with Charles
Cardona and John Cardona. These agreements supercede any prior agreement between
AdZone Research, Inc. and Charles Cardona and John Cardona. The Company assumes
all outstanding unpaid back salary/compensation liability under previous
contracts with AdZone Research, Inc.

On May 1, 2006, the Company entered into an employment agreement with Jeffrey
Hale as our Chief Executive Officer and President which will terminate on May,
1, 2009. The agreement specifies a starting bonus of 500,000 shares of AdZone
common stock. The base salary will be $300,000 annually as follows; $200,000
paid as a weekly salary, $50,000 guaranteed from the Stock Option Plan plus
$50,000 will be deferred until the Company reaches either $200,000 in annual
revenues or paid as $961.54 additional each week the Company stock price exceeds
..25 cents.

Upon reaching $500,000 in annual revenues, the base salary shall increase to
$325,000, upon reaching $3,000,000 in annual revenues, the base salary shall
increase to $450,000 and upon reaching $10,000,000 in annual revenues, the base
salary shall increase to $650,000.

Bonuses: Quarterly Qualitative Bonus of $20,000 at the Board's discretion plus
         Year-end Qualitative bonus of $50,000 at the Board's discretion and in
         addition, Employee shall receive an annual bonus as follows; .5% of the
         previous year's revenues plus 5% of the prior year's profits, and in
         addition, if the Company reaches annual profitability, employee will
         receive a $250,000 bonus plus 250,000 shares of common stock.

Upon reaching the first $500,000 in annual revenues, the Employee shall receive
250,000 shares of common stock; upon reaching first $5,000,000 in annual
revenues, the employee shall receive 500,000 shares of AdZone common stock plus
$250,000 in cash; and upon reaching first $15,000,000 in annual revenues, the
employee shall receive 1,000,000 shares of common stock plus $500,000 in cash.

Upon reaching positive cash flow for one quarter, the employee shall receive
250,000 shares of AdZone common stock.

The Board of Directors shall at its discretion grant up to an additional
$150,000 in bonus to the employee on an annual basis.

The Board of Directors shall at its discretion grant up to an additional
3,000,000 options in bonus to the employee on an annual basis at strike prices
the Board may determine.

Stock Options: The employee shall receive options to purchase 4,000,000 (Four
Million) shares as follows;

      Options for 1,000,000 shares at $0.07
      Options for 750,000 shares at $.25
      Options for 750,000 shares at $.50
      Options for 750,000 shares at $1.00
      Options for 750,000 shares at $1.50

Additionally, the employee shall receive the following;

      3,000,000 options upon the Company achieving $5,000,000 in total revenues
      prior to March 31, 2008.

      Options shall be priced at the closing stock bid price the next trading
      date after $5,000,000 in revenues have been received.

      All the options granted above shall be exercisable for six years from the
      date of granting.


                                      F-37
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

Additional Consideration;

      The Board will in good faith recognize the employee with additional cash,
      stock and Stock options for contributing to successful business events
      including acquisitions and mergers.

Other Agreements;

      Medical and dental insurance will be fully paid for the employee by the
Company during the employment period. In addition, the employee will participate
in the Company 401 K Plan. The employee shall be reimbursed for business
expenses reasonably and necessarily incurred in connection with employment
duties, upon presentation of proper supporting documentation. Company shall
reimburse or pay for reasonable Company vehicle expense including lease or
purchase payments, gas, tolls and repairs upon the Company reaching the first
$500,000 in revenues. AdZone Research agrees to defend employee against any and
all legal claims and litigation. In addition, AdZone Research further agrees to
pay all expenses arising from any and all litigation, including but not limited
to, attorney's fees, legal fees and miscellaneous expenses. Legal representation
will continue during the term of this contract.

On May 1, 2006, the Company entered into an employment agreement with Terrance
Kent as our Chief Operating Officer which will terminate on May, 1, 2009. The
agreement specifies a starting bonus of 400,000 shares of AdZone common stock.
The base salary will be $250,000 annually as follows; $150,000 paid as a weekly
salary, $50,000 guaranteed from the Stock Option Plan plus $50,000 will be
deferred until the Company reaches either $200,000 in annual revenues or paid as
$961.54 additional each week the Company stock price exceeds .25 cents.

Upon reaching $500,000 in annual revenues, the base salary shall increase to
$275,000, upon reaching $3,000,000 in annual revenues, the base salary shall
increase to $400,000 and upon reaching $10,000,000 in annual revenues, the base
salary shall increase to $500,000.

Bonuses: Quarterly Qualitative Bonus of $15,000 at the Board's discretion plus
         Year-end Qualitative bonus of $25,000 at the Board's discretion and in
         addition, Employee shall receive an annual bonus as follows; .35% of
         the previous year's revenues plus 2.5% of the prior year's profits, and
         in addition, if the Company reaches annual profitability, employee will
         receive a $100,000 bonus plus 150,000 shares of common stock.

Upon reaching the first $500,000 in annual revenues, the Employee shall receive
250,000 of common stock; upon reaching first $5,000,000 in annual revenues, the
employee shall receive 500,000 shares of AdZone common stock plus $100,000 in
cash; and upon reaching first $15,000,000 in annual revenues, the employee shall
receive 750,000 shares of common stock plus $250,000 in cash.

Upon reaching positive cash flow for one quarter, the employee shall receive
200,000 shares of AdZone common stock.

The Board of Directors shall at its discretion grant up to an additional $75,000
in bonus to the employee on an annual basis.

The Board of Directors shall at its discretion grant up to an additional
1,500,000 options in bonus to the employee on an annual basis at strike prices
the Board may determine.


                                      F-38
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

Stock Options: The employee shall receive options to purchase 3,000,000 (Three
Million) shares as follows;

      Options for 1,000,000 shares at $0.07
      Options for 500,000 shares at $.25
      Options for 500,000 shares at $.50
      Options for 500,000 shares at $1.00
      Options for 500,000 shares at $1.50

Additionally, the employee shall receive the following;

      1,500,000 options upon the Company achieving $5,000,000 in total revenues
      prior to March 31, 2008.

      Options shall be priced at the closing stock bid price the next trading
      date after $5,000,000 in revenues have been received.

      All the options granted above shall be exercisable for six years from the
      date of granting.

Additional Consideration;

      The Board will in good faith recognize the employee with additional cash,
      stock and Stock options for contributing to successful business events
      including acquisitions and mergers.

Other Agreements;

      Medical and dental insurance will be fully paid for the employee by the
Company during the employment period. In addition, employee will participate in
the Company 401 K Plan. Employee shall be reimbursed for business expenses
reasonably and necessarily incurred in connection with employment duties, upon
presentation of proper supporting documentation. Company shall reimburse or pay
for reasonable Company vehicle expense including lease or purchase payments,
gas, tolls and repairs upon the Company reaching the first $500,000 in revenues.
AdZone Research agrees to defend employee against any and all legal claims and
litigation. In addition, AdZone Research further agrees to pay all expenses
arising from any and all litigation, including but not limited to, attorney's
fees, legal fees and miscellaneous expenses. Legal representation will continue
during the term of this contract.


                                      F-39
<PAGE>

                              ADZONE RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

During the period April 1, 2006 through July 7, 2006 the following equity
transactions occurred:

In June, 2006, the Company filed a Schedule 14C in order to increase the $0.001
par value common stock from 200,000,000 shares to an authorized issuance of
400,000,000 shares.

During the period April 1, 2006 through July 7, 2006 the following equity
transactions occurred:

      o     The Company issued 5,422,394 shares of its common stock in
            consideration for professional services performed.

      o     The Company placed 6,900,000 shares of its common stock in escrow
            with its stock transfer agent in anticipation of future exercises of
            stock options issued under the Company's stock option plans.

            Three holders of convertible debentures converted $143,500 of their
            debt for 2,067,839 shares of common stock.

      o     The Company issued warrants to purchase up to 75,000 shares of its
            common stock.

      o     The Company issued options to purchase up to 6,375,000 shares of its
            common stock to employees, 2,000,000 shares to directors and 900,000
            shares to consultants.

      o     The Company issued stock grants of 1,150,000 shares of common stock
            to employees and 1,000,000 shares to directors.


                                      F-40