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, 2003

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

    For the transition period from ______________ to _____________

                         Commission File Number: 0-28717


                              AdZone Research, Inc.
 (Exact name of small business issuer as specified in its charter)


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


                   4062-80 Grumman 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 has (1) filed all reports required to be files by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period the Company 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. [ ]

The issuer's revenues for the fiscal year ended March 31, 2003 was $-0-

The aggregate market value of voting common equity held by non-affiliates as of
March 31, 2003 was approximately $470,762, using the closing price of the
Company's common stock of $.02 per share on March 31 2003

As of March 31, 2003,  there were  50,096,462  shares of Common Stock issued and
outstanding.


Transitional Small Business Disclosure Format : Yes [ ] No [X]
<PAGE>
                              ADZONE RESEARCH, INC.
                                TABLE OF CONTENTS


                                                                     Page Number
                                                                     -----------
Part I

Item 1 - Description of Business                                               1
Item 2 - Description of Property                                               6
Item 3 - Legal Proceedings                                                     6
Item 4 - Submission of Matters to a Vote of Security Holders                   7

Part II

Item 5 - Market for Company's Common Stock and Related Stockholders Matters    7
Item 6 - Management's Discussion and Analysis or Plan of Operation            15
Item 7 - Index to Financial Statements                                        17
Item 8 - Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosures                                                17

Part III

Item 9  - Officers and Directors                                              18
Item 10 - Executive Compensation                                              20
Item 11 - Security Ownership of Certain Beneficial Owners
          And Management                                                      23
Item 12 - Certain Relationships and Related Transactions                      24
Item 13 - Exhibits and Reports on 8-K                                         24

Signatures                                                                    25
<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 the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.

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

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

                                     PART I

ITEM 1 - DESCRIPTION OF BUSINESS

General

AdZone Research, Inc.(the "Company" or "AdZone") was 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 its inception until June 1999, the Company had no significant operations.
In June 1999, Management decided to capitalize on the advances on Internet
technology that had occurred since the Company's inception in order to reach a
broader customer base. The Company began to offer its 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.

In January 2000, the Company registered its Common Stock with the Securities and
Exchange Commission on Form 10-SB under the Securities Exchange Act of 1934 and
became a publicly reporting company. The Company 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. A clearance letter was issued to the
Company, then known as Executive Help Services, Inc., and the Company was issued
its initial trading symbol EHSV. The Company's first posted trade was conducted
on May 30, 2000.

Upon a change in management that occurred in January 2001, the Company abandoned
its previously adopted business plan. However, from January 2001 until August of
that year, the Company did not engage in any significant activity other than
negotiating a proposed merger with AdZone Interactive, Inc. ("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, the Company closed an Agreement and Plan of Share Exchange
with AII whereby the Company exchanged 18,000,000 shares of its restricted
common stock for 100% of the issued and outstanding common stock of AII.
Immediately thereafter the Company effected a merger of the two entities with
the Company as the surviving entity. At the time of the merger the Company
changed its corporate name to AdZone Research, Inc. and changed its trading
symbol to ADZR.

                                       1
<PAGE>
Since its merger with AII, the Company has 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
the Company's clients.

Among the applications of the extracted data are the compilation of advertising
activity and information regarding advertising expenditures on Internet
websites. The Company also has developed a subscription based online application
for accessing data from websites that are hosted within the United States, the
United Kingdom, Europe, and Asia and for providing such data to its clients in a
variety of customizable report formats.

The events of September 11, 2001 and threats of terrorist activity that have
occurred subsequently thereto have generated additional interest in the Company
as a potential provider of Internet data mining information from various private
and public sector clients, including the federal government and the State of New
York. Shortly after September 11, 2001, the Company was contacted by the United
States Office of Homeland Security, which expressed an interest in using the
Company's NetGet(TM) Internet monitoring technology to monitor the internet for
terrorist planning and other communication. The Company believes its technology
is well suited for this purpose and has been working with local members of
Congress in both the House and Senate to secure funding for its proposal. The
proposal has earned support from various Congressmen and senators. Based on its
initial discussions with officials of the federal government and the State of
New York, management believes that the Company is well placed to obtain federal
and New York State contracts for internet monitoring of possible terrorist
communication and planning and various forms of cybercrime.

The company continues to market it's surveillance systems and data directly to
various govt agencies. The company has temporarily suspended its efforts in
marketing it's products at the state level and is instead currently focusing on
more lucrative federal agency contracts and contracts through it's partners
Autometric, Raytheon and Sarnoff.

The Company was also negotiating with officials of the Global Public Health
Intelligence Network, a world-wide public health organization based in Canada,
and the World Health Organization based Geneva, for possible contracts or grants
to provide internet monitoring for possible bioterrorist activities. These
negotiations were terminated during the year ended March 31, 2003

In June 2002, the Company concluded a Systems Integrator Agreement with the
Raytheon Company under which Raytheon agreed to use its efforts to obtain
systems integrator agreements with smaller technology firms to provide software
tools developed by the Company 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 the Company'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.

In June 2002, the Company signed a Financial Services Agreement with First
American Financial Group, New York, New York, pursuant to which First American
Financial Group agreed to attempt to complete a private placement of up to $5
million of the Company's 9% convertible preferred stock. As of the date of this
Report, First American Financial Group has not introduced the Company to any
proposed purchaser(s) of its convertible preferred stock, and management cannot
provide any assurances that the Company will be able to complete such financing
in the future.

In December 2002, the company signed an investment banking agreement with
Spartan Securities of Florida, whereby Spartan intends to provide assistance in
banking and capital raising for the company. The company is in the process of
completing a private placement with the assistance of Spartan Securities.

                                       2
<PAGE>
In March of 2003, the company signed an agreement with Sarnoff Corp. to jointly
market anti-terrorist services to govt. security agencies. The companies plan to
offer technology that discovers and tracks clandestine communications by
terrorist or other outlaw groups across the World Wide Web. Their combined
expertise can produce advanced tools for uncovering and decoding hidden messages
and other content embedded in the pixels of innocent-looking Web pages.

In April of 2003, the company signed an agreement with Autometric Inc ( A
subsidiary of the Boeing) Corp). The Companies will explore ways to integrate
the NetGet TM technology with Autometrics range of products and services.

In May of 2003 the company received its first purchase order from a US Defense
contractor in connection with using the Company's technology in a viable
commercial setting. Due to nondisclosure agreements the Company is prohibited
from disclosing any further information in regard to this purchase order. The
Company anticipated this to be the first of many revenue generating
opportunities for the Company. Although there are no assurances that this
revenue stream will continue. In June of 2003 the Company filed for preliminary
Patent protection for its NetGet technology. The patent application is in the
early stages and there is no assurance that a patent will be granted.

The Company is in it's a development stage, and has focused principally on the
development of its proprietary software, and has just begun to initiate efforts
towards developing a significant revenue base.

Competition

AdZone has several competitors in the commercial arena, many of which have
financial and other resources that are far greater than its own. The Company'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 expenditure information on close to 300 web sites as
well as an online application for accessing certain of its data. Management
believes that AdZone's product although similar in methodology to CMR, is
superior and that its database contains more information on a greater number of
sites. In addition, Leading Web Advertisers (LWA)a.k.a. Evalient, another
significant competitor, offers custom reports on banner creativity. Evalient was
recently acquired by CMR.

Employees

AdZone has 6 employees consisting of Charles Cardona, its Chief Executive
Officer, Daniel Wasserman, its Executive Vice President and Managing Director of
the Global Defense Group, 2 programmers that assists Mr. Cardona in developing
and writing software for the Company's services and products, and two part-time
clerical staff, one of whom are related to Charles Cardona. John Cardona had
served as President of the Company until his resignation from such position in
June 2002. John Cardona has agreed to continue to act as Homeland Security
Defense Advisor to the Company advising the Company on matters of long-term
corporate planning and global and operational strategies. None of the Company's
employees is represented by a union, and the Company considers its employee
relations to be good.

Sales and Marketing

The Company markets its products and services principally through e-mail
distributions to selected target markets, through direct sales contacts, through
the sales efforts of EVP Dan Wasserman, advisor General Paul Weaver and through
its websites, www.adzoneinteractive.com, and www.adzoneresearch.com.

Distribution Methods of Products or Services

The Company 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, the Company concluded a
Systems Integrator Agreement with Raytheon Company, whereby Raytheon agreed to
demonstrate and promote sales of the Company's proprietary software for defense

                                       3
<PAGE>
and security applications. Any such sales of the Company's software products
through Raytheon, therefore, will be completed through sales of Raytheon's own
technology with which the Company's products will be integrated. In March of
2003, the company signed a joint marketing agreement with Sarnoff Corp. to
jointly market its technology to various govt agencies that Sarnoff already has
contacts with. In April of 2003 the company signed a deal with Autometric
agreeing to provide it's technology to Autometric and their clients through
Autometric contracts. The company will provide data, custom development and
support to Autometric with the current contract and contracts under negotiation.

Status of Any Publicly Announced New Product or Service

The Company's agreements with Autometric and Sarnoff has only recently been
concluded (March and April 2003), and the Company is not able to predict the
effect that such contract will have, if any, on the Company's operating results
or financial position.

The only tangible result is the companies initial purchase order from a Large US
Defense contractor. Although the initial purchase order of $ 50,000 is small the
Company believes it is the first of many to be recognized during the Fiscal year
ended March 31, 2004.

Since September 11, 2001, several federal, New York State, and world health
agencies have expressed interest in possible use of the Company's proprietary
NetGet(TM) software for Homeland Security applications. The Company has
submitted proposals to the Office of homeland security and been in contact with
many members of Congress regarding various appropriations. Discussions and
negotiations are continuing with these agencies. The Company has not concluded
an agreement with any of such organizations and cannot provide any assurances
that it will be able to do so in the future Due to the bureaucratic nature of
the US Government the Company has been concentrating on its outside sales
efforts through its strategic alliances with larger more well established
defense contractors.

Dependence on One or a Few Major Customers

The Company does not depend on any one or a few customers. The Company's
principal target markets for its products and services are agencies of the
United States Government, State Agencies as well as advertising agencies,
advertisers, large websites, financial companies, media groups, newspapers,
magazines and television and radio networks.

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts, Including Duration

The Company 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 June of 2003 the Company
applied for patent protection for its methodology and / or technology.

In addition, the Company has no plans to enter into franchise, concession or
labor contracts. In June 2002, the Company concluded a Systems Integrator
Agreement with Raytheon Company pursuant to which it granted Raytheon the right
to integrate certain of the Company's proprietary software for integration with
Raytheon's software for defense and security applications. In March of 2003, the
company signed a joint marketing agreement with Sarnoff Corp. to jointly market
its technology to various govt agencies that Sarnoff already has contacts with.
In April of 2003 the company signed a deal with Autometric (A division of the
Boeing Company) agreeing to provide it's technology to their clients through
Autometric contracts.

Need for Government Approval of Principal Products or Services

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

                                       4
<PAGE>
Effect of Existing or Probable Governmental Regulations on the Business

The Company 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 the company 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. The Company 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 the Company's products or services or increase the cost of doing business as
a result of litigation costs or increased service delivery costs.

Estimate of the Amount Spent During Each of the Last Two Fiscal Years on
Research and Development Activities, and if Applicable the Extent to Which the
Cost of Such Activities are Borne Directly by Customers The Company has expended
approximately $71,463 for development of its proprietary software during the
fiscal year ended March 31, 2002 and approximately $88,309 during its 2003
fiscal year. The cost of all of such development was funded through the sale of
the Company's equity securities and loans and was not borne directly by the
Company's customers.

Possible Private Placement of the Company's Convertible Preferred Stock

In June 2002, the Company signed a Financial Services Agreement with First
American Financial Group ("First American") pursuant to which First American
agreed to attempt to complete a private placement of up to $5 million of the
Company's convertible preferred stock. If such financing is completed, the
Company is obligated to pay First American cash compensation equal to 5% of the
gross amount of such financing and a number of shares of common stock computed
by dividing 5% of the gross proceeds of the financing by the price per share
agreed to between the Company and the investor.

Dividends on the preferred stock would be payable semi-annually at the rate of
9% per annum, with the conversion rate and other terms to be agreed upon.
Holders of the convertible preferred stock will have anti-dilution and piggyback
registration rights.

If First American identifies a proposed purchaser(s) of the Company's
convertible preferred stock acceptable to the Company, and the Company and such
proposed purchaser(s) agree upon the conversion rate and other terms of the
convertible preferred stock, First American has agreed to provide a bridge loan
to the Company of $500,000, with interest payable on such loan monthly at the
rate of 12% per annum. The Company shall be obligated to repay the bridge loan
on a date which is the earlier of three months after the date such loan is made
or the date on which a closing on the purchase of at least $1 million of the
Company's convertible preferred stock is held. As additional consideration for
such loan, the Company will be obligated to issue to First American a number of
shares of common stock computed by dividing $50,000 by the average closing bid
price of the Company's common stock for the 10-consecutive trading day period
prior to the first closing of the purchase of the convertible preferred stock.
If the bridge loan is extended beyond the initial three month term, the Company
is obligated to issue to First American additional common stock using the same
formula contained in the previous sentence.

                                       5
<PAGE>
As of the date of this Report, First American has not introduced the Company to
any proposed purchaser(s) of the Company's convertible preferred stock, and
management cannot provide any assurance that the Company will be able to
complete any such financing.

In December 2002, the company signed an investment banking agreement with
Spartan Securities Group, Ltd. (Spartan) of Florida, whereby Spartan intends to
provide assistance in banking and capital raising for the company. The company
is in the process of completing a private placement with the assistance of
Spartan Securities.

Costs and Effects of Compliance with Environmental Laws

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

Reports to Security Holders

The Company has not in the past provided an annual report to its shareholders
and does not intend to do so until it is able to generate sufficient revenues to
fund the expense of such reports. The Company is subject to the disclosure rules
of Regulation S-B for a small business issuer under the Securities Act of 1933
and the Securities Exchange Act of 1934 and is therefore required to file a Form
10-KSB annually and Forms 10-QSB quarterly. In addition, the Company is required
to file Forms 8-K and other proxy and information statements from time to time
as required.

The public may read and copy any materials the Company files with the Securities
and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an internet site (http://wwwsec.gov) That contains reports
,proxy and information statements, and other information regarding issuers that
file electronically with SEC.

Dependence on and Control by Management

Charles Cardona, our Chief Executive Officer and Chairman of the Board, John
Cardona, a member of our Board of Directors, and other members of the Cardona
family beneficially own in the aggregate approximately 51% of the outstanding
shares of the Company's common stock. Accordingly, such individuals may be able
to control the election of directors and all other matters subject to
shareholder vote. This concentration of ownership may have the effect of
delaying or preventing a change of control of AdZone, even if this change of
control would benefit shareholders. In addition, our future success depends to a
significant extent on the efforts and abilities of Charles Cardona. The loss of
the services of Mr. Cardona could substantially harm our business. Should Mr.
Cardona's services be terminated, we may be unable to attract, motivate and
retain a suitable replacement for him.

ITEM 2 - DESCRIPTION OF PROPERTY

The Company 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

The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated. The Company may be subject to a claim
relating to certain previously leased facilities. In May 2000 the Company
executed a 5-year lease for a marketing premises in the Empire State Building in
New York City. This office was closed prior to March 2001, and the Company
surrendered the premises to the landlord. The scheduled annual rental amount was
approximately $65,145 for the period from May 1, 2000 through December 31, 2001;
approximately $68,175 for the period from January 1, 2002 through August 31,
2003; and approximately $71,205 for the period from September 1, 2003 through

                                       6
<PAGE>
April 30, 2005. Additionally, the Company was responsible for its pro-rata share
of increases in ad valorem taxes, utilities, insurance and common area operating
costs over the base year expenses. The lease also provided that in the event of
the Company's early termination of the lease, the Company would be responsible
for supplemental amounts during the occupancy period using the effective annual
rental yield of approximately $68,175 and the amounts actually paid by the
Company. The Company has surrendered all security deposits to the landlord. To
date, the Company has not received any notice from the landlord demanding
amounts additional to such security deposits. Management cannot provide you any
assurances, however, that such demand may not be made in the future.

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

The Company has not conducted any meetings of shareholders during the preceding
quarter or periods subsequent thereto.

                                     PART II

ITEM 5 - MARKET FOR COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

As of March 31, 2003, there were 51,846,462 shares of $0.001 par value common
stock (the "Common Stock") of the Company outstanding and owned by approximately
159 shareholders of record, exclusive of shareholders holding their shares in
street name. As of June 12, 2003, there were 52,828,462 shares of $0.001 par
value common stock (the "Common Stock") of the Company outstanding and owned by
approximately 169 shareholders of record, exclusive of shareholders holding
their shares in street name.

Our Certificate of Incorporation authorizes 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. No shares of preferred stock have been issued. 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 therefor. In the event
of a liquidation, dissolution, or winding up of the company, 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.

In January, 2000, the Company 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. The Company 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. A clearance letter was issued to
the Company, then known as Executive Help Services, Inc., and the Company was
issued its initial trading symbol, EHSV. The Company's first posted trade was
conducted on May 30, 2000. Concurrently with its merger with AII on August 10,
2001, the Company changed its corporate name to AdZone Research, Inc. and
changed its trading symbol to ADZR.

                                       7
<PAGE>
The following are the high and low closing prices of the Company's Common Stock
for each quarter during the last two fiscal years:

Fiscal Year ended March 31, 2003

                           High                   Low
                           ----                   ---
First Quarter             $0.08                  $0.03
Second Quarter            $0.10                  $0.02
Third Quarter             $0.08                  $0.02
Fourth Quarter            $0.04                  $0.02

Fiscal Year ended March 31, 2002

First Quarter             $0.25                  $0.09
Second Quarter            $0.14                  $0.07
Third Quarter             $0.38                  $0.03
Fourth Quarter            $0.20                  $0.04

Equity Compensation Plan Information

The following table sets forth the aggregate number of shares of the Company's
Common Stock that may be issued upon exercise of outstanding options granted to
Mr. Charles Cardona, our Chairman of the Board and Chief Executive Officer, and
Mr. John Cardona, our former President and a Director of the Company, 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             -0-                -0-                -0-
By security holders

Equity compensation plans not           2,000,000                .10                 -0-
Approved by security holders

      Total                             2,000,000                .10                 -0-
</TABLE>

Dividend policy

The Company 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.

Recent Sales of  Securities

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

During Fiscal 2003 and 2002,  the Company  issued  approximately  25,364,332 and
3,136,108   shares  of  common  stock,   in  both   registered  and  restricted,
unregistered form.

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

                                       8
<PAGE>
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 1/28/02                     538,665          459,998        78,667
Filing dated 2/21/02                     303,000          171,000       132,000
Filing dated 3/26/03 (as amended)     17,100,000       11,889,000     5,211,000

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

                                      Registered         Restricted    Total
                                      ----------     ----------        -----
Balances at March 31, 2001             5,346,000     18,000,022      23,346,022
  Cash                                        --        744,442         744,442
  Conversion of short-term loans              --        360,000         360,000
  Consulting and Legal services          681,666         25,000         706,666
  Lawsuit settlement                          --        500,000         500,000
  Legal services                              --        170,000         170,000
  Operating expenses                          --        405,000         405,000
  Personnel compensation                      --        250,000         250,000
                                     -----------    -----------     -----------

Balances at March 31, 2002             6,027,666     20,454,464      26,482,130

  Cash                                        --      2,413,334       2,413,334
  Consulting and Legal services       12,258,332      2,982,666      15,240,998
  Directors fees                              --        160,000         160,000
  Operating expenses                          --         10,000          10,000
  Personnel compensation                      --      5,790,000       5,790,000
  Reclassifications per Rule 144(k)   20,454,464    (20,454,464)             --
                                     -----------    -----------     -----------

Balances at March 31, 2003            38,740,462     11,356,000      50,096,462
                                     ===========    ===========     ===========

                                       9
<PAGE>
The  following  tables  recap the  Company's  stock  issuances,  by  purpose  or
function,  for  each  of the  Fiscal  Years  ended  March  31,  2002  and  2003,
respectively:

                        FISCAL YEAR ENDED MARCH 31, 2002

Issuances pursuant to an exemption from registration pursuant to Section 4(2)

<TABLE>
<CAPTION>
Date of                                                  Number     Proceeds or      Excess
 Issue              Issuee                             of Shares     Valuation     Fair Value
 -----              ------                             ---------     ---------     ----------
<S>                                                    <C>          <C>           <C>
Cash
8/22/2001       Seth Blumenthal                         100,000      $  7,000      $     --
8/29/2001       Suzanne Tryphonos                         1,666           100            --
10/11/2001      Thomas Clemens                           33,333         2,000            --
10/11/2001      Gerard Stankewicz                        33,333         2,000            --
10/11/2001      Barbara Welker                           10,000           600            --
10/11/2001      Marcia Strada                            10,000           600            --
10/22/2001      Colleen Strada                           10,000           600            --
10/31/2001      Kenneth Ullman                          444,444        20,000            --
12/18/2001      Gerard Stankewicz                        16,666         2,000           500
1/22/2002       Ruth Makofske                            85,000         5,000            --
                                                        -------      --------      --------
                                                        744,442      $ 39,900      $    500
                                                        =======      ========      ========
Conversion of short-term loans (1)
8/10/2001       Barbara Welker                          166,667      $ 10,000      $     --
8/10/2001       Charles Blanchfield                      83,333         5,000            --
8/10/2001       Thomas Clemens                           50,000         3,000            --
8/10/2001       Marilyn Hyman                            33,333         2,000            --
8/10/2001       Joe Mortimer                             16,667         1,000            --
8/10/2001       Suzanne Tryphonos                        10,000           600            --
                                                        -------      --------      --------
                                                        360,000      $ 21,600      $     --
                                                        =======      ========      ========
Consulting and Legal services
11/29/2001      Seth Blumenthal                          25,000      $  1,000      $    250

Lawsuit settlement (2)
9/9/2001        Competitive Media Reporting, LLC.       500,000      $ 20,000      $     --

Legal services (3)
12/28/2001      Warren Hamburger                        120,000      $  7,200      $     --
3/7/2002        Warren Hamburger                         50,000         2,500            --
                                                        -------      --------      --------
                                                        170,000      $  9,700      $     --
                                                        =======      ========      ========
Operating expenses
1/29/2002       Jeffrey Halbirt (4)                     200,000      $ 14,000      $     --
1/29/2002       Terry Nield (4)                         200,000        14,000            --
3/14/2002       Sheldon Katz (5)                          5,000           250            --
                                                        -------      --------      --------
                                                        405,000      $ 28,250      $     --
                                                        =======      ========      ========
Personnel compensation
3/24/2002       Daniel Wasserman (6)                    250,000      $ 15,000      $     --
</TABLE>

                                       10
<PAGE>
(1)  - Between April 1, 2001 and August 10, 2001, AdZone received  approximately
     $21,600 in cash proceeds for the sale of  restricted,  unregistered  common
     stock of Executive Help  Services,  Inc. to be issued  concurrent  with the
     business combination date at a rate of $0.06 per share.
(2)  - In September  2001,  the Company  issued  500,000  shares of  restricted,
     unregistered common stock to an unrelated company in settlement of a breach
     of contract and  non-competition  agreement between the Company's President
     and the President's former employer.
(3)  - Mr. Hamburger is a member of the Company's Board of Directors
(4)  - Mr. Halbirt and Mr. Nield were previously  officers and/or  affiliates of
     the Company prior to the reverse acquisition  business  combination between
     AdZone Research,  Inc. (formerly Executive Help Services,  Inc.) and AdZone
     Interactive, Inc.
(5)  - Issued in payment  of late fees  incurred  on the lease of the  Company's
     former executive offices in Riverhead, New York.
(6)  - Issued  pursuant to an employment  contract for services as the Company's
     Vice President for Contract Procurement in lieu of cash compensation

Issuances pursuant to Registration Statement(s) filed on Form(s) S-8
with the U. S. Securities and Exchange Commission

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or       Excess
 Issue              Issuee                       of Shares      Valuation      Fair Value
 -----              ------                       ---------      ---------      ----------
<S>              <C>                            <C>           <C>             <C>
Consulting services
12/13/2001        Charles Blanchfield (7)          40,000        $  4,000        $   --
12/13/2001        Robert King (7)                  40,000           4,000            --
12/13/2001        Thomas Kober (7)                 40,000           4,000            --
12/13/2001        Theresa Kober (7)               300,000          18,000            --
1/29/2002         Leonard Braumberger (8)         133,333          16,000            --
3/1/2002          Leonard Braumberger (8)          53,333           8,000            --
2/21/2002         Dave Grandy (9)                  75,000           9,000            --
                                                 --------        --------        ------
                                                  681,666        $ 63,000        $   --
                                                 ========        ========        ======
</TABLE>

(7)  - Issued to various professionals, some of whom were existing shareholders,
     providing  legal and  accounting  services  to the Company  under  one-year
     contracts.
(8)  - Issued to Mr.  Braumberger  and/or  Communique  Media  Services,  Inc. of
     Blaine,  Washington,  an  unrelated  entity,  to  provide  web  development
     services and maintain the Company's  corporate  internet web site for a fee
     of $8,000 per month payable in shares as registered on a Form S-8 filing.
(9)  - Issued to Mr. Grandy and/or International Standard Consulting Corporation
     of Vancouver,  British  Columbia,  Canada,  an unrelated entity, to provide
     strategic business and technology development consulting services for a fee
     of $4,500 per month payable in shares as registered on a Form S-8 filing.

                                       11
<PAGE>
Issuances pursuant to an exemption from registration pursuant to Section 4(2)

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or       Excess
 Issue              Issuee                       of Shares      Valuation      Fair Value
 -----              ------                       ---------      ---------      ----------
<S>              <C>                            <C>           <C>             <C>
Cash
5/15/02       B&G Holding Co.                       75,000      $    5,000        $   --
6/6/02        Eleanor Garrett                      300,000          15,000            --
6/6/02        Warren Hamburger (10)                200,000          10,000            --
6/24/02       Kevin Messina                        375,000          15,000            --
7/19/02       Scott Bolkema                        700,000          35,000            --
10/8/02       Carl Washwick                        333,334          10,000            --
11/18/02      Joshua Blumenthal                     50,000          10,000            --
3/21/02       Eleanor Garrett                      140,000           2,000            --
3/21/03       Warren Hamburger (10)                140,000           2,000            --
3/31/03       Warren Hamburger (10)                100,000           2,000            --
                                                ----------      ----------        ------
                                                 2,413,334      $  106,000        $   --
                                                ==========      ==========        ======
Consulting and Legal Services
8/2/02        Jack Kratoville (11)                  20,000      $    1,200        $   --
8/5/02        Keith Peters (12)                     50,000           5,000            --
9/7/02        Keith Peters (12)                     50,000           5,000            --
9/7/02        Dag Finn Sjoen (11/18)                10,000             250            --
9/20/02       Suzanne Tryphonos (13)                16,666             333            --
10/2/02       Warren Hamburger (10/14)             100,000           2,000            --
10/4/02       Kathleen Kenney (14)                  25,000             500            --
10/9/02       Jason Genet (15)                   1,200,000          36,000            --
10/11/02      First American Ventures (16)         500,000          12,500            --
10/16/02      Jason Genet (15)                      25,000             875            --
11/7/02       Arthur Metz (17)                      14,000             700            --
11/20/02      Bob Schmidt                          100,000           5,000            --
12/3/02       Arthur Metz (17)                     150,000           4,500            --
12/12/02      Robert Fitzpatrick (14)               60,000           1,200            --
1/10/03       Arthur Metz (17)                     162,000           4,860            --
2/28/03       Warren Hamburger (10/14)             210,000           4,200            --
2/28/03       Thomas Kober (17)                    100,000           3,000            --
3/21/03       Charles Blanchfield (17)             100,000           3,000            --
3/21/03       Thomas Gavin (16)                    100,000           5,000            --
                                                ----------      ----------        ------
                                                 2,992,666      $   95,118        $   --
                                                ==========      ==========        ======
Directors fees
5/1/02        John Conley                           10,000      $      500        $   --
11/18/02      Jonathan White                        40,000           4,500            --
2/28/03       Russell Ivy                           10,000             300            --
2/28/03       John Conley                           50,000           1,500            --
2/28/03       Jonathan White                        50,000           1,500            --
                                                ----------      ----------        ------
                                                   160,000      $    8,300        $   --
                                                ==========      ==========        ======
Personnel compensation
2/28/02        Charles Cardona                   2,000,000      $   30,000        $   --
5/29/02        Valerie Cardona (19)                150,000           4,500            --
7/9/02         Daniel Wasserman                    300,000          12,000            --
8/5/02         Elizabeth Neese                       5,000             500            --
9/20/02        Reidar Sjoen (18)                   275,000           5,500            --
10/1/02        Ursula Olivares                     250,000           5,000            --
10/7/02        Valerie Cardona (19)                275,000           5,500            --
1/27/03        Reidar Sjoen (18)                   250,000           5,000            --
1/28/03        Thomas Madigan                       60,000             900            --
2/28/03        Thomas Madigan                       25,000             750            --
2/28/03        John Cardona                      2,000,000          30,000            --
2/28/03        Ursula Olivares                     100,000           3,000            --
2/28/03        Reidar Sjoen (18)                   100,000           2,000            --
                                                ----------      ----------        ------
                                                 5,790,000      $  104,650        $   --
                                                ==========      ==========        ======
</TABLE>

                                       12
<PAGE>
(10) - Mr. Hamburger is a member of the Company's Board of Directors
(11) - Issued for various services  related to the Company's  relocation of it's
       corporate offices.
(12) - Issued for general business advisory services.
(13) - Issued for general office and clerical services
(14) - Issued for legal services.
(15) - Issued for Website development, updates and maintenance.
(16) - Issued for various investor and public relations services.
(17) - Issued  for  accounting,   bookkeeping  and  other  financial  reporting
       services.
(18) - Mr. Dag Finn Sjoen is the father of Mr. Reidar Sjoen,  an employee of the
       Company.
(19) - Ms. Cardona is the mother of Charles Cardona, the Company's Chairman, and
       John Cardona, the Company's former President of the Company

Issuances pursuant to Registration Statement(s) filed on Form(s) S-8
with the U. S. Securities and Exchange Commission

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or       Excess
 Issue              Issuee                       of Shares      Valuation      Fair Value
 -----              ------                       ---------      ---------      ----------
<S>              <C>                            <C>           <C>             <C>
Common stock directly issued
Consulting and Legal services
4/3/02         Leonard Braumberger (8)             53,333        $ 8,000        $    --
4/10/02        Dave Grandy (9)                     30,000          4,500             --
5/7/02         Leonard Braumberger (8)             53,333          8,000             --
5/7/02         Dave Grandy (9)                     30,000          4,500             --
6/6/02         Leonard Braumberger (8)             53,333          8,000             --
6/6/02         Dave Grandy (9)                     18,000          4,500             --
7/1/02         Leonard Braumberger (8)             53,333          8,000             --
7/1/02         Dave Grandy (9)                     18,000          4,500             --
8/19/02        Tyler Byrd (12)                    400,000         24,000             --
8/19/02        Thomas Gavin (16)                  175,000         10,500             --
9/7/02         Thomas Gavin (16)                  140,000          7,000             --
9/20/02        Charles Blanchfield (17)           233,333           9,333             --
9/20/02        Robert King (17)                   233,333           9,333             --
9/20/02        Thomas Kober (17)                  233,334           9,334             --
10/4/02        Robert Fitzpatrick (14)            100,000           3,000             --
10/7/02        Jason Genet (15)                   400,000           8,000          8,000
10/9/02        Leonard Braumberger (8)             60,000           8,000             --
1/1/03         Thomas Gavin (17)                  306,000          15,300             --
1/10/03        John Calcagni (14)                 168,000           4,200             --
3/27/03        Hank Zemla (12)                    150,000           2,250             --
                                               ----------       ---------        -------
                                                2,908,332       $ 160,250        $ 8,000
                                               ==========       =========        =======
</TABLE>

Common stock issued pursuant to the granting of options to purchase

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or       Excess
 Issue              Issuee                       of Shares      Valuation      Fair Value
 -----              ------                       ---------      ---------      ----------
<S>              <C>                            <C>           <C>             <C>
Consulting and Legal services
8/19/02         Kyle Kennedy (20)                 500,000        $ 18,000        $12,000
10/7/02         Kyle Kennedy (20)                 250,000           2,500          5,000
10/16/02        Kyle Kennedy (20)               1,000,000          15,000         20,000
11/12/02        Kyle Kennedy (20)                 200,000           3,000          3,000
11/26/02        Kyle Kennedy (20)                 300,000           4,300          2,700
12/10/02        Kyle Kennedy (20)               2,100,000          30,800         23,100
1/23/03         Kyle Kennedy (20)               1,050,000          23,100         15,750
1/28/03         Kyle Kennedy (20)               3,950,000          28,500         11,850
                                               ----------        --------        -------
                                                9,350,000        $113,100        $93,400
                                               ==========        ========        =======
</TABLE>

                                       13
<PAGE>

(20) - On Aug. 19, 2002 the Company  entered into a  consulting  agreement  with
     Kyle  Kennedy  to assist  the  Company  with  business  strategy,  business
     development and mergers and acquisitions. Mr. Kennedy's compensation was in
     the form of options to purchase  registered  freely  trading  securities at
     various  discounts to the then current Market price. The agreement was on a
     month to month basis  cancellable  at 30 days notice by either  party.  Mr.
     Kennedy was also formerly  affiliated with Spartan  Securities  Group, Ltd.
     and has  represented  to the  Company  that the  services  provided in this
     agreement are separate and unique to Spartan's efforts in capital raising.

Transactions subsequent to March 31, 2003

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

During the period from April 1, 2003 through June 25, 2003,  the Company  issued
shares of registered and restricted, unregistered common stock for

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or
 Issue              Issuee                       of Shares      Valuation      Purpose
 -----              ------                       ---------      ---------      -------
<S>              <C>                            <C>           <C>             <C>
Registered on Form S-8
4/3/03          Leonard Braumberger                 53,333      $2,133       Investor relations
5/7/03          Duane Lewin                         20,000         600       Office design
5/7/03          Elizabeth Lewin                     15,000         400       Office design
5/7/03          Sunny Lewin                         15,000         400       Office design
                                                   -------
                                                   103,333
                                                   =======
Restricted, Unregistered shares
4/23/03        Ruth Makofske                 500,000        $ 8,000        Cash investment
5/5/03         Thomas Madigan                  5,000            100        Cash investment
5/13/03        Warren Hamburger              150,000          3,000        Cash investment
6/3/03         Kevin Messina                 375,000         15,000        Cash investment
5/23/03        Jo Ann Palminteri               3,000            150        Clerical services
5/23/03        Elizabeth Neese                 3,000            150        Clerical services
4/28/03        Daniel Wasserman              500,000         10,000        Compensation
4/28/03        Paidoussis Olga               200,000          3,200        Legal services
4/30/03        Paul Weaver                    50,000          1,000        Military consulting
5/22/03        Victor Yurkins                 25,000          1,250        Military consulting
5/5/03         Jason Miller                    7,000            280        Investor relations
5/5/03         Scott Rubin                     7,000            280        Investor relations
5/5/03         Thomas Gavin                   50,000          2,000        Public relations
6/5/03         Hank Zemla                    100,000          9,000        Public relations
7/5/03         Equities Magazine, LLC         50,000          4,500        Conference fees
                                           ---------
                                           2,025,000
                                           =========
</TABLE>
                                       14
<PAGE>
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

General

The Company  follows the accrual basis of  accounting  in  accordance  with U.S.
generally accepted accounting principles.  The accompanying financial statements
reflect  the  Company's  fiscal  year-end of March 31 as of the first day of the
first period presented.

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

Fiscal Year ended March 31, 2003 compared to March 31, 2002

The year end March 31, 2003 has seen tremendous  change at AdZone Research.  The
economic  downturn in the US economy has hampered our expected  inroads into the
commercial adverting end of our business and we have had to slow our development
in that area.  The  portion of our  business  dealing  with  defense  issues and
internet  terrorism  has show  great  potential  for  growth  . We have  aligned
ourselves with The Raytheon Corp,  Sarnoff Corp and Autometric ( a subsidiary of
the Boeing Corp.) We had expected to have secured a direct  contract with the US
government  but  bureaucratic  and  political  issues have  slowed our  expected
growth.  During  the year we turned  our focus to  partnering  with  established
defense contractors .

The Company is still  considered  to be in the  development  stage as we have no
substantial  revenues to date.  We expect to fully  implement  our business plan
during the year ended March 31, 2004.

The Company incurred system production and maintenance expenses of approximately
88,309,   including   depreciation  of  approximately  14,305,  as  compared  to
approximately 71,463 for the same period of the prior fiscal year.

The Company incurred  operating  expenses of approximately  598,486 exclusive of
officer's  compensation,  for fiscal 2003, as compared to approximately  200,882
the same period of the prior  fiscal  year.  The Company  experienced  shifts in
categorical  expenses  including a decrease in selling and marketing expenses by
approximately  43,831,  a  decrease  in  consulting  and  professional  fees  of
approximately2374,29,  and an increase in other general and administrative costs
of approximately 245,517

For the fiscal year ended  March 31,  2003,  the Company  incurred a net loss of
approximately  $(927,536) as compared to a net loss of approximately  $(611,630)
for the fiscal year ended March 31, 2002. Based on the  weighted-average  number
of shares of common  stock  issued and  outstanding  at March 31, 2003 and 2002,
respectively,  the Company incurred a net loss per share of approximately $(.03)
and $(.02).

For the fiscal  year ended  March 31,  2003 the  Company  accrued  approximately
$229,278 in compensation expense relating to employment contracts it had entered
into  with  its  Chief  Executive  Officer,  Charles  Cardona,  and  its  former
President, John Cardona.

Fiscal Year ended March 31, 2002 compared to March 31, 2001

The Company was  incorporated  in February 2000 and elected a fiscal year-end of
March  31.  Accordingly,  there  were  no  significant  assets,  liabilities  or
operating  activities  during  the  initial  period  following  formation.   The
Company's  first full period of  operating  activity  began with the fiscal year
starting April 1, 2000.

During fiscal 2001, the Company  commenced the  implementation of its extraction
of various data elements through the monitoring and review of internet  websites
developed and  maintained by  independent  third parties  worldwide.  During the
initial  testing  and  refinement  phase,  the  Company  generated  revenues  of
approximately $81,000.

                                       15
<PAGE>
During the initial  operating phase of the Company,  the Company incurred system
production  and  maintenance  expenses  of  approximately  $679,000,   including
depreciation of approximately $13,000.  Approximately $507,000 of these expenses
were for personnel,  payroll and related expenses with the remaining approximate
$159,000 relating to occupancy and other general expenditures.

The Company maintained a sales and marketing office in the Empire State Building
in New York City. This office was abandoned prior to March 31, 2001. During this
period,  the Company  incurred  sales and  marketing  expenses of  approximately
$614,000, of which approximately $326,000 was for personnel, payroll and related
expenses with the remaining approximate $288,000 relating to occupancy and other
general expenditures.

During the fiscal year ended March 31, 2001, the Company expended  approximately
$148,000 on various legal,  accounting,  consulting and other  professional fees
related to the formation of the Company and locating the appropriate  vehicle to
facilitate the Company's reverse  acquisition  transaction which was consummated
on August 10, 2001.

For the fiscal  year ended  March 31,  2001 the  Company  accrued  approximately
$211,428 in compensation expense relating to employment contracts it had entered
into  with  its  Chief  Executive  Officer,  Charles  Cardona,  and  its  former
President, John Cardona.

Liquidity

The Company has been able to advance its business  plan in a limited  fashion by
maintaining  and  upgrading  the defense  oriented  products  and  services  and
marketing efforts for these products.

The capitalization of the Company through the sale of equity  securities,  loans
and options  exercised  has  allowed  the  Company to  maintain a positive  cash
position.  The  Company  has  approximately  $8,084 on hand at March 31, 2003 as
compared to $0 as of March 31, 2002.

Liquidity  during  Fiscal  2002 and 2003 was  provided  principally  through the
unregistered sales of equity securities, loans and the exercise of options under
the companies  stock option plan. See Section 5 elsewhere in this 10k . There is
no  guarantee  that the  Company  will be  successful  in Cash  from the Sale of
unregistered  Securities or through loans.  Total proceeds from these sales were
approximately $ 103,587 during fiscal 2003 and $39,656 during Fiscal 2002

The companies  Chairman and CEO,  Charles Cardona and director John Cardona have
loaned the company 8 million of their  shares for the  company to acquire  stock
loans to assist in funding the companies operations. Management felt this was in
the best  interest  of the  company  and  shareholders  as the  stock is held in
escrow.

Additional  funding from either the sale of equity  securities  or advances from
shareholders  will be helpful to support  future  maintenance  of the  corporate
entity and  development of the Company's  business  plan.  The companies  recent
revenue  generating  contract  with A  large  defense  contractor  will  help in
providing liquidity for ongoing operations.  The company anticipates  additional
revenue generating  contracts from its partners and directly from Govt. agencies
in the coming fiscal year.

Plan of Operation

The  Company  has  initially  identified  three key  potential  markets  for the
Company's products:  businesses engaged in advertising research; agencies of the
federal and of state governments and world health organizations; and the defense
and security  industries.  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.  The company has been very successful in garnering  support from many
members of  Congress,  and it's  partners  Autometric  (A  division  Of Boeing),
Raytheon and Sarnoff  Corp.  The company  feels this is excellent  validation of
it's technology and the usefulness of it's data.

                                       16
<PAGE>
The company is sometimes  frustrated by it's  inability to fully discuss some of
the many capabilities of it's technology due to national security concerns.  The
company  does  continue  to work  very  earnestly  on all of the  contracts  and
opportunities it feels are in it's best interest.

In June 2002,  the Company  concluded a Systems  Integrator  Agreement  with the
Raytheon  Company  under  which  Raytheon  agreed to use its  efforts  to obtain
systems integrator  agreements with smaller technology firms to provide software
tools   developed  by  the  Company  that  would   enhance  the  data   analysis
capabilities.  Our contacts at Raytheon have  indicated that they are presenting
AdZone's products to various clients including US and international governmental
and security agencies.  The company  anticipates  contracts to result from these
efforts in the fiscal year beginning April 1, 2003.

In March of 2003,  the company signed an agreement with Sarnoff Corp. to jointly
market anti-terrorist services to govt. security agencies. The companies plan to
offer  technology  that  discovers  and  tracks  clandestine  communications  by
terrorist  or other  outlaw  groups  across the World Wide Web.  Their  combined
expertise can produce advanced tools for uncovering and decoding hidden messages
and other content embedded in the pixels of innocent-looking Web pages.

In April of 2003, the company signed an agreement with Autometric (A division Of
Boeing) The Company anticipates  substantial revenue to result within the fiscal
year  beginning  April 1, 2003.  The company  believes  that its  alliance  with
Autometric  (A  division  Of Boeing)  will  benefit  both  entities  and provide
considerable sales opportunities.

The company continues to market it's  surveillance  systems and data directly to
various govt  agencies.  The company has  temporarily  suspended  its efforts in
marketing it's products at the state level and is instead currently  focusing on
more  lucrative  federal  agency  contracts and contracts  through it's partners
Autometric (A division Of Boeing), Raytheon and Sarnoff.

The Company 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 the Company's inability to raise
capital in the equity securities market. The Company is currently dependent upon
either funds  advanced or loaned by the Company's  directors and officers or the
sale of equity  securities.  The Company's officers and directors have no formal
commitments or  arrangements to advance or loan funds for the Company and do not
have any legal requirement to do so.

The  company  is very  optimistic  about it's  future and has  pledged to try to
improve  shareholder  value  through  a stock  repurchase  program  and  through
corporate  awareness  programs.  The Board of  directors  approved a plan to set
aside 5% of the first $3 million in sales  revenues  for the  repurchase  of the
companies stock.

ITEM 7 - INDEX TO FINANCIAL STATEMENTS

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

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

None

                                       17
<PAGE>
                                    PART III

ITEM 9 - OFFICERS AND DIRECTORS

The directors and executive officers serving the Company are as follows:

Name                  Position Held and Tenure      Date First Elected/Appointed
----                  ------------------------      ----------------------------
Charles Cardona       Chairman of the Board and              August 2001
                      Chief Executive Officer

Daniel Wasserman      Executive Vice President              January 2002

John Cardona          Director                               August 2001

Warren Hamburger      Director                               August 2001

Russell Ivy           Director                              January 2001

The directors named above will serve until the next annual meeting of the
Company'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 the Company that terminates on August 31, 2004, and
Daniel Wasserman has entered into an employment agreement that terminates on
March 3, 2004. There is no arrangement or understanding between any of the
directors or officers of the Company 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 the Company'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 the Company's affairs.

Biographical Information

Charles Cardona Charles Cardona, age 39, has served as the Company's President
and Chairman of the Board since the Company'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
the Company 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.

John Cardona

John Cardona, age 35, is consultant to the Company serving as its Homeland
Security Defense Advisor with responsibility for long-term corporate planning
and global and operational strategies. Mr. Cardona is also serving as a
consultant to Competitrack, a market research company. From August 2001 until
his resignation in June 2002, Mr. Cardona served as President of the Company.
Mr. Cardona has also served the Company 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.

Daniel Wasserman

Daniel Wasserman, age 52, was appointed Executive Vice President and Managing
Director of the Company's Global Defense Group in January 2002. >From July 2001
to December 2001, Mr. Wasserman was Vice President-Commercial Sales of Reliable
Integration Services, a systems integration company. From November 2000 until
June 2001, he was Vice President of Sales of zGraffitti, a desktop advertising
firm. Mr. Wasserman served as Vice President of Sales/Advertising for Conducent,
Inc., a desktop advertising firm, from March 1999 through November 2000.
Beginning in 1995 through February 1999, Mr. Wasserman was a consultant to

                                       18
<PAGE>
various companies specializing in technology marketing, including Lucent
Technologies and Sympatico, which subsequently became the largest internet
service provider in Canada. Mr. Wasserman received a Bachelor of Science degree
in biology in 1972 from the University of Toronto and an MBA degree in marketing
from The Schulich School of Business of York University, Toronto, Canada, in
1978.

Warren Hamburger

Warren Hamburger, age 49, has been a director of the Company 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 36, is a Director of the Company and was President of
the Company from January 2001 until the merger of the Company with AII 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 McCleod 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.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than ten
percent shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.

Charles Cardona, the Company's Chief Executive Officer and Director, has not
filed a Form 3 - Initial Statement of Beneficial Ownership of Securities, as
required by Section 16(a). If filed, Mr. Cardona's Form 3 would have reflected
xxx shares currently held by him and 12,849 shares and xxx shares owned by
Michael Cardona, Mr. Cardona's brother and Valerie Cardona, Mr. Cardona's
mother, respectively. Mr. Cardona has not at any time previously sold any
securities of the Company owned by him.

John Cardona, the Company's former President and a Director of the Company, has
not filed a Form 3 - Initial Statement of Beneficial Ownership of Securities, as
required by Section 16(a). If filed, Mr. Cardona's Form 3 would have reflected
xxx shares currently held by him and 12,849 shares and xxx shares owned by
Michael Cardona, Mr. Cardona's brother and Valerie Cardona, Mr. Cardona's
mother, respectively. Mr. Cardona has not at any time previously sold any
securities of the Company owned by him.

Daniel Wasserman, the Company's Executive Vice President, has not filed a Form 3
- - Initial Statement of Beneficial Ownership of Securities, as required by
Section 16(a). If filed, Mr. Wasserman's Form 3 would have reflected 1,050,000
shares currently held by him. Mr. Wasserman has not at any time previously sold
any securities of the Company owned by him.

                                       19
<PAGE>
Warren Hamburger, a Director of the Company, has not filed a Form 3 - Initial
Statement of Beneficial Ownership of Securities, as required by Section 16(a).
If filed, Mr. Hamburger's Form 3 would have reflected xxx shares currently held
by him. Mr. Hamburger has not at any time previously sold any securities of the
Company owned by him.

ITEM 10 - EXECUTIVE COMPENSATION

In August 2001, the Company entered into an employment agreement with Mr.
Charles Cardona, which superseded a prior agreement, under which Mr. Cardona
will serve as the Company's Chief Executive Officer through August 31, 2004.
Under his agreement, Mr. Cardona was/is entitled to base salary at the rate of
$141,000 during the balance of the 2001 calendar year; $151,000 for the 2002
calendar year; $161,000 for the 2003 calendar year; and at the rate of $208,000
for the 2004 calendar year. In addition, Mr. Cardona may be awarded, at the sole
discretion of the Board of Directors of the Company, a bonus of $15,000 during
each quarter of his employment and a bonus of $25,000 at the conclusion of the
2002 calendar year. Mr. Cardona may also receive a $100,000 cash bonus and
250,000 shares of common stock of the Company if the Company reaches annual
profitability. Under his employment agreement, Mr. Cardona will also receive 10%
of sales revenues generated through his efforts. Additional bonuses are payable
as follows: (i) 0.5% of prior year's revenues; (ii) 3.5% of prior year's
profits; (iii) 3.75% of the first $3 million in growth in market capitalization
during any year; and (iv) 1.75% of any growth in market capitalization over $3
million during any year. Mr. Cardona was also granted an option to purchase
1,000,000 shares of the Company's common stock exercisable at $0.10 per share
for 5 years after the date of grant. In the event Mr. Cardona's employment is
involuntarily terminated, he will be entitled to receive an amount equal to
three times his annual salary in effect during the year in which such
termination occurred.

In August 2001, the Company entered into an employment agreement with Mr. John
Cardona under which, which superseded a prior agreement, Mr. Cardona agreed to
serve as the Company's President through August 31, 2004. Under his agreement,
the Company agreed to pay Mr. Cardona base salary at the rate of $141,000 during
the balance of the 2001 calendar year; $151,000 for the 2002 calendar year;
$161,000 for the 2003 calendar year; and at the rate of $208,000 for the 2004
calendar year. In addition, the agreement provided that Mr. Cardona could be
awarded, at the sole discretion of the Board of Directors of the Company, a
bonus of $15,000 during each quarter of his employment and a bonus of $25,000 at
the conclusion of the 2002 calendar year. Mr. Cardona was also entitled to a
$100,000 cash bonus and 250,000 shares of common stock of the Company if the
Company achieved annual profitability. Under his agreement, Mr. Cardona was also
entitled to receive 10% of sales revenues generated through his efforts.
Additional bonuses were payable as follows: (i) 0.5% of prior year's revenues;
(ii) 3.5% of prior year's profits; (iii) 3.75% of the first $3 million in growth
in market capitalization during a previous year; and (iv) 1.75% of any growth in
market capitalization over $3 million during a previous year. Mr. Cardona was
also granted an option to purchase 1,000,000 shares of the Company's common
stock exercisable at $0.10 per share for 5 years after the date of grant. Mr.
Cardona terminated his employment with the Company in June 2002 but has remained
as a consultant to the Company.

In March 2003, the Company entered into an employment agreement with Daniel
Wasserman to serve as its Executive Vice President and Managing Director of
Global Defense Group for a 12-month period. Under his agreement, Mr. Wasserman
received a salary of $175,000 per year, commencing upon closing of a paid sale
or completed financing of $1,000,000 or more. Until such time, the Company shall
pay Employee an interim salary beginning at $550 per week. The salary will
increase by $1000 per month upon the first paid sale of $50,000 or more made by
the employee. The salary will then increase by an additional $1500 per month
upon each paid sale of $100,000 or more made by the employee. These increases
will continue until the standard base salary of $175,000 per year is reached.
This salary is independent of any commission, which may be earned and paid.
Should the employee reach $1,200,00 in paid sales by the end of 2003 the
employee will be entitled to full base salary of $175,000 for the entire year of
2003, any back portion of which is unpaid at that time will be paid to the
employee within 30 days. This provision is in addition to any commission, which
is due. Mr. Wasserman also received a contract sign bonus of 450,000 shares. The
company shall pay the employee a bonus of 100,000 shares upon the contracting of
a sale of $1,000,000 or more. The employee shall be entitled to 4 weeks paid
vacation, plus 10 holiday days off per year. Unused vacation will be paid at the

                                       20
<PAGE>
end of the year. Medical benefits will be paid by the company once the board
begins coverage for the employee. The company shall pay the employee a cash
bonus of $175,000 should sales exceed $3,000,000 for the calendar year of 2003.
This bonus shall be paid proportionally as sales revenues are received. The
employee shall receive 1.5 % of the first $1,000,000 of contract value as paid
on each contract brought in by employee. The employee shall receive 2.5 % of
contract values above $1,000,000 as paid on each contract brought in by
employee. Additional compensation for consulting contracts brought in will be
negotiated on a case by case basis. This commission shall be payable when funds
are received by the company and shall be paid to the employee regardless of the
salary status. There shall be an additional sales commission bonus of 1% on any
$ 500,000 plus sale closed prior to July 4, 2003. Should a multi year contract
be closed, this bonus shall apply to first year value only. This commission
bonus shall be paid as the money is received by AdZone.

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, 2003, 2002, 2001
and 2000:

                           SUMMARY COMPENSATION TABLE

                                                                     Securities
                                                                     Underlying
Name/Title                           Year            Salary         Options/SARs
----------                           ----            ------         ------------
Charles Cardona                      2003           $190,385                  0
Chief Executive Officer              2002           $153,525          1,000,000
                                     2001           $ 25,941                  0
                                     2000           $      0                  0

John Cardona                         2003           $ 38,893                  0
                                     2002           $157,408          1,000,000
                                     2001           $ 22,058                  0
                                     2000           $  6,667                  0

In May 2002, the Company issued 1,500,000 shares of its Common Stock to each of
Mr. Charles Cardona, the Company's Chairman of the Board and Chief Executive
Officer, and to Mr. John Cardona, the Company's President until his resignation
in June 2002, and a Director of the Company. Such shares were issued in lieu of
$45,000 of cash compensation to which each of such persons was entitled under
his respective employment agreement. From the date of his employment with the
Company on March 1, 2002 through March 32, 2003, Mr. Daniel Wasserman, the
Company's Executive Vice President and Managing Director of Global Defense
Group, has received 1,050,000 shares of the Company's common stock in lieu of
cash compensation pursuant to the terms of his employment agreement.

Director Compensation

The Company does not currently pay a director fee for attending scheduled and
special meetings of the Board of Directors. The Company does not pay the
expenses of all of its directors in attending board meetings. From time to time
the Management Advisory Board members receive compensation at the discretion of
the board for their services.. The company issued 10,000 shares of its
restricted common to Russell Ivy for his participation in all board meetings

                      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 of
Name                Options/SAR's Granted        In Fiscal Year        Base Price($/Sh)     Expiration Date
----                ---------------------        --------------        ----------------     ---------------
<S>                      <C>                         <C>                    <C>                  <C>  <C>
Charles Cardona          1,000,000                   50.00%                 $0.10                8/28/06
John Cardona             1,000,000                   50.00%                 $0.10                8/28/06
</TABLE>

                                       21
<PAGE>
               AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
                                                                                     Value of Unexercised
                                                         Number of Unexercised           In-The-Money
                                                         Securities Underlying             Option/SARs
                   Shares Acquired                       Options/SARs At FY-End           At FY-End
Name                On Exercise       Value Realized    Exercisable/Unexercisable    Exercisable/Unexercisable
----                -----------       --------------    -------------------------    -------------------------
<S>                      <C>                <C>               <C>                             <C>
Charles Cardona         -0-                 $0                1,000,000                       $0
John Cardona            -0-                 $0                1,000,000                       $0
</TABLE>

Stock Compensation to Third Party Consultants

In October 2001, the Company entered into a consulting agreement with Theresa A.
Kober pursuant to which Ms. Kober agreed to engage in negotiations on behalf of
the Company with the federal government or an agency thereof for purchase of the
Company's products, to provide marketing and bid process support, and to consult
with the Company on the proper procedures for billing and for receiving payment
from the federal government. Ms. Kober agreed to provide not less than 180 hours
of services within the 12-month period after the commencement of the contract.
As compensation, the Company agreed to issue to Ms. Kober 300,000 shares of its
common stock and to cause such common stock to be registered with the Securities
and Exchange Commission through the filing of an S-8 Registration Statement.

In November 2001, the Company entered into a consulting agreement with
Blanchfield, King, Kober & Company, P.C. ("BKK") for the period commencing
November 1, 2001 through December 31, 2002 pursuant to which various principals
of BKK would provide accounting, tax and financial reporting services to the
Company. The Company agreed to pay BKK $18,000 for such services. Of such
amount, $6,000 is required to be paid in twelve (12) installments of $500.00
each and $12,000 is payable through the issuance of 120,000 shares of common
stock of the Company, valued at $0.10 per share, to three principals of BKK. The
Company also agreed to cause such stock to be registered with the Securities and
Exchange Commission on Form S-8. The company defaulted n the cash portion of the
agreement. And the contract was cancelled. A new contract incorporating the
unpaid balance as well as additional work was negotiated for a fee of 700,000
shares of freely trading common stock registered on form S-8

In January 2002, the Company entered into a one-year consulting agreement with
Communique Media Services International, Inc. ("CMS") pursuant to which CMS
agreed to plan, design and develop the contents and programming of the Company's
website and to provide ongoing support of materials and postings for the
Company's website. As compensation, the Company agreed to pay a principal of CMS
a fee of $8,000 per month payable in common stock of the Company in accordance
with the following schedule: 80,000 shares in the first month of the contract
valued at $0.10 per share; 53,333 shares per month in months 2 through 6 of the
contract valued at $0.15 per share; and 32,000 shares per month in months 7
through 12 of the contract valued at $0.25 per share. The Company also agreed to
cause the stock to be issued under the consulting agreement to be registered
with the Securities and Exchange Commission on Form S-8.

In February 2002, the Company entered into a consulting agreement for a period
of one year with International Standard Consulting Corporation ("ISCC") pursuant
to which ISCC agreed to use best efforts to identify to the Company prospective
strategic partners for business and technology development. As compensation, the
Company agreed to pay a principal of ISCC a monthly consulting fee of $4,500 in
common stock of the Company. Such fee is payable as follows: 45,000 shares in
the first month of the contract valued at $0.10 per share; 30,000 shares per
month in months 2 through 6 of the contract valued at $0.15 per share; and
18,000 shares per month in months 7 through 12 of the contract valued at $0.25
per share. The Company also agreed to cause the stock to be issued under the
consulting agreement to be registered with the Securities and Exchange
Commission on Form S-8.

In April 2002, the Company entered into a one-year consulting agreement with
NuQuest Consulting, Inc. pursuant to which NuQuest agreed to consult with and
assist the Company with respect to the Company's business plan, its financial
statements and other materials prepared for the purpose of obtaining equity

                                       22
<PAGE>
financing, engaging in a public offering, and/or relating to the trading of the
Company's common stock in the public markets. NuQuest also agreed to use
reasonable efforts to seek and identify potential investors for the Company, to
assist the Company in the consummation of any proposed financing, and to provide
the Company with written reports of the status of its efforts on behalf of the
Company. As compensation for its services, the Company agreed to issue to
NuQuest warrants to purchase 900,000 shares of common stock, on a fully diluted
basis. The warrants are exercisable at $0.15 per share, and the Company has
agreed to file an S-8 Registration Statement with the Securities and Exchange
Commission to register the shares underlying the warrants. In addition, the
Company agreed to pay NuQuest cash compensation of $33,000 payable in monthly
installments over the term of the contract. This agreement is currently in
dispute by the company. No compensation has been granted to NuQuest and no
settlement has been arrived at as of yet.

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of the date of this Report 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 the
Company. 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                        15,046,422 (1)                 25%
17 Sunny Line Dr.
Calverton, NY 11933

John Cardona                           11,091,849 (2)                 18%
118 Overlook Dr.
Aquebogue, NY 11931

Daniel Wasserman                        1,050,000                      2%
20953 Cohasset Ter
Ashburn, VA

Warren Hamburger                        1,070,000                      2%
42 Fire Island Ave.
Babylon, NY 11702

Russell Ivy                                50,000                     .1%
211 West Sealy Street
Alvin, TX 77511

All Executive Officers and
Directors of the Company as
a Group (5 persons)                    28,308,271                     50%

----------
(1)  Includes 1,000,000 shares that may be acquired upon exercise of stock
     options granted to Mr. Cardona at an exercise price of $0.10 per share.
     Excludes 11,091,849 shares owned by John Cardona, Mr. Cardona's brother;
     12,849 shares owned by Michael Cardona, Mr. Cardona's brother; and 198,183
     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 the company
     4,000,000 shares for the purpose of a stock loan.
(2)  Includes 1,000,000 shares that may be acquired upon exercise of stock
     options granted to Mr. Cardona at an exercise price of $0.10 per share.
     Excludes 15,046,422 shares owned by Charles Cardona, Mr. Cardona's brother;
     12,849 shares owned by Michael Cardona, Mr. Cardona's brother; and 198,183
     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 the company
     4,000,000 shares for the purpose of a stock loan.

                                       23
<PAGE>
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

John Cardona and Charles Cardona have made advances to the Company for operating
and other expenses from time to time. As of March 31, 2002, approximately $xxx
of such advances remained outstanding. Such loans bear interest at a rate of 10%
per annum and are repayable in aggregate monthly installments of $xxx Due to the
nature of this debt and the Company's irregular payment history, such advances
have been classified as "current" in the Company's audited financial statements
included with this Form 10-KSB.

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

Exhibit
-------
 2.1    Plan of Acquisition, Reorganization or Liquidation *
 3.1    Certificate of Incorporation **
 3.2    By-Laws **
10.1    Consulting Agreement dated as of October 26, 2001 with Theresa A. Kober
        ***
10.2    Consulting Agreement dated as of November 2, 2001 with Blanchfield,
        King, Kober & Company, P.C. +
10.3    Consulting Agreement dated as of August 13, 2002 with Thomas F. Gavin
10.4    Consulting Agreement dated as of February 5, 2002 with International
        Standard Consulting Corporation +++
10.5    Employment Agreement dated August 29, 2001 with Charles Cardona
10.6    Employment Agreement dated as of August 29, 2001 with John Cardona
10.7    Employment Agreement dated as of March 1, 2002 with Daniel Wasserman
10.8    Consulting Agreement dated as of April 2002 with NuQuest Consulting,
        Inc.
10.9    Systems Integration Agreement dated as of June 21 2002 with Raytheon
        Company
10.10   Financial Services Agreement with First American Financial Group dated
        June 20, 2002
10.11   Term Sheet between the Company and First American Financial Group dated
        June 19, 2002 relating to private placement of convertible preferred
        stock
10.12   Term Sheet between the Company and First American Financial Group dated
        June 19, 2002 relating to Bridge loan
23.1    Consent of Independent Public Accountant

Reports on Form 8-K:

*    Incorporated by reference to Exhibit 2 to the Registrant's Report on Form
     8-K filed with the Securities and Exchange Commission on September 21,
     2001.
**   Incorporated by reference to the same exhibit number in the Registrant's
     Form 10SB12G filed with the Securities and Exchange Commission on December
     30, 1999.
***  Incorporated by reference to Exhibit 101 to the Registrant's Form S-8 filed
     with the Securities and Exchange Commission on December 13, 2001.
+    Incorporated by reference to Exhibit 10.2 to the Registrant's Form S-8
     filed with the Securities and Exchange Commission on December 13, 2001.
++   Incorporated by reference to Exhibit 10.1 to the Registrant's Form S-8
     filed with the Securities and Exchange Commission on January 28, 2002.
+++  Incorporated by reference to Exhibit 10.1 to the Registrant's Form S-8
     filed with the Securities and Exchange Commission on February 21, 2002.

                                       24
<PAGE>
                                   SIGNATURES


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

                                   AdZone Research, Inc.


Dated: June 25, 2003               By: /s/ Charles Cardona
                                       ----------------------------------------
                                       Charles Cardona, Chief Executive Officer
                                       and Chief  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 the Company and in
the capacities and on the date indicated.


Dated: June 25, 2003               By: /s/ Charles Cardona
                                       ----------------------------------------
                                       Charles Cardona, Chairman of the Board


Dated: June 25, 2003               By: /s/ John Cardona
                                       ----------------------------------------
                                       John Cardona, Director


Dated: June 25, 2003               By: /s/ Warren Hamburger
                                       ----------------------------------------
                                       Warren Hamburger, Director


Dated: June 25, 2003               By: /s/ Russell Ivy
                                       ----------------------------------------
                                       Russell Ivy, Director

                                       25
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                                    CONTENTS

                                                                          Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                         F-2

FINANCIAL STATEMENTS

   Balance Sheets
     as of March 31, 2003 and 2002                                         F-3

   Statements of Operations and Comprehensive Income for the years
     ended March 31, 2003 and 2002 and for the period from
     February 28, 2000 (date of inception) through March 31, 2003          F-4

   Statement of Changes in Shareholders' Equity for the years ended
     March 31, 2003 and 2002 and for the period from February 28, 2000
     (date of inception) through March 31, 2003                            F-5

   Statements of Cash Flows
     for the years ended March 31, 2003 and 2002 and
     for the period from February 28, 2000 (date of inception)
     through March 31, 2003                                                F-6

   Notes to Financial Statements                                           F-7

                                      F-1
<PAGE>
S. W. HATFIELD, CPA
certified public accountants

Member: Texas Society of Certified Public Accountants
        Press Club of Dallas


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
AdZone Research, Inc.

We have audited the  accompanying  balance  sheets of AdZone  Research,  Inc. (a
Delaware  corporation and a development  stage company) as of March 31, 2003 and
2002 and the related statements of operations and comprehensive loss, changes in
shareholders'  equity and cash flows for the years ended March 31, 2003 and 2002
and for the period from February 28, 2000 (date of inception)  through March 31,
2003.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of AdZone Research,  Inc. as of
March 31, 2003 and 2002 and the results of its operations and cash flows for the
years ended March 31,  2003 and 2002 and for the period from  February  28, 2000
(date of  inception)  through  March  31,  2003 in  conformity  with  accounting
principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note C to the
financial  statements,  the  Company is in the  development  stage,  has focused
principally on the development of its  proprietary  software and has not focused
efforts towards  developing a mature revenue base.  Accordingly,  the Company is
dependent on short-term loans from shareholders,  officers and affiliates and/or
additional private placements of equity securities to provide sufficient working
capital to maintain the integrity of the corporate entity.  These  circumstances
create  substantial  doubt  about the  Company's  ability to continue as a going
concern and are discussed in Note C. The financial statements do not contain any
adjustments that might result from the outcome of these uncertainties.

                               /s/ S. W. HATFIELD, CPA
Dallas, Texas
June 30, 2003

                      Use our past to assist your future (sm)
(secure mailing address)                   (overnight delivery/shipping address)
P. O. Box 820395                               9002 Green Oaks Circle, 2nd Floor
Dallas, Texas  75382-0395                               Dallas, Texas 75243-7212
214-342-9635 (voice)                                          (fax) 214-342-9601
800-244-0639                                                      SWHCPA@aol.com

                                      F-2
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)
                                 BALANCE SHEETS
                             March 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                          March 31,          March 31,
                                                            2003               2002
                                                         -----------       -----------
<S>                                                      <C>               <C>
                                     ASSETS
CURRENT ASSETS
   Cash on hand and in bank                              $     8,084       $        --
   Prepaid expenses and other                                 35,375            22,175
                                                         -----------       -----------
     TOTAL CURRENT ASSETS                                     43,459            22,175
                                                         -----------       -----------

PROPERTY AND EQUIPMENT - AT COST                              60,860            60,252
   Accumulated depreciation                                  (49,255)          (32,352)
                                                         -----------       -----------
     NET PROPERTY AND EQUIPMENT                               11,605            27,920
                                                         -----------       -----------
OTHER ASSETS
   Security deposits and other                                   390             2,190
                                                         -----------       -----------

TOTAL ASSETS                                             $    55,454       $    52,285
                                                         ===========       ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Current maturities of Note payable                    $    65,958       $    65,958
   Accounts payable - trade                                  130,341           121,398
   Accrued interest payable                                    2,514             1,078
   Advances from officers                                     34,774            14,694
   Accrued officer compensation                              570,360           358,932
                                                         -----------       -----------
     TOTAL CURRENT LIABILITIES                               803,947           562,060
                                                         -----------       -----------

LONG-TERM LIABILITIES                                             --                --
                                                         -----------       -----------

     TOTAL LIABILITIES                                       803,947           562,060
                                                         -----------       -----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
   Preferred stock - $0.001 par value 20,000,000 shares
    authorized none issued and outstanding                        --                --
   Common stock - $0.001 par value 100,000,000 shares
    authorized 50,096,462 and 26,482,130 shares
    issued and outstanding, respectively                      50,096            26,482
   Additional paid-in capital                              2,251,242         1,571,238
   Deficit accumulated during the development stage       (3,035,031)       (2,107,495)
                                                         -----------       -----------
                                                            (733,693)         (509,775)
   Stock subscription receivable                             (14,800)               --
                                                         -----------       -----------

     TOTAL SHAREHOLDERS' EQUITY                             (748,493)         (509,775)
                                                         -----------       -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY               $    55,454       $    52,285
                                                         ===========       ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-3
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)
                 STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
                     Years ended March 31, 2003 and 2002 and
    Period from February 28, 2000 (date of inception) through March 31, 2003

<TABLE>
<CAPTION>
                                                                                           Period from
                                                                                        February 28, 2000
                                                                                       (date of inception)
                                                   Year ended          Year ended            through
                                                 March 31, 2003      March 31, 2002      March 31, 2003
                                                 --------------      --------------      --------------
<S>                                               <C>                 <C>                 <C>
REVENUES                                          $        --         $     2,890         $    84,006
                                                  -----------         -----------         -----------
PRODUCTION EXPENSES
   Salaries, wages and related costs                   33,881                  --             568,907
   Direct occupancy and operating expenses             40,123              57,294             258,626
   Depreciation                                        14,305              14,169              41,317
                                                  -----------         -----------         -----------
     Total production expenses                         88,309              71,463             868,850
                                                  -----------         -----------         -----------

GROSS PROFIT                                          (88,309)            (68,573)           (784,844)
                                                  -----------         -----------         -----------
OPERATING EXPENSES
   Selling and marketing costs
     Salaries, wages and related costs                     --                 361             326,458
     Direct occupancy and operating expenses               --              43,470             337,457
   General and administrative costs
     Officers compensation                            229,278             310,933             618,210
     Consulting and professional fees                 356,438             119,009             623,683
     Other general and administrative costs           138,030              34,142             174,207
   Compensation expense related to common
     stock issuances at less than "fair value"        101,400                 750             102,150
   Depreciation                                         2,618               3,140              11,964
                                                  -----------         -----------         -----------
     Total operating expenses                         827,764             511,815           2,194,129
                                                  -----------         -----------         -----------

LOSS FROM OPERATIONS                                 (916,073)           (580,388)         (2,978,973)

OTHER INCOME (EXPENSE)
   Interest and other income                               --                  --               4,338
   Interest expense                                   (11,463)            (11,242)            (24,580)
   Lawsuit settlement                                      --             (20,000)            (20,000)
   Loss on disposition of equipment                        --                  --             (15,816)
                                                  -----------         -----------         -----------

NET LOSS                                             (927,536)           (611,630)         (3,035,031)

OTHER COMPREHENSIVE INCOME                                 --                  --                  --
                                                  -----------         -----------         -----------

COMPREHENSIVE LOSS                                $  (927,536)        $  (611,630)        $(3,035,031)
                                                  ===========         ===========         ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-4
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)
     STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS - CONTINUED
                     Years ended March 31, 2003 and 2002 and
    Period from February 28, 2000 (date of inception) through March 31, 2003

<TABLE>
<CAPTION>
                                                                                     Period from
                                                                                  February 28, 2000
                                                                                 (date of inception)
                                             Year ended          Year ended            through
                                           March 31, 2003      March 31, 2002      March 31, 2003
                                           --------------      --------------      --------------
<S>                                         <C>                 <C>                 <C>
NET LOSS                                   $   (927,536)        $   (611,630)        $ (3,035,031)

OTHER COMPREHENSIVE INCOME                           --                   --                   --
                                           ------------         ------------         ------------

COMPREHENSIVE INCOME                       $   (927,536)        $   (611,630)        $ (3,035,031)
                                           ============         ============         ============
Net loss per weighted-average share
 of common stock outstanding,
 computed on Net Loss
 - basic and fully diluted                 $      (0.03)        $      (0.02)        $      (0.11)
                                           ============         ============         ============
Weighted-average number of shares
 of common stock outstanding
 - basic and fully diluted                   36,670,763           24,479,563           27,360,150
                                           ============         ============         ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-5
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)
                  STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
      Period from May 31, 1994 (date of inception) through March 31, 2003

<TABLE>
<CAPTION>
                                                                                   Deficit
                                                                                  accumulated
                                                                   Additional       in the           Stock
                                         Common Stock               paid-in      development     subscription
                                     Shares         Amount          capital         stage         receivable        Total
                                     ------         ------          -------         -----         ----------        -----
<S>                                <C>          <C>             <C>             <C>             <C>             <C>
INITIAL CAPITALIZATION
 FEBRUARY 28, 2000                       170     $       150     $        --     $        --     $        --     $       150
Effect of September 10, 2000
 125,000 for 1 forward stock
 split and change to $0.001
 par value                        21,249,830          21,100         (21,100)             --              --              --

February 29, 2000 private
 placement of common stock                30       1,000,000              --              --        (600,000)        400,000
Effect of September 10, 2000
 125,000 for 1 forward stock
 split and change to $0.001
 par value                         3,749,970        (996,250)        996,250              --              --              --
Less costs of raising capital             --              --         (12,500)             --              --         (12,500)

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

BALANCES AT MARCH 31,2000         25,000,000          25,000         962,650         (35,822)       (600,000)        351,828

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

November 30, 2000 private
 placement of common stock           666,665             667         289,333              --              --         290,000
Less costs and expenses of
 raising capital                          --              --        (188,500)             --              --        (188,500)
Common stock issued for:
 Costs and expenses of raising
  capital                            400,000             400         175,600              --              --         176,000
 Prepaid interest on loan            250,000             250          31,000              --              --          31,250
 Employee wages and bonuses        1,095,000           1,095          64,605              --              --          65,700
 Officer bonus                       500,000             500          29,500              --              --          30,000
 Professional services               107,000             107           6,313              --              --           6,420

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

BALANCES AT MARCH 31, 2001        28,018,665     $    28,019     $ 1,370,501     $(1,495,865)    $        --     $   (97,345)
                                 ===========     ===========     ===========     ===========     ===========     ===========
</TABLE>

                                  - CONTINUED -

The accompanying notes are an integral part of these financial statements.

                                      F-6
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)
            STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - CONTINUED
      Period from May 31, 1994 (date of inception) through March 31, 2003

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

BALANCES AT MARCH 31, 2001        28,018,665       $ 28,019     $ 1,370,501     $(1,495,865)    $     --       $ (97,345)

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

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

BALANCES AT MARCH 31, 2001
 POST-REVERSE ACQUISITION         23,346,022         23,346       1,375,174      (1,495,865)          --         (97,345)

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

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

BALANCES AT MARCH 31, 2002        26,482,130         26,482       1,571,238      (2,107,495)          --        (509,775)

Issuance of common stock for
  Cash                             2,413,334          2,413         103,587              --           --         106,000
  Exercise of granted options      9,350,000          9,350         211,950              --      (14,800)        206,500
  Directors fees                     160,000            160           8,140              --           --           8,300
  Employee compensation            5,790,000          5,790          98,860              --           --         104,650
  Professional services            5,900,998          5,901         257,467              --           --         263,368

Net loss for the year                     --             --              --        (927,536)          --        (927,536)
                                 -----------       --------     -----------     -----------     --------       ---------

BALANCES AT MARCH 31, 2003        50,096,462       $ 50,096     $ 2,251,242     $(3,035,031)    $(14,800)      $(748,493)
                                 ===========       ========     ===========     ===========     ========       =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-7
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)
                            STATEMENTS OF CASH FLOWS
                     Years ended March 31, 2003 and 2002 and
    Period from February 28, 2000 (date of inception) through March 31, 2003

<TABLE>
<CAPTION>
                                                                                                 Period from
                                                                                              February 28, 2000
                                                                                             (date of inception)
                                                         Year ended          Year ended            through
                                                       March 31, 2003      March 31, 2002      March 31, 2003
                                                       --------------      --------------      --------------
<S>                                                     <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss for the period                               $  (927,536)        $  (611,630)        $(3,035,031)
  Adjustments to reconcile net loss
   to net cash provided by operating activities
      Depreciation and amortization                          16,923              17,309              53,281
      Loss on disposition of equipment                           --                  --              15,816
      Compensation expense related to common
       stock issuances at less than "fair value"            101,400                 750             102,150
      Common stock issued for
        Salaries, wages and bonuses                          37,850                  --             133,550
        Professional fees                                   236,168             116,950             359,538
        Directors fees                                        8,300                  --               8,300
        Interest expense                                      7,500               7,500              16,875
        Lawsuit settlement                                       --              20,000              20,000
      (Increase) Decrease in
        Deposits and other assets                             1,800              36,552                (390)
      Increase (Decrease) in
        Accounts payable and accrued liabilities              8,943              35,476             211,298
        Accrued officers compensation                       276,428             310,933             570,360
        Accrued interest payable                              1,436               1,078               2,514
                                                        -----------         -----------         -----------

NET CASH USED IN OPERATING ACTIVITIES                      (230,788)            (65,082)         (1,541,739)
                                                        -----------         -----------         -----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Cash paid to purchase property and equipment                 (608)                 --             (85,385)
  Cash received on disposition of equipment                      --                  --               5,900
                                                        -----------         -----------         -----------

NET CASH USED IN INVESTING ACTIVITIES                          (608)                 --             (80,701)
                                                        -----------         -----------         -----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net cash activity on officer advances                      20,380                (417)             34,774
  Principal received from notes payable                          --              21,600              71,600
  Sale of common stock                                      219,100              39,900           1,549,150
  Cash paid for raising capital                                  --                  --             (25,000)
                                                        -----------         -----------         -----------

NET CASH PROVIDED  BY FINANCING ACTIVITIES                  239,480              61,083           1,630,524
                                                        -----------         -----------         -----------

INCREASE (DECREASE) IN CASH                                   8,084              (3,999)              8,084

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

CASH AT END OF PERIOD                                   $     8,084         $        --         $     8,084
                                                        ===========         ===========         ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-8
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)
                            STATEMENTS OF CASH FLOWS
                     Years ended March 31, 2003 and 2002 and
    Period from February 28, 2000 (date of inception) through March 31, 2003

<TABLE>
<CAPTION>
                                                                                             Period from
                                                                                          February 28, 2000
                                                                                         (date of inception)
                                                     Year ended          Year ended            through
                                                   March 31, 2003      March 31, 2002      March 31, 2003
                                                   --------------      --------------      --------------
<S>                                                 <C>                 <C>                 <C>
SUPPLEMENTAL DISCLOSURE OF
 INTEREST AND INCOME TAXES PAID
   Interest paid for the period                     $   2,527            $      --             $ 2,527
                                                    =========            =========             =======
   Income taxes paid for the period                 $      --            $      --             $    --
                                                    =========            =========             =======

SUPPLEMENTAL DISCLOSURE OF NON-CASH
 INVESTING AND FINANCING ACTIVITIES
    Common stock issued for prepaid interest        $      --            $      --             $31,250
                                                    =========            =========             =======
    Common stock issued in repayment of
      short-term debt                               $      --            $  21,600             $21,600
                                                    =========            =========             =======
    Common stock issued for prepaid
      consulting fees                               $  28,000            $      --             $28,000
                                                    =========            =========             =======
    Common stock issued in partial
      payment of accrued officers
      compensation                                  $  65,000            $      --             $65,000
                                                    =========            =========             =======
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-9
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

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

On 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.

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

NOTE B - PREPARATION OF FINANCIAL STATEMENTS

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

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

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

                                      F-10
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE C - GOING CONCERN UNCERTAINTY

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

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

The events which occurred on September 11, 2001, and  subsequent  thereto,  have
generated  additional  interest in the Company's  internet data mining  research
capabilities  for  potential  private  and  public  sector  clients.  Management
continues  to  maintain  the  belief  that the  Company  will be able to acquire
various contracts to provide research information for various private and public
sector purposes. On May 27, 2003, the Company received a $50,000 contract from a
major United States defense  contractor to provide support  services  related to
that entity's provision of services for Homeland Security issues.

The Company remains in the  development  stage,  has focused  principally on the
refinement and  maintenance of its proprietary  software and continues  pursuing
various revenue sources.

The Company  continues to be dependent on  short-term  loans from  shareholders,
officers  and  affiliates  and/or  additional   private   placements  of  equity
securities to provide  sufficient  working  capital to maintain the integrity of
the corporate entity.

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

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

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

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.   CASH AND CASH EQUIVALENTS

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

                                      F-11
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

2.   ACCOUNTS RECEIVABLE AND REVENUE RECOGNITION

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

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

3.   PROPERTY, PLANT AND EQUIPMENT

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

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

4.   ORGANIZATION COSTS

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

5.   PRODUCTION, RESEARCH AND DEVELOPMENT EXPENSES

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

6.   ADVERTISING EXPENSES

     Advertising and marketing expenses are charged to operations as incurred.

7.   INCOME TAXES

     The Company  utilizes  the asset and  liability  method of  accounting  for
     income  taxes.  At March 31,  2003 and  2002,  the  deferred  tax asset and
     deferred tax liability  accounts,  as recorded when material,  are entirely
     the result of temporary differences.

     Temporary  differences  represent  differences in the recognition of assets
     and  liabilities  for  tax  and  financial  reporting  purposes,  primarily
     accumulated  depreciation and amortization.  As of March 31, 2003 and 2002,
     the deferred tax asset is related  solely to the  Company's  net  operating
     loss carryforward and is fully reserved.

                                      F-12
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

8.   LOSS PER SHARE

     Basic  earnings  (loss) per share is computed  by  dividing  the net income
     (loss) by the weighted-average  number of shares of common stock and common
     stock  equivalents  (primarily  outstanding  options and warrants).  Common
     stock equivalents  represent the dilutive effect of the assumed exercise of
     the  outstanding  stock  options and  warrants,  using the  treasury  stock
     method.  The calculation of fully diluted earnings (loss) per share assumes
     the dilutive effect of the exercise of outstanding  options and warrants at
     either the  beginning  of the  respective  period  presented or the date of
     issuance,  whichever is later. As of March 31, 2003 and 2002, respectively,
     the Company's  outstanding stock options are deemed to be anti-dilutive due
     to the Company's net operating loss position.

NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS

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

NOTE F - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at March 31, 2003 and 2002:

                                       March 31,      March 31,
                                         2003           2002      Estimated life
                                       --------      --------     --------------
Computer equipment                     $ 50,856      $ 50,248        3 years
Office furniture and other equipment     10,004        10,004        7 years
                                       --------      --------
                                         60,860        60,252
Less accumulated depreciation           (49,255)      (32,332)
                                       --------      --------

Net property and equipment             $ 11,605      $ 27,920
                                       ========      ========

Depreciation  expense for the years ended March 31, 2003 and 2002 and the period
from February 28, 2000 (date of  inception)  through March 31, 2003 was $16,923,
$17,309, and $53,281, respectively.

                                      F-13
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE G - NOTES PAYABLE
                                                          March 31,    March 31,
                                                            2003         2002
                                                            ----         ----
$50,000 installment note payable to an individual.
  Interest  imputed  at 15.0% and paid in  advance
  with  the   issuance   of   250,000   shares  of
  restricted,  unregistered  common  stock  to the
  lender.   Payable  in  monthly  installments  of
  $1,000  commencing  September  1,  2001 and each
  successive  month until paid in full.  Scheduled
  payments  are in default  at March 31,  2002 and
  the entire  amount is classified as "current" in
  the    accompanying     financial    statements.
  Unsecured.                                            $50,000         $50,000

$15,958  promissory  note  payable  to a law firm.
  Interest  at 9.0%.  Payable  in full on June 30,
  2001. Scheduled payments are in default at March
  31, 2002 and the entire  amount is classified as
  "current"   in   the   accompanying    financial
  statements.  Secured by 150,000 shares of common
  stock  owned by the  Company's  Chief  Operating
  Officer.                                               15,958          15,958
                                                        -------         -------

                                                        $65,958         $65,958
                                                        =======         =======

NOTE H - ADVANCES FROM OFFICERS

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

NOTE I - OFFICER COMPENSATION

In August  2001,  the Company  entered  into an  employment  agreement  with Mr.
Charles Cardona  (CCardona),  which  superseded a prior  agreement,  under which
CCardona will serve as the Company's Chief Executive  Officer through August 31,
2004.  Under his agreement,  CCardona was/is entitled to base salary at the rate
of $141,000 during the balance of the 2001 calendar year;  $151,000 for the 2002
calendar year;  $161,000 for the 2003 calendar year; and at the rate of $208,000
for the 2004 calendar  year. In addition,  CCardona may be awarded,  at the sole
discretion of the Board of Directors of the Company,  a bonus of $15,000  during
each quarter of his  employment  and a bonus of $25,000 at the conclusion of the
2002 calendar year.  CCardona may also receive a $100,000 cash bonus and 250,000
shares  of  common  stock  of  the  Company  if  the  Company   reaches   annual
profitability. Under his employment agreement, CCardona will also receive 10% of
sales revenues generated through his efforts.  Additional bonuses are payable as
follows:  (i) 0.5% of prior year's revenues;  (ii) 3.5% of prior year's profits;
(iii)  3.75% of the first $3 million in growth in market  capitalization  during
any year; and (iv) 1.75% of any growth in market  capitalization over $3 million
during  any year.  CCardona  was also  granted an option to  purchase  1,000,000
shares of the Company's common stock  exercisable at $0.10 per share for 5 years
after the date of grant.  In the event  CCardona's  employment is  involuntarily
terminated,  he will be entitled  to receive an amount  equal to three times his
annual salary in effect during the year in which such termination occurred.

                                      F-14
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE I - OFFICER COMPENSATION - CONTINUED

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

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

In March 2003,  the Company  entered into an  employment  agreement  with Daniel
Wasserman to serve as its  Executive  Vice  President  and Managing  Director of
Global Defense Group for a 12-month period.  Under his agreement,  Mr. Wasserman
received a salary of $175,000 per year,  commencing  upon closing of a paid sale
or completed financing of $1,000,000 or more. Until such time, the Company shall
pay  Employee  an interim  salary  beginning  at $550 per week.  The salary will
increase  by $1000 per month upon the first paid sale of $50,000 or more made by
the employee.  The salary will then  increase by an  additional  $1500 per month
upon each paid sale of $100,000 or more made by the  employee.  These  increases
will  continue  until the standard  base salary of $175,000 per year is reached.
This  salary is  independent  of any  commission,  which may be earned and paid.
Should the  employee  reach  $1,200,000  in paid  sales by the end of 2003,  the
employee will be entitled to full base salary of $175,000 for the entire year of
2003,  any back  portion  of which is  unpaid  at that  time will be paid to the
employee within 30 days. This provision is in addition to any commission,  which
is due. Mr.  Wasserman also received a contract signing bonus of 450,000 shares.
The  company  shall  pay the  employee  a  bonus  of  100,000  shares  upon  the
contracting of a sale of $1,000,000 or more. The employee shall be entitled to 4
weeks paid vacation,  plus 10 holiday days off per year. Unused vacation will be
paid at the end of the year.  Medical  benefits will be paid by the company once
the board begins coverage for the employee. The Company shall pay the employee a
cash bonus of $175,000  should sales exceed  $3,000,000 for the calendar year of
2003.  This bonus shall be paid  proportionally  as sales revenues are received.
The employee  shall receive 1.5 % of the first  $1,000,000 of contract  value as
paid on each contract brought in by employee. The employee shall receive 2.5% of
contract  values  above  $1,000,000  as  paid  on each  contract  brought  in by
employee.  Additional  compensation for consulting  contracts brought in will be
negotiated on a case by case basis.  This commission shall be payable when funds
are received by the company and shall be paid to the employee  regardless of the
salary status.  There shall be an additional sales commission bonus of 1% on any
$ 500,000 plus sale closed prior to July 4, 2003.  Should a multi year  contract
be closed,  this bonus  shall apply to first year value  only.  This  commission
bonus shall be paid as the money is received by AdZone.

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

                                            March 31,         March 31,
                                              2003              2002
                                              ----              ----
Officer compensation                        $570,360          $358,932
                                            ========          ========

                                      F-15
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE I - OFFICER COMPENSATION - CONTINUED

Future minimum amounts due under the employment agreements are as follows:

                                           Year ending
                                            March 31,              Amount
                                            ---------              ------
                                              2004                $201,350
                                              2005                 156,000
                                                                  --------
                                             Totals               $357,350
                                                                  ========

NOTE J - INCOME TAXES

The  components  of income tax  (benefit)  expense for the years ended March 31,
2003 and 2002 and for the period  from  February  28,  2000 (date of  inception)
through March 31, 2003, respectively, are as follows:

                                                             Period from
                                                           February 28, 2000
                                                          (date of inception)
                     Year ended           Year ended           through
                   March 31, 2003       March 31, 2002      March 31, 2003
                   --------------       --------------      --------------
Federal:
  Current             $     --             $     --             $     --
  Deferred                  --                   --                   --
                      --------             --------             --------
                            --                   --                   --
                      --------             --------             --------
State:
  Current                   --                   --                   --
  Deferred                  --                   --                   --
                      --------             --------             --------
                            --                   --                   --
                      --------             --------             --------

Totals                $     --             $     --             $     --
                      ========             ========             ========

As of March 31,  2003,  the Company has a net  operating  loss  carryforward  of
approximately  $2,400,000 to offset future  taxable  income.  Subject to current
regulations,  this  carryforward  will  begin to expire in 2020.  The amount and
availability  of  the  net  operating  loss  carryforwards  may  be  subject  to
limitations set forth by the Internal  Revenue Code.  Factors such as the number
of shares ultimately issued within a three year look-back period;  whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate;  continuity of historical  business;  and subsequent income of
the  Company  all  enter  into  the  annual   computation  of  allowable  annual
utilization of the carryforwards.


                (Remainder of this page left blank intentionally)

                                      F-16
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE J - INCOME TAXES - CONTINUED

The Company's  income tax expense for each of the years ended March 31, 2003 and
2002 and for the period from February 28, 2000 (date of inception) through March
31, 2003,  respectively,  differed from the statutory federal rate of 34 percent
as follows:

<TABLE>
<CAPTION>
                                                                                                   Period from
                                                                                                 February 28, 2000
                                                                                                (date of inception)
                                                           Year ended           Year ended           through
                                                         March 31, 2003       March 31, 2002      March 31, 2003
                                                         --------------       --------------      --------------
<S>                                                        <C>                 <C>                 <C>
Statutory rate applied to loss before income taxes         $  (315,225)        $  (204,000)        $(1,032,225)
Increase (decrease) in income taxes resulting from:
  State income taxes                                                --                  --                  --
  Other, including reserve for deferred tax asset              315,225             204,000           1,032,225
                                                           -----------         -----------         -----------

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

Temporary  differences,  consisting primarily of statutory deferrals of expenses
for organizational costs and statutory  differences in the depreciable lives for
property and equipment, between the financial statement carrying amounts and tax
bases of assets and liabilities give rise to deferred tax assets and liabilities
as of March 31, 2002 and 2001:

                                                March 31, 2003    March 31, 2002
                                                --------------    --------------
Deferred tax assets
Net operating loss carryforwards                  $ 790,000         $ 716,600
Less valuation allowance                           (790,000)         (716,600)
                                                  ---------         ---------

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

During the years  ended March 31,  2003 and 2002,  the reserve for the  deferred
current tax asset increased by approximately $73,400 and $208,000, respectively.

NOTE K - COMMON STOCK TRANSACTIONS

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

During Fiscal 2003 and 2002,  the Company  issued  approximately  25,364,332 and
3,136,108   shares  of  common  stock,   in  both   registered  and  restricted,
unregistered form.

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

                                      F-17
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE K - COMMON STOCK TRANSACTIONS - CONTINUED

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 1/28/02                     538,665          459,998        78,667
Filing dated 2/21/02                     303,000          171,000       132,000
Filing dated 3/26/03 (as amended)     17,100,000       11,889,000     5,211,000

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

                                      Registered         Restricted    Total
                                      ----------     ----------        -----
Balances at March 31, 2001             5,346,000     18,000,022      23,346,022
  Cash                                        --        744,442         744,442
  Conversion of short-term loans              --        360,000         360,000
  Consulting and Legal services          681,666         25,000         706,666
  Lawsuit settlement                          --        500,000         500,000
  Legal services                              --        170,000         170,000
  Operating expenses                          --        405,000         405,000
  Personnel compensation                      --        250,000         250,000
                                     -----------    -----------     -----------

Balances at March 31, 2002             6,027,666     20,454,464      26,482,130

  Cash                                        --      2,413,334       2,413,334
  Consulting and Legal services       12,258,332      2,982,666      15,240,998
  Directors fees                              --        160,000         160,000
  Operating expenses                          --         10,000          10,000
  Personnel compensation                      --      5,790,000       5,790,000
  Reclassifications per Rule 144(k)   20,454,464    (20,454,464)             --
                                     -----------    -----------     -----------

Balances at March 31, 2003            38,740,462     11,356,000      50,096,462
                                     ===========    ===========     ===========

In each instance where the agreed-upon value of the Company's common stock, when
issued,  and/or the value of the services rendered or the cash received was less
than the "fair  value" of the  Company's  common  stock,  as  determined  by the
discounted closing quoted closing price of the Company's securities as quoted on
the OTC Bulletin Board,  the Company  recognized a non-cash charge to operations
for the difference.

                (Remainder of this page left blank intentionally)

                                      F-18
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE K - COMMON STOCK TRANSACTIONS - CONTINUED

The  following  tables  recap the  Company's  stock  issuances,  by  purpose  or
function,  for  each  of the  Fiscal  Years  ended  March  31,  2002  and  2003,
respectively:

                        FISCAL YEAR ENDED MARCH 31, 2002

Issuances pursuant to an exemption from registration pursuant to Section 4(2)

<TABLE>
<CAPTION>
Date of                                                  Number     Proceeds or      Excess
 Issue              Issuee                             of Shares     Valuation     Fair Value
 -----              ------                             ---------     ---------     ----------
<S>                                                    <C>          <C>           <C>
Cash
8/22/2001       Seth Blumenthal                         100,000      $  7,000      $     --
8/29/2001       Suzanne Tryphonos                         1,666           100            --
10/11/2001      Thomas Clemens                           33,333         2,000            --
10/11/2001      Gerard Stankewicz                        33,333         2,000            --
10/11/2001      Barbara Welker                           10,000           600            --
10/11/2001      Marcia Strada                            10,000           600            --
10/22/2001      Colleen Strada                           10,000           600            --
10/31/2001      Kenneth Ullman                          444,444        20,000            --
12/18/2001      Gerard Stankewicz                        16,666         2,000           500
1/22/2002       Ruth Makofske                            85,000         5,000            --
                                                        -------      --------      --------
                                                        744,442      $ 39,900      $    500
                                                        =======      ========      ========
Conversion of short-term loans (1)
8/10/2001       Barbara Welker                          166,667      $ 10,000      $     --
8/10/2001       Charles Blanchfield                      83,333         5,000            --
8/10/2001       Thomas Clemens                           50,000         3,000            --
8/10/2001       Marilyn Hyman                            33,333         2,000            --
8/10/2001       Joe Mortimer                             16,667         1,000            --
8/10/2001       Suzanne Tryphonos                        10,000           600            --
                                                        -------      --------      --------
                                                        360,000      $ 21,600      $     --
                                                        =======      ========      ========
Consulting and Legal services
11/29/2001      Seth Blumenthal                          25,000      $  1,000      $    250

Lawsuit settlement (2)
9/9/2001        Competitive Media Reporting, LLC.       500,000      $ 20,000      $     --

Legal services (3)
12/28/2001      Warren Hamburger                        120,000      $  7,200      $     --
3/7/2002        Warren Hamburger                         50,000         2,500            --
                                                        -------      --------      --------
                                                        170,000      $  9,700      $     --
                                                        =======      ========      ========
Operating expenses
1/29/2002       Jeffrey Halbirt (4)                     200,000      $ 14,000      $     --
1/29/2002       Terry Nield (4)                         200,000        14,000            --
3/14/2002       Sheldon Katz (5)                          5,000           250            --
                                                        -------      --------      --------
                                                        405,000      $ 28,250      $     --
                                                        =======      ========      ========
Personnel compensation
3/24/2002       Daniel Wasserman (6)                    250,000      $ 15,000      $     --
</TABLE>

                                      F-19
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE K - COMMON STOCK TRANSACTIONS - CONTINUED

(1)  - Between April 1, 2001 and August 10, 2001, AdZone received  approximately
     $21,600 in cash proceeds for the sale of  restricted,  unregistered  common
     stock of Executive Help  Services,  Inc. to be issued  concurrent  with the
     business combination date at a rate of $0.06 per share.
(2)  - In September  2001,  the Company  issued  500,000  shares of  restricted,
     unregistered common stock to an unrelated company in settlement of a breach
     of contract and  non-competition  agreement between the Company's President
     and the President's former employer.
(3)  - Mr. Hamburger is a member of the Company's Board of Directors
(4)  - Mr. Halbirt and Mr. Nield were previously  officers and/or  affiliates of
     the Company prior to the reverse acquisition  business  combination between
     AdZone Research,  Inc. (formerly Executive Help Services,  Inc.) and AdZone
     Interactive, Inc.
(5)  - Issued in payment  of late fees  incurred  on the lease of the  Company's
     former executive offices in Riverhead, New York.
(6)  - Issued  pursuant to an employment  contract for services as the Company's
     Vice President for Contract Procurement in lieu of cash compensation

Issuances pursuant to Registration Statement(s) filed on Form(s) S-8
with the U. S. Securities and Exchange Commission

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or       Excess
 Issue              Issuee                       of Shares      Valuation      Fair Value
 -----              ------                       ---------      ---------      ----------
<S>              <C>                            <C>           <C>             <C>
Consulting services
12/13/2001        Charles Blanchfield (7)          40,000        $  4,000        $   --
12/13/2001        Robert King (7)                  40,000           4,000            --
12/13/2001        Thomas Kober (7)                 40,000           4,000            --
12/13/2001        Theresa Kober (7)               300,000          18,000            --
1/29/2002         Leonard Braumberger (8)         133,333          16,000            --
3/1/2002          Leonard Braumberger (8)          53,333           8,000            --
2/21/2002         Dave Grandy (9)                  75,000           9,000            --
                                                 --------        --------        ------
                                                  681,666        $ 63,000        $   --
                                                 ========        ========        ======
</TABLE>

(7)  - Issued to various professionals, some of whom were existing shareholders,
     providing  legal and  accounting  services  to the Company  under  one-year
     contracts.
(8)  - Issued to Mr.  Braumberger  and/or  Communique  Media  Services,  Inc. of
     Blaine,  Washington,  an  unrelated  entity,  to  provide  web  development
     services and maintain the Company's  corporate  internet web site for a fee
     of $8,000 per month payable in shares as registered on a Form S-8 filing.
(9)  - Issued to Mr. Grandy and/or International Standard Consulting Corporation
     of Vancouver,  British  Columbia,  Canada,  an unrelated entity, to provide
     strategic business and technology development consulting services for a fee
     of $4,500 per month payable in shares as registered on a Form S-8 filing.


                (Remainder of this page left blank intentionally)

                                      F-20
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE K - COMMON STOCK TRANSACTIONS - CONTINUED

                        FISCAL YEAR ENDED MARCH 31, 2003

Issuances pursuant to an exemption from registration pursuant to Section 4(2)

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or       Excess
 Issue              Issuee                       of Shares      Valuation      Fair Value
 -----              ------                       ---------      ---------      ----------
<S>              <C>                            <C>           <C>             <C>
Cash
5/15/02       B&G Holding Co.                       75,000      $    5,000        $   --
6/6/02        Eleanor Garrett                      300,000          15,000            --
6/6/02        Warren Hamburger (10)                200,000          10,000            --
6/24/02       Kevin Messina                        375,000          15,000            --
7/19/02       Scott Bolkema                        700,000          35,000            --
10/8/02       Carl Washwick                        333,334          10,000            --
11/18/02      Joshua Blumenthal                     50,000          10,000            --
3/21/02       Eleanor Garrett                      140,000           2,000            --
3/21/03       Warren Hamburger (10)                140,000           2,000            --
3/31/03       Warren Hamburger (10)                100,000           2,000            --
                                                ----------      ----------        ------
                                                 2,413,334      $  106,000        $   --
                                                ==========      ==========        ======
Consulting and Legal Services
8/2/02        Jack Kratoville (11)                  20,000      $    1,200        $   --
8/5/02        Keith Peters (12)                     50,000           5,000            --
9/7/02        Keith Peters (12)                     50,000           5,000            --
9/7/02        Dag Finn Sjoen (11/18)                10,000             250            --
9/20/02       Suzanne Tryphonos (13)                16,666             333            --
10/2/02       Warren Hamburger (10/14)             100,000           2,000            --
10/4/02       Kathleen Kenney (14)                  25,000             500            --
10/9/02       Jason Genet (15)                   1,200,000          36,000            --
10/11/02      First American Ventures (16)         500,000          12,500            --
10/16/02      Jason Genet (15)                      25,000             875            --
11/7/02       Arthur Metz (17)                      14,000             700            --
11/20/02      Bob Schmidt                          100,000           5,000            --
12/3/02       Arthur Metz (17)                     150,000           4,500            --
12/12/02      Robert Fitzpatrick (14)               60,000           1,200            --
1/10/03       Arthur Metz (17)                     162,000           4,860            --
2/28/03       Warren Hamburger (10/14)             210,000           4,200            --
2/28/03       Thomas Kober (17)                    100,000           3,000            --
3/21/03       Charles Blanchfield (17)             100,000           3,000            --
3/21/03       Thomas Gavin (16)                    100,000           5,000            --
                                                ----------      ----------        ------
                                                 2,992,666      $   95,118        $   --
                                                ==========      ==========        ======
Directors fees
5/1/02        John Conley                           10,000      $      500        $   --
11/18/02      Jonathan White                        40,000           4,500            --
2/28/03       Russell Ivy                           10,000             300            --
2/28/03       John Conley                           50,000           1,500            --
2/28/03       Jonathan White                        50,000           1,500            --
                                                ----------      ----------        ------
                                                   160,000      $    8,300        $   --
                                                ==========      ==========        ======
</TABLE>

                                      F-21
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE K - COMMON STOCK TRANSACTIONS - CONTINUED

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or       Excess
 Issue              Issuee                       of Shares      Valuation      Fair Value
 -----              ------                       ---------      ---------      ----------
<S>              <C>                            <C>           <C>             <C>
Personnel compensation
2/28/02        Charles Cardona                   2,000,000      $   30,000        $   --
5/29/02        Valerie Cardona (19)                150,000           4,500            --
7/9/02         Daniel Wasserman                    300,000          12,000            --
8/5/02         Elizabeth Neese                       5,000             500            --
9/20/02        Reidar Sjoen (18)                   275,000           5,500            --
10/1/02        Ursula Olivares                     250,000           5,000            --
10/7/02        Valerie Cardona (19)                275,000           5,500            --
1/27/03        Reidar Sjoen (18)                   250,000           5,000            --
1/28/03        Thomas Madigan                       60,000             900            --
2/28/03        Thomas Madigan                       25,000             750            --
2/28/03        John Cardona                      2,000,000          30,000            --
2/28/03        Ursula Olivares                     100,000           3,000            --
2/28/03        Reidar Sjoen (18)                   100,000           2,000            --
                                                ----------      ----------        ------
                                                 5,790,000      $  104,650        $   --
                                                ==========      ==========        ======
</TABLE>

(10) - Mr. Hamburger is a member of the Company's Board of Directors
(11) - Issued for various services  related to the Company's  relocation of it's
       corporate offices.
(12) - Issued for general business advisory services.
(13) - Issued for general office and clerical services
(14) - Issued for legal services.
(15) - Issued for Website development, updates and maintenance.
(16) - Issued for various investor and public relations services.
(17) - Issued  for  accounting,   bookkeeping  and  other  financial  reporting
       services.
(18) - Mr. Dag Finn Sjoen is the father of Mr. Reidar Sjoen,  an employee of the
       Company.
(19) - Ms. Cardona is the mother of Charles Cardona, the Company's Chairman, and
       John Cardona, the Company's former President of the Company

Issuances pursuant to Registration Statement(s) filed on Form(s) S-8
with the U. S. Securities and Exchange Commission

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or       Excess
 Issue              Issuee                       of Shares      Valuation      Fair Value
 -----              ------                       ---------      ---------      ----------
<S>              <C>                            <C>           <C>             <C>
Common stock directly issued
Consulting and Legal services
4/3/02         Leonard Braumberger (8)             53,333        $ 8,000        $    --
4/10/02        Dave Grandy (9)                     30,000          4,500             --
5/7/02         Leonard Braumberger (8)             53,333          8,000             --
5/7/02         Dave Grandy (9)                     30,000          4,500             --
6/6/02         Leonard Braumberger (8)             53,333          8,000             --
6/6/02         Dave Grandy (9)                     18,000          4,500             --
7/1/02         Leonard Braumberger (8)             53,333          8,000             --
7/1/02         Dave Grandy (9)                     18,000          4,500             --
8/19/02        Tyler Byrd (12)                    400,000         24,000             --
8/19/02        Thomas Gavin (16)                  175,000         10,500             --
9/7/02         Thomas Gavin (16)                  140,000          7,000             --
</TABLE>

                                      F-22
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE K - COMMON STOCK TRANSACTIONS - CONTINUED

Issuances pursuant to Registration Statement(s) filed on Form(s) S-8
with the U. S. Securities and Exchange Commission - Continued

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or       Excess
 Issue              Issuee                       of Shares      Valuation      Fair Value
 -----              ------                       ---------      ---------      ----------
<S>              <C>                            <C>           <C>             <C>
Common stock directly issued
Consulting and Legal services - continued
9/20/02        Charles Blanchfield (17)           233,333           9,333             --
9/20/02        Robert King (17)                   233,333           9,333             --
9/20/02        Thomas Kober (17)                  233,334           9,334             --
10/4/02        Robert Fitzpatrick (14)            100,000           3,000             --
10/7/02        Jason Genet (15)                   400,000           8,000          8,000
10/9/02        Leonard Braumberger (8)             60,000           8,000             --
1/1/03         Thomas Gavin (17)                  306,000          15,300             --
1/10/03        John Calcagni (14)                 168,000           4,200             --
3/27/03        Hank Zemla (12)                    150,000           2,250             --
                                               ----------       ---------        -------
                                                2,908,332       $ 160,250        $ 8,000
                                               ==========       =========        =======
</TABLE>

Common stock issued pursuant to the granting of options to purchase

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or       Excess
 Issue              Issuee                       of Shares      Valuation      Fair Value
 -----              ------                       ---------      ---------      ----------
<S>              <C>                            <C>           <C>             <C>
Consulting and Legal services
8/19/02         Kyle Kennedy (20)                 500,000        $ 18,000        $12,000
10/7/02         Kyle Kennedy (20)                 250,000           2,500          5,000
10/16/02        Kyle Kennedy (20)               1,000,000          15,000         20,000
11/12/02        Kyle Kennedy (20)                 200,000           3,000          3,000
11/26/02        Kyle Kennedy (20)                 300,000           4,300          2,700
12/10/02        Kyle Kennedy (20)               2,100,000          30,800         23,100
1/23/03         Kyle Kennedy (20)               1,050,000          23,100         15,750
1/28/03         Kyle Kennedy (20)               3,950,000          28,500         11,850
                                               ----------        --------        -------
                                                9,350,000        $113,100        $93,400
                                               ==========        ========        =======
</TABLE>

(20) - On Aug. 19, 2002 the Company  entered into a  consulting  agreement  with
     Kyle  Kennedy  to assist  the  Company  with  business  strategy,  business
     development and mergers and acquisitions. Mr. Kennedy's compensation was in
     the form of options to purchase  registered  freely  trading  securities at
     various  discounts to the then current Market price. The agreement was on a
     month to month basis  cancellable  at 30 days notice by either  party.  Mr.
     Kennedy was also formerly  affiliated with Spartan  Securities  Group, Ltd.
     and has  represented  to the  Company  that the  services  provided in this
     agreement are separate and unique to Spartan's efforts in capital raising.


                (Remainder of this page left blank intentionally)

                                      F-23
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE L - STOCK OPTIONS

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

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

At various  times during Fiscal 2003,  the Company  granted  short-term  options
(generally  with a term of 30 days) to Kyle  Kennedy to assist the Company  with
business  strategy,  business  development  and  mergers and  acquisitions.  Mr.
Kennedy's  compensation was in the form of options to purchase registered freely
trading  securities at various  discounts to the then current Market price.  The
agreement was on a month to month basis  cancellable at 30 days notice by either
party.
                                                               Weighted average
                                                                price per share
                                                                ---------------
Options outstanding at April 1, 2001        2,000,000               $0.10
  Issued                                           --
  Exercised                                        --
  Expired/Terminated                               --
                                          -----------

Options outstanding at March 31, 2002       2,000,000               $0.10
  Issued                                   13,350,000                0.03
  Exercised                                (9,350,000)               0.01
  Expired/Terminated                       (4,000,000)               0.08
                                          -----------

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

The weighted  average  exercise price of all issued and  outstanding  options at
March 31, 2002 is approximately $0.10.

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

The  calculations  to estimate the fair value of the options were made using the
Black-Scholes pricing model which required making significant assumptions. These
assumptions include the expected life of the options, which was determined to be
one year, the expected volatility,  which was based on management's estimates as
there was no quoted or listed  price on the  Company's  equity  securities,  the
expected  dividends,  determined to be zero based on past  performance,  and the
risk free interest rate,  which was estimated using the bond equivalent yield of
6.0% at March 31, 2002.

                                      F-24
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE M - STOCK WARRANTS

Pursuant to an agreement with Thomas Gavin (Gavin) to provide  informational and
educational  news releases and distribute  said releases to the news media,  the
Company  issued 180,000  warrants to purchase an equivalent  number of shares of
the Company's common stock at a price of $0.25 per share and 380,000 warrants to
purchase an equivalent number of shares of the Company's common stock at a price
of $0.10 per share.  The aggregate  560,000  warrants  have an average  exercise
price of  approximately  $0.15 per share.  Each warrant will be for a three year
term from the date of issuance.

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

                               Warrants          Warrants
                              originally      outstanding at
                                issued        March 31, 2003     Exercise price
                                ------        --------------     --------------
Gavin warrants - Series A       180,000           180,000       $0.25 per share
Gavin warrants - Series B       380,000           380,000       $0.10 per share
                                -------           -------

Totals at March 31, 2003        560,000           560,000
                                =======           =======


NOTE N - COMMITMENTS AND CONTINGENCIES

LITIGATION

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

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

OFFICE FACILITIES

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

                                      F-25
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE N - COMMITMENTS AND CONTINGENCIES - CONTINUED

CONSULTING AGREEMENTS

In January 2002, the Company executed a one-year  contract with Communique Media
Services,  Inc. and/or Leonard Braumberger,  an unrelated entity, to provide web
development  services and maintain the Company's corporate internet web site for
a  fee  of  $8,000  per  month  payable  in  shares  registered  on a  Form  S-8
Registration  Statement.  Through July 1, 2002,  the Company issued an aggregate
399,998 shares under the Form S-8 Registration Statement.  Each monthly issuance
was charged to  operations  as  consulting  fees.  As of December 31, 2002,  the
Company has no further obligations under this agreement.

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

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

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

                (Remainder of this page left blank intentionally)

                                      F-26
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE N - COMMITMENTS AND CONTINGENCIES - CONTINUED

CONSULTING AGREEMENTS - CONTINUED

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

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

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

INVESTMENT BANKING AGREEMENTS

On June 20, 2002, the Company signed a Financial  Services  Agreement with First
American  Financial Group, New York, New York,  pursuant to which First American
Financial  Group  agreed to attempt to complete a private  placement of up to $5
million of the Company's 9% convertible  preferred stock. As of the date of this
Report,  First  American  Financial  Group has not introduced the Company to any
proposed  purchaser(s) of its convertible preferred stock, and management cannot
provide any assurances  that the Company will be able to complete such financing
in the future.  Through  December 31, 2002,  the Company has paid First American
Financial Group approximately $5,000 in conjunction with this Agreement.

                                      F-27
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE N - COMMITMENTS AND CONTINGENCIES - CONTINUED

INVESTMENT BANKING AGREEMENTS - CONTINUED

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

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

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

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

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

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

                                      F-28
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE N - COMMITMENTS AND CONTINGENCIES - CONTINUED

BUSINESS DEVELOPMENT AGREEMENT

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

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

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

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

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

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

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

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

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

As of March 31, 2003,  Mr.  Kennedy owes the Company  approximately  $14,800 for
shares issued under exercised options.


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                                      F-29
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE N - COMMITMENTS AND CONTINGENCIES - CONTINUED

BROKER-DEALER MARKETING AGREEMENT

On October 10, 2002,  the Company  signed a  "Broker-Dealer  Marketing  Program"
agreement with First American  Financial Group of New York, NY (First American).
First  American will contact  broker-dealers  as potential  market makers in the
Company's equity securities;  contact broker-dealers via e-mail and telephone to
review  current  Company  information  and meet with  broker-dealers,  and their
registered  representatives,  to discuss and promote  awareness of the Company's
equity  securities.  As  compensation  to First  Financial,  the Company  issued
500,000  shares of restricted,  unregistered  common stock upon the execution of
this  agreement.  Further,  the Company is  obligated  to pay First  Financial a
non-accountable  expense  allowance  of $10,000 cash payable upon receipt of any
financing  from any  source in a  minimum  amount of  $500,000.  Further,  First
American  is  entitled  to  Bonus   Compensation  equal  to  100,000  shares  of
restricted,  unregistered  common  stock if at any  time  during  the 12  months
following the execution of this  agreement,  the Company's  common stock reaches
$0.10 per share; an additional 100,000 shares of restricted, unregistered common
stock if at any time  during  the 12  months  following  the  execution  of this
agreement,  the Company's  common stock  reaches $0.20 per share;  an additional
100,000  shares of restricted,  unregistered  common stock if at any time during
the 12 months  following the execution of this agreement,  the Company's  common
stock reaches $0.40 per share;  and an additional  100,000 shares of restricted,
unregistered  common  stock if at any time  during the 12 months  following  the
execution of this agreement, the Company's common stock reaches $0.60 per share.
This agreement terminates on September 30, 2003.


NOTE O - SUBSEQUENT EVENTS

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

During the period from April 1, 2003 through June 25, 2003,  the Company  issued
shares of registered and restricted, unregistered common stock for

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or
 Issue              Issuee                       of Shares      Valuation      Purpose
 -----              ------                       ---------      ---------      -------
<S>              <C>                            <C>           <C>             <C>
Registered on Form S-8
4/3/03          Leonard Braumberger                 53,333      $2,133       Investor relations
5/7/03          Duane Lewin                         20,000         600       Office design
5/7/03          Elizabeth Lewin                     15,000         400       Office design
5/7/03          Sunny Lewin                         15,000         400       Office design
                                                   -------
                                                   103,333
                                                   =======
</TABLE>

                (Remainder of this page left blank intentionally)

                                      F-30
<PAGE>
                              ADZONE RESEARCH, INC.
                          (a development stage company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE O - SUBSEQUENT EVENTS - CONTINUED

<TABLE>
<CAPTION>
Date of                                            Number      Proceeds or
 Issue              Issuee                       of Shares      Valuation      Purpose
 -----              ------                       ---------      ---------      -------
<S>              <C>                            <C>           <C>             <C>
Restricted, Unregistered shares
4/23/03        Ruth Makofske                 500,000        $ 8,000        Cash investment
5/5/03         Thomas Madigan                  5,000            100        Cash investment
5/13/03        Warren Hamburger              150,000          3,000        Cash investment
6/3/03         Kevin Messina                 375,000         15,000        Cash investment
5/23/03        Jo Ann Palminteri               3,000            150        Clerical services
5/23/03        Elizabeth Neese                 3,000            150        Clerical services
4/28/03        Daniel Wasserman              500,000         10,000        Compensation
4/28/03        Paidoussis Olga               200,000          3,200        Legal services
4/30/03        Paul Weaver                    50,000          1,000        Military consulting
5/22/03        Victor Yurkins                 25,000          1,250        Military consulting
5/5/03         Jason Miller                    7,000            280        Investor relations
5/5/03         Scott Rubin                     7,000            280        Investor relations
5/5/03         Thomas Gavin                   50,000          2,000        Public relations
6/5/03         Hank Zemla                    100,000          9,000        Public relations
7/5/03         Equities Magazine, LLC         50,000          4,500        Conference fees
                                           ---------
                                           2,025,000
                                           =========
</TABLE>

                                      F-31