UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  FORM 10-KSB/A

(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, 2004

 [ ] 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 AdZone 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, 2004 was $74,844.

The aggregate market value of voting common equity held by non-affiliates as of
March 31, 2004 was approximately $12,695,285.12, using the closing price of
AdZone's common stock of $0.32 per share on March 31 2004.

As of March 31, 2004, there were 70,832,255 shares of common stock issued and
outstanding. As of September 30, 2004, there were 83,058,606 shares of common
stock issued and outstanding.

Transitional Small Business Disclosure Format : Yes [ ] No [X]


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                              ADZONE RESEARCH, INC.

                                  FORM 10-KSB/A
                    FOR THE FISCAL YEAR ENDED MARCH 31, 2004


                                      INDEX

                                     PART I

                                                                           Page

Item 1.   Description of Business                                            1
Item 2.   Description of Property                                            5
Item 3.   Legal Proceedings                                                  5
Item 4.   Submission of Matters to a Vote of Security Holders                5

                                     PART II

Item 5.   Market for the Registrant's Common Equity and                      6
          Related Stockholder Matters
Item 6.   Management's Discussion and Analysis or Plan of Operation          9
Item 7.   Financial Statements                                              12
Item 8.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure                               12
Item 8A.  Controls and Procedures                                           12

                                    PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(A) of the Exchange Act.            13
Item 10.  Executive Compensation                                            15
Item 11.  Security Ownership of Certain Beneficial Owners and Management    20
Item 12.  Certain Relationships and Related Transactions                    21
Item 13.  Exhibits and Reports on Form 8-K                                  22

                                     PART IV

Item 14.  Principal Accountant Fees and Services                            23


                                   SIGNATURES

CAUTION REGARDING FORWARD-LOOKING INFORMATION

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

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

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


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<PAGE>

                                     PART I

ITEM 1 - DESCRIPTION OF BUSINESS

GENERAL

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

In January 2000, we registered our common stock with the Securities and Exchange
Commission on a Form 10-SB pursuant to the Securities Exchange Act of 1934 and
became a public reporting company. We also filed a request with the NASD for
clearance of quotations on the OTC Bulletin Board under Rule 15c2-11 of the
Securities Exchange Act of 1934. A clearance letter was issued to us and we were
issued the trading symbol "EHSV."

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

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

Since our merger with AII, we have continued the business of AII as an Internet
advertising research firm engaged in the extraction of data through the
monitoring of internet websites. The extracted data are then used to provide
various market research statistics and other focused information as requested by
AdZone's clients. AdZone 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.

Among the applications of the extracted data are the compilation of advertising
activity and information regarding advertising expenditures on Internet
websites. AdZone 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 interest in AdZone as a potential
provider of Internet data. Shortly after September 11, 2001, AdZone was
contacted by the United States Office of Homeland Security, which expressed an
interest in using AdZone's NetGet(TM) Internet monitoring technology to monitor
the internet for terrorist planning and other communication. AdZone 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 our initial discussions with officials of the federal government and
the State of New York, we believe that AdZone is well placed to obtain federal
and New York State contracts for Internet monitoring of possible terrorist
communication, planning and various forms of cybercrime.

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

AdZone 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, AdZone 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 AdZone that would enhance the data analysis capabilities of
Raytheon's software or that would more effectively gather data for analysis by
Raytheon and any of its systems integrator partners. Raytheon's intent is to
demonstrate AdZone's technologies in conjunction with its own technologies to
its prospective governmental customers, which include all agencies and
departments of the United States government and its approved international
allies.

On October 10, 2002, Adzone 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 AdZone's
equity securities; contact broker-dealers via e-mail and telephone to review
current AdZone information and meet with broker-dealers, and their registered
representatives, to discuss and promote awareness of AdZone's equity securities.
This agreement originally terminated on September 30, 2003 and was extended to


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September 30, 2004 by a written amendment dated January 7, 2004. First American
has asserted that AdZone breached various components of this contractual
agreement and filed for arbitration of the contested matters. AdZone and First
American reached a settlement agreement on June 24, 2004 whereby the
"Broker-Dealer Marketing Program" agreement was settled in full with the
issuance of 200,000 shares of restricted unregistered common stock on June 25,
2004. AdZone has no further obligations in relation to this agreement.

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

In March of 2003, AdZone 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, AdZone 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 June of 2003 AdZone 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.

In May of 2004 AdZone received its first purchase order from a US Defense
contractor in connection with using AdZone's technology in a viable commercial
setting. Due to nondisclosure agreements AdZone is prohibited from disclosing
any further information in regard to this purchase order. AdZone anticipated
this to be the first of many revenue generating opportunities for AdZone.
Although there are no assurances that this revenue stream will continue.

COMPETITION

AdZone has several competitors in the commercial arena, many of which have
financial and other resources that are far greater than its own. AdZone's
limited resources may hinder its ability to compete effectively. AdZone's
principal competitor is Competitive Media Research (CMR), a division of Taylor
Nelson Sofres, which offers 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 9 full time and two part time employees. None of AdZone's employees
are represented by a union, and AdZone considers its employee relationships to
be good.

SALES AND MARKETING

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

DISTRIBUTION METHODS OF PRODUCTS OR SERVICES

AdZone distributes its products and services electronically through e-mailing
its reports to the client, posting such reports to a private website that is
accessible to the client, distribution of the report on a CD-ROM, or faxing its
reports to the client location. In June 2002, AdZone concluded a Systems
Integrator Agreement with Raytheon Company, whereby Raytheon agreed to
demonstrate and promote sales of AdZone's proprietary software for defense and
security applications. Any such sales of AdZone's software products through
Raytheon, therefore, will be completed through sales of Raytheon's own
technology with which AdZone's products will be integrated. In March of 2003,
AdZone 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 AdZone signed a deal with Autometric agreeing to provide it's
technology to Autometric and their clients through Autometric contracts. AdZone
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

In May 2004, we executed a letter of intent based on a proposal for services
issued to a major United States Governmental agency. The agency subsequently
issued and executed a contract with an initial face value of $100,000 with
provisions for increases based on certain specified performance benchmarks.


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<PAGE>

DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS

In the normal course of business, AdZone periodically extends unsecured credit
to it's customers which during fiscal 2004 were 100% derived from a sole source.
Because of the credit risk involved, management will provide an allowance for
doubtful accounts which will reflect its opinion of amounts which will
eventually become uncollectible. In the event of complete non-performance, the
maximum exposure to us is the recorded amount of trade accounts receivable shown
on the balance sheet at the date of non-performance.

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

AdZone owns its internet domain names, www.adzoneinteractive.com,,
www.adzoneresearch.com, and www.adzonereports.com and holds a common law
copyright on all of its proprietary software. In June of 2003 AdZone applied for
patent protection for its methodology and / or technology.

In addition, AdZone has no plans to enter into franchise, concession or labor
contracts. In June 2002, AdZone concluded a Systems Integrator Agreement with
Raytheon Company pursuant to which it granted Raytheon the right to integrate
certain of AdZone's proprietary software for integration with Raytheon's
software for defense and security applications. In March of 2003, AdZone 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 AdZone 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

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

EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS

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

RESEARCH AND DEVELOPMENT. AdZone has expended approximately $566,000 and $88,000
during fiscal 2004 and 2003, respectively, for the maintenance and upgrading of
its proprietary software.

COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS

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

REPORTS TO SECURITY HOLDERS

AdZone 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. AdZone 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, AdZone 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 AdZone files with the Securities and
Exchange Commission, 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 AdZone'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


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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

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

ITEM 3 - LEGAL PROCEEDINGS

AdZone is not a party to any pending legal proceedings, and no such proceedings
are known to be contemplated. AdZone may be subject to a claim relating to
certain previously leased facilities. In May 2000 AdZone 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 AdZone 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 April 30, 2005.
Additionally, AdZone 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 AdZone's early
termination of the lease, AdZone 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 AdZone. AdZone has
surrendered all security deposits to the landlord. To date, AdZone 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

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


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                                     PART II

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

As of March 31, 2004, there were 70,832,255 shares of $0.001 par value common
stock of AdZone outstanding and owned by approximately 159 shareholders of
record, exclusive of shareholders holding their shares in street name. As of
June 29, 2004, there were 76,604,148 shares of $0.001 par value common stock of
AdZone 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 AdZone, the holders of shares of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. Holders of common stock have no preemptive or other
subscription rights, and there are no conversion rights or redemption or sinking
fund provisions with respect to such shares.

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

The following are the high and low closing prices of AdZone's Common Stock for
each quarter during the last two fiscal years:

FISCAL YEAR ENDED MARCH 31, 2004

First Quarter             $0.18                  $0.01
Second Quarter            $0.24                  $0.06
Third Quarter             $0.37                  $0.15
Fourth Quarter            $1.35                  $0.31

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


EQUITY COMPENSATION PLAN INFORMATION

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


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<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             8,000,000                .98                 -0-
Approved by security holders

      Total                               8,000,000                .98                 -0-
</TABLE>

DIVIDEND POLICY

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

RECENT SALES OF SECURITIES

On January 5, 2004, we issued 15,000 shares of common stock to Ronald C. Mayhew
for a purchase price of $0.34 per share.

On January 7, 2004, we issued 54,444 shares of common stock to Ronald C. Mayhew
in consideration of $4,900 in accounting services.

On January 20, 2004, we issued, 20,000 shares of common stock to William F.
Bogardus in consideration of $7,000 in services.

On January 20, 2004, we issued 60,000 shares of common stock and 100,000 common
stock purchase warrants exercisable at $0.15 per share to Thomas F. Gavin in
consideration of consulting services relating to new releases and shareholder
service.

On January 20, 2004, we issued 160,000 shares of common stock to Tom Kober in
consideration of accounting consulting services.

On January 23, 2004, we issued 3,227 shares of common stock to Art Metz in
consideration of accounting consulting services.

On January 27, 2004, we issued 30,000 shares of common stock to Ronald C. Mayhew
for a purchase price of $0.34 per share.

On January 30, 2004, we issued 36,000 shares of common stock to Peter Cardona in
consideration of web design services.

On February 20, 2004, we issued an aggregate of 224,000 shares of common stock
to employees in lieu of cash bonuses.

On February 23, 2004, we issued 700 shares of common stock to Equities Magazine
in consideration of services rendered.

On March 5, 2004, we issued 51,617 shares of common stock to Ronald C. Mayhew in
consideration of accounting services rendered.

On March 12, 2004, we issued 5,000 shares of common stock to Duane B. Lewin in
consideration of consulting services rendered.

On March 20, 2004, AdZone Research, Inc. entered into a Subscription Agreement,
with The Nutmeg Group, L.L.C, for a private placement of up to $1,750,000 for
shares of common stock of the Company. As of date, the Company issued and sold
to the Purchaser (i) 6,746,691 shares of common stock; and (ii) warrants to
purchase 3,373,345 shares of common stock for a purchase price of $1,000,000.

The issuance of the shares and the warrants was exempt from registration
requirements of the Securities Act of 1933 pursuant to Section 4(2) of such
Securities Act and Regulation D promulgated thereunder based upon the
representations of each of the Investors that it was an "accredited investor"
(as defined under Rule 501 of Regulation D) and that it was purchasing such
securities without a present view toward a distribution of the securities. In
addition, there was no general advertisement conducted in connection with the
sale of the securities.

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

GENERAL

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

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

RESULTS OF OPERATIONS
One Year Ended March 31,2004 and March 31, 2003


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REVENUES:

Revenues for the year ended March 31, 2004 amounted to $74,844, compared to nil
for the same period of the prior fiscal year. Current period revenues are
derived from sales from our Defense Division representing sub-contracting sales
to major defense supply contractors. While the company expects similar revenue
producing industry contracts in the future, no additional contracts have been
entered into as of this date. Adzone currently has three proposals in process
promoting our NetGet technology.

PRODUCTION EXPENSES:

Salaries, wages and related costs:
For the fiscal year ended March 31, 2004, Adzone incurred wage related costs of
$393,288 compared to $33,881 for the same period of the prior fiscal year. This
increase was caused by additions to staff, and the creation of new positions to
accommodate requirements for new revenue-producing contracts. The company is
investigating the use of interns to supplement salaried positions for standard
monitoring for future contracts.

Direct occupancy and operating expenses:
For the fiscal year ended March 31, 2004, Adzone incurred operating-related
expenses of $169,855 compared to $40,123 for the same period of the prior fiscal
year. This increase was due to office related expansions, increased rent and
building improvements. The company's current facilities will accommodate
foreseeable expansions.

Depreciation:
Depreciation amounted to $3,292 for the fiscal year ended March 31, 2004
compared to $14,305 for the same period of the prior fiscal year due to lower
levels of fixed assets in the current period.

OPERATING EXPENSES:

Selling and marketing costs for salaries and wages:
For the fiscal year ended March 31, 2004, Adzone incurred wage related costs for
Marketing of $127,150 compared to non-existent for the prior fiscal year. This
increase is due to the creation of our Marketing Division and related employee
salaries. It is expected, that with increased contracts requiring monitoring
and/or input the operating expenses for our Marketing Division may increase in
the future.

Selling and marketing costs for direct occupancy and operating expenses:
For the fiscal year ended March 31, 2004, Adzone incurred expenses related to
securing, outfitting and opening our Marketing Division of $54,141 compared to
non-existent for the prior fiscal year. The company's current facilities for its
Marketing Division are expected to accommodate future expansions.

General and Administrative Costs:

Officers compensation:
Officers compensation increased from $229,278 for the fiscal year ended March
31, 2003 to $271,969 for fiscal year ended March 31, 2004 per employment
agreements.

Consulting and professional fees:
For the fiscal year ended March 31, 2004, Adzone incurred costs related to
Consulting and Professional Fees of $354,737 compared to $356,438 for the prior
fiscal year.

Other general and administrative costs:
For the fiscal year ended March 31, 2004, Adzone incurred costs relating to
general and administration of $180,466 compared to $138,030 for the prior fiscal
year. This increase represents our expansion efforts during the 2004 fiscal
year. The company feels that its current administrative staff can handle any
increase in general and administrative activities.

Compensation expense:
Adzone has experienced costs related to compensation expenses for common stock
issuances at less that "fair value". This expense was $237,629 for fiscal year
ended March 31, 2004 compared to $101,400. for fiscal year ended March 31, 2003.
The company uses stock-based compensation as a means to preserve cash reserves
and plans to continue such issuances in the foreseeable future.

Depreciation:
Depreciation amounted to $2,177 for the fiscal year ended March 31, 2004
compared to $2,618 for the same period of the prior fiscal year. The company has
no commitments to acquire property or equipment at this time.

OTHER INCOME (EXPENSE):

Interest and other income:
For the fiscal year ended March 31, 2004, Adzone earned interest of $298 from
deposits in a Business Money Market Account opened in August 2003.


                                       9
<PAGE>

Interest expense:
For the fiscal year ended March 31, 2004, Adzone incurred interest expense of
$11,580 compared to $11,463 for the same period of the prior fiscal year. The
company's average loan balances have not changed in this time period, nor does
it expect changes in the near future.

Lawsuit settlement:
During the fiscal year ended March 31, 2004, Adzone entered into a settlement
related to occupancy agreements in the amount of $3,000

PREFERRED STOCK DIVIDENDS AND ACCRETIONS:

Preferred stock dividends relate to the Company's 9% Series A and 9% Series B
Preferred Stock. The Company carries its preferred stock based upon amounts
allocated to these securities in connection with certain unit offerings during
the year. The Company accretes the carrying value to its respective redemption
values through periodic charges to retained earnings. Preferred stock dividends
and accretions are reflected as reductions in net loss to arrive at net loss
applicable to common stockholders for purposes of our loss per common share
computations. Preferred stock dividends will be recorded so long as the
preferred stock is outstanding. Preferred stock accretions will be recorded
periodically until the full redemption values are reflected.

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

NET LOSS:

Based upon the aforementioned discussion items, Adzone incurred a net loss of
approximately $(1,735,105) for the fiscal year ended March 31, 2004, as compared
to a net loss of approximately $(927,536) for the fiscal year ended March 31,
2003.


LIQUIDITY

Adzone 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 Adzone through the sale of equity securities, loans and
options exercised has allowed Adzone to maintain a positive cash position.
Adzone has approximately $622,797 on hand at March 31, 2004 as compared to
$8,084 of March 31, 2003.

On March 20, 2004, AdZone entered into a Subscription Agreement, with The Nutmeg
Group, L.L.C, for a private placement of up to $1,750,000 for shares of common
stock. As of date, we issued and sold to The Nutmeg Group (i) 6,746,691 shares
of common stock; and (ii) warrants to purchase 3,373,345 shares of common stock
for a purchase price of $1,000,000.

The shares of common stock are priced at the lesser of

(a) $.20, or

(b) fifty-seven percent (57%) of the average closing bid price for common stock
on the two trading days immediately prior to Closing of such traunche, or

(c) fifty-seven percent (57%) of the average closing bid price for common stock
on the two trading days immediately prior to the date on which the registration
statement (as described in the Registration Rights Agreement) is declared
effective,

(the lesser of (a), (b) and (c) being hereinafter referred to as the "Fixed
Price").

The Purchaser will be issued Warrants exercisable into such number of shares of
common stock as is equal to 50% of the purchase price paid by Nutmeg, divided by
the Fixed Price. The common stock into which the Warrants are exercisable will
have piggyback registration rights, and the Warrants will be transferable.
Unexercised Warrants will expire December 31, 2008. Warrants will be exercisable
into common stock at a price equal to 125% of fifty-seven percent (57%) of the
average closing bid price for Common Stock on the two trading days immediately
prior to the filing with the Securities and Exchange Commission of the
registration statement (as described in the Registration Rights Agreement).

The third traunche will be at the option of the Company for an amount of
$750,000 and shall occur within 5 days of the date on which the registration
statement registering the Securities is declared effective.

Liquidity during fiscal 2004 and 2003 was provided principally through the
unregistered sales of equity securities, loans and the exercise of options under
the companies stock option plan. There is no guarantee that we will be
successful in raising cash from the sale of unregistered securities or through
loans. Total proceeds from sales were approximately $ 1,381,600 during fiscal
2004 and $239,500 during Fiscal 2003.


                                       10
<PAGE>

PLAN OF OPERATION

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

Adzone plans to continue marketing it's G-Stir product which reports on current
and historical data in it's clandestine message interception database. This
product has been well received by the various interested parties within the
Government and Defense Industry. Adzone intends to have sales with this and
similar products in the near future. Adzone has numerous potential clients with
which it is currently working.

Adzone also has developed an updated strategic business plan which incorporates
an aggressive sales strategy in the defense area of our business. The plan also
includes strategic alliances and acquisitions, to that end Adzone has retained
Baltic Ventures run by Jeff Hale, former President of VNU USA. His experience
brings considerable talents to AdZone in the field of acquisitions and
integrations of acquired companies. His experience includes multiple
acquisitions and research and defense company management. This should help
Adzone in it's goal of completing a strategically valuable acquisition.

In June 2002, Adzone 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. Adzone anticipated contracts to result from these efforts in the
fiscal year beginning April 1, 2003, while delays have occurred, Adzone is
confident it will achieve revenues from this agreement.

In March of 2003, Adzone 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, Adzone signed an agreement with Autometric (A division Of
Boeing). Adzone anticipated revenue to result within fiscal year 2003. Adzone in
fact did generate revenues from this agreement. Additional business is being
negotiated and is anticipated in the coming year from Autometric. Adzone
believes that its alliance with Autometric will benefit both entities and
provide considerable sales opportunities.

Adzone continues to market it's surveillance systems and data directly to
various govt agencies. Adzone 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.

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

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

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

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


                                       11
<PAGE>

financial statements for the year ended March 31, 2004 and 2004, expressed
substantial doubt with respect to the Company's ability to continue as a going
concern.

      During the two most recent fiscal years and through August 4, 2004, the
Company has not consulted with Aidman, Piser & Company regarding either:

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

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

SWH furnish the Company with a letter addressed to the Securities and Exchange
Commission stating that it agrees with the above statements. A copy of such
letter, dated August 4, 2004, is filed as Exhibit 16.1 to Form 8-K, filed with
the Securities and Exchange Commission.


ITEM 8-A - CONTROLS AND PROCEDURES

         Evaluation of disclosure controls and procedures. An evaluation was
performed under the supervision and with the participation of our management,
including the chief executive officer, or CEO, who is also the acting chief
financial officer, or CFO, of the effectiveness of the design and operation of
our disclosure procedures. Based on management's evaluation as of as of the end
of the period covered by this Annual Report, our principal executive officer and
acting principal financial officer has concluded that AdZone's disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) were
sufficiently effective to ensure that the information required to be disclosed
by AdZon in the reports that we file under the Exchange Act is gathered,
analyzed and disclosed with adequate timeliness, accuracy and completeness.

         Changes in internal controls. There have been no significant changes in
our internal controls or in other factors during the quarterly period ended
March 31, 2004 that could significantly affect these controls subsequent to the
date of the evaluation referred to above, nor were there any significant
deficiencies or material weaknesses in AdZone's internal controls. Accordingly,
no corrective actions were required or undertaken.



                                       12
<PAGE>

                                                     PART III

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

The directors and executive officers serving AdZone are as follows:

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

Daniel Wasserman      Executive Vice President              January 2002

John Cardona*         Director                               August 2001

Warren Hamburger      Director                               August 2001

Russell Ivy           Director                              January 2001

Richard A. McCann     Director                                  May 2004

*Charles Cardona and John Cardona are brothers.


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

BIOGRAPHICAL INFORMATION

CHARLES CARDONA

Charles Cardona, age 39, has served as AdZone's President and Chairman of the
Board since AdZone's merger with AdZone Interactive, Inc. in August 2001. From
February 2000 to August 2001, Mr. Cardona was President and Chief Executive
Officer of AdZone Interactive, Inc., with which AdZone merged in August 2001.
From 1992 to February 2000, Mr. Cardona was the President of Owl Data Systems,
Inc., a software development company owned by Mr. Cardona.

JOHN CARDONA

John Cardona, age 35, is consultant to AdZone 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 AdZone. Mr. Cardona has also
served AdZone as a Director from August 2001 to the present time. From 1990
through August 2001, Mr. Cardona was a director of sales for Competitive Media
Reporting, an advertising research firm. Mr. Cardona received a Bachelor of Arts
Degree from New York Institute of Technology, Long Island, New York.

DANIEL WASSERMAN

Daniel Wasserman, age 52, was appointed Executive Vice President and Managing
Director of AdZone'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
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


                                       13
<PAGE>

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

RUSSELL STOVER IVY

Russell Stover Ivy, age 36, is a Director of AdZone and was President of
Executive Help from January 2001 until the merger AdZone in August 2001. Mr. Ivy
has been a consultant to small and medium sized companies for over 20 years. He
has been involved in the start-up, design and implementation of numerous
business ranging from small financial services corporations to publicly traded
telecommunications companies. In 1998, Mr. Ivy was a consultant to IWL
Communications, which merged with CapRoc Communications, which was later
purchased by McLeod Communications. In 1999 and 2000, Mr. Ivy was a consultant
to First Financial Group of America, where he served as Director of Operations.
Mr. Ivy continues to consult for companies regarding their operational
activities and goals. Mr. Ivy received a Bachelor's degree in international
economics from Texas Tech University in 1991.

RICHARD A. MCCANN

Richard McCann 68, is a director of AdZone Research, Inc. During his career, Mr.
McCann has held positions of increasing responsibility. He initially began as a
Vice President and Co-Manager of equity trading with Bank of America in San
Francisco, and several years later joined Montgomery Securities in that city as
a Partner. Thereafter he served as a Vice President and Senior Institutional
Trader in Plymouth, California, and then relocated to the Tampa, Florida
headquarters of Raymond James & Co., serving there as a Vice President and then
became a Vice President at Ryan, Beck & CO., another Tampa area financial firm.
He relocated to Atlanta, Georgia to become Senior Vice President and Equity
Trading Manager at Wachovia Securities, and the following year became a Partner
at Florida-based Spartan Securities.

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

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

CODE OF ETHICS

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

ITEM 10 - EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth all cash and non-cash
compensation paid or accrued for services rendered in all capacities to the
named Executive Officers for the fiscal years ended March 31, 2004, 2003, and
2002:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                   Other Annual         Long-Term
                                                                                   Compensation       Compensation
                                                                                  (# of Share of  Awards (# Securities
                Name and Positions              Year     Salary ($)    Bonus      Common Stock)    Underlying Options)
=========================================================================================================================
<S>                                             <C>    <C>               <C>      <C>                      <C>
Charles Cardona     Chief Executive Officer     2004   $188,551(2)       0        5,471,151 (1)            50,000
                    Acting Chief Financial      2003   $190,385          0              0                   0
                    Officer                     2002   $153,525          0              0               1,000,000
                    Director

John Cardona        Director                    2004   $ 83,418(3)       0        5,706,899 (1)           100,000
                                                2003   $190,385          0              0                   0
                                                2002   $153,525          0              0               1,000,000
</TABLE>

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


                                       14
<PAGE>

DIRECTOR COMPENSATION

From time to time the members of the board of directors receive shares of common
stock at the discretion of the board for their services. The following table is
a list of directors and the amount of shares each one had received as
compensation:

------------------ -------------------- ----------------- ----------------------
NAME               TITLE                NUMBER OF SHARES  DATE OF ISSUANCE
------------------ -------------------- ----------------- ----------------------
John Conley        Advisory Director    50,000            February 28, 2003
------------------ -------------------- ----------------- ----------------------
                                        10,000            May 1, 2003
------------------ -------------------- ----------------- ----------------------
Jonathan White     Advisory Director    40,000            November 18, 2002
------------------ -------------------- ----------------- ----------------------
                                        50,000            February 28, 2003
------------------ -------------------- ----------------- ----------------------
Russell Ivy        Director             10,000            February 28, 2003
------------------ -------------------- ----------------- ----------------------
                                        50,000            September 3, 2003
------------------ -------------------- ----------------- ----------------------
                                        15,000            February 20, 2004
------------------ -------------------- ----------------- ----------------------
Warren Hamburger   Director             200,000           September 3, 2003
------------------ -------------------- ----------------- ----------------------
                                        15,000            February 20, 2004
------------------ -------------------- ----------------- ----------------------


                      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>
Charles Cardona          3,000,000                   20.69%                 $0.10                2/5/10
John Cardona             3,000,000                   20.69%                 $0.10                2/5/10


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

<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                7,000,000                       $0
John Cardona            -0-                 $0                7,000,000                       $0
</TABLE>


On February 5, 2004, we entered into an employment agreement with Mr. Charles
Cardona, which superseded all prior agreements. In this agreement, Mr. Cardona
will continue to serve as our Chief Executive Officer, through February 5, 2007.
This agreement contains the following terms and conditions:


                                       15
<PAGE>

Position: CEO

Effective Date: February 5, 2004

BASE SALARY:

2004 - $161,000 annual
2005 - $181,000 annual
2006 - $191,000 annual
2007 - $208,000 annual

The initial base salary shall be reduced to $1,500 per week until such time as
the company reaches a cash flow positive position for at least 1 month, or the
company raises at least $2 Million within 12 months, or management deems that
the companies cash position is sufficient to support an increase. No additional
salary above the reduced base shall accrue as back salary during the first 6
months of this contract.

Bonuses: Quarterly Qualitative Bonus of $ 10,000

2ND YEAR, YEAR END QUALITATIVE BONUS OF $ 25,000

Profitability Bonus: If the company reaches annual profitability employee will
receive a $100,000 bonus plus 250,000 shares in stock.

Mr. Cardona shall receive an annual bonus as follows:

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

The Board of Directors shall at it's discretion grant up to an additional
$100,000 in bonus to Mr. Cardona on an annual basis.

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

Options for 750,000 shares at $.85 Options for 750,000 shares at $1.00 Options
for 750,000 shares at $1.50 Options for 750,000 shares at $1.75

Additionally the employee shall receive the following 3,000,000 options upon the
Company achieving $500,000 in total revenues prior to March 31, 2005.

Options for 750,000 shares at $.85
Options for 750,000 shares at $1.00
Options for 750,000 shares at $1.50
Options for 750,000 shares at $1.75

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

Additionally the company shall maintain any existing options under previous
contracts.

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

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

On February 5, 2004, the Company entered into an Employment Agreement with Mr.
John A. Cardona (JCardona), which superseded all prior agreements. In this
agreement, JCardona will serve as the Company's Chief Operating Officer, through
February 5, 2007. This agreement contains the following terms and conditions:


                                       16
<PAGE>

Position: COO

Effective Date: February 5, 2004

BASE SALARY:

2004 - $161,000 annual
2005 - $181,000 annual
2006 - $191,000 annual
2007 - $208,000 annual

The initial base salary shall be reduced to $1500 per week until such time as
the company reaches a cash flow positive position for at least 1 month, or the
company raises at least $2 Million within 12 months, or management deems that
the companies cash position is sufficient to support an increase. No additional
salary above the reduced base shall accrue as back salary during the first 6
months of this contract.

Bonuses: Quarterly Qualitative Bonus of $ 10,000

2ND YEAR, YEAR END QUALITATIVE BONUS OF $ 25,000

PROFITABILITY BONUS:

If the company reaches annual profitability employee will receive a $100,000
bonus plus 250,000 shares in stock.

JCardona shall receive an annual bonus as follows:


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

The Board of Directors shall at it's discretion grant up to an additional
$100,000 in bonus to JCardona on an annual basis.

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

Options for 750,000 shares at $.85
Options for 750,000 shares at $1.00
Options for 750,000 shares at $1.50
Options for 750,000 shares at $1.75

Additionally the employee shall receive the following 3,000,000 options upon the
company achieving $500,000 in total revenues prior to March 31, 2005.

Options for 750,000 shares at $.85
Options for 750,000 shares at $1.00
Options for 750,000 shares at $1.50
Options for 750,000 shares at $1.75

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

Additionally the company shall maintain any existing options under previous
contracts.

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

Other Agreements: Medical and Dental insurance is fully paid for the employee by
the Company during the employment period. Company shall reimburse or pay for
reasonable company vehicle expenses including lease or purchase payments, gas,
tolls and repairs. AdZone Research agrees to defend employee against any and all
legal claims and litigation. In addition, AdZone Research further agrees to pay
all expenses arising from any and all litigation, including but not limited to


                                       17
<PAGE>

attorney's fee's legal fee's, and miscellanous expenses. Legal representation
for John A. Cardona will continue beyond the term of this contract and will
continue for the remainder of John A. Cardona's life.

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
AdZone. Also included are the shares held by all executive officers and
directors as a group.

                                                                  % of Class
Name and address                     Number of Shares         Beneficially Owned
----------------                     ----------------         ------------------
Charles Cardona                        22,352,422 (1)                 26.74%
17 Sunny Line Dr.
Calverton, NY 11933

John Cardona                           18,381,849 (2)                 19.35%
118 Overlook Dr.
Aquebogue, NY 11931

Daniel Wasserman                        3,081,000 (3)                  4.01%
20953 Cohasset Ter
Ashburn, VA

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

Russell Ivy                                65,000                       .08%
211 West Sealy Street
Alvin, TX 77511

Richard A. McCann                       1,709,218                       .08%
116 Holcomb Cove Rd.
Candler, NC 28715

All Executive Officers and
Directors of AdZone as
a Group (6 persons)                    46,659,489                     51.41%

----------

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

(1) Includes 7,000,000 shares that may be acquired upon exercise of stock
options granted to Mr. Cardona at exercise prices ranging from $0.10 to $1.75
per share. Excludes securities 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 AdZone 4,000,000 shares for the
purpose of a stock loan.

(2) Includes 7,000,000 shares that may be acquired upon exercise of stock
options granted to Mr. Cardona at exercise prices ranging from $0.10 to $1.75
per share. Excludes securities 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 AdZone 4,000,000 shares for the
purpose of a stock loan.

(3) Includes 1,500,000 shares that may be acquired upon exercise of stock
options granted to Mr. Wasserman at exercise prices ranging from $0.3182 to
$0.3612 per share.


                                       18
<PAGE>

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In prior periods, the Company's officers advanced various monies to the Company
under formal unsecured note documents bearing interest at 10.0%. The advances
are repayable in at least minimum 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.
During Fiscal 2004, no advances were made and all amounts previously advanced
amounts to Company officers were repaid in full.

The following table reflects the advances and repayments during each of the two
years in the period ended March 31, 2004:

        Year ended March 31,             Advances        Repayments
                                  -----------------------------------
               2004                         none          $33,754
               2003                     ($30,410)         $10,030

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

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

Exhibit
-------
3.1     Certificate of Incorporation **
3.2     By-Laws **
10.1    Consulting Agreement dated as of October 26, 2001 with Theresa A. Kober
        ***
10.2    Consulting Agreement dated as of November 2, 2001 with Blanchfield,
        King, Kober & Company, P.C. +
10.3    Consulting Agreement dated as of Thomas F. Gavin
10.4    Consulting Agreement dated as of February 5, 2002 with International
        Standard Consulting Corporation +++
10.5    Employment Agreement dated February 5, 2004 with Charles Cardona
10.6    Employment Agreement dated as of February 5, 2004 with John Cardona
10.7    Systems Integration Agreement dated as of June 21 2002 with Raytheon
        Company
10.8    A-K Consulting agreements with Kyle Kennedy Dated Aug. 19, 2002 - May
        22, 2003
10.9    Stipulation of Settlement with Sheldon Katz , Sept. 2002
10.10   Multimedia Web Site design contract with Jason Genet dated Oct. 16, 2002
10.11   Investment Banking Agreement with Spartan Securities dated Nov. 27, 2002
10.12   Agreement to borrow shares for stock loans dated Mar. 7, 2003
10.13   Joint Marketing agreement with Sarnoff Corp. dated Mar. 3, 2003
10.14   Warrant agreement with Tom Gavin dated Mar. 12, 2003
10.15   Agreement with Boeing Autometric Division dated April 2003.
31.1    Certification by Chief Executive Officer and Acting Chief Financial
        Officer pursuant to Sarbanes Oxley Section 302.
32.1    Certification by Chief Executive Officer and Acting Chief Financial
        Officer pursuant to 18 U.S. C. Section 1350

23.1 CONSENT OF AUDITORS

* 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.


                                       19
<PAGE>

REPORTS ON FORM 8-K:

AdZone filed twe reports on form 8-K during the quarter ended March 31, 2004.
Information regarding the items reported on is as follows:

DATE OF REPORT             ITEM REPORTED ON
--------------             ----------------
February 11, 2004          AdZone announced the private placement of $300,000.
March 30, 2004             AdZone disseminated a corporate update.


ITEM 14- PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Company paid or accrued the following fees in each of the prior two fiscal
years to it's principal accountant, S. W. Hatfield, CPA of Dallas, Texas

                                       Year ended          Year ended
                                        March 31,           March 31,
                                          2004                2003
                                       ----------          ----------

(1)   Audit fees                         $26,613              $24,040
(2)   Audit-related fees                      --                   --
(3)   Tax fees                                --                   --
(4)   All other fees                          --                   --
                                        --------             --------

   Totals                                $26,613              $24,040
                                        ========             ========


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

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

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

The Board reviewed the audited financial statements of the Company as of and for
the year ended March 31, 2004 and 2003 with management and the independent
auditors. Management has the sole ultimate responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for their examination of those statements.

Based on the above-mentioned review and discussions with the independent
auditors and management, the Board of Directors approved the Company's audited
financial statements and recommended that they be included in its Annual Report
on Form 10-KSB for the year ended March 31, 2004, for filing with the Securities
and Exchange Commission.


                                       20
<PAGE>

The Company's principal accountant, S. W. Hatfield, CPA did not engage any other
persons or firms other than the principal accountant's full-time, permanent
employees.


                                   SIGNATURES

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

                                      ADZONE RESEARCH, INC.


Dated: October 19, 2004               By:  /s/ Charles Cardona
                                       ----------------------------------------
                                       Charles Cardona, Chief Executive Officer
                                       and Principal Financial and Accounting
                                       Officer

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


Dated: October 19, 2004               By:  /s/ Charles Cardona
                                       ----------------------------------------
                                       Charles Cardona, Chairman of the Board


Dated: October 19, 2004               By:  /s/ John Cardona
                                       ----------------------------------------
                                       John Cardona, Director


Dated: October 19, 2004               By:  /s/ Warren Hamburger
                                       ----------------------------------------
                                       Warren Hamburger, Director


Dated: October 19, 2004               By:  /s/ Russell Ivy
                                       ----------------------------------------
                                       Russell Ivy, Director

Dated: October 19, 2004               By:  /s/ Richard A. McCann
                                       ----------------------------------------
                                       Richard A. McCann, Director




                                       21
<PAGE>

                             ADZONE RESEARCH, INC.
                         (a development stage company)

                                    CONTENTS
<TABLE>
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>                                                                                       <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                        F-2

RESTATED FINANCIAL STATEMENTS

   Restated Balance Sheets
     as of March 31, 2004 and 2003                                                        F-3

   Restated  Statements of  Operations  and  Comprehensive  Income for the years
     ended  March 31, 2004 and 2003 and for the period  from  February  28, 2000
     (date of inception)
     through March 31, 2004                                                               F-4

   Restated  Statement  of Changes in  Shareholders'  Equity for the period from
     February 28, 2000 (date of inception)
     through March 31, 2004                                                               F-5

   Restated Statements of Cash Flows for the years ended March 31, 2004 and 2003
     and for the period from February 28, 2000 (date of inception)
     through March 31, 2004                                                               F-6

   Notes to Restated Financial Statements                                                 F-7
</TABLE>


                                      F-1
<PAGE>

                        LETTERHEAD OF S. W. HATFIELD, CPA

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
AdZone Research, Inc.

We have audited the  accompanying  restated  balance sheets of AdZone  Research,
Inc. (a Delaware  corporation  and a development  stage company) as of March 31,
2004  and  2003  and  the  related   restated   statements  of  operations   and
comprehensive loss,  restated changes in shareholders'  equity and restated cash
flows for each of the years  ended  March 31,  2004 and 2003 and for the  period
from February 28, 2000 (date of inception) through March 31, 2004, respectively.
These  restated  financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion  on these  restated
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the restated
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 restated  financial  statement  presentation.  We believe
that our audits provide a reasonable basis for our opinion.

In our opinion,  the restated  financial  statements  referred to above  present
fairly,  in all material  respects,  the financial  position of AdZone Research,
Inc. as of March 31, 2004 and 2003 and the  results of its  restated  operations
and restated  cash flows for each of the years ended March 31, 2004 and 2003 and
for the period from February 28, 2000 (date of inception) through March 31, 2004
in conformity with accounting principles generally accepted in the United States
of America.

The accompanying  restated financial statements have been prepared assuming that
the Company  will  continue as a going  concern.  As  discussed in Note C to the
restated  financial  statements,  the Company has not  developed a revenue  base
since the development of it's proprietary software. Accordingly, the Company has
been  principally  dependent on private  placements of equity  securities or the
sale of equity  securities  into the open market through the Company's  Employee
Stock  Option  Plan 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 restated  financial  statements do not contain any adjustments  that
might result from the outcome of these uncertainties.

We  initially  issued a  Report  of  Independent  Certified  Public  Accountants
(Report) on the above listed  financial  statements on June 23, 2004 (except for
Note S as to which  the date is June 25,  2004).  Subsequent  to the date of our
Report,  Management  of  the  Company  discovered  that  there  were  beneficial
conversion  features  present in the Unit offerings of the Series A and Series B
preferred stock which had not been properly  calculated and accounted for in the
originally  released financial  statements.  The results of this finding had the
effect of an accretion  charge to  operations of  approximately  $53,856 for the
year  ended  March 31,  2004.  While not  material  to the  Company's  financial
statements,  we concur with this change and,  accordingly,  withdraw our opinion
dated June 23, 2004  (except for Note S as to which the date is June 25,  2004).
No reliance should be placed on our opinion dated June 23, 2004 (except for Note
S as to which the date is June 25, 2004)

                                                        /s/ S. W. Hatfield, CPA
                                                        ------------------------
                                                        S. W. HATFIELD, CPA
Dallas, Texas
October 20, 2004

                                      F-2
<PAGE>

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

                              ADZONE RESEARCH, INC.
                          (a development stage company)
                             RESTATED BALANCE SHEETS
                             March 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                                                  (RESTATED)
                                                                                   March 31,    March 31,
                                                                                    2004           2003
                                                                               -------------- -------------
                                     ASSETS
<S>                                                                            <C>            <C>
CURRENT ASSETS
   Cash on hand and in bank                                                    $   622,797    $     8,084
   Prepaid expenses and other                                                      134,272         35,375
                                                                               -----------    -----------
     TOTAL CURRENT ASSETS                                                          757,069         43,459
                                                                               -----------    -----------

PROPERTY AND EQUIPMENT - AT COST                                                    62,098         60,860
   Accumulated depreciation                                                        (51,675)       (49,255)
                                                                               -----------    -----------
     NET PROPERTY AND EQUIPMENT                                                     10,423         11,605
                                                                               -----------    -----------

OTHER ASSETS
   Restricted cash - Preferred Stock dividend reserve                               37,266             --
   Security deposits and other                                                       1,089            390
                                                                               -----------    -----------
     TOTAL OTHER ASSETS                                                             38,355            390
                                                                               -----------    -----------
TOTAL ASSETS                                                                   $   805,847    $    55,454
                                                                               ===========    ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Current maturities of Note payable                                          $    62,787    $    65,958
   Accounts payable - trade                                                        297,389        130,341
   Accrued dividends payable                                                           583             --
   Accrued interest payable                                                             --          2,514
   Advances from officers                                                               --         34,774
   Accrued officer compensation                                                    160,926        570,360
                                                                               -----------    -----------
     TOTAL CURRENT LIABILITIES                                                     521,685        803,947
                                                                               -----------    -----------

LONG-TERM LIABILITIES
   Notes payable                                                                   166,783             --
                                                                               -----------    -----------
     TOTAL LIABILITIES                                                             688,468        803,947
                                                                               -----------    -----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
   Preferred stock - $0.001 par value.  20,000,000 shares authorized
     Series A - 50 shares authorized
       24.2194 and -0- shares issued and outstanding, respectively                      --             --
     Series B - 100 shares authorized
       31.0000 and -0- shares issued and outstanding, respectively                      --             --
   Common stock - $0.001 par value.  200,000,000 shares authorized
     70,832,255 and 50,096,462 shares issued and outstanding, respectively          70,832         50,096
   Additional paid-in capital                                                    4,929,961      2,251,242
   Deficit accumulated during the development stage                             (4,850,649)    (3,035,031)
                                                                               -----------    -----------
                                                                                   150,144       (733,693)
   Stock subscription receivable                                                   (30,550)       (14,800)
   Treasury stock - at cost (25,000 shares)                                         (2,215)            --
                                                                               -----------    -----------
     TOTAL SHAREHOLDERS' EQUITY                                                    117,379       (748,493)
                                                                               -----------    -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                     $   805,847    $    55,454
                                                                               ===========    ===========
</TABLE>

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

                                      F-3
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
             RESTATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
                     Years ended March 31, 2004 and 2003 and
            Period from February 28, 2000 (date of inception) through
                                 March 31, 2004

<TABLE>
<CAPTION>
                                                                               (RESTATED)
                                                                               Period from
                                                                             February 28, 2000
                                                 (RESTATED)                  (date of inception)
                                                   Year  ended   Year ended      through
                                               March 31, 2004   March 31, 2003 March 31, 2004
                                               --------------   -------------- --------------
<S>                                              <C>            <C>            <C>
REVENUES                                         $    74,844    $        --    $   158,850
                                                 -----------    -----------    -----------

PRODUCTION EXPENSES
   Salaries, wages and related costs                 393,288         33,881        962,195
   Direct occupancy and operating expenses           169,855         40,123        428,481
   Depreciation                                        3,292         14,305         44,609
                                                 -----------    -----------    -----------
     Total production expenses                       566,435         88,309      1,435,285
                                                 -----------    -----------    -----------

GROSS PROFIT                                        (491,591)       (88,309)    (1,276,435)
                                                 -----------    -----------    -----------

OPERATING EXPENSES
   Selling and marketing costs
     Salaries, wages and related costs               127,150             --        453,608
     Direct occupancy and operating expenses          54,141             --        391,598
   General and administrative costs
     Officers compensation                           271,969        229,278        890,179
     Consulting and professional fees                354,737        356,438        978,420
     Other general and administrative costs          180,466        138,030        354,673
   Compensation expense related to common
     stock issuances at less than "fair value"       237,629        101,400        339,779
   Depreciation                                        2,177          2,618         14,141
                                                 -----------    -----------    -----------
       Total operating expenses                    1,228,269        827,764      3,422,398
                                                 -----------    -----------    -----------

LOSS FROM OPERATIONS                              (1,719,860)      (916,073)    (4,698,833)

OTHER INCOME (EXPENSE)
   Interest and other income                             298             --          4,636
   Interest expense                                  (11,580)       (11,463)       (36,160)
   Lawsuit settlement                                 (3,000)            --        (23,000)
   Loss on disposition of equipment                     (963)            --        (16,779)
   Accretion of beneficial discount
     conversion feature on preferred stock           (53,856)            --        (53,856)
                                                 -----------    -----------    -----------

NET LOSS                                          (1,788,961)      (927,536)    (4,823,992)

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

COMPREHENSIVE LOSS                               $(1,788,961)   $  (927,536)   $(4,823,992)
                                                 ===========    ===========    ===========
</TABLE>

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

                                      F-4
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
       RESTATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS - CONTINUED
                     Years ended March 31, 2004 and 2003 and
            Period from February 28, 2000 (date of inception) through
                                 March 31, 2004

<TABLE>
<CAPTION>
                                                                                  Period from
                                                                               February 28, 2000
                                                                              (date of inception)
                                             Year ended         Year ended         through
                                            March 31, 2004     March 31, 2003   March 31, 2004
                                            --------------    --------------    --------------
<S>                                         <C>               <C>               <C>
NET LOSS                                    $   (1,788,961)   $     (927,536)   $   (4,823,992)

PREFERRED STOCK DIVIDENDS                          (26,657)               --           (26,657)
                                            --------------    --------------    --------------

NET LOSS AVAILABLE TO COMMON SHAREHOLDERS   $   (1,815,618)   $     (927,536)   $   (4,850,649)
                                            ==============    ==============    ==============

Net loss per weighted-average share
   of common stock outstanding,
   computed on Net Loss
   - basic and fully diluted                $        (0.03)   $        (0.03)   $        (0.14)
     Preferred stock dividend                        (0.00)            (0.00)            (0.00)
                                            --------------    --------------    --------------

     Total basic and fully diluted loss
     per weighted-average share available
     to common shareholders                 $        (0.03)   $        (0.03)   $        (0.14)
                                            ==============    ==============    ==============

Weighted-average number of shares
   of common stock outstanding -
   basic and fully diluted                      62,374,341        36,670,763        35,891,430
                                            ==============    ==============    ==============
</TABLE>

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

                                      F-5
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
                              RESTATED STATEMENT OF
                         CHANGES IN SHAREHOLDERS' EQUITY
                          Period from February 28, 2000
                           (date of inception) through
                                 March 31, 2004

<TABLE>
<CAPTION>
                                                                                                             Deficit
                                                                                                           accumulated
                                            Preferred Stock             Common Stock         Additional       in the
                                            ---------------            ------------           paid-in       development
                                       Shares        Amount        Shares         Amount       capital        stage
                                    -----------   -----------   -----------   -----------    -----------    -----------
<S>                                    <C>         <C>            <C>          <C>            <C>            <C>
INITIAL CAPITALIZATION
   FEBRUARY 28, 2000                         --   $        --           170   $       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             --             --
     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)           --
Net loss for the period                      --            --            --            --             --        (35,822)
                                    -----------   -----------   -----------   -----------    -----------    -----------

BALANCES AT MARCH 31,2000                    --            --    25,000,000        25,000        962,650        (35,822)

Cash received on stock
   subscription receivable                   --            --            --            --             --             --
November 30, 2000 private
   placement of common stock                 --            --       666,665           667        289,333             --
   Less costs and expenses
     of raising capital                      --            --            --            --       (188,500)            --
Common stock issued for:
   Costs and expenses of
     raising capital                         --            --       400,000           400        175,600             --
   Prepaid interest on loan                  --            --       250,000           250         31,000             --
   Employee wages and bonuses                --            --     1,095,000         1,095         64,605             --
   Officer bonus                             --            --       500,000           500         29,500             --
   Professional services                     --            --       107,000           107          6,313             --
Net loss for the year                        --            --            --            --             --     (1,460,043)
                                    -----------   -----------   -----------   -----------    -----------    -----------
BALANCES AT MARCH 31, 2001                   --   $        --    28,018,665   $    28,019    $ 1,370,501    $(1,495,865)
                                    ===========   ===========   ===========   ===========    ===========    ===========

<CAPTION>

                                    Stock        Treasury
                                 subscription     Stock
                                  receivable      at cost        Total
                                  -----------    -----------    -----------
<S>                              <C>            <C>            <C>
INITIAL CAPITALIZATION
   FEBRUARY 28, 2000              $        --    $        --    $       150
   Effect of September 10, 2000
     125,000 for 1 forward stock
     split and change to $0.001
     par value                             --             --             --
February 29, 2000 private
   placement of common stock         (600,000)            --        400,000
     Effect of September 10, 2000
     125,000 for 1 forward stock
     split and change to $0.001
     par value                             --             --             --
   Less costs of raising capital           --        (12,500)
Net loss for the period                    --             --        (35,822)
                                  -----------    -----------    -----------

BALANCES AT MARCH 31,2000            (600,000)            --        351,828

Cash received on stock
   subscription receivable            600,000             --        600,000
November 30, 2000 private
   placement of common stock               --             --        290,000
   Less costs and expenses
     of raising capital                    --             --       (188,500)
Common stock issued for:
   Costs and expenses of
     raising capital                       --             --        176,000
   Prepaid interest on loan                --             --         31,250
   Employee wages and bonuses              --             --         65,700
   Officer bonus                           --             --         30,000
   Professional services                   --             --          6,420
Net loss for the year                      --             --     (1,460,043)
                                  -----------    -----------    -----------
BALANCES AT MARCH 31, 2001        $        --             --    $   (97,345)
                                  ===========    ===========    ===========
</TABLE>

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

                                      F-6
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
                 RESTATED STATEMENT OF CHANGES IN SHAREHOLDERS'
             EQUITY - CONTINUED Period from February 28, 2000 (date
                      of inception) through March 31, 2004

<TABLE>
<CAPTION>
                                                                                                                      Deficit
                                                                                                                     accumulated
                                            Preferred Stock               Common Stock               Additional         in the
                                            ---------------               ------------                 paid-in        development
                                       Shares         Amount           Shares         Amount           capital           stage
                                   -------------   -------------   -------------    -------------    -------------    -------------
<S>                                      <C>         <C>              <C>           <C>              <C>              <C>
BALANCES AT MARCH 31, 2001                    --   $          --      28,018,665    $      28,019    $   1,370,501    $  (1,495,865)

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)

Issuance of common stock for
   Conversion of short-term debt              --              --         360,000              360           21,240               --
   Cash                                       --              --         744,442              744           39,656               --
   Lawsuit settlement                         --              --         500,000              500           19,500               --
   Professional services                      --              --       1,531,666            1,532          115,668               --
Net loss for the year                         --              --              --               --               --         (611,630)
                                   -------------   -------------   -------------    -------------    -------------    -------------

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

Issuance of common stock for
   Cash                                       --              --       2,413,334            2,413          103,587               --
   Exercise of granted options                --              --       9,350,000            9,350          211,950               --
   Directors fees                             --              --         160,000              160            8,140               --
   Employee compensation                      --              --       5,790,000            5,790           98,860               --
   Professional services                      --              --       5,900,998            5,901          257,467               --
Net loss for the year                         --              --              --               --               --         (927,536)
                                   -------------   -------------   -------------    -------------    -------------    -------------

BALANCES AT MARCH 31, 2003                    --   $          --      50,096,462    $      50,096    $   2,251,242    $  (3,035,031)
                                   =============   =============   =============    =============    =============    =============

<CAPTION>

                                      Stock           Treasury
                                   subscription         Stock
                                     receivable         at cost         Total
                                    -------------    -------------   -------------
<S>                                 <C>              <C>             <C>
BALANCES AT MARCH 31, 2001          $          --    $          --   $     (97,345)

Conversion of AdZone
   Interactive, Inc. common
   stock to AdZone Research,
   Inc. common stock                           --               --              --
Effect of reverse merger with
   AdZone Research, Inc.                       --               --              --
                                    -------------    -------------   -------------

BALANCES AT MARCH 31, 2001
   POST-REVERSE ACQUISITION                    --               --         (97,345)

Issuance of common stock for
   Conversion of short-term debt               --               --          21,600
   Cash                                        --               --          40,400
   Lawsuit settlement                          --               --          20,000
   Professional services                       --               --         117,200
Net loss for the year                          --               --        (611,630)
                                    -------------    -------------   -------------

BALANCES AT MARCH 31, 2002                     --               --        (509,775)

Issuance of common stock for
   Cash                                        --               --         106,000
   Exercise of granted options            (14,800)              --         206,500
   Directors fees                              --               --           8,300
   Employee compensation                       --               --         104,650
   Professional services                       --               --         263,368
Net loss for the year                          --               --        (927,536)
                                    -------------    -------------   -------------

BALANCES AT MARCH 31, 2003          $     (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)
                              RESTATED STATEMENT OF
                         CHANGES IN SHAREHOLDERS' EQUITY
                        - CONTINUED Period from February
                          28, 2000 (date of inception)
                             through March 31, 2004

<TABLE>
<CAPTION>
                                                                                                                  Deficit
                                                                                                                 accumulated
                                                 Preferred Stock              Common Stock        Additional       in the
                                                ---------------              ------------          paid-in       development
                                            Shares         Amount         Shares       Amount       capital         stage
                                         -----------    -----------   -----------   -----------   -----------    -----------
<S>                                            <C>      <C>            <C>          <C>           <C>            <C>
BALANCES AT MARCH 31, 2003                        --    $        --    50,096,462   $    50,096   $ 2,251,242    $(3,035,031)

Issuance of preferred stock
   Series A                                    34.85             --            --            --       348,500             --
   Series B                                    31.00             --            --            --       310,000             --
Redemption of preferred stock
   Series A                                   (10.63)            --            --            --      (106,304)            --
   Redemption premium                             --             --            --            --       (15,946)            --
Accretion of beneficial conversion
   discount feature on preferred stock            --             --            --            --        53,856             --
Issuance of common stock for
   Cash                                           --             --       772,333           773        69,602             --
   Employee stock option plan
     Employees                                    --             --     1,950,000         1,950       883,100             --
     Officers                                     --             --       150,000           150        91,350             --
   Compensation
     Employees                                    --             --     3,119,000         3,119       266,057             --
     Officers                                     --             --    11,180,000        11,180       576,870             --
   Professional services
     Restricted shares                            --             --     1,909,460         1,909       241,578             --
     Registered shares                            --             --     1,075,000         1,075        44,675             --
   Director fees                                  --             --       280,000           280        30,520             --
   Cost of obtaining capital                      --             --       300,000           300      (115,139)            --
   Purchase of treasury stock                     --             --            --            --            --             --
Payment of dividends on
   Series A and Series B
   preferred stock                                --             --            --            --            --        (26,657)
Net loss for the year                             --             --            --            --            --     (1,788,961)
                                         -----------    -----------   -----------   -----------   -----------    -----------
BALANCES AT MARCH 31, 2004                     55.22    $        --    70,832,255   $    70,832   $ 4,929,961    $(4,850,649)
                                         ===========   ===========   ===========   ===========    ===========    ===========

<CAPTION>

                                            Stock        Treasury
                                         subscription      Stock
                                          receivable     at cost        Total
                                        -----------    -----------    -----------
<S>                                     <C>            <C>            <C>
BALANCES AT MARCH 31, 2003              $   (14,800)   $        --    $  (748,493)

Issuance of preferred stock
   Series A                                      --             --        348,500
   Series B                                      --             --        310,000
Redemption of preferred stock
   Series A                                      --             --       (106,304)
   Redemption premium                            --             --        (15,946)
Accretion of beneficial conversion
   discount feature on preferred stock           --             --         53,856
Issuance of common stock for
   Cash                                          --             --         70,375
   Employee stock option plan
     Employees                                   --             --        885,050
     Officers                                    --             --         91,500
   Compensation
     Employees                                   --             --        269,176
     Officers                                    --             --        588,050
   Professional services
     Restricted shares                           --             --        243,487
     Registered shares                      (15,750)            --         30,000
   Director fees                                 --             --         30,800
   Cost of obtaining capital                     --             --       (114,839)
   Purchase of treasury stock                    --         (2,215)        (2,215)
Payment of dividends on
   Series A and Series B
   preferred stock                               --             --        (26,657)
Net loss for the year                            --             --     (1,788,961)
                                        -----------    -----------    -----------
BALANCES AT MARCH 31, 2004              $   (30,550)   $    (2,215)   $   117,379
                                        ===========    ===========    ===========

</TABLE>

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

                                      F-8
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
                        RESTATED STATEMENTS OF CASH FLOWS
                     Years ended March 31, 2004 and 2003 and
            Period from February 28, 2000 (date of inception) through
                                 March 31, 2004

<TABLE>
<CAPTION>
                                                                                         (RESTATED)
                                                                                         Period from
                                                                                      February 28, 2000
                                                         (RESTATED)                 (date of inception)
                                                         Year ended     Year ended        through
                                                       March 31, 2004   March 31, 2003 March 31, 2004
                                                        -----------    -----------     -----------
<S>                                                     <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss for the period                              $(1,788,961)   $  (927,536)   $(4,823,992)
   Adjustments to reconcile net loss
     to net cash provided by operating activities
       Depreciation and amortization                          5,736         16,923         59,017
       Loss on disposition of equipment                         963             --         16,779
       Compensation expense related to common
         stock issuances at less than "fair value"          237,629        101,400        339,779
       Accretion of beneficial discount
         conversion feature on preferred stock              (53,856)            --        (53,856)
       Common stock issued for
         Salaries, wages and bonuses                        664,718         37,850        798,268
         Professional fees                                  273,488        236,168        633,026
         Directors fees                                      30,800          8,300         39,100
         Interest expense                                     7,500          7,500         24,375
         Lawsuit settlement                                      --             --         20,000
       (Increase) Decrease in
         Deposits and other assets                           (2,500)         1,800           (390)
       Increase (Decrease) in
         Accounts payable and accrued liabilities           167,048          8,943        378,346
         Accrued officers compensation                     (409,434)       276,428        160,926
         Accrued interest payable                            (2,514)         1,436             --
                                                        -----------    -----------    -----------
NET CASH USED IN OPERATING ACTIVITIES                      (761,671)      (230,788)    (2,300,910)
                                                        -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Cash paid to purchase property and equipment              (5,250)          (608)       (91,851)
   Cash received on disposition of equipment                     --             --          5,900
                                                        -----------    -----------    -----------
NET CASH USED IN INVESTING ACTIVITIES                        (5,250)          (608)       (85,951)
                                                        -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net cash activity on officer and employee advances       (35,754)        20,380         (1,010)
   Principal received from notes payable                    166,783             --        238,383
   Principal paid on notes payable                           (3,171)            --         (3,171)
   Loan acquisition fees paid                                  (966)            --           (966)
   Sale of preferred stock                                  658,500             --        658,500
   Cash paid to redeem preferred stock                     (122,250)            --       (122,250)
   Sale of common stock                                     894,620        219,100      2,443,770
   Cash paid for raising capital                           (147,839)            --       (172,839)
   Cash paid to acquire treasury stock                       (2,215)            --         (2,215)
   Cash paid for preferred stock dividends                  (26,074)            --        (26,074)
                                                        -----------    -----------    -----------
NET CASH PROVIDED  BY FINANCING ACTIVITIES                1,381,634        239,480      3,012,158
                                                        -----------    -----------    -----------

INCREASE (DECREASE) IN CASH                                 614,713          8,084        625,297
Cash at beginning of period                                   8,084             --             --
                                                        -----------    -----------    -----------
CASH AT END OF PERIOD                                   $   622,797    $     8,084    $   625,297
                                                        ===========    ===========    ===========
</TABLE>

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

                                      F-9
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)
                  RESTATED STATEMENTS OF CASH FLOWS - CONTINUED
                     Years ended March 31, 2004 and 2003 and
            Period from February 28, 2000 (date of inception) through
                                 March 31, 2004

<TABLE>
<CAPTION>
                                                                                (RESTATED)
                                                                                 Period from
                                                                              February 28, 2000
                                                 (RESTATED)                   (date of inception)
                                                Year ended       Year ended       through
                                               March 31, 2004  March 31, 2003  March 31, 2004
                                               --------------- -------------- -------------------
<S>                                             <C>            <C>            <C>
SUPPLEMENTAL DISCLOSURE OF
   INTEREST AND INCOME TAXES PAID
     Interest paid for the period               $      6,029   $      2,527   $      8,556
                                                ============   ============   ============
     Income taxes paid for the period           $         --   $         --   $         --
                                                ============   ============   ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH
   INVESTING AND FINANCING ACTIVITIES
     Common stock issued for prepaid interest   $         --   $         --   $     31,250
                                                ============   ============   ============
     Common stock issued in repayment of
       short-term debt                          $         --   $         --   $     21,600
                                                ============   ============   ============
     Common stock issued for prepaid
       consulting fees                          $         --   $     28,000   $     28,000
                                                ============   ============   ============
     Common stock issued in partial
       payment of accrued officers
       compensation                             $    192,797   $     65,000   $    257,797
                                                ============   ============   ============
</TABLE>

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

                                      F-10
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

                     NOTES TO RESTATED FINANCIAL STATEMENTS

NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

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

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

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

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-11
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE C - CORRECTION OF AN ERROR AND FINANCIAL STATEMENT RESTATEMENT

Subsequent to the issuance of the Company's financial statements as of and for
the year ended March 31, 2004, Management discovered that there were beneficial
conversion features present in the Unit offerings of the Series A and Series B
preferred stock, during Fiscal 2004, which had not been properly calculated and
accounted for in the financial statements as originally released. The results of
this finding had the effect of an accretion charge to operations of
approximately $53,856 for the year ended March 31, 2004.

The effect of any and all changes are reflected in the accompanying restated
financial statements as of the respective date of the transaction and the effect
of the corrections are summarized below by fiscal period and cumulatively.

<TABLE>
<CAPTION>
                                                                     (RESTATED)
                                                                     Period from
                                                                  February 28, 2000
                                          (RESTATED)              (date of inception) Cumulative
                                          Year ended   Year ended      through,       effect of
                                       March 31, 2004 March 31, 2003  March 31, 2004   changes
                                       -----------    -----------    -----------    -----------
<S>                                    <C>            <C>            <C>            <C>
Net Loss, as previously reported       $(1,735,105)   $  (927,536)   $(4,770,136)

Effect of the correction of an error
   Accretion of beneficial discount
     conversion feature on
     preferred stock                       (53,856)            --        (53,856)   $   (53,856)
                                       -----------    -----------    -----------    -----------
   Total effect of changes
     on Loss from Operations
     and Net Loss                          (53,856)            --        (53,856)   $   (53,856)
                                       -----------    -----------    -----------    ===========

Net Loss, as restated                  $(1,788,961)   $  (927,536)   $(4,823,992)
                                       ===========    ===========    ===========

Earnings per share,
   as previously reported              $     (0.03)   $        --    $     (0.13)
Total effect of changes                      (0,00)            --          (0.01)
                                       -----------    -----------    -----------

Earnings per share, as restated            $(0,03)    $        --    $     (0.14)
                                       ===========    ===========    ===========
</TABLE>

NOTE D - 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.

                                      F-12
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE D - GOING CONCERN UNCERTAINTY - CONTINUED

The events which occurred on September 11, 2001, and subsequent thereto,
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. This contract
generated gross revenues of approximately $75,000 during the Fiscal Year ended
March 31, 2004.

In May 2003, the Company executed a letter of intent based on a proposal for
services issued to a major United States Governmental agency (Agency). The
Agency subsequently issued and executed a contract with an initial face value of
$100,000 with provisions for increases based on certain specified performance
benchmarks.

With cumulative revenues of approximately $159,000 from limited revenue sources,
the Company remains in the development stage.

The Company continues to be dependent on private placements of equity securities
and the proceeds from the sale of common stock to employees and officers under
the Company's Stock Option Plan 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 E - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Cash and cash equivalents

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

2. Accounts receivable and revenue recognition

     In the normal course of business, the Company periodically extends
     unsecured credit to it's customers which during Fiscal 2004 were 100%
     derived from a sole source. 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.

                                      F-13
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE E - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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, 2004 and 2003, 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, 2004 and 2003,
     the deferred tax asset is related solely to the Company's net operating
     loss carryforward and is fully reserved.

8.   Loss per share

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

     As of March 31, 2004 and 2003, the Company's outstanding stock options and
     warrants are deemed to be anti-dilutive due to the Company's net operating
     loss position.

                                      F-14
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE F - 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.

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

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

NOTE G - CONCENTRATIONS OF CREDIT RISK

The Company maintains its cash accounts in various financial institutions
subject to insurance coverage issued by the Federal Deposit Insurance
Corporation (FDIC). Under FDIC rules, the Company is entitled to aggregate
coverage of $100,000 per account type per separate legal entity per financial
institution. During the year ended March 31, 2004 the Company had deposits in
these financial institutions at various times for varying lengths of time with
credit risk exposures in excess of statutory FDIC coverage. The Company has
incurred no losses to date as a result of any of these unsecured situations.

NOTE H - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at March 31, 2004 and 2003:

<TABLE>
<CAPTION>
                                                      March 31,         March 31,
                                                        2004              2003        Estimated life
                                                       -------           ------
<S>                                                    <C>               <C>           <C>
         Computer equipment                            $54,168           $50,856       3 years
         Office furniture and other equipment            7,930            10,004       7 years
                                                       -------           ------
                                                        62,098            60,860
         Less accumulated depreciation                 (51,675)          (49,255)
                                                        ------            ------

         Net property and equipment                    $10,423           $11,605
                                                        ------            ------
</TABLE>

Depreciation expense for the years ended March 31, 2004 and 2003 and the period
from February 28, 2000 (date of inception) through March 31, 2004 was $5,469,
$16,923, and $58,750, respectively.

                (Remainder of this page left blank intentionally)

                                      F-15
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE I - NOTES PAYABLE

<TABLE>
<CAPTION>
                                                                                   March 31, March 31,
                                                                                     2004     2003
                                                                                   -------   -------
<S>                                                                                <C>       <C>
$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, 2004 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%. Originally
   payable in full on June 30, 2001. Renegotiated as a result of litigation
   during February 2004. Payable as follows: $5,000 on the date of execution of
   the settlement agreement; seven monthly installments of $2,000, starting
   March 13, 2004; final installment of $766.50 on October 13, 2004
   Non-interest bearing subsequent to the February 2004 settlement date. Secured
   by 150,000 shares of common stock owned by the
   Company's Chief Operating Officer                                                12,787    15,958
                                                                                   -------   -------

                                                                                   $62,787   $65,958
                                                                                   =======   =======
</TABLE>

NOTE J - ADVANCES FROM OFFICERS

In prior periods, the Company's officers 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.

During Fiscal 2004, all amounts advanced by Company officers were repaid in
full.

NOTE K - LONG-TERM NOTES PAYABLE

<TABLE>
<CAPTION>
                                                                                     March 31,     March 31,
                                                                                       2004          2003
                                                                                   ------------- -------------
<S>                                                                                <C>             <C>
Four separate notes payable to a non-financial institution investment
   corporation. Interest at the prevailing Prime Rate plus 100 basis points
   (5.00% at March 31, 2004), payable quarterly in arrears plus an origination
   fee equal to 1.0% of the principal amount. Principal payable in full in May
   2006. Collateralized by shares of the Company's common stock (aggregating
   approximately 7,958,121 shares at March 31, 2004) , placed in escrow with the
   lender's brokerage firm, owned by the Company's
   Chief Executive and Chief Operating Officers, respectively                      $     166,783   $          --
                                                                                   =============   =============
</TABLE>

                                      F-16
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE K - LONG-TERM NOTES PAYABLE - CONTINUED

The lender was inconsistent in the application of the 1.0% origination fee in
the various closing documents. The Company is contingently liable for
approximately $709 in unbilled and unremitted origination fees.

NOTE L - OFFICER COMPENSATION

On February 5, 2004, the Company entered into an Employment Agreement with Mr.
Charles Cardona (CCardona), which superseded all prior agreements. In this
agreement, CCardona will continue to serve as the Company's Chief Executive
Officer, through February 5, 2007. This agreement contains the following terms
and conditions:

Position:                      CEO
Effective Date:                February 5, 2004
Base Salary:                   2004 - $161,000 annual
                               2005 - $181,000 annual
                               2006 - $191,000 annual
                               2007 - $208,000 annual

The initial base salary shall be reduced to $1,500 per week until such time as
the company [sic] reaches a cash flow positive position for at least 1 month, or
the company raises at least $2 Million within 12 months, or management deems
that the companies cash position is sufficient to support an increase. No
additional salary above the reduced base shall accrue as back salary during the
first 6 months of this contract.

Bonuses:                       Quarterly Qualitative Bonus of $ 10,000
                               2nd Year, Year end Qualitative Bonus of $ 25,000
Profitability Bonus:           If the company reaches annual profitability
                               employee will receive a $100,000 bonus plus
                               250,000 shares in stock.

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

The Board of Directors shall at it's discretion grant up to an additional
$100,000 in bonus to CCardona on an annual basis.

Stock Options:                 The employee shall receive options to purchase
                               3,000,000 (Three Million) shares as follows:
                               Options for 750,000 shares at $.85 (85 cents )
                               Options for 750,000 shares at $1.00 (1 dollar )
                               Options for 750,000 shares at $1.50 (1 dollar and
                               50 cents ) Options for 750,000 shares at $1.75 (1
                               dollar and 75 cents )

                               Additionally the employee shall receive the
                               following 3,000,000 options upon the company
                               achieving $500,000 in total revenues prior to
                               March 31, 2005.
                               Options for 750,000 shares at $.85 (85 cents )
                               Options for 750,000 shares at $1.00 (1 dollar )
                               Options for 750,000 shares at $1.50 (1 dollar and
                               50 cents ) Options for 750,000 shares at $1.75 (1
                               dollar and 75 cents )

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

                                      F-17
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE L - OFFICER COMPENSATION - CONTINUED

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

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

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

On February 5, 2004, the Company entered into an Employment Agreement with Mr.
John A. Cardona (JCardona), which superseded all prior agreements. In this
agreement, JCardona will serve as the Company's Chief Operating Officer, through
February 5, 2007. This agreement contains the following terms and conditions:

Position:                      COO
Effective Date:                February 5, 2004
Base Salary:                   2004 - $161,000 annual
                               2005 - $181,000 annual
                               2006 - $191,000 annual
                               2007 - $208,000 annual

The initial base salary shall be reduced to $1500 per week until such time as
the company [sic] reaches a cash flow positive position for at least 1 month, or
the company raises at least $2 Million within 12 months, or management deems
that the companies cash position is sufficient to support an increase. No
additional salary above the reduced base shall accrue as back salary during the
first 6 months of this contract.

Bonuses:                       Quarterly Qualitative Bonus of $ 10,000
                               2nd Year, Year end Qualitative Bonus of $ 25,000

Profitability Bonus:           If the company reaches annual profitability
                               employee will receive a $100,000 bonus plus
                               250,000 shares in stock.

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

The Board of Directors shall at it's discretion grant up to an additional
$100,000 in bonus to JCardona on an annual basis.

Stock Options:     The employee shall receive options to purchase
                   3,000,000 (Three Million) shares as follows:
                   Options for 750,000 shares at $.85 (85 cents )
                   Options for 750,000 shares at $1.00 (1 dollar )
                   Options for 750,000 shares at $1.50 (1 dollar and 50 cents )
                   Options for 750,000 shares at $1.75 (1 dollar and 75 cents )


                                      F-18
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE L - OFFICER COMPENSATION - CONTINUED

                         Additionally the employee shall receive the following
                         3,000,000 options upon the company achieving
                         $500,000 in total revenues prior to March 31,
                         2005.
                         Options for 750,000 shares at $.85 (85 cents )
                         Options for 750,000 shares at $1.00 (1 dollar )
                         Options for 750,000 shares at $1.50 (1 dollar and
                         50 cents ) Options for 750,000 shares at $1.75 (1
                         dollar and 75 cents )

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

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

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

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

In March 2003, the Company entered into an employment agreement with Daniel
Wasserman (Wasserman) to serve as its Executive Vice President and Managing
Director of Global Defense Group for a 12-month period. Under this agreement,
Wasserman receives 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 Wasserman 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 Wasserman. The salary will then increase by an additional $1500 per
month upon each paid sale of $100,000 or more made by Wasserman. 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 Wasserman reach $1,200,000 in paid sales by the end of 2003, Wasserman
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 Wasserman
within 30 days. This provision is in addition to any commission, which is due
and payable. Wasserman also received a contract signing bonus of 450,000 shares.
The Company shall pay Wasserman a bonus of 100,000 shares upon the contracting
of a sale of $1,000,000 or more. Wasserman 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 Wasserman 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. Wasserman
shall receive 1.5 % of the first $1,000,000 of contract value as paid on each
contract brought in by Wasserman and 2.5% of contract values above $1,000,000 as
paid on each contract brought in Wasserman. 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, 2004 and 2003, total cumulative amounts unpaid under the
agreements with CCardona and JCardona are as follows:

                                                      March 31,       March 31,
                                                       2004             2003
                                                     --------         --------
Officer compensation                                 $160,926         $570,360
                                                     ========         ========


                                      F-19
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE L - OFFICER COMPENSATION - CONTINUED

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

Year ending
 March 31,               Amount
   2005                $  328,667
   2006                   365,333
   2007                   387,667
   2008                   346,666
                       ----------
  Totals               $1,428,333

NOTE M - INCOME TAXES

The components of income tax (benefit) expense for the years ended March 31,
2004 and 2003 and for the period from February 28, 2000 (date of inception)
through March 31, 2004, respectively, are as follows:

                                                              Period from
                                                           February 28, 2000
                                                          (date of inception)
                  Year ended            Year ended            through
                March 31, 2004         March 31, 2003      March 31, 2004
                --------------         --------------      ------------------
Federal:
  Current         $     --               $     --               $     --
  Deferred              --                     --                     --
                  --------               --------               --------
State:
  Current               --                     --                     --
  Deferred              --                     --                     --
                  --------               --------               --------

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

As of March 31, 2004, the Company has a net operating loss carryforward of
approximately $4,000,000 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-20
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE M - INCOME TAXES - CONTINUED

The Company's income tax expense for each of the years ended March 31, 2004 and
2003 and for the period from February 28, 2000 (date of inception) through March
31, 2004, 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, 2004            March 31, 2003M          March 31, 2004
                                                                  -----------                -----------             -----------
<S>                                                               <C>                        <C>                     <C>
Statutory rate applied to loss before income taxes                $  (608,000)               $  (315,000)            $(1,640,000)
Increase (decrease) in income taxes resulting from:
    State income taxes                                                     --                         --                      --
   Non-deductible charges
     Compensation expense related to issuances
       of common stock at less than "fair value"                       81,000                     34,500                 115,500
     Accretion of beneficial discount conversion
       feature on preferred stock                                      18,000                         --                  18,000
    Other, including reserve for deferred tax asset                   509,000                    280,500               1,506,500
                                                                  -----------                -----------             -----------

      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, 2004 and 2003:

<TABLE>
<CAPTION>
                                                 March 31, 2004            March 31, 2003
                                                  -----------                -----------
<S>                                               <C>                        <C>
Deferred tax assets
   Net operating loss carryforwards               $ 1,360,000                $   790,000
   Less valuation allowance                        (1,360,000)                  (790,000)
                                                  -----------                -----------

     Net Deferred Tax Asset                       $        --                $        --
                                                  ===========                ===========
</TABLE>

During the years ended March 31, 2004 and 2003, the reserve for the deferred
current tax asset increased by approximately $570,000 and $73,400, respectively.

NOTE N - PREFERRED STOCK TRANSACTIONS

Preferred stock consists of the following as of March 31, 2004 and 2003,
respectively:

<TABLE>
<CAPTION>
                                                              March 31, 2004                            March 31, 2003
                                                         --------------------------               ----------------------------
                                                         # shares par value# shares                        par value

<C>                                                       <C>                 <C>                    <C>                 <C>
9.0% Series A Cumulative Convertible Stock                24.22               $   --                   --               $   --
9.0% Series B Cumulative Convertible Stock                31.00                   --                   --                   --
                                                         ------               ------               ------               ------
     Totals                                               55.22               $   --                   --               $   --
                                                         ======               ======               ======               ======
</TABLE>


                                      F-21
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE N - PREFERRED STOCK TRANSACTIONS - CONTINUED

9.0% Series A Cumulative Preferred Stock

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

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

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

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

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

The Company is contractually obligated to file a Registration Statement with the
U. S. Securities and Exchange Commission, and use its best efforts to have said
Registration Statement declared effective within 120 days of the closing date of
this Private Placement Memorandum, registering a number of shares of its common
stock issuable upon the conversion of the Series A Preferred Stock and the
exercise of the Warrants. This offering was closed by the Company on October 31,
2003. As of March 31, 2004, and subsequent thereto, the Company has not filed
the required Registration Statement.

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


                                      F-22
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE N - PREFERRED STOCK TRANSACTIONS - CONTINUED

9.0% Series B Cumulative Preferred Stock

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

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

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

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

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

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

The Company initially sold approximately 31.00 Units for gross proceeds of
approximately $310,000. The Company paid a commission of approximately $36,000
to Spartan Securities Group, Ltd. for the selling of this offering.
Additionally, approximately $122,250 of the net proceeds were used to repurchase
approximately 10.63 shares of the then issued and outstanding 9.0% Series A
Preferred Stock.

Dividend reserve

In conjunction with the Series A and Series B Preferred Stock transactions, the
Company established a contractual reserve account for the payment of 12 months
of dividends. At March 31, 2004, approximately $37,300 was in two separate bank
accounts maintained by the Company's Escrow Agent for the payment of monthly
dividends.


                                      F-23
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED

NOTE O - BENEFICIAL CONVERSION DISCOUNT FEATURE ON PREFERRED STOCK

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

The following table reflects the details of the amounts of accretions that would
have been recorded during our fiscal year ended March 31, 2004 and, coupled with
preferred stock dividends at the cumulative rate, the adjustment to net loss in
calculating loss applicable to common stockholders.

<TABLE>
<CAPTION>
                                    Accretions          Dividends                Totals
                                    ---------           ----------              --------
<S>                                  <C>                   <C>                   <C>
Series A Unit Offering               $34,306               $18,035               $52,341
Series B Unit Offering
   Traunch 1                          11,500                 5,175                16,675
   Traunch 2                           7,667                 3,450                11,117
   Traunch 3                             383                   173                   556
                                     -------               -------               -------
                                     $53,856               $26,832               $80,688
                                     =======               =======               =======
</TABLE>

For purposes of the Company's calculation, Management allocated the proceeds
received from each Unit Offering between the preferred stock and warrants. Based
upon the resulting amount of preferred stock carrying value, Management
recalculated the "effective conversion rate" for the convertible preferred
stock, as required in EITF 98-5, for purposes of calculating the beneficial
conversion. As a result, the carrying value of the Series A Unit Offering
amounted to $57,711; the Series B Unit Offering amount to 0. These amounts
require accretion to the redemption values (SX5-02.28) of $400,775 and $356,500,
respectively.

As it relates to the carrying value of preferred stock, the initial carrying
amount (approximately $57,711), plus accretions of approximately $53,856 is
reflected as the total carrying value of the issued and outstanding Series A and
Series B preferred stock, with the accretion being charged to operations as a
component of "other income (expense)" in the accompanying restated statements of
operations and comprehensive loss. The carrying value of the Series A Preferred
Stock is approximately $92,017 and the carrying value of the Series B Preferred
Stock is approximately $19,550 as of March 31, 2004, respectively.

NOTE P - 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.

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

                                      F-24

<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE P - COMMON STOCK TRANSACTIONS - CONTINUED

During Fiscal 2004, 2003 and 2002, the Company issued approximately 20,735,793,
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.

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

<TABLE>
<CAPTION>
                                          Cumulative        Cumulative
                                           number of         number of         Remaining
                                            shares            shares             to be
                                          registered          issued            issued
                                        --------------   ----------------   --------------
<S>                                          <C>               <C>               <C>
     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        16,864,000        2,036,000
</TABLE>

The following table presents the various categories for stock issuances during
Fiscal 2004, 2003 and 2002:

<TABLE>
<CAPTION>
                                                   Registered    Restricted          Total
                                                  -----------   -----------    -----------
<S>                                                 <C>          <C>            <C>
       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

         Cash                                       2,100,000       772,333      2,872,333
         Capital formation and public relations            --       730,700        730,700
         Consulting and Legal services              1,075,000       200,000      1,275,000
         Directors fees                                    --       280,000        280,000
         Operating expenses                                --     1,278,760      1,278,760
         Personnel compensation                            --    14,299,000     14,299,000
         Reclassifications per Rule 144(k)         11,356,000   (11,356,000)            --
                                                  -----------   -----------    -----------

       Balances at March 31, 2004                  53,271,462    17,560,793     70,832,255
                                                  ===========   ===========    ===========
</TABLE>


                                      F-25
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE P - COMMON STOCK TRANSACTIONS - CONTINUED

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.

The following tables recap the Company's stock issuances, by purpose or
function, for each of the Fiscal Years ended March 31, 1004, 2003 and 2002,
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>        <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)
Various                Warren Hamburger                     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-26
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE P - 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 January 28, 2001 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 February 21, 2001 Form S-8
filing.

                        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          --
</TABLE>


                                      F-27
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE P - COMMON STOCK TRANSACTIONS - CONTINUED

                  FISCAL YEAR ENDED MARCH 31, 2003 - CONTINUED

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

<TABLE>
<CAPTION>
  Date of                                         Number     Proceeds or      Excess
   Issue                 Issuee                 of Shares     Valuation     fair value
 ---------      ------------------------        ---------    -----------    ----------
<S>             <C>                               <C>         <C>            <C>
Cash - continued
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      $   --
Various          Keith Peters (12)                 100,000       10,000          --
9/7/02           Dag Finn Sjoen (11/18)             10,000          250          --
9/20/02          Suzanne Tryphonos (13)             16,666          333          --
Various          Warren Hamburger (10/14)          310,000        6,200          --
10/4/02          Kathleen Kenney (14)               25,000          500          --
Various          Jason Genet (15)                1,225,000       36,875          --
10/11/02         First American Ventures (16)      500,000       12,500          --
11/20/02         Bob Schmidt                       100,000        5,000          --
12/12/02         Robert Fitzpatrick (14)            60,000        1,200          --
Various          Arthur Metz (17)                  326,000       10,060          --
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      $   --
2/28/03          John Cardona                    2,000,000       30,000          --
8/5/02           Elizabeth Neese                     5,000          500          --
7/9/02           Daniel Wasserman                  300,000       12,000          --
Various          Reidar Sjoen (18)                 625,000       12,500          --
Various          Valerie Cardona (19)              425,000       10,000          --
Various          Thomas Madigan                     85,000        1,650          --
Various          Ursula Olivares                   350,000        8,000          --
                                                ----------   ----------      ------

                                                 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.

                                      F-28
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE P - COMMON STOCK TRANSACTIONS - CONTINUED

(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       11,000       15,750
1/28/03          Kyle Kennedy (20) (*)       3,950,000       28,500       11,850
                                            ----------   ----------   ----------
                                             9,350,000   $  113,100   $   93,400
                                            ==========   ==========   ==========
</TABLE>


                                      F-29
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE P - COMMON STOCK TRANSACTIONS - CONTINUED

(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.

                            YEAR ENDED MARCH 31, 2004

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
4/23/03          Ruth Makofske                500,000   $     8,000   $        --
5/5/03           Thomas Madigan                 5,000           100            --
5/13/03          Warren Hamburger (10)        150,000        30,000            --
7/28/03          Ruth Makofske                 33,333         2,000            --
7/28/03          Warren Hamburger (10)          6,000           500            --
11/20/03         Warren Hamburger (10)         33,000         6,000            --
1/27/04          Ronald Mayhew                 30,000        10,200         1,125
1/30/04          Ronald Mayhew                 15,000         5,100         7,350
                                          -----------   -----------   -----------
                                              772,333   $    61,900   $     8,475
                                          ===========   ===========   ===========
Personnel compensation
Various          Charles Cardona            5,473,151   $   287,187   $        --
Various          John Cardona               5,706,849       300,574            --
Various          Brian Mayhew (21)            170,000        14,200            --
Various          Chris Vita                    35,000         4,000            --
Various          Daniel Wasserman           1,275,000        77,000            --
Various          Michael Moore                  5,000           400            --
Various          Nicole Brownell               31,000         5,035            --
Various          Paul Weaver                  210,000        31,850            --
Various          Reidar Sjoen (18)            760,000        63,600            --
Various          Thomas Madigan               308,000        26,880            --
Various          Ursula Oliveras              260,000        37,600            --
Various          Valerie Cardona (19)          65,000         8,900            --
                                          -----------   -----------   -----------
                                           14,299,000   $   857,226   $        --
                                          ===========   ===========   ===========
Consulting and legal services
Various          Arthur Metz                   29,699         5,284   $       581
Various          Charles Blanchfield          310,000        30,500        16,000
Various          Equities Magazine, LLC        50,700         4,990            --
Various          Ronald Mayhew                216,061        35,275        21,303
Various          Thomas Gavin                 170,000        26,300            --
Various          Thomas Kober                 315,000        32,300        16,000
5/5/03           Jason Miller                   7,000           280            --
5/5/03           Scott Rubin                    7,000           280            --
5/23/03          Victor Yurkins                25,000         1,250            --
5/23/03          Elizabeth Neese               10,000           700            --
5/23/03          JoAnn Palminteri               3,000           105            --
6/6/03           Hank Zemla                   100,000         8,500            --
7/22/03          John Calcagni                200,000         8,000            --
</TABLE>


                                      F-30
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE P - COMMON STOCK TRANSACTIONS - CONTINUED

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

<TABLE>
<CAPTION>
  Date of                                         Number    Proceeds or     Excess
   Issue                 Issuee                 of Shares    Valuation    fair value
 ---------      ------------------------        ---------   -----------   ----------
<S>             <C>                             <C>        <C>           <C>
Consulting and legal services - continued
7/22/03          Nu-Quest Consulting, Inc.         200,000        8,000           --
9/17/03          Barrow Street Research              5,000          700           --
3/12/04          Duane Lewin                         5,000        2,000           --
5/8/03           Olga Paidoussis                   200,000        3,200           --
1/7/04           William Bogardus                   20,000        7,000           --
1/30/04          Peter Cardona (22)                 36,000        8,000        6,940
                                                ----------   ----------   ----------
                                                 1,909,460   $  182,664   $   60,824
                                                ==========   ==========   ==========
Directors Fees
Various          Russell Ivy                        65,000   $    9,400   $       --
Various          Warren Hamburger                  215,000       21,400           --
                                                ----------   ----------   ----------
                                                   280,000   $   30,800   $       --
                                                ==========   ==========   ==========
Investment Banking services
11/18/03         Spartan Securities Group, Inc.    300,000   $   33,000   $       --
                                                ==========   ==========   ==========
</TABLE>

(21) - Brian Mayhew is the son of Thomas Mayhew.
(22) - Peter Cardona is the brother of Charles and John Cardona and the son of
Valerie Cardona.

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 services
5/5/03          Hank Zemla (12)                    100,000        4,000   $       --
5/13/03         Duane Lewin                         20,000          600           --
5/13/03         Elizabeth Wooley-Lewin              15,000          450           --
5/13/03         Sunny Lewin                         15,000          450           --
                                                ----------   ----------   ----------
                                                   150,000   $    5,500   $       --
                                                ==========   ==========   ==========
</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 services
5/6/03          Kyle Kennedy (20) (*)              300,000   $    9,000   $       --
5/20/03         Kyle Kennedy (20) (*)              625,000       31,250           --
                                                ----------   ----------   ----------
                                                   925,000   $   40,250   $       --
                                                ==========   ==========   ==========
Employees
Various         Charles Cardona                     50,000   $   30,500   $       --
Various         John Cardona                       100,000       61,000           --
Various         Brian Mayhew                       300,000      100,964       26,436
Various         Daniel Wasserman                   500,000      166,840       47,160
Various         Nicole Brownell                     50,000       30,500           --
Various         Ronald Mayhew                      475,000      158,025       41,100
Various         Thomas Madigan                     325,000      138,271       18,129
Various         Ursula Oliveras                    300,000      122,120       35,505
                                                ----------   ----------   ----------
                                                 2,100,000   $  808,220   $  168,330
                                                ==========   ==========   ==========
</TABLE>

                                      F-31
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE P - COMMON STOCK TRANSACTIONS - CONTINUED

(*) - Mr. Kennedy owes the Company an aggregate $30,550 in cash for the exercise
of various stock options and the issuance of the underlying registered shares of
common stock as of March 31, 2004.


NOTE Q - 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 this 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 this employment agreement and expire in
August 2006.

Pursuant to replacement employment contracts, executed in February 2004, the
Company has granted an aggregate options to purchase up to 3,000,000 shares of
common stock each to Charles Cardona and John Cardona at exercise prices ranging
from $0.85 to $1.75 per share. These options vested immediately upon execution
of each respective employment agreement and expire in February 2010.

At various times during Fiscal 2004 and 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
       Issued                                   11,025,000         1.02
       Exercised                                (3,025,000)        0.28
       Expired/Terminated                               --           --
                                                                  -----

     Options outstanding at March 31, 2004      10,000,000        $1.06
                                                                  =====

The weighted average exercise price of all issued and outstanding options at
March 31, 2004 is approximately $1.06.


                                      F-32
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE Q - STOCK OPTIONS - CONTINUED

The weighted-average remaining contractual life of the options outstanding at
March 31, 2004 was 5.00 years. The exercise prices of the options outstanding at
March 31, 2004 ranged from $0.10 to $2.00 per share. The following table
summarizes the outstanding options at March 31, 2004:

<TABLE>
<CAPTION>
                                                                                Weighted-          Weighted-
                                                              Weighted-          average            average
                                                               average          exercise           exercise
     Range of              Stock               Stock          remaining         price of           price of
     exercise             options             options        contractual         options            options
      prices            outstanding         exercisable         life           outstanding        outstanding
   ------------         -----------         -----------   ----------------     -----------        -----------
<S>                       <C>                <C>              <C>                 <C>                <C>
       $0.10              2,000,000          2,000,000        2.00 yrs            $0.10              $0.10
       $0.85              2,150,000          2,150,000        5.77 yrs            $0.85              $0.85
       $1.00              1,750,000          1,750,000        5.71 yrs            $1.00              $1.00
       $1.50              1,950,000          1,950,000        5.74 yrs            $1.50              $1.50
       $1.75              1,700,000          1,700,000        6.00 yrs            $1.75              $1.75
       $2.00                450,000            450,000        4.89 yrs            $2.00              $2.00
                         ----------         ----------
                         10,000,000         10,000,000
</TABLE>

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123 (SFAS 123). Accordingly, no compensation cost other
than that required to be recognized by Accounting Principles Board Statement No.
25 for the difference between the fair value of the Company's common stock at
the grant date and the exercise price of the options. Had compensation cost for
the Company's Stock Plan been determined based on the fair value at the grant
date for awards consistent with SFAS 123, the Company's net loss and loss per
share for the years ended March 31, 2004 and 2003 and for the period from
February 28, 2000 (date of inception) through March 31, 2004 would have
increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                                         Period from
                                                                                      February 28, 2000
                                                                                     (date of inception)
                                                    Year ended        Year ended           through
                                                  March 31, 2004    March 31, 2003     March 31, 2004
                                                  --------------    --------------     --------------
<S>                                                 <C>               <C>                <C>
Net Loss
   As reported                                      $(1,735,105)      $(927,536)         $(4,770,136)
   Add stock based employee compensation
     expense included in net income, net of taxes            --              --                   --
   Less total stock based employee compensation
     expense determined under fair value method
     for all awards, net of tax                        (127,676)        (31,475)            (180,135)
                                                    -----------       ---------          -----------

     Pro forma Net Loss                             $(1,862,781)      $(959,011)         $(4,950,271)
                                                    ===========       =========          ===========

Earnings per weighted-average share of
   common stock outstanding
     Basic - as reported                                 $(0.03)         $(0.03)             $(0.13)
                                                         ======          ======              ======
     Basic - pro forma                                   $(0.03)         $(0.03)             $(0.14)
                                                         ======          ======              ======
     Fully diluted - as reported                         $(0.03)         $(0.03)             $(0.13)
                                                         ======          ======              ======
     Fully diluted - pro forma                           $(0.03)         $(0.03)             $(0.14)
                                                         ======          ======              ======
</TABLE>


                                      F-33
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE Q - STOCK OPTIONS - CONTINUED

For purposes of computing the pro forma disclosures required by SFAS No. 123,
the fair value of each option granted to employees and directors is estimated
using the Black-Scholes option-pricing model with the following weighted-average
assumptions for the year ended March 31, 2004: dividend yield of 0%, expected
volatility of 942% (using the Rutters Volatility Calculator using the high/low
price at the last trading day of each month for the previous 12 months), a
risk-free interest rate of approximately 3.0%, and an expected life of five
years.

The weighted-average fair value of options covering approximately 600,000 shares
of common stock granted during the year ended March 31, 2004 for which the
exercise price was greater than the market price on the grant date was $0.28 and
the weighted-average exercise price was $0.33.

The weighted-average fair value of options covering approximately 2,425,000
shares of common stock granted during the year ended March 31, 2004 for which
the exercise price was less than the market price on the grant date was $0.34
and the weighted-average exercise price was $0.26.

No stock options were granted during the year ended March 31, 2004 for which the
exercise price was equal to the market price on the grant date.

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


NOTE R - STOCK WARRANTS

On August 13, 2002, 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 up to 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
of these warrants is for a three year term and expire on August 13, 2005. During
Fiscal 2004, the Company issued an additional aggregate 250,000 warrants as
compensation to Gavin to facilitate the purchase up to an equivalent number of
shares of the Company's common stock at exercise prices ranging from $0.15 to
$0.85 per share. Each of these warrants expire on the 2nd anniversary date of
issuance.

On August 12, 2003, the Company opened a Private Placement Memorandum to sell up
to 50 Units, consisting of one (1) share of 9.0% Series A Cumulative Preferred
Stock and Warrants to purchase up to 4,220,459 shares of the Company's common
stock at a price of $10,000 per Unit. The number of warrants to be issued to
each purchaser was determined by dividing the purchase price of the Unit by the
average bid price of the Company's common stock during the 5 day trading period
prior to such purchaser's delivery of cleared funds to the Company's Escrow
Agent for this specific offering. The Warrants have an exercise price calculated
using the average closing bid price for the 5 trading day period prior to the
receipt of cleared funds from the purchaser times 115%. Each Warrant shall
expire on the 5th anniversary date of the Private Placement Memorandum, August
12, 2008.


                                      F-34
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE R - STOCK WARRANTS - CONTINUED

On November 17, 2003, the Company opened a Private Placement Memorandum to sell
up to 100Units, consisting of one (1) share of 9.0% Series B Cumulative
Preferred Stock and Warrants to purchase up to 2,091,138 shares of the Company's
common stock at a price of $10,000 per Unit. The number of warrants to be issued
to each purchaser was determined by dividing the purchase price of the Unit by
the average bid price of the Company's common stock during the 5 day trading
period prior to such purchaser's delivery of cleared funds to the Company's
Escrow Agent for this specific offering. The Warrants have an exercise price
calculated using the average closing bid price for the 5 trading day period
prior to the receipt of cleared funds from the purchaser times 115%. Each
Warrant shall expire on the 5th anniversary date of the Private Placement
Memorandum, November 17, 2008.

As additional compensation for investment banking services, Spartan Securities
Group, Inc. received Warrants to purchase up to an aggregate 1,409,000 shares of
common stock at a price of either $0.07 per share (995,714 shares) or $0.20 per
share (413,333 shares). Each Warrant shall expire on either August 12, 2008 or
November 17, 2008, respectively.

No warrants have been exercised during the period ended March 31, 2004 or
subsequent thereto.

The following table summarizes the outstanding warrants as of March 31, 2004 and
2003, respectively:

<TABLE>
<CAPTION>
                                          Warrants        Warrants
                                         originally     outstanding at   Exercise price
                                           issued       March 31, 2004      per share
                                         ------------   --------------   --------------
<S>                                         <C>           <C>           <C>
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

Gavin warrants - FY2004                       250,000       250,000     $0.15 - $0.85
9.0% Series A Preferred Stock Warrants      4,220,459     4,220,459     $0.07406 - $0.13858
9.0% Series B Preferred Stock Warrants      2,091,138     2,091,138     $0.14819 - $0.15
Underwriter's Warrants                      1,409,047     1,409,047     $0.07 - $0.20
                                            ---------     ---------

     Totals at March 31, 2004               8,530,644     8,530,644
                                            =========     =========
</TABLE>

The weighted-average exercise price of the Company's outstanding warrants at
March 31, 2004 is approximately $0.11 per share.

NOTE S - 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 judgment in the amount of $34,691.87,
including interest, was entered against the Company during Fiscal 2004. The
Company executed a settlement agreement whereby the judgment will be retired as
follows: $5,000 cash upon execution of the settlement agreement and $1,000 per
month, commencing December 15, 2003, until the judgment is paid in full. In
prior periods, the Company has accrued, and charged to operations, all costs
associated with this transaction. No further effect on the financial condition
of the Company should occur on this matter.


                                      F-35
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - COMMITMENTS AND CONTINGENCIES - CONTINUED

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

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

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

                                  Year ending
                                   March 31,                Amount
                                     2005                 $  25,608
                                     2006                    29,778
                                     2007                    31,020
                                     2008                    15,750
                                                          ---------

                                     Total                $ 102,156
                                                          =========

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.


                (Remainder of this page left blank intentionally)


                                      F-36
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - COMMITMENTS AND CONTINGENCIES - CONTINUED

Consulting agreements - continued
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. The
Company cancelled and settled this agreement with the issuance of 200,000 shares
of restricted, unregistered common stock on July 22, 2003, valued at
approximately $8,000.

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.

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.

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. During
Fiscal 2004, the Company issued an additional aggregate 250,000 warrants to
Gavin to purchase up to an equivalent number of shares of the Company's common
stock at a price ranging from $0.15 to $0.85 per share. Each of the FY2004
warrants expire on the 2nd anniversary date of issuance.


                                      F-37
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - COMMITMENTS AND CONTINGENCIES - CONTINUED

Consulting agreements - continued
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. As of March 31, 2004,
this agreement has terminated and the Company has no further obligation.

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. Through December 31,
2002, the Company paid First American Financial Group approximately $5,000 in
conjunction with this Agreement and First American Financial Group, Inc. has not
provided any financing pursuant to this agreement.

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.


                                      F-38
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - COMMITMENTS AND CONTINGENCIES - CONTINUED

Investment Banking agreements - continued
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.

At November 27, 2003, the Spartan Agreement matured and became a non-exclusive
agreement for the same services. Spartan was the Placement Agent for the
Company's Private Placement Memorandums offering both the 9.0% Series A
Preferred Stock and the 9.0% Series B Preferred Stock and was paid cumulative
commissions of approximately $77,280, including a commission on a 9.0% Series A
Preferred Stock Unit purchased by Spartan.

On April 6, 2004, the Company executed a non-exclusive Financial Advisor,
Investment Bank and Placement Agent Agreement with Hartsfield Capital
Securities, Inc. of Atlanta, Georgia (Hartsfield) whereby Hartsfield will use
it's "best efforts" to assist the Company in one or more capital
investments/fundings which might result in a private placement, merger,
acquisition, sale of assets, sale of common stock, sale of ownership interest or
any other financial transaction as defined in this agreement. This agreement has
an initial term of one year (expiring April 6, 2005) with an option to extend
the expiration date for an additional six (6) months. For these services,
Hartsfield will receive a success fee of 6.0% of the gross proceeds on all
common debt financing; 10.0% of the gross proceeds on any hybrid debt
(convertibles, warrants, etc.); 10.0% of the gross proceeds on any equity
raised; 10.0% of the gross proceeds on all closings from Transactions (as
defined) with an Investor Candidate or a Strategic Candidate (as defined); 10.0%
on the gross proceeds received from any mezzanine loan or other subordinated
form of indebtedness; and 10.0% of the Aggregate Consideration (as defined) of
any merger or acquisition introduced by Hartsfield.

Additionally, Hartsfield will be granted warrants to purchase shares of the
Company's common stock equal to 20.0% of the value of such transactions for
successful common stock equity raised at 100.0% of the market price of the
Company's common stock at the closing of such transaction for a period of two
(2) years, and/or to grant Hartsfield warrants to purchase that number of shares
of the Company's common stock equal to 20.0% of the value of such transactions
for successful preferred stock, debt, hybrid debt of any kind (convertibles,
warrants, etc.) or debt and equity combination raised at 100.0% of the market
price of the Company's common stock at the closing of such transaction for a
period of two (2) years. These stocks shall be delivered on a cashless exercise
and issuable from the investment closing date up to no more than five (5) years
from the date and upon exercise thereof. The stock obtainable under these
warrants shall have "piggyback" registration rights on the next Registration
Statement filed with the U. S. Securities and Exchange Commission after their
issue.

Business Development agreement
During Fiscal 2004 and 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. At the beginning of the business relationship between the Company and
Mr. Kennedy, Mr. Kennedy was 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.


                                      F-39
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - COMMITMENTS AND CONTINGENCIES - CONTINUED

Business Development agreement - continued

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.

May 6, 2003           300,000 options to purchase an equivalent number of shares
                      of the Company's common stock at $0.03 per share. These
                      options expired on June 6, 2003.

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

As of March 31, 2004 and 2003, Mr. Kennedy owed the Company approximately
$30,550 and $14,800, respectively, for shares purchased by Mr. Kennedy under the
exercised options.

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


                                      F-40
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - COMMITMENTS AND CONTINGENCIES - CONTINUED

Broker-Dealer Marketing agreement - continued
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 originally terminated on September 30, 2003 and
was extended to September 30, 2004 by a written amendment dated January 7,
2004.. First American has asserted that the Company is in breach of various
components of this contractual agreement and filed for arbitration of the
contested matters. The Company and First American reached a settlement agreement
on June 24, 2004 whereby the "Broker-Dealer Marketing Program" agreement was
settled in full with the issuance of 200,000 shares of restricted, unregistered
common stock on June 25, 2004. The Company has no further obligations in
relation to this agreement.


NOTE T - SUBSEQUENT EVENTS

Contract for Services
In May 2004, the Company executed a letter of intent based on a proposal for
services issued to a major United States Governmental agency (Agency). The
Agency subsequently issued and executed a contract with an initial face value of
$100,000 with provisions for increases based on certain specified performance
benchmarks.

Issuances of Common Stock
During the period from April 1, 2003 through June 25, 2004, the Company issued
shares of registered and restricted, unregistered common stock for

                                            Number
               Issuee                     of Shares            Purpose
   -------------------------------------  ---------    -------------------------

Registered on Form S-8
   Jeff Hale/Baltic Ventures                 50,000       Consulting Agreement
   Thomas F. Gavin                          330,000    Public relations services
   Pelle Ojasu                              450,000      Consulting Agreement
   Sichenzia Ross Friedman Ference, LLP      50,000          Legal services
   Gregory Sichenzia, Esq.                   75,552          Legal services

Restricted, Unregistered shares
   The Nutmeg Group, LLC                  3,457,217     Subscription Agreement
   Paul B. and Becky B. Sigfusson           525,000              Cash
   First American Financial Group           200,000       Contract Settlement
   Baltic Ventures                          200,000      Consulting Agreement
   Pelle Ojasu                              197,000      Consulting Agreement
   Arthur J. Metz                           136,472       Accounting services
   Paul B. Sigfusson Profit Sharing Trust   110,000              Cash
   Paul A. Weaver                           100,000      Consulting Agreement
   John Conley                               81,000      Consulting Agreement
   Ronald Mayhew                             71,652       Accounting services


                                      F-41
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE T - SUBSEQUENT EVENTS - CONTINUED

Issuances of Common Stock - continued

                                            Number
               Issuee                     of Shares            Purpose
   -------------------------------------  ---------    -------------------------

Restricted, Unregistered shares - continued

   Robert Fitzpatrick                       50,000          Legal services
   Thomas F. Gavin                          10,000     Public relations services
   John B. and Peggy A. Murphy              10,000       Consulting Agreement
   Enzo Saulee                               4,000       Consulting Agreement
   Larry Beierly                             1,000       Consulting Agreement


On May 20, 2004, the Company executed a Subscription Agreement with The Nutmeg
Group, L. L. C., a U. S. Virgin Islands limited liability company, for the sale
of common stock. The aggregate purchase price is approximately $1,750,000 to be
paid in three traunches as follows: a minimum of $400,000 by May 20, 2004;
$1,000,000 minus the funds paid in the first traunche by June 4, 2004; and
$750,000, at the option of the Company, within five (5) days of the date that a
Registration Statement covering the underlying securities in this agreement is
declared effective by the U. S. Securities and Exchange Commission. The number
of shares to be issued will be equal the purchase price divided by the lesser of
a)$0.20 per share; b) 57.0% of the average closing bid price for the Company's
common stock on the two trading days prior to the closing of the respective
traunche; or c) 57.0% of the average closing bid price for the Company's common
stock on the two (2) trading days prior to the date on which the Registration
Statement covering the underlying shares in this agreement is declared effective
by the U. S. Securities and Exchange Commission. This formula is referred to as
the "Fixed Price". The Company initially issued Nutmeg 3,457,217 shares of
common stock to be registered for resale on the initial $600,000 funding. Based
on the Fixed Price formula, the Company has a contingent obligation to issue
additional shares based on the average closing bid price for the Company's
common stock for the two (2) days prior to the effective date of the Company's
Registration Statement to be filed.

Nutmeg will also be issued Warrants to purchase shares of common stock
exercisable into such number of shares of common stock as is equal to 50.0% of
the Purchase Price paid by Nutmeg, divided by the Fixed Price. The common stock
underlying the Warrants will also have "piggyback" registration rights and the
Warrants will be transferrable. The Warrants will expire on December 31, 2008.
The Warrant's exercise price will be at 125.0% of 57.0% of the average closing
bid price for Common Stock on the two (2) trading days immediately prior to the
filing of a Registration Statement covering the underlying stock in this
agreement with the U. S. Securities and Exchange Commission.

Upon each closing, the Company will pay to Nutmeg a fixed non-accountable
allowance for due diligence expenses equal to 1.0% of the gross proceeds, plus a
flat non-accountable expense allowance of $10,000, in addition to a 10.0% fee to
Hartsfield Capital Securities, Inc. and the Company's direct legal expenses.

The Company contractually obligated itself to file a Registration Statement with
the U. S. Securities and Exchange Commission to accommodate the total shares
issued on the Subscription Agreement and the number of shares that the Warrants
will be exercisable into within 45 days of the receipt of $1,000,000 and to have
the Registration Statement declared effective within 120 days of the initial
filing and to maintain the effectiveness through December 31, 2008. In the
Registration Statement is not declared effective within 120 days of the initial
filing, the Company will owe Nutmeg a penalty equal to 1.0% of the amount
invested by Nutmeg. Further, the Company is liable for an additional penalty of
1.0% for each additional 30 day period that the Registration Statement is not
declared effective. All costs and expenses related to the Registration Statement
are the sole responsibility of the Company.

On June 4, 2004, the Company received gross proceeds of $600,000 on the initial
funding by Nutmeg and realized net proceeds of approximately $529,000.
Approximately $71,000 was paid in cash for fees to Nutmeg and Hartsfield. The
Company's legal fees were satisfied with the issuance of shares of common stock
registered on Form S-8.


                                      F-42
<PAGE>

                              ADZONE RESEARCH, INC.
                          (a development stage company)

               NOTES TO RESTATED FINANCIAL STATEMENTS - CONTINUED


NOTE T - SUBSEQUENT EVENTS - CONTINUED

Purchase of Warrants
On March 24, 2004, the Company executed a Securities Purchase Agreement with
Spartan Securities Group, Ltd. whereby the Company would purchase from Spartan
232,528 Warrants issued to Spartan as additional compensation on the sale of the
Company's 9.0% Series A Preferred Stock issue. The Company completed this
transaction with the payment of an aggregate $76,744 to Spartan in April 2004
($50,000) and May 2004 ($26,744).

Consulting Agreement
On April 30, 2004, the Company executed an Engagement Agreement with Baltic
Ventures, LLC, a New York limited liability company, (Baltic) to provide advise
and representation for strategic opportunities including Mergers, Joint
Ventures, Acquisitions and other business matters and to advise and represent
the Company after such assessment to close a transaction or acquisition after
approval by the Company as soon as reasonably possible. This agreement is valid
through January 31, 2005 and is renewable at the option of either party. For
compensation, the Company issued 25,000 shares of common stock registered on
Form S-8 each to Baltic's principals, Jeffrey Hale and Terry Kent. Further, the
Company issued 200,000 shares of unregistered, restricted common stock to
Baltic. In the event that Baltic terminates the contract during the initial
term, the 200,000 shares must be returned to the Company. Additionally, the
Company must issue Warrants to purchase up to 1,000,000 shares of the Company's
common stock, exercisable for a two (2) year period, at an exercise price of
$1.00 per share. As compensation for any consummated transaction, the Company is
liable to pay Baltic a commission of 10.0% of the closing transaction value and
Warrants to purchase up to 1,000,000 shares of the Company's common stock at the
quoted closing price of the Company's common stock on the date of closing with a
term of two (2) years from the closing date. Further, the Company shall
reimburse Baltic for all reasonable out-of-pocket expenses upon approval by the
Company. Additionally, the Company shall furnish Baltic a computer system, if
requested, with a value of not more than $2,500.

Transactions subsequent to April 30, 2004
During the six months ended September 30, 2004, the Company compensated various
consultants with stock issuances totaling 427,711 shares of Free Trading stock
and 812,856 of Restricted stock for various consulting services.

On May 20, 2004, the Company issued 3,457,217 shares of Restricted stock to the
Nutmeg Group for net proceeds of $321,000.

On May 26, 2004, the Company issued 635,000 shares of Restricted stock to Paul
Sigfusson for proceeds of $120,000.

On June 4, 2004, the Company issued 3,289,474 shares of Restricted stock to the
Nutmeg Group for net proceeds of $529,000.

On July 29, 2004, the Company issued 825,593 shares of Restricted stock to Arbus
Capital for proceeds of $100,000.

On August 3, 2004, AdZone's Board of Directors allocated stock options to key
employees totaling 2,350,000 options to purchase common stock. Through September
30, 2004, the exercises of these employee options netted the Company $179,189.

On August 19, 2004, the Company issued 400,000 shares of Restricted stock to
Scott Bolkema for $40,000.


                                      F-43

<PAGE>

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

None

ITEM 8-A - CONTROLS AND PROCEDURES

         Evaluation of disclosure controls and procedures. An evaluation was
performed under the supervision and with the participation of our management,
including the chief executive officer, or CEO, who is also the acting chief
financial officer, or CFO, of the effectiveness of the design and operation of
our disclosure procedures. Based on management's evaluation as of as of the end
of the period covered by this Annual Report, our principal executive officer and
acting principal financial officer has concluded that AdZone's disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) were
sufficiently effective to ensure that the information required to be disclosed
by AdZon in the reports that we file under the Exchange Act is gathered,
analyzed and disclosed with adequate timeliness, accuracy and completeness.

         Changes in internal controls. There have been no significant changes in
our internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation referred to above, nor were
there any significant deficiencies or material weaknesses in AdZone's internal
controls. Accordingly, no corrective actions were required or undertaken.

                                       13
<PAGE>

                                    PART III

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

The directors and executive officers serving AdZone are as follows:

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

Daniel Wasserman      Executive Vice President              January 2002

John Cardona*         Director                               August 2001

Warren Hamburger      Director                               August 2001

Russell Ivy           Director                              January 2001

Richard A. McCann     Director                                  May 2004

*Charles Cardona and John Cardona are brothers.


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

BIOGRAPHICAL INFORMATION

CHARLES CARDONA

Charles Cardona, age 39, has served as AdZone's President and Chairman of the
Board since AdZone's merger with AdZone Interactive, Inc. in August 2001. From
February 2000 to August 2001, Mr. Cardona was President and Chief Executive
Officer of AdZone Interactive, Inc., with which AdZone merged in August 2001.
From 1992 to February 2000, Mr. Cardona was the President of Owl Data Systems,
Inc., a software development company owned by Mr. Cardona.

JOHN CARDONA

John Cardona, age 35, is consultant to AdZone 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 AdZone. Mr. Cardona has also
served AdZone as a Director from August 2001 to the present time. From 1990
through August 2001, Mr. Cardona was a director of sales for Competitive Media
Reporting, an advertising research firm. Mr. Cardona received a Bachelor of Arts
Degree from New York Institute of Technology, Long Island, New York.

                                       14
<PAGE>

DANIEL WASSERMAN

Daniel Wasserman, age 52, was appointed Executive Vice President and Managing
Director of AdZone'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
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 AdZone from August 2001 to the
present. He has been a practicing attorney for 21 years during which he has
operated his own firm as a sole practitioner. Mr. Hamburger received a Juris
Doctor degree from New England School of Law, Boston Massachusetts, and a
Bachelor of Science degree in business administration from Duquesne University,
Pittsburgh, Pennsylvania.

RUSSELL STOVER IVY

Russell Stover Ivy, age 36, is a Director of AdZone and was President of
Executive Help from January 2001 until the merger AdZone in August 2001. Mr. Ivy
has been a consultant to small and medium sized companies for over 20 years. He
has been involved in the start-up, design and implementation of numerous
business ranging from small financial services corporations to publicly traded
telecommunications companies. In 1998, Mr. Ivy was a consultant to IWL
Communications, which merged with CapRoc Communications, which was later
purchased by McLeod Communications. In 1999 and 2000, Mr. Ivy was a consultant
to First Financial Group of America, where he served as Director of Operations.
Mr. Ivy continues to consult for companies regarding their operational
activities and goals. Mr. Ivy received a Bachelor's degree in international
economics from Texas Tech University in 1991.

RICHARD A. MCCANN

Richard McCann 68, is a director of AdZone Research, Inc. During his career, Mr.
McCann has held positions of increasing responsibility. He initially began as a
Vice President and Co-Manager of equity trading with Bank of America in San
Francisco, and several years later joined Montgomery Securities in that city as
a Partner. Thereafter he served as a Vice President and Senior Institutional
Trader in Plymouth, California, and then relocated to the Tampa, Florida
headquarters of Raymond James & Co., serving there as a Vice President and then
became a Vice President at Ryan, Beck & CO., another Tampa area financial firm.
He relocated to Atlanta, Georgia to become Senior Vice President and Equity
Trading Manager at Wachovia Securities, and the following year became a Partner
at Florida-based Spartan Securities.

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

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

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

                                       15
<PAGE>

ITEM 10 - EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth all cash and non-cash
compensation paid or accrued for services rendered in all capacities to the
named Executive Officers for the fiscal years ended March 31, 2004, 2003, and
2002:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                   Other Annual         Long-Term
                                                                                   Compensation       Compensation
                                                                                  (# of Share of  Awards (# Securities
                Name and Positions              Year     Salary ($)    Bonus      Common Stock)    Underlying Options)
=========================================================================================================================
<S>                 <C>                         <C>    <C>               <C>      <C>                   <C>
Charles Cardona     Chief Executive Officer     2004   $188,551(2)       0        5,471,151 (1)            50,000
                    Acting Chief Financial      2003   $190,385          0              0                   0
                    Officer                     2002   $153,525          0              0               1,000,000
                    Director

John Cardona        Director                    2004   $ 83,418(3)       0        5,706,899 (1)           100,000
                                                2003   $190,385          0              0                   0
                                                2002   $153,525          0              0               1,000,000
</TABLE>

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


DIRECTOR COMPENSATION

From time to time the members of the board of directors receive shares of common
stock at the discretion of the board for their services. The following table is
a list of directors and the amount of shares each one had received as
compensation:

------------------ -------------------- ----------------- ----------------------
NAME               TITLE                NUMBER OF SHARES  DATE OF ISSUANCE
------------------ -------------------- ----------------- ----------------------
John Conley        Advisory Director    50,000            February 28, 2003
------------------ -------------------- ----------------- ----------------------
                                        10,000            May 1, 2003
------------------ -------------------- ----------------- ----------------------
Jonathan White     Advisory Director    40,000            November 18, 2002
------------------ -------------------- ----------------- ----------------------
                                        50,000            February 28, 2003
------------------ -------------------- ----------------- ----------------------
Russell Ivy        Director             10,000            February 28, 2003
------------------ -------------------- ----------------- ----------------------
                                        50,000            September 3, 2003
------------------ -------------------- ----------------- ----------------------
                                        15,000            February 20, 2004
------------------ -------------------- ----------------- ----------------------
Warren Hamburger   Director             200,000           September 3, 2003
------------------ -------------------- ----------------- ----------------------
                                        15,000            February 20, 2004
------------------ -------------------- ----------------- ----------------------


                                       16
<PAGE>

                      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>
Charles Cardona          3,000,000                   20.69%                 $0.10                2/5/10
John Cardona             3,000,000                   20.69%                 $0.10                2/5/10
</TABLE>


               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                7,000,000                       $0
John Cardona            -0-                 $0                7,000,000                       $0
</TABLE>

On February 5, 2004, we entered into an employment agreement with Mr. Charles
Cardona, which superseded all prior agreements. In this agreement, Mr. Cardona
will continue to serve as our Chief Executive Officer, through February 5, 2007.
This agreement contains the following terms and conditions:

Position: CEO

Effective Date: February 5, 2004

BASE SALARY:

2004 - $161,000 annual
2005 - $181,000 annual
2006 - $191,000 annual
2007 - $208,000 annual

                                       17

<PAGE>

The initial base salary shall be reduced to $1,500 per week until such time as
the company reaches a cash flow positive position for at least 1 month, or the
company raises at least $2 Million within 12 months, or management deems that
the companies cash position is sufficient to support an increase. No additional
salary above the reduced base shall accrue as back salary during the first 6
months of this contract.

Bonuses: Quarterly Qualitative Bonus of $ 10,000

2ND YEAR, YEAR END QUALITATIVE BONUS OF $ 25,000

Profitability Bonus: If the company reaches annual profitability employee will
receive a $100,000 bonus plus 250,000 shares in stock.

Mr. Cardona shall receive an annual bonus as follows:

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

The Board of Directors shall at it's discretion grant up to an additional
$100,000 in bonus to Mr. Cardona on an annual basis.

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

Options for 750,000 shares at $.85 Options for 750,000 shares at $1.00 Options
for 750,000 shares at $1.50 Options for 750,000 shares at $1.75

Additionally the employee shall receive the following 3,000,000 options upon the
Company achieving $500,000 in total revenues prior to March 31, 2005.

Options for 750,000 shares at $.85
Options for 750,000 shares at $1.00
Options for 750,000 shares at $1.50
Options for 750,000 shares at $1.75

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

Additionally the company shall maintain any existing options under previous
contracts.

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

                                       18
<PAGE>

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

On February 5, 2004, the Company entered into an Employment Agreement with Mr.
John A. Cardona (JCardona), which superseded all prior agreements. In this
agreement, JCardona will serve as the Company's Chief Operating Officer, through
February 5, 2007. This agreement contains the following terms and conditions:

Position: COO

Effective Date: February 5, 2004

BASE SALARY:

2004 - $161,000 annual
2005 - $181,000 annual
2006 - $191,000 annual
2007 - $208,000 annual

The initial base salary shall be reduced to $1500 per week until such time as
the company reaches a cash flow positive position for at least 1 month, or the
company raises at least $2 Million within 12 months, or management deems that
the companies cash position is sufficient to support an increase. No additional
salary above the reduced base shall accrue as back salary during the first 6
months of this contract.

Bonuses: Quarterly Qualitative Bonus of $ 10,000

2ND YEAR, YEAR END QUALITATIVE BONUS OF $ 25,000

PROFITABILITY BONUS:

If the company reaches annual profitability employee will receive a $100,000
bonus plus 250,000 shares in stock.

JCardona shall receive an annual bonus as follows:

                                       19
<PAGE>

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

The Board of Directors shall at it's discretion grant up to an additional
$100,000 in bonus to JCardona on an annual basis.

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

Options for 750,000 shares at $.85
Options for 750,000 shares at $1.00
Options for 750,000 shares at $1.50
Options for 750,000 shares at $1.75

Additionally the employee shall receive the following 3,000,000 options upon the
company achieving $500,000 in total revenues prior to March 31, 2005.

Options for 750,000 shares at $.85
Options for 750,000 shares at $1.00
Options for 750,000 shares at $1.50
Options for 750,000 shares at $1.75

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

Additionally the company shall maintain any existing options under previous
contracts.

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

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

                                       20
<PAGE>

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
AdZone. Also included are the shares held by all executive officers and
directors as a group.

                                                                  % of Class
Name and address                     Number of Shares         Beneficially Owned
----------------                     ----------------         ------------------
Charles Cardona                        22,352,422 (1)                 26.74%
17 Sunny Line Dr.
Calverton, NY 11933

John Cardona                           18,381,849 (2)                 19.35%
118 Overlook Dr.
Aquebogue, NY 11931

Daniel Wasserman                        3,081,000 (3)                  4.01%
20953 Cohasset Ter
Ashburn, VA

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

Russell Ivy                                65,000                       .08%
211 West Sealy Street
Alvin, TX 77511

Richard A. McCann                       1,709,218                       .08%
116 Holcomb Cove Rd.
Candler, NC 28715

All Executive Officers and
Directors of AdZone as
a Group (6 persons)                    46,659,489                     51.41%

----------

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

(1) Includes 7,000,000 shares that may be acquired upon exercise of stock
options granted to Mr. Cardona at exercise prices ranging from $0.10 to $1.75
per share. Excludes securities 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 AdZone 4,000,000 shares for the
purpose of a stock loan.

(2) Includes 7,000,000 shares that may be acquired upon exercise of stock
options granted to Mr. Cardona at exercise prices ranging from $0.10 to $1.75
per share. Excludes securities 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 AdZone 4,000,000 shares for the
purpose of a stock loan.

(3) Includes 1,500,000 shares that may be acquired upon exercise of stock
options granted to Mr. Wasserman at exercise prices ranging from $0.3182 to
$0.3612 per share.

                                       21
<PAGE>

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In prior periods, the Company's officers 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.

During Fiscal 2004, all amounts advanced by Company officers were repaid in
full.

The above-referenced transactions are at least as fair to the Company as we
would expect to negotiate with unaffiliated third parties.


                                       22

<PAGE>

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

Exhibit
-------
3.1     Certificate of Incorporation **
3.2     By-Laws **
10.1    Consulting Agreement dated as of October 26, 2001 with Theresa A. Kober
        ***
10.2    Consulting Agreement dated as of November 2, 2001 with Blanchfield,
        King, Kober & Company, P.C. +
10.3    Consulting Agreement dated as of Thomas F. Gavin
10.4    Consulting Agreement dated as of February 5, 2002 with International
        Standard Consulting Corporation +++
10.5    Employment Agreement dated February 5, 2004 with Charles Cardona
10.6    Employment Agreement dated as of February 5, 2004 with John Cardona
10.7    Systems Integration Agreement dated as of June 21 2002 with Raytheon
        Company
10.8    A-K Consulting agreements with Kyle Kennedy Dated Aug. 19, 2002 - May
        22, 2003
10.9    Stipulation of Settlement with Sheldon Katz , Sept. 2002
10.10   Multimedia Web Site design contract with Jason Genet dated Oct. 16, 2002
10.11   Investment Banking Agreement with Spartan Securities dated Nov. 27, 2002
10.12   Agreement to borrow shares for stock loans dated Mar. 7, 2003
10.13   Joint Marketing agreement with Sarnoff Corp. dated Mar. 3, 2003
10.14   Warrant agreement with Tom Gavin dated Mar. 12, 2003
10.15   Agreement with Boeing Autometric Division dated April 2003.
31.1    Certification by Chief Executive Officer and Acting Chief Financial
        Officer pursuant to Sarbanes Oxley Section 302.
32.1    Certification by Chief Executive Officer and Acting Chief Financial
        Officer pursuant to 18 U.S. C. Section 1350

23.1 CONSENT OF AUDITORS

* 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.

REPORTS ON FORM 8-K:

AdZone filed twe reports on form 8-K during the quarter ended March 31, 2004.
Information regarding the items reported on is as follows:

                                       23

<PAGE>

DATE OF REPORT         ITEM REPORTED ON
--------------         ----------------
February 11, 2004      AdZone announced the private placement of $300,000.
March 30, 2004         AdZone disseminated a corporate update.


ITEM 14- PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Company paid or accrued the following fees in each of the prior two fiscal
years to it's principal accountant, S. W. Hatfield, CPA of Dallas, Texas

                                       Year ended          Year ended
                                        March 31,           March 31,
                                          2004                2003
                                       ----------          ----------

(1)   Audit fees                         $26,613              $24,040
(2)   Audit-related fees                      --                   --
(3)   Tax fees                                --                   --
(4)   All other fees                          --                   --
                                        --------             --------

   Totals                                $26,613              $24,040
                                        ========             ========

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

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

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

The Board reviewed the audited financial statements of the Company as of and for
the year ended March 31, 2004 and 2003 with management and the independent
auditors. Management has the sole ultimate responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for their examination of those statements.

Based on the above-mentioned review and discussions with the independent
auditors and management, the Board of Directors approved the Company's audited
financial statements and recommended that they be included in its Annual Report
on Form 10-KSB for the year ended March 31, 2004, for filing with the Securities
and Exchange Commission.

The Company's principal accountant, S. W. Hatfield, CPA did not engage any other
persons or firms other than the principal accountant's full-time, permanent
employees.

                                       24
<PAGE>

                                   SIGNATURES

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

                                  ADZONE RESEARCH, INC.


Dated:November 1, 2004            By:  /s/ Charles Cardona
                                       ----------------------------------------
                                       Charles Cardona, Chief Executive Officer
                                       and Principal Financial and Accounting
                                       Officer


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


Dated: November 1, 2004           By:  /s/ Charles Cardona
                                       ----------------------------------------
                                       Charles Cardona, Chairman of the Board


Dated: November 1, 2004           By:  /s/ John Cardona
                                       ----------------------------------------
                                       John Cardona, Director


Dated: November 1, 2004           By:  /s/ Warren Hamburger
                                       ----------------------------------------
                                       Warren Hamburger, Director


Dated: November 1, 2004           By:  /s/ Russell Ivy
                                       ----------------------------------------
                                       Russell Ivy, Director

Dated: November 1, 2004           By:  /s/ Richard A. McCann
                                       ----------------------------------------
                                       Richard A. McCann, Director


                                       25