FORM 10-KSB

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


(MARK ONE)

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

     For the fiscal year ended September 30, 2000

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

     For the transition period from _____________ to _____________

     Commission file number 000-21659


                       Entertainment Digital Network, Inc.
                 (Name of small business issuer in its charter)

Delaware                                                        94-3173300
--------------------------------------------------------------------------------
(State or other jurisdiction                                 (IRS Employer
of incorporation or organization)                            Identification No.)


One Union Street, San Francisco, California                            94111
--------------------------------------------------------------------------------
Address of principal executive offices                             (Zip Code)

Issuer's telephone number, including area code     (415) 274-8800
                                                   -----------------------------

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

         Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock, par value $0.001
                                (Title of Class)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes _X_ No ___ (See Disclosure Items Omitted)


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         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  registrant'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 twelve  months ended  September 30, 2000
were $4,938,632.

         As of December 22, 2000, the aggregate market value of the Common Stock
of the  Registrant  based upon the  closing bid prices of the Common  Stock,  as
quoted on the OTC Bulletin Board,  held by  non-affiliates of the Registrant was
approximately $1,026,250. (8,552,081 x .12)

         As of December 22, 2000,  23,956,980  shares of $0.001 par value Common
Stock, of the Registrant were outstanding.


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PART I

ITEM 1 DESCRIPTION OF BUSINESS

Summary of Business

Entertainment  Digital  Network,  Inc.,  ("EDN" or the  "Company"),  a  Delaware
corporation,  develops and services digital communications systems for the North
American  advertising and  entertainment  industry.  The company is 51% owned by
Visual Data Corporation  (VDC) of Pompano Beach,  Florida.  These  entertainment
systems help our clients deliver,  store and manage  professional-quality  audio
and video files over proprietary networks.  Our private wide-area network, which
we established through strategic alliances with tier one ISP's (Internet Service
Providers),  long distance  carriers,  regional telephone  companies,  satellite
operators and independent fiber-optic  telecommunications  providers, enable our
clients to exchange high quality audio,  video and  multimedia  data. We provide
engineering services, technical advice, and audio, video and networking hardware
and software  together  with our  networking  services.  In January of 1999,  we
expanded  our  business  to  include  the  production  of live  audio  and video
streaming  broadcasts  over the  Internet  (Webcasting)  for our  corporate  and
entertainment  clients.  We also provide  crews and equipment for live audio and
videoconferences, and the digital communication lines for transporting the media
back to our server for live streaming distribution over the Internet.

Industry Overview

The  digital  communications  industry  originated  in the  1970's  based on the
ability  of  digital  technology  to  support  new  and  advanced  communication
applications.   Digital   content  can  be   compressed,   enabling   data-dense
applications such as the instantaneous exchange of large amounts of high-quality
media in real or  near-real  time over any  distance.  Important  communications
equipment suppliers  increasingly recognize our expertise in systems integration
using telecommunications and Internet technology.

Business of the Company

Principal  Markets.  We sell services to advertising and entertainment  industry
clients,  including  production  and  post-production  companies,   advertisers,
producers, directors and talent. Our networking technology makes it possible for
producers, directors and talent to interact in real time, with less interruption
of their schedules,  despite being in distant cities.  Management believes these
services are of growing importance in the entertainment  industry because, while
the production of audio and video entertainment is inherently a creative process
requiring the  collaboration  of many parties,  the participants in this process
are often in separate locations.  Traditionally,  this meant frequent travel and
delay in the audio and video  production  process.  Our  applications  allow the
collaborative  process to go forward without delay despite physical  separation.
We expanded our market  during the past two years by entering  into the business
of producing  audio and video live streaming  broadcasts  over the Internet.  We
have extended this service into the corporate market.

Audio and Video  Network  Systems  Development  Process.  We use a  standardized
process for developing  audio and video network  communications  systems for our
customers.  When we  contract  with a new audio or video  network  customer,  we
determine the technical information and

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specifications  regarding  the  customer's  existing  facility,   equipment  and
communications  requirements.  Based on those  specifications,  we determine the
configuration of the new system,  select the appropriate  equipment  components,
modify the software  and/or  hardware as needed,  and perform the final  quality
control  procedures.  Next,  we  package  and ship the  system to the  customer.
Affiliated  technicians  can usually  install the system with telephone  support
from  our  in-house  engineers.  After  installation,  our  technical  personnel
typically  perform a routine  series of system checks and  diagnostics  from the
headquarters  over  the  remote  network  to  ensure  that the  newly  installed
equipment functions properly.

Technical  Support.  Our technical  support staff responds  directly to customer
inquiries  during  business  hours.  For emergency  support during  non-business
hours,  domestic  customers can contact us through a toll-free 800 number, and a
special direct-dial  telephone number is available for international  customers.
The technical  support staff can resolve the vast majority of technical  support
issues directly through remote network connection techniques,  which enables the
staff to perform remote diagnostics on a customer's equipment.  If we are unable
to diagnose and service a hardware or software  problem over the remote  network
connection,  a  customer  can ship  equipment  to us for  on-site,  or  "bench",
diagnostics  and service.  We have a supply of field  replacement  equipment for
occasional customer  emergencies.  These services are included in the customers'
fees.

Key Suppliers and Alliances.  We act as a systems  integrator by acquiring other
companies'  technologies and integrating  them into an effective  communications
solution.  We do not  manufacture  any of the  components  used in the networks.
Instead, we purchase digital  communications  equipment components directly from
manufacturers such as Dolby Labs, Telos, Musicam USA, APT,  PictureTel,  Polycom
and  Telestream.  We are the  North  American  master  distributor  for  certain
Telestream,  Dolby and APT equipment, and we are the primary maintenance support
for APT equipment in the United States.  Because the individual  components used
in the systems are  generally  available  from more than one reliable  source or
manufacturer,  management believes the risk of an adverse impact to our business
from an  interruption  in supply from any single  supplier  is minimal.  We also
maintain a small  ongoing  inventory  of all of the  components  of our  various
communications  products. Most of our suppliers have offices and/or distribution
points  near  our  San  Francisco  headquarters.  In the  event  we do not  have
sufficient  inventory  on-hand to fill a system  hardware  order, we can usually
order and receive  additional  inventory with  turnaround  times of as little as
twenty-four  hours and generally no more than four weeks.  This does not exclude
an  adverse  effect in the event  that any of our  suppliers,  for which we have
exclusive distributorship, files bankruptcy or ceases operations.

Marketing.  We market  our  services  through a direct  full-time  sales  staff,
through  appearances at industry trade shows, and through selling  arrangements,
such as, with independent  sales reps, our marketing  alliances with DG Systems,
and an agreement with PR Newswire.

Description of Current and Developing Products

Audio Networking Services. Our integrated audio networking systems allow artists
and sound  engineers in remote  locations  to record a single  audio  track.  We
provide  compression  and  transmission  of studio  quality  audio  signals over
fiber-optic lines (i.e., telephone digital data lines) between separate studios.
Engineers can send time codes with audio data so that operators at the different
studios can  synchronize  the audio to film  projectors or VCR machines for real
time editing

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of movies and video.  When we install an audio media  communications  system and
the requisite sound equipment, a studio becomes an "affiliate studio",  equipped
with a device to digitize,  compress,  send,  receive and decompress audio media
(known as a "codec").  In addition,  the studio becomes a part of our network of
media production and post-production studios. Studios enter into agreements with
us to join our network of recording  studios,  usually for three years.  Joining
the network  allows an affiliate  studio to establish a link with,  and transmit
audio and/or video  information  to, any other  affiliate  studio.  An affiliate
studio  may  participate  in  joint   promotional  and  advertising   activities
describing  the network,  and it has access to technical  support and a software
directory of affiliate  studios.  Affiliate studios pay lower link-up rates than
non-affiliate  studios pay to connect to studios  with  incompatible  equipment.
Currently,  our network is comprised of over 550 studios  across North  America,
with major  concentrations in Los Angeles, San Francisco,  Chicago,  Washington,
D.C. and New York. By granting access to the network, we earn one-time fees from
customers  for the sale and  installation  of  equipment  and  ongoing  fees for
technical assistance and the use of the network.

Our audio  communications  systems  cost from  $3,500 to  $18,000.  We pay local
telephone service providers the telephone data connection  installation  charges
(depending  upon  bandwidth  requirements,  from  $250 to  $1,000)  and  monthly
recurring  connection charges (from $40 to $300). Our customers reimburse us for
all of these charges. Outside customers (non-affiliates) seeking to access media
production  facilities  or  otherwise  review or  record an audio  clip with the
assistance  of a person in a different  location can do so through our affiliate
studios.  Through  EDN's web site,  an  affiliate  studio can quickly  determine
whether their studio, or another affiliate  studio,  operates  equipment that is
compatible  with  the  non-affiliate's  needs.  After  choosing  an  appropriate
affiliate  studio,  the customer can schedule an appointment to use the network.
If nearby  studios  do not have  compatible  equipment,  technicians  in our San
Francisco  Network  Operations  Center (NOC) can digitally  "bridge" the studios
together.  The customer then pays EDN a network access fee. The primary  markets
for our audio services are radio and television advertisers,  motion picture and
television program production companies and music recording companies.

We  presently  do not  develop  the  hardware  or  software  that is used on our
network,  nor do we  build  wide-area  networks.  Instead,  we buy  commercially
available  equipment,   purchase  network  time  from  long  distance  carriers,
integrate this equipment and time into a full time,  24/7 network  service,  and
resell this service to our customers.

Video Networking Services. The video networking service is similar in concept to
the audio  networking  service,  in that it provides  end to end service for the
transmission of short and long-form video, such as commercials,  special effects
and daily  shoots,  from one affiliate to another.  The video network  presently
incorporates Broadband IP-based (Internet Protocol)  videoconferencing  devices,
the  "ClipMailPro",  or "Clip  Express"  ("ClipMail")  appliances  developed and
manufactured by Telestream,  Inc., of Nevada City, California. The "ClipMail" is
a "store and forward"  system,  in that the  transmission of the video is not in
"real time".  Using this  technology,  video media producers and their customers
can efficiently  and effectively  transmit very high quality video for approval,
rather  than wait for  overnight  delivery of tapes.  We liken these  systems to
e-mail for video.  Compared to conventional  methods of transmitting video, such
as overnight courier or by messenger,  we can  significantly  increase the speed
and efficiency of the video editing and decision-making process.

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The "ClipMail" system uses MPEG-2 or MPEG-1 compression technology,  and IP data
networks  to  allow  video   professionals  to  send  and  receive  approval  of
digital-master  quality video and audio over a range of standard data  networks.
Professionals  use these systems  primarily to transmit short form video such as
commercials,   special  effects,  graphics,  storyboards  and  animation  shots.
However,   with  the  increase  in  high   bandwidth   data  lines,   directors,
photographers  and other  professionals  have been able to send  audio and video
dailies  from remote  locations  to editors  working  back at the home studio by
using EDN's network rather than conventional delivery methods.

Company's  Internet-Based  Virtual Private Network.  Our video systems cost from
$4,500 to $16,250 depending on the choice of product.  The customer pays through
us for the Internet service,  the connectivity  installation  charges (depending
upon  bandwidth  requirements,  from  $500  to  $5,000)  and  monthly  recurring
connection  charges  (from $200 to $8,000).  We offer  customer  service for the
"ClipMail"  video product through a separate  virtual  private network  ("VPN").
This  network  offers  customers  wide-area  connections,  based on a variety of
technologies,   including  T-1,  DSL,  or  cable.  This  service  also  provides
applications  support,  software  upgrades,  and media file  conversion and data
storage.  We bill  monthly fees to  customers  who have direct  access to the IP
network. These fees cover local loop costs and high-speed Internet access.

Webcasting.  We provide crews and equipment for live audio and videoconferences,
and the digital  communications  lines to  transport  the media back to the main
office  for live  streaming  distribution  over  the  Internet.  The  webcasting
services we provide for our audio and video  network  affiliates,  our corporate
clients in the exciting  streaming  media market has already  become the fastest
growing  part of our  business.  This  component of the  Company's  revenue grew
nearly 400% over the prior year.

Competition.  There is likely to be an  increase  in the  number of  competitors
providing  broadband  services  for moving  video in the  entertainment  market.
Several long  distance  and  regional  telephone  companies  have offered  video
wide-area  networking  services to their  clients  from time to time,  but those
efforts have not yielded substantial results.

Competition in audio and video networking  services is based upon the ability to
provide systems  compatibility and proprietary  off-the-shelf codecs. Due to the
difficulty and expense of developing and maintaining  private digital  networks,
management  believes that the number of competitors is, and will remain,  small.
The Company's'  principal  competitor in audio networking has been Globecast,  a
division of French  Telecom.  Until March 31, 1995, 3D2 (aka  Globecast) was the
exclusive  North  American  distributor  of apt-X codecs  manufactured  by Audio
Processing  Technology  ("APT"),  which  were in demand in the radio  voice-over
market. EDN was able to negotiate an agreement allowing it to represent APT, and
quickly  became the brand's  largest  reseller.  In 1998, the Company became the
exclusive distributors in North America of the apt-X codecs.

The  Company's  primary  video  networking  competitor  is VYVX,  a division  of
Williams Co. This company's focus is on video-networking services utilizing more
expensive,  higher-bandwidth  fiber connections than ours. The Company will also
see  competition  in the  high-end  networking  market from JCI,  MediaNet,  and
Wam!Net.

In its  Webcasting  sector,  the Company  experiences  competition  from V-call,
TellSoft, Activate, YahooBroadcasting, and others who are offering live webcasts
of quarterly earnings  conference calls. In live event webcast  production,  the
Company  has  competition  from  MediaLink,  Yahoo,  and  others.  However,  the
production  services  of the  company  have  also  been in demand by some of its

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competitors,  and from time to time we contract services to these companies. The
nature  of  the  streaming  media  sector  of  the  Internet  market  is  highly
interdependent  while  being  competitive.  This  tends to give rise to  unusual
relationships such as those described above.

Patents & Trademarks

We do not own any patents and rely instead on a  combination  of  statutory  and
common-law  copyright,  trademark and trade secret laws to protect the rights of
our proprietary technologies. We have registered "EDnet", "Entertainment Digital
Network" and "ZeroC" as trademarks with the U.S. Patent and Trademark Office.

Research and Development

We had no research and  development  expenditures  in 2000, 1999 or 1998. We did
not spend any funds on  material  customer-sponsored  research  and  development
during the past three years.

Governmental Approvals and Regulation

Our  products  and  services  are  currently  not subject to  regulation  by any
government agency or regulatory body.

Parent & Subsidiaries Companies

The parent  company of EDN is Visual Data  Corporation  (VDC),  based in Pompano
Beach,  Florida.  VDC currently has a 51% holding in the company.  EDN currently
operates through a wholly owned  subsidiary also known as Entertainment  Digital
Network, which is a California corporation.

Employees

The  company in the past two years has had  significant  growth in the number of
employees.  There were 19 employees  and 22 employees at September  30, 1999 and
September 30, 2000 respectively.  Of the employees in the fiscal year 2000 there
are 20 full time  employees and 1 part time employee.  In addition,  the company
has used up to 8 contract personnel at various times through out the year.


ITEM 2   PROPERTY

Description of Property

Our  principal  business  offices  are  located  at  One  Union  Street,  in San
Francisco, California. This office is a 5,000 square foot facility that operates
as  administrative  headquarters  and provides the  centralized  network hub for
electronically   bridging  affiliate   studios,   as  well  as  overall  network
management. We lease this facility pursuant to a Sublease dated November 1, 1993
with Varitel Video, Inc.  ("Varitel"),  an unaffiliated  entity. The term of the
sublease was for five years, commencing November 15, 1993. At November 14, 1998,
the lease was renewed for an additional  term ending August 31, 2003.  Under the
renewed sublease, the monthly lease payment is $13,251 per month.


ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No items were  submitted  to the  shareholders  for vote  during the fiscal year
ending September 30, 2000.

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PART II

ITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Price Range of Common Stock

Our Common Stock is traded on the OTC electronic bulletin board under the symbol
EDNT.  The reported high and low bid  information  as quoted on the OTC bulletin
board for the period ended  September30 31, 1998 through  September 30, 2000, is
shown  below.  The high and low bid  information  as quoted on the OTC  bulletin
board represents  prices between brokers and dealers and does not include retail
markups,  markdowns or commissions to the  broker-dealer,  and may not represent
actual transactions.

              High and Low Bid Price for Registrant's Common Stock
                   October 1, 1998 through September 30, 2000


                   Period                            High                 Low
                   ------                            ----                 ---
Quarter Ended September 30, 2000                    0.4531               0.2344
Quarter Ended June 30, 2000                         0.7969               0.3125
Quarter Ended March 31, 2000                        1.875                0.6250
Quarter Ended December 31, 1999                     1.3594               0.6250
Quarter Ended September 30, 1999                    1.750                0.6875
Quarter Ended June 30, 1999                         4.125                1.000
Quarter Ended March 31, 1999                        4.875                0.2656
Quarter Ended December 31, 1998                     0.641                0.125


The source of the above data is Yahoo.com  Finance and Commodity  Systems,  Inc.
The number of holders of record of EDN's Common  Stock as of September  30, 2000
is approximately 650.

Dividends

EDN has never  paid cash  dividends  on Common  Stock,  and we intend to utilize
current  resources  to expand our  operations.  Moreover,  outstanding  warrants
restrict the ability of the Company to pay dividends.  Therefore,  we anticipate
that cash  dividends  will not be paid on the  Common  Stock in the  foreseeable
future.


ITEM 6 MANAGEMENT'S  DISCUSSION AND ANALYSIS of FINANCIAL  CONDITION and RESULTS
of OPERATIONS

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Forward Looking Statements

The  statements  contained  in this  report on Form  10-KSB  that are not purely
historical are  forward-looking  statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of
1934,  including  statements  regarding EDN's expectations,  hopes,  intentions,
beliefs,  or  strategies  regarding  the  future.  Words such as  'anticipates',
`expects', `intends', `plans' `believes', `seeks', `hopes', and `estimates', and
variations  of these  words and  similar  expressions  are  intended to identify
forward-looking statements.  Examples of forward-looking statements contained in
this  Report,  including  `Management's  Discussion  and  Analysis of  Financial
Condition and Results of Operations', include the Company's statements regarding
planned new Telestream  products,  anticipated product revenue increase and loss
reduction,  ability to reduce or increase  Research & Development  and marketing
expenses  depending  upon the Company's cash  resources,  and  anticipated  cash
needs, credit line availability and ability to raise financing.  Forward-looking
statements  contained herein or in other statements made by the Company are made
based on  management's  expectations  and beliefs  concerning  future events and
trends  impacting  the Company and are subject to  uncertainties  and risks that
could  cause  actual  results  of the  Company to differ  materially  from those
matters  expressed  in or implied by  forward-looking  statements.  The  Company
believes  that the  following  factors,  among  others,  could affect its future
performance  and cause actual results of the Company to differ  materially  from
those expressed in or implied by forward looking statements made by or on behalf
of the Company: (a) ability to raise financing,  (b) demand for Company products
or services,  (c)  effectiveness of marketing and promotion,  and (d) ability to
complete  development of new products and services.  Other risks that could also
so affect Company  performance and results are discussed in the `Risks and Other
Factors Affecting Future Performance'  section below.  Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only as
of the date hereof.  Except as required by law, we undertake  no  obligation  to
update any  forward-looking  statement,  whether as a result of new information,
future events, or otherwise.

The following  discussion and analysis  should be read in  conjunction  with the
Consolidated  Financial Statements and notes thereto appearing elsewhere in this
report.

Overview

We continued to expand our core audio  networking  services,  which now includes
over 600 affiliates and associates in the United States and Canada. For example,
the  number of Grammy  and Oscar  recipients  that use the audio  network in the
music and motion picture industry has increased annually.

During the fiscal year 2000 the company  continued  to work with PR Newswire and
Visual Data Corporation, under an agreement from 1999, to provide customers with
live  audio  and video  webcasting  over the  Internet.  After  two  years,  our
relationship with PR Newswire remains very strong.

The  Company  also  continued  its'   agreement  with   Telestream,   Inc.,  the
manufacturer of a high-quality video delivery system,  "ClipMailPro"  (which can
send video over data networks using high-speed broadband Internet networks).  We
became the first OEM dealer for this video appliance.  Since it's launching this
appliance  has been well  accepted  in the  advertising,  television  and motion
picture production and  postproduction  market. We continue to believe that this
product  and  service  will  become  a  significant  part of the  growth  of the
Company's  revenues in the coming year. Our relationship with Telestream remains
strong after two years of very close work  together,  though we

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have both fallen  short of the original  expectations.  The long sales cycle and
hesitance on the part of media  professionals  to adopt the new  technology  has
resulted in a build-up of excessive inventory.

Liquidity and Capital Resources at September 30, 2000

At September 30, 2000,  our principal  source of liquidity was $196,211 in cash.
The current ratio  diminished  over the current year compared to the year ending
September  30,  1999 as a  result  of the  growth  efforts  detailed  above.  At
September  30,  2000 the  current  ratio  (current  assets  divided  by  current
liabilities) was 0.66.

Financing  activities  provided a net amount of $1,577,234 for fiscal year 2000,
primarily  due to advances  from the VDC parent of  $1,419,670,  the exercise of
warrants  and options for $50,898 and  proceeds of a note from VDC of  $283,746.
The Company's  cash on hand as of September  30, 2000,  would not be adequate to
fund the  Company's  operation  for one quarter if the Company  continued to use
cash in  operating  activities  at the same rate as in  fiscal  year  2000.  The
Company has, however,  reduced its cash used in operations  through a variety of
cost-cutting  measures,  including  slowing down the rate of  expansion  and the
purchase of inventory.  In addition the Company hopes to have increased revenues
in all lines of business, most particularly video equipment sales and Webcasting
operations. In order to fund these operations the Company has assurance from the
parent  company,  VDC, of the infusion of necessary  capital as the need arises.
While the Company currently has a $1,419,670 balance of short-term advances, VDC
has made clear its intention to fund the Company's  growth and not call the loan
balance  until the Company shows  positive cash flow.  There can be no assurance
that the VDC can provide such  financing,  and if this were to be the case,  the
Company  would be  forced to  reduce  operating  losses,  through  further  cost
cutting, layoffs, or by raising money by other means.

At September  30,  2000,  our  accumulated  deficit was  $7,915,038  compared to
$6,260,249 at September 30, 1999. Working capital was $(1,002,297), and $547,484
at September 30, 2000 and September 30, 1999  respectively.  The major impact on
working  capital for fiscal year 2000 is the  intercompany  balance with VDC for
approximately  $1,575,000.  We have not been able to generate  operating  profit
since  inception and the loss from  operations  has  increased  from $793,714 in
fiscal year 1999 to  $1,625,135  in fiscal year 2000.  This is attributed to the
launch of new  businesses,  and the  re-assessment  of the  company's  inventory
valuation  of slow  moving  inventory.  In this  action the company has moved to
write  down the  value of slow  moving  inventory  of  "ClipMail"  equipment  by
approximately   $300,000.   In  addition,   the  company  moved  to  write  down
questionable  accounts  receivable of  approximately  $138,000.  We continued to
increase  our  efforts  in two new  business  components:  webcasting  and video
equipment  sales.  As these  are  still in the early  development  phase,  these
businesses are incurring  start up costs that should  decrease over time.  These
costs are related to sales,  personnel,  travel, and overhead resulting in lower
gross margins.

Results  of  Operations:  Projected  Year End  September  30,  2001,Years  Ended
September 30, 2000 and 1999

<TABLE>
The following  table sets forth for the periods  indicated the percentage of net
sales  represented  by certain line items from our  consolidated  statements  of
income:
                                    10 of 37


<PAGE>


<CAPTION>
                                       September 30, 2001           September 30, 2000          September 30, 1999
           Description                      Projected                     Actual                      Actual
           -----------                 ------------------           ------------------          ------------------
<S>                                          <C>                          <C>                          <C>
Revenues                                     100.0%                       100.0%                       100.0%
Cost of sales                                 47.8%                        81.3%                        74.1%
Gross profit                                  52.2%                        18.7%                        25.9%
Operating expenses:
Sales and marketing                           16.1%                        13.6%                        14.1%
General and administrative                    36.1%                        38.0%                        32.1%
Total operating expenses                      52.2%                        51.6%                        46.2%
Gain (Loss) from operations                    0.0%                       (32.9)%                      (20.3)%
Other income                                   0.1%                       (0.55)%                       17.3%
Loss before income taxes and
extraordinary item                             0.0%                           0%                        (3.0)%
Provision for income taxes                     0.0%                        0.05%                         0.2%
Loss before extraordinary item                (2.3)%                     (33.78)%                       (3.2)%
Extraordinary item                              --                          --                            --
Net loss                                      (2.3%)                     (33.51)%                       (3.2)%
</TABLE>


Revenues.  Net sales for  fiscal  year 2000  increased  26.3% to  $4,938,632  as
compared  to  $3,910,466  in the  year  ended  September  30,  1999.  Management
attributes the increase in revenue primarily to the growth of its Webcasting and
Video  networking   business.   Currently,   video  equipment  sales  contribute
approximately  17.9% of our gross sales. We continue to anticipate  revenue from
video  equipment  sales to  increase  during the next  fiscal  year.  Webcasting
contributed  approximately 19.1% to our gross sales. In addition, we continue to
expect this  component of the  business to make a  significant  contribution  in
fiscal year 2001,  as new  marketing  programs  have been  developed to increase
market share.

Gross Profit.  Gross Profit  decreased to $922,036,  or 18.7 % of sales,  in the
year ended  September  30, 2000 compared to  $1,011,925,  or 26% of sales in the
year ended  September  30, 1999.  Decreases  in gross profit as a percentage  of
sales  compared to  September  30, 1999 are  primarily  due to  increased  costs
associated with "ClipMail" lines of business, discounts to attract this business
and the write  down of slow  moving  "ClipMail"  inventory  in an effort to more
realistically assess its' value. The cost of goods for the Webcasting department
increased by $219,000 as a result of the expansion of this line of business. The
operations  department  saw an increase of $386,915  due  primarily to increased
personnel  costs.  However,  gross revenues  increased 34.5% for the fiscal year

                                    11 of 37


<PAGE>


2000  offsetting  much of the increase in costs.  Webcasting  saw an increase of
$731,000  in the  fiscal  year 2000,  along  with an  increase  of  $249,500  in
equipment sales.

Operating Expenses. Operating expenses (including Sales & Marketing, and General
&  Administrative)  increased  to  $2,547,171  in fiscal  year 2000  compared to
$1,805,639  for the fiscal year ended  September  30,  1999.  This  expansion of
operating  expense  reflects the  company's  increased  efforts in sales,  sales
personnel,  and the expansion of the Webcasting operations.  Sales and Marketing
costs increased by $261,000,  along with Engineering costs increasing  $147,000,
and General  Administrative cost increasing $219,000. All of these increases are
reflective  of the  increase  in activity of the  business  and the  increase in
personnel.

Other Income and  Expenses.  Other  income and  expenses  decreased to a loss of
$27,254 in fiscal  year 2000,  compared  to a $675,239  gain for the fiscal year
ended September 30,1999.  Income in the prior year was attributed to the sale of
the  Company's   consulting   subsidiary,   IBS  (Internet  Business  Solution).
Additionally,  interest expense  increased from $22,773 in the fiscal year ended
September  30,  1999 to $38,790 in the  current  fiscal  year.  The  increase is
primarily due to the interest costs for the related party loan.



                       ENTERTAINMENT DIGITAL NETWORK, INC.

                                    12 of 37


<PAGE>


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


                               Report on Audits of

                        Consolidated Financial Statements
                 for the years ended September 30, 2000 and 1999


                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
Entertainment Digital Network, Inc.

We have audited the  accompanying  consolidated  balance sheets of Entertainment
Digital  Network,  Inc. and  subsidiaries as of September 30, 2000 and 1999, and
the  related  consolidated   statements  of  operations,   stockholders'  equity
(deficit),  and cash flows for the years then ended. These financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  consolidated  financial  position of Entertainment
Digital  Network,  Inc. and  subsidiaries as of September 30, 2000 and 1999, and
the consolidated  results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.


Burr, Pilger & Mayer
San Francisco, California
November 20, 2000


                                    13 of 37

<PAGE>


<TABLE>
                                                 ENTERTAINMENT DIGITAL NETWORK, INC.

                                                     CONSOLIDATED BALANCE SHEETS

                                                     September 30, 2000 and 1999

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

<CAPTION>


                                     ASSETS                                                              2000               1999
                                                                                                     -----------        -----------
<S>                                                                                                  <C>                <C>
Current assets:
  Cash                                                                                               $   196,211        $   282,862
  Accounts receivable, net of allowance for doubtful accounts of $170,000 and
      $18,458 at September 30, 2000 and 1999,
      respectively                                                                                       955,226            713,452
  Account receivable-related party                                                                        73,175             32,698
  Accounts receivable-escrow                                                                                --               50,000
  Inventories, net of valuation allowance of $338,000 and $40,000 at
      September 30, 2000 and 1999, respectively                                                          708,284            576,433
  Prepaid expenses and other current assets                                                               11,294             48,452
                                                                                                     -----------        -----------
        Total current assets                                                                           1,944,190          1,703,897

Property and equipment, net                                                                              624,321            385,698

Other assets                                                                                              21,062              5,254
                                                                                                     -----------        -----------

                                                                                                     $ 2,589,573        $ 2,094,849
                                                                                                     ===========        ===========


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
   Accounts payable                                                                                  $   954,463        $   628,959
   Accrued expenses                                                                                      260,746            225,374
   Deferred revenue                                                                                       27,200               --
   Notes payable-related party                                                                           125,000            290,500
   Current portion of capital lease obligations                                                            4,045             11,580
   Advances and accrued expenses-related party                                                         1,575,033               --
                                                                                                     -----------        -----------
         Total current liabilities                                                                     2,946,487          1,156,413

Capital lease obligations                                                                                   --                4,045
                                                                                                     -----------        -----------
           Total liabilities                                                                           2,946,487          1,160,458
                                                                                                     -----------        -----------
Stockholders' equity (deficit):
   Common stock; $0.001 par value; 50,000,000 shares authorized;  23,956,980 and
       23,186,398 shares issued and outstanding at September 30, 2000 and 1999,
       respectively                                                                                       23,956             23,186
   Additional paid-in capital                                                                          7,535,535          7,500,711
   Note receivable                                                                                        (1,367)          (283,746)
   Unearned compensation                                                                                    --              (45,511)
   Accumulated deficit                                                                                (7,915,038)        (6,260,249)
                                                                                                     -----------        -----------
         Total stockholders' (deficit) equity                                                           (356,914)           934,391
                                                                                                     -----------        -----------
                                                                                                     $ 2,589,573        $ 2,094,849
                                                                                                     ===========        ===========


<FN>
                                               The accompanying notes are an integral
                                          part of these consolidated financial statements.
</FN>
</TABLE>

                                                             14 of 37

<PAGE>


<TABLE>
                                                 ENTERTAINMENT DIGITAL NETWORK, INC.

                                                CONSOLIDATED STATEMENTS OF OPERATIONS

                                           for the years ended September 30, 2000 and 1999

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


<CAPTION>
                                                                                                   2000                    1999
                                                                                               ------------            ------------
<S>                                                                                            <C>                     <C>
Revenue:
   Usage fees                                                                                  $  1,604,336            $  1,562,387
   Equipment sales                                                                                1,410,122               1,160,617
   Web-casting                                                                                      942,656                 192,258
   Installation and monthly fees                                                                    808,078                 647,174
   Rental fees and other                                                                            173,440                  75,497
   Web design and consulting                                                                           --                   272,533
                                                                                               ------------            ------------

         Total revenue                                                                            4,938,632               3,910,466

Cost of sales                                                                                     4,016,596               2,898,541
                                                                                               ------------            ------------

         Gross profit                                                                               922,036               1,011,925

Sales and marketing                                                                                 670,075                 551,480

General and administrative                                                                        1,877,096               1,254,159
                                                                                               ------------            ------------

         Loss from operations before other income (expenses) and
              provision for income taxes                                                         (1,625,135)               (793,714)
                                                                                               ------------            ------------

Other income (expenses):
   Interest income                                                                                   11,536                  35,300
   Interest expense                                                                                 (38,790)                (22,773)
   Loss on sale of equipment                                                                           --                      (818)
   Gain on sale of subsidiary assets                                                                   --                   663,530
                                                                                               ------------            ------------

         Total other (expense) income                                                               (27,254)                675,239
                                                                                               ------------            ------------
         Loss before provision for income taxes                                                  (1,652,389)               (118,475)

Provision for income taxes                                                                            2,400                   7,434
                                                                                               ------------            ------------

         Net loss                                                                              $ (1,654,789)           $   (125,909)
                                                                                               ============            ============

Basic and Diluted loss per share                                                               $      (0.07)           $      (0.01)
                                                                                               ============            ============

Weighted average number of shares outstanding                                                    23,305,635              19,298,846
                                                                                               ============            ============

<FN>
                                               The accompanying notes are an integral
                                          part of these consolidated financial statements.
</FN>
</TABLE>

                                                             15 of 37

<PAGE>


<TABLE>
                                                 ENTERTAINMENT DIGITAL NETWORK, INC.

                                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                                           for the years ended September 30, 2000 and 1999

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

<CAPTION>
                                                                               Common Stock            Additional
                                                                       ---------------------------       Paid-in           Note
                                                                         Shares          Amount          Capital        Receivable
                                                                       -----------     -----------     -----------      -----------

<S>                                                                     <C>                 <C>        <C>              <C>
Beginning balance, October 1, 1998                                      16,761,836          16,761     $ 6,755,443      $  (283,746)

Common shares issued upon exercise of stock options                      1,297,500           1,298         128,453             --
Common shares issued upon exercise of warrants
  pursuant to S-3 Registration                                           1,914,831           1,915         202,804             --
Common shares issued to Visual Data Corporation
  upon exercise of mirror stock options and warrants                     3,212,231           3,212         318,011             --
Stock option grants                                                           --              --            96,000             --

         Net loss                                                             --              --              --               --
                                                                       -----------     -----------     -----------      -----------

Ending balance, September 30, 1999                                      23,186,398          23,186       7,500,711         (283,746)

Common shares issued upon exercise of stock options and
  warrants                                                                 425,291             425          51,840           (1,367)
Common shares issued to Visual Data Corporation
  upon exercise of mirror stock options and warrants                       345,291             345          34,184             --
Stock option amortization and forfeitures                                     --              --           (51,200)            --
Subscription for common stock received                                        --              --              --            283,746

         Net loss                                                             --              --              --               --
                                                                       -----------     -----------     -----------      -----------

Ending balance, September 30, 2000                                      23,956,980     $    23,956       7,535,535      $    (1,367)
                                                                       ===========     ===========     ===========      ===========





                                                                                Unearned           Accumulated
                                                                              Compensation           Deficit               Total
                                                                              -----------          -----------          -----------

Beginning balance, October 1, 1998                                                   --            $(6,134,340)         $   354,118

Common shares issued upon exercise of stock options                                  --                   --                129,751
Common shares issued upon exercise of warrants
  pursuant to S-3 Registration                                                       --                   --                204,719
Common shares issued to Visual Data Corporation
  upon exercise of mirror stock options and warrants                                 --                   --                321,223
Stock option grants                                                           $   (45,511)                --                 50,489

         Net loss                                                                    --               (125,909)            (125,909)
                                                                              -----------          -----------          -----------

Ending balance, September 30, 1999                                                (45,511)          (6,260,249)             934,391

Common shares issued upon exercise of stock options and
  warrants                                                                           --                   --                 50,898
Common shares issued to Visual Data Corporation
  upon exercise of mirror stock options and warrants                                 --                   --                 34,529
Stock option amortization and forfeitures                                          45,511                 --                 (5,689)
Subscription for common stock received                                               --                   --                283,746

         Net loss                                                                    --             (1,654,789)          (1,654,789)
                                                                              -----------          -----------          -----------

Ending balance, September 30, 2000                                                   --            $(7,915,038)         $  (356,914)
                                                                              ===========          ===========          ===========


<FN>
                                               The accompanying notes are an integral
                                                 part of these financial statements.
</FN>
</TABLE>

                                                             16 of 37


<PAGE>


<TABLE>
                                                 ENTERTAINMENT DIGITAL NETWORK, INC.

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                                           for the years ended September 30, 2000 and 1999

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


<CAPTION>
                                                                                                      2000                 1999
                                                                                                   -----------          -----------
<S>                                                                                                <C>                  <C>
Cash flows from operating activities:
   Net loss                                                                                        $(1,654,789)         $  (125,909)
   Adjustments to reconcile net loss to cash used in operating activities:
     Depreciation and amortization                                                                     186,655              122,380
     Inventory valuation allowance                                                                     300,453               40,000
     Bad debt                                                                                          159,510               17,945
     Gain on sale of subsidiary assets                                                                    --               (663,530)
     Compensation expense on below market value stock options                                           (5,689)              50,489
     Loss on sale of fixed assets                                                                         --                    818
     Decrease (increase) in assets:
       Accounts receivable                                                                            (391,761)            (353,889)
       Inventories                                                                                    (591,209)            (485,251)
       Prepaid expenses and other assets                                                                21,350              (54,794)
     (Decrease) increase in liabilities:
       Accounts payable                                                                                325,504              331,174
       Accrued expenses                                                                                225,266              (12,424)
       Deferred revenue                                                                                 27,200                 --
                                                                                                   -----------          -----------

         Net cash used in operating activities                                                      (1,397,510)          (1,132,991)
                                                                                                   -----------          -----------

Cash flows from investing activities:
   Purchase of property and equipment                                                                 (266,375)            (258,729)
   Proceeds from sale of subsidiary's and other assets                                                    --                905,213
                                                                                                   -----------          -----------

         Net cash (used in) provided by investing activities                                          (266,375)             646,484
                                                                                                   -----------          -----------

Cash flows from financing activities:
   Proceeds from advances from related party                                                         1,419,670                 --
   Proceeds from short-term related party note                                                            --                250,000
   Payment on short-term related party notes                                                          (165,500)                --
   Proceeds from repayment of note receivable                                                          283,746                 --
   Proceeds from line of credit                                                                        100,000                 --
   Payment on line of credit                                                                          (100,000)              (8,214)
   Principal payments on debt                                                                             --               (200,000)
   Payments on capital leases                                                                          (11,580)             (16,580)
   Proceeds from exercise of stock options and warrants                                                 50,898              655,693
                                                                                                   -----------          -----------

         Net cash provided by financing activities                                                   1,577,234              680,899
                                                                                                   -----------          -----------

         Net (decrease) increase in cash                                                               (86,651)             194,392

Cash at beginning of year                                                                              282,862               88,470
                                                                                                   -----------          -----------

Cash at end of year                                                                                $   196,211          $   282,862
                                                                                                   ===========          ===========


<FN>
                                               The accompanying notes are an integral
                                                 part of these financial statements.
</FN>
</TABLE>

                                                             17 of 37

<PAGE>


                       ENTERTAINMENT DIGITAL NETWORK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1.   Significant Accounting Policies

     Nature of Operations

     Entertainment  Digital Network, Inc. (the Company), a Delaware corporation,
     and  its  subsidiaries  develop  and  market  integrated  systems  for  the
     delivery,   storage,   and  management  of  professional   quality  digital
     communications  for  media-based  applications,  including  audio and video
     production  for the U. S.  entertainment  industry.  The  Company,  through
     strategic  alliances  with  long-distance   carriers,   regional  telephone
     companies,    satellite    operators,    and   independent    fiber   optic
     telecommunications  providers,  has  established  a worldwide  network that
     enables the exchange of high quality  audio,  video,  multimedia,  and data
     communications.    The   Company   provides    engineering   services   and
     application-specific   technical  advice,   audio,  video,  and  networking
     hardware  and  software  as part of its  business.  In December  1998,  the
     Company sold  substantially  all of the assets of a wholly owned subsidiary
     that provided  Internet web site development and hosting services (see Note
     8).

     The  Company  is 51%  owned by  Visual  Data  Corporation  (VDC),  a public
     company,  and accordingly,  the results of the Company's operations will be
     consolidated with those of VDC.

     In March  2000,  VDC signed a letter of intent to  purchase  the balance of
     outstanding common shares of the Company.  The proposed terms of the letter
     of intent included the right to receive one share of common stock of Visual
     Data for every ten  outstanding  shares of the common  stock of the Company
     and the  conversion  of every ten  outstanding  options or  warrants of the
     Company into one option or warrant to purchase a share of VDC common stock.
     The transaction was subject to the execution of a definitive  agreement and
     the  approval  of the  Company's  shareholders.  On  April  17,  2000,  VDC
     announced  the  postponement  of its  intent to  purchase  the  balance  of
     outstanding  common  shares of the Company due to market  conditions at the
     time.

     Financial Results and Liquidity

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles, which contemplate continuation of
     the  Company as a going  concern.  The Company  has  sustained  losses from
     operations since inception, and has accumulated a deficit of $7,915,038. In
     addition,  the  Company  has  used,  rather  than  provided,  cash  in  its
     operations. As a result of the foregoing matters, recoverability of a major
     portion of the recorded  assets amounts shown in the  accompanying  balance
     sheet is dependent upon continued operations of the Company,  which in turn
     are dependent upon the Company's ability to meet its financing requirements
     on a  continuing  basis.  The  financial  statements  do  not  include  any
     adjustments  relating  to  the  recoverability  and  classification  of the
     recorded asset amounts or amounts and  classification  of liabilities  that
     might be necessary should the Company be unable to continue in existence.

                                    Continued

                                    18 of 37
<PAGE>


1.   Significant Accounting Policies

     Financial Results and Liquidity, continued

     Management  has  recently  instituted  a cost  containment  program for its
     operations to conserve its cash resources. The Company has also implemented
     marketing and sales plans that include  specific sales  incentive  programs
     intended to increase  inventory  turnover and liquidate certain slow moving
     components  of its  inventory.  These  efforts  are  expected  to result in
     increased  revenues  for fiscal year 2001 and reduced  operating  expenses.
     With  increased  revenues in fiscal year 2001,  the Company is expecting an
     increase in the gross profit margin that will ultimately reduce the overall
     net loss incurred from operations and conserve the Company's cash resource.

     Management has received a commitment from VDC, its majority shareholder, to
     defer  repayment of prior advances made to the Company,  and to provide the
     Company with  additional  advances  that may be required by the Company for
     working  capital during its next business  cycle.  Management  believes the
     Company will have sufficient working capital to provide it with the ability
     to continue in existence through its next fiscal year.

     Basis of Consolidation

     The consolidated  financial  statements include the accounts of the Company
     and its principal  subsidiary,  Entertainment  Digital  Network (EDN).  All
     material   inter-company   transactions   have  been   eliminated   in  the
     consolidated financial statements.

     Use of Estimates

     The  preparation of the financial  statements in accordance  with generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect  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 and
     other estimates.

     Cash and Equivalents

     All highly liquid debt  instruments  purchased  with maturity dates of less
     than three months are classified as cash equivalents.

     Allowance for Doubtful Accounts

     Bad  debts  are  provided  on the  allowance  method  based  on  historical
     experience and management's evaluation of outstanding accounts receivable.

                                    19 of 37

<PAGE>


1.   Summary of Significant Accounting Policies, continued

     Inventories

     Inventories,  composed  primarily  of purchased  products  for resale,  are
     valued at the lower of cost or market  with cost  being  determined  on the
     first-in, first-out basis.

     Property and Equipment and Leasehold Improvements

     Property  and  equipment  are  carried at cost and are  depreciated  on the
     straight-line  basis over their estimated  useful lives of five years.  The
     costs of leasehold  improvements are amortized over the lesser of the lease
     term or the  life  of the  improvement.  Expenditures  for  improvement  or
     expansion  of  property  and   equipment  are   capitalized.   Repairs  and
     maintenance are charged to expense as incurred. When the assets are sold or
     retired,  their cost and related accumulated  depreciation are removed from
     the accounts with the resulting  gain or loss reflected in the statement of
     operations.

     Income Taxes

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

     Fair Value of Financial Instruments

     The carrying  amounts of certain  financial  instruments,  including  cash,
     accounts receivable, notes receivable,  accounts payable, accrued expenses,
     notes payable,  and line of credit,  approximate  fair value because of the
     relatively short-term maturity of these instruments.

     Long-Lived Assets

     Long-lived  assets  such  as  property  and  equipment  are  evaluated  for
     impairment  when  events or  changes  in  circumstances  indicate  that the
     carrying amount of the assets may not be  recoverable.  When the indicators
     of impairment are present and the estimated  undiscounted future cash flows
     from the use of these assets are less than the assets'  carrying value, the
     related assets will be written down to fair value.

                                    20 of 37

<PAGE>


1.   Summary of Significant Accounting Policies, continued

     Revenue Recognition

     A significant component of revenue relates to the sale of equipment,  which
     is  recognized  when the  equipment  is  installed  or upon  execution of a
     contract  after a free trial  period.  During  the trial  period a customer
     normally receives an extended period of time before purchasing the product.
     During this trial period, the Company accounts for the product as inventory
     and  recognizes the revenue upon execution of the contract by the customer.
     Installation  fees are recognized when the installation has been completed.
     Usage fees are  recognized  over the period the  equipment is used based on
     the relative usage level.

     The  Company  leases  some  equipment  to  customers  under  terms that are
     accounted  for as operating  leases.  Under the  operating  method,  rental
     revenue  from leases is  recognized  ratably over the life of the lease and
     the related equipment is depreciated over its estimated useful life.

     Stock-Based Compensation

     The Company has elected to account for stock-based  compensation  under the
     intrinsic  value  method as  permitted  by the  provisions  of Statement of
     Financial  Accounting  Standards (SFAS) No. 123, Accounting for Stock-Based
     Compensation.  Under this method,  no compensation  expense is recorded for
     stock  options  granted  when the exercise  price of the option  granted is
     equal to or exceeds the fair market value of the Company's common stock The
     Company  makes  the  pro  forma  disclosures  of  stock-based  compensation
     required by SFAS No. 123.

     Earnings (Loss) per Share

     Earnings  (loss) per share have been  computed  according  to SFAS No. 128,
     Earnings per Share for all periods  presented.  Basic earnings per share is
     computed  using the  weighted  average  number  of  shares of common  stock
     outstanding  during the  periods.  Diluted  earnings  per share is computed
     using the  weighted  average  number  of common  shares  and  common  share
     equivalents outstanding during the period.

     Effects of Recent Accounting Pronouncements

     In June 1998 and June 1999, the Financial Accounting Standards Board (FASB)
     issued SFAS No. 133,  Accounting  for  Derivative  Instruments  and Hedging
     Activities, and SFAS 137, Accounting for Derivative Instruments and Hedging
     Activities-Deferral  of the Effective Date of FASB Statement No. 133. These
     statements  require companies to record derivatives on the balance sheet as
     assets or liabilities,  measured at fair value.  Gains or losses  resulting
     from  changes in the values of those  derivatives  would be  accounted  for
     depending upon the use of the derivative and whether it qualifies for hedge
     accounting. SFAS 133 will be effective for the Company's fiscal year ending
     September  30,  2001.  Management  believes  that  the  adoption  of  these
     statements  will not have a significant  impact on the Company's  financial
     position or results of operations.

                                    21 of 37

<PAGE>


1.   Summary of Significant Accounting Policies, continued

     Effects of Recent Accounting Pronouncements, continued

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
     Accounting  Bulletin No. 101 (SAB 101),  Revenue  Recognition  in Financial
     Statements.  SAB 101 will be effective for the Company's fiscal year ending
     September 30, 2001. The Company has not yet determined the impact,  if any,
     that SAB 101 may have on its financial position or results of operations.

     In March 2000, the FASB issued  Interpretation No. 44 (FIN 44),  Accounting
     for Certain Transactions involving Stock Compensation, an interpretation of
     APB Opinion No. 25. FIN 44 clarifies the  application of APB 25 for certain
     issues,  including  the  definition  of an employee,  the  treatment of the
     acceleration  of stock options,  and the  accounting  treatment for options
     assumed in business combinations.  FIN 44 became effective on July 1, 2000,
     but is applicable  for certain  transactions  dating back to December 1998.
     The adoption of FIN 44 is not expected to have a significant  impact on the
     Company's financial position or results of operations.

     Reclassification

     Certain  reclassifications  have  been  made to the  prior  year  financial
     statements in order for them to conform to the current year presentation.

2.   Accounts Receivable

     Accounts receivable at September 30, 2000 and 1999 comprise the following:


                                                       2000            1999
                                                   -----------      -----------

     Receivables                                   $   970,276      $   561,863
     Unbilled charges                                  154,950          170,042
                                                   -----------      -----------
                                                     1,125,226          731,905

     Less allowance for doubtful accounts             (170,000)         (18,453)
                                                   -----------      -----------
            Total                                  $   955,226      $   713,452
                                                   ===========      ===========

                                    22 of 37

<PAGE>


2.   Accounts Receivable, continued

     The allowance for doubtful  accounts is composed of a provision  based on a
     percentage  of aged accounts  receivable  and specific  account  provisions
     based upon  review of the  individual  accounts  receivable.  Accounts  are
     written off when deemed to be uncollectible.  Certain  individual  accounts
     were identified as requiring specific  allowance  amounting to $150,000 due
     to significant aging of receivables and the financial status of the client.
     Total bad debt  expense  was  $159,510  and  $17,945  for the  years  ended
     September 30, 2000 and 1999, respectively.

     In 1999,  the Company  maintained  a  receivable  of $50,000 from an escrow
     account related to the sale of a subsidiary in 1998. During 2000 funds were
     received and the account was closed.

3.   Related Party Transactions

     During the year the Company  entered  into  various  transactions  with the
     majority shareholder, Visual Data Corporation (VDC).

     VDC provided  approximately  $796,000 in revenues from  web-casting  events
     during 2000 and 1999.  The related  accounts  receivable  related party was
     $73,175 and $32,698 as of September 30, 2000 and 1999.

     The Company paid to VDC $50,000 and $29,167 in management  fees and $89,475
     and  $19,494  for  directors  and  officers'  insurance  in 2000 and  1999,
     respectively.  Accrued expenses for management fees are $50,000 and $30,000
     for 2000 and 1999, respectively (see Note 6).

     At September 31, 1999, there was a 7% secured note receivable in the amount
     of $283,746,  due from VDC as part of the payment for VDC's purchase of the
     Company's  common stock.  The note was secured by the acquired common stock
     and a second  mortgage.  During the year ended  September 30, 2000 the note
     was paid in full.

     During 2000, the Company obtained cash advances of $1,419,670 from VDC. The
     increase in other related party  transactions of $189,894 has been added to
     the  advance  account  and  $34,529  was  applied to the  exercise of stock
     options.  Accordingly,  the note payable balance to VDC is $1,575,033 as of
     September 30, 2000.

4.   Inventory

     Inventory consists of the following:

                                                        2000             1999
                                                     ----------       ----------
     Finished goods and repair parts                 $1,046,284       $  616,433
     Valuation allowance                                338,000           40,000
                                                     ----------       ----------
           Total                                     $  708,284       $  576,433
                                                     ==========       ==========

                                    23 of 37

<PAGE>


4.   Inventory, continued

     The Company  increased  its  inventory  valuation  allowance  for inventory
     related to a new product line.  This decision is based on inventory on loan
     at  customers'  sites as well as  extraordinarily  large  inventory  due to
     advance commitments for the purchase of such inventory,  which could result
     in excess and potentially obsolete inventory. Accordingly, at September 30,
     2000 and 1999, inventory for this product line has been written down to its
     estimated net realized value, and results of operations for the years ended
     September 30, 2000 and 1999 include a corresponding charge of approximately
     $300,453 and $40,000, respectively.

5.   Property and Equipment

     Property  and  equipment  are  summarized  by major  category as follows at
     September 30, 2000 and 1999:

                                                      2000              1999
                                                   -----------      -----------
     Network and related equipment                 $ 1,378,046      $   991,549
     Furniture and fixtures                            204,619          175,279
     Computer software                                  28,418           29,176
     Leasehold improvements                             26,183           26,183
                                                   -----------      -----------

            Subtotal                                 1,637,266        1,222,187

     Accumulated depreciation and amortization      (1,012,945)        (836,489)
                                                   -----------      -----------

            Property and equipment, net            $   624,321      $   385,698
                                                   ===========      ===========


     Depreciation  and  amortization  included in the  statements  of operations
     amounted to $186,655 and $122,380  for the years ended  September  30, 2000
     and 1999, respectively.

6.   Accrued Expenses

     Accrued  expenses are  summarized by major category as follows at September
     30, 2000 and 1999:

                                                           2000           1999
                                                         --------       --------
     Accrued expenses-other                              $ 90,445       $101,886
     Vacation                                              53,383         45,462
     Management fees-related party (Note 3)                50,000         30,000
     Payroll                                               65,585         46,693
     Customer deposits                                      1,333          1,333
                                                         --------       --------
                                                         $260,746       $225,374
                                                         ========       ========

                                    24 of 37

<PAGE>


7.   Notes Payable and Other Debt

     Notes Payable

     Notes payable-related party consist of the following:   2000         1999
                                                           ---------   ---------
     Note payable to Eric Jacobs, a Director of the
        Company and VDC, with principal of $250,000 at
        12% interest issued in May 1999. The principal
        balance and accrued interest is due on December
        31, 2001. Accrued interest payable as of
        September 30, 2000 is $863.                        $ 125,000   $ 250,000
                                                           ---------   ---------

     Note payable to officer, interest at 6% per annum,
        uncollateralized. The note was subordinated to
        the $100,000 credit line credit discussed
        below. The note and related interest were paid
        in full in January 2000.                               --         40,500
                                                           ---------   ---------

     Total notes payable--related party                    $ 125,000   $ 290,500
                                                           =========   =========


     Line of Credit

     During the year ended  September 30, 2000, the Company had a line of credit
     of $100,000  with a financial  institution.  Interest on the line of credit
     was at the institution's published reference rate and it was collateralized
     by the  assets of the  Company.  During  the  year,  the  Company  borrowed
     $100,000  against the line of credit;  however,  there is no balance on the
     line of credit as of September 30, 2000. At September 30, 2000, the line of
     credit was closed.

8.   Sale of Internet Business Solutions (IBS)

     In December  1998,  The Company  sold  substantially  all of the assets and
     certain of the liabilities of its wholly owned subsidiary Internet Business
     Solutions,  Inc. (IBS) for $1,000,000.  The assets sold included office and
     computer  equipment used by IBS in its business of web site development and
     design as well as  receivables  and certain  other  intangible  assets.  At
     closing,  The Company  received  $900,000 of the purchase  price,  with the
     remaining  $100,000  deposited  into  an  interest-bearing  escrow  account
     established for the benefit of The Company. Such amount will be released in
     full to The Company in increments  upon the  termination  of the statute of
     limitations  governing  certain  potential  claims against IBS or the buyer
     connected  with the  disposition  of  IBS's  assets,  or upon  the  earlier
     agreement of the buyer.  As of September 30, 2000, The Company has received
     the remaining $100,000, of which $50,000 was received during the year ended
     September 30, 2000.

     Results of  operations  for the year ended  September  30, 1999 include IBS
     revenue and expenses of $252,000 and  $229,000,  respectively.  The sale of
     IBS resulted in a $663,530  realized  gain in the year ended  September 30,
     1999.

                                    25 of 37

<PAGE>


9.   Income Taxes

     The  provision  for income taxes for the fiscal years ended  September  30,
     2000 and 1999 consists of California  franchise taxes. A reconciliation  of
     the expected and reported provision for income taxes follows:

                                                               2000       1999
                                                               ----       ----
     Benefit expected based on federal statutory rate          34.0%      34.0%
     State taxes, net of federal benefit                        6.1        6.1
     Utilization of net operating loss carryforwards            --         --
     Valuation allowance, net                                 (40.1)     (40.1)
                                                               ----       ----
          Net income tax provision                              0.0%       0.0%
                                                               ====       ====

     The  Company  has  Federal  and   California   net  operating   loss  (NOL)
     carryforwards   totaling  approximately  $7.7  million  and  $3.5  million,
     respectively,  as shown below. The utilization of NOL carryforwards through
     1998,  expiring in 2013, is limited due to a change of ownership as defined
     in the Internal  Revenue Code. As a result,  the federal and state NOLs can
     be utilized at the rate of $68,000 a year through the year 2013.

     At  September  30, 2000 the Company had NOL  carryforwards  for federal tax
     purposes expiring as follows:

     Year Expires                                           Federal
     ------------                                           -------
        2009                                             $   204,000
        2010                                                 386,000
        2011                                               1,181,000
        2012                                               4,262,000
        2013                                                 395,000
        2014                                                 167,000
        2020                                               1,158,000
                                                         -----------
        Total loss carryforwards                         $ 7,753,000
                                                         ===========

     NOL  carryforwards  for state tax  purposes of  approximately  $3.5 million
     expire in varying amounts between 2001 and 2005.

     The tax effects of significant temporary differences  representing deferred
     tax assets as of September 30, 2000 and 1999 are as follows:

                                                      2000              1999
                                                  -----------       -----------
     Deferred tax assets:
       Net operating loss carryforwards           $   821,000       $   405,000
       Allowance for inventory                        136,000              --
       Allowance for bad debt                          68,000              --
       Deferred revenue                                11,000              --
       Property and equipment                             800            24,000
                                                  -----------       -----------
         Total deferred tax assets                  1,036,800           429,000

     Less: valuation allowance                     (1,036,800)         (429,000)
                                                  -----------       -----------
         Net deferred tax asset                          --                --
                                                  ===========       ===========

                                    26 of 37

<PAGE>


10.  Earnings (Loss) Per Share

<TABLE>
     Basic  earnings  (loss) per share is  computed  using the  weighted-average
     number of shares of common stock  outstanding  during the periods.  Diluted
     earnings per share is computed using the weighted-average  number of common
     shares and  common  share  equivalents  outstanding  during  the year.  The
     computation of net loss per share was a follows:

<CAPTION>
                                                                                Income (Loss)          Shares            Per Share
                                                                                 (Numerator)        (Denominator)          Amount
                                                                                 -----------        -------------        -----------
<S>                                                                              <C>                  <C>                <C>
Year ended September 30, 2000:
  Basic loss per share                                                           $(1,654,789)         23,305,635         $    (0.07)
  Effect of dilutive stock options and warrants                                         --                  --               --
                                                                                 -----------          ----------         -----------
  Diluted loss per share                                                         $(1,654,789)         23,305,635         $    (0.07)
                                                                                 ===========         ===========         ===========
Year ended September 30, 1999:
  Basic loss per share                                                           $  (125,909)         19,298,846         $    (0.01)
  Effect of dilutive stock options and warrants                                         --                  --               --
                                                                                 -----------          ----------         -----------
  Diluted loss per share                                                         $  (125,909)         19,298,846         $    (0.01)
                                                                                 ===========         ===========         ===========
</TABLE>

     At  September  30, 2000 and 1999,  options and warrants for the purchase of
     6,094,872 and 7,143,668, respectively, common shares at prices ranging from
     $0.10  to  $1.25  were  antidilutive  and  therefore  not  included  in the
     computation of diluted earnings per share.

11.  Commitments

     Lease Commitments

     In January  1999,  the Company  entered  into an  operating  lease to lease
     office space.  This operating  lease is effective for two years with yearly
     options  thereafter for not more than five years. In addition,  the Company
     leases control equipment under various  noncancelable  capital leases.  The
     capital leases began expiring in March 2000. The remaining capital lease as
     of  September  31,  2000 is  secured by the  equipment  under the lease and
     expires in May 2001.

     Future minimum lease payments required under the  noncancelable  leases are
     as follows:

                                                      Operating        Capital
Year Ending September 30:                              Leases          Leases
                                                     ---------       ---------
  2001                                               $ 159,016       $   4,239
  2002                                                 159,016            --
  2003                                                 145,761            --
  2004                                                    --              --
                                                     ---------       ---------
         Total minimum lease payments                $ 463,793           4,239
                                                     =========
Less amount representing interest                                          194
                                                                     ---------
Present value of net minimum lease payments                              4,045
Less current portion                                                     4,045
                                                                     ---------
         Long-term portion                                                --
                                                                     =========

                                    27 of 37

<PAGE>


11.  Commitments, continued

     Lease Commitments, continued

     Total rental expense for all operating leases for the years ended September
     30, 2000 and 1999 amounted to $164,872 and $137,521, respectively.

     Employment Contracts

     The Company and its subsidiary  have  employment  contracts with several of
     their key employees  that expire at different  times through  September 30,
     2002. At September 30, 2000, the commitment  under all of the contracts was
     approximately $495,000.

     Annual Volume Commitment

     The Company has entered into an agreement  with a major  telecommunications
     company for network usage  discounts.  The Company  committed to a two-year
     term commencing March 31, 1998 to a $480,000 annual volume commitment.  The
     commitment  expired on March 31,  2000.  The  Company is in the  process of
     renewing its commitment for network usage discounts.

12.  Concentration of Credit Risk

     Cash

     The Company  maintains  cash balances  primarily  with two major  financial
     institutions  and, as such, from time to time the balances may be in excess
     of the federally insured limit of $100,000 per institution.

     Accounts Receivable

     Accounts  receivable  includes $173,665 from one company,  which represents
     15% of the total accounts receivable  balance.  This account was identified
     as one requiring a specific additional allowance for bad debt.

     Accounts Payable

     Accounts  payable  include   $241,550  to  one  company,   which  comprises
     approximately  25% of the balance,  and $272,423 to another company,  which
     comprises approximately 29% of the balance.

     Advances from Related Party

     The Company has $1.6 million in debt to VDC, its majority shareholder.  The
     Company relies on advances from VDC to fund operations (see Note 3).

                                    28 of 37

<PAGE>


13.  Employee Benefit Plans

     The Company has a 401(k) Income  Deferral Plan (the Plan) for employees who
     have  completed  three  months of  service  and are 21 years or older.  The
     Company  may  make a  discretionary  contribution  to the Plan  each  year,
     allocable to all Plan participants. However, the Company elected to make no
     contributions   for  the  years   ended   September   30,  2000  and  1999.
     Administrative fees for the plan totaled $2,300.

14.  Stockholders' Equity

     Warrants

     At September 30, 2000, the Company has reserved 1,967,158 common shares for
     potential  exercise  of  outstanding  warrants  issued in  connection  with
     various equity and debt financing activities as follows:

                                                  Number of  Expiration
                                                  Warrants      Date       Price
                                                  --------      ----       -----

September 30, 2000:
  Conversion of notes, August 1997                 974,000       2002      1.250
  Senior note warrants, November 1996                9,579       2003       .250
  VDC mirror warrants                              983,579    1999-2003     .100
                                                 ---------
        Total warrants                           1,967,158
                                                 =========


15.  Stock Compensation Plans

     The Company  adopted a stock  option plan on April 3, 1998 which allows the
     Company to grant incentive or nonqualified  options up to 3,000,000  shares
     of  common  stock  to its  employees,  board  members,  and  certain  other
     consultants in order to motivate them to maintain  their  commitment to the
     Company at this stage of its  development.  In February  1999, the plan was
     amended  to allow the  Company  to grant up to  5,000,000  shares of common
     stock.  Additionally,  the Company has stock options  outstanding under two
     nonqualified stock option plans adopted in 1995.

     The Company applies Accounting  Principles Board Opinion No. 25 and related
     interpretations in accounting for its stock option plans.  Accordingly,  no
     compensation  expense has been  recognized  for options  where the exercise
     price has equaled the stock fair value on the date of grant.  During fiscal
     1999,  an employee was granted  options to acquire  75,000 shares of common
     stock at exercise prices below the fair value at the date of grant.  During
     fiscal  year 2000,  the  employee  left the Company  and  exercised  35,000
     shares; 40,000 shares were forfeited. Total compensation expense recognized
     for these  grants in fiscal 2000 and 1999 was  $(5,689)  and  $50,489,  and
     unearned  compensation in the amount of $-0- and $45,511  relating to these
     options was recorded as a reduction in stockholders' equity.

                                    29 of 37

<PAGE>


15.  Stock Compensation Plans, continued

     Had  compensation  expense been determined for stock options granted during
     the twelve  months  ended  September  30, 2000 and 1999,  based on the fair
     value at grant dates consistent with SFAS No. 123, the Company's  condensed
     Pro Forma  Statement of  Operations  for those  periods  would have been as
     follows:

                                                      2000              1999
                                                 ------------       -----------
     Net loss:
       As reported                               $ (1,654,789)      $  (125,909)
                                                 ============       ===========
       Pro forma                                 $ (1,948,587)      $  (376,833)
                                                 ============       ===========

     Basic and diluted loss per share:
       As reported                               $      (0.07)      $     (0.01)
                                                 ============       ===========
       Pro forma                                 $      (0.08)      $     (0.02)
                                                 ============       ===========

     The pro forma amounts were estimated using the Black-Scholes option pricing
     model with the following assumptions for the years ended September 30, 2000
     and 1999, respectively.

                                       2000                         1999
                                       ----                         ----

Interest rate                     4.45%   -  5.80%             4.45%  -   5.80%
Dividend yield                           0%                          0%
Expected volatility                197%   -   214%              197%  -    214%
Expected life in years                    5                           5

<TABLE>
     The following table summarizes  employee stock option plan activity for the
     year ended  September 30, 2000 and 1999:  September 30, 2000  September 30,
     1999

<CAPTION>
                                                          September 30, 2000               September 30, 1999
                                                     ---------------------------      -----------------------------
                                                                     Weighted                           Weighted
                                                       Number         Average           Number           Average
                                                     of Options   Exercise Price      of Options     Exercise Price
                                                     ----------   --------------      ----------     --------------

<S>                                                   <C>              <C>             <C>                <C>
       Outstanding, beginning of period               5,171,458        0.33            6,271,458          0.11
       Granted                                                -           -            1,525,000          0.81
       Canceled                                         277,214        0.58               30,000          0.11
       Exercised                                        766,530        0.11            2,595,000          0.10
                                                     ----------                       ----------

       Outstanding                                    4,127,714        0.36            5,171,458          0.33

       Eligible for exercise, end of period           4,127,714        0.36            4,901,458          0.31
       Weighted average fair value of options
           granted during the year                                                             -          0.81
</TABLE>

                                    30 of 37

<PAGE>


15.  Stock Compensation Plans, continued

<TABLE>
     The  following  table  summarizes   information   regarding  stock  options
     outstanding at September 30, 2000:


<CAPTION>
                                             Weighted            Weighted                           Average
      Exercise            Number              Average             Average           Number         Exercise
        Price           Outstanding       Remaining Life      Exercise Price      Exercisable        Price
     ----------         -----------       --------------      --------------      -----------      ---------
<S>   <C>                    <C>            <C>                  <C>               <C>             <C>
      $ 1.250                49,500         0.80  years          $ 1.250              49,500       $  1.250
        1.000             1,080,000         3.46  years            1.000           1,080,000          1.000
        0.150                30,000         3.34  years            0.150              30,000          0.150
        0.145               620,000         2.85  years            0.145             620,000          0.145
        0.100             2,348,214          3.6  years            0.100           2,348,214          0.100
                        -----------                                              -----------
                          4,127,714                                                4,127,714
                        ===========                                              ===========
</TABLE>


16.    Supplemental Cash Flow Information

     The following table presents additional cash flow information for the years
     ended September 30, 2000 and 1999:

                                                            2000          1999
                                                          --------      --------
     Interest paid                                        $ 40,113      $ 22,773

     Income taxes paid                                       2,400         7,434

     Subscription for common stock                           1,367          --

     Common stock issued for settlement of a portion
         of advances from related party                     34,529          --

     Stock option-related compensation                      (5,689)       50,489


17.  Segment Information

     The Company operates in one business segment,  digital communications.  All
     material  balances related to Company sales,  primary business  activities,
     and  location  of  property,  plant,  and  equipment  are within the United
     States. For the year ended September 30, 1999, no single customer accounted
     for 10% or more of the  Company's net sales.  For the year ended  September
     30, 2000, a single customer  (related party)  accounted for $796,000 or 16%
     of the Company's net sales.

18.  Fourth Quarter Adjustments

     The fourth quarter of 2000 includes $170,000 in the valuation allowance for
     specifically identified bad debts. The fourth quarter of 2000 also includes
     an increase in the  valuation  allowance  for  inventory  of  approximately
     $300,000.


ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

There have been no changes in or  disagreements  with the Company's  accountants
regarding accounting and financial disclosure.

                                    31 of 37

<PAGE>


PART III

ITEM 9 DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

The following sets forth the names,  ages and current positions with the Company
held by Directors,  Executive Officers and significant employees,  together with
the year such positions were assumed. Tom Kobayashi,  Founder and Director,  and
David  Gustafson,  Chief Executive  Officer and President are  brothers-in  law.
Other than as described in the preceding sentence,  there is no immediate family
relationship  between  or among  any of the  Directors,  Executive  Officers  or
significant  employees.  We are not aware of any  arrangement  or  understanding
between any Director or Executive Officer and any other person pursuant to which
he was elected to his current position.

Tom Kobayashi,  age 71, has served as a Director and Chief Executive  Officer of
EDN from 1992 to June 30, 2000.  Mr.  Kobayashi also has served on the Executive
Committee of EDN since August 1998.  From June 1992 to July 1998, Mr.  Kobayashi
served  as the  Chairman  of the Board of  Directors  of  EDNMr.  Kobayashi  has
resigned from the position of CEO, but continues as a Director and is working in
business   development  from  the  company's  Southern  California  office.  Mr.
Kobayashi  will  continue to be employed by the company  through the term of the
current  employment  contract,  December 31, 2000. After that date Mr. Kobayashi
has agreed to continue his relationship with the company as a consultant.

Randy S. Selman, age 44, has served as the Chairman of the Board of Directors of
EDN since July 1998.  Since the  inception  of VDC in May 1993,  Mr.  Selman has
served  as its'  Chief  Executive  Officer,  President,  and  Director  and from
September 1996 through June 1999, he served as its' Chief Financial Officer. Mr.
Selman also serves on the VDC Compensation Committee of the board of directors.

David Gustafson,  age 54, was named Chief Executive Officer July 1, 2000 and has
served as a Director of the Company since 1992. He has held his current position
on the Executive Committee of EDN since August 1998. He has occupied his current
positions as the President and Secretary of EDN since March 1996, and previously
served as Vice President, Marketing and Sales, from July 1992 to March 1996.

Brian K. Service, age 52, has served on the Board of Directors and presides over
the Audit and Remuneration  Committees of the Board of Directors since 1998. Mr.
Service is an international  business consultant with clients in North and South
America,  the United Kingdom,  Asia,  Australia and New Zealand. Mr. Service has
served as a member of the Board of Directors  and on the Audit and  Compensation
Committees  of VDC since July 1997.  In addition to becoming a Director in 1998,
Mr.  Service was  appointed  the CFO and  Secretary of Travel  Dynamics in 1999.
Effective September 15, 1999, Mr. Service was appointed CEO of 3D Systems, Inc.,
a publicly traded company.

Eric Jacobs,  age 53, has been a member of the Board of Directors since December
1998. He has served on the Board of Directors of Visual Data  Corporation  since
July 1997 and has served as Secretary since February 1999. From March 1996 until
August 1997, Mr. Jacobs was Vice  President and General  Manager of VDC's wholly
owned  subsidiary,  HotelView  Corporation  and thereafter he has served as Vice
President  and General  Manager of their  wholly  owned  subsidiary,  ResortView
Corporation.  Since  1976,  Mr.  Jacobs has served as the  Chairman of the Miami
Beach Visitor and Convention  Authority and since  September 1995  asChairman of
the Greater Miami and the Beaches Hotel Association.  Since 1972, Mr. Jacobs has
been a member of Miami Beach  Chamber of Commerce and has served as its Chairman
since September 1996.

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<PAGE>


Alan M.  Saperstein,  age 41, has served as a Director  and on the  Remuneration
Committee of the Board of Directors  since 1998. Mr.  Saperstein also has served
as the  Executive  Vice  President,  Treasurer  and a Director  of VDC since its
inception in May 1993.

Tom Scott, age 56, has served as the Vice-President and Chief Technology Officer
of the  Company  since  1992.  Mr.  Scott is  active  in  numerous  professional
organizations and standards committees, including the Audio Engineering Society,
Society of Motion Picture and Television Engineers,  the Society of Professional
Audio Recording  Studios,  the National  Academy of Recording Arts and Sciences,
and the Academy of Motion  Picture Arts and  Sciences.  He currently  chairs the
Audio subcommittee for the Digital Cinema committee of the SMPTE.

Employment Agreements

We maintain  employment  agreements  with key management and employees as listed
below. All referenced contracts contain identical non-competition provisions:



       Name             Title             Date of Agreement    Expiration Date
       ----             -----             -----------------    ---------------
Tom Kobayashi       Founder              September 1, 1995    December 31, 2000
David Gustafson     CEO, President       July 1, 2000         September 30, 2002
Tom Scott           VP Engineering, CTO  September 1, 1995    December 31, 2000

Compliance with Section 16(a) of the Exchange Act

Under the Securities  Laws of the United States,  the Company's  Directors,  its
Executive (and certain other)  Officers,  and any persons  holding more than ten
percent  (10%) of the  Company's  Common  Stock are  required  to  report  their
ownership of the Company's Common Stock and any changes in that ownership to the
Securities  and Exchange  Commission  and the NASDAQ stock market.  Specific due
dates for these  reports  have been  established  and the Company is required to
disclose in this report any failure to file by these dates during the  preceding
fiscal year.

All of these filing  requirements  were  satisfied by its Officers and Directors
and ten percent (10%) holders.


ITEM 10  EXECUTIVE COMPENSATION

The following table sets forth  information  concerning all annual  compensation
paid to our Chief  Executive  Officer and each of the two highest  paid  persons
other than the Chief  Executive  Officer who were  officers or directors for the
fiscal year ended September 30, 2000:


                                                                   Additional
    Name             Year        Salary            Bonus          Remuneration
    ----             ----        ------            -----          ------------
Tom Kobayashi        2000      $ 140,000             0                 0
                     1999        132,708(1)          0                 0
                     1998        131,000             0                 0

David Gustafson      2000        141,077             0                 0
                     1999        131,831(2)          0                 0
                     1998        131,000             0                 0

Tom Scott            2000        120,000             0                 0

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<PAGE>


                     1999        111,403(3)          0                 0
                     1998         90,000             0                 0

Totals               2000        401,077             0                 0
                     1999        375,942             0                 0
                     1998        352,000             0                 0

(1)  Mr.  Kobayashi  has an  Employment  Agreement  with the  Company,  expiring
     December  2000,  with a base salary of $11,666 per month.  Fiscal year 2000
     compensation includes $500 per month of auto allowance.

(2)  Mr.  Gustafson  has an  Employment  Agreement  with the  Company,  expiring
     September  30, 2002,  with a base salary of $13,333 per month.  Fiscal year
     2000 compensation includes $500 per month of auto allowance.

(3)  Mr. Scott has an Employment  Agreement with the Company that provides for a
     three-and-one-half-year term expiring December 31, 2000, with a base salary
     of $10,000 per month. With the exception of Mr. Service, who had a one-year
     consulting contract under which he received $9,000 per month,  Directors of
     the  Company  do  not  receive  any  compensation  for  their  services  as
     directors.  They  receive  reimbursement  from the Company  for  reasonable
     out-of-pocket   travel  expenses  incurred  in  connection  with  attending
     director meetings in person.

Stock Options

During the fiscal year 2000,  there were 766,530  options for shares  exercised,
and 277,214  options for shares  expired.  At September 30, 2000 there  remained
2,463,500 options for shares total  outstanding.  In addition,  there remains at
September 30, 2000,  843,500 options for shares  authorized but unissued,  along
with 1,664,214 options for shares authorized for mirror exercise by VDC.

On September  19, 1995, we granted a total of 263,420  non-qualified  options to
employees and directors to purchase Common Stock at $0.10 per share. As a result
of the recapitalization,  these options were converted into fully vested options
to purchase  Common Stock at a  conversion  of .87495 per share for each Company
share, resulting in 230,479 options outstanding on September 30, 1999 at a price
of $.11 per share.  As of September  30, 2000 all of these shares priced at $.11
had been exercised.

The Company's  initial  nonqualified  option plan was  terminated as of April 3,
1998. At that time,  the Board of Directors of the Company  adopted and approved
the  Company's  1998 Stock  Option Plan (the  "Plan") for its  employees,  board
members  and certain  other  consultants  in order to motivate  them to maintain
their commitment to the Company. Options under this Plan may be either Incentive
Stock Options or  Nonstatutory  Stock Options and may be exercised no later than
five (5)  years  from the date of their  grant.  The Board of  Directors  of the
Company administers the Plan. The Board has directed the officers of the Company
to reserve  three million  (3,000,000)  shares of Common Stock for issuance upon
exercise of options  granted  pursuant to the Plan. As of September 30, 2000, we
had granted  options  under the Plan to purchase a total of 2,041,500  shares of
Common Stock at a price of $.10 per share.

Other than as  discussed  herein,  we do not have any pension,  profit  sharing,
stock bonus,  or other benefit plans.  In addition,  we make  available  certain
non-monetary  benefits to its  executive  officers  with a view to acquiring and
retaining  qualified  personnel and facilitating  job  performance.  The Company
considers  such  benefits  to be  ordinary  and  incidental  business  costs and
expenses.

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<PAGE>


ITEM 11 SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS

<TABLE>
The following table sets forth information,  as of September 30, 2000, regarding
shares of Common  Stock (a) held of record and (b) that the named  owner has the
right to acquire within sixty days from options,  warrants,  rights,  conversion
privilege  or  similar  obligations  by: (I)  officers  or  directors;  (ii) all
officers and directors as a group; and (iii) each shareholder who owns more than
5% of any class of our securities, including those shares subject to outstanding
options and warrants.  Unless indicated  otherwise,  each shareholder  exercises
sole voting and investment power with respect to shares owned.

<CAPTION>

                                 Name and Address                Amount Owned or Right to
   Title of Class                    Of Owner                    Acquire Within 60 Days        Percent of Class (1)
   --------------                ----------------                ------------------------      --------------------
<S>                   <C>                                            <C>                               <C>
Common                Tom Kobayashi                                     932,474(2)                      4%
                      One Union Street
                      San Francisco, CA 94111

Common                David Gustafson                                   558,684(3)                      2%
                      One Union Street
                      San Francisco, CA 94111

Common                Tom Scott                                         542,802(4)                      2%
                      One Union Street
                      San Francisco, CA 94111

Common                Randy Selman                                      300,000(5)                      1%
                      1291 SW 29th Avenue
                      Pompano Beach, FL 33069

Common                Alan Saperstein                                   300,000(6)                      1%
                      1291 SW 29th Avenue
                      Pompano Beach, FL 33069

Common                Brian Service                                     300,000(7)                      1%
                      One Union Street
                      San Francisco, CA 94111

Common                Eric Jacobs                                       350,000(8)                      2%
                      1291 SW 29th Avenue
                      Pompano Beach, FL 33069

Common                Visual Data                                    12,120,839                        51%

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<PAGE>


Common                All officers and directors as a group
                                                                      3,283,960                        14%

<FN>
(1)  Based upon  23,956,980  shares of Common Stock issued and outstanding as of
     September 30, 2000.
(2)  Includes right to acquire 220,000 shares within 60 days from options.
(3)  Includes right to acquire 470,000 shares within 60 days from options.
(4)  Includes right to acquire 127,917 shares within 60 days from options.
(5)  Includes  right to  acquire  300,000  shares  within 60 days from  options,
     excludes VDC shares.
(6)  Includes  right to  acquire  300,000  shares  within 60 days from  options,
     excludes VDC shares.
(7)  Includes  right to  acquire  300,000  shares  within 60 days from  options,
     excludes VDC shares.
(8)  Includes  right to  acquire  350,000  shares  within 60 days from  options,
     excludes VDC shares.
</FN>
</TABLE>


ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Consulting Agreement with B.K. Service International  Business  Consultancy.  On
July 1, 1998, we entered into a consulting agreement with Mr. Service,  pursuant
to which Mr.  Service  agreed to serve EDN in preparing  SEC filings,  corporate
governance,  financial planning, cash management, and investor relations. We had
a contract for $9,000 per month. The term of this contract extended to September
30,  2000,  at which  point the  consulting  arrangement  with Mr.  Service  was
discontinued.

Consulting  Agreement with Mackenzie Shea Inc. On June 16, 1998. We entered into
an agreement with Mackenzie Shea, Inc. ("MSI"), pursuant to which MSI introduced
EDN to Visual Data  Corporation and assisted in effecting the closing of the VDC
Purchase  Agreement.  We agreed to compensate MSI for its services in a lump sum
of $66,000.  MSI also  received  warrants to  purchase an  aggregate  of 750,000
shares of Common  Stock at a per share  price of  $0.145.  These  warrants  were
exercised in May 1999.

Short-term Loans from Officers, Directors and Shareholders

There is only one loan outstanding from a Director,  Mr. Eric Jacobs. Mr. Jacobs
made a loan for  $250,000,  evidenced  by a  promissory  note  dated May 1999 to
November 17, 2000.  The maturity date of the note was  subsequently  extended to
December  31,  2001.  During the current  year  payments of  principal  totaling
$125,000 were made. At year end the remaining balance of this note is $125,000.

In addition,  there is short term  funding made  available to the company by the
parent,  VDC, in the form of a short-term  loan. The company has drawn upon this
resource  over the current year such that the balance at  September  30, 2000 is
$1,419,670.


ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K

Exhibit No.                Type of Exhibit

(10)                       Material Contracts.  NONE
                           Reports on Form 8-K.  NONE
(27)                       Financial Data Schedule. FILED HEREWITH

SIGNATURES

                                    36 of 37

<PAGE>


In accordance  with the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934,  the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Entertainment Digital Network, Inc.

(Registrant)

Date: January 11, 2001                  By: /s/David Gustafson
                                            --------------------------
                                            David Gustafson,

                                        By: /s/Steven M. Wright
                                            --------------------------
                                            Steven M. Wright,

In accordance with the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

Date: January 11, 2001                  By: /s/David Gustafson
                                            --------------------------
                                         David Gustafson,
                                         Chief Executive Officer and Director

Date: January 11, 2001                  By: /s/Tom Kobayashi
                                            --------------------------
                                         Tom Kobayashi,
                                         Director

Date: January 11, 2001                  By: /s/Eric Jacobs
                                            --------------------------
                                         Eric Jacobs,
                                         Director

Date: January 11, 2001                  By: /s/Alan Saperstein
                                            --------------------------
                                         Alan Saperstein,
                                         Director

Date: January 11, 2001                  By: /s/Randy Selman
                                            --------------------------
                                         Randy Selman,
                                         Chairman of the Board of Directors

Date: January 11, 2001                  By: /s/Brian Service
                                            --------------------------
                                         Brian Service,
                                         Director

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