UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                   FORM 10-QSB


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

         For the quarterly period ended March 31, 1998 or


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

         For the transition period from ________ to ________

                        Commission file number 000-21659


                                   EDnet, INC.

        (Exact name of small business issuer as specified in its charter)


           Colorado                                         84-1273795
  --------------------------                              ---------------
  State or other jurisdiction                            (I.R.S. Employer
of incorporation or organization)                       Identification No.)


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


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


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 ( ).

Number of shares outstanding of the issuer's common stock as of March 31, 1998:
8,178,419

Transitional Small Business Disclosure Format (Check one):  Yes ( ) No (X)


<PAGE>

Part I.  FINANCIAL INFORMATION

                                   EDnet, Inc.
                           CONSOLIDATED BALANCE SHEETS
                     As of March 31, 1998 and June 30, 1997

                                     ASSETS
                                                         3/31/98       6/30/97
                                                       (Unaudited)   (Unaudited)
                                                       -----------   ----------
CURRENT ASSETS
      Cash                                                $42,105       $31,067
      Accounts Receivable, net                            496,343       445,121
      Inventories                                         108,454       202,913
      Other Current Assets                                 39,319       193,949
                                                       ----------    ----------
                    TOTAL CURRENT ASSETS                  686,221       873,050

PROPERTY AND EQUIPMENT, NET                               468,369       556,533
OTHER ASSETS                                               15,904         5,478
                                                       ----------    ----------
      TOTAL ASSETS                                     $1,170,494    $1,435,061
                                                       ==========    ==========
                 LIABILTIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Accounts payable                                 $1,118,999    $1,648,167
      Accrued expenses                                    314,964       466,455
      Deferred revenue                                      3,376        69,193
      Line of credit                                        9,073        34,628
      Notes payable                                       424,580       592,286
      Current portion of capital lease obligations         11,175        27,817
                                                       ----------    ----------
      TOTAL CURRENT LIABILITIES                         1,882,167     2,838,546

LONG TERM LIABILITIES                                     627,244       770,904
                                                       ----------    ----------
      TOTAL LIABILITIES                                 2,509,411     3,609,450

STOCKHOLDERS' EQUITY
      Common  stock;  par value $.001 per share
      Authorized  50,000,000  shares, 8,178,419
      and 5,720,465 shares issued and outstanding
      as of March 31, 1998 and June 30,1997
      respectively                                          8,178         5,720

      Preferred Stock; par value $1,000 per share
      Authorized 1,750 shares, 150 shares
      issued and outstanding as of March 31, 1998               -       165,596

      Capital paid in excess of par value
      of common stock                                   5,332,638     4,411,577

      Accumulated Deficit                              (6,679,733)   (6,757,282)
                                                       ----------    ----------
      TOTAL STOCKHOLDERS' EQUITY                       (1,338,917)   (2,174,389)

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $1,170,494    $1,435,061
                                                       ==========    ==========

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

<PAGE>

                                   EDnet, Inc.
                        CONSOLIDATED STATEMENTS OF INCOME
            For the Three and Nine Months ended March 31, 1998 & 1997

<TABLE>
<CAPTION>
                                                Three Months               Nine Months
                                               Ended March 31            Ended March 31
                                                ( Unaudited )             ( Unaudited )
                                          ----------------------------------------------------
                                              1998         1997        1998         1997
                                          ----------------------------------------------------
<S>                                          <C>          <C>         <C>         <C>      
Revenues:
    Equipment sales and installation          $268,951     $192,778    $709,511      $834,483
    Site development and services              211,417      205,157     571,296       781,032
    Access, Usage, and Hosting fees            549,408      504,199   1,596,917     1,306,063
    Other fees                                  30,128       36,718      94,208        95,357
                                          ----------------------------------------------------
                                             1,059,904      938,852   2,971,932     3,016,935

Cost of sales                                  688,422      515,022   1,919,627     1,718,837
                                          ----------------------------------------------------

    Gross Profit                               371,482      423,830   1,052,305     1,298,098

Research & Development                               -       51,188           -       974,284
Sales and Marketing expenses                   148,336      232,412     471,696       670,284
General and Administrative expenses            306,151      838,319   1,179,199     1,949,637
                                          ----------------------------------------------------
                                               454,487    1,121,919   1,650,895     3,594,205

    Income (loss) from operations              (83,005)    (698,089)   (598,590)   (2,296,107)
                                          ----------------------------------------------------

Other income (expense):
    Interest income (expense)                  (16,192)    (164,118)    (37,985)     (261,412)
    Other income (expense)                     214,293        2,323     551,078         2,323
                                          ----------------------------------------------------

    Total other income (expense), net          198,101     (161,795)    513,093      (259,089)
                                          ----------------------------------------------------

    Income (loss) before provision
      for income taxes                         115,096     (859,884)    (85,497)   (2,555,196)

Income taxes                                         -        3,266       2,400         3,266
                                          ----------------------------------------------------

    Net income (loss)                         $115,096    $(863,150)   $(87,897)  $(2,558,462)
                                          ====================================================

Net Income (Loss) Per Common Share               $0.01       $(0.17)     $(0.01)       $(0.54)
                                          ====================================================

Weighted Average Number
    of Shares Outstanding                    8,032,899    5,178,909   7,516,790     4,747,188
                                          ====================================================
</TABLE>


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

<PAGE>

                                   EDnet, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                for the Nine Months ended March 31, 1998 and 1997

                                                       3/31/98        3/31/97
                                                     (Unaudited)    (Unaudited)
                                                      ----------     ----------
Cash flows from operating activities:

    Net income (loss)                                   $(87,897)   $(2,558,462)

    Adjustments to reconcile net loss to
    cash used in operating activities:                                

       Depreciation and amortization                     147,201        307,771
       Provision for doubtful accounts                   (10,930)         3,498
       Noncash compensation expenses                     421,244        222,541
       Decrease (increase) in other current assets       (22,462)        12,539
       Decrease (increase) in accounts receivable        (40,292)      (160,180)
       Decrease (increase) in inventory                   22,478        (88,826)
       Increase (decrease) in accounts payable
          and accrued expenses                        (1,069,862)       926,202
       Increase (decrease) in deferred revenue           (65,817)       (52,344)
                                                      ----------      ---------
          Net cash used in operating activities         (706,337)    (1,387,261)
                                                      ----------      ---------
Cash flows from investing activities:

    Purchase of property and equipment                   (18,817)      (276,116)
    Sale of property and equipment                         9,844              -
    Proceeds from sale of assets                         495,000              -
                                                      ----------      ---------
          Net cash used in investing activities          486,027       (276,116)
                                                      ----------      ---------
Cash flows from financing activities:

    Repayment on borrowings                             (310,208)      (379,116)
    Proceeds from borrowings                             569,422      1,000,000
    Repayments on capital leases                         (28,754)       (22,526)
    Issuance of common stocks                                888              -
    Issuance of shares under Reg D                             -        738,011
    Issuance of shares under Reg S                             -        163,352
                                                      ----------      ---------
          Net cash provided by financing activities      231,348      1,499,721
                                                      ----------      ---------

                 Net increase (decrease) in cash          11,038       (163,655)
                                                      ==========      =========

Cash at beginning of period                               31,067        221,875
                                                      ----------      ---------

Cash at end of period                                    $42,105        $58,219
                                                      ==========      =========

              The accompanying notes are an integral part of these
                       consolidated financial statements.
<PAGE>


                                   EDNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   Basis of Presentation
     In  the  opinion  of  management,   the  unaudited  consolidated  condensed
     financial  statements  included  herein have been  prepared on a consistent
     basis  with  the  June  30,  1996  audited  and  June  30,  1997  unaudited
     consolidated  financial  statements  and include all material  adjustments,
     consisting of normal recurring adjustments, necessary to fairly present the
     information  set  forth  therein.  As  reported  in the  audited  financial
     statements of June 30, 1996 and the unaudited financial  statements of June
     30, 1997, EDnet Inc. (the Company) has not been able to generate any profit
     since  inception  until last quarter.  The Company had executed a Letter of
     Agreement (LOI) to be acquired by Curtis Mathes Holding Corporation (Curtis
     Mathes) as described in Note 10, which was subsequently rescinded by Curtis
     Mathes on  January  29,  1998 as per Note 12. If the  Company  is unable to
     raise additional funds or consummate a merger or other transaction,  it may
     not have the  financial  resources  to  continue  as a going  concern.  The
     financial  statements do not contain any adjustments  that may be needed if
     the Company is unable to continue as a going concern.

2.   Consolidation
     The consolidated  financial  statements include the accounts of the Company
     and its wholly owned subsidiaries Entertainment Digital Network, Inc. (EDN)
     and  Internet   Worldwide   Business   Solutions,   Inc.  (IBS).   Material
     inter-company transactions and balances have been eliminated.

3.   Loss per Share
     Net income for the quarter  ended March 31, 1998 and the loss per share for
     the nine months ended March 31, 1998 has been  computed  using the weighted
     average number of common shares  outstanding  totaling 8,032,899 shares for
     the three months and 7,516,790 for nine months ended March 31, 1998.  There
     were a  weighted  average of  5,718,909  shares  outstanding  for the three
     months and  4,747,188  for nine  months  ended March 31,  1997.  Due to the
     Company's  loss  position,  common  equivalent  shares  have been  excluded
     because they are anti-dilutive.

4.   Notes Receivable
     In connection  with the  licensing by IBS to  Breakthrough  Software,  Inc.
     (Breakthrough)  of IBS'  software,  completed  in the  prior  quarter,  the
     Company had an unsecured note  receivable  from  Breakthrough  of $250,000,
     which was amended  effective  December 19, 1997.  The Note was reduced by a
     debt  transfer  by  IBS  and  assumption  by  Breakthrough  of  the  Global
     Automation,  Inc.,  debt of $91,891.65 and San Jose Mercury News of $2,000.
     The  $156,108.35  balance of the Note was  canceled  and  substituted  by a
     Convertible  Subordinated  Promissory  Note. On March 13, 1998, the company
     sold the  balance  of  Breakthrough's  note  receivable  $156,108.35  to an
     outside investor of Breakthrough  Software,  Inc. for $80,000.  The Company
     had  established a 100% reserve against the note in fiscal year ending June
     30, 1997.




<PAGE>


5.   Notes Payable
     On March 19, 1998,  the company wrote off a forgiven  debt of  $100,000.00,
     the first of two notes receivable from IDB Communications  Group Inc (IDB).
     On the advice of legal and  auditing  firms,  these  notes were kept on the
     books until the four (4) year statute of  limitations  expired.  The second
     note for $100,000 will be written off on April 8, 1998.

6.   Sale of Breakthrough Preferred Stock
     On November 3, 1997,  the Company  entered  into an  agreement  to sell the
     Company's 2,000,000 shares of Breakthrough  Series A Convertible  Preferred
     Stock for  $415,000 and to exchange  the balance of the  unsecured  note of
     $156,108 due March 31, 1998 into a Convertible  Promissory Note with Common
     Stock  Purchase  Warrants  as  described  in Note 4. The first  payment  of
     $250,000 for the sale was received on November 7, 1997, a second payment of
     $67,995.04  on December 19, 1997 and the balance of  $97,004.96  on January
     21, 1998.

7.   Letter of Intent.
     On December 23, 1997,  Curtis Mathes and the Company  entered into a Letter
     of Intent wherein Curtis Mathes would acquire all of the outstanding shares
     of the Company.  In the acquisition,  the outstanding  Company common stock
     would have been exchanged for newly issued shares of common stock of Curtis
     Mathes on a one for one basis. As a result of the acquisition,  the Company
     would have become a wholly-owned  subsidiary of Curtis Mathes.  However, on
     January 29, 1998,  Curtis Mathes informed the Company that they had decided
     not to proceed with the  acquisition  of the Company based on their opinion
     that certain contingencies in the Letter of Intent did not occur.

8.   Revolving Credit and Security Agreement
     Under a revolving  credit and security  agreement  executed on December 30,
     1997, Curtis Mathes (Lender) established a Revolving Credit in favor of the
     Company in an aggregate  principal  amount at any one time  outstanding not
     exceeding $1,000,000. The amount of any borrowing may be repaid in whole or
     in part within one (1) year from date of funding  and such  repaid  amounts
     may be  thereafter re borrowed.  All principal and accrued  interest due on
     such borrowing must be repaid within one (1) year from date of funding. The
     annual rate of interest is at the rate  equivalent to the rate described by
     the Wall Street Journal as the prime rate in effect from time to time, plus
     one and  one-half  (1.5%).The  Company  has  granted  security  interest as
     collateral all accounts,  contract rights and general intangibles  relating
     to accounts,  receivables and claims whether now or hereafter arising;  all
     inventory,  wherever located and whether now or hereafter existing; and all
     equipment, wherever located and whether now or hereafter arising.

     The Company borrowed $75,000 under this agreement on December 30, 1997. The
     Company  borrowed an additional  $275,000  under the  Revolving  Credit and
     Security  Agreement  from January 1, 1998 to January 22, 1998.  The Company
     had  repaid  through  January  27,  1998  against  the  loans  a  total  of
     $221,493.58  leaving a balance  due on the  principal  of  $129,987.74  and
     accrued interest as of March 31, 1998 of $2,381.03.

9.   Conversion of Preferred Stock
     Corner  Banca S A converted  its 150 shares of  preferred  stock to 150,000
     shares of common stock at $1.00 per share on January 8, 1998.

10.  Subsequent Events
     On April 2, 1998,  Charles W. Clark submitted his resignation as a director
     of EDnet, Inc. for personal reasons.



<PAGE>

                                   EDNET, INC.
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


Results of Operations

For the  three  months  ended  March  31,  1998,  the  Company's  revenues  were
$1,059,904,  an  increase  of 11.42%  compared  to  revenues  of $938,852 in the
comparable  period last year.  Increases  in revenue  resulted  from audio codec
equipment sales, network access,  usage fees and hosting revenues.  Revenues for
the nine months ended March 31, 1998  decreased  1.5% to $2,971,932  compared to
revenues of $3,016,935 in the comparable period last year.  Decreases in revenue
are  primarily  due to  decreases  in web  site  development,  and for  sales of
equipment in the first two  quarters.  The decline of equipment  revenues in the
nine months ended March 31, 1998 was due to  unavailability of inventory because
of vendor credit restrictions.  However, there were increases in network access,
usage fees and hosting revenues associated with a growing installed base for the
past nine months.

Gross Profit  decreased  to $371,482 or 35% of sales,  in the three months ended
March 31, 1998 compared to $423,830,  or 45% of sales, in the equivalent  period
last year.  For the nine months ended March 31, 1998 gross  profit  decreased to
$1,052,305,  or 35% of sales, from $1,298,098, or 43% of sales in the equivalent
period last year. Decreases in gross profit as a percentage of sales compared to
prior periods are primarily due to increase in web programmers costs and hosting
services of $185,102  for the three  months  ended March 31, 1998 and nine month
costs of $469,821. In prior periods these costs were shown as operating overhead
costs.  If these items were  included in overhead  rather than cost of sales for
our current  quarter and  year-to-date,  the gross profit for three months ended
March 31, 1998 would be $556,584 or 52% of sales  compared to $423,830 or 45% of
sales in the  equivalent  period,  and for the nine months ended March 31, 1998,
the gross profit would increase to $1,522,126 or 51% of sales from $1,298,098 or
43% of sales.

Operating expenses  (including  Research & Development,  Sales & Marketing,  and
General & Administrative)  decreased to $454,487 in the three months ended March
31, 1998 compared to $1,121,919 in the equivalent period last year. For the nine
months ended March 31, 1998  operating  expenses  decreased to  $1,650,895  from
$3,594,205  in  the  equivalent   period  last  year.   There  were  significant
non-recurring  expenditures  in the three months and nine months ended March 31,
1997 which included the  following:  (1) Three and nine months  expenditures  on
Research & Development  were $51,188 and $974,284.  (2) Expenses of $313,160 for
three months and $561,112 for nine months, included the amortization of the cost
of Liviakis consulting agreement,  amortization of goodwill, non-recurring legal
and accounting costs  associated with the IBS  acquisition,  the Company's three
year audit,  the filing of Form 10-SB  registration  statement with the SEC, and
fees  associated  with the Senior Notes.  The Company did not incur any research
and development expense during the current three and nine months ended March 31,
1998. This reduction in research and development from prior  equivalent  periods
is due  primarily  to the action  taken to license the  Company's  IBS  Internet
software  product to  Breakthrough  Software  Inc.  (Breakthrough),  rather than
continue  development  efforts.  Other operating  expenses include reductions of
$185,102 for the three months and $469,821 for nine months ended March 31, 1998,
of web development  cost and hosting  service  expenses that are now included in
the  cost  of  sales  for  web  development  and  hosting  services.  The  major



<PAGE>


non-recurring  expense of $400,000 for the current nine months period represents
the cost of the 400,000  shares of S-8 common stock of the Company  issued under
the Charles Clark consulting agreement in July, 1997.

Other income and expenses  increased to a positive  $198,101 in the three months
ended  March 31,  1998  compared to a negative  $161,795  during the  equivalent
period last year.  For the nine months ended March 31, 1998 net other income and
expenses increased to a positive $513,093 compared to a negative $259,089 in the
equivalent prior period.  The increase in other income was attributed to sale of
assets for the investment of Breakthrough of $415,000 (Note 5), restructuring of
certain  accounts payable debts of $165,793 and write-off of the note payable of
$100,000 from IDB (Note 5). For the three and nine month period ending March 31,
1998,  other income also  includes the reduction of $91,892 for transfer of debt
against the reserved  note  receivable  from  Breakthrough,  and the sale of the
balance of this reserved note to an outside investor for $80,000 (Note 4).

The decrease in interest expense was due to the restructuring of senior notes on
June 30, 1997,  which resulted in interest  expense  decreasing from $164,188 to
$16,192 for three months ended March 31, 1998 and  decreasing  from  $261,412 to
$37,985 for nine  months  ended  March 31,  1998  compared  to their  respective
comparable periods.

For the three months ended March 31, 1998, the Company  produced a net income of
$115,096  or $0.01 per share  based on a weighted  average of  8,032,899  shares
outstanding, compared with a net loss of $863,150, or ($0.17) per share based on
a weighted  average of  5,178,909  shares  outstanding  in the prior  year.  The
Company incurred a net loss for the nine months ended March 31, 1998 of $87,897,
or  ($0.01)  per  share  based  on  a  weighted   average  of  7,516,790  shares
outstanding,  compared with a net loss of $2,558462 or ($0.54) per share,  based
on a weighted average of 4,747,188 shares in the prior period.

Financial Condition, Liquidity, and Capital Resources

At March 31, 1998,  the Company's  accumulated  deficit was  $6,679,733  and its
working capital  deficit was  $1,195,946.  The rate of decrease in the Company's
accumulated  deficit  declined in the quarter ended March 31, 1998 due primarily
to the sale of assets for  investment of  Breakthrough  (Note 6),  assumption of
debt by Breakthrough  against a note  receivable  which was fully reserved (Note
4),  restructuring  of the debt with certain  vendors,  and writing off the note
payable from IDB (Note 5). The Company's  working  capital  deficit  improved by
$769,550  since  June 30,  1997 due  primarily  to the  restructuring  of Morgan
Fuller's  Senior  Notes,  the  Conversion  of Irawan  Onggara's  Note Payable to
equity,  and the  improvement  in net income.  The Company has also made several
adjustments  to its  operations  to further  reduce  costs during the nine month
period.

Disclosure Pursuant to the Private Securities Litigation Reform Act of 1995

When used in this Management's  Discussion and Analysis, the words "anticipate,"
"estimate,"   "expect,"  and  similar   expressions  are  intended  to  identify
forward-looking  statements.  These  statements are subject to certain risks and
uncertainties,  including,  but not limited to, the following:  risks associated
with  fundraising  and the company's  ability to secure  resources  necessary to
fully develop business products; risks associated with mergers and acquisitions,



<PAGE>


the nature of any  transaction  consummated,  and the  ability  to  successfully
operate  a  merged  entity;   business  conditions  in  the  telecommunications,
entertainment,  advertising  and  Internet-related  industries,  and the general
economy;  competitive  factors such as rival  networking  technology,  competing
products,   and  competitive   pricing;   risks  associated  with   development,
introduction,  and acceptance of new products;  the company's  ability to manage
its rapid growth and attract and retain key  employees;  and other risk factors.
Actual results may differ  materially from management  expectations as discussed
here.


<PAGE>




PART II  OTHER INFORMATION



Item 1.  Legal Proceedings

None


Item 2.  Changes in Securities

None


Item 3.  Defaults Upon Senior Securities

None


Item 4.  Submission of Matters to a Vote of Security Holders

None


Item 5.  Other Information

None


Item 6.  Exhibits and Reports on Form 8-K

         (a) (27) Financial Data Schedule, filed electronically

<PAGE>




                                   SIGNATURE

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




                                              EDNET, INC.



May 11, 1998                                  By: /s/ Tom Kobayashi 
                                                  -------------------
                                                  Tom Kobayashi 
                                                  Chairman and CEO




                                              By: /s/ David Gustafson
                                                  -------------------
                                                  David Gustafson
                                                  President