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, 1997 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)


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


         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, 1997:
5,665,465

Transitional Small Business Disclosure Format (Check one):        Yes___  No_X_

<PAGE>


<TABLE>

Part I.  FINANCIAL INFORMATION


                                                            EDnet, Inc.
                                                  CONSOLIDATED STATEMENTS OF INCOME
                                     For the Three and Nine Months ended March 31, 1997 & 1996
<CAPTION>
                                                        
                                                                         Three Months                          Nine Months         
                                                                        Ended March 31                        Ended March 31       
                                                                        ( Unaudited )                         ( Unaudited )        
                                                               ------------------------------        ------------------------------
                                                                   1997               1996               1997               1996    
                                                               -----------        -----------        -----------        -----------
<S>                                                            <C>                <C>                <C>                <C>        
Revenues:
        Equipment sales and installation                       $   192,778        $   352,299        $   834,483        $ 1,050,123
        Site development and services                              205,157               --              781,032               --   
        Access, Usage, and Hosting fees                            504,199            215,087          1,306,063            720,340
        Other fees                                                  36,718             28,257             95,357            157,439
                                                               -----------        -----------        -----------        -----------
                                                                   938,852            595,643          3,016,935          1,927,902

Cost of sales                                                      515,022            358,451          1,718,837          1,177,555
                                                               -----------        -----------        -----------        -----------

        Gross Profit                                               423,830            237,192          1,298,098            750,347



Research & Development                                              51,188               --              974,284               --   
Sales and Marketing expenses                                       232,412             11,460            670,284             19,130
General and Administrative expenses                                838,319            405,014          1,949,637          1,066,274
                                                               -----------        -----------        -----------        -----------

        Loss from operations                                      (698,089)          (179,282)        (2,296,107)          (335,057)
                                                               -----------        -----------        -----------        -----------

Other income (expense):
        Interest expense                                          (164,118)            (2,956)          (261,412)           (26,522)
        Gain on sales of fixed assets                                2,323               --                2,323               --   
                                                               -----------        -----------        -----------        -----------

        Total other income (expense), net                         (161,795)            (2,956)          (259,089)           (26,522)
                                                               -----------        -----------        -----------        -----------

        Loss before provision for income taxes                    (859,884)          (182,238)        (2,555,196)          (361,579)

Income taxes                                                         3,266               --                3,266               --   
                                                               -----------        -----------        -----------        -----------

        Net Loss                                               $  (863,150)       $  (182,238)       $(2,558,462)       $  (361,579)
                                                               ===========        ===========        ===========        =========== 

Net Loss Per Common Share                                      $     (0.17)       $     (0.08)       $     (0.54)       $     (0.16)
                                                               ===========        ===========        ===========        =========== 

Weighted Average Number                                          5,178,909          2,261,945         4,747,188           2,261,945
                                                               ===========        ===========        ===========        =========== 


<FN>

                      The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
                                                                 2
<PAGE>

<TABLE>
                                                             EDnet, Inc.
                                                     CONSOLIDATED BALANCE SHEETS
                                               As of March 31, 1997 and June 30, 1996
<CAPTION>

                                                               ASSETS
                                                                                                   3/31/97              6/30/96
                                                                                                 (Unaudited)   
                                                                                                -----------------------------------
<S>                                                                                             <C>                     <C>    
CURRENT ASSETS
        Cash                                                                                    $    58,219             $   221,875
        Accounts Receivable, net                                                                    634,758                 478,076
        Inventories                                                                                 236,235                 147,409
        Other Current Assets                                                                        768,400                  14,298
                                                                                                -----------------------------------
                TOTAL CURRENT ASSETS                                                              1,697,612                 861,658

PROPERTY AND EQUIPMENT, NET                                                                         623,951                 488,943
GOODWILL, NET                                                                                       714,996               1,088,568
OTHER ASSETS                                                                                         64,445                  79,342
                                                                                                -----------------------------------
        TOTAL ASSETS                                                                            $ 3,101,004             $ 2,518,511
                                                                                                ===================================

                                           LIABILTIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
        Accounts payable                                                                        $ 1,531,048             $   659,709
        Accrued expenses                                                                            427,037                 390,002
        Deferred revenue                                                                             17,279                  69,623
        Line of credit                                                                               34,465                  16,638
        Notes payable                                                                             1,332,122                 990,991
        Current portion of capital lease obligations                                                 36,172                  24,493
                                                                                                -----------------------------------
                TOTAL CURRENT LIABILITIES                                                         3,378,123               2,151,456

CAPITAL LEASE OBLIGATIONS-LONG TERM                                                                  23,863                  43,622
                                                                                                -----------------------------------
        TOTAL LIABILITIES                                                                         3,401,986               2,195,078


STOCKHOLDERS' EQUITY (DEFICIT)
        Common stock; par value $.001 per share
        Authorized 50,000,000 shares, 5,665,465 and
        4,468,322 shares issued and outstanding as of
        March 31, 1997 and June 30,1996 respectively                                                  5,665                   4,468

        Preferred Stock; par value $1,000 per share
        Authorized 1,750 shares, 150 shares issued and
        outstanding as of March 31, 1997                                                            163,352                    --   

        Common stock warrants                                                                       222,920
        Capital paid in excess of par value of common stock                                       4,351,032               2,758,644

        Accumulated Deficit                                                                      (5,043,951)             (2,439,679)
                                                                                                -----------------------------------
        TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                                       (300,982)                323,433

        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                    $ 3,101,004             $ 2,518,511
                                                                                                ===================================

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

                                                                 3


<PAGE>

<TABLE>
                                                            EDnet, Inc.
                                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         for the Nine Months ended March 31, 1997 and 1996
                                                                                
<CAPTION>
                                                                                                    3/31/97                3/31/96 
                                                                                                  (Unaudited)           (Unaudited)
                                                                                                 ----------------------------------
<S>                                                                                              <C>                    <C>         
Cash flows from operating activities:                                                                           
                                                                                
        Net loss                                                                                 $(2,558,462)           $  (361,579)

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

                Depreciation and amortization                                                        307,771                 73,109
                Noncash compensation expenses                                                        222,541                   --   
                Decrease (increase) in other current assets                                           12,539                 (8,804)
                Increase in accounts receivable                                                     (156,682)              (158,935)
                Increase in inventory                                                                (88,826)              (252,302)
                Increase (decrease) in accounts payable
                        and accrued expenses                                                         926,202               (141,485)
                Decrease in deferred revenue                                                         (52,344)              (124,477)
                                                                                                 ----------------------------------

                        Net cash used in operating activities                                     (1,387,261)              (974,473)
                                                                                                 ----------------------------------

Cash flows from investing activities:

        Purchase of property and Equipment                                                          (276,116)               (39,301)
                                                                                                 ----------------------------------

                        Net cash used in investing activities                                       (276,116)               (39,301)
                                                                                                 ----------------------------------

Cash flows from financing activities:

        Repayment on borrowings                                                                     (379,116)              (126,725)
        Proceeds from borrowings                                                                   1,000,000                   --   
        Repayments on capital leases                                                                 (22,526)               (12,604)
        Issuance of shares under Reg D                                                               738,011              1,159,727
        Issuance of shares under Reg S                                                               163,352                   --   
                                                                                                 ----------------------------------


                        Net cash provided by financing activities                                  1,499,721              1,020,398
                                                                                                 ----------------------------------

                                Net increase (decrease) in cash                                     (163,655)                 6,624
                                                                                                 ==================================


Cash at beginning of period                                                                          221,875                 56,437
                                                                                                 ----------------------------------

Cash at end of period                                                                            $    58,219            $    63,061
                                                                                                 ==================================

<FN>

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

                                                                 4

<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 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,  EDnet,
     Inc. (the Company) has not been able to generate any operating profit since
     inception, and is attempting to raise additional funds as described in Note
     8. In addition, as described in Notes 7 and 9, the Company is delinquent in
     principal payments on its senior  collateralized  promissory notes (Notes),
     and  has  entered  into  preliminary  discussions  with  several  companies
     regarding   merger,   acquisition,   asset  sales,   and  other   potential
     transactions.  However,  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
     Loss per  share has been  computed  using the  weighted  average  number of
     common shares  outstanding  totaling  5,178,909 shares for the three months
     ended March 31, 1997 and  4,747,188  shares for the nine months ended March
     31, 1997. There were 2,261,945  weighted average shares outstanding for the
     three and nine  months  ended March 31,  1996.  Due to the  Company's  loss
     position,  common  equivalent  shares have been  excluded  because they are
     anti-dilutive.

4.   Research and Development
     The Company incurred $51,188 of research and development expense during the
     three months ended March 31, 1997.  This is a reduction from prior quarters
     due  primarily to the  licensing  of the  Company's  IBS Internet  software
     product to Breakthrough Software Inc. (Breakthrough) completed in the prior
     quarter.  Total nine month  expenditures on research and  development  were
     $974,284.

5.   Consulting Agreements
     The  Company  entered  into an  agreement  effective  January 12, 1997 with
     Liviakis Financial  Communications,  Inc.  (Liviakis),  to provide investor
     relations  consulting services to the Company for a term of one year ending
     on January 2, 1998. As payment for its services,  Liviakis received 490,000
     unregistered  shares of common stock from the Company,  valued at $643,125,
     which amount will be amortized over the term of the  agreement.  At the end
     of  the   consulting   agreement,   Liviakis  will  have  the  same  demand
     registration  rights  to  register  such  shares  with the  Securities  and
     Exchange  Commission  (SEC) as given to investors  in the December  31,1996
     private  placement  of common  stock  initiated by the Company in the prior
     quarter.

     On January 31, 1997, the Company  entered into a Consulting  Agreement with
     NET Financial International, Ltd. (NET) to assist the Company in raising up
     to $5,000,000 in a series of private placements of stock,  discussed below.
     The  Company  has agreed to pay NET fees equal to 10% of

                                       5

<PAGE>

     the  total  capital  raised in the  financing  as well as  issuing  to it a
     warrant exercisable for two years allowing the purchase of shares of common
     stock with a value on the date of the closing of the financing  equal to 6%
     of the capital raised in the  financing,  at an exercise price equal to the
     closing  bid price of the  common  stock on the date of the  closing of the
     financing.  The  agreement  has a term of three  months and  thereafter  is
     terminable by either party upon ten days prior written notice. In addition,
     if the Company seeks  additional  financing  during the twelve month period
     after the execution of the NET consulting agreement,  the Company must give
     NET the right of first refusal to obtain such  additional  financing,  upon
     the  compensation  terms described  above. As of March 31, 1997 the Company
     has paid NET cash fees of $15,000  and is  obligated  to issue  warrants as
     described in Note 8 in compensation  for assistance in placing the Series A
     Preferred Stock described in Note 8.

6.   Notes Receivable
     In connection  with the licensing by IBS to  Breakthrough of IBS' software,
     completed  in  the  prior  quarter,  the  Company  has  an  unsecured  note
     receivable  from  Breakthrough of $250,000 as of March 31, 1997. No further
     advances  will be made to  Breakthrough  under the note.  The  Company  has
     extended the due date of the note receivable from Breakthrough to March 31,
     1998, and has established a 100% reserve against the note.

7.   Notes Payable
     On January 31, 1997, the Notes, in the amount of $1,000,000, converted into
     a term loan,  with interest  increasing  to 18% and  principal  payments of
     $100,000  per month  commencing  February  15,  1997.  The  Company  made a
     $100,000  principal  payment on February 15, 1997.  On March 11, 1997,  the
     Company's  financial  advisor,  Morgan Fuller Capital Group (Morgan Fuller)
     verbally  agreed to defer the March 15, 1997 payment for a two week period.
     Subsequent to March 31, 1997, the Company received a written payment demand
     notice from Morgan Fuller,  placing the Company in default.  The Company is
     currently in negotiation with Morgan Fuller and participants  regarding the
     Notes.

8.   Equity Private Placements
     As of March 31, 1997 the Company had issued  265,000 shares of common stock
     priced at $1.00  per share  under its  equity  private  placement  of up to
     $5,000,000 initiated December 31, 1996. The Company anticipates terminating
     this private  placement on June 30, 1997,  whether fully subscribed or not.
     Holders of this common stock will have piggyback and Form S-3  registration
     rights.

     Pursuant to a Certificate of Designation filed with the Colorado  Secretary
     of State on February 2, 1997, the Company's  Articles of incorporation were
     amended  to allow  the  Company  to issue  Series A  Preferred  Shares.  On
     February 3, 1997,  the  Company  offered up to  $1,750,000  of its Series A
     Preferred  Stock at $1,000  per share to  non-United  States  persons in an
     offering exempt from registration  under Regulation S of the Securities Act
     of 1933, as amended,  under its agreement with NET,  described  above.  The
     shares  are  convertible  into  common  stock at any time  until  the third
     anniversary  of their  issuance at the lesser of 70% of: (i) the average of
     the  closing  bid  price  of the  common  stock on the  five  trading  days
     preceding  conversion  (the  "Market  Price");  or (ii) the  average of the
     closing bid price for the common stock on the five  trading days  preceding
     the closing  (the  "Closing  Price"),  or (iii) if the Market  Price or the
     Closing  Price is less than $1.43 per share,  the  minimum  price  shall be
     deemed to be $1.43 per share (the "Floor").  The Series A Preferred  Shares
     are also subject to mandatory  conversion on the third anniversary of their
     issuance  at the lesser of 70% of the Market  Price or the  Closing  Price,
     subject to the Floor.  Upon  conversion,  the holders of Series A Preferred
     Shares will be paid a 6%  cumulative  dividend  measured  from the issuance
     date  through the  conversion  date,  payable in common stock valued at the
     Market Price. The Series A

                                       6

<PAGE>

     Preferred Shares have a liquidation  preference of $1,000 per share and all
     other stock of the Company is  subordinate to such  preference.  Holders of
     Series A Preferred Shares or the underlying conversion common stock will be
     granted  piggyback  and Form S-3  registration  rights  for the  underlying
     common  stock.  As of March 31, 1997,  the Company has issued 150 shares of
     Series A Preferred  Stock for $150,000 under this offering,  has recorded a
     30% preferred stock dividend associated with the conversion  discount,  and
     has accrued a 6%  cumulative  dividend  from the date of  issuance  through
     March 31, 1997. The Company  anticipates  terminating this offering on June
     30, 1997,  whether fully  subscribed or not.  Under the agreement  with NET
     described  in Note 5, the  Company is  obligated  to issue  warrants to NET
     equal to 6% of the capital raised for its assistance in placing this stock.
     The warrants will be priced and issued upon closing of the financing.

9.   Subsequent Events

     Consulting Agreement

     The Company is finalizing  an agreement to be effective  April 7, 1997 with
     an  individual  to act as  the  Company's  President  and  Chief  Executive
     Officer. The agreement will specify cash compensation,  participation in an
     incentive  stock  option  plan to be  developed  by the Company in the next
     ninety days,  and  membership  on the  Company's  Board of  Directors.  The
     agreement  may be  terminated  by either  party with  thirty  days  advance
     notice.

     Merger Discussions

     On April 25, 1997, the Company announced that it has initiated  preliminary
     discussions with several potential partners as merger candidates.  To date,
     those discussions have covered merger, acquisition,  asset sales, and other
     potential  transactions.  As of the  date of  this  filing,  no  definitive
     agreement has been reached.

                                       7

<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, 1997, the Company's revenues were $938,852,
an increase of 58%  compared  to revenues of $595,643 in the  comparable  period
last year.  Revenues for the nine months ended March 31, 1997  increased  56% to
$3,016,935,  compared to revenues of  $1,927,902 in the  comparable  period last
year.  Increases in revenue are  attributed  to increases in network  access and
usage fees  associated  with a larger  installed  base and the  addition  of web
development  and hosting  revenues  associated  with the acquisition of IBS. The
equipment component of revenue declined in the three months ended March 31, 1997
due  to   unavailability   of  inventory  for  shipment  due  to  vendor  credit
restrictions, and comparison to unusually high equipment sales in the comparable
period of the prior year which resulted from equipment promotions.

Gross Profit  increased  to $423,830 or 45% of sales,  in the three months ended
March 31, 1997 compared to $237,192,  or 40% of sales, in the equivalent  period
last year.  For the nine months ended March 31, 1997 gross  profit  increased to
$1,298,098,  or 43% of sales, from $750,347,  or 39% of sales, in the equivalent
period  last  year.  Increases  in gross  profit  as a  percentage  of sales are
attributed to growth in usage revenues,  which carry a higher profit margin, and
the addition of web development and hosting revenues,  which carry a high profit
margin.

Operating expenses  (including  Research & Development,  Sales & Marketing,  and
General &  Administrative)  increased  to  $1,121,919  in the three months ended
March 31, 1997 compared to $416,474 in the equivalent  period last year. For the
nine months ended March 31, 1997 operating expenses increased to $3,594,205 from
$1,085,404 in the equivalent  period last year. The Company  incurred $51,188 of
research and  development  expense during the three months ended March 31, 1997.
This is a reduction  from prior  quarters due  primarily to the licensing of the
Company's  IBS  Internet   software   product  to  Breakthrough   Software  Inc.
(Breakthrough)  completed in the prior quarter. Total nine month expenditures on
research and  development  were $974,284.  Operating  expenses for the three and
nine month  periods  ending  March 31, 1997 also  include  $313,160 and $561,112
respectively,  which represent  amortization of the cost of the current Liviakis
consulting  agreement,  amortization of goodwill,  and  non-recurring  legal and
accounting costs associated with the prior quarter's  Breakthrough  transaction,
the  filing  of a Form  10-SB  registration  statement  with  the  SEC,  and the
Company's  initial  three-year  audit.  With  these  items  excluded,  operating
expenses were $757,571 for the three months ended March 31, 1997 and  $2,058,809
for the nine months ended March 31, 1997,  representing  an 82% and 90% increase
respectively  over the  comparable  periods in the prior year.  This increase is
consistent  with the necessary  addition of  infrastructure  associated with the
Company's increase in sales. Current year operating expenses also include public
and investor  relations,  and other costs associated with being a public company
that were not incurred in comparable periods of the prior fiscal year.

Other  expenses  increased  to $161,795 in the three months ended March 31, 1997
compared to $2,956 in the equivalent period last year. For the nine months ended
March 31,  1997  other  expenses  increased  to  $259,089  from  $26,522  in the
equivalent period last year. The increase in other expenses was due to increases
in interest  expense and  amortization of debt issuance costs and note discounts
associated with the Notes (Note 7).

                                       8

<PAGE>

For the three months ended March 31,  1997,  the Company  incurred a net loss of
$863,150 or ($0.17) per share based on a weighted  average of  5,178,909  shares
outstanding, compared with a net loss of $182,238, or ($0.08) per share based on
a weighted  average of  2,261,945  shares  outstanding  in the prior  year.  The
Company  incurred  a net  loss for the  nine  months  ended  March  31,  1997 of
$2,558,462,  or ($0.54) per share based on  4,747,188  weighted  average  shares
outstanding,  compared with a net loss of $361,579,  or ($0.16) per share, based
on 2,261,945 weighted average shares outstanding for the same period last year.


Financial Condition, Liquidity, and Capital Resources

At March 31, 1997,  the Company's  accumulated  deficit was  $5,043,951  and its
working capital  deficit was  $1,680,511.  The rate of increase in the Company's
accumulated  deficit  declined in the quarter ended March 31, 1997 due primarily
to the  elimination  of Research and  Development  expense  associated  with the
licensing of the IBS Internet  software  product to  Breakthrough  (Note 4), and
elimination  of  other  non-recurring   operating  expenses  incurred  in  prior
quarters.  The Company's  working  capital  deficit  improved by $437,805  since
December 31, 1996 due primarily to common and preferred  shares issued under the
equity  private  placements  described  in Note 8. The  Company  was  unable  to
complete and close these offerings as planned,  however, due to a decline in the
Company's stock price late in the quarter,  which reduced investor's interest in
the  offerings.  This came at a time of critical  need and prevented the Company
from making its second principal payment on the Notes (Note 7). As a result, the
Company has made several  adjustments to its operations to further reduce costs,
and,  partially  as  a  result  of  funding  needs,  has  initiated  preliminary
discussions with several potential partners regarding merger, acquisition, asset
sales and  other  potential  transactions  (Note 9).  The  Company  is in active
discussions with Morgan Fuller regarding payment,  conversion, and other options
on the Notes. Subsequent to March 31, 1997, the Company's stock price increased,
renewing  investor   interest  in  the  Company's  equity  private   placements.
Management is continually  monitoring the Company's cash position and the status
of all of its financing alternatives.


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,
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.

                                       9

<PAGE>


PART II  OTHER INFORMATION


Item 1.   Legal Proceedings

None


Item 2.  Changes in Securities

Pursuant to a Certificate  of Designation  filed with the Colorado  Secretary of
State on February 2, 1997, the Company's  Articles of Incorporation were amended
to allow the  Company  to issue  Series A  Preferred  shares  (see Note 8 to the
unaudited consolidated condensed financial statements).


Item 3.  Defaults Upon Senior Securities

On January 31, 1997, the Company's senior  collateralized  promissory  notes, in
the amount of $1,000,000,  converted into a term loan, with interest  increasing
to 18% and  principal  payments of $100,000  per month  commencing  February 15,
1997.  The Company made a $100,000  principal  payment on February 15, 1997.  On
March 11, 1997,  the Company's  financial  advisor,  Morgan Fuller Capital Group
(Morgan  Fuller)  verbally  agreed to defer the March 15, 1997 payment for a two
week  period.  Subsequent  to March 31,  1997,  the  Company  received a written
payment  demand notice from Morgan Fuller,  placing the Company in default.  The
Company  is  currently  in  negotiation  with  Morgan  Fuller  and  participants
regarding  the  Notes  (see  Note  7 to  the  unaudited  consolidated  condensed
financial statements).


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.

(b)      Form 8-K filed March 13, 1997 to report the  February  27, 1997 sale of
         Equity Securities exempt from registration  pursuant to Regulation S of
         the Securities Act of 1933 (Note 8).

                                       10

<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 15, 1997                             By:      /s/Tom Kobayashi
                                                  ------------------------------
                                                  Tom Kobayashi
                                                  Chairman of the Board



                                         By:      /s/Alan K. Geddes
                                                  ------------------------------
                                                  Alan K. Geddes
                                                  Vice President, Finance and
                                                  Chief Financial Officer

                                       11