UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                   FORM 10-QSB


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

For the quarterly period ended September 30, 1998  or


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

For the transition period from   July 1, 1998  to   September 30, 1998
                                 ------------       ------------------

                        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

     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
                                                  September 30, 1998: 16,761,836

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


                                       1

<PAGE>
Part I.  FINANCIAL INFORMATION
                                   EDnet, Inc.
                           CONSOLIDATED BALANCE SHEETS
                   As of September 30, 1998 and June 30, 1998
                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                               <C>              <C> 
                                                                    9/30/98          6/30/98
                                                                 ( Unaudited )     ( Audited )
                                                            ----------------------------------
CURRENT ASSETS
    Cash                                                            $ 52,089         $ 32,911
    Accounts Receivable, net of alloance for doubtful
      accounts of                                                    610,720          488,843
    $14,500 and $17,502 in September 30, 1998 and
      June 30, 1998                                                   (8,582)         (17,502)
    Note Receivable - related party                                   62,354             -
    Inventories                                                      119,770           87,157
    Prepaid expenses                                                   8,601           58,823
    Other Current Assets                                                -              16,665
                                                            ----------------------------------
TOTAL CURRENT ASSETS                                                 844,952          666,897
NOTE RECEIVABLE - RELATED PARTY                                      226,997          283,746
PROPERTY AND EQUIPMENT, NET                                        1,201,238        1,159,414
                                                                    (820,821)        (767,933)
OTHER ASSETS                                                           7,281           13,711
                                                            ----------------------------------
    TOTAL ASSETS                                                 $ 1,459,647      $ 1,355,835
                                                            ==================================
                       LIABILTIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                               $ 261,348        $ 388,325
    Accrued expenses                                                 229,765          294,980
    Deferred revenue                                                  33,421           21,286
    Line of credit                                                     7,986            8,872
    Notes payable                                                    257,122           40,500
    Current portion of capital lease obligations                      17,147            9,288
                                                            ----------------------------------
       TOTAL CURRENT LIABILITIES                                     806,789          763,251

Capital Lease obligations                                             15,058           11,470
                                                            ----------------------------------
    TOTAL LIABILITIES                                                821,847          774,721

STOCKHOLDERS' EQUITY
    Common  stock;  par value  $0.001 per share  Authorized 
      50,000,000  shares, 16,761,836 issued and outstanding 
      as of September 30, 1998 and June 30,1998 respectively          16,761           16,761
    Capital paid in excess of par value of common stock            6,755,443        6,755,443
    Accumulated Deficit                                           (6,134,404)      (6,191,090)
                                                            ----------------------------------
    TOTAL STOCKHOLDERS' EQUITY                                       637,800          581,114

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $ 1,459,647      $ 1,355,835
                                                            ==================================
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.
                                       2
<PAGE>

                                   EDnet, Inc.
                        CONSOLIDATED STATEMENTS OF INCOME
                  For the Three ended September 30, 1998 & 1997

                                                           Three Months
                                                        Ended September 30
                                                          ( Unaudited )
                                                 -------------------------------
                                                      1998              1997
                                                 -------------------------------
Revenues:
     Equipment sales                               $ 281,673          $ 137,720
     Installation and monthly fees                   153,440            152,508
     Web design and consulting                       255,850            191,817
     Usage and hosting fees                          428,449            396,571
     Other fees                                       27,633             24,755
                                                 -------------------------------
                                                   1,147,045            903,371
Cost of sales                                        680,540            553,101
                                                 -------------------------------
     Gross Profit                                    466,505            350,270

Sales and Marketing expenses
General and Administrative expenses                  129,139            172,638
                                                     308,895            722,356
                                                 -------------------------------
     Income (loss) before other income (expenses)    438,034            894,994
        and provision for income taxes
                                                      28,471           (544,724)
                                                 -------------------------------
Other income (expense):
     Interest income (expense)
     Sales tax write-off                                 843             (4,524)
     Other income (expense)                           30,000
                                                      (2,628)              -
                                                 -------------------------------
     Total other income (expense), net
                                                      28,215             (4,524)
                                                 -------------------------------
     Income (loss) before provision
                   for income taxes
                                                      56,686           (549,248)
Income taxes
                                                        -                  -
                                                 -------------------------------
     Net income (loss)
                                                    $ 56,686         $ (549,248)
                                                 ===============================
Net Income (Loss) Per Common Share                  $ 0.003           $ (0.08)
                                                 ===============================
Weighted Average Number of Shares Outstanding     16,761,836          6,670,226
                                                 ===============================

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

                                       3
<PAGE>

                                   EDnet, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              for the Three Month ended September 30, 1998 and 1997

                                                       9/30/98        9/30/97
                                                    ( Unaudited )  ( Unaudited )
                                                  ------------------------------
Cash flows from operating activities:

Net income (loss)                                      $ 56,686      $ (549,258)

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

Depreciation and amortization                            52,888          52,672
Provision for doubtful accounts                          (8,920)          3,389
Noncash compensation expenses                              -            400,000
Gain on write-off of accrued sales tax                  (30,000)           -
Decrease (increase) in other current assets              67,711          (9,011)
Decrease (increase) in accounts receivable             (121,877)        (32,717)
Decrease (increase) in inventory                        (32,613)         (9,607)
Increase (decrease) in accounts payable
    and accrued expenses                               (128,079)          2,467
Increase (decrease) in deferred revenue                  12,135          27,252
                                                  ------------------------------
Net cash used in operating activities                  (132,069)       (114,813)
                                                  ------------------------------

Cash flows from investing activities:

Purchase of property and equipment                      (41,824)         (5,065)

Net cash used in investing activities                   (41,824)         (5,065)
                                                  ------------------------------

Cash flows from financing activities:

Repayment on borrowings                                    (886)        (31,719)
Proceeds from borrowings                                200,000         131,755
Repayments on capital leases                             (6,043)        (10,049)
                                                  ------------------------------

Net cash provided by financing activities               193,071          89,987
                                                  ------------------------------

Net increase (decrease) in cash                          19,178         (29,891)
                                                  ==============================

Cash at beginning of period                              32,911          31,067
                                                  ------------------------------
Cash at end of period                                  $ 52,089         $ 1,176
                                                  ==============================

     The accompanying notes are an integral part of these consolidated financial
statements.
                                       4
<PAGE>



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


1.   Basis of Presentation

     The opinion of management,  the unaudited  consolidated condensed financial
     statements  included  herein have been prepared on a consistent  basis with
     the  June  30,  1997  and June  30,  1998  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,
     1998, the Company was burdened by substantial credit restrictions from many
     of its major suppliers,  and the Company also faced substantial outstanding
     debts to financial  consultants and investors.  However,  with the proceeds
     received from the VDC  transaction at the end of fiscal year ended June 30,
     1998, the Company paid off or restructured its past due accounts  payables,
     notes payables and liens and thereby corrected many of these problems.  The
     majority  of  the   Company's   suppliers   have  now  eased  their  credit
     restrictions and are allowing the Company to resume purchasing equipment on
     credit.   Similarly,  the  Company  has  settled  all  of  the  substantial
     outstanding  claims of third  parties  based on services  performed for the
     Company  and based on various  promissory  notes  previously  issued by the
     Company.  As a result of the restructuring,  the Company has greater access
     to vendors and is able to negotiate  better  terms.  These  advantages  are
     expected to contribute  to enhanced  profitability  and increased  revenues
     during the next fiscal year.

2.   Consolidation

     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.   Gain (Loss) per Share

     Gain (loss) per share has been computed  using the weighted  average number
     of common shares outstanding totaling 16,761,836 shares as of September 30,
     1998 and 6,670,226  shares as of September 30, 1997. Due to the Companyloss
     position in September 30, 1997, common equivalent shares have been excluded
     because they are anti-dilutive.

4.   Research and Development

     The Company  incurred no research and development  expense during the three
     months ended September 30, 1998.






                                       5

<PAGE>


5.   Consulting Agreements

     July 1, 1998,  the Company  entered into a Consulting  Agreement  with B.K.
     Service  International  Business  Consultancy "BKS",  pursuant to which BKS
     agreed to serve the Company in  advising,  investor  relation,  SEC filing,
     managing  and  directing  all  corporate  governance  activities,  and cash
     management. The Company agreed to compensate BKS in an amount of $6,000 per
     month. The agreements will expire on June 30, 1999.

6.   Sales Tax Payable

     An accrual of sales and use tax liability in the amount of $30,000 recorded
     on the financial  statements  for the year ended in June 30, 1998 and 1997.
     The State Board of Equalization  completed an audit of the Companyliability
     for the period from July 1, 1994 through  June 30,  1997.  No sales and use
     tax  liability  was due for the  period and the  accrual  was  reversed  at
     September 22, 1998.

7.   Notes Payable

     August 4, 1998,  a Promissory  Note  ("Note") in the amount of $200,000 was
     executed  between the Company  and Eric Jacobs  ("Jacobs")  a member of the
     Company's  Board of Directors.  The Company  transferred the principal to a
     Equipment  Purchase Repo Account  ("Account") an interest  bearing account.
     This Account was  restricted to use solely for the purchase of equipment to
     fulfill existing customer orders. The principal amount of $200,000 has been
     utilized in full for the purchase of equipment as of October 30, 1998.  The
     interest will be at the rate of twelve (12%) per annum,  with the principal
     balance and all accrued  interest  being due and payable on August 3, 1999.
     Interest  payments  are to be paid  quarterly.  After ninety (90) days from
     date of  execution  of the Note,  at Jacob's  discretion,  Jacob may review
     principal  amount  outstanding,  and upon five (5) days written notice such
     amount shall be reduced if deemed appropriate.

8.   Subsequent Events

     Resignations and New Appointment in Board Member:

     October  29,  1998  David  Goodman  resigned  as a member  of the  Board of
     Directors  of EDnet,  Inc. and was  replaced by Eric Jacobs  ("Jacobs")  on
     October 30, 1998.  Jacobs is presently a member of the Board of Visual Data
     Corporation  and Vice President and General Manager of Visual Data's wholly
     owned subsidiary, ResortView Corporation.

     Sales of Subsidiary

     In the months of October and November,  the Company  initiated  preliminary
     discussion  with  a  potential  acquirer  of  the  Company's  wholly  owned
     subsidiary,  Internet Business Solutions. As of the date of this filing, no
     definitive agreement has been reached.

     Lines of Credit
     During the past 30 days,  the Company  has been  negotiating  with  various
     lending  institutions  to establish a Line of Credit.  As of this date,  no
     agreement has been reached.
                                       6

<PAGE>



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


Results of Operations

     For the three months ended  September 30, 1998,  the  Companyrevenues  were
$1,147,045,  an  increase  of  21%  compared  to  revenues  of  $903,371  in the
comparable period last year. Increases in revenue are primarily due to increases
in the sales of equipment (51%) and web development (25%) sales.

     Gross  Profit  increased  to $466,505 or 41% of sales,  in the three months
ended September 30, 1998 compared to $350,270 or 39% of sales, in the equivalent
period  last  year.  Increase  in  grossprofit  as  a  percentage  of  sales  is
attributable to growth in the higher profit margin sales,  network usage and web
site development. In addition, a new contract with MCI was executed in February,
1998,  becoming  effective with our usage billing between March 15 and April 15,
1998, which has resulted in lower costs for our ISDN usage.

     Operating   expenses   (including   Sales  &   Marketing,   and  General  &
Administrative)  decreased to $438,034 in the three months ended  September  30,
1998 compared to $894,994 in the  equivalent  period last year.  The Company did
not incur any  non-cash  compensation  expense  during  the three  months  ended
September 30, 1998.  Operating expenses for the three months ended September 30,
1997,  includes the amortization of $400,000 for the S-8 shares that were issued
for the consulting agreement with Charles Clark. Compared to the current period,
after removing this non-recurring expense of $400,000, the operating expense for
the prior period would be  $494,994,  resulting in a slight  decrease of 12% for
the current period.

     Other income  increased to $28,215 in the three months ended  September 30,
1998 compared to other  expenses of $4,524 in the  equivalent  period last year.
The increase in other income was primarily due to the $30,000  accrued sales tax
write-off in September 1998 (Note 5).

     For the three months ended  September 30, 1998, the Company  incurred a net
profit of $56,686 or $0.003 per share based on a weighted  average of 16,761,836
shares outstanding,  compared with a net loss of $549,248,  or ($0.08) per share
based on a weighted average of 6,670,226 shares outstanding in the prior year.

Financial Condition, Liquidity, and Capital Resources

     At September 30, 1998,  the  Companyaccumulated  deficit was $6,134,404 and
the  Company  had a positive  net  working  capital of  $38,163.  The  Company's
accumulated  deficit was reduced due to the net profit achieved during the three
months ended September 30, 1998. The Company's  working capital  improved from a
negative  $96,354 on June 30, 1998 to a positive net working  capital of $38,163
at the end of the current  period.  This increase was due primarily to the shift
of the first  payment of the note due from Visual Data of $62,354 from long term
to short term assets,  and the  write-off of the accrued  sales tax $30,000 with
the completion of the audit.


                                       7

<PAGE>


PART II  OTHER INFORMATION


Item 1.   Legal Proceedings

None


Item 2.  Submission of Matters to a Vote of Security Holders

None


Item 3.  Other Information

None

Item 4.  Exhibits and Reports on Form 8-K

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

         (b)      Form 8-K filed  November 18, 1998 to report  change the fiscal
                  year from one  ending  June 30 of each  year to a fiscal  year
                  ending  each  September  30.  Thus  the  fiscal  year  of  the
                  registrant  will  begin  on  October  1,  1998  and  will  end
                  September 30, 1999.





























                                       8

<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.
                                               ------------------------------



November 19, 1998                           By: /s/Tom Kobayashi
                                               ------------------------------
                                               Tom Kobayashi
                                               Chief Executive Officer






                                            By: /s/David Gustafson
                                               ------------------------------
                                               David Gustafson
                                               Secretary


























                                       9