SECURITIES AND EXCHANGE COMMISSION
                          Washington D.C.  20549

                              FORM 10-KSB/A

           (X)	Annual Report Pursuant to Section 13 or 15(d) of
                  the Securities Exchange Act of 1934

For the Fiscal Year Ended June 30, 1998			      Commission File No. 0-26884



                    NETTER DIGITAL ENTERTAINMENT, INC.
          (Exact name of Small Business Issuer in its Charter)


         	Delaware	                                95-3392054
  (State or other jurisdiction         (I.R.S. Employer Identification No.)
        of incorporation)



                        5125 Lankershim Boulevard
                   North Hollywood, California  91601
                 (Address of principal executive office)

         Registrant's telephone number, including area code: 818-753-1990



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

Title of Each Class 	                               Name of Each Exchange
-------------------                                	Which Registered
                                                    ----------------
Common Stock, $.01 Par Value	                            NASDAQ
Common Stock Purchase Warrants	                          NASDAQ

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

                                    None

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 ____

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10K-SB or any
amendment to this Form 10-KSB.  [X]

   The Registrant's revenues for the most recent fiscal year were $ 32,312,551.


The aggregate market value of the voting stock held by non-affiliates of the
Company, based upon the closing price of the Common Stock on the NASDAQ
Automated Quotation System on September 23, 1998 was $2,711,000.  Shares of
Common Stock held by each officer and director and by each person who owns
5% or more  of the outstanding Common Stock have been excluded in that such
persons may be deemed affiliates.

As of September 23, 1998, there were 3,334,405 shares of common stock
outstanding.



                        DOCUMENTS INCORPORATED BY REFERENCE

Pursuant to General Instruction E(3) to this form, the information required by
Items 9, 10, 11, 12 and 13 of Part III hereof is incorporated by reference from
the registrant's definitive Proxy Statement for its Annual Meeting of
Stockholders scheduled to be held on November 16, 1998.


Transitional Small Business Disclosure Format:
Yes________________ No     X




                          PART IV

ITEM 13.   	EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits (numbered in accordance with Item 601 of regulation S-B).

Exhibit   Description
Number
-------   ------------
2.1       Agreement and Plan of Merger and Reorganization, as amended. (5)
2.2       Amendment No. 2 to the Agreement of Merger and Reorganization. (6)
2.3       Amendment No. 3 to the Agreement of Merger and Reorganization. (7)
2.4       Amendment No. 4 to the Agreement of Merger and Reorganization. (7)
2.5       Amendment No. 5 to the Agreement of Merger and Reorganization. (7)
3.1       Certificate of Incorporation. (1)
3.2       Bylaws. (1)
4.1       Certificate of Designation. (8)
10.1      Mr. Netter's Employment Agreement. (1)
10.2      Mr. Copeland's Employment Agreement. (1)
10.3      "Babylon 5" Production Agreement. (1)
10.4      1995 Stock Option Plan. (1)
10.5      Talbot Consulting/Completion Fee Agreement. (6)
10.6      Warrant, dated September 4, 1997, issued to W.J. Gallagher & Company.
          (9)
10.7      Letter Agreement, dated September 1, 1997, between the Company and
          H.D. Brous & Co., Inc. (9)
10.8      Stock Option Agreement, dated September 1, 1997, between the Company
          and H.D. Brous & Co., Inc. (9)
10.9      Lease for premises at 5125 Lankershim Blvd., North Hollywood, CA. (9)
10.10     Equipment and furniture lease with Lyon Credit Corporation. (9)
10.11     Equipment lease with Terminal Marketing Company. (9)
10.12     Installment note and Loan and Security Agreement with Comerica Bank.
          (9)
10.13     Mr. Costa's Employment Agreement. (9)
10.14     Mr. Francis's Employment Agreement. (9)
10.15     Mr. Cercone's Employment Agreement. (9)
10.16     Letter agreement, dated October 20, 1997, between the Company and
          Martin E. Janis & Company, Inc. (10)
10.17     Consulting Agreement, dated October 1, 1997, by and between Netter
          Digital Entertainment, Inc and Geoffrey Talbot. (11)
10.18     Stock Option Agreement, dated October 1, 1997, by and between Netter
          Digital Entertainment, Inc. and Geoffrey Talbot. (11)
10.19     Equipment lease with Comerica Leasing Corporation. (12)
10.20     Equipment lease with Digital Financial Services. (12)
10.21     Amendment to Employment Agreement, Douglas Netter. (13)
10.22     Amendment to Employment Agreement, John Copeland. (13)
10.23     Equipment lease with Comerica Leasing, Schedules No. 2 and 3.(14)(15)
10.24     GE Capital Corporation Master lease, Schedules No. 1 and 2.
          (14)(15)
21			     List of Subsidiaries. (9)
23.1      Consent of Independent Certified Public Accountants (16)
27		     	Financial Data Schedule. (13)

                                     15

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

(1) Incorporated by reference to the Company's Registration Statement on
    Form SB-2 (Registration Number is 33-97402-LA) declared effective November
    20, 1995.
(2) Incorporated by reference to the Company's Registration Statement on
    Form 8-A dated November 20, 1995.
(3) Incorporated by reference to the Company's Form 10-QSB for the quarter ended
    December 31, 1995.
(4) Incorporated by reference to the Company's Form 10-QSB for the quarter ended
    March 31, 1996.
(5) Incorporated by reference to the Company's Proxy Statement , dated June 26,
    1996 for the approval/disapproval of the proposed merger between the Company
    and Videssence, Inc.
(6) Incorporated by reference to the Company's Form 10-KSB for the year ended
    June 30, 1996.
(7) Incorporated by reference to the Company's Form 8-K dated January 10, 1997.
(8) Incorporated by reference to the Company's Form 10-QSB for the quarter ended
    September 30, 1996.
(9) Incorporated by refernce to the Company's Form 10-KSB for the year ended
    June 30, 1997.
(10)Incorporated by reference to the Company's Form 10-QSB for the quarter ended
    September 30, 1997.
(11)Incorporated by reference to the Company's Form 10-QSB for the quarter ended
    December 31, 1997.
(12)Incorporated by reference to the Company's Form 10-QSB for the quarter ended
    March 31, 1998.
(13)Incorporated by reference to the Company's Form 10-KSB for the year ended
    June 30, 1998, filed on September 25, 1998.
(14)Certain portions of this exhibit have been redacted and are subject to a
    request for confidential treatment.  The entirety of this exhibit has been
    filed separately with the Commission.
(15)Incorporated by reference to the Company's Form 10-KSB/A for the year ended
    June 30, 1998, filed on January 20, 1999.
(16)Filed herewith.

                                   16





SIGNATURE


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



NETTER DIGITAL ENTERTAINMENT, INC.



Dated: February 25, 2000		        By: /s/Chad Kalebic
                                    -------------------
                             							Chad Kalebic, Chief Financial Officer


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

SIGNATURE                 TITLE                           DATE
---------                 -----                           ----
/s/Douglas Netter         Chairman of the Board of        February 25, 2000
Douglas Netter            Directors, Chief Executive
                          Officer, and President

/s/John Copeland          Executive Vice President and    February 25, 2000
John Copeland             Secretary/Director

/s/Chad Kalebic           Chief Financial Officer         February 25, 2000
Chad Kalebic              (Chief Accounting Officer)

/s/Dr. Leonard Silverman  Director                        February 25, 2000
Dr. Leonard Silverman

/s/Kate Netter Forte      Director                        February 25, 2000
Kate Netter Forte

/s/Lennart Ringquist      Director                        February 25, 2000
Lennart Ringquist

                                   17

                EXHIBIT INDEX
Exhibit         Description
Number

23.1            Consent of Independent Certified Public Accountants

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