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                     U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-KSB

(Mark One)

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

         For the fiscal year ended September 30, 2000

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

         For the transition period from                 to
                                        ---------------    -------------------

         Commission file number 000-22849
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                             VISUAL DATA CORPORATION
                   ------------------------------------------
                 (Name of small business issuer in its charter)

                                     FLORIDA
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         (State or other jurisdiction of incorporation or organization)

                                   65-0420146
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                      (I.R.S. Employer Identification No.)

                   1291 SW 29 AVENUE, POMPANO BEACH, FL 33069
                -------------------------------------------------
               (Address of principal executive offices)(Zip Code)

                     Issuer's telephone number 954-917-6655
                                               ------------

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

                                      NONE
                        ---------------------------------
                              (Title of each class)

                    Name of each exchange on which registered

                                 NOT APPLICABLE
                ------------------------------------------------

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

                                  COMMON STOCK
                    ----------------------------------------


                    REDEEMABLE COMMON STOCK PURCHASE WARRANTS
                    -----------------------------------------
                                (Title of Class)

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         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [ ]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [x]

         State issuer's revenues for its most recent fiscal year. $5,868,435 for
the 12 months ended September 30, 2000.

         State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days. The aggregate market value of the voting stock held by
non-affiliates computed at the closing price of the Company's common stock on
December 15, 2000 is approximately $20,400,490.

         State the number of shares outstanding of each of the issuer's class of
common equity, as of the latest practicable date. As of December 15, 2000,
8,453,358 shares of Common Stock are issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB into which the document
is incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) of
the Securities Act of 1933 ("Securities Act"). Not Applicable.

         Transitional Small Business Disclosure Form (check one):

         Yes [ ] No [X]

         THE DISCUSSION IN THIS ANNUAL REPORT ON FORM 10-KSB REGARDING THE
COMPANY AND ITS BUSINESS AND OPERATIONS INCLUDES "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1996. SUCH
STATEMENTS CONSIST OF ANY STATEMENT OTHER THAN A RECITATION OF HISTORICAL FACT
AND CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY,"
"EXPECT," "ANTICIPATE," "ESTIMATE" OR "CONTINUE" OR THE NEGATIVE THEREOF OR
OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. THE READER IS CAUTIONED THAT
ALL FORWARD-LOOKING STATEMENTS ARE NECESSARILY SPECULATIVE AND THERE ARE CERTAIN
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER
MATERIALLY FROM THOSE REFERRED TO IN SUCH FORWARD LOOKING STATEMENTS. THE
COMPANY DOES NOT HAVE A POLICY OF UPDATING OR REVISING FORWARD-LOOKING
STATEMENTS AND THUS IT SHOULD NOT BE ASSUMED THAT SILENCE BY MANAGEMENT OF THE
COMPANY OVER TIME MEANS THAT ACTUAL EVENTS ARE BEARING OUT AS ESTIMATED IN SUCH
FORWARD LOOKING STATEMENTS.

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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

General

         Visual Data Corporation ("VDC" or the "Company") is a full service
provider of streaming-content applications, production technology and media
solutions. Using advanced technology and information solutions, we provide a
sensory-rich experience to businesses and consumers enabling them to make
superior decisions.

         Visual Data is comprised of four operating groups including:

            Visual Data Travel Group (includes HotelView, ResortView, etc.)
            Visual Data On-line Broadcast and Production Group (includes
               Webcasting, Live audio and video events, etc.)
            Visual Data Networking Solutions Group (EDNET)
            Visual Data Financial Solutions Group (TheFIrstNews.com)

Products and services provided by each of the groups are:

         VISUAL DATA TRAVEL GROUP

         The Visual Data Travel Group produces high quality, Internet-based
multi-media streaming videos such as hotel, resort, golf facility, travel
destination and time-share productions designed to keep a high level of viewer
interest. These concise, broadband-enabled "vignettes" generally have running
times from 2-4 minutes. By incorporating the services of many of the largest
Travel and Leisure web-sites such as Yahoo Lodging, Roadrunner, NBCi, TravelWeb,
All-Hotels.com, WorldChoiceTravel.com, MyTravelco.com and Vacation.com, VDC has
created a unique distribution channel for travel industry businesses such as
hotel chains and golf courses to significantly augment their marketing programs
using highly effective multi-media applications.

         The multi-media vignette business model incorporates three key revenue
generating features: revenue from the initial sale of production and encoding
services, recurring monthly revenue streams, and media library syndication and
service fees including advertising, subscriptions, viewership, hosting,
e-commerce transactions and sponsorships. Also significant is that Visual Data
Corporation owns or co-owns virtually all the content it creates positioning the
Company with desirable content for the upcoming advent of Interactive
Television.

         VISUAL DATA ON-LINE BROADCAST AND PRODUCTION GROUP

         The Visual Data On-line Broadcast and Production group provides an
array of corporate-oriented web-based media services to the corporate market
including live audio and video webcasting, packaged corporate announcements, and
information distribution (Internet, broadcast TV and radio) for any business
entity, and can provide point-to-point audio and video transport worldwide.
Significant to this business division is our strategic partnership with the
Internet's leading press release service, PR Newswire, providing a global sales
force to promote the VDC broadband corporate services packages. Visual Data also
completed development of a suite of trade show related broadband media services
including a "Virtual Exhibit Hall",

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rich-video filming, key-note speaker interview vignettes, and conference
webcasting. All have the benefit of extending the life of a trade show, a highly
attractive proposition for show producers and exhibitors alike.

         VISUAL DATA NETWORKING SOLUTIONS GROUP

         Visual Data's Networking Solutions Group consists of our EDNET
("EDNET") subsidiary, which provides connectivity within the entertainment and
advertising industries through its private network, which encompasses production
and post-production companies, advertisers, producers, directors, and talent.
The network enables trouble-free, high-speed exchange of high quality audio,
compressed video and multimedia data communications, utilizing long distance
carriers, regional phone companies, satellite operators, and major Internet
Service Providers. EDNET also provides systems integration and engineering
services, application-specific technical advice, web-casting services, audio
equipment, proprietary and off-the-shelf codecs, teleconferencing equipment, and
other innovative products to facilitate Visual Data's broadcast and production
applications.

         EDNET manages a rapidly expanding global network of over 500 North
American Affiliates, and nearly 200 International Associates, in cities
throughout the United States, Canada, Mexico, Europe, and the Pacific Rim. EDNET
has strategically utilized the extensive relationships and established
reputation of its principals in conjunction with this market opportunity to
quickly establish its position as the most innovative value-added
telecommunications network in the entertainment industry. EDNET's client base
includes LucasFilms Skywalker division, Sony Entertainment, Disney, MGM, Capitol
Studios, Warner Brothers, NFL Films and PGA Tour Productions. EDNET's recent
projects included such blockbuster films as Titanic, Antz, Saving Private Ryan
and the Star Wars prequel.

         VISUAL DATA FINANCIAL SOLUTIONS GROUP

         Visual Data's Financial Solutions Group was established in November
1999 to further realize the potential for our audio content delivery capability.
TheFirstNews.com(TM) the initial service of the division was created to address
information needs for the financial sector. TheFirstNews.com(TM), is an Internet
based news service that delivers aggregated, up-to-the-minute corporate and
business live-audio and text content - in a constant stream throughout the
trading day. Patent pending preference technology allows the user to selectively
hear the stories for individual stocks and industry segments that they want to
hear. TheFirstNews.com brings the latest business information from the top
corporate news sources--just minutes after it is released--with no spin, slant
or editorial angle.

         TheFirstNews.com affords investors and financial professionals
accessibility to timely, filtered financial and news information, including
press releases, Internet webcasts and teleconferences. Subscribers benefit from
VDC generated proprietary content and reported stories, improved programming,
additional news sources and trading tools. TheFirstNews.com's business model
includes revenues from end user subscriptions, content syndication, affiliate
site licenses and source company promotion programs.

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Sales and Marketing

         One element of our marketing strategy has been to partner with the
recognized leaders in each of the markets our video content addresses. Our
partners include PR Newswire, Interval International, Inc., Yahoo Lodging and
WorldRez. Through these partnerships we can take advantage of each partner's
existing marketing programs, sales forces and business relationships. By
offering our products and services in conjunction with their products, our
partners can increase the value of their offerings and increase the revenues
associated with the individual sales. Likewise, we can take advantage of our
partners' products and reduce costs in areas such as sales personnel, marketing
and service fees. Contracts with these partners range from one to two years.

         We also use a variety of additional marketing methods, including our
internal sales force, to market Webcasting services, HotelView, MedicalView,
ResortView, CruiseView, GolfersView, AttractionView, Video News Wire and
TheFirstNews.Com to a variety of potential clients including hotel chains,
resorts, portals, business and financial news sites, on-line brokerages and
other web sites.

Our Products and Services

         We are a leading producer and owner of original video content
specifically developed for the Internet and interactive television. In addition
to revenues generated from our core businesses, we recorded revenues in fiscal
2000 and 1999 from equipment sales, installation and usage fees from our
majority owned subsidiary EDNET. We anticipate that the majority of our future
revenues will be from various streaming-content applications, production
technology, media solutions and distribution. The revenue associated with the
distribution of the content will primarily be either a recurring flat fee per
month or a continuation of our pay-per-view program.

         VISUAL DATA TRAVEL GROUP - PRODUCTS AND SERVICES

         HotelView(R) -- www.hotelview.com

         Our HotelView(R) library provides two to four minute multimedia video
tours that give the viewer a detailed look at the hotel's guestrooms, grounds,
meeting space, recreational facilities, dining venues and other amenities. It
also includes a map showing the hotel's location relative to area attractions
and airports. The video tour can be accessed through the participating hotel's
own Website, HotelView's Website at www.hotelview.com, and hundreds of other
Websites, such as Yahoo Lodging, All-Hotels.com, HotelBook.com and
REZsolutions.com (the world's leading supplier of integrated business solutions
for the hospitality industry).

         HotelView(R) streaming video vignettes feature hotels, throughout the
world including the Anaheim (California) Hilton & Towers, Baltshug Kempinski
(Moscow), Eden Roc Resort & Spa (Miami), Hilton at Walt Disney World Village,
Hotel Nikko (San Francisco), Ritz Carlton Laguna (Niguel California), Vier
Jahreszeiten (Berlin) and the Waldorf Astoria (New York).

         HotelView's revenues are generated through an annual subscription fee,
which includes the creation, storage and serving of the video on the Internet.
Hotels have the option of paying via a monthly per-view revenue plan, or via a
fixed monthly fee plan, in addition to an annual fee plan.

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         ResortView(R) -- www.resortview.com

         Our ResortView(R) library provides developers of timeshare properties
with the ability to advertise their resort to a more targeted, and potentially
larger, prospect audience than they have had in the past. It is accessible via
travel agents, at home or work via the Internet. ResortView(R) then "closes the
loop" by allowing the property to be booked by travel agencies throughout the
world utilizing the Global Distribution System ("GDS"). GDS is the electronic
database that travel agents around the world use to research and book rooms in
hotels and resorts. Through an exclusive distribution and marketing agreement
with Interval International, Inc., the second largest marketing organization in
the timeshare industry with properties world-wide, ResortView(R) has been
designed to use video advertising in conjunction with the GDS to promote lead
generation and rental income for the resort developers.

         Revenues are generated via an annual membership fee. In addition,
Visual Data receives a commission on each completed stay realized by the resort.
Current ResortView(R) properties include Harbour Lights (Myrtle Beach), Newport
Beachside Hotel and Resort (Miami Beach), The Royal Resorts (Cancun), Isle of
Bali (Orlando), Fairfield Royal Vista (Pompano Beach, Florida) and Peppertree at
Wild Wing (Conway, South Carolina).

         AttractionView(TM) -- www.attractionview.com

         Many vacation planners need more than just information about the
accommodations, and AttractionView(TM) has been designed as a natural complement
to HotelView(R) and ResortView(R). AttractionView(TM) focuses on marrying the
neighboring attractions, such as amusement parks, theme parks, regional malls,
and the like to the HotelView(R) and ResortView(R) accommodations. Our existing
library includes information on the United Nations in New York, the Kennedy
Space Center in Florida and Busch Gardens in Tampa.

         Revenues from the marketing of AttractionView(TM) will be generated
through an annual subscription fee, which includes the creation, storage and
serving of the video on the Internet, and recurring revenues, which will be paid
by the attraction, each time someone views the video on the Internet.

         DestinationView(TM) -- www.destinationview.com

         In addition to AttractionView(TM), DestinationView(TM) has been
designed to provide additional information to travelers on the specific
destination including tours of the area, major attractions, historical places,
recreational facilities and shopping/dining venues. Our existing library
includes many destinations including Paris, London, Las Vegas, South Florida,
Seychelles, Hawaii, Jamaica and Hong Kong.

         Revenues from the marketing of DestinationView(TM) will be generated
through an annual subscription fee, which includes the creation, storage and
serving of the video on the Internet, and recurring revenues, which will be paid
by the tourist boards/local hotel associations.

         GolfersView(TM) -- www.golfersview.com

         In April 1999, Visual Data acquired the Internet broadcast rights to a
collection of golf-related videos including approximately 200 course tours,
instructional videos and golf-related attractions from an unaffiliated third
party. GolfersView(TM) provides full-motion tours of some of the world's most
renowned golf courses and resorts and related attractions, including Pebble
Beach, Innisbrook and the Golf Hall of Fame, as well as instructional videos and
golf products and services. We are also distributing these videos in

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conjunction with our other travel related content on websites such as Yahoo
Broadcast and RoadRunner where they are aggregated by destination.

         Revenues will be generated through an annual subscription fee, which
includes the creation, storage and serving of the video on the Internet, and
recurring revenues, which will be paid by the golf course, each time someone
views the video on the Internet.

         CruiseView(TM) - www.cruiseview.com

         We have designed CruiseView(TM) to provide a detailed video tour of a
ship's guestrooms, common areas, recreational facilities and dining venues. As
the cruise market continues to grow, we believe cruise lines will need to
utilize a service like CruiseView(TM) to maximize their exposure to the travel
agents of the world. We intend to position CruiseView(TM) to take early
advantage of these opportunities as a result of our existing presence in the
travel agency networks.

         Revenues are generated through an annual subscription fee, which
includes the creation, storage and serving on the Internet, and recurring
revenues, which are paid by the cruise line, each time someone views the video
on the Internet.

         VISUAL DATA ON-LINE BROADCAST AND PRODUCTION GROUP - PRODUCTS AND
         SERVICES

         The Visual Data On-line Broadcast and Production Group was created to
provide a cost effective means for corporations to broadcast analyst conference
calls live, making them available to the investing public, the media and
worldwide to anyone with Internet access. Visual Data markets the On-line
Broadcast and Productions Solutions webcasting products through a direct sales
channel, and in conjunction with our business partner, PR Newswire. Each Visual
Data webcast can be archived for replay for an additional fee and the archived
material can be accessed through a company's own website. Major corporations and
small businesses are hiring Visual Data to produce live webcasts and custom
videos for the web to communicate corporate earnings announcements, conference
calls on the web, speeches on demand, product launches, internal training,
corporate video news and profiles, crisis communications, visual trade shows,
and basic online multimedia fulfillment.

         Revenues are generated through the production and storage of all the
multi-media content produced and distributed by the Company. In addition we
generate revenues from the production of video press releases, video corporate
profiles and video footage of events. Services include:

o        Earnings Announcements
o        Conference Calls
o        Product Launches
o        Speeches-on demand, with multimedia sideshows
o        Online Meetings (One way or two way live or on demand)
o        Video Conferencing
o        Corporate Video Snapshot
o        Corporate News in Video
o        Custom Streaming-Video Production

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Current clients include Daimler-Chrysler Corporation, Delta Airlines, McDonalds
Corporation, Real Networks, Seagate Technologies, United News and Media and
Warner Brothers.

The On-Line Broadcast and Production Solutions Group also produces syndicated
content for the healthcare industry under the name MedicalView(TM), described on
our WWW.MEDICALVIEW.COM website.

         MedicalView's primary objective is to provide online consumers with
access to a comprehensive video library of healthcare programming designed
exclusively for the Internet. Presented in streaming video, MedicalView
programming is designed to answer frequently asked questions about the most
common health topics and concerns.

         The MedicalView library provides the growing online, broadband
community with access to on-demand information on subjects such as cancer, heart
disease, sports medicine & orthopedics, eye care, surgical procedures,
nutrition, and pregnancy just to name a few. Each topic is presented as a series
of video vignettes addressing frequently asked questions on disease prevention,
recognition, diagnosis, and appropriate treatments. MedicalView is partnering
with board certified physicians and accredited medical institutions to insure
that the material is both informative and accurate.

         The MedicalView library is being distributed under syndication and
licensing arrangements with individual web sites. The content is made available
by individual video clips, by health topic, or as an entire library.

         Revenues are generated through content licensing agreements, medical
industry webcasts and sponsorships. The video content is licensed under either a
private label or co-branded format and the fee is based on the number of video
clips and health topics used and the duration of the agreement. MedicalView is
also obtaining pharmaceutical industry sponsorships for its various programs.

         VISUAL DATA NETWORKING SOLUTIONS GROUP - PRODUCTS AND SERVICES

         In June 1998, we acquired a 51% interest in Entertainment Digital
Network, Inc. (OTCBB: EDNT). Based in San Francisco, CA. EDNET develops and
markets integrated systems for the delivery, storage and management of
professional quality digital communications for media-based applications,
including audio and video production for the North American advertising and
entertainment industries. EDNET has established a private wide-area network
(WAN) through strategic alliances with long distance carriers, regional
telephone companies, satellite operators and independent fiber optic
telecommunications providers, which enables the exchange of high quality audio,
compressed video and multimedia data communications. EDNET provides engineering
services, application-specific technical advice, and audio, video and networking
hardware and software as part of its business.

         During 1999, EDNET teamed with Telestream, a manufacturer of high
quality video delivery systems, to provide EDNET customers the means to send
high quality video via the Internet and other Internet Protocol (IP) based WANS.
Under the terms of the agreement, EDNET provides complete turnkey solution,
bundling Telestream video equipment with their network services. It is
anticipated that this relationship will provide EDNET's entertainment and
advertising company clients the ability to cost effectively transmit their daily
shots of commercials, special effects, graphics, storyboards and animated shots,
thereby providing a more dependable and faster delivery system than was
previously available.

         In order to maintain the 51% interest acquired, we received an option
to purchase, at an exercise price of $.10 per share, the number of shares
actually purchased upon exercise of each option, warrant and other

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convertible security of EDNET outstanding at the date of closing the EDNET
transaction (the "EDNET Stock Equivalents"). Based upon the number of EDNET
Stock Equivalents outstanding, we have the right to purchase up to an aggregate
of 2,647,793 shares of EDNET's common stock. Our right to exercise the options
shall accrue on the date of issuance of shares of EDNET common stock upon
exercise of the corresponding outstanding EDNET Stock Equivalents and shall
expire on the first anniversary of the exercise date of each such outstanding
EDNET Stock Equivalent. During the year ended September 30, 2000 and 1999, we
exercised options and warrants to purchase a total of 344,525 and 3,212,231
shares, respectively, of EDNET Common Stock.

         VISUAL DATA FINANCIAL SOLUTIONS GROUP - PRODUCTS AND SERVICES

         The Visual Data Financial Solutions Group's TheFirstNews.com has been
fully operational for one year as an internet-based, live audio news broadcast
service and is uniquely positioned for growth in both wireless and PC desktop
environments. Our goal is to provide financial professionals, brokers and active
traders with "stock-affecting" content using our proprietary software and
patent-pending technology. We currently provide our content to 75 corporate
Affiliates and a growing individual subscriber base. Our subscribers are able to
listen to "live" audio excerpts as well as, view short and long version text
stories about stocks and market sectors they prefer to listen to - when they
want! Our information is delivered in real time streaming audio, with "no spin,"
to personal computers, wireless telephones and personal digital assistants.
TheFirstNews.com maintains strategic partnerships and revenue-sharing
relationships with PR Newswire, Yahoo.com, Bloomberg.com and Zacks Investment
Research.

         TheFirstNews.com affords investors and financial professionals
accessibility to timely, filtered financial and news information, including
press releases, Internet webcasts and teleconferences. Subscribers benefit from
VDC generated proprietary content and reported stories, improved programming,
additional news sources and trading tools. TFN's business model includes
revenues from end-user subscriptions, content syndication, affiliate site
licenses and source company promotion programs.

Competition

         The market for Internet broadcast services and video content is
relatively new, rapidly evolving and highly competitive. We expect our
competition to intensify. We compete with:

         o        Other websites, Internet portals and Internet broadcasters to
                  acquire and provide content to attract users;

         o        video and audio conferencing companies and Internet business
                  services broadcasters;

         o        online services, other Website operators and advertising
                  networks; and

         o        traditional media such as television, radio and print.

         Visual Data believes it is one of the premier Internet broadcaster's
offering an end-to-end solution for production and serving digital video on the
Internet, however, we face competition from a number of other companies,
including local production companies and other travel content Websites. We
believe Visual Data stands apart from its competitors in that they do not
provide their customers with production or editing services, extensive
distribution and they do not own the content that is aggregated on their site.
In contrast,

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we create and produce most of our content and own virtually all the video and
audio content on our Websites.

Government Regulation

         Although there are currently few laws and regulations directly
applicable to the Internet, it is likely that new laws and regulations will be
adopted in the United States and elsewhere covering issues such as music
licensing, broadcast license fees, copyrights, privacy, pricing, sales taxes and
characteristics and quality of Internet services. It is possible that
governments will enact legislation that may be applicable to us in areas such as
content, network security, encryption and the use of key escrow, data and
privacy protection, electronic authentication or "digital" signatures, illegal
and harmful content, access charges and retransmission activities. Moreover, the
applicability to the Internet of existing laws governing issues such as property
ownership, content, taxation, defamation and personal privacy is uncertain. The
majority of such laws were adopted before the widespread use and
commercialization of the Internet and, as a result, do not contemplate or
address the unique issues of the Internet and related technologies. Any such
export or import restrictions, new legislation or regulation or governmental
enforcement of existing regulations may limit the growth of the Internet,
increase our cost of doing business or increase our legal exposure, which could
have a material adverse effect on our business, financial condition and results
of operations.

         By distributing content over the Internet, we face potential liability
for claims based on the nature and content of the materials that we distribute,
including claims for defamation, negligence or copyright, patent or trademark
infringement, which claims have been brought, and sometimes successfully
litigated, against Internet companies. To protect Visual Data from such claims,
we maintain general liability insurance. The general liability insurance may not
cover all potential claims of this type or may not be adequate to indemnify
Visual Data for any liability to which we may be imposed. Any liability not
covered by insurance or in excess of insurance coverage could have a material
adverse effect on our business, results of operations and financial condition.

Intellectual Property

         Our success depends in part on our ability to protect our intellectual
property. To protect our proprietary rights, we rely generally on copyright,
trademark and trade secret laws, confidentiality agreements with employees and
third parties, and agreements with consultants, vendors and customers, although
we have not signed such agreements in every case. Despite such protections, a
third party could, without authorization, copy or otherwise obtain and use our
content. We can give no assurance that our agreements with employees,
consultants and others who participate in development activities will not be
breached, or that we will have adequate remedies for any breach, or that our
trade secrets will not otherwise become known or independently developed by
competitors.

         We pursue the registration of certain of our trademarks and service
marks in the United States, although we have not secured registration of all our
marks. In addition, the laws of some foreign countries do not protect our
proprietary rights to the same extent as do the laws of the United States, and
effective copyright, trademark and trade secret protection may not be available
in such jurisdictions. In general, there can be no assurance that our efforts to
protect our intellectual property rights through copyright, trademark and trade
secret laws will be effective to prevent misappropriation of our content. Our
failure or inability to protect our proprietary rights could materially
adversely affect our business, financial condition and results of operations.

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         As part of TheFirstNews.com, we have a patent pending for a proprietary
technology, "Method for Manipulating a Live Audio Media Stream". This patent was
filed on November 23, 1999 under Docket No. 1285.012, by Marc Goldstein, and
assigned to us on the same date.

Employees

         We currently have 88 full-time employees, of whom 44 are design,
production and technical personnel, 19 are sales and marketing personnel and 25
are general, administrative and executive management personnel. None of the
employees are covered by a collective bargaining agreement and our management
considers relations with employees and consultants to be good.

ITEM 2.  DESCRIPTION OF PROPERTY

         In September 1997, we purchased from an unaffiliated third party a
25,000 square foot facility in Pompano Beach, Florida which now serves as our
corporate headquarters and houses all of our production, marketing and
distribution activities, exclusive of our EDNET subsidiary. The aggregate
purchase price paid for the facility was $1,475,000, comprised of $475,000 in
cash and an 18-month first mortgage in the principal amount of $1,000,000,
bearing interest at the rate of 8.75% per annum, with 15-year amortization. In
March 1999 we extended the expiration date until September 30, 2002.

         EDNET's principal business offices are located at One Union Street, in
San Francisco, California. This office is a 5,000 square foot facility that
operates as administrative headquarters and provides the centralized network hub
for electronically bridging affiliate studios, as well as overall network
management. EDNET leases this facility pursuant to a Sublease dated November 1,
1993 with Varitel Video, Inc. ("Varitel"), an unaffiliated entity. The term of
the sublease was for five years, commencing November 15, 1993. At November 14,
1998, the lease was renewed for an additional term ending August 31, 2003. Under
the renewed sublease, the monthly lease payment is $13,251 per month. In lieu of
a security deposit, EDNET granted Varitel a security interest in certain of
EDNET's equipment with an aggregate purchase price of approximately $75,000.
Varitel may terminate this sublease upon 90 days prior written notice, upon a
change in the principal ownership of EDNET or in the event that EDNET engages in
a "competing type of film or video service business like or similar to Varitel".
This excludes any "networking service application" which we offer in connection
with audio, video and other multimedia networking services. Varitel has agreed
not to terminate the lease due to our purchase of 51% of EDNET.

ITEM 3.  LEGAL PROCEEDINGS

         On or about October 18, 1999, Peter Bisulca instituted an action
against Visual Data and Randy Selman, our Chief Executive Officer and President,
individually, entitled BISULCA V. VISUAL DATA CORPORATION AND RANDY S. SELMAN,
Case No. CL 99-9971 AD, in the 15th Judicial Circuit in and for Palm Beach
County, Florida. The Complaint alleged breach of contract and conversion against
Visual Data and tortious interference with contract against Randy S. Selman,
seeking damages in excess of $2,000,000 in connection with a Consulting
Agreement dated May 1, 1998, allegedly entered into between Visual Data and
Peter Bisulca. A Motion to Dismiss was filed on behalf of Visual Data and Randy
S. Selman, the hearing on which was cancelled as a result of the Complaint being
amended. The Complaint was amended to no longer include Randy S. Selman as a
defendant and the claim for conversion was dropped. The Company intends to
vigorously defend itself in this action and, in the opinion of management, the
ultimate outcome of this matter will not have a material impact on the Company's
financial position or results of operations.

                                       11
<PAGE>   12

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock and warrants were quoted on the Nasdaq SmallCap Market
since our initial public offering on July 30, 1997, and are traded under the
symbols "VDC" and "VDCW," respectively. Since August 5, 1999 our common stock
and warrants have been listed on the Nasdaq National Market. The following table
sets forth, for the periods from October 1, 1998 through August 5, 1999, the
high and low closing bid sale prices for our common stock and warrants as
reported on the Nasdaq SmallCap Market and for the period from August 6, 1999
through September 30, 2000, the high and low closing bid sale prices for our
common stock and warrants as reported on the Nasdaq National Market System.

           COMMON STOCK             HIGH           LOW
         -----------------        --------       --------

         FISCAL YEAR 1999:
           First Quarter          $  6.875       $  2.125
           Second Quarter         $ 16.375       $  6.563
           Third Quarter          $ 40.000       $ 15.750
           Fourth Quarter         $ 20.438       $  8.063

         FISCAL YEAR 2000:
           First Quarter          $ 15.688       $  7.188
           Second Quarter         $ 16.375       $  6.563
           Third Quarter          $ 13.875       $  8.438
           Fourth Quarter         $  9.250       $  3.031

             WARRANTS               HIGH           LOW
         -----------------        --------       --------

         FISCAL YEAR 1999:
           First Quarter          $  2.750       $  0.313
           Second Quarter         $ 10.250       $  2.500
           Third Quarter          $ 35.000       $  9.625
           Fourth Quarter         $ 14.500       $  4.250

         FISCAL YEAR 2000:
           First Quarter          $ 10.125       $  3.500
           Second Quarter         $  8.938       $  4.000
           Third Quarter          $  4.250       $  1.313
           Fourth Quarter         $  1.813       $  0.813

                                       12
<PAGE>   13

         On December 15, 2000, the last reported sale prices of the common stock
and warrants on the Nasdaq National Market was $2.500 per share and $0.625 per
warrant. These prices do not include retail mark-ups, markdowns or commissions,
and may not necessarily represent actual transactions. As of December 15, 2000,
there were at least 430 shareholders of record of the common stock.

Recent Sales of Unregistered Securities

         On December 8, 2000 we sold an aggregate of $2,040,000 principal amount
of 6% Convertible Debentures to two unaffiliated third parties who were
accredited investors in a transaction exempt from registration under the
Securities Act of 1933 in reliance on Section 4(2) and Regulation D promulgated
under such act. No underwriter was involved in this transaction. The Convertible
Debentures mature on December 8, 2003 and are convertible, in whole or in part,
at the option of the holders into shares of our common stock at a conversion
price equal to the lesser of (i) $2.13 per share, or (ii) 90% of the average of
the three lowest closing bid prices for the 20 trading days prior to conversion
(the "variable conversion price"). The conversion price of the Convertible
Debentures shall not be less than $.90 per share; provided that this floor price
will be reset to 50% of the variable conversion price on December 8, 2001.

         In conjunction with this transaction, we issued the purchasers (i) a
one year warrant to purchase an aggregate of 500,000 shares of our common stock
at an exercise price of $4.00 per share, and (ii) a five year warrant to
purchase an aggregate of 200,000 shares of our common stock at an exercise price
of $2.13 per share (collectively, the "Warrants").

         In the event that the market price of our common shares shall be less
than $1.50 per share for 20 consecutive trading days, at our option all or a
portion of the Convertible Debentures are redeemable in an amount equal to 115%
of the Outstanding Principal Amount (as that term is defined in the Convertible
Debenture) plus all accrued but unpaid interest and all Delay Payments (as that
term is defined in the Convertible Debenture), subject to certain conditions.
Our redemption right shall, if exercised, be irrevocable, may be exercised no
more than twice and may not be exercised again until three months after the
first redemption closing date.

         The notice of redemption must be delivered by us within not less than
five nor more than 20 trading days of such redemption triggering event (the
"Redemption Closing Date"). Our right of redemption cannot be exercised if:

         -        there is an Event of Default (as that term is defined in the
                  Convertible Debenture) or an event which, with the giving of
                  notice or the passage of time or both would constitute an
                  Event of Default under any Convertible Debenture; or

         -        there is an effective registration statement with respect to
                  the share issuable upon the conversion of or as interest on
                  the Convertible Debentures.

         In addition, the holders of the Convertible Debentures have the right
to convert the debentures at any time until the Redemption Closing Date.

         Commencing on the effective date of the registration statement
hereinafter described, Visual Data has the right to sell to the purchasers an
additional $1,000,000 principal amount of Convertible Debentures and five year
warrants to purchase an additional 50,000 shares of its common stock, the
conversion price and exercise price of which shall be identical to those
described above. In addition, if this first put right shall have occurred and
the Total Dollar Volume (as defined in the Purchase

                                       13
<PAGE>   14

Agreement) shall have exceeded $400,000, during the period commencing 90 days
from the closing of the first put right and ending on December 8, 2001, Visual
Data shall have the right to sell to the purchasers an additional $1,000,000
principal amount of Convertible Debentures and five year warrants to purchase an
additional 50,000 shares of its common stock, the conversion price and exercise
price of which shall be equal to the market price of Visual Data's common stock
on the second put closing date. In each of the first put right and second put
right, the obligation of the purchasers to purchase these securities is several
and not joint, and shall be allocated pro rata based upon the amount of
Convertible Debentures and Warrants purchased pursuant to the Purchase
Agreement.

         In December 2000, TheFirstNews.Com ("TFN"), in a private offering, sold
Units to accredited investors under Rule 506 each Unit consisting of 10,000
shares of TFN common stock and 20,000 shares of TFN 10% redeemable, convertible
preferred stock. The purchase price for each unit was $50,000. TFN received net
proceeds of approximately $.8 million. TFN has the right to redeem each block of
20,000 shares of preferred stock included in each Unit, at any time from the
closing of the offering until 12 months thereafter, after providing the holder
with 10 days notice, for $50,000 per 20,000 shares of preferred stock plus
accrued and unpaid interest. In the event TFN fails to redeem the preferred
stock within 12 months after the closing of the offering, the preferred stock
shall be automatically converted into common stock at the conversion rate of 1
share of preferred stock for 1 share of common stock. In the event TFN fails to
either file a registration statement under the Securities Act of 1933, as
amended, with the Securities and Exchange Commission for the public offering of
TFN's common stock within 12 months of the closing of the offering, or such
registration statement has not been declared effective within 6 months of its
initial filing with the SEC, the investors shall have the right to convert those
shares of TFN common stock received initially with the Units and those received
upon conversion of the preferred stock into shares of VDC common stock, at the
conversion rate of 1 share of TFN common stock for 2 shares of VDC common stock.

                                 DIVIDEND POLICY

         We have never declared or paid any cash dividends on our common stock.
We currently expect to retain future earnings, if any, to finance the growth and
development of our business.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following discussion should be read together with the information
contained in the Consolidated Financial Statements and related Notes included
elsewhere in this annual report.

OVERVIEW

General

         Visual Data Corporation is a full service provider of streaming-content
applications, production technology and media solutions. Using advanced
technology and information solutions, we provide a sensory-rich experience to
businesses and consumers enabling them to make superior decisions.

         Visual Data is comprised of four operating groups including:

             Visual Data Travel Group (includes HotelView, ResortView, etc.)
             Visual Data On-line Broadcast and Production Group (includes
               Webcasting, Live audio and video events, etc.)


                                       14
<PAGE>   15

             Visual Data Networking Solutions Group (EDNET)
             Visual Data Financial Solutions Group (TheFIrstNews.com)


PLAN OF OPERATION

         Our current plan of operation includes continuing to expand the
marketing of our video libraries, the development and marketing of our new
on-line products and services and to continue to look for synergistic
acquisition opportunities.

         The Visual Data Travel Group which includes HotelView, ResortView,
DestinationView, CruiseView, GolfersView and AttractionView will continue to
expand its offering through the development of additional vignettes as a result
of corporate agreements with companies such as Leading Hotels, Historic, Royal
Resorts, Radisson, Choice, Lexington, Worldres, Peninsula and Park Place. With
the growth of our Internet based distribution network with companies such as
Yahoo!, NBCi, Roadrunner, New River, All-Hotels, Lycos-TV via Entertainment Blvd
and management believes the Company has created a value for the travel industry.
We will continue to add to the distribution relationships in order to increase
the value of our travel program. We have created a flexible pricing model that
gives the properties the choice of a pay-per-view or a fixed monthly service fee
in addition to an annual fee. It was initially necessary to maintain the
individual property sales while establishing brand identity, building a critical
mass of properties and building the distribution network. We have refocused our
marketing target from the individual properties to the corporate or chain level.
This change in marketing focus should enable us to reduce the costs of our sales
and marketing program and provide more substantial prospects. We believe we are
in a position to build on the infrastructure we have created.

         The Visual Data On-line Broadcast and Production Group ("OLBPG") was
created during the first quarter of fiscal 1999. OLBPG which includes our
partnership with PR Newswire for conference call webcasts and live audio and
video event webcasts, as well as our other business services including "about
the company" videos, visual trade shows and other multi-media presentations. By
combining the worldwide high speed data networks of EDNET, and our worldwide
network of camera crews, we are able to provide our clients with live audio and
video event broadcast capabilities via the Internet. During 2000 we added
additional encoders and other required facilities and staff to support the
growing demand for our webcasting services. In addition, we developed software
that would enable us to compete with companies offering specialized webcasting
services such as slide shows. We are now positioned to offer PR Newswire and
their clients full service webcasting capability. We will continue to remain
competitive, develop new features and expand our service offerings as this new
form of media continues to grow. OLBPG includes our MedicalView division that
creates and distributes Internet-based video programs for physicians, health
care professionals and consumers. Over 400 videos have been created and are
online and being syndicated to websites on the Internet. We will continue to
work with major sponsors to develop new and informative health content as well
as provide webcasting services to the health industry and derive new content
from these events.

         The Visual Data Networking Solutions Group (Ednet) was created in June
1998, when we acquired a 51% interest in Entertainment Digital Network, Inc.
(OTCBB: EDNT). Based in San Francisco, CA. EDNET develops and markets integrated
systems for the delivery, storage and management of professional quality digital
communications for media-based applications, including audio and video
production for the North American advertising and entertainment industries.
EDNET has established a private wide-area network (WAN) through strategic
alliances with long distance carriers, regional telephone companies, satellite
operators and independent fiber optic telecommunications providers, which
enables the exchange of high quality audio, compressed video and multimedia data
communications. EDNET provides engineering services,

                                       15
<PAGE>   16

application-specific technical advice, and audio, video and networking hardware
and software as part of its business.

         During 1999, EDNET teamed with Telestream, a manufacturer of high
quality video delivery systems, to provide EDNET customers the means to send
high quality video via the Internet and other Internet Protocol (IP) based WANS.
Under the terms of the agreement, EDNET provides complete turnkey solution,
bundling Telestream video equipment with their network services. It is
anticipated that this relationship will provide EDNET's entertainment and
advertising company clients the ability to cost effectively transmit their daily
shots of commercials, special effects, graphics, storyboards and animated shots,
thereby providing a more dependable and faster delivery system than was
previously available.

         For the past year our EDNET subsidiary has been focusing on developing
the webcasting services as well as developing the video network. During 2000, we
partnered with Digital Generation Systems to create the "One Digital Path", a
network service to enable production companies to deliver their productions
through a digital video network, through major television network's compliance
divisions, through the customer and approval process, right to the television
broadcasters. During the coming year we will focus on improving the audio
equipment sales and the audio network usage the core business of EDNET. We plan
to move the conference call portion of the webcasting business to Visual Data
(Florida), reduce the expenses of Ednet and apply the remaining resources to
growing the audio and video network business.

         The Visual Data Financial Solutions Group (theFirstNews.com) began
operations in November 1999 as TheFirstNews.com(TM) to address the information
needs of the financial community. This subsidiary provides aggregated,
up-to-the-minute, information for the financial community. The initial offering
was a streaming-audio presentation of the content over the internet.
TheFirstNews.com is currently developing a wireless delivery to provide the same
service to customers through cell phones and PDA's. During 2000, we relaunched
the service through a network of affiliates that has now grown to over 75. In
the coming year we intend to launch our wireless service providing a means for
investors to get news alerts on their cellular phones, PDA's and any other
wireless device capable of receiving short messages or audio voice mail. We
intend to further develop our affiliates both on-line and wireless and to find
new uses of our content and audio feeds and begin syndicating this unique
content.

         In addition to the various initiatives described, we have re-evaluated
our operating costs and reduced costs that do not impact the Company's ability
to operate the business. These included a more stringent travel policy, the
reduction of several public relations and marketing firms and the elimination of
unnecessary remote offices. We have consolidated all marketing communications
through a single source. The Company also reduced costs associated with the
CareView division, which was sold to CuraSpan, Inc. See Note 12 in the
Consolidated Financial Statements.

REVENUE RECOGNITION

         Our HotelView, CareView and ResortView libraries recognize a portion of
their contract revenue at the time of completion of video production services
with the remaining revenue recognized over the term of the contracts. Per hit
charges are recognized when users watch a video on the Internet. Fixed monthly
fees are recognized on a monthly basis consistent with the terms of the
contracts. Commissions on ResortView bookings are recognized when the stays are
completed. Currently, our Video News Wire and MedicalView divisions recognize
revenue when a project is completed and our client is billed. A significant
component of EDNET's revenue relates to the sale of equipment, which is
recognized when the equipment is installed or upon signing of a contract after a
free trial period. EDNET recognizes revenues from equipment installation,

                                       16
<PAGE>   17

Webcasting and bridging when service is performed. Network usage revenue is
recognized based on an estimate of customers' monthly usage. EDNET leases some
equipment to customers under terms that are accounted for as operating leases.
Rental revenue from leases is recognized ratably over the life of the lease and
the related equipment is depreciated over its estimated useful life. All leases
of the related equipment contain fixed terms. TheFirstNews.com recognizes its
subscription revenue ratably as service is provided.

RESULTS OF OPERATIONS

         In the discussion below, we compare our results of operations for the
years ended September 30, 2000 and 1999. The discussion details the changes in
operations for Visual data Corporation and it's wholly-owned subsidiaries
("Visual") and EDNET.


                                       17
<PAGE>   18

         The following table shows for the periods presented the percentage of
revenue represented by items on our consolidated statements of operations.

                                            PERCENTAGE OF REVENUE
                                         --------------------------

                                          YEAR ENDED SEPTEMBER 30,
                                         --------------------------
                                          2000                1999
                                         ------              ------

Revenue                                   100.0%              100.0%

Cost of revenue                           119.7               110.4
                                         ------              ------

Gross loss                                (19.7)              (10.4)
                                         ------              ------

Operating expenses:
   General and administrative             101.6               103.8

   Sales and marketing                     92.4                58.5
                                         ------              ------

Total operating expenses                  194.0               162.3
                                         ------              ------

Loss from operations                     (213.7)             (172.7)

Other income (expense):
   Interest income                          9.7                 4.9

   Rental income                            1.4                 1.7

   Loss on disposal of assets              (0.2)               (0.3)

   Interest expense                        (2.2)               (2.4)

   Minority interest                       10.8                 8.7
                                         ------              ------

Net loss before taxes                    (194.2)             (160.1)

Income taxes                                 --                 0.2
                                         ------              ------

Net loss                                 (194.2)%            (160.3)%
                                         ======              ======

REVENUE

Visual

         Revenue increased by approximately $992,000, or 137%, to approximately
$1,715,000 for the fiscal year ended September 30, 2000 from approximately
$723,000 for the fiscal year ended September 30, 1999. This increase was
primarily attributable to an increase in webcasts and live audio and video
events from the Visual Data On-line Broadcast and Production Group ("OLBPG").
Revenue from OLBPG increased by approximately $738,000, or 216%, to
approximately $1,079,000 for the fiscal year ended September 30, 2000 from
approximately $341,000 for the fiscal year ended September 30, 1999. In
addition, the Company experienced an increase in the Visual Data Travel Group
("Travel Group") as a result of

                                       18
<PAGE>   19

increased production and distribution of hotel vignettes. Revenue from Travel
Group increased by approximately $148,000, or 64%, to approximately $380,000 for
the fiscal year ended September 30, 2000 from approximately $232,000 for the
fiscal year ended September 30, 1999. Revenue from the CareView division
increased by approximately $120,000, or 93%, to approximately $250,000 for the
fiscal year ended September 30, 2000 from approximately $130,000 for the fiscal
year ended September 30, 1999. In December 2000, we sold the CareView name as
well as the CareView library to CuraSpan, Inc.

EDNET

         Revenue increased by approximately $413,000, or 11%, to approximately
$4,154,000 for the fiscal year ended September 30, 2000 from approximately
$3,741,000 for the fiscal year ended September 30, 1999. This increase was
primarily attributable to an increase in webcasts and video networking from the
Visual Data Networking Solutions Group ("Networking Group").

GROSS (LOSS) PROFIT

Visual

         Gross loss decreased by approximately $12,000, or 1%, to approximately
$1,293,000 for the fiscal year ended September 30, 2000 from approximately
$1,305,000 for the fiscal year ended September 30, 1999. Gross loss as a
percentage of revenue for the fiscal years ended September 30, 2000 and 1999 was
approximately 75% and 180%, respectively, reflecting the impact of an increase
in revenues and additional cost of revenues to support current revenues and
future growth. The increase in cost of revenue was the result of an increase in
camera crews fees, information technology group salaries and consultants and
depreciation of assets acquired to increase the capacity of operations.

EDNET

         Gross profit decreased by approximately $706,000, or 84%, to
approximately $137,000 for the fiscal year ended September 30, 2000 from
approximately $843,000 for the fiscal year ended September 30, 1999. Gross
profit as a percentage of revenue for the fiscal years ended September 30, 2000
and 1999 was approximately 3% and 23%, respectively. The increase in cost of
revenue is the result of costs associated with "ClipMail" lines of business,
discounts to attract this business and the write down of slow moving "ClipMail"
inventory in an effort to more realistically assess its value.

OPERATING EXPENSES

Visual

         GENERAL AND ADMINISTRATIVE. General and administrative expense remained
relatively consistent at approximately $4,090,000 for the fiscal year ended
September 30, 2000 from approximately $4,085,000 for the fiscal year ended
September 30, 1999. General and administrative expense as a percentage of sales
was approximately 238% and 565% for the fiscal years ended September 30, 2000
and 1999, respectively. The significant decrease in general and administrative
expense as a percentage of sales is primarily attributable to a decrease of
approximately $120,000 for the SEC filing fees and a decrease of approximately
$625, 000 for consulting fees. This was off-set by an increase of approximately
$390,000 in administrative compensation, an increase of approximately $130,000
for depreciation and an increase of approximately $120,000 in telephone
expenses.

         SALES AND MARKETING. Sales and marketing increased by approximately
$3,392,000, or approximately 250%, to approximately $4,750,000 for the fiscal
year ended September 30, 2000 from

                                       19
<PAGE>   20

approximately $1,358,000 for the fiscal year ended September 30, 1999. The
increase in sales and marketing was primarily due to an increase in
compensation, travel and entertainment and advertising. Compensation expense
increased to approximately $1,565,000 during the fiscal year ended September 30,
2000 from approximately $671,000 during the fiscal year ended September 30,
1999. This increase was a result of the increase in sales personnel during the
year. The increase in travel and entertainment to approximately $491,000 during
the fiscal year ended September 30, 2000 from approximately $231,000 during the
fiscal year ended September 30, 1999 was a result of the increase in sales
personnel during the year. Advertising expenses increased to approximately
$1,263,000 during the fiscal year ended September 30, 2000 from approximately
$521,000 during the fiscal year ended September 30, 1999 as a result of the
Company utilizing several marketing firms during the year. Subsequent to
year-end, the Company terminated the CareView employees, as a result of the sale
to CuraSpan, Inc. (see Note 12 to the Consolidated Financial Statements). In
addition, the Company has consolidated the advertising efforts for all of its
divisions to realize better economies, and, therefore, reduce advertising costs
for Fiscal Year Ended September 30, 2001.

EDNET

         GENERAL AND ADMINISTRATIVE. General and administrative expense
increased approximately $623,000, or approximately 50%, to approximately
$1,877,000 for the fiscal year ended September 30, 2000 from approximately
$1,254,000 for the fiscal year ended September 30, 1999. General and
administrative expense as a percentage of sales was approximately 45% and 34%
for the fiscal years ended September 30, 2000 and 1999, respectively. The
increase in general and administrative expense as a percentage of sales is
primarily attributable to the expansion of the webcasting operations that
includes additional equipment depreciation and personnel.

         SALES AND MARKETING. Sales and marketing increased by approximately
$119,000, or approximately 22%, to approximately $670,000 for the fiscal year
ended September 30, 2000 from approximately $551,000 for the fiscal year ended
September 30, 1999. The increase in sales and marketing was primarily due to an
increase in sales personnel.

OTHER INCOME (EXPENSE)

Visual

         OTHER INCOME. Other income increased approximately $602,000, or
approximately 106%, to approximately $1,171,000 for the fiscal year ended
September 30, 2000 from approximately $569,000 for the fiscal year ended
September 30, 1999. The increase is primarily attributable to an increase in
interest income and an increase in minority interest. The increase in interest
income is the result of the increase in average cash balance for the fiscal year
ended September 30, 2000 compared with the fiscal year ended September 30, 1999.
The increase in minority interest is the result of the increase in the loss from
EDNET. As a result of the losses generated by EDNET, the minority interest
balance has been fully absorbed as of September 30, 2000, and, therefore, all
future losses will be fully absorbed by VDC. As the minority interest's 49%
share in EDNET's cumulative net losses through September 30, 2000 is in excess
of the minority interest's original investment by approximately $174,000, VDC
has reduced the minority interest liability to zero in the accompanying
consolidated balance sheet as of September 30, 2000. VDC will restore the
minority interest's 49% share in EDNET when and if the cumulative earnings in
EDNET become positive.

EDNET

         OTHER EXPENSE. Other expense remained relatively consistent increasing
approximately $17,000, or approximately 170%, to approximately $27,000 for the
fiscal year ended September 30, 2000 from approximately $10,000 for the fiscal
year ended September 30, 1999.

                                       20
<PAGE>   21

PROVISION FOR INCOME TAXES

         We have incurred significant net losses since our inception in 1993.
These losses have resulted in net operating loss carryforwards and deferred tax
assets, which have been used by us to offset tax liabilities, which may have
been incurred in prior periods. We have recorded a valuation allowance against
the deferred income tax assets, since future utilization of these assets is
subject to our ability to generate taxable income.

LIQUIDITY AND CAPITAL RESOURCES

         Our working capital at September 30, 2000 was $3,820,000, a decrease of
approximately $12,215,000 from September 30, 1999. The change in working capital
was primarily attributable to cash used in operating activities. Net cash used
in operating activities increased to $10,466,000 for the fiscal year ended
September 30, 2000 from $5,353,000 for the fiscal year ended September 30, 1999.
This was the result of an increase in net loss of approximately $4,243,000,
changes in certain non-cash operating activities and changes in certain assets
and liabilities. Net cash used in investing activities increased to $1,167,000
for the fiscal year ended September 30, 2000 as compared to $470,000 for the
fiscal year ended September 30, 1999 primarily as a result of the sale of IBS in
fiscal year ended September 30, 1999, which resulted in cash from investing
activities of $887,000. Net cash used by financing activities for the fiscal
year ended September 30, 2000 was $483,000 compared to cash provided by
financing activities of $20,806,000 for the fiscal year ended September 30,
1999. This decrease was primarily attributable to the proceeds from the issuance
and exercise of common stock and warrants during the fiscal year ended September
30, 1999.

         For the year ended September 30, 2000, we had an operating loss of
approximately $12.5 million and cash used in operations of approximately $10.5
million. The Company's forecast for fiscal year 2001 anticipates a reduction in
cash used in operations. At September 30, 2000, we had $3.8 million of cash and
cash equivalents and restricted cash available to fund future operations.
Subsequent to the year ended September 30, 2000, we received net proceeds of
$2.6 million ($0.8 million for TheFirstNews.com). See Note 12 of the
Consolidated Financial Statements. We believe that the cash on hand plus funds
available related to the 6% Debenture financing discussed in Note 12 of the
Consolidated Financial Statements will be sufficient to fund the Company's
working capital, anticipated operating cash flow deficit and capital expenditure
requirements for at least the next 12 months.

         We are constantly evaluating our cash needs and existing burn rate. In
the evaluation of our cash needs, we will continue to raise additional capital
through the sale of equity and debt securities, as deemed necessary. In
addition, we have a plan whereby certain non-essential personnel and
administrative costs may be reduced so that we may continue to meet its
operating and financing obligations as they come due. No assurances can be given
that we will be successful in obtaining additional capital, or that such capital
will be available in terms acceptable to us. Further, there can be no assurance
that even if such additional capital is obtained or the planned cost reductions
are implemented, that we will achieve profitability or positive cash flow.

RECENT DEVELOPMENTS

Sale of CareView Assets

         In December 2000 pursuant to the terms and conditions of an Asset
Purchase Agreement by and between the Company, its wholly-owned subsidiary,
CareView and CuraSpan, Inc., Visual Data sold substantially all of the assets of
CareView to CuraSpan. CuraSpan, an Application Service Provider (ASP)

                                       21
<PAGE>   22

that develops technology-based solutions to meet the organizational,
communication and compliance needs of healthcare organizations, is an
unaffiliated third party and the terms of the transaction were the result of
arms length negotiations by the parties.

         Excluded from the assets sold were (i) CareView's cash on hand, (ii)
any claims for tax refunds for the periods prior to the closing date, (iii) all
notes and accounts receivables and other receivables of CareView, and (iv) any
amounts received by CareView in settlement of or relating to disputes or
litigation which relate to periods prior to the closing date. In connection with
the asset purchase, CuraSpan assumed all liabilities and obligations related to
CareView's business following the closing date, together with certain
contractual obligations as specified in the Asset Purchase Agreement.

         As consideration for the purchase, CuraSpan issued to Visual Data
182,000 shares of its Series B Preferred Stock and a promissory note in the
principal amount of $1,000,000. The note, which bears no interest, is payable
semi-annually commencing in May 2001, with each semi-annual payment equal to the
lesser of $125,000 or 50% of the renewal fees collected by Visual Data in the
previous six months from the post-acute facilities with which CuraSpan had a
contract as of the closing date; provided that the first and second payments to
be made thereunder shall not be less than $50,000 each, the third and fourth
payments to be made thereunder shall not be less than $75,000 each, and each
payment thereafter shall not be less than $100,000. Principal payments not made
within 10 days of the due date shall bear interest at 13% per annum. Visual Data
also agreed to provide CuraSpan with access of up to $30,000 during the 30 day
period following the closing date under a revolving note bearing interest at 6%
per annum and due on the earlier of (i) six months from the date of issuance or
(ii) the closing date of an equity financing of CuraSpan in an amount of not
less than $1,000,000.

         As additional consideration for the asset purchase, Visual Data and
CuraSpan also entered into a Services Agreement wherein CuraSpan will purchase a
minimum of $250,000 of video services from Visual Data during the 12 month
period following the closing date.

SportSoft Golf, Inc. Merger with VDC Subsidiary

         In December 2000 VDC, and SportsSoft Golf, Inc., a Delaware corporation
("SSG"), and certain shareholders of SSG entered into an Agreement and Plan of
Merger dated as of December 1, 2000 (the "Merger Agreement"), which provides,
among other things, that, upon the terms and subject to conditions thereof,
which includes the approval of SSG's stock holders', a wholly-owned subsidiary
of VDC ("Acquisition Sub") will be merged with and into SSG, with SSG being the
surviving corporation in the merger. In the merger, all outstanding shares of
common stock of SSG issued and outstanding shall be converted into the right to
receive .0969 shares of restricted common stock of VDC, par value $.0001. The
aggregate number of VDC shares to be received by the SSG shareholders will be
1,686,445.

         A Management Agreement (the "Management Agreement") between SSG and
VDC was entered into concurrently with the Merger Agreement which provides that
SSG retained the services of VDC to manage and oversee the business of SSG with
respect to its operations until the earlier to occur of (a) the effective date
of the Merger Agreement, or (b) the termination of the Merger Agreement. VDC
will act as manager and shall assume complete and absolute managerial day-to-day
control over SSG. VDC shall receive as compensation all of the consolidated
income of SSG and it subsidiaries, subject to certain provisions in the
Management Agreement.

                                       22
<PAGE>   23

RISK FACTORS

WE HAVE AN ACCUMULATED DEFICIT AND ANTICIPATE CONTINUING LOSSES

         Visual Data continues to incur operating losses. For the years ended
September 30, 2000 and 1999, we incurred losses of $11,401,583 and $7,158,376,
respectively and had an accumulated deficit at September 30, 2000 of
$28,170,584. Operating expenses have increased. Future profitability will depend
on substantial increases in revenues from operations. Future events, including
unanticipated expenses, increased competition or inability to effectively
integrate acquisitions, could have a material adverse effect on operating
margins and results of operations. Accordingly, we may experience significant
liquidity and cash flow problems if the Company is not able to raise additional
capital as needed. There can be no assurance that future revenues will grow
sufficiently to generate a positive cash flow or otherwise enable Visual Data to
be profitable.

WE CANNOT PREDICT OUR FUTURE REVENUES OR WHETHER OUR PRODUCTS WILL BE ACCEPTED

         Revenues from our information libraries and other products and services
have been limited (approximately $5,868,435 and $4,464,157 for the years ended
September 30, 2000 and 1999, respectively). In addition, the markets for our
information libraries and other products and services have only recently begun
to develop, are rapidly evolving and are increasingly competitive. Demand and
market acceptance for recently introduced products and services are subject to a
high level of uncertainty and risk. It is difficult to predict whether, or how
fast, these markets will grow. We cannot guarantee either that the demand for
our information libraries and other products and services will continue to
develop or that such demand will be sustainable. If the market develops more
slowly than expected or becomes saturated with our competitors' products and
services, or do not sustain market acceptance, our business, operating results,
and financial condition will be materially and adversely affected.

WE ARE DEPENDENT ON CONTRACTS, SOME OF WHICH ARE SHORT TERM

         We are dependent upon contracts with our strategic partners and clients
including Interval International, Inc., InterVu, Inc. and PR Newswire
Corporation. These contracts are generally for terms ranging from one to two
years; however, many of them permit our clients and partners to terminate their
agreements with us on short term notice. The termination of certain of these
contracts could have a material adverse effect on our business operations and
prospects.

WE DEPEND ON MANAGEMENT TO INTEGRATE OUR ACQUISITIONS AND TO MANAGE OUR GROWTH

         Our business strategy includes growth through acquisition and internal
development. We are subject to various risks associated with our growth
strategy, including the risk that we will be unable to identify and recruit
suitable acquisition candidates in the future or to integrate and manage the
acquired companies.

         We completed the acquisition of 51% of EDnet and are in the continuing
process of integrating these operations. We recently announced an agreement to
acquire SportSoft Golf, Inc. Acquired companies' history, geographical location,
business model and business culture is different from ours in many respects. Our
directors and senior management face a significant challenge in their efforts to
integrate our businesses and the business of acquired companies or assets, and
to effectively manage our continued growth. There can be no assurance that our
efforts to integrate the operations of these companies and the acquired assets
will be successful, that we can manage our growth or that the anticipated
benefits of the acquisitions or their assets will be fully realized. The
dedication of management resources to such efforts may detract attention from
our day-to-day business. There can be

                                       23
<PAGE>   24

no assurance that there will not be substantial costs associated with such
activities or of the success of our integration efforts, either of which could
have a material adverse effect on our operating results.

WE MAY NEED ADDITIONAL FINANCING

         We believe that our cash on hand, plus funds available relating to the
6% Debenture financing described in Note 12 to the Consolidated Financial
Statements, plus our banking arrangements will be sufficient to fund our working
capital, anticipated operating cash flow deficit and capital expenditure
requirements for at least the next 12 months. Our future capital requirements,
however, depend on a number of factors, including our ability to grow our
revenues and manage our business.

         Accordingly, we may need to raise additional funds in order to grow our
business and pursue new expansion opportunities. Our business could suffer if we
are unable to raise such additional funds on acceptable terms, or at all.

WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL CAPITAL ON ACCEPTABLE TERMS

         Our acquisition and internal growth strategy requires substantial
capital investment. Capital is typically needed not only for the acquisition of
additional companies, but also for the effective integration, operation and
expansion of these businesses. Capital is also necessary for the production and
marketing of additional on-line multi-media libraries, products and services.
Therefore, our growth may depend upon our ability to raise additional capital,
possibly through the issuance of long-term or short-term indebtedness or the
issuance of our equity securities in private or public transactions. This will
likely result in dilution of existing equity positions or increased interest
expense. There can be no assurance that acceptable financing for future
acquisitions or for the integration and expansion of existing operations can be
obtained on suitable terms, if at all.

         If we raise additional funds through the issuance of equity or
convertible debt securities, the percentage ownership of Visual Data held by
existing shareholders will be reduced and those shareholders may experience
significant additional dilution. In addition, new securities may contain certain
rights, preferences or privileges that are senior to those of our common stock.

THE EXERCISE OF OPTIONS AND WARRANTS WILL HAVE DILUTIVE EFFECT

         As of September 30, 2000, we had outstanding options and warrants to
purchase a total of 7,728,715 shares of our common stock at prices ranging
between $.00016 and $17.188 per share, including 4,966,385 options issued to
directors, executive officers and employees. The existence of such options and
warrants may adversely affect the terms under which we could obtain additional
equity capital. The exercise of these warrants and options may materially
adversely affect the market price of our common stock.

WE EXPECT TO EXPERIENCE VOLATILITY AND FLUCTUATIONS IN OUR STOCK PRICES

         Historically, there has been and there may continue to be volatility in
the market price for our common stock. Our quarterly operating results, changes
in general conditions in the economy, the financial markets or the marketing
industry, or other developments affecting us or our competitors, could cause the
market price of our common stock to fluctuate substantially. In addition, the
stock market in general and the market prices for Internet-related companies in
particular, have experienced extreme volatility that often has been unrelated to
the operating performance of such companies. These broad market and industry
fluctuations may adversely affect the price of our common stock, regardless of
our operating performance.

                                       24
<PAGE>   25

         We expect to experience significant fluctuations in our future
quarterly operating results due to a variety of factors, many of which are
outside our control. Factors that may adversely affect our quarterly operating
results include:

         - the announcement or introduction of new services and products by us
and our competitors;

         - our ability to upgrade and develop our systems in a timely and
effective manner;

         - our ability to retain existing clients and attract new clients at a
steady rate, and maintain client satisfaction;

         - the level of use of the Internet and online services and the rate of
market acceptance of the Internet and other online services for transacting
business;

         - technical difficulties, system downtime, or Internet brownouts;

         - the amount and timing of operating costs and capital expenditures
relating to expansion of our business and operations;

         - government regulation; and

         - general economic conditions and economic conditions specific to the
Internet and e-commerce.

         As a result of these factors, in one or more future quarters, our
operating results may fall below the expectations of securities analysts and
investors. In this event, the market price of our common stock would likely be
materially adversely affected.

ITEM 7.  FINANCIAL STATEMENTS

         Our financial statements are contained in pages F-1 through F-22 as
follows.

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

         None.

                                       25
<PAGE>   26

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

         Our executive officers and directors, and their ages are as follows:

<TABLE>
<CAPTION>
         NAME                                AGE              POSITION
         ----                                ---              --------
         <S>                                 <C>             <C>
         Randy S. Selman(1)                   44              Chief Executive Officer, President and Chairman;
                                                              Chairman of EDNET
         Alan M. Saperstein                   41              Executive Vice President, Treasurer and Director;
                                                              Director of EDNET
         George Stemper                       46              Chief Operating Officer
         Gail Babitt                          37              Chief Financial Officer
         Benjamin Swirsky(1)(2)               58              Director
         Brian K. Service(1)(2)               53              Director; Director of EDNET
         Eric Jacobs                          53              Secretary, Director; Director of EDNET
         Robert J. Wussler(1)(2)              61              Director
</TABLE>

         (1) Member of the Compensation Committee.
         (2) Member of the Audit Committee.

         RANDY S. SELMAN. Since our inception in May 1993, Mr. Selman has served
as our Chief Executive Officer, President, and a director and from September
1996 through June 1999, as our Chief Financial Officer. Mr. Selman is also a
member of the Compensation Committee of the Board of Directors. Since July 1998
Mr. Selman has been Chairman of the Board of EDNET. From March 1985 through May
1993, Mr. Selman was Chairman of the Board, President and Chief Executive
Officer of SK Technologies Corporation (OTC Bulletin Board: SKTC), a
publicly-traded software development company. SKTC develops and markets software
for point-of-sale with complete back office functions such as inventory, sales
analysis and communications. Mr. Selman founded SKTC in 1985 and was involved in
their initial public offering in 1989. Mr. Selman's responsibilities included
management of SKTC, public and investor relations, finance, high level sales and
general overall administration.

         ALAN M. SAPERSTEIN. Mr. Saperstein has served as our Executive Vice
President, Treasurer and a director since our inception in May 1993. Mr.
Saperstein also serves as an alternate member of the Compensation Committee of
the Board of Directors. Since July 1998, Mr. Saperstein has been a member of the
Board of Directors of Ednet. From March 1989 until May 1993, Mr. Saperstein was
a free-lance producer of video film projects. Mr. Saperstein has provided
consulting services for corporations that have set up their own sales and
training video departments. From 1983 through 1989, Mr. Saperstein was the
Executive Director/Entertainment Division of NFL Films where he was responsible
for supervision of all projects, budgets, screenings and staffing.

         GEORGE STEMPER. Mr. Stemper has served as our Chief Operating Officer
since September 2000. Mr. Stemper comes to Visual Data with 25 years in the
computer, Internet application and hospitality technology fields. He served as a
Senior Vice President and General Manager with Hospitality Solutions
International (HSI) from June, 1997 through July, 2000. HSI is a leading global
developer and marketer of Windows NT and Internet based systems and applications
software for the restaurant, hotel, and club hospitality industry business
segments. From September, 1995 through June, 1997 Mr. Stemper served as the
Chief Operating Officer and as Executive Vice President for MCORP, an Edison, NJ
based software developer and product integrator having hotel technology,
telecom, military applications, and enterprise oriented business solutions. From
April, 1981 through September, 1995, Mr. Stemper was with Control Transaction
Corporation and served in key sales and marketing positions and as the Executive
Vice President. From July 1996 through August 1999, Mr. Stemper was with the
Hyatt Hotels Corporation and with Hilton Hotels from August, 1979 through March
1981. Mr. Stemper has a B.S. degree from Cornell University with and MBA from
Fairleigh Dickinson University.

         GAIL BABITT, CPA. Ms. Babitt joined VDC as Chief Financial Officer in
November 2000. From 1999 through October 2000 Ms. Babitt served as Vice
President of Finance, North America and Corporate Controller for TeleComputing
ASA. TeleComputing ASA is a leading application service provider. From 1997 to
1999 Ms. Babitt served as Manager-Transaction Services for Price Waterhouse
Coopers LLP. During 1997 Ms. Babitt served as Director of Finance for
ToppTelecom, Inc. Topp Telecom is a prepaid cellular

                                       26
<PAGE>   27

company based in Miami. From 1994 to 1997 Ms. Babitt worked in the audit group
with Price Waterhouse Coopers LLP (formerly Price Waterhouse LLP) and with Ernst
& Young LLP from 1992 to 1994. Ms. Babitt has received a MBA from Boston
University and a B.S. from Nova Southeastern University.

         BENJAMIN SWIRSKY. Mr. Swirsky has been a member of the Board of
Directors since July 1997 and serves on the Audit and Compensation Committees of
the Board of Directors. Mr. Swirsky is the owner of Beswir Properties Inc., an
investment capital company. Since June 1998, Mr. Swirsky has been Chairman and
CEO of Zconnect, an e-commerce company, where he serves as Chairman. From June
1993 until January 1998, Mr. Swirsky was President and Chief Executive Officer
of Slater Steel, Inc., a publicly-traded company listed on the (Toronto Stock
Exchange: SSI) with investments in the steel, steel service, forging, pole-line
hardware and trucking industries. Mr. Swirsky was Chairman of P.C.Docs
International, Inc., a Canadian publicly-traded company (Nasdaq: DOCSF, TSE:
DXX) from 1997-1999. Mr. Swirsky is also a member of the Board of Directors of
the Four Seasons Hotel Corp., a chain of first class hotels located throughout
the world, and serves on the Audit, Compensation and Governance committees of
the Board. Mr. Swirsky also sits on the Board of Directors of a number of other
companies, including (i) CamVec Corp., a Canadian publicly-traded company
(CAT.CV), (ii) MigraTEC Inc., a publicly-traded company (Nasdaq: MIGR) where he
currently serves as Chairman, (iii) Commercial Alcohols, Inc., in which he is
also a principal shareholder, (iv) Bee Line Monorail Systems, Inc.,
(v) Peregrine Industries, Inc. (OTC Bulletin Board: HVAC), (vi) Kaledon.com,
Inc., where he currently serves as Chairman, and (vii) Don Bell Corporation.

         BRIAN K. SERVICE. Mr. Service has been a member of our Board of
Directors since July 1997 and serves on the Audit and Compensation Committees of
the Board of Directors. Also, since August 1998 Mr. Service has been a Director
of EDNET. Mr. Service is a dual New Zealand and U.S. citizen and currently
resides in California. Mr. Service currently spends a substantial amount of his
professional time in the United States acting as an international business
consultant. In this capacity, he has clients in North and South America, the
United Kingdom, Asia, Australia and New Zealand. From October 1992 to October
1994, Mr. Service was Chief Executive Officer and Managing Director of Salmond
Smith BioLab, a New Zealand publicly traded company engaged in the production
and sale of consumer and industrial products. From 1982 to 1986 he was Chief
Executive Officer and Executive Chairman of Milk Products, Holding (North
America), Inc., a wholly-owned subsidiary of the New Zealand Dairy Board that
was located in Santa Rosa, California. Mr. Service also serves as a Director,
Chief Financial Officer and Secretary for Travel Dynamics, Inc. Since September
1999, Mr. Service has served as Chief Executive Officer of 3D Systems, Inc., a
publicly traded company.

         ERIC JACOBS. Mr. Jacobs has been a member of the Board of Directors
since July 1997 and has served as Secretary since February 1999. From March 1996
until August 1997, Mr. Jacobs was Vice President and General Manager of our
wholly owned subsidiary, HotelView(R) Corporation and thereafter he has served
as Vice President and General Manager of our wholly owned subsidiary, ResortView
Corporation. Since October 1998, Mr. Jacobs has been a member of the Board of
Directors of EDNET. Since 1976, Mr. Jacobs has served as the Chairman of the
Miami Beach Visitor and Convention Authority and since September 1995 as
Chairman of the Greater Miami and the Beaches Hotel Association. Since 1972, Mr.
Jacobs has been a member of Miami Beach Chamber of Commerce and has served as
its Chairman since September 1996. From 1972 through October 1993, Mr. Jacobs
was the owner of, and served as President and General Manager of, the Tarleton
Hotel, Miami Beach, Florida.

         ROBERT J. WUSSLER. Mr. Wussler has been a member of the Board of
Directors since July 1999. Mr. Wussler has served as a Director of EDNET since
1995. Since June 1998 he has served as Chairman, Chief Executive Officer and
President of U.S. Digital Communications, Inc., a global satellite
communications firm that specializes in corporate applications. From June 1995
to May 1998, Mr. Wussler was President and Chief Executive Officer of Affiliate
Enterprises, Inc., the company formed by ABC Television affiliates to pursue new
business opportunities, including emerging technology applications. From 1989 to
1992, he was President and Chief Executive Officer of COMSAT Video Enterprises,
where he managed the acquisition of

                                       27
<PAGE>   28

the NBA Denver Nuggets. Previously, from 1980 to 1990, he was Senior Vice
President of Turner Broadcasting, where he oversaw the launch of CNN, Headline
News and TNT, in addition to serving as President of SuperStation TBS, and from
1974 to 1978 he was the President of CBS Television Network and CBS Sports.

         There is no family relationship between any of the executive officers
and directors. Each director is elected at our annual meeting of shareholders
and holds office until the next annual meeting of shareholders, or until his
successor is elected and qualified. At present, our bylaws provide for not less
than two directors. The bylaws permit the Board of Directors to fill any vacancy
and such director may serve until the next annual meeting of shareholders or
until his successor is elected and qualified. The Board of Directors elects
officers annually and their terms of office are at the discretion of the Board.
Our officers devote full time to our business.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

         During our fiscal year ended September 30, 2000, our Board of Directors
held seven (7) meetings and took action one (1) additional time, by unanimous
written consent. Each member of the Board participated in each action of the
Board.

         Our Board of Directors has established a Compensation Committee and an
Audit Committee. The Compensation Committee administers our stock option plan
and makes recommendations to the Board of Directors concerning compensation,
including incentive arrangements, of our officers and key employees. The members
of the Compensation Committee are Randy S. Selman, Benjamin Swirsky, Brian K.
Service and Robert J. Wussler. During the year ended September 30, 2000, the
Compensation Committee did not hold any meetings. The Audit Committee reviews
the engagement of the independent accountants and reviews the independence of
the accounting firm. The Audit Committee also reviews the audit and non-audit
fees of the independent accountants and the adequacy of our internal accounting
controls. The members of the Audit Committee are Benjamin Swirsky, Brian K.
Service and Robert J. Wussler. During the year ended September 30, 2000, the
Audit Committee held two (2) meetings. The Compensation Committee and the Audit
Committee consist of a majority of independent directors.

DIRECTORS' COMPENSATION

         Directors who are not our employees receive $1,000 per meeting as
compensation for serving on the Board of Directors, as well as reimbursement of
reasonable out-of-pocket expenses incurred in connection with their attendance
at Board of Directors' meetings. Members of the Compensation and Audit
Committees also receive compensation of $1,000 per committee meeting.

         In June and November 1998, we granted Mr. Service options to acquire
25,000 shares (each grant) of our common stock at an exercise price of $3.00 and
$2.125 per share. The term of these options is four years from the date of
grant. These options are fully vested and remain exercisable until the
expiration date thereof. These options were granted in connection with services
performed regarding the EDNET transaction.

         On November 19, 1998, we granted each of Messrs. Service and Swirsky
options to each acquire 35,000 shares of our common stock at an exercise price
of $16.00 per share. The term of these options is five years from the date of
grant. These options are fully vested and remain exercisable until the
expiration date thereof.

         On July 16, 1999, we granted Mr. Wussler options to acquire 75,000
shares of our common stock at an exercise price of $17.1875 per share. The term
of these options is three years from the date of vesting, with 25,000 vesting on
the first anniversary of the date of grant, 25,000 vesting on the second
anniversary of the

                                       28
<PAGE>   29

date of grant and the remaining 25,000 vesting on the third anniversary of the
date of grant. In December 2000, the 25,000 vested shares were cancelled.

         On November 1, 1999, we granted Mr. Jacobs options to acquire 30,000
shares of our common stock at an exercise price of $7.50 per share. The term of
these options is four years from the date of grant, with 10,000 vesting on the
first anniversary of the date of grant, 10,000 vesting on the second anniversary
of the date of grant and the remaining 10,000 vesting on the third anniversary
of the date of grant.

         In December 1999, the Board of Directors ratified the Compensation
Committee's recommendation that the option packages for the remaining two
independent directors, Mr. Swirsky and Mr. Service, be extended for a further
two years as from July 16, 1999 with an additional 50,000 options for each
director vesting equally over the final two years, and expiring on the same date
in 2004.

         On May 26, 2000, we granted Mr. Wussler options to acquire 25,000
shares of our common stock at an exercise price of $2.875 per share. The term of
these options is four years from the date of grant. The options are fully vested
and remain exercisable until the expiration date thereof.

Compliance With Section 16(a) of the Exchange Act

         Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company under Rule 16a-3(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") during the fiscal year ended September 30,
2000 and Forms 5 and amendments thereto furnished to the Company with respect to
the fiscal year ended September 30, 2000, as well as any written representation
from a reporting person that no Form 5 is required, the Company is not aware of
any person that failed to file on a timely basis, as disclosed in the
aforementioned Forms, reports required by Section 16(a) of the Exchange Act
during the fiscal year ended September 30, 2000.

ITEM 10. EXECUTIVE COMPENSATION

         The following table sets forth certain information relating to the
compensation of (i) our Chief Executive Officer; and (ii) each of our executive
officers who earned more than $100,000 during the fiscal year ended September
30, 2000 (collectively, the "Named Executive Officers"):

<TABLE>
<CAPTION>
                               ANNUAL                                  LONG-TERM
                             COMPENSATION                           COMPENSATION AWARDS
                           ----------------                     ---------------------------
     NAME AND                                          OTHER ANNUAL    RESTRICTED     OPTIONS          ALL OTHER
PRINCIPAL POSITION    YEAR     SALARY      BONUS       COMPENSATION    STOCK AWDS     SARs(#)  LTIP  COMPENSATION
------------------    -----    ------      -----       ------------    ----------     -------  ----  ------------
<S>                   <C>      <C>         <C>          <C>               <C>           <C>     <C>        <C>
Randy S. Selman       2000     $223,646     -0-         $12,912(1)         -0-          -0-     -0-        -0-
  President, Chief    1999     $162,110     -0-         $ 9,794(2)         -0-          -0-     -0-        -0-
  Executive Officer
  and Director

Alan Saperstein       2000     $223,646     -0-         $15,480(3)         -0-          -0-     -0-        -0-
  Vice President      1999     $162,110     -0-         $14,894(4)         -0-          -0-     -0-        -0-
  Treasurer and
  Director

Pauline Schneider     2000     $110,000     -0-         $ 1,775(5)         -0-          -0-     -0-        -0-
  Chief Financial     1999     $ 76,083     -0-         $22,874(6)         -0-          -0-     -0-        -0-
  Officer
</TABLE>

(1)      Includes $681 for disability insurance, $3,981 for medical insurance
         and $8,250 automobile allowance.
(2)      Includes $681 for disability insurance, $1,913 for medical insurance
         and $7,200 automobile allowance.

                                       29
<PAGE>   30

(3)      Includes $681 for disability insurance, $6,549 for medical insurance
         and $8,250 automobile allowance.
(4)      Includes $597 for disability insurance, $7,097 for medical insurance
         and $7,200 automobile allowance.
(5)      Includes $0 for disability insurance, $1,775 for medical insurance and
         $2,250 automobile allowance. Ms. Schneider served as the Chief
         Financial Officer until October 2000.
(6)      Includes $0 for disability insurance, $2,287 for medical insurance and
         $0 automobile allowance.

EMPLOYMENT AGREEMENTS

         Effective January 9, 1998, we entered into amended and restated
employment agreements with Randy S. Selman, our Chief Executive Officer,
President and a director, and with Alan Saperstein, our Executive Vice
President, Treasurer and a director. The agreements with each of Messrs. Selman
and Saperstein are substantially similar and superseded in their entirety
previous employment agreements with each of Messrs. Selman and Saperstein. The
term of the agreement is for three years from the effective date of the
agreements and is renewable for successive one-year terms unless terminated. The
annual salary under each of the agreements is $137,500, which amount will be
increased by 10% each year. Messrs. Selman and Saperstein are also each eligible
to receive an annual bonus in cash or stock equal to 2% of our earnings before
income tax, depreciation and amortization (EBITDA) on that portion of EBITDA
that has increased over the previous year's EBITDA.

         Additionally, each of Messrs. Selman and Saperstein were granted
options (which contain certain anti-dilution provisions) to purchase 375,000
shares of common stock at $2.125 per share, vesting 125,000 options on each
anniversary date of the effective date of each of the agreements. The options,
which are exercisable for a period of four years from the vesting date,
automatically vest upon the occurrence of certain events, including a change in
control, constructive termination (as defined in the agreements) of the
employee, or the termination of the employee other than for cause.

         The agreements were further amended, effective September 1, 1999, to
(i) extend the term an additional two years, until January 9, 2003 (ii) increase
the annual salary under each agreement to $195,000, and (iii) grant an
additional 250,000 options at $8.875 (the fair market value at the date of
grant) per share to each of Messrs. Selman and Saperstein, vesting 125,000
options on each anniversary date of the effective date of the additional two
year term provided for under the amendment to the amended and restated
employment agreements.

         The agreements also provide, among other things, for (i) participation
in any profit-sharing or retirement plan and in other employee benefits
applicable to our employees and executives, (ii) an automobile allowance and
fringe benefits commensurate with the duties and responsibilities of Messrs.
Selman and Saperstein, (iii) benefits in the event of disability and (iv)
contain certain non-disclosure and non-competition provisions. Additionally,
Messrs. Selman and Saperstein may be granted certain bonus incentives by our
Board of Directors. Furthermore, we have agreed to indemnify each of them for
any obligations or guaranties which either of them may have undertaken on our
behalf.

         Under the terms of the agreements, we may terminate the employment of
Mr. Selman or Mr. Saperstein either with or without cause. If the Agreements are
terminated by us without good cause, or by Mr. Selman or Mr. Saperstein with
good cause, as applicable, we would be obligated to pay that executive an amount
equal to three times that executive's current annual compensation (including
base salary and bonus), payable in bi-weekly installments (except in the case of
a termination upon a change in control wherein the executive may elect either a
lump sum payment, discounted to present market value or payment over a three
year period in bi-weekly installments). Additionally, the executive would be
entitled to participate in and accrue medical benefits for a period of two years
after the date of termination without cause (by us) or for good cause (by the
executive). To the extent that either Messrs. Selman or Saperstein are
terminated for cause, no severance benefits shall be paid.

                                       30
<PAGE>   31

STOCK OPTION INFORMATION

         The following table sets forth certain information with respect to
stock options granted in fiscal 2000 to the Named Executive Officers.

                 OPTION GRANTS IN YEAR ENDED SEPTEMBER 30, 2000

<TABLE>
<CAPTION>
                                                    INDIVIDUAL GRANTS
                                                  --------------------
                           NO. OF SECURITIES      % OF TOTAL OPTIONS
                              UNDERLYING          GRANTED TO EMPLOYEES          EXERCISE      EXPIRATION
     NAME                   OPTIONS GRANTED          IN FISCAL YEAR               PRICE          DATE
     ----                 -------------------     --------------------          --------      ----------
<S>                           <C>                      <C>                      <C>               <C>
Randy S. Selman,
  President, Chief
  Executive Officer
  and Director                       --                  0%                         --            --

Alan Saperstein, Vice
  President,
  Secretary and
  Director                           --                  0%                         --            --

Pauline Schneider, Chief
  Financial Officer              50,000(1)               10.32%                     (1)           (1)

</TABLE>

         (1)      On May 26, 2000 we granted options to acquire 50,000 shares of
                  common stock at an exercise price of $2.875 per share. These
                  options were granted as part of a five-year bonus program. The
                  term of these options is four years from the date of grant.
                  These options are fully vested.

         These options were not granted under the 1996 Stock Option Plan. See
"Management -- 1996 Stock Option Plan."

         The following table sets forth certain information regarding stock
options held as of September 30, 2000 by the Named Executive Officers.


           AGGREGATE OPTION EXERCISES IN YEAR ENDED SEPTEMBER 30, 2000
                           AND YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                  NO. OF SECURITIES
                                                UNDERLYING UNEXERCISED            VALUE OF UNEXERCISED
                                                      OPTIONS AT                 IN-THE-MONEY OPTIONS AT
                      SHARES                      SEPTEMBER 30, 2000               SEPTEMBER 30, 2000(1)
                     ACQUIRED              -------------------------------      ---------------------------
                        ON        VALUE
NAME                 EXERCISE   REALIZED   EXERCISABLE       UNEXERCISABLE      EXERCISABLE    UNEXERCISABLE
----                 --------   --------   -----------       -------------      -----------    -------------
<S>                     <C>       <C>      <C>                 <C>              <C>            <C>
Randy S. Selman,
  President, Chief
  Executive Officer
  and Director           --       $  --    1,097,230(2)       375,000 (2)       $802,215         $ 117,250
Alan Saperstein, Vice
  President, Treasurer
  and Director           --       $  --    1,097,230(2)       375,000 (2)       $802,215         $ 117,250
Pauline Schneider,
  Chief Financial
  Officer                --       $  --      120,500(3)            --           $ 75,529         $    --

</TABLE>

(1)      The dollar value of the unexercised in-the-money options is calculated
         based upon the difference between the option exercise price and $3.063
         per share, being the closing price of our common stock on October 2,
         2000 as reported The Nasdaq National Market.

(2)      Of such exercisable options, at September 30, 2000, 32,230 options were
         exercisable at $.00016 per share,

                                       31
<PAGE>   32

         750,000 options were exercisable at $2.125 per share and the remaining
         315,000 were exercisable at $16.00. Of the unexercisable options,
         125,000 have an exercise price of $2.125 per share and 250,000 have an
         exercise price of $8.875 per share at September 30, 2000. See Option
         Grants in Year Ended September 30, 2000 above.

(3)      Of such exercisable options, at September 30, 2000, 70,500 options were
         exercisable at $2.125 per share and the remaining 50,000 were
         exercisable at $2.875. See Option Grants in Year Ended September 30,
         2000 above.

1996 STOCK OPTION PLAN

         On February 9, 1997, the Board of Directors and a majority of our
shareholders adopted our 1996 Stock Option Plan (the "Plan"). The purpose of the
Plan is to increase the employees', advisors', consultants' and non-employee
directors' proprietary interest in us and to align more closely their interests
with the interests of our shareholders. The purpose of the Plan is also to
enable us to attract and retain the services of experienced and highly qualified
employees and non-employee directors.

         Pursuant to an amendment to the Plan ratified by shareholders on July
16, 1999, we have reserved an aggregate of 2,500,000 shares of common stock for
issuance pursuant to options granted under the Plan ("Plan Options"). To date,
1,487,575 options have been granted under the Plan. Such options were issued to
our directors, employees and consultants at exercise prices ranging from $2.031
to $16.00 per share. The Board of Directors or a Committee of the Board of
Directors (the "Committee") will administer the Plan including, without
limitation, the selection of the persons who will be granted Plan Options under
the Plan, the type of Plan Options to be granted, the number of shares subject
to each Plan Option and the Plan Option price. As of this date, the Board of
Directors has not established a separate Committee.

         Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or options that do not so qualify
("Non-Qualified Options"). In addition, the Plan also allows for the inclusion
of a reload option provision ("Reload Option"), which permits an eligible person
to pay the exercise price of the Plan Option with shares of common stock owned
by the eligible person and to receive a new Plan Option to purchase shares of
common stock equal in number to the tendered shares. Any Incentive Option
granted under the Plan must provide for an exercise price of not less than 100%
of the fair market value of the underlying shares on the date of such grant, but
the exercise price of any Incentive Option granted to an eligible employee
owning more than 10% of our common stock must be at least 110% of such fair
market value as determined on the date of the grant.

         The term of each Plan Option and the manner in which it may be
exercised is determined by the Board of Directors or the Committee, provided
that no Plan Option may be exercisable more than 10 years after the date of its
grant and, in the case of an Incentive Option granted to an eligible employee
owning more than 10% of our common stock, no more than five years after the date
of the grant. In any case, the exercise price of any stock option granted under
the Plan will not be less than 85% of the fair market value of the common stock
on the date of grant. The exercise price of Non-Qualified Options shall be
determined by the Board of Directors or the Committee.

         The per share purchase price of shares subject to Plan Options granted
under the Plan may be adjusted in the event of certain changes in our
capitalization, but any such adjustment shall not change the total purchase
price payable upon the exercise in full of Plan Options granted under the Plan.
Officers, directors and key employees of and consultants to us and our
subsidiaries will be eligible to receive Non-Qualified Options under the Plan.
Only our officers, directors and employees who are employed by us or by any of
our subsidiaries thereof are eligible to receive Incentive Options.

                                       32
<PAGE>   33

         All Plan Options are nonassignable and nontransferable, except by will
or by the laws of descent and distribution and, during the lifetime of the
optionee, may be exercised only by such optionee. If an optionee's employment is
terminated for any reason, other than his death or disability or termination for
cause, or if an optionee is not our employee but is a member of our Board of
Directors and his service as a Director is terminated for any reason, other than
death or disability, the Plan Option granted may be exercised on the earlier of
the expiration date or 30 days following the date of termination. If the
optionee dies during the term of his employment, the Plan Option granted to him
shall lapse to the extent unexercised on the earlier of the expiration date of
the Plan Option or the date one year following the date of the optionee's death.
If the optionee is permanently and totally disabled within the meaning of
Section 22(c)(3) of the Code, the Plan Option granted to him lapses to the
extent unexercised on the earlier of the expiration date of the option or one
year following the date of such disability.

         The Board of Directors or the Committee may amend, suspend or terminate
the Plan at any time, except that no amendment shall be made which (i) increases
the total number of shares subject to the Plan or changes the minimum purchase
price therefore (except in either case in the event of adjustments due to
changes in our capitalization), (ii) affects outstanding Plan Options or any
exercise right thereunder, (iii) extends the term of any Plan Option beyond ten
years, or (iv) extends the termination date of the Plan.

         Unless the Plan shall be earlier suspended or terminated by the Board
of Directors, the Plan shall terminate on approximately 10 years from the date
of the Plan's adoption. Any such termination of the Plan shall not affect the
validity of any Plan Options previously granted thereunder.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                             PRINCIPAL SHAREHOLDERS

         The following table contains information regarding beneficial ownership
of our common stock as of December 15, 2000 held by (i) persons who own
beneficially more than 5% of our outstanding common stock, (ii) our directors,
(iii) Named Executive Officers and (iv) all of our directors and officers as a
group. The table also represents the same information as adjusted to reflect the
sale of shares offered hereby.

                                              SHARES OF COMMON
                                             STOCK BENEFICIALLY
                                                 OWNED (2)
         NAME AND ADDRESS OF           -----------------------------------
         OF BENEFICIAL OWNER(1)          NUMBER            PERCENTAGE
         ----------------------        -----------      ------------------

         Randy S. Selman(3)            1,200,849              10.6%
         Alan M. Saperstein(4)         1,200,173              10.6%
         George Stemper (5)                   --                --
         Gail Babitt (6)                      --                --
         Benjamin Swirsky(7)             135,000               1.2%
         Brian K. Service(8)             185,000               1.6%
         Eric Jacobs(9)                  163,600               1.4%
         Robert Wussler(10)               25,000                *
         All Directors and
         Officers (8 persons)(11)      2,909,622              25.6%

           *  Less than 1%

(1)      Unless otherwise indicated, the address of each of the listed
         beneficial owners identified is c/o Visual Data Corporation, 1291
         Southwest 29th Avenue, Pompano Beach, Florida 33069. Unless otherwise

                                       33
<PAGE>   34

         noted, we believe that all persons named in the table have sole voting
         and investment power with respect to all shares of our common stock
         beneficially owned by them.

(2)      A person is deemed to be the beneficial owner of securities that can be
         acquired by such a person within sixty days from the date of this
         annual report upon exercise of options, warrants or convertible
         securities. Each beneficial owner's percentage ownership is determined
         by assuming that options, warrants and convertible securities that are
         held by such a person (but not those held by any other person) and are
         exercisable within sixty days from the date hereof have been exercised.
         As of December 15, 2000 there were 8,453,358 shares of common stock
         outstanding.

(3)      This amount includes options to acquire an aggregate of 32,230 shares
         of common stock at an exercise price of $.00016 per share, options to
         acquire an aggregate of 750,000 shares of common stock at an exercise
         price of $2.125 per share, and options to purchase 315,000 shares of
         common stock at an exercise price of $16.00 per share. Excludes options
         to purchase 125,000 shares of common stock at an exercise price of
         $2.125 per share and options to purchase 250,000 shares of common stock
         at an exercise price of $8.875 per share, all of which have not yet
         vested.

(4)      This amount includes options to acquire an aggregate of 32,230 shares
         of common stock at an exercise price of $.00016 per share, options to
         acquire an aggregate of 750,000 shares of common stock at an exercise
         price of $2.125 per share, and options to purchase 315,000 shares of
         common stock at an exercise price of $16.00 per share. Excludes options
         to purchase 125,000 shares of common stock at an exercise price of
         $2.125 per share and options to purchase 250,000 shares of common stock
         at an exercise price of $8.875 per share, all of which have not yet
         vested.

(5)      This amount excludes options to purchase 100,000 shares at $4.188 per
         share, which was granted in September 2000, which have not yet vested.

(6)      This amount excludes options to purchase 75,000 shares at $2.031 per
         share, which was granted in October 2000, which have not yet vested.

(7)      This amount includes options to purchase 100,000 shares at $2.125 per
         share and 35,000 shares of common stock at an exercise price of $16.00
         which were granted in November 1998 and subsequently repriced in June
         1999, but excludes options to acquire 50,000 shares of common stock at
         an exercise price of $17.188 per share which were granted in November
         1999, which have not yet vested. Mr. Swirsky's address is 350 Fairlawn
         Avenue, Toronto, Ontario, Canada.

(8)      This amount includes options to purchase 125,000 shares at $2.125 per
         share, options to purchase an additional 25,000 shares at $3.00, and
         options to acquire 35,000 shares of common stock at an exercise price
         of $16.00, which were granted in November 1998 and subsequently
         repriced in June 1999. Excludes options to acquire an aggregate of
         50,000 shares of common stock at an exercise price of $7.50 per share,
         which were granted in November 1999, which have not yet vested. Mr.
         Service's address is 123 Red Hill Circle, Tiburon, CA 94920.

(9)      This amount includes options to acquire 75,000 shares of common stock
         at an exercise price of $2.125 per share which were granted in November
         1998 and includes options to purchase 25,000 shares of common stock at
         $7.50 which were granted in November 1999, but excludes options to
         acquire 50,000 shares of common stock at an exercise price of $7.50 per
         share which were granted in November 1999, which have not yet vested.

(10)     This amount includes options to acquire 25,000 shares of common stock
         at an exercise price of $2.875 per share, which were granted in May
         2000, but excludes options to acquire 75,000 shares of common stock at
         an exercise price of $17.188 per share, which were granted in July
         1999, of which, 25,000 were cancelled in December 2000. The remaining
         50,000 options have not yet vested.

(11)     See notes (3)-(10) above.


                                       34
<PAGE>   35

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In August 1998, Eric Jacobs, a director of both the Company and EDNET,
lent EDNET $200,000 under a one year unsecured promissory note bearing interest
at 12% per annum. Such funds were used by EDNET for general working capital. As
additional consideration for such loan, Mr. Jacobs received a warrant to
purchase 50,000 shares of EDNET's common stock at an exercise price of $.20 per
share. Such loan was repaid in full by EDNET on January 8, 1999.

         In May 1999, Eric Jacobs lent EDNET an additional $250,000 under a
90-day unsecured renewable promissory note bearing interest at 12% per annum.
Such funds were used by EDNET for the purchase of inventory. The note has been
renewed, $125,000 has been repaid, and, the remaining $125,000 is unpaid as of
the date of this filing which is due on December 31, 2001.

         The Company has adopted a corporate governance policy which requires
the approval of any transaction between the Company and any officer, director or
5% shareholder by a majority of the independent, disinterested directors. In
addition, pursuant to the inclusion of its securities on The Nasdaq National
Market, the Company is subject to compliance with certain corporate governance
standards adopted by The Nasdaq Stock Market, Inc.

                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         The following documents are filed as a part of this report or are
incorporated by reference to previous filings, if so indicated:

         (a)      EXHIBITS

EXHIBIT NO.                         DESCRIPTION
-----------                         -----------

1(a)                       Form of Underwriting Agreement(11)
3(i)(a)                    Articles of Incorporation(1)
3(i)(b)                    Articles of Amendment dated July 26, 1993(1)
3(i)(c)                    Articles of Amendment dated January 17, 1994(1)
3(i)(d)                    Articles of Amendment dated October 11, 1994(1)
3(i)(e)                    Articles of Amendment dated March 25, 1995(1)
3(i)(f)                    Articles of Amendment dated October 31, 1995(1)
3(i)(g)                    Articles of Amendment dated May 23, 1996(1)
3(i)(h)                    Articles of Amendment dated May 5, 1998(2)
3(i)(i)                    Articles of Amendment dated August 11, 1998(6)
3(i)(j)                    Articles of Amendment dated June 13, 2000(11)
3(iii)                     By-laws(1)
4(c)                       Specimen Common Stock Certificate(1)
4(d)                       Specimen Common Stock Purchase Warrant (issued
                           pursuant to the Company's initial public offering on
                           July 30, 1997)(1)
4(e)                       Form of Underwriter Warrant(10)
4(f)                       Form of Consulting Agreement(10)
4(g)                       Form of 6% Convertible Debenture in the principal
                           amount of $1,000,000 due December 8, 2003(12)
4(h)                       Form of 6% Convertible Debenture in the principal
                           amount of $1,000,000 due December 8, 2003(12)
4(i)                       Form of one year Common Stock Purchase Warrant(12)
4(j)                       Form of five year Common Stock Purchase Warrant(12)
10(a)                      Agreement between HotelView Corporation and Pegasus
                           Systems, Inc. dated January 14, 1997(1)
10(b)                      Form of Stock Option Plan and Amendment
                           thereto(1)(14)

                                       35
<PAGE>   36

10(c)                      Third Amended and Restated Employment Agreement
                           between the Company and Randy S. Selman(7)
10(d)                      Third Amended and Restated Employment Agreement
                           between the Company and Alan Saperstein(7)
10(e)                      Contract for Purchase and Sale of Real Property(3)
10(f)                      Asset Purchase Agreement between the Company and
                           Digital Criteria Technologies, Inc.(4)
10(g)                      Securities Purchase Agreement between the Company and
                           EDNET, Inc.(5)
10(h)                      Option Agreement between the Company and EDNET,
                           Inc.(5)
10(i)                      Agreement dated March 9, 1998 by and between Interval
                           International, Inc. and CondoView Corporation(8)
10(j)                      Agreement dated March 30, 1998 by and between Video
                           News Wire Corporation and P.R. Newswire, Inc.(8)
10(k)                      Securities Purchase Agreement between the Company and
                           Cranshire Capital, L.P. and Gilford Partners, L.P.(9)
10(l)                      Securities Purchase Agreement between the Company and
                           Olive Investors LLC(9)
10(m)                      Purchase Agreement(12)
10(n)                      Registration Rights Agreement(12)
10(o)                      Asset Purchase Agreement*
10(p)                      Promissory note in the principal amount of
                           $1,000,000 between CuraSpan, Inc. and Visual Data
                           Corporation*
10(q)                      Merger Agreement among the Company, SportSoft Golf,
                           Inc. and certain shareholders of SportSoft Golf,
                           Inc.(13)
21                         Subsidiaries of the Company*
23.1                       Consent of Independent Certified Public Accountants*
27                         Financial Data Schedule*

---------------
*Filed herewith

(1)      Incorporated by reference to the exhibit of the same number filed with
         the Company's Registration Statement on Form SB-2, Registration No.
         333-18819, as amended and declared effective by the Commission on July
         30, 1997.
(2)      Incorporated by reference to the Company's Current Report on Form 8-K
         dated May 8, 1998.
(3)      Incorporated by reference to the Company's Annual Report on Form 10-KSB
         for the year ended September 30, 1997.
(4)      Incorporated by reference to the Company's Current Report on Form 8-K
         dated May 20, 1998.
(5)      Incorporated by reference to the Company's Current Report on Form 8-K
         dated August 11, 1998.
(6)      Incorporated by reference to the Company's Current Report on Form 8-K
         dated August 21, 1998.
(7)      Incorporated by reference to the exhibit of the same number filed with
         the Company's Registration Statement on Form S-3, Registration No.
         333-62071, as amended and declared effective by the Commission on
         November 3, 1998.
(8)      Incorporated by reference to the Company's Quarterly Report on Form
         10-QSB/A for the period ended June 30, 1998 as filed with the
         Commission on October 15, 1998.
(9)      Incorporated by reference to the Company's Quarterly Report on Form
         10-QSB for the period ended December 31, 1998 as filed with the
         Commission on February 17, 1999.
(10)     Incorporated by reference to the exhibit of the same number filed with
         the Company's Registration Statement on Form S-1, Registration No.
         333-79887.
(11)     Incorporated by reference to the Company's Quarterly Report on Form
         10-QSB for the period ended June 30, 2000 as filed with the Commission
         on August 14, 2000
(12)     Incorporated by reference to the Company's Current Report on Form 8-K
         dated December 18, 2000
(13)     Incorporated by reference to the Company's Current Report on Form 8-K
         dated January 3, 2001
(14)     Incorporated by reference to the Company's Proxy Statement for the
         year ended September 30, 1998


         (b)      REPORTS ON FORM 8-K

                  None.

                                       36
<PAGE>   37

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Visual Data Corporation has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                            Visual Data Corporation

                                            By: /s/ Randy S. Selman
                                               ---------------------------------
                                               Randy S. Selman, President, Chief
                                               Executive Officer


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

<TABLE>
<CAPTION>
         Signature                                   Title                             Date
         ---------                                   -----                             ----
<S>                                         <C>                                 <C>
/s/ Randy S. Selman                         Director, President,                January 2, 2001
------------------------------------        Chief Executive Officer
Randy S. Selman



/s/ Gail Babitt                             Chief Financial Officer and
------------------------------------        Principal Accounting Officer        January 2, 2001
Gail Babitt



/s/ Alan M. Saperstein                      Director and Vice President         January 2, 2001
------------------------------------
Alan M. Saperstein



/s/ Ben Swirsky                             Director                            January 2, 2001
------------------------------------
Ben Swirsky



/s/ Brian K. Service                        Director                            January 2, 2001
------------------------------------
Brian K. Service



/s/ Eric Jacobs                             Director and Secretary              January 2, 2001
------------------------------------
Eric Jacobs



/s/ Robert Wussler                          Director                            January 2, 2001
------------------------------------
Robert Wussler
</TABLE>

                                       37
<PAGE>   38

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders of Visual Data Corporation:

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

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

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

ARTHUR ANDERSEN LLP


Fort Lauderdale, Florida,
   December 29, 2000.


                                      F-1
<PAGE>   39

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           SEPTEMBER 30, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                    2000            1999
                                                                 -----------     -----------
                                     ASSETS
<S>                                                                  <C>             <C>

CURRENT ASSETS:
   Cash and cash equivalents                                     $ 3,457,784     $15,573,644
   Restricted cash                                                   316,546         301,008
   Accounts receivable, net of allowance for
     doubtful accounts of $268,433 and $43,953, respectively       1,714,135         944,973
   Prepaid expenses                                                  427,306         565,461
   Inventories, net of allowance for inventory
     obsolescence of $538,000 and $40,000, respectively              508,284         576,433
   Other                                                                  --         136,221
                                                                 -----------     -----------
                  Total current assets                             6,424,055      18,097,740

PROPERTY, PLANT AND EQUIPMENT, net                                 3,795,656       3,609,417

EXCESS OF PURCHASE PRICE OVER
           NET ASSETS ACQUIRED, net                                  581,018         689,890


OTHER NON-CURRENT ASSETS                                              29,583          13,775
                                                                 -----------     -----------

                  Total assets                                   $10,830,312     $22,410,822
                                                                 ===========     ===========
</TABLE>

                                   (Continued)

                                      F-2
<PAGE>   40

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                        AS OF SEPTEMBER 30, 2000 AND 1999

                                   (Continued)

<TABLE>
<CAPTION>
                                                                                      2000              1999
                                                                                  ------------      ------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                                               <C>               <C>

CURRENT LIABILITIES:
   Accounts payable and accrued expenses                                          $  1,931,374      $  1,429,808
   Deferred revenue                                                                    499,234           290,225
   Current portion of obligations under capital leases                                   4,045            11,580
   Current portion of mortgage note payable                                             44,181            40,492
   Notes payable - related parties                                                     125,000           290,500
                                                                                  ------------      ------------
                  Total current liabilities                                          2,603,834         2,062,605

OBLIGATIONS UNDER CAPITAL LEASES, net of current portion                                    --             4,045

MORTGAGE NOTE PAYABLE, net of current portion                                          848,891           891,175

COMMITMENTS AND CONTINGENCIES (Notes 1, 5, 11 & 12)

MINORITY INTEREST                                                                           --           635,959
                                                                                  ------------      ------------

STOCKHOLDERS' EQUITY:
   Preferred stock, par value $.0001 per share: authorized
     5,000,000 shares:
       Series A Convertible Preferred stock, designated 300 shares,
         None issued and outstanding                                                        --                --
       Series A-1 Convertible Preferred stock, designated 150 shares,
         None issued and outstanding                                                        --                --
       Series B Convertible Preferred stock, designated 1,000,000 shares,
         None issued and outstanding                                                        --                --
   Common stock, par value $.0001 per share; authorized 50,000,000 shares,
     8,453,358 and 8,444,870 issued and outstanding, respectively                          845               844
   Additional paid-in capital                                                       35,547,326        35,585,195
   Accumulated deficit                                                             (28,170,584)      (16,769,001)
                                                                                  ------------      ------------
                  Total stockholders' equity                                         7,377,587        18,817,038
                                                                                  ------------      ------------

                  Total liabilities and stockholders' equity                      $ 10,830,312      $ 22,410,822
                                                                                  ============      ============
</TABLE>

       The accompanying notes are an integral part of these consolidated
                                balance sheets.

                                      F-3
<PAGE>   41

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999


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

REVENUE                                        $  5,868,435      $  4,464,157

COST OF REVENUE                                   7,024,242         4,926,917
                                               ------------      ------------

GROSS LOSS                                       (1,155,807)         (462,760)

OPERATING EXPENSES:
   General and administrative                     5,967,041         4,636,003
   Sales and marketing                            5,420,060         2,611,768
                                               ------------      ------------
                  Total operating expenses       11,387,101         7,247,771
                                               ------------      ------------

Loss from operations                            (12,542,908)       (7,710,531)
                                               ------------      ------------

OTHER INCOME (EXPENSE):
   Interest income                                  567,576           219,673
   Rental income                                     81,665            76,410
   Loss on disposal of assets                       (12,251)          (14,141)
   Interest expense                                (129,224)         (109,178)
   Minority interest share of losses                635,959           386,825
                                               ------------      ------------
                  Total other income, net         1,143,725           559,589
                                               ------------      ------------

Loss before income tax provision                (11,399,183)       (7,150,942)

Income tax provision                                  2,400             7,434
                                               ------------      ------------

Net loss                                       $(11,401,583)     $ (7,158,376)
                                               ============      ============

Loss per share - basic and diluted             $      (1.35)     $      (1.20)
                                               ============      ============
Weighted average shares of common stock
     outstanding - basic and diluted              8,446,724         5,968,262
                                               ============      ============

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

                                      F-4
<PAGE>   42

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999

<TABLE>
<CAPTION>
                                       Series A                        Series A-1
                                     Convertible                      Convertible
                                  -----------------     ----------------------------------------
                                   Preferred Stock       Preferred Stock         Common Stock         Additional
                                  -----------------     ----------------      ------------------       Paid-in        Accumulated
                                  Shares     Amount     Shares    Amount      Shares      Amount       Capital          Deficit
                                  ------     ------     ------    ------      ------      ------       -------          -------
<S>                                <C>       <C>        <C>      <C>          <C>         <C>        <C>           <C>
Balance, September 30, 1998         150      $  --         150   $   --       3,732,100   $    373   $ 13,494,945   $ (9,610,625)
Issuance of warrants and
   options for services and          --         --          --       --              --         --      1,122,003             --
   incentives
Issuance of shares for assets        --         --          --       --          12,800          1        139,999             --
Issuance of shares for cash          --         --          --       --       2,277,978        228     15,866,505             --
Conversion of preferred stock      (150)        --        (150)      --         917,490         92            (92)            --
Issuance of warrants for cash        --         --          --       --              --         --          9,660             --
Exercise of warrants                 --         --          --       --       1,504,502        150      4,931,134             --
Issuance of shares for
   preferred stock dividend          --         --          --       --              --         --         21,041             --
Net loss                             --         --          --       --              --         --             --     (7,158,376)
                                 ------      -----     -------   ------    ------------   --------   ------------   ------------

Balance, September 30, 1999          --         --          --       --       8,444,870        844     35,585,195    (16,769,001)
Issuance of warrants and
   options for services and
   incentives                        --         --          --       --              --         --        177,099             --
Issuance of shares for assets        --         --          --       --           9,938          1         52,173             --
Exercise of warrants                 --         --          --       --          37,550          4        115,488             --
Exercise of options                  --         --          --       --          50,000          5        106,245             --
Stock repurchase and retirement      --         --          --       --         (89,000)        (9)      (488,874)            --
Net loss                             --         --          --       --              --         --             --    (11,401,583)
                                 ------      -----     -------   ------    ------------   --------   ------------   ------------

Balance, September 30, 2000          --      $  --          --   $   --       8,453,358   $    845   $ 35,547,326   $(28,170,584)
                                 ======      =====     =======   ======    ============   ========   ============   ============
</TABLE>

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

                                      F-5
<PAGE>   43

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                        2000              1999
                                                                    ------------      ------------
<S>                                                                 <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                         $(11,401,583)     $ (7,158,376)
   Adjustments to reconcile net loss to
   net cash used in operating activities-
       Depreciation and amortization                                   1,148,193           857,805
       Loss on disposal of fixed assets                                   12,251            14,141
       Provision for doubtful accounts                                   239,980             7,760
       Provision for inventory obsolescence                              460,453            40,000
       Minority interest                                                (635,959)          313,908
       Amortization of deferred services and incentives                  301,946         1,122,003
       Changes in assets and liabilities:
         Increase in accounts receivable                              (1,059,142)         (478,789)
         Decrease/(Increase) in prepaid expenses                          13,308          (224,129)
         Decrease in other current assets                                136,221            71,888
         Increase in inventories                                        (392,304)         (656,433)
         Increase in accounts payable and accrued expenses               501,566           564,201
         Increase in deferred revenue                                    209,009           172,770
                                                                    ------------      ------------
              Net cash used in operating activities                  (10,466,061)       (5,353,251)
                                                                    ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisitions of property and equipment                             (1,217,177)         (847,521)
   Increase in restricted cash                                           (15,538)         (181,008)
   Capital transactions of subsidiary                                     31,540          (321,223)
   Sale of IBS subsidiary's assets, net of expenses                       50,000           886,997
   Increase in other non-current assets                                  (15,808)           (6,939)
                                                                    ------------      ------------
              Net cash used in investing activities                   (1,166,983)         (469,694)
                                                                    ------------      ------------
</TABLE>

                                   (Continued)

                                      F-6
<PAGE>   44

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999

                                   (Continued)

<TABLE>
<CAPTION>
                                                                           2000              1999
                                                                      ------------      ------------
<S>                                                                   <C>               <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on mortgage note payable                                  $    (38,595)     $    (35,356)
   Payments on capital leases                                              (11,580)          (16,580)
   Proceeds from line of credit                                            100,000                --
   Repayments of line of credit                                           (100,000)               --
   Proceeds from notes payable - related parties                                --           250,000
   Repayment of notes payable - related parties                           (165,500)         (200,000)
   Stock repurchase and retirement                                        (488,883)               --
   Issuance of common stock, net of expenses                                    --        15,866,733
   Proceeds from sale of warrants                                               --             9,660
   Proceeds from exercise of warrants and options                          221,742         4,931,284
                                                                      ------------      ------------
              Net cash (used in) provided by financing activities         (482,816)       20,805,741
                                                                      ------------      ------------

NET (DECREASE) INCREASE IN CASH AND
   CASH EQUIVALENTS                                                    (12,115,860)       14,982,796

CASH AND CASH EQUIVALENTS, beginning of year                            15,573,644           590,848
                                                                      ------------      ------------

CASH AND CASH EQUIVALENTS, end of year                                $  3,457,784      $ 15,573,644
                                                                      ============      ============

SUPPLEMENTAL DISCLOSURES OF CASH
   FLOW INFORMATION:
     Cash payments for interest                                       $    121,452      $    109,178
                                                                      ============      ============
     Cash payments for income taxes                                   $      2,400      $      7,434
                                                                      ============      ============

SUPPLEMENTAL SCHEDULE OF NON-CASH
   INVESTING AND FINANCING ACTIVITIES:
     Issuances of common shares for
       Property, plant and equipment                                  $     52,173      $    140,000
     Issuance of warrants and options for deferred
       services and incentives                                             177,099         1,122,003
                                                                      ------------      ------------

                                                                      $    229,272      $  1,262,003
                                                                      ============      ============
</TABLE>

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

                                      F-7
<PAGE>   45

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000

NOTE 1:  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

Visual Data Corporation ("VDC" or the "Company") is comprised of four operating
groups; Visual Data Travel Group, Visual Data On-line Broadcast and Production
Group, Visual Data Networking Solutions Group and Visual Data Financial
Solutions Group. VDC is a full service provider of streaming-content
applications, production technology and media solutions, primarily in the United
States. Using advanced technology and information solutions, the Company
provides a sensory-rich experience to businesses and consumers enabling them to
make superior decisions. The Company has accumulated a substantial library
containing short concise vignettes on various topics such as travel, medicine,
finance and corporate information. During the years ended September 30, 2000 and
1999, the primary distribution channel for all of VDC's libraries was the
Internet. VDC and its wholly-owned subsidiaries are Florida Corporations.

EDnet, Inc. ("EDNET"), a Delaware Corporation, a 51% owned subsidiary of VDC,
develops and markets integrated systems for the delivery, storage, and
management of professional quality digital communications for media-based
applications, including audio and video production for the United States
entertainment industry. EDNET, through strategic alliances with long-distance
carriers, regional telephone companies, satellite operators, and independent
fiber optic telecommunications providers, has established a worldwide network
that enables the exchange of high quality audio, video, multimedia, and data
communications. It provides engineering services and application-specific
technical advice, audio, video, and networking hardware and software as part of
its business.

In March 2000, VDC signed a letter of intent to purchase the balance of
outstanding common shares of the 51% owned subsidiary EDNET. The proposed terms
of the letter of intent included the right to receive one share of common stock
of Visual Data for every ten outstanding shares of the common stock of EDNET,
and the conversion of every ten outstanding options or warrants of EDNET into
one option or warrant to purchase a share of VDAT common stock The transaction
was subject to the execution of a definitive agreement and the approval of
EDNET's shareholders.

On April 17, 2000, VDC announced the postponement of it's intent to purchase the
balance of outstanding common shares of EDNET due to market conditions at the
time.

The Company has incurred losses since its inception and has an accumulated
deficit of $28,170,584 at September 30, 2000 and its operations have been
financed primarily through issuance of equity. The Company's liquidity has
substantially diminished because of such continuing operating losses and the
Company may be required to seek additional capital to continue operations.


                                      F-8
<PAGE>   46

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 1:  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

During fiscal year 2000, the Company instituted a cost containment program for
its operations as well as reduced its employee head count to conserve its cash
resources. The Company has also fully implemented its marketing and sales plan
to maintain a certain number of key sales representatives. These efforts are
expected to result in increased revenues for fiscal year 2001 and reduced
operating expenses. With increased revenues in fiscal year 2001, the Company is
expecting an increase in the gross profit margin that will ultimately reduce the
overall net loss incurred from operations and conserve the Company's cash
resources.

In the first quarter of fiscal year 2001 the Company appointed a new COO and CFO
and implemented an expense reduction program to take effect by the second
quarter of fiscal 2001. The expense constraints were implemented across all of
the Company's operations and resulted in a reduction in headcount and operating
expenses. These budget constraints resulted in an expense structure appropriate
with the ongoing sales achievements while still allowing the Company to move
forward with a progressive plan in the marketplace.

Management believes that the Company heads into FY 2001 having achieved
improvements in expense controls, sales infrastructure and product acceptance.
Management's focus and commitment in FY 2001 is to maintain expense controls
while optimizing sales execution in the field and developing widespread market
acceptance.

For the year ended September 30, 2000, the Company had an operating loss of
approximately $12.5 million and cash used in operations of approximately $10.5
million. The Company's forecast for fiscal year 2001 anticipates a reduction in
cash used in operations. At September 30, 2000, the Company had $3.8 million of
cash and cash equivalents and restricted cash available to fund future
operations. Subsequent to the year ended September 30, 2000, the Company
received net proceeds of $2.6 million ($0.8 million for TheFirstNews.com). See
Note 12. Management believes the cash on hand plus funds available related to
the 6% Debenture financing discussed in Note 12 will be sufficient to fund the
Company's working capital, anticipated operating cash flow deficit and capital
expenditure requirements for at least the next 12 months.

                                      F-9
<PAGE>   47

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 1:  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

BASIS OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of VDC
and its subsidiaries, HotelView Corporation ("HotelView"), CareView Corporation
("CareView"), Video News Wire Corporation, ResortView Corporation
("ResortView"), AttractionView Corporation, MedicalView Corporation,
TheFirstNews.Com and EDNET. All significant intercompany accounts and
transactions have been eliminated in consolidation.

VDC has recognized the minority interest's 49% share of the ownership in EDNET
in the accompanying consolidated financial statements, net of the minority
interest's 49% share in EDNET's cumulative net losses. As the minority
interest's 49% share in EDNET's cumulative net losses through September 30, 2000
is in excess of the minority interest's original investment by approximately
$174,000, VDC has reduced the minority interest liability to zero in the
accompanying consolidated balance sheet as of September 30, 2000. VDC will
restore the minority interest's 49% share in EDNET when and if the cumulative
earnings in EDNET become positive.

ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States, requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consists of all highly liquid investments with
original maturities of three months or less.

RESTRICTED CASH

Restricted cash consists of amounts provided by one of the Company's customers
and is held in an escrow account. The restricted cash relates to a minimum
revenue commitment by such customer and will be released from the escrow account
as the services are provided by the Company or by the passage of time, not to
extend beyond September 30, 2001. The Company anticipates that the full amount
of the remaining restricted cash will be released in Fiscal 2001.

                                      F-10
<PAGE>   48

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 1:  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVENTORIES

Inventories, composed primarily of purchased products for resale, are valued at
the lower of cost or market with cost being determined on the first-in,
first-out basis. Provision has been made for excess or obsolete inventories
based on the amounts by which original cost is determined to be in excess of
market.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost. Property and equipment under
capital leases is stated at the lower of the present value of the minimum lease
payments at the beginning of the lease term or the fair value at the inception
of the lease. Depreciation is computed using the straight-line method over the
estimated useful lives of the related assets. Amortization expense on assets
acquired under capital leases is included with depreciation expense. The costs
of leasehold improvements are amortized over the lesser of the lease term or the
life of the improvement.

SOFTWARE

Included in property, plant and equipment is computer software obtained for
internal use. Such amounts have been accounted for in accordance with Statement
of Position 98-1 "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." Such costs are amortized on a straight-line basis
over three to five years.

EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED

Goodwill is the excess of the purchase price over the fair value of net assets
acquired in business combinations accounted for under the purchase method of
accounting. Goodwill is amortized on a straight-line basis over 15 years.
Amortization was approximately $77,000 and $74,000 for the years ended September
30, 2000 and 1999, respectively and is included in general and administrative
expenses in the accompanying consolidated Statements of Operations. Excess of
purchase price over net assets acquired is reflected in the accompanying
consolidated Balance Sheets net of accumulated amortization of approximately
$169,000 and $92,000, as of September 30, 2000 and 1999, respectively.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews long-lived assets for impairment whenever events or changes
in business circumstances indicate that the carrying amount of the assets may
not be fully recoverable. The Company performs an undiscounted cash flow
analysis to determine if an impairment has occurred. If an impairment is
determined to exist, any related impairment loss is calculated based upon a
discounted cash flow analysis to determine the fair value of the related asset.
Impairment losses on assets to be disposed of, if any, are based on the
estimated proceeds to be received, less costs of disposal.

                                      F-11
<PAGE>   49

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 1:  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION

HotelView, CareView and ResortView libraries recognize a portion of their
contract revenue at the time of completion of video production services with the
remaining revenue recognized over the term of the contracts. Per hit charges are
recognized when users watch a video on the Internet. Fixed monthly fees are
recognized on a monthly basis consistent with the terms of the contracts.
Commissions on ResortView bookings are recognized when the stays are completed.
Currently, Video News Wire and MedicalView divisions recognize revenue when a
project is completed and the client is billed. A significant component of
EDNET's revenue relates to the sale of equipment, which is recognized when the
equipment is installed or upon signing of a contract after a free trial period.
EDNET recognizes revenues from equipment installation, webcasting and bridging
when the service is performed. Installation and training costs are expensed as
incurred. Network usage revenue is recognized based on an estimate of customers'
monthly usage. EDNET leases some equipment to customers under terms that are
accounted for as operating leases. Rental revenue from leases is recognized
ratably over the life of the lease and the related equipment is depreciated over
its estimated useful life. All leases of the related equipment contain fixed
terms. TheFirstNews.com recognizes its subscription revenue ratably as service
is provided.

ADVERTISING

Advertising costs are charged to operations as incurred. Advertising expenses
were $1,282,000 and $761,000 for the years ended September 30, 2000 and 1999,
respectively.

COMPREHENSIVE INCOME OR LOSS

The Company has no components of other comprehensive income or loss,
accordingly, net loss equals comprehensive loss for all periods presented.

INCOME TAXES

In accordance with Financial Accounting Standards Board Statement on Financial
Accounting Standards ("SFAS") Statement No. 109 deferred tax assets or
liabilities are computed based upon the difference between the financial
statement and income tax basis of assets and liabilities using the enacted
marginal tax rate applicable when the related asset or liability is expected to
be realized or settled. Deferred income tax expense or benefit is based on the
changes in the asset or liability from period to period. If available evidence
suggests that it is more likely than not that some portion or all of the
deferred tax assets will not be realized, a valuation allowance is required to
reduce the deferred tax assets to the amount that is more likely than not to be
realized. Because of the uncertainty regarding the realizability of the
Company's net operating loss carryforwards, the Company has provided a 100%
valuation allowance on its net deferred tax assets at September 30, 2000 and
1999. Future changes in such valuation allowance would be included in the
provision for deferred income taxes in the period of change.

                                      F-12
<PAGE>   50

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 1:  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE

For the years ended September 30, 2000 and 1999, net loss per share is based on
the weighted average number of shares of common stock outstanding. Since the
effect of common stock equivalents was anti-dilutive, all such equivalents were
excluded from the calculation of net loss per share. The total outstanding
options and warrants, which have been excluded from the calculation of loss per
share, were 7,728,715 and 6,503,465 at September 30, 2000 and 1999,
respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, restricted cash, accounts
receivable, accounts payable, accrued expenses, mortgage notes payable and notes
payable - related parties approximate fair value due to the short maturity of
the instruments.

CONCENTRATION OF CREDIT RISK

The Company at times has cash in banks in excess of FDIC insurance limits and
places its temporary cash investments with high credit quality financial
institutions. The Company performs ongoing credit evaluations of its customers'
financial condition and does not require collateral from them. Reserves for
credit losses are maintained at levels considered adequate by management.

EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998 and June 1999, the Financial Accounting Standards Board (FASB)
issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, and SFAS 137, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES-DEFERRAL OF THE EFFECTIVE DATE OF FASB STATEMENT NO. 133. These
statements require companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the values of those derivatives would be accounted for depending upon
the use of the derivative and whether it qualifies for hedge accounting. SFAS
133 will be effective for the first fiscal quarter of the Company's fiscal year
ending September 30, 2001. The Company has not yet determined the impact, if
any, that SFAS 133 and SFAS 137 may have on its consolidated financial position
or results of operations.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (SAB 101), REVENUE RECOGNITION IN FINANCIAL STATEMENTS. SAB 101
will be effective for the Company's fiscal year ending September 30, 2001.
Management believes that the adoption of SAB 101 will not have a significant
impact on its consolidated financial position or results of operations. SAB 101
is required to be adopted no later than the fourth fiscal quarter of the
Company's fiscal year ending September 30, 2001.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year
presentation.

                                      F-13
<PAGE>   51

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 2:  PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, including equipment acquired under capital
leases, consists of:

                                           September 30,           Useful Lives
                                    ----------------------------   ------------
                                        2000             1999        (Years)
                                    -----------      -----------    -----------

   Building                         $ 1,551,189      $ 1,551,189        39
   Furniture and fixtures               266,988          210,388         7
   Equipment                          3,272,290        2,321,478      3-10
   Video library content                429,175          243,750       2-3
   Software                           1,026,143        1,066,245       3-5
   Leasehold improvements               104,837           26,183         5
                                    -----------      -----------
                                      6,650,622        5,419,223
   Less:  Accumulated depreciation
            and amortization         (2,854,966)      (1,809,816)
                                    -----------      -----------

                                    $ 3,795,656      $ 3,609,417
                                    ===========      ===========

Depreciation and amortization of property, plant and equipment included in the
statements of operations amounted to $1,070,861 and $784,025 for the years ended
September 30, 2000 and 1999, respectively.

NOTE 3: NOTES PAYABLE - RELATED PARTY AND OTHER DEBT

NOTES PAYABLE - RELATED PARTIES

Notes payable - related parties consist of the following as of September 30:

<TABLE>
<CAPTION>
                                                                                       2000               1999
                                                                                    ---------           ---------
<S>                                                                                 <C>                 <C>
Note payable to a director of VDC, with original principal of $250,000 at 12%
     interest was issued in May 1999. The principal balance and accrued interest
     is due on December 31, 2001. Accrued interest payable as of September 30,
     2000 is $863.                                                                  $ 125,000           $ 250,000

Notes payable to employees, interest at 6% per annum, uncollateralized. The
     notes and related interest were paid in full in January 2000.                         --              40,500
                                                                                    ---------           ---------
         Total notes payable-related parties                                        $ 125,000           $ 290,500
                                                                                    =========           =========
</TABLE>

Interest expense to related parties was approximately $29,000 and $14,000 for
the years ended September 30, 2000 and 1999, respectively.

                                      F-14
<PAGE>   52

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 3: NOTES PAYABLE - RELATED PARTY AND OTHER DEBT(CONTINUED)

LINE OF CREDIT

As of September 30, 2000, the Company had a line of credit of $100,000 with a
financial institution. The line of credit bears interest at the institution's
published reference rate. The line of credit is secured by the assets of EDNET.
During the year, the Company borrowed $100,000 against the line of credit;
however, there is no balance on the line of credit as of September 30, 2000.

MORTGAGE NOTE PAYABLE

Mortgage note payable consists of the following as of September 30:

<TABLE>
<CAPTION>
                                                                                       2000               1999
                                                                                    ---------           ---------
<S>                                                                                 <C>                 <C>

Note payable to an unrelated financial institution, interest payable at 8.75% on
     a 15 year amortization, unpaid principal balance and any accrued interest
     due September 30, 2002, secured by a mortgage on VDC's facility in Pompano
     Beach, Florida.                                                                $  893,072         $  931,667

         Less:  current portion                                                        (44,181)           (40,492)
                                                                                    ----------         ----------

         Long term portion                                                          $  848,891         $  891,175
                                                                                    ==========         ==========
</TABLE>

NOTE 4: SALE OF INTERNET BUSINESS SOLUTIONS (IBS)

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

Results of operations for the year ended September 30, 1999 include IBS revenues
and expenses of $252,000 and $229,000, respectively. Pro forma information is
not required as the sale of the assets and liabilities was immaterial to the
Company's financial statements.

                                      F-15
<PAGE>   53

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 5:  COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

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

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

                                                      Operating      Capital
     Year Ending September 30:                         Leases        Leases
                                                    -----------     ----------
       2001                                          $ 159,016      $ 4,239
       2002                                            159,016            -
       2003                                            145,761            -
                                                     ---------      -------

              Total minimum lease payments           $ 463,793        4,239
                                                     =========
     Less amount representing interest                                  194
                                                                    -------
     Present value of net minimum lease payments                      4,045
     Less current portion                                             4,045
                                                                    -------
              Long-term portion                                     $    --
                                                                    =======

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

EMPLOYMENT CONTRACTS

In January 1998, the Company's President and Vice President entered into amended
employment agreements with the Company. The three-year contracts provided for
the granting of 375,000 stock options to the President and the Vice President at
an exercise price of $2.125 to vest at the rate of 125,000 on each anniversary
of the effective date of the amended contract. These contracts were amended in
September 1999 to extend the term for two-years and grant an additional 250,000
stock options with an exercise price of $8.875, representing the fair value at
the date of grant, to each executive to vest at the rate of 125,000 shares on
each anniversary of the effective date of the contract. The amended contracts
increase the annual salary to $195,000, each. The contracts further provide for
an annual bonus in cash or stock equal to 2% of the Company's increase in
earnings as defined therein.

EDNET has contracts with several of its key employees that expire at dates
through December 31, 2000. In July 2000, EDNET entered into a two year
employment agreement with its President and CEO. The contract provides for an
annual salary of $160,000.

                                      F-16
<PAGE>   54

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 5:  COMMITMENTS AND CONTINGENCIES (CONTINUED)

ANNUAL VOLUME COMMITMENT

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

NOTE 6:  REVENUE

Revenue by type for the years ended September 30, 2000 and 1999 is as follows:

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

      Contract revenue                    $  691,657     $  393,322
      Webcasting and related services      1,180,802        327,823
      Sales:
         Equipment sales                   1,410,122      1,160,617
         Installation fees                   808,078        647,174
         Usage fees                        1,604,336      1,393,003
         Web design and consulting                --        472,146
         Other                               173,440         70,072
                                          ----------     ----------

                                          $5,868,435     $4,464,157
                                          ==========     ==========

Contract revenue and webcasting and related services are primarily derived from
Visual Data Corporation and its wholly-owned subsidiaries and Sales are
primarily derived from EDNET.

NOTE 7:  CAPITAL STOCK

PREFERRED STOCK

In December 1998 the holders of VDC's Series A Convertible Preferred Stock and
Series A-1 Convertible Preferred Stock converted their shares into shares of
VDC's Common Stock pursuant to the designations, rights and preferences of such
securities. The 150 shares of Series A Convertible Preferred Stock and the 150
shares of the Series A-1 Convertible Preferred Stock, which represented 100% of
the issued and outstanding shares of those series of preferred stock, were
converted into an aggregate of 917,490 shares of Common Stock. Subsequent to
their conversion, the shares of Series A Convertible Preferred Stock and Series
A-1 Convertible Preferred Stock were returned to the treasury of VDC with the
status of authorized but unissued securities.

                                      F-17
<PAGE>   55

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 7:  CAPITAL STOCK (CONTINUED)

COMMON STOCK

During November and December 1998 VDC sold an aggregate of 544,644 shares of its
Common Stock, to a group of accredited investors in a private placement exempt
from registration under the Securities Act of 1933, as amended. VDC received
approximately $940,000 in gross proceeds from such private placement. In
February 1999, VDC received net proceeds of approximately $2,600,000 from the
sale of common stock to institutional investors in the second private placement,
selling a total of 333,334 shares.

In August 1999, the Company concluded a secondary offering of 1,400,000 shares
of common stock, which resulted in net proceeds of approximately $12,400,000.
The underwriters of the offering received a commission of 8%, a non-accountable
expense allowance of 1% and warrants to purchase 140,000 shares of the Company's
common stock at an exercise price of $16.50. The warrants are exercisable for a
period of four years beginning August 11, 2000.

On April 17, 2000, VDC announced that its Board of Directors had authorized the
Company to repurchase up to one million shares of its common stock from time to
time in the open market. The Company has repurchased 89,000 shares of its Common
Stock for an aggregate purchase price of approximately $489,000, or an average
purchase price per share of approximately $5.49. The Board of Directors has
determined that no additional shares will be purchased as part of this program.
The Common Stock that was repurchased has been subsequently retired.

VDC has reserved 8,815,440 and 7,003,465 shares of common stock for issuance
relating to unexpired options and warrants at September 30, 2000 and 1999,
respectively.

In order to maintain the 51% interest acquired, we received an option to
purchase, at an exercise price of $.10 per share, the number of shares actually
purchased upon exercise of each option, warrant and other convertible security
of EDNET outstanding at the date of closing the EDNET transaction (the "EDNET
Stock Equivalents"). Based upon the number of EDNET Stock Equivalents
outstanding, we have the right to purchase up to an aggregate of 2,647,793
shares of EDNET's common stock. Our right to exercise the options shall accrue
on the date of issuance of shares of EDNET common stock upon exercise of the
corresponding outstanding EDNET Stock Equivalents and shall expire on the first
anniversary of the exercise date of each such outstanding EDNET Stock
Equivalent. During the year ended September 30, 2000 and 1999, we exercised
options and warrants to purchase a total of 344,525 and 3,212,231 shares,
respectively, of EDNET Common Stock.

                                      F-18
<PAGE>   56

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 8:  INCOME TAXES

VDC has a net operating loss carryforward as of September 30, 2000 of
approximately $24.9 million for federal income tax purposes, inclusive of
accumulated start-up costs. The net operating losses are carried forward for tax
purposes and begin to expire in 2016. The Company's deferred tax assets
primarily consist of the net operating losses. VDC has recorded a valuation
allowance of approximately $9,960,000 (100%) with respect to any future tax
benefits arising from any net operating losses and the amortization of the
start-up costs due to the uncertainty of their ultimate realization.
Accordingly, no income tax benefit has been recorded in the accompanying
consolidated statement of operations as a result of the increase in the
Company's valuation allowance related to the net operating losses.

NOTE 9:  SEGMENT INFORMATION

The Company's operations are comprised of two segments. One segment, consisting
of Visual Data and its wholly-owned subsidiaries ("Visual"), is comprised of
Visual Data Travel Group, Visual Data On-Line Broadcast and Production Group and
Visual Data Financial Group. The Company's EDNET subsidiary is the Visual Data
Networking Solutions Group. The Company's management relies on reports generated
by two separate management accounting systems, which present various data for
management to run the business. Company management makes financial decisions and
allocates resources based on the information it receives from these systems.

All material balances related to Company sales, primary business activities, and
location of property, plant and equipment are within the United States.

For the year ended September 30, 2000 the Company provided webcasting services
to a single customer in excess of 10% of total consolidated revenues. Revenues
for such customer totaled approximately $1,023,000. Revenues for such customer
for the year ended September 30, 1999 did not exceed 10% of total consolidated
revenues.

                                      F-19
<PAGE>   57

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 9:  SEGMENT INFORMATION (CONTINUED)

Detailed below are the results of operations by segment for the years ended
September 30, 2000 and 1999.

<TABLE>
<CAPTION>
                                                                2000
                                          ------------------------------------------------
                                             Visual             EDNET             Total
                                          ------------      ------------      ------------
<S>                                       <C>               <C>               <C>
Revenue from unaffiliated customers       $  1,714,916      $  4,153,519      $  5,868,435

Cost of revenue                              3,007,646         4,016,596         7,024,242
                                          ------------      ------------      ------------

Gross profit (loss)                         (1,292,730)          136,923        (1,155,807)

   General and administrative                4,089,945         1,877,096         5,967,041
   Sales and marketing                       4,749,985           670,075         5,420,060
                                          ------------      ------------      ------------
         Total operating expenses            8,839,930         2,547,171        11,387,101
                                          ------------      ------------      ------------
         Loss from operations              (10,132,660)       (2,410,248)      (12,542,908)
                                          ------------      ------------      ------------

Other income (expense)
   Interest income                             556,040            11,536           567,576
   Rental income                                81,665                --            81,665
   Loss on disposal of assets                  (12,251)               --           (12,251)
   Interest expense                            (90,434)          (38,790)         (129,224)
   Minority interest share of losses           635,959                --           635,959
                                          ------------      ------------      ------------
         Total other income (expense)        1,170,979           (27,254)        1,143,725
                                          ------------      ------------      ------------
Loss before income tax provision            (8,961,681)       (2,437,502)      (11,399,183)

   Income tax provision                             --             2,400             2,400
                                          ------------      ------------      ------------

   Net loss                               $ (8,961,681)     $ (2,439,902)     $(11,401,583)
                                          ============      ============      ============

   Depreciation and amortization          $    961,538      $    186,655      $  1,148,193
                                          ------------      ------------      ------------

   Assets                                 $  8,313,914      $  2,516,398      $ 10,830,312
                                          ------------      ------------      ------------

   Capital expenditures                   $    950,801      $    266,375      $  1,217,176
                                          ------------      ------------      ------------
</TABLE>

                                      F-20
<PAGE>   58

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 9:  SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
                                                                1999
                                          ------------------------------------------------
                                             Visual             EDNET            Total
                                          ------------      ------------      ------------
<S>                                       <C>               <C>               <C>
Revenue from unaffiliated customers       $    723,075      $  3,741,082      $  4,464,157

Cost of revenue                              2,028,376         2,898,541         4,926,917
                                          ------------      ------------      ------------

Gross profit (loss)                         (1,305,301)          842,541          (462,760)

   General and administrative                4,084,523         1,254,159         4,636,003
   Sales and marketing                       1,357,609           551,480         2,611,768
                                          ------------      ------------      ------------
         Total operating expenses            5,442,132         1,805,639         7,247,771
                                          ------------      ------------      ------------
         Loss from operations               (6,747,433)         (963,098)       (7,710,531)
                                          ------------      ------------      ------------

Other income (expense)
   Interest income                             205,967            13,706           219,673
   Rental income                                76,410                --            76,410
   Loss on disposal of assets                  (13,323)             (818)          (14,141)
   Interest expense                            (86,405)          (22,773)         (109,178)
   Minority interest share of losses           386,825                --           386,825
                                          ------------      ------------      ------------
         Total other income (expense)          569,474            (9,885)          559,589
                                          ------------      ------------      ------------
Loss before income tax provision            (6,177,959)         (972,983)       (7,150,942)

   Income tax provision                             --             7,434             7,434
                                          ------------      ------------      ------------

   Net loss                               $ (6,177,959)     $   (980,417)     $ (7,158,376)
                                          ============      ============      ============

   Depreciation and amortization          $    735,425      $    122,380      $    857,805
                                          ------------      ------------      ------------

   Assets                                 $ 20,330,087      $  2,080,735      $ 22,410,822
                                          ------------      ------------      ------------

   Capital expenditures                   $    588,792      $    258,729      $    847,521
                                          ------------      ------------      ------------
</TABLE>

For the years ended September 30, 2000 and 1999 EDNET recorded revenue from
Visual and Visual recorded cost of revenue of $785,113 and $169,384,
respectively. Such amounts have been eliminated in the consolidated results of
operations.

                                      F-21
<PAGE>   59

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 10:  STOCK OPTIONS GRANTED TO DIRECTORS AND EMPLOYEES

On February 9, 1997, the Board of Directors and a majority of our shareholders
adopted our 1996 Stock Option Plan (the "Plan"). Pursuant to an amendment to the
Plan ratified by shareholders on July 16, 1999, the Company reserved an
aggregate of 2,500,000 shares of common stock for issuance pursuant to options
granted under the Plan ("Plan Options"). At September 30, 2000 and 1999 the
Company has granted options to management, employees and directors under the
Plan. The term of these options are from three to eight years and the vesting
periods are from immediate to three years.

The Company has granted options to management, employees, directors and
consultants that are outside of the Plan. For the year ended September 30, 2000,
the Company granted 200,000 options to consultants at a weighted average fair
value of $.89 per share. The term of these options are from three to four years
and the vesting periods are from immediate to two years. At September 30, 2000
the Company had 1,158,129 granted options consultants outstanding. These options
have been accounted for under Statement of Financial Accounting Standards No.
123 "Accounting for Stock-Based Compensation," ("SFAS 123").

In addition to the 1,135,000 publicly traded warrants issued at the time of the
Company's IPO, at September 30, 2000, there were vested warrants to purchase an
aggregate of 469,201 shares of common stock outstanding, inclusive of the
Underwriter Warrants discussed in Note 7, at exercise prices ranging from $2.563
to $16.50 expiring from July 2002 to August 2005. In fiscal years 2000 and 1999
the Company granted 100,000 and 140,000 warrants with a weighted fair value at
the date of grant of $130,000 and $340,000, respectively.

All options are granted at a price equal to or greater than the fair market
value at the date of grant. Detail of option activity is as follows:

                                          2000                    1999
                                -----------------------   ----------------------
                                               Weighted                Weighted
                                  Number        Average    Number       Average
                                    Of         Exercise      of        Exercise
                                  Shares         Price     Shares        Price
                                  ------       --------   ---------    ---------

Balance, beginning of year      4,429,635      $   5.86   1,935,041    $   3.82
Expired during year              (605,900)     $  11.55          --          --
Granted during year             1,192,650      $   7.47   2,711,300    $   8.15
Exercised during year             (50,000)     $   2.13    (216,706)   $    .15
                               ----------                 ---------

Balance, end of year            4,966,385      $   5.59   4,429,635    $   5.86
                               ==========                 =========

Exercisable at end of year      3,648,885      $   5.09   2,844,635    $   5.57


                                      F-22
<PAGE>   60

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 10:  STOCK OPTIONS GRANTED TO DIRECTORS AND EMPLOYEES (CONTINUED)

The following table summarizes information about the Company's outstanding and
exercisable stock options at September 30, 2000:

<TABLE>
<CAPTION>
                                        Outstanding
                           ------------------------------------          Exercisable
                                          Weighted                --------------------------
                                          Average      Weighted                    Weighted
                                         Remaining     Average                      Average
                                        Contractual    Exercise                    Exercise
Range of Exercise Price      Shares     Life (Years)    Price       Shares          Price
-----------------------    ---------    ------------    -----     ---------       ----------
<S>                        <C>              <C>        <C>        <C>              <C>
$.00016 - $2.125           2,543,735        2.25       $  2.07    2,261,235        $  2.07
$2.25 - $4.50                730,000        2.58       $  3.00      560,000        $  2.68
$7.313 - $17.188           1,692,650        3.92       $ 11.99      827,650        $ 14.97
                           ---------                              ---------
                           4,966,385        2.83       $  5.59    3,648,885        $  5.09
                           =========                              =========
</TABLE>

The Company adopted SFAS 123 in the fiscal year ended 1997. VDC has elected to
continue using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," in accounting for employee stock options.

The following table summarizes the pro forma consolidated results of operations
of VDC as though the fair value based accounting method in SFAS 123 had been
used in accounting for stock options.

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

Pro forma results of operations:
   Net loss                               $ (12,603,824)       $ (15,830,641)
   Net loss per share                     $       (1.49)       $       (2.65)

The fair value of each option granted is estimated on the date of grant using
the Black-Scholes model with the following assumptions: expected volatility of
50.0%, risk-free interest rate of 6.25%, expected dividends of $0 and expected
terms of 4 years.

                                      F-23
<PAGE>   61

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 11: LEGAL PROCEEDINGS

On or about October 18, 1999, Peter Bisulca instituted an action against Visual
Data and Randy Selman, our Chief Executive Officer and President, individually,
entitled BISULCA V. VISUAL DATA CORPORATION AND RANDY S. SELMAN, Case No. CL
99-9971 AD, in the 15th Judicial Circuit in and for Palm Beach County, Florida.
The Complaint alleged breach of contract and conversion against Visual Data and
tortious interference with contract against Randy S. Selman, seeking damages in
excess of $2,000,000 in connection with a Consulting Agreement dated May 1,
1998, allegedly entered into between Visual Data and Peter Bisulca. A Motion to
Dismiss was filed on behalf of Visual Data and Randy S. Selman, the hearing on
which was cancelled as a result of the Complaint being amended. The Complaint
was amended to no longer include Randy S. Selman as a defendant and the claim
for conversion was dropped. The Company intends to vigorously defend itself in
this action and, in the opinion of management, the ultimate outcome of this
matter will not have a material impact on the Company's financial position or
results of operations.

NOTE 12: SUBSEQUENT EVENTS

CAREVIEW

In December, 2000 pursuant to the terms and conditions of an Asset Purchase
Agreement by and between the Company, its wholly-owned subsidiary, CareView and
CuraSpan, Inc., Visual Data sold substantially all of the assets of CareView to
CuraSpan. CuraSpan, an Application Service Provider (ASP) that develops
technology-based solutions to meet the organizational, communication and
compliance needs of healthcare organizations, is an unaffiliated third party and
the terms of the transaction were the result of arms length negotiations by the
parties.

Excluded from the assets sold were (i) CareView's cash on hand, (ii) any claims
for tax refunds for the periods prior to the closing date, (iii) all notes and
accounts receivables and other receivables of CareView, and (iv) any amounts
received by CareView in settlement of or relating to disputes or litigation
which relate to periods prior to the closing date. In connection with the asset
purchase, CuraSpan assumed all liabilities and obligations related to CareView's
business following the closing date, together with certain contractual
obligations as specified in the Asset Purchase Agreement.

                                      F-24
<PAGE>   62

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 12: SUBSEQUENT EVENTS (CONTINUED)

CAREVIEW (CONTINUED)

As consideration for the purchase, CuraSpan issued to Visual Data 182,000 shares
of its Series B Preferred Stock and a promissory note in the principal amount of
$1,000,000. The note, which bears no interest, is payable semi-annually
commencing in May 2001, with each semi-annual payment equal to the lesser of
$125,000 or 50% of the renewal fees collected by Visual Data in the previous six
months from the post-acute facilities with which CuraSpan had a contract as of
the closing date; provided that the first and second payments to be made
thereunder shall not be less than $50,000 each, the third and fourth payments to
be made thereunder shall not be less than $75,000 each, and each payment
thereafter shall not be less than $100,000. Principal payments not made within
10 days of the due date shall bear interest at 13% per annum. Visual Data also
agreed to provide CuraSpan with access of up to $30,000 during the 30 day period
following the closing date under a revolving note bearing interest at 6% per
annum and due on the earlier of (i) six months from the date of issuance or (ii)
the closing date of an equity financing of CuraSpan in an amount of not less
than $1,000,000.

As additional consideration for the asset purchase, Visual Data and CuraSpan
also entered into a Services Agreement wherein CuraSpan will purchase a minimum
of $250,000 of video services from Visual Data during the 12 month period
following the closing date.

6% CONVERTIBLE DEBENTURES

In December, 2000 the Company sold an aggregate of $2,040,000 principal amount
of 6% Convertible Debentures to two unaffiliated third parties who were
accredited investors in a transaction exempt from registration under the
Securities Act of 1933 in reliance on Section 4(2) and Regulation D promulgated
under such act. No underwriter was involved in this transaction. The Convertible
Debentures mature on December 8, 2003 and are convertible, in whole or in part,
at the option of the holders into shares of our common stock at a conversion
price equal to the lesser of (i) $2.13 per share, or (ii) 90% of the average of
the three lowest closing bid prices for the 20 trading days prior to conversion
(the "variable conversion price"). The conversion price of the Convertible
Debentures shall not be less than $.90 per share; provided that this floor price
will be reset to 50% of the variable conversion price on December 8, 2001.

In conjunction with this transaction, the Company issued the purchasers (i) a
one year warrant to purchase an aggregate of 500,000 shares of VDC common stock
at an exercise price of $4.00 per share, and (ii) a five year warrant to
purchase an aggregate of 200,000 shares of VDC common stock at an exercise price
of $2.13 per share (collectively, the "Warrants").

                                      F-25
<PAGE>   63

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 12: SUBSEQUENT EVENTS (CONTINUED)

6% CONVERTIBLE DEBENTURES (CONTINUED)

In the event that the market price of VDC common shares shall be less than $1.50
per share for 20 consecutive trading days, at the Company's option all or a
portion of the Convertible Debentures are redeemable in an amount equal to 115%
of the Outstanding Principal Amount (as that term is defined in the Convertible
Debenture) plus all accrued but unpaid interest and all Delay Payments (as that
term is defined in the Convertible Debenture), subject to certain conditions.
VDC's redemption right shall, if exercised, be irrevocable, may be exercised no
more than twice and may not be exercised again until three months after the
first redemption closing date.

The notice of redemption must be delivered by the Company within not less than
five nor more than 20 trading days of such redemption triggering event (the
"Redemption Closing Date"). VDC's right of redemption cannot be exercised if:

         -        there is an Event of Default (as that term is defined in the
                  Convertible Debenture) or an event which, with the giving of
                  notice or the passage of time or both would constitute an
                  Event of Default under any Convertible Debenture; or

         -        there is an effective registration statement with respect to
                  the share issuable upon the conversion of or as interest on
                  the Convertible Debentures.

In addition, the holders of the Convertible Debentures have the right to convert
the debentures at any time until the Redemption Closing Date.

Commencing on the effective date of the registration statement hereinafter
described, Visual Data has the right to sell to the purchasers an additional
$1,000,000 principal amount of Convertible Debentures and five year warrants to
purchase an additional 50,000 shares of its common stock, the conversion price
and exercise price of which shall be identical to those described above. In
addition, Visual Data shall have the right to sell to the purchasers an
additional $1,000,000 principal amount of Convertible Debentures and five year
warrants to purchase an additional 50,000 shares of its common stock, the
conversion price and exercise price of which shall be equal to the market price
of Visual Data's common stock on the second put closing date. In each of the
first put right and second put right, the obligation of the purchasers to
purchase these securities is several and not joint, and shall be allocated pro
rata based upon the amount of Convertible Debentures and Warrants purchased
pursuant to the Purchase Agreement.

                                      F-26
<PAGE>   64

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 12: SUBSEQUENT EVENTS (CONTINUED)

THEFIRSTNEWS.COM STOCK OFFERING

In December 2000, TheFirstNews.Com ("TFN"), in a private offering, sold Units
each Unit consisting of 10,000 shares of TFN common stock and 20,000 shares of
TFN 10% redeemable, convertible preferred stock. The purchase price for each
unit was $50,000. TFN received net proceeds of approximately $.8 million. TFN
has the right to redeem each block of 20,000 shares of preferred stock included
in each Unit, at any time from the closing of the offering until 12 months
thereafter, after providing the holder with 10 days notice, for $50,000 per
20,000 shares of preferred stock plus accrued and unpaid interest. In the event
TFN fails to redeem the preferred stock within 12 months after the closing of
the offering, the preferred stock shall be automatically converted into common
stock at the conversion rate of 1 share of preferred stock for 1 share of common
stock. In the event TFN fails to either file a registration statement under the
Securities Act of 1933, as amended, with the Securities and Exchange Commission
for the public offering of TFN's common stock within 12 months of the closing of
the offering, or such registration statement has not been declared effective
within 6 months of its initial filing with the SEC, the investors shall have the
right to convert those shares of TFN common stock received initially with the
Units and those received upon conversion of the preferred stock into shares of
VDC common stock, at the conversion rate of 1 share of TFN common stock for 2
shares of VDC common stock.

SPORTSOFT GOLF, INC. MERGER WITH VDC SUBSIDIARY

In December 2000 VDC, and SportsSoft Golf, Inc., a Delaware corporation ("SSG"),
and certain shareholders of SSG entered into an Agreement and Plan of Merger
dated as of December 1, 2000 (the "Merger Agreement"), which provides, among
other things, that, upon the terms and subject to conditions thereof, which
includes the approval of SSG's stock holders', a wholly-owned subsidiary of VDC
("Acquisition Sub") will be merged with and into SSG, with SSG being the
surviving corporation in the merger. In the merger, all outstanding shares of
common stock of SSG issued and outstanding shall be converted into the right to
receive .0969 shares of restricted common stock of VDAT, par value $.0001. The
aggregate number of VDAT shares to be received by the SSG shareholders will be
1,686,445.

A Management Agreement (the "Management Agreement") between SSG and VDAT was
entered into concurrently with the Merger Agreement which provides that SSG
retained the services of VDAT to manage and oversee the business of SSG with
respect to its operations until the earlier to occur of (a) the effective date
of the Merger Agreement, or (b) the termination of the Merger Agreement. VDAT
will act as manager and shall assume complete and absolute managerial day-to-day
control over SSG. VDAT shall receive as compensation all of the consolidated
income of SSG and it subsidiaries, subject to certain provisions in the
Management Agreement.

                                      F-27