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, 1997

[ ]    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  


                             Visual Data Corporation
                       -----------------------------------
                 (Name of small business issuer in its charter)


                                     Florida
                       -----------------------------------
         (State or other jurisdiction of incorporation or organization)


                                   65-0420146
                      -------------------------------------
                      (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)

                                                                  
<PAGE>


         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. $ 193,038 for
the 12 months ended September 30, 1997.

         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 average price for which the Company's common
stock was sold on January 12, 1998 is approximately $5,008,282. 

         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 31, 1997,
3,082,150 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
            ---              -----

<PAGE>

                                     PART I

Item 1.           Description of Business

General

Visual Data Corporation, a Florida corporation (the "Company") was formed in May
1993 with the goal of becoming the predominant digital multi-media content
provider in the advertising industry. In August 1997, one year after exiting
from its development stage activities, the Company completed its initial public
offering. As used herein, the Company includes HotelView Corporation, a Florida
corporation ("HVC") incorporated in September 1993, CareView Corporation, a
Florida corporation ("CareView") incorporated in August 1997 and CondoView
Corporation, a Florida corporation ("CondoView") incorporated in January 1998,
all of which are wholly-owned subsidiaries of the Company.

The Company develops digital multi-media libraries of interactive visual
information which can be marketed and distributed through a variety of media,
including the Internet, other On-line services, laser disc, DVD and, eventually,
Interactive Television ("ITV"). Much like a magazine selling advertising space,
the Company generates revenues through fees paid by companies which advertise
and showcase their products in one of the Company's innovative multi-media
libraries, each of which are targeted to a specific industry, such as travel,
health care and interval ownership. Each of the libraries, or "Views," are
essentially marketing companies designed to distribute advertising over new,
non-traditional media, supplementing traditional advertising mediums such as
print, television and radio. Unlike traditional advertising which is essentially
passive, the use of non-traditional media should, in management's opinion, allow
the Company's messages to have greater impact and higher recall because of the
active interface between the advertiser and the consumer and the proactive
nature of the medium. The ability of the product to be revisited at the
consumer's discretion, combined with the detail of the message provided by the
video, will also permit a more aggressive promotion by the advertiser (the
Company's client) by allowing the client the opportunity to supplement their
traditional advertising, broaden reach and frequency, and, hopefully, improve
market position.

As discussed above, the Company's libraries will be offered to the general
public through various media. The Company's first library, HotelView(R), is a
visual library of hotels and resorts, including nearby services and attractions
which was initially available through a travel agency distribution channel
developed by the Company and since November 1997 on the Internet at the
Company's web site www.hotelview.com. Additional libraries which possess certain
synergies to HotelView(R), including CruiseView(TM), AdventureView(TM) and
ConventionView(TM) will be offered through the travel agency distribution
channel and the Internet as these libraries are developed. The Company currently
has 11 additional libraries in various stages of development, including
CareView(TM) and CondoView(TM) which the Company expects to debut in fiscal
1998. Management of the Company currently anticipates that many of the Company's
other libraries, such as MedicalView(TM),

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CampusView, Health and FitnessView(TM) and ProductView(TM), will be fully
developed and launched as soon as high speed data transmission capability, such
as cable modems, is widely available. The Company owns, or in the case of
libraries under development will own, all of the content included in its
libraries.

Consumers today are accustomed to television, a visual medium of full-motion,
full-color video that is sound enhanced and readily available to every
consumer's home or business. On-line computer users are accustomed to TV-like
monitors and displays providing access to graphics and text databases on every
topic imaginable through service providers that make connections to these
databases affordable and easy. Computers outsold television sets in 1995 for the
first time in history. The combination of accessible, indexed, on-line
information in full-motion, full-color video forms the basis and the requirement
for multi-media Internet capability or ITV. Beginning in 1997, certain
technological advancements, including cable modems, digital satellite and high
speed wireless modems, began to become available to consumers. These
advancements will enable suppliers and users of the Internet to access
multi-media information efficiently. Management of the Company believes content
such as that offered by the Company will become increasingly more in demand to
fill voids created by the expanded capacity these new technologies provide.

In the opinion of management, the current demographics of the Internet consumer
offers the Company a very favorable platform for using the Company's products
and services to advertise and promote client products and services. For
instance, according to Nielsen Media and the U.S. Census Bureau, it is currently
estimated there are 50,000,000 Internet users worldwide, of which 30,000,000 are
in the United States. The total number of worldwide users is expected to reach
200,000,000 by the end of 1998. Current statistics reflect that total Internet
advertising revenues in 1996 were approximately $267 million, with only 38% of
those advertising dollars spent on computer products. By the year 2000, it is
estimated that 41% of Internet commerce will be travel related, one reason the
Company chose HotelView(R) as its first library. Of the people on-line, the
average annual income is $72,000 (compared to $32,000 nationwide), 25% generate
income of at least $80,000 annually and 50% are professional or managerial.
Further, there has been a notable increase in on-line purchasing, having
increased from 19% in 1995 to 27% in 1997. A survey by the Emerging Technologies
Research Group revealed that 39% of users who have made purchases on-line
reviewed on-line advertising prior to purchasing.

The HotelView(R)  Library

The HotelView(R) Library, which contains short, concise visual brochures
("vignettes") depicting the specific characteristics and amenities of hotels and
resorts in full-motion video, is being marketed to hotels and resorts that pay
an annual subscription fee to be included in the library. The HotelView(R)
Library on the Internet and in the travel agency network developed by the
Company currently includes 81 hotels and resorts across the United States, the
Caribbean and Europe. These include such well-know properties as the Arizona
Biltmore, Fountainbleau Hilton Resort & Towers, The Mirage, Treasure Island at
the Mirage, New York Hilton & Towers, The Hyatt Key West

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Boutique Resort & Marina, Turnberry Isle Resort & Club, The Ritz-Carlton Laguna
Niguel, Elbow Beach Bermuda, Pier House Resort & Caribbean Spa, Schlosshotel
Vier Jahreszeiten - Berlin and the Boca Raton Resort & Club.

All facilities included in the Hotel View(R) Library are videotaped in a uniform
manner following a format developed by the Company in order to maintain
consistency and quality. Hotel and resort management are not involved in the
development or content of the vignette except to verify accuracy, thereby
permitting the Hotel View(R) Library to be fair and consistent in its
presentation. Professionally videotaped with a voice narrative, the vignette
shows the features of the hotel, including rooms, conference facilities, lobby,
pool, restaurants, grounds, sports facilities, and spas. Information concerning
the location of the property relative to area attractions and airport facilities
is also provided.

The HotelView(R) Library is marketed to hotels and resorts and serves travel
agencies, travel sites on the Internet and, ultimately, potential travelers. By
inclusion in the HotelView(R) Library, a hotel reaches thousands of travel
agents and potential guests through a convenient, low cost, and effective
method. The Company's HotelView(R) Library was initially distributed on laser
discs to its travel agency network. Following the closing of the Company's
initial public offering, the HotelView(R) Library is now also available in
full-motion video on the Internet at the Company's HotelView(R) website,
www.hotelview.com. As high speed access, such as cable modems and digital
satellite technology, becomes more readily available, the Company plans to
distribute its client vignettes through its single video storage location (file
server) which will be connected to the Internet and linked to all major travel
related websites. In this arrangement, Internet users visiting a travel website,
such as TravelWeb(TM) (www.travelweb.com) can make airline reservations, select
a hotel, see the HotelView(R) video and book the hotel without leaving the
travel services' website.

Additional Libraries Under Development

Management of the Company believes that as a result of the rapid development of
high speed data transmission capability (such as cable modems) as well as new
high speed file transfer technology which permits consumers to view on-line
information in full-motion, full-color video, an increasing demand for high
quality video content will continue to grow. To fill this perceived demand for
additional information, the Company is developing the infrastructure to add
additional libraries to present the advertising for a broader range of travel
related products and services as well as libraries of products and services for
other non-travel industries, such as health, education, and durable and
non-durable goods. While the Company anticipates most of these future libraries
will be available over the Internet, some, such as CareView(TM) may be better
suited to distribution through non-public, member only electronic data delivery
meda much the same as the travel agency distribution channel in use by
HotelView(R). Accordingly, like HotelView(R), these additional libraries will
not be collectively dependent on the technological architecture of a single
media service (Internet, On-line service, ITV, Intranet, DVD, etc) but will be
developed in order to take advantage of the medium or media that maximize the
delivery of the message to the targeted audience.

                                    3                               3

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The following are examples of the libraries already in concept and/or final
development stages by the Company.

*        CareView(TM)--A library of nursing homes, adult care centers and
         rehabilitation facilities.

*        CondoView(TM)--A collection of time share residences in connection
         with other marketing partners in the interval ownership business.

*        CruiseView(TM)--A visual database of top cruise ships and port-of-call
         facilities.

*        AttractionView(TM)--A visual database of attractions and services
         located at destinations where the Company has hotel properties included
         in the HotelView(R) Library. It is anticipated the Company will also
         earn additional revenues through prospects viewing the featured
         attractions which are presented via the Company's media distribution
         channels.

*        AdventureView(TM)--A collection of advertisements of exotic and
         exciting client-managed vacations. Vignettes of unusual activities
         ranging from rafting trips, safaris, mountain climbing, diving
         expeditions and even hiking through the Amazon.

*        CampView(TM)--A collection of video tours of seasonal camps, sports
         camps and other types of campgrounds for children and adults.

*        ConventionView(TM)--A visual library of convention centers and meeting
         facilities.

*        CampusView--A visual database of American colleges and universities.
         Concise vignettes include tours of the school's facilities, special
         program descriptions, and campus social life.

*        Health & FitnessView(TM)--A collection of specific exercise videos. The
         viewer can customize a workout by watching and selecting only the
         exercise segments they need.

*        MedicalView(TM)--Medical treatments are presented in-depth, in
         easy-to-understand, comforting terms by the physician advertising his
         or her speciality.

*        ProductView(TM)--A collection of advertisements of consumer products
         presented in a format enabling consumers to review each item's features
         and capabilities in more depth than available via traditional media.
         Selected manufacturer's entire lines, in every model and color, will be
         shown. Full-motion instructional information can be included on
         products requiring assembly.

Based upon other opportunities which may present themselves to the Company, the
Company may seek acquisitions of additional content or technology to facilitate
the expansion of the Company's operations. In conjunction therewith, the Company
is presently negotiating the terms and conditions

                                                                       
                                        4

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which will permit it to acquire all rights and interests in four software
products from Digital Criteria Search Technologies, Inc., together with certain
computer hardware and software related thereto, as well as exclusive worldwide
marketing rights for a multi-media dating service and a multi-media job
opportunity library to be available on the Internet. The Company has not
executed a definitive agreement for this acquisition and there are no assurances
the negotiations will result in terms and conditions which will permit the
Company to consummate this transaction.

Videotaping and Production

The Company's libraries are edited and produced in house. The on-site filming of
a property is handled by an international network of independent professional
camera crews in 40 states as well as Europe and Asia, cultivated over 13 years
by the Company's co-founder, Alan Saperstein, who was Executive
Director/Entertainment Division of NFL Films where he was responsible for
supervision of all projects, budgets, screens and staffing. See " Item 9.
Directors, Executive Officers, Promoters and Control Persons; Compliance with
Section 16(a) of the Exchange Act." These crews have been trained by the Company
to tape properties in an efficient and low cost manner. Once a site is filmed,
the Company's in-house production staff has been trained to create vignettes
from these tapes which conform in content, quality and duration.

The Company uses Media 100, a state-of-the-art non-linear video editing system,
as well as a digital sound editing system fully operational in its facility.
During the past few years, the advanced technology available through the use of
digital editing systems, such as the Company's, have significantly reduced both
the cost of the equipment as well as the post-production costs associated with
creating full-motion videos such as those which form the basis of the Company's
libraries. According to literature provided by Media 100 Inc. (Nasdaq: MDEA),
systems similar to those used by the Company are operated by nearly 10,000 users
worldwide, including a wide variety of companies such as Microsoft, Apple
Computers, Hanna Barbera, BBC, CBS, CNN, MTV, TCI Cable, Time Warner Cable,
Smithsonian Institution, DuPont, General Motors, Sega Enterprises, Warren Miller
Entertainment, the Central Intelligence Agency and the Los Alamos National Lab.
Editing equipment once costing close to $1 million per editing suite is being
replaced by digital editing systems such as those in use by the Company for less
than $200,000. According to management and based upon their previous experience,
the sophistication of the digital technology is reducing the post-production
time for similar type videos from as much as four days to as little as four
hours.

Acquisition of Internet Service Provider (ISP)

In November 1997 the Company acquired certain assets of Armigeron Information
Services, Inc. ("Armigeron"), including web servers with supporting network
infrastructure, and context sensitive web technology which allows for highly
complex interactive web site development. The purchase of the technology and
equipment enables the Company to operate its own proprietary Internet web sites
for use in distributing its full-motion videos via the Internet. The Company
also acquired

                                                                        
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Armigeron's Internet service business which included 31 clients for whom
Armigeron acted as a web site host, generating annual revenues of approximately
$100,000. In conjunction with the asset purchase, the Company and the principals
of Armigeron entered into a software development agreement for the development
of software which will allow the Company's full-motion video libraries to be
accessed and viewed on the Internet and provide for interactive links with other
related web sites that will offer access to and from the Company's sites as well
as various levels of access to the Company's video libraries for strategic
partners and clients. As a result of this agreement, since November 1997 end
users and end user suppliers (i.e., travel agents) have been able to access the
Company's HotelView(R) web site, www.hotelview.com, and benefit from the depth
of information presented in the full-motion video advertisement of the
participating hotels and resorts.

Strategic Alliances and General Marketing Strategies

Strategic Alliances

One of the Company's marketing strategies is to consider strategic alliances
with entities or groups which can assist the Company in its effort to develop
client contacts and media mechanisms for delivery of client messages to targeted
consumer markets. In this regard, the Company has already successfully
established relationships with prominent companies in the travel industry to
assist the Company in the marketing and distribution of the Hotel View(R)
Library to clients and end users.

The Company has entered into a two year agreement (the "Pegasus Agreement") with
Pegasus Systems, Inc. ("Pegasus") whereby Pegasus has agreed to use its
reasonable efforts to market, endorse and promote the Hotel View(R) Library to
each of its hotel clients and to obtain executed agreements from hotels for
inclusion in the Hotel View(R) Library. Pegasus has further agreed to link and
supply data for the all hotels within the HotelView(R) Library, thus enabling
the visitors to the Travelweb website (www.travelweb.com) to view HotelView
video vignettes . Pegasus will receive a commission of 20% on sales made for
initial contracts and 10% for renewals of contracts obtained by its efforts. The
Pegasus Agreement also gives Pegasus an option to purchase up to 331/3% of the
outstanding capital stock of HVC (currently a wholly-owned subsidiary of the
Company) based upon the number of contracts between Pegasus member-based hotels
and the Company. Specifically: at such time as the Company has entered into at
least 1,000 initial contracts with Pegasus member hotels, Pegasus has the option
to purchase up to 5% of HVC for $500,000 in cash; at such time as the Company
has entered into at least an additional 1,500 initial contracts with Pegasus
member hotels (for a total of 2,500 initial contracts) Pegasus has the option to
purchase up to an additional 10% of HVC for $1 million in cash; at such time as
the Company has entered into at least an additional 2,500 initial contracts with
Pegasus member hotels (for a total of 5,000 initial contracts), Pegasus has the
option to purchase up to an additional 10% of the Company for $1 million in
cash; and, finally, at such time as the Company has entered into at least an
additional 5,000 initial contracts with Pegasus member hotels (for a total of
10,000 initial contracts), then Pegasus has the option to purchase up to an
additional 8.3% of the Company for $833,333 in cash. Assuming all performance
levels were met by Pegasus, it would have the option to acquire 331/3% of HVC
for a total cash payment of $3,333,333.

                                                                        
                                        6

<PAGE>
Marketing

The Company continues to target and establish relationships with major hotel
chains, travel agencies, travel associations and travel bureaus throughout the
United States, Canada, Europe and the Caribbean. While the Company has
established relationships with a number of the larger hotel chains such as
Hilton, Hyatt and SuperClubs, the Company is also focusing on lesser-known, but
high quality hotels and resorts who may not have the name recognition of the
larger chains and, thus, are often overlooked by travelers and travel
professionals. The immediate focus will be on three to five star hotels in the
top 25 leisure destinations to initiate market combination and control market
share of the video component on the Internet in these key global markets. HVC is
also in current negotiations with several of the largest and most well-known
reservation and representation companies in the industry to expedite the
solicitation process. There can be no assurances, however, that such
negotiations will lead to contracts or agreements. On the agency distribution
side, the Company has already established relationships with agencies that are
part of a number of the major consortiums, including American Express(R), VTS(R)
and Carlson(R), and will continue to focus and expand this "pull" side of the
business.

The Company has created a promotional video that demonstrates the operation of
the Hotel View(R) system. The video contains examples of hotel vignettes and
shows the benefits of the system to the traveler, travel agent and hotel and
resort operators. The video, along with various brochures, has been sent to the
targeted travel agencies representing a significant portion of the leisure
travel business. The Company has installed over 200 systems in travel agencies
nationwide to promote the program and test its operation.

To date, signed contracts with hotels for inclusion in the Hotel View(R) Library
have primarily resulted from the Company's direct sales group. Regional sales
representatives have canvassed primary U.S., Caribbean, and European leisure
destinations for the initial library. The Company has developed brochures,
marketing collaterals and demo videos to support the sales efforts.

The Company presently intends to utilize the HotelView(R) strategy in rolling
out various products and services in other vertical markets, i.e., the Company
will own the content and utilize a variety of media to distribute the
information to the targeted consumer market. The additional libraries will also
benefit from strategic alliances the Company will seek to form with partners in
these markets.

Competition

The Company is engaged in the business of presenting information (i.e.,
conveying messages) in a consolidated and organized fashion over non-traditional
media. As such, the Company must first educate clients and consumers that a need
exists, then educate them that the Company's products

                                                                    
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satisfy the need. As such, the Company may compete directly or indirectly with
many companies, a number of which are larger, better capitalized, more
established and have greater access to resources necessary to produce a
competitive advantage. However, the Company believes, but there can be no
assurances that, there are no competitors who have or are developing products
using the same strategic plan as the Company's, although many of the elements of
the Company's products may exist in different formats. Although clients may
undertake the production of a video advertisement of their product as a
marketing tool, the Company knows of no other company that is assembling and
distributing a library similar to the Company's Hotel View(R) Library.

Employees

The Company currently has 14 full-time employees and 2 part-time employee, of
which three are in executive management. The Company believes its employee
relations are good.

Item 2.           Description of Property

In September 1997 following its initial public offering, the Company purchased
from an unaffiliated third party a 25,000 square foot facility in Pompano Beach,
Florida which now serves as the Company's corporate headquarters and houses all
of its production, marketing and distribution activities. 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. At maturity on March
31, 1999, the amount due under the mortgage, which is held by an unaffiliated
financial institution, will be approximately $963,000. See Item 13(a), Exhibit
10(ii) hereto.

Item 3.           Legal Proceedings

The Company is not a party to any material legal proceedings.

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

None.
                                     PART II

Item 5.           Market for Common Equity and Related Stockholder Matters

On July 30, 1997 the Company's Common Stock and Warrants began trading on The
Nasdaq SmallCap Market(TM) ("Nasdaq") under the symbols VDAT and VDATW,
respectively. Prior to such date, there had been no market for the Company's
Common Stock. The following table sets forth the high and low closing or sale
prices of the Company's Common Stock for each quarter since the stock began
trading on July 30, 1997, and for the interim period from October 1, 1997
through December 31, 1997. The following quotations are over-the-market
quotations and, accordingly, reflect inter-


                                       8
<PAGE>

dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
                                                           Closing Price
                                                        -------------------
                                                        High             Low
                                                        ----             ---
July 30, 1997 through September 30, 1997                $6.00            $5.50
October 1, 1997 through December 31, 1997               $5.63            $2.38

On January 12, 1998, the closing bid price for the Common Stock was $2.25. As of
December 31, 1997 the approximate number of record holders of the Company's
Common Stock was 151. Management of the Company, however, believes there to be
in excess of 800 beneficial holders of the Company's Common Stock.

Dividend Policy

The Company has not paid any cash dividends on its Common Stock since its
inception. The Company presently intends to retain future earnings, if any, to
finance the expansion of its business and does not anticipate that any cash
dividends will be paid in the foreseeable future. Future dividend policy will
depend on the Company's earnings, capital requirements, expansion plans,
financial condition and other relevant factors.

Item 6.           Management's Discussion and Analysis or Plan of Operation

The following discussion regarding the Company and its business and operations
contains "forward- looking statements" within the meaning of Private Securities
Litigation Reform Act 1995. 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.


PLAN OF OPERATIONS

The Company exited the development stage during the fourth quarter of fiscal
1996. During its development stage, the Company produced the initial installment
of vignettes included in the HotelView(R) Library. In November, 1997, Volume 2
of the HotelView(R) Library was distributed to the approximately 200 travel
agencies nationwide which comprise the equipped HotelView travel agency network.
Implementation of the Company's plan of operation is being funded by Company's
receipt of the net proceeds of approximately $4.8 million from its initial
public offering ("IPO") which closed August 4, 1997.

The Company's current plan of operation includes continuing to expand its base
of travel agencies as well as to establish the distribution of the HotelView(R)
Library over the Internet. The Company intends to continue the development of
additional content and, during the first quarter of fiscal 1998, acquired the
hardware and software necessary to link the Company to the Internet and provide
links to other websites. This was made possible by the acquisition of certain
assets of Armigeron Information Services, Inc. (see Description of Business -
Acquisition of Internet Service Provider) as well as two software development
agreements that were entered into by the Company; one with Advanced Media
Developers, Inc. and one with Cyber Publishing, Inc. The HotelView website
became operational in November, 1997 and management anticipates the Company's
Internet links to other websites will become operational during the second
quarter of fiscal 1998.

The Company further intends to complete the development of certain additional
content libraries for travel related topics as well as other topics of general
consumer interest. During the twelve month period following the date of the
Company's IPO, management intends to expand the HotelView(R) Library as well as
complete initial volumes of the CondoView(TM), AttractionView(TM) and
CareView(TM) libraries. The Company, however, does not anticipate reporting
significant revenues from any of these libraries during fiscal 1998.

Revenues of $193,038 were recognized during fiscal 1997 based on the redemption
of room credit balances due to bookings made by the HotelView travel agency
network and tape sales to hotels. Interest expense increased approximately
$1,015,115 in fiscal 1997 versus 1996 primarily due to the non-cash amortization
of discounts on certain notes payable. Selling, general and administrative
expenses increased approximately 173% in fiscal 1997 versus 1996 and included
$690,000 of deferred costs which were charged to expense during fiscal 1997.
Both of these items are non-recurring and the Company does not anticipate
significant interest expense during fiscal year 1998. Through December 1997, the
Company offered hotels and resorts the option of either paying the contract in
full in cash at the time of execution or paying a cash deposit, with the balance
of the contract price due under a performance based arrangement. Because there
is no time limitation when or if the balance of the fees will become billable,
the Company cannot predict when these funds will be available. Although
management believes it will

<PAGE>

continue to bill and collect amounts due under this performance based
arrangement during fiscal 1998, any long term delay in or inability to collect
these amounts may have an adverse effect on the Company. Hotel contract renewals
are being billed on a cash basis and from January 1998 forward, the Company will
charge hotels and resorts an annual fee, payable in cash, for their inclusion in
the library as well as a charge per Internet site visit by potential hotel
guests.

The Company has currently budgeted additional dollars to be spent on advertising
the HotelView(R) Library to the trade (including hotel chains, travel agencies
and travel industry associations) as well as to consumers to expand product
awareness and will finalize development of its advertising campaign in the
second quarter of fiscal 1998.

The Company will seek to increase the number of hotels participating in its
library through joint ventures and alliances with travel service companies
having the ability to penetrate the corporate hotel chain and management company
markets. The immediate focus will be on highly regarded hotels in the top 25
leisure markets. On January 14,1997, the Company entered into a written
agreement with Pegasus Systems, Inc., whereby Pegasus, which provides
transaction processing services between travel agents, airline reservation
systems and to hotels, resorts and hotel chains, has agreed to use its
reasonable efforts to market, endorse and promote the HotelView(R) Library to
each of its hotel clients and to obtain executed agreements from hotels for
inclusion in the Library. Pegasus has further agreed to link and supply data for
the hotels in the current HotelView(R) Library to their website, Travelweb, one
of the world's premiere travel websites, thus enabling Travelweb visitors to
view HotelView video vignettes. Discussions with several other companies are
expected to, though there can be no assurance, result in marketing and sales
agreements during fiscal 1998.


LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1997, the Company had $2,345,988 of working capital. From
inception through September 30, 1997, the Company's capital has been provided by
the sale of equity and debt instruments and shareholder loans. These funds have
been used for production, compensation, acquisition of equipment and general
operations of the Company during the development stage and the subsequent year.
Since the closing of its IPO in August, 1997, the Company has spent
approximately $1,040,000 on the repayment of debt and related interests,
$550,000 towards the purchase of its new building and related improvements in
Pompano Beach, Florida, and $160,000 on the acquisition of equipment and
technology, including an Internet file server.

Based on the level of success of its HotelView(R) Library and expected
introduction of additional libraries that the Company believes can be used in
conjunction with most forms of media now conceived or developed in the future,
the Company anticipates the acquisition of additional capital equipment
including editing facilities and an additional


<PAGE>

Internet file server with significant capacity and memory to store a larger
library of video files. The Company has sufficient working capital to provide
for such acquisitions.

The Company has sufficient working capital to fund its current plan of
operations for the balance of fiscal 1998. In the event however, management
should determine to either accelerate their business plan or seek additional
acquisitions, the Company may be required to raise additional capital . There
are no assurances that such capital will be available to the Company on terms
and conditions it finds acceptable.

                                                                  
                                        9

<PAGE>




Item 7.           Financial Statements

The Company's financial statements are contained in pages F-2 through F-18 as
follows.


                                                                       
 
                                       10

<PAGE>


                    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                       Page
                                                                      ---------
Reports of Independent Certified Public Accountants                    F - 2

Consolidated Balance Sheets as of September 30, 1997 and 1996          F - 4

Consolidated Statements of Operations
       for the Years Ended Septembe 30, 1997 and 1996                  F - 5

Consolidated Statements of Stockholders Equity
       for the Years Ended Septembe 30, 1997 and 1996                  F - 6

Consolidated Statements of Cash Flows
       for the Years Ended Septembe 30, 1997 and 1996                  F - 7

Notes to the Financial Statements                                      F - 9



<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
    of Visual Data Corporation and Subsidiaries:

We have audited the accompanying consolidated balance sheet of Visual Data
Corporation and Subsidiaries as of September 30, 1997, and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
year 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides 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, 1997, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

ARTHUR ANDERSEN LLP

Miami, Florida,
    December 10, 1997.

                                       F-2

<PAGE>
                REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT


To the Board of Directors and Stockholders
Visual Data Corporation and Subsidiary
Boca Raton, Florida


We have audited the accompanying consolidated balance sheet of Visual Data
Corporation and Subsidiary as of September 30, 1996 and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Visual Data
Corporation and Subsidiary as of September 30, 1996, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.


GOLDSTEIN LEWIN & CO.


Boca Raton, Florida
December 4, 1996

                                      F-3
<PAGE>


                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                    September 30,
                                                                           ---------------------------------
                             ASSETS                                           1997                   1996
                                                                           -----------           -----------
<S>                                                                        <C>                   <C>        
Current assets
  Cash and cash equivalents                                                $ 2,554,180           $   158,377
  Accounts receivable, net of allowance for
     doubtful accounts of $20,898 and $14,056 at                                62,695                42,168
            September 30, 1997 and 1996, respectively
  Prepaid expenses                                                              60,677                32,145
  Stockholder receivables                                                         --                  50,000
  Other receivables                                                             34,337                  --
                                                                           -----------           -----------
     Total current assets                                                    2,711,889               282,690
                                                                           -----------           -----------

Property, plant and equipment, net                                           1,861,191               272,393
                                                                           -----------           -----------

Other assets
  Financing costs, net of accumulated
     amortization of $51,000 at September 30, 1996                                --                 102,000
  Security deposits and other                                                   14,812                22,068
  Deferred offering costs                                                         --                 650,000
                                                                           -----------           -----------
       Total other assets                                                       14,812               774,068
                                                                           -----------           -----------

                  Total assets                                             $ 4,587,892           $ 1,329,151
                                                                           ===========           ===========


                            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses                                    $   215,985           $   229,043
  Deferred revenue                                                              94,295                70,500
  Deferred rent                                                                   --                   1,772
  Loans payable - stockholders                                                    --                  50,000
  Current portion of obligations under capital leases                           21,856                50,293
  Current portion of mortgage note payable                                      33,765                  --
                                                                           -----------           -----------
     Total current liabilities                                                 365,901               401,608
                                                                           -----------           -----------

Convertible notes payable, net of discount                                        --                 680,000
Obligations under capital leases,
    net of current portion                                                       8,652                58,142
Mortgage note payable, net of current amount                                   966,235                  --   
                                                                           -----------           -----------
                                                                               974,887               738,142
                                                                           -----------           -----------
Commitments and contingencies (Note 8)

Stockholders' equity:
  Preferred stock, Par Value $.0001 Per Share;
     Authorized 5,000,000 Shares;
     Series A Convertible Preferred Stock, Designated 650,000 shares
     Issued and Outstanding 185,716 at September 30, 1996                         --                      19
     Series B Convertible Preferred Stock, Designated 1,000,00 shares
     Issued and Outstanding 113,750 at September 30, 1996                         --                      11
  Common Stock, Par Value $.0001 Per Share;
     Authorized 20,000,000 Shares; Issued and Outstanding
                3,037,971 and 1,166,275 shares at September 30, 1997               304                   117
                and 1996, respectively
  Additional Paid -  in capital                                              9,401,789             2,770,281
  Accumulated deficit                                                       (6,154,989)           (2,581,027)
                                                                           -----------           -----------
     Total stockholders' equity                                              3,247,104               189,401
                                                                           -----------           -----------

     Total liabilities and stockholders' equity                            $ 4,587,892           $ 1,329,151
                                                                           ===========           ===========
</TABLE>


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


                                      F-4

<PAGE>

                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDED SEPTEMBER 30,

<TABLE>
<CAPTION>

                                                                      1997                    1996
                                                                  -----------             -----------
<S>                                                               <C>                     <C>        

Revenue                                                           $   193,038             $   111,719
                                                                  -----------             -----------


Operating Costs
       Selling, general and administrative                          1,441,173                 527,692
       Compensation and related costs                                 789,165                 985,441
       Production                                                      83,357                 121,239
       Occupancy                                                       82,373                  43,875
       Professional fees                                              352,853                 298,815
                                                                  -----------             -----------
                                                                    2,748,921               1,977,062
                                                                  -----------             -----------

       Loss from operations                                        (2,555,883)             (1,865,343)
                                                                  -----------             -----------

Other Income (Expense)
       Interest income                                                 30,403                     753
       Interest expense                                            (1,042,227)                (27,112)
       Loss on write - off of property, plant and equipment            (6,255)                   --
                                                                  -----------             -----------
          Total other income (expense)                             (1,018,079)                (26,359)
                                                                  -----------             -----------

       Net loss                                                   $(3,573,962)             (1,891,702)
                                                                  ===========             ===========

       Weighted Average Shares of Common Stock Outstanding          2,509,249               1,405,228
                                                                  ===========             ===========

       Loss Per Share                                             $     (1.42)            $     (1.35)
                                                                  ===========             ===========

</TABLE>



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


                                      F-5



<PAGE>
                    VISUAL DATA CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                 FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1996

<TABLE>
<CAPTION>

                                                  Series A                     Series B                                   
                                                Preferred Stock              Preferred Stock             Common Stock               
                                         -------------------------    ------------------------    -----------------------   
                                            Shares         Amount       Shares         Amount        Shares      Amount    
                                         -----------   -----------    ----------   -----------    ----------  -----------  

<S>                                      <C>           <C>           <C>           <C>            <C>        <C>

Balance, September 30, 1995                  185,716        $ 19            --          $ --         873,306         $ 87
Issuance for services and incentives            --            --            --            --         224,219           23
Issuance of shares for cash                     --            --         113,750          11            --             --   
Issuance of shares for cash                     --            --            --            --          15,625            2
Discount on convertible notes                   --            --            --            --          53,125            5
Compensation expense on stock
   option grants                                --            --            --            --            --             --   
Net loss                                        --            --            --            --            --             --   
                                         -----------   -----------   -----------   -----------   -----------  -----------
Balance, September 30, 1996                  185,716          19         113,750          11       1,166,275          117
Issuance of shares for
   services and incentives                      --            --            --            --          22,500            2
Issuance of shares for cash                     --            --            --            --       1,000,000          100
Conversion of Preferred Stock               (185,716)        (19)       (113,750)        (11)        374,329           37
Conversion of convertible notes                 --            --            --            --         212,500           21
Exercise of warrants                            --            --            --            --          59,688            6
Exercise of options                             --            --            --            --           2,679            1
Issuance of shares for interest expense         --            --            --            --         200,000           20
Issuance of publicly traded warrants            --            --            --            --            --             --   
Net loss                                        --            --            --            --            --             --   
                                         -----------   -----------   -----------   -----------   -----------  -----------

Balance September 30, 1997                      --          $ --            --          $ --       3,037,971         $304
                                         ===========   ===========   ===========   ===========   ===========  ===========



<CAPTION>
                                          Additional
                                           Paid in      Accumulated
                                           Capital        Deficit
                                         -----------    -----------

<S>                                      <C>           <C>

Balance, September 30, 1995              $   986,815   $  (689,325)
Issuance for services and incentives         724,240          --
Issuance of shares for cash                  454,989          --
Issuance of shares for cash                   49,998          --
Discount on convertible notes                169,995          --
Compensation expense on stock
   option grants                             384,244          --
Net loss                                        --      (1,891,702)
                                         -----------   -----------
Balance, September 30, 1996                2,770,281    (2,581,027)
Issuance of shares for
   services and incentives                   114,500          --
Issuance of shares for cash                4,759,571          --
Conversion of Preferred Stock                    (19)         --
Conversion of convertible notes              584,354          --
Exercise of warrants                          86,682          --
Exercise of options                            3,749          --
Issuance of shares for interest expense      969,521          --
Issuance of publicly traded warrants         113,150          --
Net loss                                        --      (3,573,962)
                                         -----------   -----------

Balance September 30, 1997               $ 9,401,789   $(6,154,989)
                                         ===========   ===========

</TABLE>

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

                                       F-6

<PAGE>

                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED SEPTEMBER 30,

<TABLE>
<CAPTION>
                                                                          1997               1996
                                                                     ----------------   ----------------
<S>                                                                <C>                 <C>    
CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                                       $      (3,573,962)   $    (1,891,702)
       Adjustments to reconcile net loss to net
          cash used in operating activities
          Depreciation and amortization                                       64,378             84,809
          Write off of fixed assets                                            6,255            ---
          Provision for doubtful accounts                                     53,166            ---
          Write off of deferred offering costs                               650,000            ---
          Issuance of shares for:
             Interest expense                                                969,531            ---
             Services and incentives                                         114,500            458,507
          Changes in assets and liabilities:
             Accounts receivable                                             (73,693)           (42,168)
             Prepaid expenses                                                (28,532)           (23,308)
             Other receivables                                               (34,337)           ---
             Stockholder receivables                                          50,000            (50,000)
             Financing costs                                                 102,000            ---
             Accounts payable and accrued expenses                           (13,058)           171,673
             Deferred revenue                                                 23,795             63,500
             Deferred rent                                                    (1,772)            (3,038)
                                                                     ----------------   ----------------
                   Net cash used in operating activities                  (1,691,729)        (1,231,727)
                                                                     ----------------   ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of land and building                                         (1,542,949)           ---
    Acquisition of property and equipment                                   (116,288)           (82,053)
    Increase (decrease) in deposits                                            7,062             (2,632)
                                                                     ----------------   ----------------
                   Net cash used in investing activities                 (1,652,175)           (84,685)
                                                                     ----------------   ----------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from mortgage note payable                                    1,000,000            ---
    Payments on capital leases                                               (77,927)           (37,889)
    Issuance of convertible notes                                           ----                850,000
    Conversion of convertible notes                                          (95,622)           ---
    Financing costs                                                         ----               (153,000)
    Issuance of preferred stock                                             ----                455,000
    Issuance of common stock                                               4,759,671            ---
    Proceeds from sale of warrants                                           113,150            ---
    Proceeds from exercise of warrants & options                              90,435             61,000
    Proceeds from stockholder loans                                        1,000,000            100,000
    Payments on stockholder loans                                         (1,050,000)           (50,000)
                                                                     ----------------   ----------------
                   Net cash provided by financing activities               5,739,707          1,225,111
                                                                     ----------------   ----------------

                   Net increase (decrease) in cash                                              
                   and cash equivalents                                    2,395,803            (91,301)
Cash and cash equivalents, beginning of year                                 158,377            249,678
                                                                     ----------------   ----------------
Cash and cash equivalents, end of year                             $       2,554,180  $         158,377
                                                                     ================   ================
</TABLE>

                                       F-7
<PAGE>


                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED SEPTEMBER 30,
                                   (continued)
<TABLE>
<CAPTION>

                                                                          1997               1996
                                                                     ----------------   ----------------
<S>                                                                <C>                  <C>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
    INFORMATION:
    Cash payments for interest                                     $          72,696   $         24,635
                                                                     ================   ================

SUPPLEMENTAL SCHEDULE OF NON-CASH
    INVESTING AND FINANCING ACTIVITIES:
    Issuance of common shares for:
       Subscription receivable                                     $         ---       $         50,000
       Services and incentives                                               114,500          1,108,507
                                                                     ----------------   ----------------
                                                                   $         114,500   $      1,158,507
                                                                     ================   ================

    Property and equipment financed by capital lease               $          45,813   $         30,068
                                                                     ================   ================
</TABLE>

   The accompanying notes are an integral part of these financial statements
                                 
                                       F-8

<PAGE>

                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS


NOTE 1:  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Visual Data Corporation ("VDC" or the "Company") was incorporated on May 17,
1993, and in September 1996 commenced its principal operations.

The Company is in the business of producing, marketing and distributing video
information libraries intended for use by the general public through various
distribution channels, primarily in the United States. These distribution
channels include the Internet and Interactive television ("ITV"). The
information libraries contain short concise vignettes on various topics such as
travel, medicine, nursing homes and timeshare properties. Through September 30,
1997, the Company has been engaged in the production and sale of video vignettes
to hotels and their distribution via laser disc players installed in travel
agencies throughout the United States.

On August 4, 1997, the Company closed an initial public offering of 1,000,000
shares of its common stock at $6.00 per share and 1,000,000 redeemable warrants
at $.10 per warrant. In addition, the Company granted the underwriters the
option to purchase up to 150,000 additional warrants to cover over-allotments.
During September 1997, the underwriters exercised the over-allotment option and
purchased an additional 150,000 warrants.

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of VDC
and its wholly-owned subsidiaries, HotelView Corporation ("HVC")and CareView
Corporation ("CVC"). All significant intercompany accounts and transactions have
been eliminated in consolidation.

Revenue Recognition

Upon the completion and distribution of the video vignettes to the travel
agents, the non-refundable deposit portion of the contract price is recognized
as revenue. The remaining balance due under the terms of the contracts are
earned and recorded as revenue as rooms are booked by the HVC travel agency
network.

                                      F-9

<PAGE>


                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS


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

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.

Deferred Offering Costs

Prior to September 30, 1996 the Company had incurred $650,000 of costs related
to a proposed public offering of the Company's common stock. Accordingly, such
amounts are reflected as deferred offering costs in the accompanying September
30, 1996 consolidated balance sheet. In accordance with generally accepted
accounting principles, as these costs did not benefit the ultimately consummated
IPO, they were charged to expense during the fiscal year ended September 30,
1997. These costs are included as a component of selling, general and
administrative expense in the accompanying consolidated statement of operations.

Accounting Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain 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.


                                      F-10

<PAGE>


                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS


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

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. Future changes in such valuation allowance would be included in the
provision for deferred income taxes in the period of change.

Earnings Per Share

For the year ended September 30, 1997, 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.

Pursuant to Securities and Exchange Commission Staff Accounting Bulletins,
common and common equivalent shares issued at prices below the initial public
offering price during the twelve month period prior to a public offering are
required to be included in the calculation of earnings or loss per share as if
they were outstanding for all periods presented prior to the offering (using the
treasury stock method and the public offering price)even if antidilutive.
Accordingly, the weighted average number of shares of common stock outstanding
for the years ended September 30, 1997 and 1996 have been adjusted to reflect
the impact of such additional common and common equivalent shares issued at
prices below the initial public offering price.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses, loans payable, notes payable and obligations under
capital leases approximate fair value due to the short maturity of the
instruments and the provision for what management believes to be adequate
reserves for potential losses.


                                      F-11


<PAGE>


                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS


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

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.

Reclassifications

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

NOTE 2:  PROPERTY, PLANT AND EQUIPMENT

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

                                       SEPTEMBER 30,      LIVES
                                    1997         1996    (YEARS)
                                    ----         ----    -------

  Building                       $1,542,948   $     -        39
  Furniture and Fixtures             26,029      16,814      7
  Equipment                         170,525      91,272      5
  Editing Equipment                 169,305     168,305    3-10
  Computer Equipment                 55,918      26,608    3-5
  Leasehold Improvements                -        13,532      7
                                 ----------   ---------

                                  1,964,725     316,531

  Less:  Accumulated Depreciation
          and Amortization         (103,534)    (44,138)
                                 ----------    --------

                                 $1,861,191   $ 272,393
                                 ==========   =========



NOTE 3:  STOCKHOLDER RECEIVABLES

Stockholder receivables at September 30, 1996 consisted of $50,000 from one of
the Company's stockholders for the purchase of stock. This amount was received
in cash during the fiscal year ended September 30, 1997.


                                      F-12


<PAGE>


                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS


NOTE 4:  CAPITAL LEASE OBLIGATIONS

The Company acquired certain equipment under leases which are accounted for as
capital leases. The following is a schedule, by year, of the future minimum
lease payments under the capital leases together with the present value of the
net minimum lease payments.

                                        SEPTEMBER 30,

                                     1997          1996
                                     ----          ----

Year Ending September 30, 1997    $    -          $74,192
                          1998      27,403         54,418
                          1999       9,134            -
                     Thereafter        -              -
                                  --------       --------
Total Minimum Lease Payments        36,537        128,610
Less:Amount Representing Interest  ( 6,029)      ( 20,175)
                                  --------       --------
Present Value of Minimum Lease

 Payments                           30,508        108,435
     Current Portion               (21,856)       (50,293)
                                  --------       --------

     Long-Term Portion            $  8,652       $ 58,142
                                  ========       ========

Equipment held under capital leases has a book value of $37,174 and $193,748 as
of September 30, 1997 and 1996, respectively. Accumulated depreciation related
to this equipment is $8,639 and $27,582 as of September 30, 1997 and 1996,
respectively.

NOTE 5:  CONVERTIBLE NOTES

In July and August 1996, the Company issued units ("1996 Units") consisting of
convertible notes ("1996 Notes") aggregating $850,000 and common stock
aggregating 53,125 shares. Each 1996 Unit consisted of a $50,000 note and 3,125
shares of common stock. The 1996 Notes were unsecured and bore interest at 10%.
Each 1996 Note was convertible into 12,500 additional shares of common stock at
$4.00 per share, subject to the conversion provisions of the 1996 Notes and each
1996 Note matured on January 31, 1997 unless a registration statement was filed.
If such statement had been filed, the maturity date became the earlier of two
weeks after the effective date or July 31, 1997. The convertible 1996 Notes were
recorded at a discount of $170,000, reflecting an average per share price of
$3.20 for all shares issued or to be issued upon conversion.

All convertible notes were converted into common stock in October, 1996.
Accordingly, such notes are classified as long-term debt on the balance sheet as
of September 30, 1996.


                                      F-13

<PAGE>


                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS


NOTE 6:  NOTES PAYABLE - SHAREHOLDERS

Certain stockholders made loans to the Company for working capital purposes.
These loans had an interest rate of one half of 1% per month and were to be
repaid from 50% of the monthly cash received from hotels, with a maturity of six
months from the date of the notes. These shareholders also received 25,000
warrants to purchase common stock at $1.40 for a four year period, expiring
March 4, 2000.

These notes were repaid during the fiscal year ended September 30, 1997.

NOTE 7: NOTES PAYABLE

During the fiscal year ended September 30, 1997, the Company, in exchange for
$1,000,000 in cash, issued units ("1997 Units") consisting of notes payable in
the aggregate amount of $1,000,000 ("1997 Notes") and common stock aggregating
200,000 shares. The 1997 Notes were unsecured, with an interest rate of 10% and
were due the earlier of one month after the effective date of the Company's IPO
or one year from the date of the note. The 1997 Notes were repaid during August
1997. Non - cash interest expense in the amount of $969,531 was recorded during
the fiscal year ended September 30, 1997.

NOTE 8:  COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leased their operating facility in Boca Raton, Florida under a
twenty-four month lease which expired in April, 1997. This lease provided for a
monthly base rent of $3,525. In conjunction with the lease, the Company paid
back rent in the amount of $1,494 per month for 24 months ending April, 1997.
From May 1, 1997 through September 5, 1997 the Company leased these facilities
on a month-to-month basis at the same rate. At September 30, 1996, the back
rent payable aggregated $10,118 and is included in accounts payable. No such
back rent is payable at September 30, 1997.

Rent expense for the years ended September 30, 1997 and 1996 aggregated $72,161
and $42,071, respectively.

                                      F-14


<PAGE>


                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS


NOTE 8:  COMMITMENTS AND CONTINGENCIES(continued)

Employment Contracts

Effective October 1996, and as amended during the fiscal year ended September
30, 1997, the Company entered into three year, renewable employment contracts
with the President and Vice President. The contracts provide for annual
compensation of $125,000 each subject to an annual increase of 10%. The
contracts also provide for an annual bonus in cash or stock equal to 3% of the
Company's increase in earnings as defined therein, an annual granting of stock
options for 125,000 shares of common stock to each at $6.00 per share for an
exercise period of five years from the grant date and other fringe benefits. In
the event of the death of the Company's principal officers, the contracts call
for payments of all compensation for a period of one year. In the event of the
disability of the Company's principal officers, the contracts call for payments
of all compensation for a period of no less than six months. The contracts also
include severance agreements which create certain liabilities in the event of
termination without cause aggregating three times the executives annual
compensation plus certain fringes.

Effective August 15, 1997 the Company entered into an employment agreement with
its Chief Operating Officer ("COO"). The term of this agreement is for one year
from the effective date of the agreement and is renewable for successive one
year terms unless terminated. The annual salary under the agreement is $125,000,
which amount will be adjusted annually based upon performance. Also the COO is
eligible to receive a bonus based upon the achievement of agreed upon goals.

Additionally, beginning on September 30, 1998 ("Initial Grant Date") and on each
anniversary of the Initial Grant Date, the COO shall receive 50,000 options to
purchase common stock at an exercise price of $6 per share exercisable for a
period of five years. The contract also provides for the payment of three
months' base salary in the event the COO is terminated without cause.

Effective October 1997, the Company, modified its employment contracts with the
President, Vice President and COO. The contracts now provide for an annual bonus
in cash or stock equal to 2% of the Company's increase in earnings as defined
therein.

                                      F-15

<PAGE>


                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS



NOTE 8:  COMMITMENTS AND CONTINGENCIES(continued)

Underwriter Warrants
--------------------

In connection with the IPO, the Company granted to the underwriters rights to
purchase from the Company up to 100,000 shares of common stock and 100,000
warrants. They are initially exercisable at a price of 140% of the initial
public offering price per share of common stock (or the exercise price per share
for the warrants) for a period of four years commencing one year from the
effective date of the registration statement and are restricted from sale,
transfer and assignment for a specified period. Such warrants continue to be
outstanding at September 30, 1997.

NOTE 9:  CAPITAL STOCK

Preferred Stock
---------------

Series A convertible preferred stock was convertible at the holder's option into
2 shares of common stock. Accordingly, at September 30, 1996, 232,141 shares of
common stock was reserved for this contingency. Each share of the Series A
preferred stock had two votes per share and votes with the common stock. Holders
of Series A preferred stock were entitled to a liquidation distribution of $3.50
per share before any distributions were made on any other capital stock of the
Company. The shares had no dividend rights.


                                      F-16

<PAGE>

                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS


Preferred Stock (continued)
---------------------------

Series B convertible preferred stock was convertible at the holder's option into
2 shares of common stock. Accordingly, at September 30, 1996, 142,188 shares of
common stock were reserved for this contingency. Each share of the Series B
preferred stock had two votes per share and votes with the common stock. Holders
of Series B preferred stock were entitled to a liquidation distribution of $4.00
per share after the Series A shareholders had been paid their liquidation
distribution and before any other distributions were made on any other capital
stock of the Company. The shares had no dividend rights.

During the fiscal year ended September 30, 1997 all of the Company's Series A
preferred stock and Series B preferred stock was converted into 374,329 shares
of common stock.

Common Stock
------------

Common stock has one vote per share for the election of directors and all other
matters submitted to a vote of stockholders. Shares of common stock do not have
cumulative voting, preemptive, redemption or conversion rights.

The Company, at September 30, 1997 and 1996, had reserved 1,033,645 shares of
common stock for issuance relating to unexpired options and warrants.

Reverse Stock Split
-------------------

The financial statements have been retroactively adjusted to reflect the effect
of a 1 to 1.6 reverse stock split which occurred in July 1997.

Stock Warrants
--------------

In conjunction with the issuance of debentures in 1994, the Company issued
warrants redeemable for a total of 11,161 shares of common stock at $1.40 per
share. The warrants are exercisable any time and expire at varying dates between
November 1996 and September 1998.

As part of the Company's private placement offerings for the purchase of common
and preferred shares, the Company issued warrants redeemable for common stock.
The warrants outstanding at September 30, 1997 are for a total of 200,925 shares
of common stock, have an exercise price ranging from $1.40 to $6.60 per share
and expire between December 1997 and July 2002, as follows:


               Exercise                       Number of
               Price                          Shares
               -------                        ---------
                $1.40                         12,390
                 2.80                          8,334
                 6.00                         90,000
                 6.60                         90,201
                                              ------
                                             200,925
                                             =======

Employee Stock Option Plan

In October, 1996, the Board of Directors approved the 1996 Stock Option Plan
(the "Plan") which was approved by a majority of the shareholders at a meeting
on February 9, 1997. The Company has reserved 200,000 shares of common stock for
the grant of qualified incentive options or non-qualified options to employees
and directors of the Company under the Plan. Option prices must provide for an
exercise price of not less than 100% of the fair market value of the common
stock on the date the options are granted unless the eligible employee owns more
than 10% of the Company's common stock for which the exercise price must be at
least 110% of such fair market value. To date, no options have been granted 
under the Plan.

                                      F-17

<PAGE>


                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS


NOTE 11:  INCOME TAXES

The deficit accumulated during the development stage (inception through August
31, 1996) of approximately $2,025,000 is capitalized for income tax purposes as
accumulated start-up costs, and is being amortized over a 60 month period
beginning September 1, 1996. The Company has a net operating loss carryforward
as of September 30, 1997 of approximately $3,7000,000 for federal income tax
purposes, inclusive of the amortization of the start-up-costs, which expires
September 30, 2001. The Company has recorded a valuation allowance of
approximately $3,700,000 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.

NOTE 12: RECENTLY ISSUED ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
128") is effective for fiscal years ending after December 15, 1997. This
statement specifies the computation, presentation and disclosure requirements
for earnings per share for entities with publicly held common stock or potential
common stock. The Company will adopt SFAS 128 in the first quarter of fiscal
1998 and based on current circumstances does not believe the effect of adoption
will be material.


                                      F-18

<PAGE>




                    VISUAL DATA CORPORATION AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS

NOTE 13: STRATEGIC ALLIANCE

The Company has entered into a two year agreement (the "Pegasus Agreement") with
Pegasus Systems, Inc. ("Pegasus") whereby Pegasus has agreed to assist in the
marketing and promotion of the HotelView(R) Library to each of its hotel
clients. Pegasus will receive a commission of 20% on sales made for initial
contracts and 10% for renewals of contracts obtained by its efforts. The Pegasus
Agreement also gives Pegasus an option to purchase up to 33 1/3% of the
outstanding capital stock of HVC based upon the number of contracts between
Pegasus member-based hotels and the Company. Specifically, at such time as HVC
has entered into at least 1,000 initial contracts with Pegasus member hotels,
Pegasus has the option to purchase up to 5% of HVC for $500,000 in cash; at such
time as the number of initial contracts increases, Pegasus has the option to
purchase additional ownership percentages of HVC. Assuming all performance
levels were met by Pegasus, for a total of 10,000 contracts, it would have the
option to acquire 33 1/3 % of HVC for a total cash payment of $3,333,333.

<PAGE>

NOTE 14:  STOCK OPTIONS

The Company adopted Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation," ("SFAS 123") in the fiscal year ended
1997.  As permitted under SFAS 123, the Company has elected to continue using
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," in accounting for employee stock options.

The Company has granted options to purchase 632,720 shares of Common Stock to
consultants, management and directors. Detail of option activity is as follows:

<TABLE>
<CAPTION>

                             Number          Weighted Average           Number          Weighted Average
                           of Shares          Exercise Price          of Shares          Exercise Price
-------------------------------------------------------------------------------------------------------------
                                       1997                                       1996
-------------------------------------------------------------------------------------------------------------
<S>                        <C>                <C>                     <C>                <C>
Balance, beginning of      282,720            $  5.95                 8,260              $  4.24
year
Granted during year        350,000               6.00                 274,460               6.00
Terminated during year         -                 -                        -                 -
Forfeited during year          -                 -                        -                 -
Balance, end of year       632,720            $  5.98                 282,720            $  5.95
Exercisable at end of      532,720            $  5.97                 282,720            $  5.95
year
</TABLE>


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

<TABLE>
<CAPTION>
                                                                                  Year Ended
-------------------------------------------------------------------------------------------------------------
                                                                           1997                 1996
-------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                   <C>
Pro forma results of operations:
Net loss                                                           $ 4,515,052           $ 1,891,702
Net loss per share                                                 $ 1.80                $ 1.35
</TABLE>

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
5.0%, risk-free interest rate of 7.0%, expected dividends of $0 and expected
terms of 5 years.

In the fiscal year ended 1996, the Company recorded compensation expense of
$384,244 related to 274,460 share options granted to two executives of the
Company with an exercise price below the estimated market price on the date of
grant. 

<PAGE>


NOTE 15: SUBSEQUENT EVENT

In November, 1997 the Company completed the acquisition of certain assets of
Armigeron Information Services, Inc. ("Armigeron"), including web servers with
supporting network infrastructure and context sensitive web technology which
allows for highly complex, interactive web site development. The Company also
acquired Armigeron's Internet service business which currently includes thirty
one clients for whom Armigeron acted as a web site host, generating annual
revenues of approximately $100,000. In conjunction with the asset purchase, the
Company and the principals of Armigeron entered into a software development
agreement for the development of software that will allow the Company's full
motion video libraries to be accessed and viewed via the Internet.


                                      F-19


<PAGE>


Item 8.           Changes in and Disagreements With Accountants on Accounting 
                  and Financial Disclosure

On October 1, 1997 Goldstein Lewin & Co. was dismissed as the Company's
independent auditor. Goldstein Lewin & Co. had served as the Company's
independent auditor since 1994. During the period Goldstein Lewin & Co. was
engaged as the Company's independent auditor there were no disagreements with
Goldstein Lewin & Co. on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure. No accountants'
report on the financial statements of the Company issued by Goldstein Lewin &
Co. contained an adverse opinion or a disclaimer of opinion, or was qualified or
modified as to uncertainty, audit scope or accounting principles. The Company
requested that Goldstein Lewin & Co. furnish it with a letter addressed to the
Securities and Exchange Commission stating whether or not it agreed with the
statements made by the Company in response to Item 4 of the Report on Form 8-K
filed by the Company with the Securities and Exchange Commission on October 1,
1997 and, if not, stating the respects in which he did not agree. The Company
filed a copy of such letter from Goldstein Lewin & Co. confirming its agreement
to the Company's statements as an exhibit to the Form 8-K Report filed with the
Securities and Exchange Commission on October 1, 1997. See Item 13(a), Exhibit
16 hereto.

On October 1, 1997 the Company engaged Arthur Andersen, LLP as its independent
accountant for the fiscal year ended September 30, 1997. The decision to change
accountants was approved by the Company's Board of Directors.


                                                                     
                                       11

<PAGE>




                                    PART III

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act

The following table sets forth the names, ages and positions held with respect
to each Director and Executive Officer of the Company.


         Name              Age                Position
         ----              ---                --------

Randy S. Selman            41        President, Chief Executive Officer, acting
                                     Chief Financial Officer, Director

Alan M. Saperstein         38        Senior Vice President, Secretary, Director

David E. Goodman           39        Executive Vice President; Chief Operating
                                     Officer

Ben Swirsky                55        Director

Brian K. Service           50        Director

Eric Jacobs                50        Director

Randy S. Selman. Since the Company's inception in May 1993, Mr. Selman has
served as the Company's Chief Executive Officer, President, and a director and
since September 1996, its acting Chief Financial Officer. From March 1985
through May 1993, Mr. Selman was Chairman of the Board, President and Chief
Executive Officer of SK Technologies Corporation (SKTC-Nasdaq SmallCap Market),
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 the company's 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 the Company's Vice President,
Secretary and a director since its inception in May 1993. 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 which 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.


                                                                       
                                       12

<PAGE>


David E. Goodman. Mr. Goodman has been Executive Vice President and Chief
Operating Officer of the Company since August 1997. From January 1997 until
joining the Company, Mr. Goodman was founder, President and Chief Executive
Officer of Edenark Group, Inc., an advisory services and development management
firm specializing in start-ups, reorganizations, mergers and acquisitions with a
geographic focus on the southeast United States, Mexico, Central America and the
Caribbean Basin. From March 1988 until December 1996 Mr. Goodman was with
LaSalle Partners and as a partner in the firm he held various senior line
positions including Managing Director of the firm's McCoy Group joint venture
and Equity Vice President/Group Manager of Florida and Latin America for the
firm's Management Services Group. From 1985 until 1988, Mr. Goodman was Manager
of New Product Development for the Beecham Cosmetics subsidiary of Beecham plc.
where he managed the marketing and advertising strategies for consumer products
in 36 countries. From 1981 until 1985 Mr. Goodman was an Account Executive with
the Leo Burnett and J. Walter Thompson advertising agencies and developed
advertising and marketing strategies for clients such as Green Giant, Keebler,
Kimberly-Clark, Kraft and Pillsbury. Mr. Goodman received a MBA from the Indiana
University School of Business and a B.S. with honors from Indiana State
University.

Ben Swirsky. Mr. Swirsky has been a member of the Board of Directors since July
1997 and serves on the Audit Committee of the Board of Directors. Since June
1992, Mr. Swirsky has been the 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 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.

Brian K. Service. Mr. Service has been a member of the Board of Directors of the
Company since July 1997 and serves on the Audit Committee of the Board of
Directors. Mr. Service is currently an international business consultant with
clients in North and South America, the United Kingdom, Asia, Australia and New
Zealand. From October 1992 to October 1994 Mr. Service was CEO and Managing
Director of Salmond Smith Biolad, a New Zealand publicly-traded company. From
October 1986 to October 1992 he was CEO and Executive Chairman of Milk Products
Holding (North America) Inc., a wholly-owned subsidiary of the New Zealand Dairy
Board in Santa Rosa California, which was the sole marketer of New Zealand dairy
products in North America.

Eric Jacobs. Mr. Jacobs has been a member of the Board of Directors since July
1997. From March 1996 until August 1997, Mr. Jacobs was Vice President and
General Manager of the Company's wholly owned subsidiary, HotelView(R)
Corporation and thereafter he has served as Vice President and General Manager
of the Company's wholly owned subsidiary, CondoView Corporation. Since 1976, Mr.
Jacobs has served as the Chairman of the Miami Beach Visitor and Convention
Authority and since September 1993 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, President, and General
Manager of the Tarleton Hotel, Miami Beach, Florida.


                                       13

<PAGE>



There is no family relationship between any of the executive officers and
directors. Each director is elected at the Company's annual meeting of
shareholders and holds office until the next annual meeting of shareholders, or
until his successor is elected and qualified. At present, the Company's 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.
Officers are elected annually by the Board of Directors and their terms of
office are at the discretion of the Board. The officers of the Company devote
full time to the business of the Company.

Key Employees

While not executive officers of the Company, the following individuals are
expected to make a significant contribution to the business of the Company.

David B. Chestler. Mr. Chestler, 34, has been General Manager of the Company's
HotelView Corporation subsidiary since November 1997. From 1989 until joining
the Company, Mr. Chestler was employed at Utell International, the world's
largest hotel reservation, sales and marketing company, serving as Regional
Director for the Eastern Region and as Vice President of Sales & Development,
North America, where he was responsible for $400 million in revenue from a
portfolio of 6,500 hotels, including 400 in the Caribbean, comprised of chains
and independents.

Jeff Hill. Mr. Hill, 46, has been General Manager of the Company's CareView
Corporation subsidiary since December 1997. From July 1996 until joining the
Company, Mr. Hill performed certain private consulting in the health industry.
Prior thereto, Mr. Hill held various executive management positions with
Emergency Consultants, a physician practice management group (January 1994 until
June 1996); SurgiCare America, an operator of ambulatory surgery centers
(September 1991 to January 1993); and CarePlus, a provider of home health
services (September 1984 to September 1991). Mr. Hill received a B.B.A. in
Marketing from Florida International University.

Directors' Compensation

Directors who are not employees of the Company 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. Pursuant to the Company's 1996 Stock Option
Plan (the "Plan"), directors who are not 10% shareholders or employees may
receive a grant of Common Stock and non-qualified stock options as described
under the Plan. In the alternative, at the option of the Company and subject to
the terms of the Underwriting Agreement, the Company may grant outside directors
fair market value options outside of the Plan.

On July 30, 1997, the Company granted to each of Messrs. Service and Swirsky
options outside of

                                       14

<PAGE>



the Plan to each acquire 50,000 shares of the Company's Common Stock at an
exercise price of $6.00 per share, being the fair market value on the date of
grant. The term of these options is five years from the date of grant, with
25,000 options vesting on the first anniversary of the date of grant, 12,500
vesting on the second anniversary of the date of grant and the remaining 12,500
vesting on the third anniversary of the date of grant. Once vested, the options
remain exercisable until the expiration date thereof. In the event, however,
either Mr. Service or Mr. Swirsky are not members of the Company's Board of
Directors at the time the options vest, they will no longer be entitled to
receive such options.

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, 1997 and
Forms 5 and amendments thereto furnished to the Company with respect to the
fiscal year ended September 30, 1997, 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, 1997, other than Mr. David Goodman, the Company's
Executive Vice President and Chief Operating Officer. Mr. Goodman joined the
Company in August 1997 and through an administrative error he was tardy in
filing his initial Form 3, which such form has been filed as of the date hereof.

Item 10.          Executive Compensation

Cash Compensation

The following table summarizes all compensation accrued by the Company in each
of the last three fiscal years for the Company's Chief Executive Officer and
each other executive officers serving as such whose annual compensation exceeded
$100,000. Directors of the Company do not receive compensation for serving in
such capacity, other than non-employee directors who receive $1,000 for each
meeting attended.

<TABLE>
<CAPTION>
                                                                                Long - Term
                                    Annual Compensation                         Compensation Awards
                                    -------------------                         -------------------

Name and                                             Other Annual      Restricted   Options                All Other
Principal Position         Year     Salary    Bonus  Compensation       Stk Awds    SARs(#)      LTIP      Compen.
<S>                        <C>     <C>        <C>    <C>               <C>          <C>          <C>       <C>

Randy S. Selman,
President, Chief           1997     $123,350   -0-   $2,100.00(1)      -0-              -0-      -0-          -0-
Executive Officer,         1996     $ 83,000   -0-   $2,092.84(2)      -0-          137,230      -0-          -0-
acting Chief               1995     $ 43,333   -0-   $2,174.83(3)      -0-              -0-      -0-          -0-
 Financial Officer, Director

Alan Saperstein,
</TABLE>
                                                                       
                                       15


<PAGE>

<TABLE>
<S>                       <C>       <C>       <C>    <C>               <C>         <C>          <C>          <C>

Senior Vice President,     1997     $123,350   -0-   $5,430.00(4)      -0-              -0-      -0-          -0-
Secretary and              1996      $83,000   -0-   $5,927.19(5)      -0-          137,230      -0-          -0-
Director                   1995      $43,333   -0-   $5,951.73(6)      -0-              -0-      -0-          -0-

David E. Goodman,(7)
Executive Vice             1997      $19,130   -0-   $        -0-      -0-               -0-     -0-          -0-
President and              1996      $   -0-   -0-   $        -0-      -0-               -0-     -0-          -0-
Chief Operating            1995      $   -0-   -0-   $        -0-      -0-               -0-     -0-          -0-
</TABLE>

-----------------------------
<TABLE>
<S>     <C>    
(1)      Includes $672.00 for disability insurance and $1,428.00 for medical insurance.
(2)      Includes $568.70 for disability insurance and $1,524.14 for medical insurance.
(3)      Includes $616.00 for disability insurance and $1,558.83 for medical insurance.
(4)      Includes $424.00 for disability insurance and $5,006.00 for medical insurance.
(5)      Includes $424.08 for disability insurance and $5,503.11 for medical insurance.
(6)      Includes $388.74 for disability insurance and $5,562.99 for medical insurance.
(7)      Mr. Goodman joined the Company in August , 1997.
</TABLE>

Employment Agreements

In October 1996 the Company entered into employment agreements (the
"Agreements") with Randy S. Selman, the Company's Chief Executive Officer,
President, acting Chief Financial Officer, and a director, and with Alan
Saperstein, the Company's Vice President, Secretary, and a director. The
Agreements between the Company and each of Messrs. Selman and Saperstein, as
amended on April 30, 1997, is substantially similar. The term of the Agreements
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 $125,000, 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 the Company's earnings before income tax,
depreciation and amortization (EBITDA) on that portion of EBITDA that has
increased over the previous year's EBITDA. Additionally, on January 1 of each
year Messrs. Selman and Saperstein shall receive options (which contain certain
anti-dilution provisions) to purchase 125,000 shares of Common Stock at $6.00
per share for an exercise period of five years from the Grant Date.

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

                                                                      
                                       16

<PAGE>


Under the terms of the Agreements, the Company may terminate the employment of
Mr. Selman or Mr. Saperstein either with or without cause. If the Agreement is
terminated by the Company without good cause, or by Mr. Selman or Mr.
Saperstein, as applicable, the Company 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 the Company) 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.

In August 1997 the Company entered into an employment agreement with David E.
Goodman, the Company's Executive Vice President and Chief Operating Officer. The
terms of this one year agreement are substantially similar to the Agreements
between the Company and each of Messrs. Selman and Saperstein. Mr. Goodman is
currently paid a base salary of $137,500, which such amount will be increased by
10% each year. Mr. Goodman is also eligible to receive an annual bonus in cash
or stock equal to 2% of EBITDA that has increased over the previous years
EBITDA. Mr. Goodman was also granted options to acquire up to 250,000 shares of
the Company's Common Stock at an exercise price of $6.00, which such options
vest as follows: 50,000 shares vested on September 30, 1997; an additional
50,000 shares vested on January 1, 1998, and thereafter an additional 50,000
shares will vest on each of September 30, 1998, September 30, 1999 and September
30, 2000. Should the Company meet certain undisclosed financial targets, the
vesting date of the September 30, 1999 and 2000 options shall be accelerated to
September 30, 1998. The employment agreement between the Company and Mr. Goodman
provides for participation in any profit-sharing or retirement plan and in other
employee benefits applicable to employees and executive officers of the Company,
including automobile allowances and fringe benefits commensurate with the duties
and responsibilities of Mr. Goodman. Under the terms of the agreement, either
party may terminate the agreement without cause upon 30 days prior written
notice, wherein Mr. Goodman would be entitled to receive three months' salary as
severance. Finally, the agreement, which provides for termination with cause, or
upon Mr. Goodman's death or disability, also contains a two year non-compete and
certain non-disclosure provisions.

Incentive and Nonqualifed Stock Option Plan

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



                                                                       
                                       17

<PAGE>


The Company has reserved an aggregate of 200,000 shares of Common Stock for
issuance pursuant to options granted under the Plan ("Plan Options"). As of the
date hereof, no options have been granted under the Plan. 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.

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 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 the Company's 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 the 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 the Company's 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 the Company's
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 the Company and its
subsidiaries will be eligible to receive Non-Qualified Options under the Plan.
Only officers, directors and employees of the Company who are employed by the
Company or by any subsidiary thereof are eligible to receive Incentive Options.

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 an employee of the Company but is a member of the
Company's Board of Directors and his service as a Director is terminated for any
reason, other than death or disability, the Plan Option granted to him shall
lapse to the extent unexercised on the earlier of the expiration date or 30 days
following the date of termination. If the optionee dies during the term 

                                                                       
                                       18

<PAGE>



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
therefor (except in either case in the event of adjustments due to changes in
the Company's 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 theretofore have been 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

As of December 31, 1997 there are 3,082,150 shares of Common Stock issued and
outstanding. The following table sets forth, as of the close of business on
January 1, 1998, (a) the name, address and number of shares of each person known
by the Company to be the beneficial owner of more than 5% of any class of each
the Company's voting securities and (b) the number of shares of each class of
voting securities owned by each director and all officers and directors as a
group, together with their respective percentage holdings of such shares. Unless
otherwise indicated, the address for each person is 1291 SW 29 Avenue, Pompano
Beach, FL 33069.

Name and                           Amount of                        Percentage
Address of                         Beneficial                       of
of Beneficial Owner                Ownership of Stock               Class (4)
-------------------                ------------------               ---------

Randy S. Selman(1)                 368,640                           11.0%
Alan M. Saperstein(2)              388,512                           11.6%
David E. Goodman(3)                100,000                            3.1%
Ben Swirsky(4)                           0                           -
Brian K. Service(5)                      0                           -
Eric Jacobs                           4390                          (6)
All Officers and Directors
as a Group (six persons)
(1)(2)(3)(4)(5)                    861,542                          23.2%
--------------------------


                                                                     
                                       19

<PAGE>


(1)  Includes options to acquire an aggregate of 140,021 shares of Common Stock
     and options to acquire an aggregate of 125,000 shares of Common Stock at an
     exercise price of $6.00 per share. See Item. 10. Executive Compensation -
     Employment Agreements and Item 12. Certain Relationships and Related
     Transactions.

(2)  Includes options to acquire an aggregate of 138,570 shares of Common Stock
     per share and options to acquire an aggregate of 125,000 shares of Common
     Stock at an exercise price of $6.00 per share. See Item. 10. Executive
     Compensation - Employment Agreements and Item 12. Certain Relationships and
     Related Transactions.

(3)  Includes options to acquire an aggregate of 100,000 shares of Common Stock
     at an exercise price of $6.00 per share but excludes an additional 150,000
     options, exercisable at $6.00 per share, which have not yet vested. See
     Item 10. Executive Compensation - Employment Agreements.

(4)  Excludes options to acquire an aggregate of 50,000 shares of Common Stock
     at an exercise price of $6.00 per share granted in August 1997 immediately
     following the Company's initial public offering. See Item 9. Directors,
     Executive Officers, Promoters and Control Persons; Compliance with Section
     16(a) of the Exchange Act - Directors Compensation.

(5)  Excludes options to acquire an aggregate of 50,000 shares of Common Stock
     at an exercise price of $6.00 per share granted in August 1997 immediately
     following the Company's initial public offering. See Item 9. Directors,
     Executive Officers, Promoters and Control Persons; Compliance with Section
     16(a) of the Exchange Act - Directors Compensation.

(6) Represents less than 1%.

Item 12.          Certain Relationships and Related Transactions

In February 1996 the Company granted each of Messrs. Selman and Saperstein,
executive officers and directors of the Company, options to acquire 137,230
shares of the Company's common stock at an exercise price of $.00016 per share
as a bonus.

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(TM) SmallCap
Market, the Company is subject to compliance with certain corporate governance
standards adopted by The Nasdaq(TM) Stock Market, Inc.


                                                                        
                                       20

<PAGE>


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

3(ii)               Bylaws of Visual Data Corporation are incorporated
                    herein by reference to Exhibit 3(iii) to the Registration
                    Statement on Form SB- 2, File No. 333-18819, as amended, as
                    declared effective by the Securities and Exchange Commission
                    on July 30, 1997

10(i)               Employment Agreement by and between Visual Data Corporation
                    and David E. Goodman, as amended

10(ii)              Contract For Purchase and Sale of Real Property, as amended.

16                  Letter on change of certifying accountant is hereby
                    incorporated by reference to Exhibit 1 to the Report on Form
                    8-K as filed with the Securities and Exchange Commission by
                    Visual Data Corporation on October 1, 1997.

21                  Subsidiaries of the registrant

27                  Financial Data Schedule

(b)      Reports on Form 8-K

         None.


                                                                        
                                       21

<PAGE>




                                   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, Acting Chief 
                                           Financial 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.


Signature                                Title                 Date
---------                                -----                 ----

/s/ Randy S. Selman             Director, President,           January 15, 1998
----------------------------    Chief Executive Officer,                       
    Randy S. Selman             Acting Chief Financial   
                                Officer                  
                                

/s/ Alan M. Saperstein          Director, Senior Vice          January 15, 1998
----------------------------    President and Secretary           
    Alan M. Saperstein          

/s/ David E. Goodman            Executive Vice President       January 15, 1998
----------------------------    and Chief Operating Officer   
    David E. Goodman           

/s/ Ben Swirsky                 Director                       January 15, 1998
----------------------------                                    

/s/ Brian K. Service            Director                       January 15, 1998
---------------------------- 
    Brian K. Service                   

/s/ Eric Jacobs                 Director                       January 15, 1998
----------------------------                                     
    Eric Jacobs

                                                                        
                                       22

<PAGE>



                                  EXHIBIT INDEX
                                  -------------

Exhibit No.                         Description
-----------                         -----------

3(ii)               Bylaws of Visual Data Corporation are incorporated herein by
                    reference to Exhibit 3(iii) to the Registration Statement on
                    Form SB-2, File No. 333- 18819, as amended, as declared
                    effective by the Securities and Exchange Commission on July
                    30, 1997

10(i)               Employment Agreement by and between Visual Data Corporation
                    and David E. Goodman, as amended

10(ii)              Contract For Purchase and Sale of Real Property, as amended.

16                  Letter on change of certifying accountant is hereby
                    incorporated by reference to Exhibit 1 to the Report on Form
                    8-K as filed with the Securities and Exchange Commission by
                    Visual Data Corporation on October 1, 1997.

21                  Subsidiaries of the registrant

27                  Financial Data Schedule



                                                                       
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