<PAGE>   1
                     U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                  Form 10-KSB/A

                                 Amendment No. 3


(Mark One)

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

For the fiscal year ended September 30, 2000

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

         For the transition period from _______________ to _______________

         Commission file number 000-22849

                             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)


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         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [x] No []

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

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

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

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

                       DOCUMENTS INCORPORATED BY REFERENCE

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

         Transitional Small Business Disclosure Form (check one):

         Yes [ ]  No [X]

         The discussion in this Annual Report on Form 10-KSB regarding the
Company and its business and operations includes "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1996. Such
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward-looking terminology such as "may,"
"expect," "anticipate," "estimate" or "continue" or the negative thereof or
other variations thereon or comparable terminology. The reader is cautioned that
all forward-looking statements are necessarily speculative and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in such forward looking statements. The
Company does not have a policy of updating or revising forward-looking
statements and thus it should not be assumed that silence by management of the
Company over time means that actual events are bearing out as estimated in such
forward looking statements.


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                                     PART I

Item 1.  DESCRIPTION OF BUSINESS

General

         Visual Data Corporation ("VDC" or the "Company"), organized in 1993, is
a full service provider of streaming-content applications, production technology
and media solutions. Using advanced technology and information solutions, we
provide a sensory-rich experience to businesses and consumers enabling them to
make superior decisions.

         Visual Data is comprised of four operating groups including:

                  Visual Data Travel Group (includes HotelView, ResortView,
                  etc..)

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

                  Visual Data Networking Solutions Group (Ednet)

                  Visual Data Financial Solutions Group (TheFIrstNews.com)

         Products and services provided by each of the groups are:

Visual Data Travel Group

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


         The Visual Data Travel Group, which represented approximately 6% of
our revenues for the year ended September 30, 2000, generates revenues from
production and distribution fees. We own or co-own virtually all the content we
create, which we believes provides us with desirable content for syndication.



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Visual Data On-line Broadcast and Production Group

         The Visual Data On-line Broadcast and Production group provides an
array of corporate-oriented web-based media services to the corporate market
including live audio and video webcasting, packaged corporate announcements, and
information distribution (Internet, broadcast TV and radio) for any business
entity, and can provide point-to-point audio and video transport worldwide.
Significant to this business division is our strategic partnership with the
Internet's leading press release service, PR Newswire, providing a global sales
force to promote the VDC broadband corporate services packages. Visual Data also
completed development of a suite of trade show related broadband media services
including a "Virtual Exhibit Hall", rich-video filming, key-note speaker
interview vignettes, and conference webcasting. All have the benefit of
extending the life of a trade show, a highly attractive proposition for show
producers and exhibitors alike. Our On-line Broadcast and Production Group,
which represented approximately 18% of our revenues for the year ended September
30, 2000, generates revenues through production and distribution fees.


Visual Data Networking Solutions Group

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

         Ednet manages a rapidly expanding global network of over 500 North
American Affiliates, and nearly 200 International Associates, in cities
throughout the United States, Canada, Mexico, Europe, and the Pacific Rim. Our
Network Solutions Group, which represented approximately 71% of our revenues for
the year ended September 30, 2000, generates revenues from the sales, rental and
installation of equipment, network usage, distribution fees and other related
fees.

Visual Data Financial Solutions Group

         Visual Data's Financial Solutions Group was established in November
1999 to further realize the potential for our audio content delivery capability.
TheFirstNews.com(TM) the initial service of the division was created to address
information needs for the financial sector. TheFirstNews.com(TM), is an Internet
based news service that delivers aggregated, up-to-the-minute corporate and
business live-audio and text content - in a constant stream throughout the
trading day. Patent pending preference technology allows the user to selectively
hear the stories for


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individual stocks and industry segments that they want to hear. TheFirstNews.com
brings the latest business information from the top corporate news sources--just
minutes after it is released - with no spin, slant or editorial angle.

         TheFirstNews.com affords investors and financial professionals
accessibility to timely, filtered financial and news information, including
press releases, Internet webcasts and teleconferences. Subscribers benefit from
VDC generated proprietary content and reported stories, improved programming,
additional news sources and trading tools. Our Financial Solutions Group, which
represented less than 1% of our revenues for the year ended September 30, 2000,
generates revenues from monthly subscription fees, revenue sharing arrangements
with affiliates, advertising fees and content licensing fees.


Sales and Marketing

         We use a variety of additional marketing methods, including our
internal sales force, to market our products and services. One key element of
our marketing strategy has been to enter into distribution agreements with
recognized leaders in each of the markets for our products and services. By
offering our products and services in conjunction with the distributors
products, we believe these distribution agreements enable us to take advantage
of the particular distributors' existing marketing programs, sales forces and
business relationships. Contracts with these distributors generally range from
one to two years. For the fiscal year ended September 30, 2000, revenues from
our agreements with PR Newswire have represented approximately 17% of our
revenues. Other than this agreement, no other agreement with a distributor has
represented more than 10% of our revenues during this period.

Our Products and Services

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

Visual Data Travel Group - Products and Services

         HotelView(R) - www.hotelview.com

         Our HotelView(R) library provides two to four minute multimedia video
tours that give the viewer a detailed look at the hotel's guestrooms, grounds,
meeting space,


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recreational facilities, dining venues and other amenities. It also includes a
map showing the hotel's location relative to area attractions and airports. The
video tour can be accessed through the participating hotel's own Website,
HotelView's Website at www.hotelview.com, and hundreds of other Websites.


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

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

         ResortView(R) -- www.resortview.com

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

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

         AttractionView(TM) -- www.attractionview.com

         Many vacation planners need more than just information about the
accommodations, and AttractionView(TM) has been designed as a natural complement
to HotelView(R) and ResortView(R). AttractionView(TM) focuses on marrying the
neighboring attractions, such as amusement parks, theme parks, regional malls,
and the like to the


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HotelView(R) and ResortView(R) accommodations. Our existing library includes
information on the United Nations in New York, the Kennedy Space Center in
Florida and Busch Gardens in Tampa.

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

         DestinationView(TM) - www.destinationview.com

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

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

         GolfersView(TM) - www.golfersview.com

         In April 1999, Visual Data acquired the Internet broadcast rights to a
collection of golf-related videos including approximately 200 course tours,
instructional videos and golf-related attractions from an unaffiliated third
party. GolfersView(TM) provides full-motion tours of some of the world's most
renowned golf courses and resorts and related attractions, including Pebble
Beach, Innisbrook and the Golf Hall of Fame, as well as instructional videos and
golf products and services. We are also distributing these videos in conjunction
with our other travel related content on websites such as Yahoo Broadcast and
RoadRunner where they are aggregated by destination.

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

         CruiseView(TM) - www.cruiseview.com

         We have designed CruiseView(TM) to provide a detailed video tour of a
ship's guestrooms, common areas, recreational facilities and dining venues. As
the cruise market continues to grow, we believe cruise lines will need to
utilize a service like


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CruiseView(TM) to maximize their exposure to the travel agents of the world. We
intend to position CruiseView(TM) to take early advantage of these opportunities
as a result of our existing presence in the travel agency networks.

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

Visual Data On-line Broadcast and Production Group - Products and Services

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

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

         Services include:

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

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


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

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

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

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

Visual Data Networking Solutions Group - Products and Services

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

         During 1999, Ednet teamed with Telestream, a manufacturer of high
quality video delivery systems, to provide Ednet customers the means to send
high quality video via the Internet and other Internet Protocol (IP) based WANS.
Under the terms of


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the agreement, Ednet provides complete turnkey solution, bundling Telestream
video equipment with their network services. It is anticipated that this
relationship will provide Ednet's entertainment and advertising company clients
the ability to cost effectively transmit their daily shots of commercials,
special effects, graphics, storyboards and animated shots, thereby providing a
more dependable and faster delivery system than was previously available.

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

Visual Data Financial Solutions Group - Products and Services

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

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

Competition


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

         *        other websites, Internet portals and Internet broadcasters to
                  acquire and provide content to attract users;

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

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

         *        traditional media such as television, radio and print.

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

Government Regulation

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


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

Intellectual Property

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

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

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

Employees

         We currently have 88 full-time employees, of whom 44 are design,
production and technical personnel, 19 are sales and marketing personnel and 25
are general,


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administrative and executive management personnel. None of the employees are
covered by a collective bargaining agreement and our management considers
relations with employees and consultants to be good.

Item 2.  DESCRIPTION OF PROPERTY

         In September 1997, we purchased from an unaffiliated third party a
25,000 square foot facility in Pompano Beach, Florida which now serves as our
corporate headquarters and houses all of our production, marketing and
distribution activities, exclusive of our Ednet subsidiary. The aggregate
purchase price paid for the facility was $1,475,000, comprised of $475,000 in
cash and an 18-month first mortgage in the principal amount of $1,000,000,
bearing interest at the rate of 8.75% per annum, with 15-year amortization. In
March 1999 we refinanced this mortgage. The current mortgage in the principal
amount of $1,000,000, which is held by a bank, bears interest at 8.75% per annum
on a 15 year amortization, and the unpaid principal balance and any accrued
interest is due on September 30, 2002. We do not anticipate any difficulty in
refinancing the property prior to the due date of this mortgage.

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

Item 3.  LEGAL PROCEEDINGS

         On or about October 18, 1999, Peter Bisulca instituted an action
against Visual Data and Randy Selman, our Chief Executive Officer and President,
individually, entitled Bisulca v. Visual Data Corporation and Randy S. Selman,
Case No. CL 99-9971 AD, in the 15th Judicial Circuit in and for Palm Beach
County, Florida. The Complaint alleged breach of contract and conversion against
Visual Data and tortious interference with contract against Randy S. Selman,
seeking damages in excess of


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$2,000,000 in connection with a Consulting Agreement dated May 1, 1998,
allegedly entered into between Visual Data and Peter Bisulca. A Motion to
Dismiss was filed on behalf of Visual Data and Randy S. Selman, the hearing on
which was cancelled as a result of the Complaint being amended. The Complaint
was amended to no longer include Randy S. Selman as a defendant and the claim
for conversion was dropped. The Company intends to vigorously defend itself in
this action and, in the opinion of management, the ultimate outcome of this
matter will not have a material impact on the Company's financial position or
results of operations.

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

         None.

                                     PART II

Item 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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

<TABLE>
<CAPTION>
COMMON STOCK                                  HIGH               LOW
-------------                               --------          --------
<S>                                         <C>               <C>
         FISCAL YEAR 1999:
         First Quarter                      $  6.875          $  2.125
         Second Quarter                     $ 16.375          $  6.563
         Third Quarter                      $ 40.000          $ 15.750
         Fourth Quarter                     $ 20.438          $  8.063

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


                                       12
<PAGE>   15

<TABLE>
<CAPTION>
WARRANTS                                      HIGH              LOW
--------                                    --------          --------
<S>                                         <C>               <C>
         FISCAL YEAR 1999:
         First Quarter                      $  2.750          $  0.313
         Second Quarter                     $ 10.250          $  2.500
         Third Quarter                      $ 35.000          $  9.625
         Fourth Quarter                     $ 14.500          $  4.250

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

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

Recent Sales of Unregistered Securities

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

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

         In the event that the market price of our common shares shall be less
than $1.50 per share for 20 consecutive trading days, at our option all or a
portion of the Convertible Debentures are redeemable in an amount equal to 115%
of the Outstanding Principal Amount (as that term is defined in the Convertible
Debenture) plus all accrued but unpaid interest and all Delay Payments (as that
term is defined in


                                       13
<PAGE>   16
the Convertible Debenture), subject to certain conditions. Our redemption right
shall, if exercised, be irrevocable, may be exercised no more than twice and may
not be exercised again until three months after the first redemption closing
date.

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

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

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

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

         Commencing on the effective date of the registration statement
hereinafter described, Visual Data has the right to sell to the purchasers an
additional $1,000,000 principal amount of Convertible Debentures and five year
warrants to purchase an additional 50,000 shares of its common stock, the
conversion price and exercise price of which shall be identical to those
described above. In addition, if this first put right shall have occurred and
the Total Dollar Volume (as defined in the Purchase Agreement) shall have
exceeded $400,000, during the period commencing 90 days from the closing of the
first put right and ending on December 8, 2001, Visual Data shall have the right
to sell to the purchasers an additional $1,000,000 principal amount of
Convertible Debentures and five year warrants to purchase an additional 50,000
shares of its common stock, the conversion price and exercise price of which
shall be equal to the market price of Visual Data's common stock on the second
put closing date. In each of the first put right and second put right, the
obligation of the purchasers to purchase these securities is several and not
joint, and shall be allocated pro rata based upon the amount of Convertible
Debentures and Warrants purchased pursuant to the Purchase Agreement.

         In December 2000, TheFirstNews.Com ("TFN"), in a private offering, sold
Units to accredited investors under role 506, each Unit consisting of 10,000
shares of TFN common stock and 20,000 shares of TFN 10% redeemable, convertible
preferred stock. The purchase price for each unit was $50,000. TFN received net
proceeds of approximately $.8 million. TFN has the right to redeem each block of
20,000 shares of preferred stock included in each Unit, at any time from the
closing of the offering until


                                       14
<PAGE>   17
12 months thereafter, after providing the holder with 10 days notice, for
$50,000 per 20,000 shares of preferred stock plus accrued and unpaid interest.
In the event TFN fails to redeem the preferred stock within 12 months after the
closing of the offering, the preferred stock shall be automatically converted
into common stock at the conversion rate of 1 share of preferred stock for 1
share of common stock. In the event TFN fails to either file a registration
statement under the Securities Act of 1933, as amended, with the Securities and
Exchange Commission for the public offering of TFN's common stock within 12
months of the closing of the offering, or such registration statement has not
been declared effective within 6 months of its initial filing with the SEC, the
investors shall have the right to convert those shares of TFN common stock
received initially with the Units and those received upon conversion of the
preferred stock into shares of VDC common stock, at the conversion rate of one
share of TFN common stock for two shares of VDC common stock.

         Dividend Policy

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

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

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

Overview

General

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

         Visual Data is comprised of four operating groups including:

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


                                       15
<PAGE>   18

Plan of Operation


         Our current plan of operation includes continuing to expand the
marketing of our video libraries, the development and marketing of our new
on-line products and services and to continue to look for synergistic
acquisition opportunities. The continued implementation of our plan of operation
may require us to raise additional working capital. In recent months, as a
result of the poor market performance of many Internet-based companies and the
resulting decline in market prices of these companies, the number of sources for
working capital for Internet-based companies such as ours have significantly
decreased. To date, despite these poor market conditions, we have not
experienced any significant difficulty in identifying working capital sources
and securing the capital as needed. Like many companies within in our industry,
however, in the future we may experience difficulties in raising additional
capital or our revenues may otherwise be adversely affected by the slowing
economy. We are unable at this time, however, to predict what effect any of
these possible future events may have on our plan of operation.



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

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


                                       16
<PAGE>   19

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

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

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

         The Visual Data Financial Solutions Group (theFirstNews.com) began
operations in November 1999 as TheFirstNews.com(TM) to address the information
needs of the financial community. This subsidiary provides aggregated,
up-to-the-minute, information for the financial community. The initial offering
was a streaming-audio presentation of the content over the Internet.
TheFirstNews.com is currently developing a wireless delivery to provide the same
service to customers through cell phones and PDA's. During 2000, we relaunched
the service through a network of affiliates that has now grown to over 75. In
the coming year we intend to launch our wireless service providing a means for
investors to get news alerts on their cellular phones, PDA's and


                                       17
<PAGE>   20

any other wireless device capable of receiving short messages or audio voice
mail. We intend to further develop our affiliates both on-line and wireless and
to find new uses of our content and audio feeds and begin syndicating this
unique content.

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

Revenue Recognition

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

Provision for Doubtful Accounts and Inventory Obsolescence

         We have increased the provision for doubtful accounts and inventory
obsolescence as of September 30, 2000. The increase in the allowance for
doubtful accounts of approximately $240,000 was primarily the result of accounts
receivable from the CareView division which were significantly aged, as well as
one Ednet customer that had filed for bankruptcy. The increase in inventory
obsolescence was the result of a significant increase in inventory at Ednet. We
recorded an allowance for inventory obsolescence based on the estimated
realizable value of the inventory at September 30, 2000.


                                       18
<PAGE>   21

Results of Operations

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

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

<TABLE>
<CAPTION>
                                               PERCENTAGE OF REVENUE

                                              Year Ended September 30,
                                             --------------------------
                                               2000               1999
                                             -------            -------

<S>                                          <C>                <C>
Revenue                                        100.0%             100.0%

Cost of revenue                                119.7              110.4
                                             -------            -------
Operating expenses:
   General and administrative                  101.6              103.8

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

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

Loss from operations                          (213.7)            (172.7)

Other income (expense):
   Interest income                               9.7                4.9

   Rental income                                 1.4                1.7

   Loss on disposal of assets                   (0.2)              (0.3)

   Interest expense                             (2.2)              (2.4)

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

Net loss before taxes                         (194.2)            (160.1)

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

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

Revenue
</TABLE>


                                       19
<PAGE>   22

Visual

         Revenue increased by approximately $992,000, or 137%, to approximately
$1,715,000 for the fiscal year ended September 30, 2000 from approximately
$723,000 for the fiscal year ended September 30, 1999. This increase was
primarily attributable to an increase in webcasts and live audio and video
events from the Visual Data On-line Broadcast and Production Group ("OLBPG").
Revenue from OLBPG increased by approximately $738,000, or 216%, to
approximately $1,079,000 for the fiscal year ended September 30, 2000 from
approximately $341,000 for the fiscal year ended September 30, 1999. In
addition, the Company experienced an increase in the Visual Data Travel Group
("Travel Group") as a result of increased production and distribution of hotel
vignettes. Revenue from Travel Group increased by approximately $148,000, or
64%, to approximately $380,000 for the fiscal year ended September 30, 2000 from
approximately $232,000 for the fiscal year ended September 30, 1999. Revenue
from the CareView division increased by approximately $120,000, or 93%, to
approximately $250,000 for the fiscal year ended September 30, 2000 from
approximately $130,000 for the fiscal year ended September 30, 1999. In December
2000, we sold the CareView name as well as the CareView library to CuraSpan,
Inc.

Ednet

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

Cost of Revenue

Visual

         Cost of revenue increased by approximately $980,000, or 48%, to
approximately $3,008,000 for the fiscal year ended September 30, 2000 from
approximately $2,028,000 for the fiscal year ended September 30, 1999. Cost of
revenue as a percentage of revenue for the fiscal years ended September 30, 2000
and 1999 was approximately 175% and 281%, respectively, reflecting the impact of
an increase in revenues and additional cost of revenues to support current
revenues and future growth. The increase in cost of revenue was the result of an
increase in camera crews fees, information technology group salaries and
consultants and depreciation of assets


                                       20
<PAGE>   23

acquired to increase the capacity of operations.

Ednet

         Cost of revenue increased by approximately $1,118,000, or 39%, to
approximately $4,017,000 for the fiscal year ended September 30, 2000 from
approximately $2,899,000 for the fiscal year ended September 30, 1999. Cost of
revenue as a percentage of revenue for the fiscal years ended September 30, 2000
and 1999 was approximately 97% and 78%, respectively. The increase in cost of
revenue is the result of costs associated with "ClipMail" lines of business,
discounts to attract this business and the write down of slow moving "ClipMail"
inventory in an effort to more realistically assess its' value.

Operating Expenses

Visual

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

         Sales and marketing. Sales and marketing increased by approximately
$3,392,000, or approximately 250%, to approximately $4,750,000 for the fiscal
year ended September 30, 2000 from approximately $1,358,000 for the fiscal year
ended September 30, 1999. The increase in sales and marketing was primarily due
to an increase in compensation, travel and entertainment and advertising.
Compensation expense increased to approximately $1,565,000 during the fiscal
year ended September 30, 2000 from approximately $671,000 during the fiscal year
ended September 30, 1999. This increase was a result of the increase in sales
personnel during the year. The increase in travel and entertainment to
approximately $491,000 during the fiscal year ended September 30, 2000 from
approximately $231,000 during the fiscal year ended September 30, 1999 was a
result of the increase in sales personnel during the year. Advertising expenses
increased to approximately $1,263,000 during the fiscal year ended September 30,
2000 from approximately $521,000 during the fiscal year ended September 30, 1999
as a result of the Company

                                       21
<PAGE>   24

utilizing several marketing firms during the year. Subsequent to year-end, the
Company terminated the CareView employees, as a result of the sale to CuraSpan,
Inc. (see Note 12 to the Consolidated Financial Statements). In addition, the
Company has consolidated the advertising efforts for all of its divisions to
realize better economies, and, therefore, reduce advertising costs for Fiscal
Year Ended September 30, 2001.

Ednet

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

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

Other Income (Expense)

Visual

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


                                       22
<PAGE>   25

Ednet

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

Provision for Income Taxes

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

Liquidity and Capital Resources

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

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


                                       23
<PAGE>   26

sufficient to fund the Company's working capital, anticipated operating cash
flow deficit and capital expenditure requirements for at least the next 12
months.

         We evaluate our cash needs and existing burn rate on an regular basis.
We have instituted a plan which also reduces certain personnel and
administrative costs. We do not presently anticipate that we will make any
additional planned cost reductions. Based upon the ongoing evaluation of our
cash needs, we may seek to raise additional capital through the sale of equity
and debt securities as we may deem necessary. No assurances can be given that we
will be successful in obtaining additional capital, or that such capital will be
available on terms acceptable to us. Further, no assurances can be given that we
will achieve profitability or positive cash flow.

Recent Developments

Sale of CareView Assets

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

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

         As consideration for the purchase, CuraSpan issued to Visual Data
182,000 shares of its Series B Preferred Stock and a promissory note in the
principal amount of $1,000,000. The note, which bears no interest, is payable
semi-annually commencing in May 2001, with each semi-annual payment equal to the
lesser of $125,000 or 50% of the renewal fees collected by Visual Data in the
previous six months from the post-acute facilities with which CuraSpan had a
contract as of the closing date; provided that the first and second payments to
be made thereunder shall not be less than $50,000 each, the third and fourth
payments to be made thereunder shall not be less than $75,000 each, and each
payment thereafter shall not be less than $100,000. Principal


                                       24
<PAGE>   27

payments not made within 10 days of the due date shall bear interest at 13% per
annum. Visual Data also agreed to provide CuraSpan with access of up to $30,000
during the 30 day period following the closing date under a revolving note
bearing interest at 6% per annum and due on the earlier of (i) six months from
the date of issuance or (ii) the closing date of an equity financing of CuraSpan
in an amount of not less than $1,000,000.

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

SportSoft Golf, Inc. Merger with VDC Subsidiary

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

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

Risk Factors

WE HAVE AN ACCUMULATED DEFICIT AND ANTICIPATE CONTINUING LOSSES

         Visual Data continues to incur operating losses. For the years ended
September 30, 2000 and 1999, we incurred losses of $11,401,583 and $7,158,376,
respectively and had an accumulated deficit at September 30, 2000 of
$28,170,584. Operating expenses have increased. Future profitability will depend
on substantial increases in revenues from operations. Future events, including
unanticipated expenses, increased


                                       25
<PAGE>   28

competition or inability to effectively integrate acquisitions, could have a
material adverse effect on operating margins and results of operations.
Accordingly, we may experience significant liquidity and cash flow problems if
the Company is not able to raise additional capital as needed. There can be no
assurance that future revenues will grow sufficiently to generate a positive
cash flow or otherwise enable Visual Data to be profitable.

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

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

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

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

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

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

         We completed the acquisition of 51% of Ednet and are in the continuing
process of integrating these operations. We recently announced an agreement to
acquire SportSoft Golf, Inc. Acquired companies' history, geographical location,
business


                                       26
<PAGE>   29

model and business culture is different from ours in many respects. Our
directors and senior management face a significant challenge in their efforts to
integrate our businesses and the business of acquired companies or assets, and
to effectively manage our continued growth. There can be no assurance that our
efforts to integrate the operations of these companies and the acquired assets
will be successful, that we can manage our growth or that the anticipated
benefits of the acquisitions or their assets will be fully realized. The
dedication of management resources to such efforts may detract attention from
our day-to-day business. There can be no assurance that there will not be
substantial costs associated with such activities or of the success of our
integration efforts, either of which could have a material adverse effect on our
operating results.

WE MAY NEED ADDITIONAL FINANCING

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

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

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

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

         If we raise additional funds through the issuance of equity or
convertible debt securities, the percentage ownership of Visual Data held by
existing shareholders will be reduced and those shareholders may experience
significant additional dilution. In


                                       27
<PAGE>   30

addition, new securities may contain certain rights, preferences or privileges
that are senior to those of our common stock.

THE EXERCISE OF OPTIONS AND WARRANTS WILL HAVE DILUTIVE EFFECT

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

WE EXPECT TO EXPERIENCE VOLATILITY AND FLUCTUATIONS IN OUR STOCK PRICES

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

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

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

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

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

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


                                       28
<PAGE>   31

         -        technical difficulties, system downtime, or Internet
                  brownouts;

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

         -        government regulation; and

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

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

Item 7.  FINANCIAL STATEMENTS

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

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

         None.

                                    PART III

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

Management

Executive Officers and Directors

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

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

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


                                       29
<PAGE>   32

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

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

         George Stemper. Mr. Stemper has served as our Chief Operating Officer
since September 2000. Mr. Stemper comes to Visual Data with 25 years in the
computer, Internet application and hospitality technology fields. He served as a
Senior Vice President and General Manager with Hospitality Solutions
International (HSI) from June, 1997 through July, 2000. HSI is a leading global
developer and marketer of Windows NT and Internet based systems and applications
software for the restaurant, hotel, and club hospitality industry business
segments. From September, 1995 through June, 1997 Mr. Stemper served as the
Chief Operating Officer and as Executive Vice President for MCORP, an Edison, NJ
based software developer and product integrator having hotel technology,
telecom, military applications, and enterprise oriented business solutions. From
April, 1981 through September, 1995, Mr. Stemper was with


                                       30
<PAGE>   33

Control Transaction Corporation and served in key sales and marketing positions
and as the Executive Vice President. From July 1996 through August 1999, Mr.
Stemper was with the Hyatt Hotels Corporation and with Hilton Hotels from
August, 1979 through March 1981. Mr. Stemper has a B.S. degree from Cornell
University with and MBA from Fairleigh Dickinson University.

         Gail Babitt, CPA. Ms. Babitt joined VDC as Chief Financial Officer in
November 2000. From 1999 through October 2000 Ms. Babitt served as Vice
President of Finance, North America and Corporate Controller for TeleComputing
ASA. TeleComputing ASA is a leading application service provider. From 1997 to
1999 Ms. Babitt served as Manager-Transaction Services for Price Waterhouse
Coopers LLP. During 1997 Ms. Babitt served as Director of Finance for
ToppTelecom, Inc. Topp Telecom is a prepaid cellular company based in Miami.
From 1994 to 1997 Ms. Babitt worked in the audit group with Price Waterhouse
Coopers LLP (formerly Price Waterhouse LLP) and with Ernst & Young LLP from 1992
to 1994. Ms. Babitt has received a MBA from Boston University and a B.S. from
Nova Southeastern University.

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

         Brian K. Service. Mr. Service has been a member of our Board of
Directors since July 1997 and serves on the Audit and Compensation Committees of
the Board of Directors. Also, since August 1998 Mr. Service has been a Director
of Ednet. Mr. Service is a dual New Zealand and U.S. citizen and currently
resides in California. Mr. Service currently spends a substantial amount of his
professional time in the United States acting as an international business
consultant. In this capacity, he has clients in


                                       31
<PAGE>   34
North and South America, the United Kingdom, Asia, Australia and New Zealand.
From October 1992 to October 1994, Mr. Service was Chief Executive Officer and
Managing Director of Salmond Smith BioLab, a New Zealand publicly traded company
engaged in the production and sale of consumer and industrial products. From
1982 to 1986 he was Chief Executive Officer and Executive Chairman of Milk
Products, Holding (North America), Inc., a wholly-owned subsidiary of the New
Zealand Dairy Board that was located in Santa Rosa, California. Since September
1999, Mr. Service has served as - President, Chief Executive Officer and
director of 3D Systems, Inc., a publicly traded company.

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

         Robert J. Wussler. Mr. Wussler has been a member of the Board of
Directors since July 1999. Mr. Wussler has served as a Director of Ednet since
1995. Since June 1998 he has served as Chairman, Chief Executive Officer and
President of U.S. Digital Communications, Inc., a global satellite
communications firm that specializes in corporate applications. From June 1995
to May 1998, Mr. Wussler was President and Chief Executive Officer of Affiliate
Enterprises, Inc., the company formed by ABC Television affiliates to pursue new
business opportunities, including emerging technology applications. From 1989 to
1992, he was President and Chief Executive Officer of COMSAT Video Enterprises,
where he managed the acquisition of the NBA Denver Nuggets. Previously, from
1980 to 1990, he was Senior Vice President of Turner Broadcasting, where he
oversaw the launch of CNN, Headline News and TNT, in addition to serving as
President of SuperStation TBS, and from 1974 to 1978 he was the President of CBS
Television Network and CBS Sports.

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


                                       32
<PAGE>   35

qualified. The Board of Directors elects officers annually and their terms of
office are at the discretion of the Board. Our officers devote full time to our
business.

Meetings and Committees of the Board of Directors

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

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

Directors' Compensation

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

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

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


                                       33
<PAGE>   36
         On July 16, 1999, we granted Mr. Wussler options to acquire 75,000
shares of our common stock at an exercise price of $17.1875 per share. The term
of these options is three years from the date of vesting, with 25,000 vesting on
the first anniversary of the date of grant, 25,000 vesting on the second
anniversary of the date of grant and the remaining 25,000 vesting on the third
anniversary of the date of grant. In December 2000, the 25,000 vested shares
were cancelled.

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

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

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

Compliance With Section 16(a) of the Exchange Act

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

Item 10. Executive Compensation

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


                                       34
<PAGE>   37


<TABLE>
<CAPTION>
                                      ANNUAL                             LONG-TERM
                                   COMPENSATION                     COMPENSATION AWARDS
      NAME AND           --------------------------------    ----------------------------------
PRINCIPAL POSITION
------------------                                           OTHER ANNUAL   RESTRICTED  OPTIONS
COMPENSATION             YEAR       SALARY          BONUS    COMPENSATION   STOCK AWDS  SARs(#)     LTIP   ALL OTHER
------------             ----      --------         -----    ------------   ----------  -------     ----   ---------
<S>                      <C>       <C>              <C>      <C>            <C>         <C>         <C>    <C>
Randy S. Selman          2000      $223,646(7)       -0-      $12,912(1)       -0-        -0-       -0-       -0-
  President, Chief       1999      $162,110          -0-      $ 9,794(2)       -0-        -0-       -0-       -0-
  Executive Officer
  and Director

Alan Saperstein          2000      $223,646(7)       -0-      $15,480(3)       -0-        -0-       -0-       -0-
  Vice President         1999      $162,110          -0-      $14,894(4)       -0-        -0-       -0-       -0-
  Treasurer and
  Director

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

(1)      Includes $681 for disability insurance, $3,981 for medical insurance
         and $8,250 automobile allowance.
(2)      Includes $681 for disability insurance, $1,913 for medical insurance
         and $7,200 automobile allowance.
(3)      Includes $681 for disability insurance, $6,549 for medical insurance
         and $8,250 automobile allowance.
(4)      Includes $597 for disability insurance, $7,097 for medical insurance
         and $7,200 automobile allowance.
(5)      Includes $0 for disability insurance, $1,775 for medical insurance and
         $2,250 automobile allowance. Ms. Schneider served as the Chief
         Financial Officer until October 2000.
(6)      Includes $0 for disability insurance, $2,287 for medical insurance and
         $0 automobile allowance.
(7)      Includes a $25,000 management fee paid by Ednet.

Employment Agreements

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

         Additionally, each of Messrs. Selman and Saperstein were granted
options (which contain certain anti-dilution provisions) to purchase 375,000
shares of common stock at $2.125 per share, vesting 125,000 options on each
anniversary date of the


                                       35
<PAGE>   38

effective date of each of the agreements. The options, which are exercisable for
a period of four years from the vesting date, automatically vest upon the
occurrence of certain events, including a change in control, constructive
termination (as defined in the agreements) of the employee, or the termination
of the employee other than for cause.

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

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

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

Stock Option Information

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


                                       36
<PAGE>   39

                 OPTION GRANTS IN YEAR ENDED SEPTEMBER 30, 2000

<TABLE>
<CAPTION>
                                                         INDIVIDUAL GRANTS
                                                       --------------------
                                 NO. OF SECURITIES      % OF TOTAL OPTIONS
                                    UNDERLYING         GRANTED TO EMPLOYEES   EXERCISE        EXPIRATION
         NAME                     OPTIONS GRANTED         IN FISCAL YEAR       PRICE              DATE
         ----                    -----------------     --------------------   --------        ----------
<S>                              <C>                   <C>                    <C>             <C>
Randy S. Selman,
  President, Chief
  Executive Officer
  and Director                            --                     0%              --               --
Alan Saperstein, Vice
  President,
  Secretary and
  Director                                --                     0%              --               --
Pauline Schneider, Chief
  Financial Officer                   50,000(1)              10.32%              (1)              (1)
</TABLE>

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

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

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

<TABLE>
<CAPTION>
                                                              NO. OF SECURITIES
                                                           UNDERLYING UNEXERCISED                VALUE OF UNEXERCISED
                             SHARES                              OPTIONS AT                     IN-THE-MONEY OPTIONS AT
                            ACQUIRED                         SEPTEMBER 30, 2000                  SEPTEMBER 30, 2000(1)
                               ON         VALUE       --------------------------------       -----------------------------
 NAME                       EXERCISE     REALIZED     EXERCISABLE        UNEXERCISABLE       EXERCISABLE     UNEXERCISABLE
 ----                       --------     --------     -----------        -------------       -----------     -------------
<S>                         <C>          <C>          <C>                <C>                 <C>             <C>
Randy S. Selman,
  President, Chief
  Executive Officer
  and Director                 --         $ --         1,097,230(2)         375,000(2)         $802,215        $117,250
Alan Saperstein, Vice
  President, Treasurer
  and Director                 --         $ --         1,097,230(2)         375,000(2)         $802,215        $117,250
Pauline Schneider,
  Chief Financial
  Officer                      --         $ --           120,500(3)              --            $ 75,529        $     --
</TABLE>
----------------
(1)      The dollar value of the unexercised in-the-money options is calculated
         based upon the difference between the option exercise price and $3.063
         per share, being the closing price of our common stock on October 2,
         2000 as reported The Nasdaq National Market.
(2)      Of such exercisable options, at September 30, 2000, 32,230 options were
         exercisable at $.00016 per share, 750,000 options were exercisable at
         $2.125 per share and the remaining 315,000 were exercisable at $16.00.
         Of the unexercisable options, 125,000 have an exercise price of $2.125
         per share and 250,000 have an exercise price of $8.875 per share at
         September 30, 2000. See Option Grants in Year Ended September 30, 2000
         above.
(3)      Of such exercisable options, at September 30, 2000, 70,500 options were
         exercisable at $2.125 per share and the remaining 50,000 were
         exercisable at $2.875. See Option Grants in Year Ended


                                       37
<PAGE>   40

         September 30, 2000 above.

1996 Stock Option Plan

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

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

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

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

         The per share purchase price of shares subject to Plan Options granted
under the Plan may be adjusted in the event of certain changes in our
capitalization, but any


                                       38
<PAGE>   41

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

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

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

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

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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


                                       39
<PAGE>   42
<TABLE>
<CAPTION>
                                                   SHARES OF COMMON
                                                  STOCK BENEFICIALLY
                                                        OWNED (2)
NAME AND ADDRESS OF                          ----------------------------
OF BENEFICIAL OWNER(1)                        NUMBER           PERCENTAGE
----------------------                       ---------         ----------
<S>                                          <C>               <C>
Randy S. Selman(3)                           1,200,849            12.4%

Alan M. Saperstein(4)                        1,222,173            12.6%


George Stemper(5)                                   --              --

Gail Babitt(6)                                      --              --

Benjamin Swirsky(7)                            135,000             1.6%

Brian K. Service(8)                            185,000             2.1%

Eric Jacobs(9)                                 163,600             1.9%

Robert Wussler(10)                              25,000               *

Halifax Fund, LP(11)                         1,505,556            15.1%

Paladin Opportunity Fund, LLC(12)            1,461,111            14.7%

All Directors and
  Officers (8 persons)(13)                   2,931,622            25.7%

</TABLE>
-----------------
  *  Less than 1%

(1)      Unless otherwise indicated, the address of each of the listed
         beneficial owners identified is c/o Visual Data Corporation, 1291
         Southwest 29th Avenue, Pompano Beach, Florida 33069. Unless otherwise
         noted, we believe that all persons named in the table have sole voting
         and investment power with respect to all shares of our common stock
         beneficially owned by them.

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

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

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

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


                                       40
<PAGE>   43
(6)      This amount excludes options to purchase 75,000 shares at $2.031 per
         share, which was granted in October 2000, which have not yet vested.

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

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

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

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


(11)     Includes up to 1,115,556 shares of common stock issuable upon the
         conversion of $1,040,000 principal amount of convertible debentures
         presently outstanding, assuming a conversion at the floor price of $.90
         per share, up to 350,000 shares of common stock issuable upon the
         exercise of presently outstanding warrants, but excludes additional
         shares of common stock, including shares of common stock underlying
         warrants we will issue, if we exercise our right to sell Halifax Fund,
         LP additional convertible debentures. The floor conversion price of the
         debentures is subject to adjustment on December 8, 2001 to an amount
         equal to 90% of the average of the three lowest closing bid prices for
         the 20 trading days prior to that date. Accordingly, we are unable to
         predict at this time any adjustment in the floor conversion price on
         December 8, 2001, and as a result the potential full dilutive nature of
         the conversion formula, as it will be based upon an adjustment
         calculated on future market prices. If we were to assume the average
         market price of our common stock for the 20 trading days prior to
         December 8, 2001 was $1.903 (which represents the average market price
         for the 20 trading days prior to May 15, 2001), the variable
         conversion price at December 8, 2001 would be $1.71 and the resulting
         reset floor conversion price would be $.855 per share, which is 50% of
         the variable conversion price. The convertible debentures provide,
         however, that the number of shares of common stock into which they are
         convertible, when added together with all other shares of our common
         stock beneficially owned by the holder and its affiliates, cannot
         exceed 9.9% of our total issued and outstanding common shares at any
         one time. Halifax Fund, LP and Paladin Opportunity Fund LLC are
         affiliates. Halifax Fund, LP's address is c/o The Paladin Group, 195
         Maplewood Avenue, Maplewood, New Jersey 07040.

(12)     Includes up to 1,111,111 shares of common stock issuable upon the
         conversion of $1,000,000 principal amount of convertible debentures
         presently outstanding, assuming a conversion at the floor price of $.90
         per share, up to 350,000 shares of common stock issuable upon the
         exercise of presently outstanding warrants, but excludes additional
         shares of common stock, including shares of common stock underlying
         warrants we will issue, if we exercise our right to sell Paladin
         Opportunity Fund, LLC additional convertible debentures. The floor
         conversion price of the debentures is subject to adjustment on December
         8, 2001 to an amount equal to 90% of the average of the three lowest
         closing bid prices for the 20 trading days prior to that date.
         Accordingly, we are unable to predict at this time any adjustment in
         the floor conversion price on December 8, 2001, and as a result the
         potential full dilutive nature of the conversion formula, as it will be
         based upon an adjustment calculated on future market prices. If we
         were to assume the average market price of our common stock for the 20
         trading days prior to December 8, 2001 was $1.903 (which represents the
         average market price for the 20 trading days prior to May 15, 2001),
         the variable conversion price at December 8, 2001 would be $1.71 and
         the resulting reset floor conversion price would be $.855 per share,
         which is 50% of the variable conversion price. The convertible
         debentures provide, however, that the number of shares of common stock
         into which they are convertible, when added together with all other
         shares of our common stock beneficially owned by the holder and its
         affiliates, cannot exceed 9.9% of our total issued and outstanding
         common shares at any one time. Paladin Opportunity Fund, LLC and
         Halifax Fund, LP are affiliates. Paladin Opportunity Fund, LLC's
         address is c/o The Paladin Group, 195 Maplewood Avenue, Maplewood, New
         Jersey 07040.


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

                                       41
<PAGE>   44

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

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

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

                                     PART IV

Item 13. EXHIBITS AND REPORTS ON FORM 8-K

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

         (a)      Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO.          DESCRIPTION
-----------          -----------
<S>                  <C>
1(a)                 Form of Underwriting Agreement(11)
3(i)(a)              Articles of Incorporation(1)
3(i)(b)              Articles of Amendment dated July 26, 1993(1)
3(i)(c)              Articles of Amendment dated January 17, 1994(1)
3(i)(d)              Articles of Amendment dated October 11, 1994(1)
3(i)(e)              Articles of Amendment dated March 25, 1995(1)
3(i)(f)              Articles of Amendment dated October 31, 1995(1)
3(i)(g)              Articles of Amendment dated May 23, 1996(1)
3(i)(h)              Articles of Amendment dated May 5, 1998(2)
3(i)(i)              Articles of Amendment dated August 11, 1998(6)
3(i)(j)              Articles of Amendment dated June 13, 2000(11)
3(iii)               By-laws(1)
</TABLE>


                                       42
<PAGE>   45
<TABLE>
<S>                  <C>
4(c)                 Specimen Common Stock Certificate(1)
4(d)                 Specimen Common Stock Purchase Warrant (issued pursuant to
                     the Company's initial public offering on July 30, 1997)(1)
4(e)                 Form of Underwriter Warrant(10)
4(f)                 Form of Consulting Agreement(10)
4(g)                 Form of 6% Convertible Debenture in the principal amount of
                     $1,000,000 due December 8, 2003(12)
4(h)                 Form of 6% Convertible Debenture in the principal amount of
                     $1,000,000 due December 8, 2003(12)
4(i)                 Form of one year Common Stock Purchase Warrant(12)
4(j)                 Form of five year Common Stock Purchase Warrant(12)
10(a)                Agreement between HotelView Corporation and Pegasus Systems,
                     Inc. dated January 14, 1997(1)
10(b)                Form of Stock Option Plan and Amendment thereto(1)(14)
10(c)                Third Amended and Restated Employment Agreement between the
                     Company and Randy S. Selman(7)
10(d)                Third Amended and Restated Employment Agreement between the
                     Company and Alan Saperstein(7)
10(e)                Contract for Purchase and Sale of Real Property(3)
10(f)                Asset Purchase Agreement between the Company and Digital
                     Criteria Technologies, Inc.(4)
10(g)                Securities Purchase Agreement between the Company and Ednet,
                     Inc.(5)
10(h)                Option Agreement between the Company and Ednet, Inc.(5)
10(i)                Agreement dated March 9, 1998 by and between Interval
                     International, Inc. and CondoView Corporation(8)
10(j)                Agreement dated March 30, 1998 by and between Video News
                     Wire Corporation and P.R. Newswire, Inc.(8)
10(k)                Securities Purchase Agreement between the Company and
                     Cranshire Capital, L.P. and Gilford Partners, L.P.(9)
10(l)                Securities Purchase Agreement between the Company and Olive
                     Investors LLC(9)
10(m)                Purchase Agreement(12)
10(n)                Registration Rights Agreement(12)
10(o)                Asset Purchase Agreement **
10(p)                Promissory note in the principal amount of $1,000,000 between
                     CuraSpan, Inc. and Visual Data Corporation **
10(q)                Merger Agreement among the Company, SportSoft Golf, Inc. and
                     Certain Shareholders of SportSoft Golf, Inc.(13)
21                   Subsidiaries of the Company **
23.1                 Consent of Independent Certified Public Accountants *
</TABLE>

---------------
*      Filed herewith
**     Previously filed


                                       43
<PAGE>   46

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

         (b)      Reports on Form 8-K

                  None.


                                       44
<PAGE>   47

                                   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 on
Form 10-KSB/A 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



                                    By: /s/ Gail Babitt
                                       ------------------------------------
                                       Gail Babitt, 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.


<TABLE>
<CAPTION>
       Signature                          Title                        Date
       ---------                          -----                        ----
<S>                                <C>                            <C>


/s/ Randy S. Selman                Director, President,           May 21, 2001
----------------------------       Chief Executive Officer
Randy S. Selman



/s/ Gail Babitt                    Chief Financial Officer and    May 21, 2001
----------------------------       Principal Accounting Officer
Gail Babitt


/s/Alan Saperstein                 Director and Executive         May 21, 2001
----------------------------       Vice President
Alan Saperstein



----------------------------       Director                       May 21, 2001
Benjamin Swirsky



----------------------------       Director                       May 21, 2001
Brian K. Service



/s/ Eric Jacobs                    Director and Secretary         May 21, 2001
----------------------------
Eric Jacobs



/s/ Robert J. Wussler              Director                       May 21, 2001
----------------------------
Robert J. Wussler
</TABLE>


The foregoing represents a majority of the board of directors


                                       45
<PAGE>   48

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders of Visual Data Corporation:

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

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

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


ARTHUR ANDERSEN LLP



Fort Lauderdale, Florida,
  December 29, 2000.


                                      F-1
<PAGE>   49

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           SEPTEMBER 30, 2000 AND 1999

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

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

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

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

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

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

                                   (Continued)

                                      F-2
<PAGE>   50

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                        AS OF SEPTEMBER 30, 2000 AND 1999

                                   (Continued)

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

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

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

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

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

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

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

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

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


                                      F-3
<PAGE>   51

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<CAPTION>
                                                         2000                  1999
                                                     ------------           -----------
<S>                                                  <C>                    <C>
REVENUE                                              $  5,868,435           $ 4,464,157

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

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

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

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

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

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

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

Loss per share - basic and diluted                   $      (1.35)          $     (1.20)
                                                     ============           ===========

Weighted average shares of common stock
  outstanding - basic and diluted                       8,446,724             5,968,262
                                                     ============           ===========
</TABLE>

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


                                      F-4
<PAGE>   52
                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999

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

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

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

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

                                      F-5
<PAGE>   53

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999

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

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

                                   (Continued)


                                      F-6
<PAGE>   54

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999

                                   (Continued)

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

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

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

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

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

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

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

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


                                      F-7
<PAGE>   55

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000

NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

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

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

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

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

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


                                      F-8
<PAGE>   56

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000

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

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

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

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

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


                                      F-9
<PAGE>   57

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000

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

Basis of Consolidation

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

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

Accounting Estimates

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

Cash and cash equivalents

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

Restricted Cash

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

Inventories

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

                                      F-10
<PAGE>   58

                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000

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. The costs
of leasehold improvements are amortized over the lesser of the lease term or the
life of the improvement.

Software

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

Excess of Purchase Price Over Net Assets Acquired

Goodwill is the excess of the purchase price over the fair value of net assets
acquired in business combinations accounted for under the purchase method of
accounting. Goodwill is the result of the excess of the purchase price over the
net assets resulting from the acquisition of 51% of Ednet. Goodwill is amortized
on a straight-line basis over 15 years. Amortization was approximately $77,000
and $74,000 for the years ended September 30, 2000 and 1999, respectively and is
included in general and administrative expenses in the accompanying consolidated
Statements of Operations. Excess of purchase price over net assets acquired is
reflected in the accompanying consolidated Balance Sheets net of accumulated
amortization of approximately $169,000 and $92,000, as of September 30, 2000 and
1999, respectively. The realizability of goodwill is evaluated periodically when
events or circumstances indicate a possible inability to recover the carrying
amount. Such evaluation is based upon an undiscounted cash flow analysis to
determine whether an impairment has occurred. Although Ednet has experienced
losses in the last two fiscal years, management's analysis of undiscounted cash
flows indicates there has been no impairment of goodwill.

Impairment of Long-Lived Assets

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


                                      F-11
<PAGE>   59
                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


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

Revenue Recognition

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

Advertising

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

Comprehensive Income or Loss

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

Income Taxes

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

                                      F-12
<PAGE>   60


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


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

Earnings Per Share

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

Fair Value of Financial Instruments

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

Concentration of Credit Risk

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

Effects of Recent Accounting Pronouncements

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

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

Reclassifications

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


                                      F-13
<PAGE>   61


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 2:  PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>

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

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

                                                                    $  3,795,656        $  3,609,417
                                                                    ============        ============
</TABLE>

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

NOTE 3: NOTES PAYABLE - RELATED PARTY AND OTHER DEBT

Notes Payable - Related Parties

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

<TABLE>
<CAPTION>
                                                                                         2000            1999
                                                                                       ---------       ---------

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

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

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


                                      F-14
<PAGE>   62


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


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

Line of Credit

As of September 30, 2000, the Company had a line of credit of $100,000 with a
financial institution. The line of credit bears interest at the institution's
published reference rate plus 2.5% (12% at September 30, 2000). The line of
credit is secured by the assets of Ednet. During the year, the Company borrowed
$100,000 against the line of credit; however, there is no balance on the line of
credit as of September 30, 2000.

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


<TABLE>
<CAPTION>
                                                                                                  2000                 1999
                                                                                               -----------          -----------
<S>                                                                                            <C>                  <C>
Note payable to an unrelated financial institution, interest payable at 8.75%
  on a 15 year amortization, unpaid principal balance and any accrued interest
  due September 30, 2002, secured by a mortgage on VDC's facility in Pompano
  Beach, Florida                                                                               $   893,072          $   931,667

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

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

NOTE 4: SALE OF INTERNET BUSINESS SOLUTIONS (IBS)

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

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


                                      F-15
<PAGE>   63


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 5:  COMMITMENTS AND CONTINGENCIES

Lease Commitments

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

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


<TABLE>
<CAPTION>
                                                                                 Operating               Capital
                           Year Ending September 30:                               Leases                 Leases
                                                                                 ---------               ------
                           <S>                                                   <C>                     <C>
                             2001                                                $ 159,016               $ 4,239
                             2002                                                  159,016                    --
                             2003                                                  145,761                    --
                                                                                 ---------               -------

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

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

Employment Contracts

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

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


                                      F-16
<PAGE>   64


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 5:  COMMITMENTS AND CONTINGENCIES (CONTINUED)

Annual Volume Commitment

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

NOTE 6:  REVENUE

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

<TABLE>
<CAPTION>
                                                                                                      2000                 1999
                                                                                                   -----------          -----------
<S>                                                                                                <C>                  <C>
Contract revenue                                                                                   $   691,657          $   393,322
Webcasting and related services                                                                      1,180,802              327,823
Sales:
   Equipment sales                                                                                   1,410,122            1,160,617
   Installation fees                                                                                   808,078              647,174
   Usage fees                                                                                        1,604,336            1,393,003
   Web design and consulting                                                                                --              472,146
   Other                                                                                               173,440               70,072
                                                                                                   -----------          -----------

                                                                                                   $ 5,868,435          $ 4,464,157
                                                                                                   ===========          ===========
</TABLE>

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

NOTE 7:  CAPITAL STOCK

Preferred Stock

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


                                      F-17
<PAGE>   65


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 7:  CAPITAL STOCK (CONTINUED)

Common Stock

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

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

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

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

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


                                      F-18
<PAGE>   66


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 8:  INCOME TAXES

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

NOTE 9:  SEGMENT INFORMATION

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

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

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


                                      F-19
<PAGE>   67


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 9:  SEGMENT INFORMATION (CONTINUED)

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

<TABLE>
<CAPTION>
                                                                                            2000
                                                                                        ------------

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

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

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

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

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

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

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

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

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


                                      F-20
<PAGE>   68


NOTE 9:  SEGMENT INFORMATION (CONTINUED)


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000

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

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

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

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

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

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

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

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

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

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


                                      F-21
<PAGE>   69


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 10:  STOCK OPTIONS GRANTED TO DIRECTORS AND EMPLOYEES

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

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

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

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

<TABLE>
<CAPTION>
                                                                       2000                             1999
                                                            -------------------------        -------------------------
                                                                             Weighted                         Weighted
                                                             Number           Average         Number          Average
                                                               Of            Exercise           of            Exercise
                                                             Shares           Price           Shares           Price
                                                            ---------        --------        ---------        --------
<S>                                                         <C>              <C>             <C>              <C>
Balance, beginning of year                                  4,429,635        $  5.86         1,935,041
                                                                                                              $  3.82
Expired during year                                          (605,900)       $ 11.55                --             --

Granted during year                                         1,192,650        $  7.47         2,711,300        $  8.15
Exercised during year                                         (50,000)       $  2.13          (216,706)       $   .15
                                                            ---------                        ---------
Balance, end of year                                        4,966,385        $  5.59         4,429,635        $  5.86
                                                            =========                        =========

Exercisable at end of year                                  3,648,885        $  5.09         2,844,635        $  5.57
</TABLE>


                                      F-22
<PAGE>   70


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


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

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

<TABLE>
<CAPTION>
                                                               Outstanding                         Exercisable
                                                                Weighted                     ------------------------
                                                                 Average      Weighted                       Weighted
                                                                Remaining     Average                        Average
                                                               Contractual    Exercise                       Exercise
Range of Exercise Price                          Shares       Life (Years)     Price           Shares         Price
                                                ---------     ------------    --------       ---------       --------

<S>                                             <C>           <C>             <C>            <C>             <C>
$.00016 - $2.125                                2,543,735          2.25        $ 2.07        2,261,235        $ 2.07
$2.25 - $4.50                                     730,000          2.58        $ 3.00          560,000        $ 2.68
$7.313 - $17.188                                1,692,650          3.92        $11.99          827,650        $14.97
                                                ---------        ------        ------        ---------        ------
                                                4,966,385          2.83        $ 5.59        3,648,885        $ 5.09
</TABLE>


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

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

<TABLE>
<CAPTION>
                                                                                2000                 1999
                                                                            -------------        -------------

<S>                                                                         <C>                  <C>
Pro forma results of operations:
   Net loss                                                                 $ (12,603,824)       $ (15,830,641)

   Net loss per share                                                       $       (1.49)       $       (2.65)

</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
50.0%, risk-free interest rate of 6.25%, expected dividends of $0 and expected
terms of 4 years.


                                      F-23
<PAGE>   71


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 11: LEGAL PROCEEDINGS

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

NOTE 12: SUBSEQUENT EVENTS

CareView

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

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


                                      F-24
<PAGE>   72


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 12: SUBSEQUENT EVENTS (CONTINUED)

CareView (Continued)

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

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

6% Convertible Debentures

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

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


                                      F-25
<PAGE>   73


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 12: SUBSEQUENT EVENTS (CONTINUED)

6% Convertible Debentures (Continued)

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

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

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

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

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

Commencing on the effective date of a registration statement covering the shares
of common stock underlying the conversion option, Visual Data has the right to
sell to the purchasers an additional $1,000,000 principal amount of Convertible
Debentures and five year warrants to purchase an additional 50,000 shares of its
common stock, the conversion price and exercise price of which shall be
identical to those described above.


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<PAGE>   74


                    VISUAL DATA CORPORATION AND SUBSIDIARIES

                        NOTES TO THE FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000


NOTE 12: SUBSEQUENT EVENTS (CONTINUED)

TheFirstNews.com Stock Offering

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

SportSoft Golf, Inc. Merger with VDC Subsidiary

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

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



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