VISUAL DATA CORP, 424B4, 1999-08-09

VISUAL DATA CORP
424B4, 1999-08-09
MISCELLANEOUS PUBLISHING

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<PAGE> 1

PROSPECTUS

1,400,000 Shares of Common Stock
(VISUAL DATA CORP LOGO)

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

We are a leading producer and owner of original video content specifically
developed for the Internet and interactive television. We are also an aggregator
and broadcaster of rich media (audio and visual) content. We are selling
1,400,000 shares of common stock.

Our shares are listed for trading on the Nasdaq National Market under the
symbol "VDAT." On August 6, 1999, the last reported sales price for our common
stock on the Nasdaq National Market was $9.625.

INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" ON
PAGE 8.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PER SHARE TOTAL
----------- -----------
<S> <C> <C>
Public Offering Price...................................... $ 10.00 $14,000,000
Underwriting Discounts and Commissions..................... $ .80 $ 1,120,000
Proceeds to Visual Data Corporation........................ $ 9.20 $12,880,000
</TABLE>

The underwriters may, under some circumstances, for 45 days after the date
of this prospectus, purchase up to an additional 210,000 shares of common stock
from the selling shareholders at the public offering price, less underwriting
discounts and commissions.

[H.C. Wainwright & Co. Logo]
[Cruttenden Roth Logo]

Prospectus dated August 9, 1999
<PAGE> 2

You should rely only on the information contained in this document or other
documents which we have referred you. We have not authorized anyone to provide
you with information that is different. This document may be used only where it
is legal to sell these securities. The information may only be accurate as of
the date of this document. Information on our Website does not constitute part
of this document.

IN CONNECTION WITH AN UNDERWRITTEN OFFERING, THE SECURITIES AND EXCHANGE
COMMISSION RULES PERMIT THE UNDERWRITERS TO ENGAGE IN TRANSACTIONS THAT
STABILIZE THE PRICE OF OUR SECURITIES. THESE TRANSACTIONS MAY INCLUDE, AMONG
OTHER THINGS, PURCHASES FOR THE PURPOSE OF FIXING OR MAINTAINING THE PRICE OF
OUR SECURITIES AT A LEVEL THAT IS HIGHER THAN THE MARKET WOULD DICTATE IN THE
ABSENCE OF SUCH TRANSACTIONS. WE DO NOT KNOW WHETHER THE UNDERWRITERS WILL
ENGAGE IN ANY TRANSACTIONS OF THAT SORT. IF THE UNDERWRITERS ENGAGE IN ANY
TRANSACTIONS OF THAT TYPE THEY MAY DISCONTINUE THEM AT ANY TIME.

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

TABLE OF CONTENTS

<TABLE>
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PAGE
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<S> <C>
Prospectus Summary.................. 3
Risk Factors........................ 8
Use of Proceeds..................... 17
Price Range of Securities........... 17
Dividend Policy..................... 18
Capitalization...................... 19
Dilution............................ 20
Selected Consolidated Financial
Data.............................. 20
Management's Discussion and Analysis
of Financial Condition and Results
of Operations..................... 22
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Business............................ 28
Management.......................... 43
Certain Transactions................ 54
Principal and Selling
Shareholders...................... 55
Description of Securities........... 56
Underwriting........................ 59
Legal Matters....................... 62
Experts............................. 62
Available Information............... 63
Index to Consolidated Financial
Statements........................ F-1
</TABLE>

2
<PAGE> 3

PROSPECTUS SUMMARY

You should read the following summary in conjunction with the more detailed
information regarding our company and the common stock being sold in this
offering and our consolidated financial statements and related notes thereto
appearing elsewhere in this prospectus. Because this is only a summary, you
should read the rest of this prospectus before you invest in our common stock.
Read the entire prospectus carefully, especially the risks described under "Risk
Factors."

Except as noted, all of the information in this prospectus assumes no
exercise of (i) all options and warrants currently outstanding (including those
options to be exercised by selling shareholders), and (ii) all publicly-traded
warrants. All references to our fiscal year means our year ending September 30.

OUR COMPANY
OVERVIEW

We produce and own original video content specifically developed for the
Internet and interactive television. We are also a full service production and
distribution company capable of aggregating, broadcasting and globally
transmitting rich media (audio and video) content. Our content includes video
libraries on topics such as travel, corporate information and healthcare. Our
growing portfolio of full-motion video information libraries is designed to
target specific audiences in order to generate revenues from advertising,
subscriptions, viewership, e-commerce and sponsorships. In order to enhance our
marketing efforts, we have developed strategic partnerships with companies such
as Carlson Travel Group, Inc., Interval International, Inc., Broadcast.com,
Inc., InterVu, Inc., PR Newswire Corporation, Canada Newswire, Ltd.,
REZsolutions, Inc., Physicians' Online, Inc., Inteli-Health, Inc. and
Pegasus/TravelWeb.

We have a worldwide network of professional freelance camera crews and
production capabilities. We are able to shoot the video, edit it in-house
utilizing the latest technology (digital, nonlinear video editing systems) and
distribute the finished product on the Internet. By owning our content and the
means of production, we are able to package and deliver the same content in a
multitude of different forms, maintain high production quality and consistency
and be price competitive, thereby effectively addressing the diverse needs of
our Internet customers. By using the latest available technology for
distribution of our content, we become partners, not competitors, with streaming
video Internet companies and network providers.

We also own a 51% equity interest in Entertainment Digital Network, Inc.
(OTCBB: EDNT). 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 industry. EDnet uses 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 to its client base of approximately 500 companies, including
LucasFilms Skywalker Division, Sony Entertainment, Disney, MGM, Capitol Studios,
Warner Brothers, NFL Films and PGA Tour Productions. EDnet's recent projects
included the transmission of digitized audio during the post-production of such
feature films as Titanic, Antz, Saving Private Ryan and the new Star Wars
prequel, The Phantom Menace. In addition to revenues generated from our core
businesses, we recorded revenues
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<PAGE> 4

in fiscal 1998 from equipment sales, installation and usage fees, as well as web
design and consulting fees from our majority owned subsidiary EDnet. We
anticipate that the majority of our future revenues will be generated from the
development, production and distribution of our original content through our
libraries and other sources associated with the content and its channels of
distribution. These other sources of revenue associated with the distribution of
the content will include per view and tuition charges, usage and booking fees,
syndication and royalty fees, advertising and sponsorship revenues, as well as
e-commerce transactions.

THE VISUAL DATA LIBRARIES

Our full-motion video libraries contain vignettes which are two to four
minutes in length and provide the viewer with a multimedia video tour or
overview of the specific facility, attraction or information being featured. Our
existing libraries include:

- HotelView (www.hotelview.com) -- hotels worldwide

- ResortView (www.resortview.com) -- timeshare resorts

- AttractionView (www.attractionview.com) -- attractions and theme parks

- CareView (www.careview.com) -- nursing homes and assisted living
facilities

- VideoNewsWire (www.videonewswire.com) -- video press releases

- MedicalView (www.medicalview.com) -- health care information library

- TalentView (www.talentview.com) -- audio library of professional voice
talent

Additional libraries currently under development include ProductView,
CampusView, CruiseView, DestinationView and GolfCourseView.

THE OPPORTUNITY AND OUR STRATEGY

Broadcasting digital based audio and video content over the Internet offers
distinct advantages over geographically limited radio and television analog
technology. Most notably with the development of streaming media products, the
Internet has evolved from a mass of static, text oriented web pages and e-mail
services to an environment capable of delivering live broadcasts of graphical,
instructive and multimedia content. We believe that the proposed convergence of
television, cable, telephone and Internet technologies in recently announced
national transactions will create an even greater demand for our audio and video
content, as viewers seek access to information of interest on a real time basis
directly from their home and business communication centers.

Our strategy is to establish ourselves as the leading Internet developer
and owner of video content. In addition, we want to become the leading provider
of Internet based video production and broadcast services. The key components to
achieving these goals include the following:

- expand our existing video "View" libraries;

- develop new video topical libraries focusing on areas such as education
and consumer products;

- expand our business to business production services;

- leverage strategic relationships; and

- make synergistic acquisitions.
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<PAGE> 5

If we successfully implement our strategy, we believe that we will not only
maintain our competitive advantage, but will establish a standard for the future
design and production of original video content for the Internet.

RECENT DEVELOPMENTS

Since the end of our last fiscal year, we have developed a variety of new
Internet products and services. These include:

- During the first quarter of fiscal 1999, we began offering a new service
to provide our clients with live audio and video event broadcast
capabilities via the Internet, by combining EDnet's worldwide high speed
data networks and our network of camera crews. This service is being
marketed through our partnership with PR Newswire.

- During the second quarter of fiscal 1999, we began creating and
distributing Internet-based video programs for physicians, health care
professionals and consumers. We are distributing this content through
Inteli-Health and have a distribution agreement with Physicians' Online.
Physicians' Online is one of the largest Internet communities of doctors
with over 170,000 physicians subscribing to its on-line service.
Inteli-Health is a joint venture between Aetna U.S. Healthcare and Johns
Hopkins University Medical School which provides consumer health
information to the general public and health care community.

- In March 1999, we launched VideoViewer (www.videoviewer.com), our
interactive video-on-demand network for high bandwidth Internet users,
designed to offer programming on a variety of subjects, including travel,
health care, business and finance, and entertainment.

- In March 1999, we launched our TalentView(TM) website, providing the
entertainment and advertising industry with an interactive multimedia
database of professional voice performers working in film, television,
radio and other media.

- In April 1999, we acquired the Internet broadcast rights to a collection
of golf-related videos, including approximately 200 course tours,
instructional videos and golf-related attractions.

- In April 1999, our EDnet subsidiary introduced new services including a
high quality video delivery system and video network. Using Telestream
Corporation's new ClipMail Pro, we are providing high speed bandwidth
connections via DSL and frame relay T1 for our clients.

OUR HISTORY AND STRUCTURE

We were incorporated in Florida in May 1993 and began operations in October
1993. Our principal executive offices are located at 1291 SW 29th Avenue,
Pompano Beach, Florida 33069. Our telephone number is 954-917-6655. Our websites
are located at www.vdat.com, www.videoviewer.com, www.hotelview.com,
www.resortview.com, www.attractionview.com, www.careview.com,
www.videonewswire.com, www.medicalview.com, and www.talentview.com. Information
contained on our Websites is not part of this prospectus. When we use the terms
"Visual Data," "we," "our" and similar terms, this includes Visual Data
Corporation and our subsidiaries, HotelView Corporation, CareView Corporation,
VideoNews Wire Corporation, ResortView Corporation, MedicalView Corporation and
InternetChef.com Corporation, as well as Entertainment Digital Network, Inc.,
our 51% owned subsidiary.
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<PAGE> 6

THE OFFERING

Common Stock Offered............ 1,400,000 shares(1)

Common Stock Outstanding After
this Offering................. 8,030,019 shares(2)

Risk Factors.................... You should consider the risks of investing
in our common stock and the impact from
various events which could affect our
business, see "Risk Factors" and "Certain
Transactions."

Use of Proceeds................. To expand and enhance our eight existing
libraries, create new libraries, purchase
additional production equipment and upgrade
our studios, and for working capital
purposes, including acquisitions. See "Use
of Proceeds."

Nasdaq SmallCap Market Symbols
and Proposed Nasdaq National
Market Symbols:

Common Stock.................... "VDAT"

Warrants........................ "VDATW"
- -------------------------
(1) This amount does not include the exercise of the underwriters'
over-allotment option which shares may be purchased from selling
shareholders. If the over-allotment option is exercised in full the number
of shares of common stock offered would be 1,610,000 shares.

(2) Excludes 1,436,701 warrants and 5,126,239 options to purchase common stock
exercisable at a weighted average of $5.95 and $5.171 per share,
respectively.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. These forward-looking
statements are not historical facts, but rather are based on our current
expectations, estimates and projections about our industry, beliefs and
assumptions. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions are intended to
identify forward-looking statements. These statements are not guarantees of
future performance and are subject to certain risks, uncertainties and other
factors, some of which are beyond our control, are difficult to predict and
could cause actual results to differ materially from those expressed or
forecasted in the forward-looking statements. These risks and uncertainties are
described in "Risk Factors" and elsewhere in this prospectus. We caution you not
to place undue reliance on these forward-looking statements, which reflect our
management's view only as of the date of this prospectus. We are not obligated
to update these statements or publicly release the result of any revisions to
them to reflect events or circumstances after the date of this prospectus or to
reflect the occurrence of unanticipated events.

6
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated financial and operating data has been
derived from our consolidated financial statements for the periods indicated.
The following financial data should be read in conjunction with our Consolidated
Financial Statements and Notes and Management's Discussion and Analysis of
Financial Condition and Results of Operations included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED SEPTEMBER 30, MARCH 31,
--------------------------------------- -------------------------
1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Operating
revenue(1)......... $ 111,719 $ 193,038 $ 1,880,842 $ 489,041 $ 2,117,901
Net loss............. $(1,891,702) $(3,573,962) $(3,434,595) $(1,098,496) $(2,823,569)
Net loss per common
share
outstanding --
basic and diluted.. $ (1.35) $ (1.42) $ (1.06) $ (0.36) $ (0.58)
Weighted average
shares of common
stock outstanding.. 1,405,228 2,509,249 3,253,731 3,078,585 4,893,186
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1999
-----------------------------
ACTUAL AS ADJUSTED(2)
----------- --------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.................................... $3,081,931 $15,271,931
Total assets....................................... $8,721,993 $20,911,993
Long-term debt..................................... $ 688,797 $ 688,797
Stockholders' equity............................... $6,028,063 $18,218,063
</TABLE>

- -------------------------
(1) Operating revenue for the fiscal year ended September 30, 1998 and the six
months ended March 31, 1999 include $1,340,602 and $1,891,930, respectively,
derived from our EDnet subsidiary.

(2) These amounts show the effect of the sale of 1,400,000 shares of common
stock offered in this offering at an offering price of $10.00 per share and
our receipt of the net proceeds from this offering.

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<PAGE> 8

RISK FACTORS

You should carefully consider the risks described below before making a
decision to invest in Visual Data. the consequences of any of these risks could
materially and adversely affect our business, financial condition or results of
future operations. in such case, the trading price of our common stock could
decline, and you may lose all or part of your investment.

WE HAVE AN ACCUMULATED DEFICIT AND WE ANTICIPATE CONTINUING LOSSES

We continue to incur operating losses. For the years ended September 30,
1997 and 1998, we incurred losses of $3,573,962 and $3,434,595, respectively.
For the six months ended March 31, 1999, we reported a net loss (unaudited) of
$2,823,569 and had an accumulated deficit as at March 31, 1999 of $12,434,194.
Our operating expenses have increased and can be expected to increase
significantly in connection with our recent acquisitions and continued proposed
expansion. As a result, our future profitability will depend on substantial
increases in revenues from operations. Future events, including unanticipated
expenses, increased competition or inability to effectively integrate our
acquisitions, could have a material adverse effect on our operating margins and
results of operations. Accordingly, we may experience significant liquidity and
cash flow problems if we are 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 us to be profitable.

BECAUSE WE HAVE BEEN IN BUSINESS FOR A SHORT PERIOD OF TIME, THERE IS LIMITED
INFORMATION UPON WHICH INVESTORS CAN EVALUATE OUR BUSINESS

Although we have developed a number of strategic partnerships to market our
video libraries and other products and services, we are still an early stage
business. Consequently, we have a very limited operating history upon which you
may base an evaluation of us and determine our prospects for achieving our
intended business objectives. We are prone to all of the risks inherent to the
establishment of any new business venture. You should consider the likelihood of
our future success to be highly speculative in light of our limited operating
history, as well as the limited resources, problems, expenses, risks, and
complications frequently encountered by similarly situated companies in the
early stages of development, particularly companies in the new and rapidly
changing Internet market. To address these risks, we must, among other things:

- implement and successfully execute our business and marketing strategy;

- continually update and improve our video libraries and other product and
service offerings;

- continue to develop and upgrade our technology;

- increase our client base;

- respond to competitive developments; and

- attract, retain, and motivate qualified personnel.

We may not be successful in addressing these risks, and our failure in this
regard could have a material adverse effect on our business, prospects,
financial condition, and results of operations.

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FLUCTUATIONS IN OUR OPERATING RESULTS MAY AFFECT OUR STOCK PRICE

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

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

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

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

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

- technical difficulties, system downtime, or Internet brownouts;

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

- government regulation; and

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

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

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

We have only recently developed and began marketing our information
libraries and other products and services, and, to date, our revenues from these
sources have been negligible (approximately $540,000 and $225,000 for the year
ended September 30, 1998 and for the six months ended March 31, 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 MAY NOT BE ABLE TO IDENTIFY AND DEVELOP NEW LIBRARIES THAT WILL HAVE BROAD
APPEAL

A key element of our strategy involves the development of information
libraries targeted for specific interest areas, demographic groups and
geographic areas. We cannot guarantee that we will be successful in our efforts
to select and target particular areas of interest which have broad appeal. Any
failure by us to develop and maintain high-quality, up to date and successful
information libraries could materially and adversely affect our business,
operating results and financial condition.

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<PAGE> 10

Even as we grow our business, potential profitability may be adversely
affected by revenue recognition methods.

Our revenue is recognized dependent upon the nature of products and
services provided as well as the terms of our contracts with our strategic
partners and clients. Increasing the number of contracts signed may not
proportionally increase our revenues and may affect the timing and extent of our
future profitability.

WE DEPEND ON THE INTERNET

We will not be able to execute our business plan if Internet usage does not
grow. Internet usage may be inhibited for any of the following reasons:

- the Internet infrastructure may not be able to support the demands placed
on it and its performance and reliability may decline as usage increases;

- security and authentication concerns with respect to the transmission
over the Internet of confidential information such as credit card
numbers, and attempts by unauthorized computer users, so-called hackers,
to penetrate online security systems; and

- privacy concerns, including those related to the ability of websites to
gather user information.

WE DEPEND ON THIRD PARTY PROVIDERS AND WEBSITE OPERATORS

Many of the Internet service providers, online service providers and other
website operators on which we depend have experienced significant service
slowdowns, malfunctions, outages and capacity limitations. We also depend on the
reliability, speed, data capacity, ease of use, accessibility and security of
the Internet as well as the Internet's continued development and acceptance for
commercial use generally. A satisfactory Internet experience may depend, as
well, on the proper functioning and continued development of equipment such as
high speed modems and personal computers. New protocols or standards are being
developed to handle new systems and increased level of activity at higher speeds
in compliance with governmental regulations. However, not all software and
equipment protocols and standards are compatible. Users may experience
difficulties due to computer-related, telecommunications or other equipment,
software, or system failures or shortcomings unrelated to our services. If users
experience such difficulties, our reputation could be harmed.

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.

THERE ARE RISKS RELATED TO OUR ACQUISITION STRATEGY

Our goal is to establish ourselves as the leading developer and owner of
video content for the Internet and interactive TV. One of our strategies to
accomplish this goal is to increase revenues and the markets we serve in part
through the acquisition of companies that can further our business plan.
Acquisition candidates include developers of video

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media. In pursuing this strategy, we must address and overcome various factors,
including the following, some of which are beyond our control:

- We may be unable to identify, acquire or profitably manage additional
companies or successfully integrate the operations of additional
companies into ours without encountering substantial costs, delays or
other problems.

- Companies acquired by us in the future may not achieve a level of
profitability that justifies our investment in them, or these acquired
companies may have unknown liabilities that could materially adversely
affect our results of operations or financial condition.

- We may compete for acquisition and expansion opportunities with companies
that have greater resources than ours and, therefore, we may not be able
to find suitable acquisition candidates. Financing for these
acquisitions, if needed, may not be obtainable on terms acceptable to us.

- We may not be able to successfully and profitably integrate these
acquired companies into our operations.

- Our results of operations in fiscal quarters immediately following a
material acquisition may be materially adversely affected while we
integrate the acquired business into our existing operations.

- We may acquire certain businesses that have either been unprofitable or
that have had inconsistent profitability prior to their acquisition. Our
inability to improve the profitability of these acquired businesses could
have a material adverse effect on us.

- Our acquisition strategy places significant demands on our resources and
there can be no assurance that our management, operational systems and
structure can be expanded to effectively support our continued
acquisition strategy.

If we are unable to implement successfully our acquisition strategy, this
inability may have a material adverse effect on our business, results of
operations or financial condition.

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 process of
integrating these operations. EDnet's history, geographical location, business
model and business culture are 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 the acquired companies or assets,
and to effectively manage our continued growth. There can be no assurance that
our efforts to integrate the operations of EDnet and the acquired assets will be
successful, that we can manage our growth or that the anticipated benefits of
EDnet or its 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.

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WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY IN OUR INDUSTRY

The market for broadcast services and video content on the Internet is
rapidly evolving, highly fragmented and intensely competitive. We compete on the
Internet with:

- other online video content Websites;

- video conferencing companies and audio conferencing companies;

- Internet business services;

- online services, other Website operators; and

- Internet portal services, Internet broadcasting and other Internet
content providers.

Some of our principal competitors include other online broadcast service
websites, such as TVontheWeb and FasTV, Inc. Many of these existing and
potential competitors have a stronger position in certain markets and
significantly greater financial, technical and marketing resources than we do.

We believe that in order to attract the maximum amount of traffic to our
Websites and increase our clients' customer base, we must establish ourselves as
the leading producer and owner of original video content on the Internet. If we
fail to do so quickly, competitors may prevent us from obtaining a leading
market position, which would adversely affect our business.

WE MAY NEED ADDITIONAL FINANCING

We believe that our cash on hand, our banking arrangements and the proceeds
from this offering will be sufficient to fund our working capital, anticipated
operating cash flow deficit and capital expenditure requirements for at least 24
months following completion of this offering. 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. Therefore, our growth may
depend upon our ability to raise additional capital, possibly through the
issuance of long-term or short-term indebtedness or the issuance of our equity
securities in private or public transactions. This will likely result in
dilution of existing equity positions or increased interest expense. There can
be no assurance that acceptable financing for future acquisitions or for the
integration and expansion of existing operations can be obtained on suitable
terms, if at all.

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

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WE DEPEND UPON KEY PERSONNEL

Implementation of our business strategy is largely dependent on the efforts
of a few senior officers. In particular, our operations are dependent to a great
degree on the efforts of our President and Chief Executive Officer, Randy S.
Selman, and our Executive Vice President, Alan M. Saperstein. Furthermore, we
will likely be dependent on the senior management of EDnet and other companies
that we acquire. Competition for highly qualified personnel is intense, and the
loss of any executive officer or other key employee, or the failure to attract
and retain other skilled employees, could have a material adverse effect upon
our business, results of operations or financial condition. We are parties to
employment agreements with each of Messrs. Selman and Saperstein which terminate
in January 2001, and are the designated beneficiary of key man life insurance in
the amount of $1,000,000 on the life of Mr. Selman and $500,000 on the life of
Mr. Saperstein. There can be no assurance, however, that such executives will
continue to perform under these agreements or that we can maintain the polices
in effect or that the coverage will be sufficient to compensate us for the loss
of the services of either Mr. Selman or Mr. Saperstein.

WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION

There are currently few laws or regulations directly attributable to access
to or commerce on the Internet. Due to the increasing popularity and use of the
Internet, it is possible that laws and regulations may be adopted covering
issues such as privacy, defamation, pricing, taxation, content regulation,
quality of products and services, and intellectual property ownership and
infringement. Such legislation could dampen the growth in, and the use of, the
Internet, decrease the acceptance of the Internet as a communications and
commercial medium, or require us to incur significant expense in complying with
any new regulation. Several telecommunications companies have petitioned the
Federal Communications Commission to regulate Internet Service Providers and
online service providers in a manner similar to long distance telephone carriers
and to impose access fees on these companies. This could increase the cost of
transmitting data over the Internet. Any new laws or regulations related to the
Internet could have a material adverse effect on our business.

MISAPPROPRIATION OF OUR INTELLECTUAL PROPERTY COULD IMPACT OUR COMPETITIVE
POSITION

Our success and ability to compete is dependent in part on the protection
of our original content for the Internet and on the goodwill associated with our
trademarks, trade names and trade secrets. A substantial amount of uncertainty
exists concerning the application of copyright laws to the Internet, and there
can be no assurance that existing laws will provide adequate protection for our
original content. In addition, because copyright laws do not prohibit
independent development of similar content, there can be no assurance that
copyright laws will provide us with any competitive advantage.

We rely on trade secret and copyright laws to protect our proprietary
technologies. There can be no assurance that these laws will provide sufficient
protection to us, that others will not develop technologies that are similar or
superior to ours, or that third parties will not copy or otherwise obtain and
use our technologies without authorization.

Policing unauthorized use of our proprietary technology and other
intellectual property rights could entail significant expense and could be
difficult or impossible, particularly

13
<PAGE> 14

given the global nature of the Internet and the fact that the laws of other
countries may afford us little or no effective protection of our intellectual
property.

In addition, we rely on certain technology licensed from third parties and
may be required to license additional technology in the future for use in
managing our website and providing related services to our customers and other
users of our website. There can be no assurance that these third-party
technology licenses will be available or will continue to be available to us on
acceptable commercial terms, or at all. If we are unable to enter into and
maintain any of these technology licenses, it could have a material adverse
effect on our business.

OTHER COMPANIES MAY CLAIM WE ARE INFRINGING UPON THEIR PROPRIETARY TECHNOLOGY

Given the nature of our business, we can not give assurance that third
parties will not bring claims of copyright or trademark infringement against us
or that they will not claim that our use of certain technologies violates a
patent. Further, there can be no assurance that third parties will not claim
that we have misappropriated their creative ideas or formats or otherwise
infringed on their proprietary rights in connection with our Internet content.
We are not currently aware of any litigation. However, any claims of
infringement, with or without merit, could be time consuming to defend, result
in costly litigation, divert management's attention, require us to enter into
costly royalty or licensing arrangements, or prevent us from using important
technologies or methods, any of which could have a material adverse effect on
our business.

THE EXERCISE OF OPTIONS AND WARRANTS WILL HAVE DILUTIVE EFFECT

As of May 20, 1999 we had outstanding options and warrants to purchase a
total of 6,562,940 shares of our common stock at prices ranging between $.00016
and $18.00 per share, including 3,399,460 options and warrants issued to
directors and executive officers. 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.

OUR DISCRETION IN THE USE OF PROCEEDS FROM THIS OFFERING

We have not designated any specific use for a portion of the net proceeds
from this offering. Therefore, our management will have some flexibility in
applying the net proceeds. We expect to use the proceeds for the expansion of
existing libraries and the development of additional libraries, to purchase
production equipment and upgrade existing studios, and for general corporate
purposes that may include financing acquisitions, joint ventures and strategic
alliances. We have no present plans or commitments and are not currently engaged
in any negotiations with respect to acquisitions, joint ventures and strategic
alliances. Our management's failure to apply these funds effectively could cause
our business to suffer.

SHARES ELIGIBLE FOR FUTURE SALE, EXPIRATION OF LOCK-UP PERIODS

As of May 20, 1999, there were 6,630,019 shares of our common stock
outstanding, of which approximately 2,020,035 were "restricted securities" as
that term is defined by Rule 144 under the Securities Act. Such shares will be
eligible for public sale only if registered under the Securities Act or if sold
in accordance with Rule 144. Under Rule 144, a person who is not our affiliate
and who has held restricted securities for a period of one year may sell a
limited number of shares to the public in ordinary brokerage

14
<PAGE> 15

transactions. Sales under Rule 144 may have a depressive effect on the market
price of the common stock due to the potential increased number of publicly held
securities. The timing and amount of sales of common stock covered by this
prospectus, as well as sales pursuant to other filed registration statements,
could also have a negative impact on the market price of the common stock. The
market price of our common stock could decline as a result of a large number of
shares of our common stock in the market after this offering, or the perception
that these sales could occur. These sales also might make it more difficult for
us to sell equity securities in the future at a time and at a price that we deem
appropriate.

The underwriter in our initial public offering imposed lock-ups of certain
shares of our common stock held by insiders and other shareholders for periods
of 12, 18 and 24 months. The lock-up on all such shares has expired. In
addition, 1,543,022 shares are subject to a 6 month lock-up period commencing on
the effective date of this prospectus.

WE HAVE IMPLEMENTED ANTI-TAKEOVER PROVISIONS THAT COULD PREVENT AN ACQUISITION
OF VISUAL DATA AT A PREMIUM PRICE

Certain provisions of our Articles of Incorporation and Bylaws may be
deemed to have anti-takeover effects and may delay, defer or prevent a takeover
attempt of us. We are subject to the "affiliated transactions" and "control
share acquisition" provisions of the Florida Business Corporation Act. These
provisions require, subject to certain exceptions, that an "affiliated
transaction" be approved by the holders of two-thirds of the voting shares other
than those beneficially owned by an "interested shareholder" or by a majority of
disinterested directors. Voting rights must also be conferred on "control
shares" acquired in specified control share acquisitions. Lastly, our Articles
of Incorporation authorize the issuance of up to 5,000,000 shares of preferred
stock with such rights and preferences as may be determined from time to time by
the Board of Directors, of which 4,999,850 shares remain without designation and
available for issuance as of March 31, 1999. We include such preferred stock in
our capitalization in order to enhance our financial flexibility. However, the
issuance of large blocks of preferred stock may have a dilutive effect with
respect to existing holders of our common stock.

WE DO NOT PLAN TO PAY CASH DIVIDENDS

Holders of our common stock are entitled to cash dividends when, as and if
declared by the Board of Directors out of funds legally available for the
payment of dividends. We have never paid dividends and our management does not
anticipate the declaration or payments of any dividends in the foreseeable
future. We intend to retain earnings, if any, to finance the developments and
expansion of our business. Our future dividend policy will be subject to the
discretion of our Board of Directors and will be contingent upon future
earnings, if any, our financial condition, capital requirements, general
business conditions and other factors. Therefore, there can be no assurance that
cash dividends of any kind will ever be paid.

WE EXPECT TO EXPERIENCE VOLATILITY 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

15
<PAGE> 16

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.

YEAR 2000 COMPLIANCE

In addition, we use third-party equipment, software and content, including
non-information technology systems, such as our security system, building
equipment and non-capital IT systems embedded micro controllers that may not be
year 2000 compliant. We are in the process of developing a plan to assess
whether these third parties are adequately addressing the year 2000 issue and
whether any of our non-IT systems have material year 2000 compliance problems.
Failure of such third-party equipment, software, or content to operate properly
with regard to the year 2000 and thereafter could require us to incur
unanticipated expenses to remedy any problems, which could have a material
adverse effect on our business, results of operations, and financial condition.

Any new software, hardware or support systems implemented in the future
will be year 2000 compliant or will have updates or upgrades or replacements
available before the year 2000 to enable the system to be year 2000 compliant.
We are currently assessing the year 2000 compliance expense and related
potential effect on our earnings.

16
<PAGE> 17

USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $12,190,000
from our sale of the 1,400,000 shares of common stock offered by us under this
prospectus at an offering price of $10.00 per share. This estimate is after
deducting estimated underwriting discounts and commissions and other fees and
expenses payable by us. We will not receive any portion of the proceeds from the
sale of shares of common stock by the selling shareholders.

We intend to use approximately $7,500,000 of the net proceeds of this
offering (61.5% of total net proceeds) for the expansion of our existing video
libraries and the development of additional video libraries. In addition, we
intend to use approximately $1,750,000 of such net proceeds (14% of the total),
to purchase production equipment and upgrade our existing studios. We have no
specific plan for use of the remaining proceeds and expect to use such proceeds
for general corporate purposes, including working capital and to fund
anticipated operating losses, capital expenditures, and potential acquisitions.
We are seeking to identify certain acquisition opportunities; however, we
currently have no agreements or understanding with third parties for any
acquisitions. We cannot assure you that we will identify suitable acquisition
candidates or that we will, in fact, complete any acquisition. Until we use the
net proceeds for a particular purpose, we will invest them in short-term,
interest-bearing, investment-grade obligations. Any income from investments will
be added to working capital. Our management will have broad discretion as to
allocation of net proceeds to use as it deems appropriate. See "Risk
Factors -- Our discretion in the use of proceeds from this offering."

PRICE RANGE OF SECURITIES

Our common stock and warrants have been 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 indicated, the high and low closing bid sale
prices for our common stock and warrants as reported on the Nasdaq SmallCap
Market.

<TABLE>
<CAPTION>
COMMON STOCK HIGH LOW
- ------------ ------- -------
<S> <C> <C>
FISCAL YEAR 1997:
Fourth Quarter (from July 30, 1997)...................... $ 6.00 $ 5.50
FISCAL YEAR 1998:
First Quarter............................................ $ 5.63 $ 2.38
Second Quarter........................................... $ 4.75 $ 2.25
Third Quarter............................................ $ 4.75 $ 2.25
Fourth Quarter........................................... $3.8125 $1.3125
FISCAL YEAR 1999:
First Quarter............................................ $ 6.875 $ 2.125
Second Quarter........................................... $16.375 $ 6.563
Third Quarter............................................ $ 40.00 $ 15.75
</TABLE>

17
<PAGE> 18

<TABLE>
<CAPTION>
WARRANTS HIGH LOW
- -------- ------ ------
<S> <C> <C>
FISCAL YEAR 1997:
Fourth Quarter (from July 30, 1997)....................... $1.875 $ .875
FISCAL YEAR 1998:
First Quarter............................................. $1.375 $ .500
Second Quarter............................................ $ .938 $ .375
Third Quarter............................................. $ .938 $ .344
Fourth Quarter............................................ $ .813 $ .250
FISCAL YEAR 1999:
First Quarter............................................. $ 2.75 $ .313
Second Quarter............................................ $10.25 $ 2.50
Third Quarter............................................. $35.00 $9.625
</TABLE>

On August 6, 1999, the last reported sale prices of the common stock and
warrants on the Nasdaq National Market was $9.625 per share and $5.875 per
warrant. These prices do not include retail mark-ups, mark-downs or commissions,
and may not necessarily represent actual transactions. As of August 6, 1999,
there were at least 1,000 shareholders of record of the 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.

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<PAGE> 19

CAPITALIZATION

The following table sets forth, as of March 31, 1999, (i) our consolidated
capitalization and (ii) our pro forma consolidated capitalization as adjusted to
reflect the sale of 1,400,000 shares of the common stock offered by us pursuant
to this prospectus, after deduction of estimated offering expenses and
underwriting discounts, at an offering price of $10.00. This table should be
read in conjunction with our consolidated financial statements and the notes
thereto included elsewhere in this prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1999
------------------------------
ACTUAL AS ADJUSTED(1)
------------ --------------
<S> <C> <C>
Notes payable, shareholders, net.................. $ 40,500 $ 40,500
Stockholders' equity
Common stock, par value $.0001, 5,744,859 shares
issued and outstanding, actual 7,144,859
shares issued and outstanding, as adjusted... 574 714
Paid-in capital................................... 18,461,683 30,651,543
Accumulated deficit............................... (12,434,194) (12,434,194)
------------ ------------
Total stockholders' equity........................ 6,028,063 18,218,063
------------ ------------
Total capitalization.............................. $ 6,068,563 $ 18,258,563
============ ============
</TABLE>

- -------------------------
(1) After deducting underwriting discounts, commissions and offering expenses,
estimated to be an aggregate of $1,810,000.

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<PAGE> 20

DILUTION

Purchasers of our common stock in this offering will experience immediate
and substantial dilution in the net tangible book value of the common stock for
this offering. "Net tangible book value" per share represents the amount of our
total tangible assets less our total liabilities, divided by the number of
shares of our common stock outstanding. At March 31, 1999, we had a net tangible
book value of $5,229,860, or approximately $0.91 per share of our outstanding
common stock. After giving effect to our receipt of the estimated net proceeds
from our sale of the 1,400,000 shares of our common stock offered hereby at an
offering price of $10.00 per share (after deducting underwriting discounts and
commissions and estimated offering expenses payable by us), our net tangible
book value at March 31, 1999 would have been approximately $17,419,860 or $2.44
per share of our common stock, representing an immediate increase in net
tangible book value of $1.53 per share to existing shareholders and an immediate
dilution of $7.56 per share to investors in this offering. "Dilution" is
determined by subtracting net tangible book value per share after the offering
from the offering price to investors.

The following table illustrates this per share dilution:

<TABLE>
<S> <C>
Offering price per share.................................... $ 10.00
Net tangible book value per share, before the offering.... .91
Increase attributable to new investors.................... 1.53
-------
Pro forma net tangible book value after the offering........ 2.44
-------
Dilution to new investors................................... $ 7.56
=======
</TABLE>

The following table summarizes the number of shares of our common stock
purchased from us, the total consideration paid and the average price per share
paid by (i) our existing shareholders at March 31, 1999 and (ii) new investors
purchasing shares of our common stock in this offering, before deducting the
underwriting discounts and commissions and our estimated offering expenses
payable by us.

<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION PAID
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing
Shareholders....... 5,744,859 80% $18,462,257 57% $ 3.21
New Investors........ 1,400,000 20% $14,000,000 43% $10.00
--------- --- ----------- ---
Total................ 7,144,859 100% $32,462,257 100% $ 4.54
========= === =========== ===
</TABLE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following tables set forth our selected consolidated financial data.
The selected statement of operations data for the period from May 1993
(inception) to September 30, 1994 and the years ended September 30, 1995 and
1996 are derived from our Consolidated Financial Statements, which have been
audited by Goldstein Lewin & Co., independent certified public accountants. The
selected statement of operations data for the years ended September 30, 1997 and
1998 are derived from our Consolidated Financial Statements, which have been
audited by Arthur Andersen LLP, independent certified public accountants. The
selected statement of operations data for the six month periods ended March 31,
1998 and 1999 and the summary balance sheet data as of March 31, 1999 have been
derived from our unaudited Consolidated Financial Statements. The Consolidated
Financial Statements for the years ended September 30, 1996, 1997 and 1998 and
the reports thereon and the six months ended March 31, 1998 and 1999 appear
elsewhere in this prospectus. The Selected Consolidated Financial Data presented
below should be read

20
<PAGE> 21

in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and the
Notes thereto, appearing elsewhere herein. The results for the six months ended
March 31, 1999 are not necessarily indicative of results that may be expected
for the full fiscal year.

SELECTED STATEMENTS OF OPERATIONS DATA*:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FROM MAY 17, 1993 FISCAL YEAR ENDED SEPTEMBER 30, MARCH 31,
(INCEPTION) TO ----------------------------------------------------- -------------------------
SEPTEMBER 30, 1994 1995 1996 1997 1998 1998 1999
------------------ ---------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue................. $ -- $ -- $ 111,719 $ 193,038 $ 1,880,842(1) $ 489,041 $ 2,117,901(1)

Operating costs:

Cost of sales.......... -- -- -- -- 803,784 -- 1,309,766

Selling, general and
administrative....... 66,674 117,092 527,692 1,441,173 2,011,815 545,317 1,901,722

Compensation and
related costs........ -- 206,935 985,441 789,165 1,341,737 580,831 927,232

Production............. -- 17,982 121,239 83,357 22,354 31,231 146,968

Occupancy.............. 38,409 62,991 43,875 82,373 157,780 72,180 73,614

Professional and
consulting fees...... 77,886 87,662 298,815 352,853 1,006,243 401,926 719,573
---------- ---------- ----------- ----------- ----------- ----------- -----------

Total operating
costs........... 182,969 492,662 1,977,062 2,748,921 5,343,713 1,631,485 5,078,875
---------- ---------- ----------- ----------- ----------- ----------- -----------

Loss from operations... (182,969) (492,662) (1,865,343) (2,555,883) (3,462,871) (1,142,444) (2,960,974)

Other income
(expense).............. (5,797) (7,897) (26,359) (1,018,079)(2) 28,276 43,948 141,405
---------- ---------- ----------- ----------- ----------- ----------- -----------

Loss before taxes...... (188,766) (500,559) (1,891,702) (3,573,962) (3,434,595) (1,098,496) (2,819,569)

Income taxes............ -- -- -- -- -- -- 4,000
---------- ---------- ----------- ----------- ----------- ----------- -----------

Net loss............... $ (188,766) $ (500,559) $(1,891,702) $(3,573,962) $(3,434,595) $(1,098,496) $(2,823,569)
========== ========== =========== =========== =========== =========== ===========

Net loss per
share -- basic and
diluted................ $ (0.18) $ (0.43) $ (1.35) $ (1.42) $ (1.06) $ (0.36) $ (0.58)
========== ========== =========== =========== =========== =========== ===========

Weighted average shares
of common stock
outstanding............ 1,066,091 1,173,413 1,405,228 2,509,249 3,253,731 3,078,585 4,893,186
========== ========== =========== =========== =========== =========== ===========
</TABLE>

- ---------------
* Certain amounts have been reclassified to conform with current financial
statement presentation.

(1) Operating revenue for the fiscal year ended September 30, 1998 and the six
months ended March 31, 1999 include $1,340,602 and $1,891,930, respectively,
derived from our EDnet subsidiary.

(2) Includes approximately $970,000 of non-cash interest expense.

SUMMARY CONSOLIDATED BALANCE SHEET DATA:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, AS OF MARCH 31,
----------------------------------------------- -----------------------
1995 1996 1997 1998 1998 1999
-------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Working capital
(deficit)................ $166,492 $ (118,918) $2,345,988 $ (439,440) $ 330,776 $3,081,931
Total assets............... $483,032 $1,329,151 $4,587,892 $6,394,088 $3,600,735 $8,721,993
Long-term debt............. $ 82,413 $ 738,142 $ 974,887 $ 15,058 $ -- $ 688,797
Stockholders' equity....... $297,596 $ 189,401 $3,247,104 $3,884,693 $2,481,134 $6,028,063
</TABLE>

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<PAGE> 22

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Read the following discussion together with the information contained in
the Consolidated Financial Statements and related Notes included elsewhere in
this prospectus.

OVERVIEW

Using the latest technology in video editing, combined with a global
network of veteran camera crews, we are able to maintain high quality and
consistency in our video productions. Our digital video production/editing
component, working in tandem with our management/storage/serving component,
produce what we believe to be a seamless infrastructure. Our goal is to deliver
a level of expertise not currently found elsewhere in the market, and our
vertically integrated structure allows us to price our services lower than other
content developers and providers as we do not need to outsource our editing
services. We utilize the latest available technology for distribution of our
content, and therefore, we are partners, not competitors, with streaming video
Internet companies and network providers.

In June 1998, we acquired a 51% interest in Entertainment Digital Network,
Inc. See "Our EDnet subsidiary." Currently EDnet accounts for a significant
amount of our revenue, representing approximately 71% and 89% of total revenues
in fiscal 1998 and for the six months ended March 31, 1999, respectively. While
we believe that EDnet will remain an important part of our revenue, as we
develop revenues from the marketing of our video information libraries, we
expect that our reliance on EDnet will decrease.

We were incorporated in May of 1993 and did not begin operations until
October of that same year. From inception through August of 1997, our operating
activities related primarily to raising capital and completing our initial
public offering, purchasing operating assets and creating our initial video
libraries. We used the proceeds from our initial public offering in 1997 to
continue to enhance our HotelView library and to establish its distribution over
the Internet, to develop additional content and libraries and to purchase the
requisite hardware and software to link us to the Internet and provide links to
other websites. Throughout the remainder of 1997 and into 1998, we introduced
new libraries in the travel industry (including AttractionView and ResortView).
In 1998 and 1999, we launched new libraries in the corporate information
industry (including VideoNews Wire and TalentView) and the healthcare industry
(including CareView and MedicalView). We continue to invest in the enhancement
of our existing video libraries, the creation of new video libraries, the
development of certain strategic partnerships, marketing and building domestic
and international sales channels.

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<PAGE> 23

PLAN OF OPERATION

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

During the first quarter of fiscal 1999, we began offering a new service
through our Video News Wire division. By combining the worldwide high speed data
networks of Entertainment Digital Network, Inc. ("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. This service is being
marketed through our partnership with PR Newswire. We have also announced our
MedicalView division that will create and distribute Internet-based video
programs for physicians, health care professionals and consumers.

As we continued with our integration of EDnet, it became apparent that the
web development resources at Internet Business Solutions, Inc. ("IBS"), EDnet's
wholly-owned subsidiary, duplicated existing facilities at Visual Data. On
December 11, 1998, EDnet completed the sale of substantially all of the assets
of IBS for a total of $1,000,000. EDnet recognized a gain of approximately
$663,000 on the sale. We recorded our portion of the gain, approximately
$338,000, as a reduction of excess of purchase price over net assets acquired.
While the sale of IBS' assets is expected to reduce budgeted revenues, EDnet
intends to offset this loss with the continued growth of its core audio
networking business and the aggressive introduction of its video networking
services which occurred in the Spring of 1999.

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 actually view a video. Commission on
ResortView bookings are recognized when the stays are completed. Currently, our
VideoNews Wire and MedicalView divisions recognize revenue when a project is
completed and our client is billed. EDnet recognizes revenues from the sale of
equipment when the product is shipped and revenues from equipment rental,
installation, Webcasting and bridging are recognized when service is performed.
Network usage is billed at the beginning of the month based on actual usage from
the middle of the previous month and an estimate of the second half of the
month, based on the activity from the previous billing.

RESULTS OF OPERATIONS

SIX MONTHS ENDED MARCH 31, 1999 COMPARED TO SIX MONTHS ENDED MARCH 31, 1998

We recognized revenue of approximately $2,118,000 for the six months ended
March 31, 1999, an increase of $1,629,000 (333%) from $489,000 for the same
period last year. Revenues from EDnet accounted for approximately $1,892,000 for
the six month period, with the balance of our revenue coming from HotelView's
new and renewal contracts, initial contracts signed by CareView and ResortView
and fees earned by Video News Wire. Production and distribution revenue
decreased from approximately $489,000 to $226,000 for the six months ended March
31, 1999 as compared to the same period last year due to a non-recurring
marketing fee of $250,000 which we recorded in March of 1998.

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<PAGE> 24

Cost of sales, which includes equipment and services, is wholly
attributable to sales by EDnet. Production costs increased by approximately
$116,000 (374%) from $31,000 to $147,000 for the six months ended March 31, 1999
as compared to the same period last year. This increase was due to an increase
in production activity, as well as the recognition of some deferred costs due to
the completion of certain contracts.

Selling, general and administrative expenses, which include advertising,
depreciation, telephone and travel, increased approximately $1,357,000 (249%)
from $545,000 to $1,902,000 for the six months ended March 31, 1999 as compared
to the same period last year. Approximately $840,000 of the increase was due to
the inclusion of EDnet's expenses. Depreciation expense increased approximately
$220,000 (423%), from $52,000 to $272,000, advertising and associated expense
increased approximately $71,900 (114%) from $62,800 to $134,700, Internet
related expense increased approximately $40,000 (222%) from $18,000 to $58,000
and the balance of the increase reflects additional website development, as well
as the rollout of the other libraries and related websites.

Compensation and related costs increased by approximately $346,400 (60%)
from $580,800 to $927,200 for the six months ended March 31, 1999, over the same
period last year due to growth in both sales and technical staff. Professional
fees increased approximately $318,000 (79%) from $402,000 to $720,000 for the
six months ended March 31, 1999 over the comparable periods last year primarily
due to an increase in consulting and investment banking fees.

YEAR ENDED SEPTEMBER 30, 1998 COMPARED TO YEAR ENDED SEPTEMBER 30, 1997

We recognized revenues of $1,880,842 during the fiscal year ended September
30, 1998, representing an increase of approximately 874% from revenues for
fiscal 1997. Included in our revenues for fiscal 1998 are revenues of $1,340,602
which we recorded from our newly acquired subsidiary, EDnet. EDnet's revenues
are derived from the sale of equipment, usage fees related to its network which
allows the exchange of high quality audio, video, multimedia and data
communications, and Website development and consulting fees. We recorded
$250,000 of revenue as a signing fee when we entered into a marketing agreement
whereby we, through our TalentView division, will be marketing and distributing
a database and search engine software product. Revenues from HotelView
recognized during fiscal 1998 include new sales and renewals, which amounted to
approximately $200,000. The balance of our revenue during fiscal 1998 came from
initial contracts signed by CareView, billings by our Internet Technologies
group, and fees earned by Video News Wire. Revenues recognized by us during
fiscal 1997 were limited to the redemption of room credit balances due to
bookings made by the HotelView travel agency network and video tape sales to
hotels. The revenues recognized by us during fiscal 1998 represent the results
of our implementation of our plan of operation, which centered on continuing to
expand the marketing of our multi-media information libraries that are designed
to capture the interest of the general public in order to generate revenues from
advertising, subscriptions, viewership, e-commerce transactions and
sponsorships. During fiscal 1998, the recognition of significant revenues from
HotelView was delayed from our internal projections due to a restructuring of
the business model as well as a new Internet site and marketing strategy. In
addition, during fiscal 1998 CareView revenues have been delayed based on the
site software and Internet software taking longer to develop than was originally
anticipated. During fiscal 1999, as our business plan is further implemented,
management expects to significantly increase the revenues reported by us, with
the majority of such increases being projected for the last two quarters of
fiscal 1999.

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<PAGE> 25

Cost of sales, as it appears in the Consolidated Statements of Operations,
related primarily to EDnet. Selling, general and administrative expenses
increased approximately $570,650 or 39.5% during fiscal 1998 as compared to the
same period last year, reflecting the growth of HotelView's sales and marketing
activities and Website development, as well as the rollout of the other
libraries and related Websites. This increase includes approximately $483,365 of
EDnet expense. Increases occurred in Internet related expenses, research and
marketing consulting, travel and depreciation. We anticipate further increases
in selling, general and administrative expenses during fiscal 1999, relative to
comparative periods in fiscal 1998, as we continue to implement our business
plan.

Compared to fiscal 1997, compensation and related costs increased by
approximately 70% due to growth in both sales and technical staff. Based upon
the current levels of staffing, management believes we will be able to further
implement our business plan during fiscal 1999 without substantially increasing
our compensation and related costs. The increase in occupancy costs reflects the
increased expense due to the move to our principal executive offices in
September 1997. Professional fees increased for fiscal 1998 over the prior year
principally due to non-recurring consulting fees totaling approximately $935,000
that were paid with stock, stock options and warrants. In addition, accounting
and legal fees increased from 1997 to 1998. Of the legal fees, approximately
$60,000 were associated with a specific contract or transaction and are
non-recurring.

Interest income reported for fiscal 1998 reflects an increase of
approximately 126% from fiscal 1997, which consisted primarily of interest
earned on the temporary investment of portions of the proceeds from our initial
public offering and other equity infusions. During fiscal 1998, we reported
rental income of $80,671 which was derived from the rental of a portion of our
building pursuant to a lease which expires in February 2003. Management expects
such income to continue during fiscal 1999. Interest expense for fiscal 1998
reflects a reduction of approximately $945,865 or 90% as a result of a non-
recurring, non-cash interest expense of $969,531 incurred in fiscal year 1997 on
shareholder loans. We reported interest expense of $96,362 during fiscal 1998
related to our mortgage and capital leases.

YEAR ENDED SEPTEMBER 30, 1997 COMPARED TO YEAR ENDED SEPTEMBER 30, 1996

Revenues of $193,038 were recognized during fiscal 1997 based on the
redemption of room credit balances due to bookings made by the HotelView travel
agency network and tape sales to hotels. Interest expense increased
approximately $1,015,115 in fiscal 1997 versus 1996 primarily due to the
non-cash amortization of discounts on certain notes payable. Selling, general
and administrative expenses increased approximately 173% in fiscal 1997 versus
1996 and included $690,000 of deferred costs which were charged to expense
during fiscal 1997. Both of these items are non-recurring and we do not
anticipate significant interest expense during fiscal year 1998. Through
December 1997, we offered hotels and resorts the option of either paying the
contract in full in cash at the time of execution or paying a cash deposit, with
the balance of the contract price due under a performance based arrangement.
Because there is no time limitation when or if the balance of the fees will
become billable, we cannot predict when these funds will be available. Although
management believes it will continue to bill and collect amounts due under this
performance based arrangement during fiscal 1998, any long term delay in or
inability to collect these amounts may have an adverse effect on us. Hotel
contract renewals are being billed on a cash basis and from January 1998
forward, we will charge hotels and resorts an annual fee, payable in cash, for
their inclusion in the library as well as a charge per Internet site visit by
potential hotel guests.

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<PAGE> 26

IMPACT OF YEAR 2000

We are aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches. The year 2000 issue relates to
whether computer systems will properly recognize and process information
relating to dates in and after the year 2000. These systems could fail or
produce erroneous results if they cannot adequately process dates beyond the
year 1999 and are not corrected. Significant uncertainty exists in the software
industry concerning the potential consequences that may result from the failure
of software to adequately address the year 2000 issue. We have reviewed all
software and hardware used internally by us in all support systems to determine
whether they are year 2000 compliant. Most of our software has already been
upgraded by the manufacturer or was recently purchased and is year 2000
compliant. We expect to have our remaining year 2000 compliant systems in place
by September 1999. We also intend to implement and test these solutions prior to
any anticipated impact of the year 2000 issue on its systems. We do not believe
that the aggregate cost for the year 2000 issue will be material. We, however,
cannot predict the effect of the year 2000 issue on entities with which we
transact business, and there can be no assurance that the effect of the year
2000 issue on such entities will not have a material adverse effect on our
business, financial condition or results of operations. We will be formulating a
contingency plan with respect to such entities with which we do business. In
addition, we utilize third-party equipment, software and content, including
non-information technology systems, such as our security system, building
equipment and non-capital IT systems embedded microcontrollers that may not be
year 2000 compliant. We are in the process of developing a plan to assess
whether these third parties are adequately addressing the year 2000 issue and
whether any of our non-IT systems have material year 2000 compliance problems.
Failure of such third-party equipment, software, or content to operate properly
with regard to the year 2000 and thereafter could require us to incur
unanticipated expenses to remedy any problems, which could have a material
adverse effect on our business, results of operations, and financial condition.

Any new software, hardware or support systems implemented in the future
will be year 2000 compliant or will have updates or upgrades or replacements
available before the year 2000 to enable the system to be year 2000 compliant.
Management is currently assessing the year 2000 compliance expense and related
potential effect on our earnings. To date, we have not incurred any incremental
expense directly related to year 2000 compliance.

LIQUIDITY AND CAPITAL RESOURCES

From inception through July 1997, our operations were funded by investment
capital from the sale of private equity and shareholder loans. In July 1997, we
completed our initial public offering and received net proceeds of approximately
$4.8 million. Since July 1997, we have sustained our operations from internally
generated funds and proceeds from the private placement of our preferred and
common stock, and the exercise of options and warrants from which we derived
total net proceeds of approximately $9.8 million through May 20, 1999.

At March 31, 1999, we had working capital of approximately $3,082,000. This
was primarily a result of two private placements. One sale took place during
November and December 1998 in which a total of 532,500 shares were sold at
approximately $2.00 per share to 20 accredited investors for which the Company
received gross proceeds of $1,040,000. In February 1999, we received net
proceeds of approximately $2,600,000 from

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<PAGE> 27

the sale of our common stock to institutional investors in the second private
placement, selling a total of 333,334 shares.

We believe we have sufficient working capital to fund our current plan of
operations until our subsidiaries begin producing revenues sufficient to sustain
operations. However, in the event management should determine to either
accelerate their business plan or seek additional acquisitions, we may be
required to raise additional capital. There are no assurances that such capital
will be available to us on terms and conditions we find acceptable. With the
proceeds of this offering, coupled with internal liquidity, we will be able to
sustain our operations for the next twenty-four months.

In March 1999, we negotiated an extension of our mortgage with the current
lender. The term of the note was extended by forty-two months and is now due on
September 30, 2002. The note requires monthly payments of approximately $10,000
and a balloon payment of approximately $800,000 at September 30, 2002.

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<PAGE> 28

BUSINESS

For example, our HotelView(R) library provides two to four minute
multimedia video tours that give the viewer a detailed look at the hotel's guest
rooms, grounds, meeting space, recreational facilities, dining venues and other
amenities that can be accessed through the participating hotels' own Website, at
HotelView.com and at hundreds of other travel sites. HotelView(R)'s revenues are
generated through an annual subscription fee, which includes the creation,
storage and serving on the Internet, and per view revenues, which are paid by
the hotel, each time someone views the video on the Internet. Additional
revenues will also be generated from advertising fees and sponsorships.

Using the latest technology in video editing, combined with a global
network of camera crews, we are able to maintain high quality and consistency in
our video productions. Our video production/editing component, working in tandem
with our management/storage/serving component, produce what we believe to be a
seamless infrastructure. Our goal is to deliver a level of expertise not
currently found elsewhere in the market. We believe that our vertically
integrated structure allows us to competitively price our services. We utilize
the latest available technology for distribution of our content, and therefore,
we are partners, not competitors, with streaming video Internet companies and
network providers.

In June 1998, we acquired a 51% interest in Entertainment Digital Network,
Inc. See "Our EDnet subsidiary." Currently, EDnet accounts for a significant
amount of our revenue representing approximately 71% and 89% of total revenues
in fiscal 1998 and for the six months ended March 31, 1999, respectively.

STRATEGIC RELATIONSHIPS

Our business model is focused on partnering Visual Data with other
synergistic companies. We have developed strategic partnerships with recognized
industry leaders in the travel, corporate information and healthcare industries,
including:

THE TRAVEL INDUSTRY

- Carlson Travel Group, Inc. We are the supplier of video content on
hotels and resorts to the country's largest travel agency franchise.

- Interval International, Inc. We are the exclusive producer and
distributor of video content for the world's second largest marketing
organization for timeshare units.

- REZsolutions, Inc. We have a co-marketing agreement with the leading
supplier of integrated business solutions for the hospitality industry.

- Broadcast.com, Inc. We are a supplier of video content on hotels,
resorts, attractions and destination information to the Internet's
largest broadcaster of video content and we are a sponsor of their travel
channel.

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THE CORPORATE INFORMATION INDUSTRY

- PR Newswire Corporation. We are the exclusive provider of video press
releases for the world's largest distributor of press releases.

- Canada Newswire, Ltd. We are the exclusive provider of video press
releases for Canada's largest distributor of press releases.

- InterVu, Inc. Under an Internet distribution and co-marketing agreement,
InterVu is a provider of streaming media services for our multimedia
content and InterVu in turn resells Visual Data production services.

THE HEALTHCARE INDUSTRY

- Physicians' Online, Inc. We have an agreement with the world's largest
Internet community of doctors, with over 170,000 physician members, to
distribute our healthcare related video content.

- Inteli-Health, Inc. We have an agreement, with the joint venture of
Aetna Insurance and Johns Hopkins Health Services, to distribute our
healthcare related video content to the general public.

INDUSTRY BACKGROUND

The Internet has experienced dramatic growth in recent years. The
development of improved search engines and Web browsers has led to substantial
end-user interest in the Internet. Computer Almanac Industry, Inc. estimates
that the number of Web users will increase from approximately 147 million at the
end of 1998 to approximately 320 million and 720 million by the end of 2000 and
2005, respectively. A 1998 study completed by the Georgia Institute of
Technology estimates that approximately 32% of Internet users spend 20 or more
hours using a Web browser each week.

Broadcasting audio and video content over the Internet offers certain
opportunities that are not generally available from traditional media. Currently
available analog technology and government regulations limit the ability of
radio and television stations to broadcast beyond certain geographic areas.
Radios and televisions are not widely used in office buildings and other
workplaces, where Internet access has become commonplace. Traditional business
communication tools such as audio conferencing and video conferencing can be
costly, non-targeted, and inconvenient. In addition, traditional broadcasters
are limited in their ability to measure or identify in real time the listeners
or viewers of a program. By using the Internet, targeted streaming media content
can be broadcast to a geographically dispersed audience of customers, suppliers,
employees and shareholders at relatively low costs. Internet users can interact
with the broadcast content by responding to online surveys, voting in polls and
obtaining additional information. In addition, Internet broadcasters can provide
highly specific information about a program's audience to content providers,
advertisers and users of Internet business services. The convergence of the
Internet's capabilities and attributes has accelerated its acceptance as a
business tool, leading to rapidly growing economic opportunities in Web-based
advertising and business service offerings, including audio conferencing,
electronic commerce and video transmission, among others.

Much of the Internet's rapid evolution towards becoming a mass medium can
be attributed to the accelerated pace of technological innovation, which has
expanded the Web's capabilities and improved users' experiences. Most notably,
the Internet has evolved from a mass of static, text-oriented Web pages and
email services to a much richer

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environment, capable of delivering graphical, interactive and multimedia
content. Prior to the development of streaming media technologies, users could
not play back audio and video clips until the content was downloaded in its
entirety. As a result, live Internet broadcasts were not possible. The
development of streaming media products from companies such as Microsoft and
RealNetworks enables the simultaneous transmission and playback (i.e., the
Internet broadcast) of continuous "streams" of audio and video content over the
Internet and intranets. These technologies have evolved to deliver audio and
video over widely used 28.8 kbps or 56 kbps narrow bandwidth modems, yet can
scale in quality to take advantage of higher speed access that is being provided
by xDSL, cable modems and other emerging broadband technologies.

We believe recent research has shown a significant increase in Internet
users with broadband width capabilities. Media Metrix, Inc. reports that, in
December 1998, more than 19 million home PC users viewed some form of streaming
video. In addition, an estimated 14 million people have connections to the
Internet at their workplaces that are fast enough to carry sophisticated moving
images and sounds. Forrester Research reported that there were approximately
700,000 households in the United States that had broadband access in 1998. This
number is expected to increase to 2.2 million in 1999, 4.7 million in 2000, 9.2
million in 2001 and 15.8 million, or approximately 26% of on-line households, by
2002.

We believe that once the major investments in broadband service have been
made and the infrastructure has been developed, the focus will turn to the
content to be viewed and that video on the Internet will logically become the
next area of major focus. The search will then begin for video that is both of
interest to users and commercially viable.

THE VISUAL DATA SOLUTION

To meet the growing demand for video content we have developed
comprehensive original video libraries in the areas of travel, corporate
information and health care. We have a worldwide network of professional
freelance camera crews, and are able to shoot the video, edit it in-house
utilizing digital, non-linear editing systems, and serve and distribute finished
content on the Internet on a price competitive basis.

In addition to being a content developer and owner, we are a full service
production and distribution (broadcasting) company, capable of aggregating,
broadcasting and globally transmitting rich media (audio and video) content. By
both creating and owning our content we are able to repurpose the content to
meet the rapidly changing needs of the Internet consumer. We can package and
deliver the same content in a multitude of different forms, simultaneously
addressing the diverse needs of Internet consumers. In addition, we are not
required to invest our capital in the rapidly changing area of streaming media
technologies but, through our strategic partners, we are able to deliver rich
media content using the latest available technologies at little or no additional
cost.

As we implement our strategy described below, we believe that we will not
only maintain our competitive advantage, but will establish a standard for the
future design and production of original video content for the Internet.

STRATEGY

Our strategy is to establish ourselves as the leading Internet developer
and owner of video content. In addition, we want to become the leading provider
of Internet based video

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production and broadcast services. The key components to achieving these goals
include the following:

EXPAND OUR EXISTING VIDEO "VIEW" LIBRARIES

We have developed video libraries of rich media content in the areas of
travel, corporate information and healthcare. Our strategy for further
development of these libraries is based on seeding each of these vertical
markets with enough content to achieve market prominence.

DEVELOP NEW VIDEO TOPICAL LIBRARIES

As a result of our success in the areas of travel, corporate information
and healthcare, we intend to identify new industries and market niches which
have a high Internet consumer demand for video libraries. Areas identified
include education, sports and product promotion.

CHART

EXPAND OUR BUSINESS TO BUSINESS PRODUCTION SERVICES

By increasing the visibility of our production and broadcast services, our
strategy is to offer end-to-end solutions, from multimedia production through
Internet broadcast services, to the business community.

LEVERAGE STRATEGIC RELATIONSHIPS

Following our business model, we focused on partnering Visual Data
Corporation with other companies strategic to all areas of our operations,
including video content, business services and distribution. Some of our
strategic partners include PR Newswire, InterVu, REZsolutions, Carlson Travel
Group, Interval International, Pegasus/TravelWeb, Inteli-Health and Physicians'
Online.

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MAKE SYNERGISTIC ACQUISITIONS

We continue to look for strategic acquisition opportunities, like EDnet,
that will allow us to accelerate the achievement of our overall business goals
and permit us to quickly take advantage of new or synergistic market
opportunities.

The major focus of our efforts to date has been the travel industry. The
majority of research currently available indicates that this sector is one of
the fastest growing on the Internet. Jupiter Communications predicts travel
related transactions on the Internet will gross $1.9 billion this year, with
this figure expected to increase to $11.7 billion by 2002. We have five
libraries, existing or under development, devoted to the travel industry. Our
goal is to attain critical mass in each category, thereby establishing Visual
Data as a significant company in this growth area.

In addition, we have developed other libraries of commercial value.
CareView(TM)'s full motion nursing home videos can be utilized by health care
workers and patients' families to locate appropriate nursing homes or assisted
living facilities. MedicalView(TM), an on-line source of information for
physicians, health care professionals and consumers, operates in the rapidly
growing area of medical and health related information.

We believe there are a number of other areas of opportunity for business
growth and revenue generation as video content is more widely used to promote
products and services. We believe Visual Data is currently well positioned to
take advantage of these expanding opportunities by having the synergy of
efficiencies and expertise in each of these areas.

SALES AND MARKETING

The core of our market strategy has been to partner with the recognized
leaders in each of the markets our video content addresses. Through these
partnerships we can take advantage of each partner's existing marketing
programs, sales forces and business relationships. By offering our products and
services in conjunction with their products, our partners can increase the value
of their offerings and increase the revenues associated with the individual
sales. Likewise, we can take advantage of our partners' products and reduce
costs in areas such as sales personnel, marketing, and service fees. Contracts
with these partners range from one to two years, some of which are terminable
upon short term notice.

For example, Interval International, the second largest timeshare exchange
company in the world, uses its sales force to sell our ResortView(R)product in
conjunction with their resort developer program.

PR Newswire has 28 offices and over 130 sales persons in the U.S. and
Europe. With PR Newswire as our marketing arm for Video News Wire, we believe it
likely that Visual Data will be able to secure a significant position in the
market for corporate videos, analysts webcasts, video press releases and live
event broadcasts.

We also use a variety of additional marketing methods, including our
internal sales force, to market HotelView, CareView, MedicalView, ResortView,
AttractionView and DestinationView to a variety of potential clients including
hotel chains, resorts and nursing homes. We utilize independent sales
representatives to market HotelView and MedicalView. Following the offering, we
will increase our marketing efforts by hiring additional internal and
independent sales representatives.

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OUR PRODUCTS AND SERVICES

We are a leading producer and owner of original video content specifically
developed for the Internet and interactive television. We currently have eight
existing libraries and five under development. In addition to revenues generated
from our core businesses, we recorded revenues in fiscal 1998 from equipment
sales, installation and usage fees, as well as web design and consulting fees
from our majority owned subsidiary EDnet. We anticipate that the majority of our
future revenues will be generated from the development, production and
distribution of our original content through our libraries and other sources
associated with the content and its channels of distribution. These other
sources of revenue associated with the distribution of the content will include
per view and tuition charges, usage and booking fees, syndication and royalty
fees, advertising and sponsorship revenues and e-commerce transactions, as
outlined in the table below.

PRODUCTS AND SERVICES

<TABLE>
<CAPTION>
CONTENT ADVERTISING
ANNUAL PER VIEW SYNDICATION REVENUES
FEE AND TRANSACTION AND AND
PRODUCTS AND SERVICES SUBSCRIPTIONS(1) TUITIONS E-COMMERCE ROYALTIES SPONSORSHIPS
- --------------------- ---------------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
EXISTING LIBRARIES:
TRAVEL INDUSTRY
HotelView.......... Yes Yes -- Yes Yes
ResortView......... Yes -- Yes Yes Yes
AttractionView..... Yes Yes Yes Yes
GolfcourseView..... Yes Yes -- Yes Yes
CORPORATE INDUSTRY:
Video News Wire.... Yes -- -- Yes Yes
TalentView......... Yes -- -- -- Yes
HEALTHCARE INDUSTRY:
CareView........... Yes -- -- -- Yes
MedicalView........ Yes Yes Yes Yes Yes
FUTURE LIBRARIES:
ProductView........ Yes -- Yes Yes Yes
CampusView......... -- Yes -- Yes Yes
DestinationView.... Yes -- -- Yes Yes
CruiseView......... Yes Yes -- Yes Yes
SERVICES:
VideoViewer........ -- -- -- Yes Yes
Production and
Broadcast
Services(2)..... Yes Yes Yes Yes Yes
</TABLE>

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

(1) Includes Production Services

(2) Includes Webcasts

OUR EXISTING VIDEO LIBRARIES

THE TRAVEL INDUSTRY

HotelView(R) -- www.hotelview.com

Our HotelView(R) library provides two to four minute multimedia video tours
that give the viewer a detailed look at the hotel's guestrooms, grounds, meeting
space, recreational facilities, dining venues and other amenities. It also
includes a map showing the hotel's location relative to area attractions and
airports. The video tour can be accessed through the participating hotel's own
Website, HotelView(R)'s Website at www.hotelview.com, and

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hundreds of other Websites, such as TravelWeb.com (Pegasus/Travel Web), All-
Hotels.com, HotelBook.com, REZsolutions.com (a product of Utell International
and Anasazi, Inc. and the world's leading supplier of integrated business
solutions for the hospitality industry) and Mercavia.com (Carlson Travel Group's
Intranet site).

HotelView(R) currently features over 105 hotels worldwide, 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 in New York.

HotelView(R)'s revenues are generated through an annual subscription fee,
which includes the creation, storage and serving of the video on the Internet,
and per view revenues, which are paid by the hotel, each time someone views the
video on the Internet. Our initial results have found that approximately 33% of
viewers who click on a hotel's Website will view a video if it is available, and
of those viewing videos approximately 10% are booking rooms.

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 or 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 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 over 1,400 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, we
receive a commission on each completed stay generated by the travel agents.
Current ResortView(R) properties include Harbour Lights in Myrtle Beach, South
Carolina, Newport Beachside Hotel and Resort in Miami Beach, The Royal Resorts
in Cancun, Mexico, Isle of Bali in Orlando, Florida, Fairfield Royal Vista in
Pompano Beach, Florida and Peppertree at Wild Wing in Conway, South Carolina.

AttractionView(TM) -- www.attractionview.com

Many vacation planners need more than just information about the
accommodations, and AttractionView(TM) has been designed as a natural complement
to HotelView(R) and ResortView(R).

AttractionView(TM) focuses on marrying the neighboring attractions, such as
amusement parks, theme parks, regional malls, and the like to the HotelView(R)
and ResortView(R) accommodations. We currently have over 25 AttractionView(TM)
videos on-line and available for viewing, including 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 per view revenues, which are paid by the
attraction, each time someone views the video on the Internet.

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GolfcourseView(TM) -- www.videoviewer.com

In April 1999, we 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.
GolfCourseView(TM), which is available on www.videoviewer.com, 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.

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

THE CORPORATE INFORMATION INDUSTRY

Video News Wire(TM) -- www.videonewswire.com

We created Video News Wire(TM) to service an agreement with PR Newswire
Corporation, the leading electronic distributor of corporate news releases.
Launched in 1998, Video News Wire(TM) creates and distributes television
news-like video press releases via the Internet. Video News Wire(TM) also
provides "About the Company" presentations and provides coverage of live
corporate events. Using a worldwide network of professional freelance camera
crews, Video News Wire(TM) can videotape press conferences and events almost
anywhere they might occur. In April 1999, we entered into an agreement with
Canada Newswire, Ltd., Canada's largest distributor of press releases.

In January 1999 we launched a new Video News Wire(TM) product which offers
publicly-traded companies a cost effective means to broadcast their analyst
conference calls live, making them available to the investing public, the media
and worldwide to anyone with Internet access. This audio "Webcast" service is
sold by PR Newswire. The Webcast can also be archived for audio replay for an
additional fee and the archived material can be accessed through a company's own
Website.

Revenues are generated through the production and storage of basic and
enhanced versions of video press releases, video corporate profiles and video
footage of events. Current Video News Wire(TM) clients include Chrysler
Corporation, Delta Airlines, McDonalds Corporation, Real Networks, Seagate
Technologies, Subway Sandwiches and Salads, United News and Media and Warner
Brothers.

In conjunction with our Video News Wire(TM) service, we are currently
developing a corporate news broadcast site on the Internet called
TheFirstNews.com. The goal of the new site is to provide a continuous audio
stream of corporate news as it is released over the various wire services. We
intend to also offer our Video News Wires, live audio and video events and other
corporate information. Users of the new service will be able to listen to all
the news stories of the day or identify specific industries or individual stocks
they wish to be informed about. When a press release, video news wire or other
event occurs they will be able to hear or see the information instantly. We
intend to make this new service available during the fourth quarter of fiscal
1999.

TalentView(TM) -- www.talentview.com

We have created our TalentView(TM) library with the goal of developing
Internet-based solutions designed expressly for the entertainment, advertising
and media industries. TalentView's(TM) initial online service, A* Cappella, is a
searchable, multimedia talent library of more than 1,500 professional voice
performers working in film, television, radio and

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<PAGE> 36

other media applications. The service is available to the production community
via a secure, restricted Website at www.talentview.com.

Directed at casting professionals and producers, A* Cappella offers a
comprehensive talent classification and auditioning system whereby talent can be
compiled, sorted and selected by specific qualities and specialities through the
use of a search menu interface. Casting directors and producers can access and
review artist voice samples and resumes which include contact information. We
believe the service provides a promotional medium for talent, as well as an
efficient, cost-effective tool for those who hire talent. We also believe
TalentView(TM) offers certain synergy to our EDnet subsidiary and their clients
in the entertainment and advertising industries.

It is anticipated that our A* Cappella voice library will generate revenues
from both membership fees and advertising.

THE HEALTHCARE INDUSTRY

CareView(TM) -- www.careview.com

Our strategy is to make our CareView(TM) library a critical source of
information for hospital case managers in the long-term care facility selection
process. CareView(TM) places a complete personal computer package in the case
management department of selected hospitals at no cost to the hospital, other
than a telephone line. CareView(TM) systems are also placed at selected senior
citizen resource centers, providing better exposure for assisted living
facilities (most of whose admissions are not from hospitals).

Subscribing long-term care facilities are provided with a full-motion,
narrated video tour as well as a printable information sheet, e-mail links for
requesting more information, and a quick reference list of services and
amenities. We have implemented and are marketing the CareView(TM) system on a
geographic market-by-market basis, starting with the Southeast Florida and the
metro New York City markets. Our goal is to install CareView(TM) systems in 30
to 40 hospitals in each market. By concentrating on the larger hospitals, we
believe that we will be able to control access to a significant amount of the
hospitalized patients in each market. We have installed CareView(TM) in over 60
hospitals and senior resource centers in South Florida and metro New York City
and we have enrolled more than 55 long-term care facilities.

Revenues are generated through the payment of an annual fee by the
subscribing nursing home or assisted living facility.

MedicalView(TM) -- www.medicalview.com

We designed MedicalView(TM) to create multimedia presentations of medical
techniques, procedures and treatments, continuing education programs,
conferences and health related information. MedicalView(TM)'s content is being
developed through alliances with leading health and medical institutions and
organizations such as university-based medical centers, major teaching
hospitals, specialty treatment hospitals and disease specific associations,
including Johns Hopkins University and the American Society of Nephrology.

To date we have agreements to distribute MedicalView(TM) multimedia content
with Physicians' Online and Inteli-Health. Physicians' Online, which bills
itself as the world's largest Internet community of doctors with over 170,000
physicians on-line, provides a "physicians only" environment with medical
databases, clinical symposiums and discussion groups with national experts.
Physicians' Online estimates that approximately 15,000 physicians use the site
daily. Inteli-Health, a joint venture between Aetna U.S. Healthcare

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and Johns Hopkins University Medical School, provides consumer health
information to the general public and health care community. Additionally, in
March 1999, we signed a content agreement with George Blackburn MD, Ph.D.,
Associate Chief of Nutrition at Harvard Medical School to develop various
programs regarding nutrition, weight loss and other health related topics. We
will also seek to establish relationships with major pharmaceutical, medical
equipment and health care service companies to develop customized content for
distribution throughout the Internet, as well as to generate advertising and
sponsorship revenues.

Revenues are generated through corporate sponsorship, continuing education
program fees, subscription (production, storage, serving) and advertising.

OUR LIBRARIES UNDER DEVELOPMENT

ProductView(TM)

As e-commerce proliferates, we believe more and more consumers will be
turning to the Internet as both a source of information as well as an
alternative method of purchasing many consumer products. In order to effectively
compete, we believe thousands of products will need to be displayed in a rich
media format that will provide the consumer with detailed information on
purchasing, assembling and operating these products. We are designing
ProductView(TM) to address this perceived need by offering video taping, editing
and digitizing services to the manufacturers of products. In addition,
ProductView(TM) will archive the product information in easy-to-access
databases.

We will offer ProductView(TM) as our high quality, low cost video creation
capability to manufacturers and distributors of products and services not
currently using video as part of their marketing efforts, as well as provide
them with a video tool for use in creating functional overviews, assembly
instructions and in-store presentations.

We anticipate that the advertising and marketing plans for ProductView(TM)
will emphasize the need to add video to not only the manufacturer's Website, but
to thousands of cybermalls, catalog companies and other retailers on the
Internet. For clients with extensive product inventories, we anticipate offering
the option of mobile taping and editing studios to be temporarily located on
site at the manufacturer's warehouse or manufacturing facility.

Revenues will be generated through a subscription fee, which includes the
creation, storage and serving of the video on the Internet, and per view
revenues, which are paid by the manufacturer and distributor, each time someone
views the video on the Internet.

CampusView(TM)

With over 3,000 colleges and universities in the United States, making the
best choice of a college can be a daunting experience for the student and their
family. In some cases, the student is simply unable to visit the institution
prior to selection, and therefore must base his or her decision on various
brochures and word-of-mouth information. As we believe the selection of a
college or university is one of the most important decisions a student and his
or her family will make, we are designing the CampusView(TM) Website to provide
the students and their families with comprehensive information in order to offer
them the opportunity for more informed decision-making in the college selection
process. Our videos will provide two to three minute tours of the campus and the
various educational, social and sports programs the school wants to highlight.

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Our strategy is to initially videotape approximately 2,500 colleges and
universities in the United States. CampusView(TM) will be a pay-per-view service
available to both high schools and individual students. Revenues from
CampusView(TM) will be generated by charging students, their families and
schools based upon the number of views. In addition, we will sell advertising
and sponsorships on our Website. Our present plans anticipate a launch of the
CampusView(TM) library within six to 12 months following the closing of this
offering.

CruiseView(TM)

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

We anticipate revenues will be generated through an annual subscription
fee, which includes the creation, storage and serving on the Internet, and per
view revenues, which are paid by the cruise line, each time someone views the
video on the Internet.

DestinationView(TM)

We are designing DestinationView(TM) as a collection of video clips
providing a detailed look at certain aspects of the destination, such as area
parks, meeting spaces, recreational facilities, dining spots, museums, and
shopping districts. Additionally, it is anticipated that these clips will
explore activities and day trips which are available to the visitor, including
golfing, skiing, wine appreciation and architecture walks, and will also include
briefs on available transportation entities (railway stations, airports, cruise
excursions, highways, etc.).

We have initially targeted the 150 most visited destinations and ports of
call. Our second focus is to target destinations that are most likely to market
via the Internet. It is anticipated that DestinationView's client base of local
city convention and visitor's bureaus, local boards of tourism, regional
consortiums and chambers of commerce will also be used to market our other
travel related libraries to their existing members.

Revenues are currently generated through subscriptions and per view
charges.

OTHER SERVICES

VideoViewer(TM) -- www.videoviewer.com

In March 1999, we launched the beta version of VideoViewer(TM), a
high-speed, video on demand network on the Internet. VideoViewer.com will enable
users of ISDNs, T1s, cable modems and other broadband services to access a
conduit to the growing world of original video content on the Web. The
VideoViewer(TM) design enables cable modem and telephone Internet Service
Providers to privately label the VideoViewer(TM) and personalize the site to
look as if it is their own. The site will enable these service providers to
clearly demonstrate to potential customers the need for higher bandwidth.

VideoViewer(TM) is a graphic representation of Interactive television.
Through
VideoViewer.com, high bandwidth users will be able to access rich media content
on subjects including travel, business and finance, education, consumer
products, health and medicine, and entertainment and recreation. When you enter
the VideoViewer.com

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Website, you are presented with an introduction screen; after clicking the Enter
button, the VideoViewer(TM) will load the three media screens and the scrolling
channel guide onto the screen. As you place the cursor on any of the scrolling
bars, a text description appears and simultaneously an audio clip is played
describing the channel's contents. For example, clicking the "Travel" bar brings
up the various choices including the HotelView(R) selector; selecting a state or
country will then display the available cities. If you click the desired city,
you can choose to view videos of hotels located there, as well as other
selections including a list of nearby golf resorts, attractions, destination
tours or other related topics or subjects. Travel oriented commercials will be
displayed on the two smaller media screens while viewing related content.

Revenues are generated through syndication, per views, advertising fees and
video production of ads.

PRODUCTION AND BROADCAST SERVICES

With our advanced video production studios and worldwide freelance camera
crew network, we can provide complete end to end multi-media advertising
services such as:

- shoot, edit and produce a product presentation;

- digitize store and serve the presentation on the Internet;

- link to client's home page or distribute to various sites on the
Internet;

- if applicable, broadcast to television or other media; and

- monitor results and track performance.

OUR EDNET SUBSIDIARY

In June 1998, we acquired a 51% interest in Entertainment Digital Network,
Inc. (OTCBB: EDNT). Based in California, 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 industry. 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. EDnet's client base of more than 500 companies includes
LucasFilms Skywalker Division, Sony Entertainment, Disney, MGM, Capitol Studios,
Warner Brothers, NFL Films and PGA Tour Productions. EDnet's recent projects
included the transmission of digitized audio during the post-production of such
feature films as Titanic, Antz, Saving Private Ryan and the new Star Wars
prequel, The Phantom Menace.

EDnet has recently 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 will provide complete turnkey solutions,
bundling Telestream video equipment with their network services. This
relationship is anticipated to 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,

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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 6,542,722
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.

COMPETITION

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

- other Websites, Internet portals and Internet broadcasters to acquire and
provide content to attract users;

- with 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.

We cannot guarantee that we can effectively compete in any of these areas.
Although Visual Data believes it is the only Internet broadcaster offering an
end-to-end solution for production and serving digital video on the Internet, we
face substantial 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 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. See "Risk
Factors -- We may not be able to compete effectively in our industry" for a
further discussion of the competitive factors facing Visual Data.

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

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regulations may limit the growth of the Internet, increase our cost of doing
business or increase our legal exposure, which could have a material adverse
effect on our business, financial condition and results of operations.

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

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 license 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.
See "Risk Factors -- Misappropriation of our intellectual property could impair
our competitive position."

FACILITIES

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
our mortgage and extended the expiration date until September 30, 2002. In
addition, in connection with our purchase of 51% of EDnet, we granted EDnet a
second mortgage on our corporate headquarters as collateral for a promissory
note.

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EMPLOYEES

We currently have 54 full-time employees, of whom 22 are design, production
and technical personnel, 17 are sales and marketing personnel and 15 are
general, administrative and executive management personnel. None of the
employees are covered by a collective bargaining agreement and our management
considers relations with employees and consultants to be good. We also hire,
from time to time, subcontractors that develop our programming.

LEGAL PROCEEDINGS

We may from time to time become a party to various legal proceedings
arising in the ordinary course of business. We are not a party to any pending
or, to our knowledge, threatened material legal proceedings.

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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).................... 43 Chief Executive Officer, President and
Chairman; Chairman of EDnet
Alan M. Saperstein.................... 40 Executive Vice President, Treasurer
and Director; Director of EDnet
Pauline Schneider..................... 43 Chief Financial Officer
Benjamin Swirsky(1)(2)................ 57 Director
Brian K. Service(1)(2)................ 51 Director; Director of EDnet
Eric Jacobs........................... 52 Secretary, Director; Director of EDnet
Robert J. Wussler(1)(2)............... 60 Director
</TABLE>

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

(2) Member of the Audit Committee.

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

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

PAULINE SCHNEIDER, CPA. Ms. Schneider joined Visual Data as Controller in
July 1995 and has served as Chief Financial Officer since July 1999. From
September 1988 through April 1993, and January 1995 through April 1995, Ms.
Schneider worked for Schmidt, Raines, Trieste, Dickenson & Adams, P.L. as a
Senior Accountant. From November 1993 to January 1995, Ms. Schneider served as
the Business Manager of the Harid Conservatory and was responsible for financial
reporting, security, transportation, risk management and facilities management.
Ms. Schneider received a B.A. in psychology from the University of Rochester and
completed a concentration equivalent to a major in accounting at Drake
University.

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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 is Chairman of P.C.Docs
International, Inc., a major software company, a Canadian publicly-traded
company (Nasdaq: DOCSF, TSE: DXX) where he serves as Chairman. 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 the Board of Directors
since July 1997 and serves on the Audit and Compensation Committees of the Board
of Directors. Since August 1998 Mr. Service has been a Director of EDnet. Mr.
Service is currently an international business consultant with clients in North
and South America, the United Kingdom, Asia, Australia and New Zealand. From
October 1992 to October 1994, Mr. Service was CEO and Managing Director of
Salmond Smith Biolad, a New Zealand publicly-traded company. From October 1986
to October 1992, he was CEO and Executive Chairman of Milk Products Holding
(North America) Inc., a wholly-owned subsidiary of the New Zealand Dairy Board
in Santa Rosa California, which was the sole marketer of New Zealand dairy
products in North America.

ERIC JACOBS. Mr. Jacobs has been a member of the Board of Directors since
July 1997 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.

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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.

KEY EMPLOYEES

DAVID B. CHESTLER. Mr. Chestler, 36, has been the General Manager of
HotelView Corporation since November 1997. From August 1989 until October 1997,
Mr. Chestler was employed at Utell International, a leading hotel reservation,
sales and marketing company, serving as Regional Director for the Eastern Region
and as Vice President of Sales & Development, North America. Mr. Chestler
received a B.S. degree from Florida International University.

BRYAN CARMODY. Mr. Carmody, 41, joined Visual Data in June 1998 as the
General Manager of our TalentView division. From October 1995 until June 1998,
Mr. Carmody was employed in the entertainment industry. During this time he
worked as a professional voice-over artist providing commercial and industrial
narratives for TV, radio and film. His clients included Pizza Hut Corporation,
Fox Television, General Motors, Suzuki and the Discovery Channel. Mr. Carmody
also wrote and produced a number of independent film projects during this time
period. In September 1993, Mr. Carmody joined St. Jon/VRX Pharmaceuticals of
Harbor City, California as Vice President and National Sales Manager where he
continued in the capacity until September 1995. Mr. Carmody received a B.S.
degree from Union College.

JOHN J. HILL. Mr. Hill, 47, has been the General Manager of CareView
Corporation since December 1997. From July 1996 until November 1997, Mr. Hill
performed consulting services within the healthcare industry. Prior thereto Mr.
Hill has held executive management positions of various companies including
Emergency Consultants, a physician practice management group, from January 1994
until June 1996, SurgiCare America, an operator of ambulatory surgery centers
from September 1991 to January 1993, and CarePlus, a provider of home healthcare
services, from September 1984 to September 1991. Mr. Hill received a B.B.A. in
Marketing from Florida International University.

RYAN J. SHAHOUD. Mr. Shahoud, 28, joined Visual Data in November 1997 as a
Software Engineer and System Administrator and has served as Director of Systems
and Development since December 1998. From September 1995 through November 1997,
Mr. Shahoud was a principal of Armigeron Information Services Inc., an Internet
Service Provider that provides customer programming and web hosting services,
where he served as CTO, Software Engineer, and Systems Administrator. From May
1995 through September 1995, Mr. Shahoud worked as a Systems Administrator for
W.R. Grace & Company and from August 1994 through June 1995, Mr. Shahoud worked
as a Computer Operator for Sensormatic Electronics. Mr. Shahoud received a B.S.
in Computer Science from Florida Atlantic University.

GLEN UDINE. Mr. Udine, 42, joined Visual Data in December 1998 as the
General Manager of the MedicalView division. From October 1995 to November 1998,
Mr. Udine was President of Novus Healthcare, Inc. a home health care and
physician practice management firm. From April 1993 until September 1995, Mr.
Udine was Regional Vice President with Coram Healthcare Corporation, one of the
largest home healthcare providers in the U.S. He was previously a Vice President
and principal with Clinical

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Homecare Corporation from April 1986 to March 1993. Mr. Udine received a B.S.
degree from Syracuse University.

TOM KOBAYASHI, 70, has served as Chief Executive Officer and a Director of
EDnet from 1992 to the present. From June 1992 to July 1998, Mr. Kobayashi
served as the Chairman of the Board of Directors of EDnet. From 1986 to 1993, he
was Vice President and General Manager of Skywalker Sound division of LucasArts.
Mr. Kobayashi is a member of the American Engineering Society, the Society of
Motion Picture and Television Engineers, the Society of Professional Audio
Recording Studios, the Academy of Motion Picture Arts and Sciences and the
Academy of Television Arts and Sciences. Mr. Kobayashi earned a Bachelor of
Science degree at the University of Southern California.

DAVID GUSTAFSON, 52, has served as the President and Chief Operating
Officer of EDnet from March 1996 to the present, and as Vice President,
Marketing and Sales, from July 1992 to March 1996. He has served as a Director
of EDnet since 1992. Previously, from July 1989 to June 1992 he was President
and Chief Operating Officer of SLT, Inc., a private New York-based apparel
manufacturer and from February 1985 to June 1989 he served as Corporate Vice
President and Director of Wacoal America, Inc., a division of Wacoal Corp., a
multi-national consumer products company based in Kyoto, Japan, where his
responsibilities included merchandising and design, sales, marketing and
advertising. Mr. Gustafson received his Bachelors degree from Westmont College.

THOMAS SCOTT, 55, has served as the Vice President-Chief Technology Officer
of EDnet since 1992. From 1985 to 1992, he was Chief Engineer for Skywalker
Sound, the post production division of LucasArts/Lucasfilm Ltd. Mr. Scott
received two Oscar Academy Awards for Best Sound on the films The Right Stuff
and Amadeus. Mr. Scott earned his Bachelor of Science degree from the
Massachusetts Institute of Technology.

There is no family relationship between any of the executive officers and
directors. Each director is elected at our annual meeting of shareholders and
holds office until the next annual meeting of shareholders, or until his
successor is elected and qualified. At present, our bylaws provide for not less
than two directors. The bylaws permit the Board of Directors to fill any vacancy
and such director may serve until the next annual meeting of shareholders or
until his successor is elected and qualified. Officers are elected annually by
the Board of Directors 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, 1998, our Board of Directors
held seven (7) meetings and took action an additional seven (7) times by
unanimous written consent. Each member of the Board participated in each action
of the Board.

Our Board of Directors have 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, 1998, the
Compensation Committee held one (1) meeting. 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

46
<PAGE> 47

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, 1998, the Audit Committee held one (1) meeting. 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.

On July 30, 1997, we granted to each of Messrs. Service and Swirsky options
to each acquire 100,000 shares of our common stock at an exercise price of
$2.125 per share. The term of these options is five years from the date of
grant, with 50,000 options 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. Once
vested, the options remain exercisable. In the event, however, either Mr.
Service or Mr. Swirsky are not members of our Board of Directors at the time the
options vest, they will no longer be entitled to receive such options.

On January 9, 1998, as amended, we granted Mr. Jacobs options to acquire
50,000 shares of our common stock at an exercise price of $2.125 per share. The
term of these options is five years from the date of grant. These options are
fully vested and remain exercisable until the expiration date thereof.

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

47
<PAGE> 48

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, 1998 (collectively, the "Named Executive Officers"):

<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
---------------- ---------------------------
NAME AND OTHER ANNUAL RESTRICTED OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWDS SARs(#) LTIP COMPENSATION
- ------------------ ---- -------- ----- ------------ ---------- ------- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Randy S. Selman,...... 1998 $138,363 -0- $ 9,613(1) -0- -0- -0- -0-
President, Chief 1997 $117,950 -0- $ 7,500(2) -0- -0- -0- -0-
Executive Officer 1996 $ 83,000 -0- $ 2,093(3) -0- 137,230 -0- -0-
and Director
Alan Saperstein,...... 1998 $138,363 -0- $13,969(4) -0- -0- -0- -0-
Vice President, 1997 $117,950 -0- $10,830(5) -0- -0- -0- -0-
Treasurer and 1996 $ 83,000 -0- $ 5,927(6) -0- 137,230 -0- -0-
Director
David E. Goodman(7)... 1998 $135,846 -0- $ 7,521(8) -0- -0- -0- -0-
Executive Vice 1997 $ 18,230 -0- $ 900(9) -0- -0- -0- -0-
President and 1996 $ -0- -0- $ -0- -0- -0- -0- -0-
Chief Operating
Officer
</TABLE>

- -------------------------
(1) Includes $511 for disability insurance, $1,902 for medical insurance and a
$7,200 automobile allowance.

(2) Includes $672 for disability insurance, $1,428 for medical insurance and a
$5,400 automobile allowance.

(3) Includes $569 for disability insurance and $1,524 for medical insurance.

(4) Includes $321 for disability insurance, $6,448 for medical insurance and a
$7,200 automobile allowance.

(5) Includes $424 for disability insurance and $5,006 for medical insurance and
a $5,400 automobile allowance.

(6) Includes $424 for disability insurance and $5,503 for medical insurance.

(7) Mr. Goodman served in such position from August 1997 until October 1998.

(8) Includes $321 for disability insurance and a $7,200 automobile allowance.

(9) Includes a $900 automobile allowance.

EMPLOYMENT AGREEMENTS

Effective January 9, 1998, we entered into amended and restated employment
agreements with Randy S. Selman, our Chief Executive Officer, President, acting
Chief Financial Officer, 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.

48
<PAGE> 49

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

The agreements 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 1998 to the Named Executive Officers.

OPTION GRANTS IN YEAR ENDED SEPTEMBER 30, 1998

<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....... 375,000(1) 31.25% $2.125(1) (4)
Alan Saperstein, Vice
President,
Secretary and
Director........... 375,000(2) 31.25% $2.125(2) (4)
David E. Goodman,
Executive Vice
President and Chief
Operating
Officer............ 400,000(3) 33.3% $ 2.50(3) October 23, 2002
</TABLE>

49
<PAGE> 50

- -------------------------
(1) Granted under the terms of the employment agreement between Mr. Selman and
us. Of such amount, 125,000 options vested on January 8, 1999, and 125,000
options will vest on each of January 8, 2000 and January 8, 2001. All vested
options remain unexercised as of July 2, 1999. The options automatically
vest and are immediately exercisable in the event of a change of control,
constructive termination of Mr. Selman or termination of Mr. Selman by us
other than for cause. The initial exercise price of the options was $2.50;
in November 1998 the Board of Directors reduced the exercise price to $2.125
as a result of the decline in the market price of our common stock and to
continue to provide incentives to senior management.

(2) Granted under the terms of the employment agreement between Mr. Saperstein
and us. Of such amount, 125,000 options vested on January 8, 1999, and
125,000 options will vest on each of January 8, 2000 and January 8, 2001.
All vested options remain unexercised as of July 2, 1999. The options
automatically vest and are immediately exercisable in the event of a change
of control, constructive termination of Mr. Saperstein or termination of Mr.
Saperstein by us other than for cause. The initial exercise price of the
options was $2.50; in November 1998 the Board of Directors reduced the
exercise price to $2.125 as a result of the decline in the market price of
our common stock and to continue to provide incentive to senior management.

(3) Mr. Goodman served as our Chief Operating Officer until October 1998. The
options are exercisable until October 23, 2002 at an exercise price of $2.50
per share. In October 1998, pursuant to a severance agreement, 300,000
options vested and 100,000 options were canceled.

(4) The options are exercisable for four years from the vesting date.

In November 1998, we granted each of Messrs. Selman and Saperstein options
to acquire 700,000 shares of our common stock, at an exercise price of $2.125
per share, as part of the executive bonus program. Of these options, 250,000
vested as a result of the successful completion of the acquisition of EDnet and
the remaining 450,000 options to purchase common stock shall vest upon the
earlier of November 19, 2004 or the occurrence of any of the following: (i) we
sell or merge with another entity whereby more than 25% of our outstanding
common stock changes ownership; (ii) sales of all, or substantially all, of our
assets, or of the assets of any of our divisions, where the proceeds from such
sale exceed $20 million; (iii) we receive a substantial financing from either
private or public funding where the proceeds from such financing exceed $20
million; (iv) we generate a year end pre-tax profit in excess of $3 million in
any of the next three years; or (v) upon achieving goals and objectives as
determined by the board of directors. On June 16, 1999 we repriced the 450,000
unvested options to $16.00 per share.

Also in November 1998, we granted each of Messrs. Swirsky and Service
options to acquire 50,000 shares of our common stock, at an exercise price of
$2.125 per share as part of the executive bonus program. All of such shares
shall vest upon the earlier of November 19, 2004 or the occurrence of any of the
following: (i) we sell or merge with another entity whereby more than 25% of our
outstanding common stock changes ownership; (ii) sales of all, or substantially
all, of our assets, or of the assets of any of our divisions, where the proceeds
from such sale exceed $20 million; (iii) we receive a substantial financing from
either private or public funding where the proceeds from such financing exceed
$20 million; (iv) we generate a year end pre-tax profit in excess of $3 million
in any of the next three years; or (v) upon achieving certain goals and
objectives

50
<PAGE> 51

as determined by the board of directors. On June 16, 1999, we repriced these
options to $16.00 per share.

Except for options issued in connection with the EDnet transaction, all of
these options were granted under the 1996 Stock Option Plan, subject to
shareholder approval of an amendment to such plan increasing the number of
shares under the plan. See "Management -- 1996 Stock Option Plan."

The following table sets forth certain information regarding stock options
held as of September 30, 1998 by the Named Executive Officers.

AGGREGATE OPTION EXERCISES IN YEAR ENDED SEPTEMBER 30, 1998
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, 1998 SEPTEMBER 30, 1998(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........ -0- n/a 387,230(2) 375,000 $374,188 $46,875
Alan Saperstein, Vice
President, Secretary
and Director........ -0- n/a 387,230(2) 375,000 $374,188 $46,875
David E. Goodman,
Executive Vice
President and Chief
Operating
Officer(3).......... -0- n/a 100,000 400,000 $ 12,500 $50,000
</TABLE>

- -------------------------
(1) The dollar value of the unexercised in-the-money options is calculated based
upon the difference between the option exercise price and $2.625 per share,
being the closing price of our common stock on September 30, 1998 as
reported The Nasdaq SmallCap Market.

(2) Of such exercisable options, at September 30, 1998, 137,230 options were
exercisable at $.00016 per share and the remaining 250,000 options were
exercisable at $2.50 per share. All Unexercisable options have an exercise
price of $2.50 per share at September 30, 1998. See Option Grants in Year
Ended September 30, 1998 above.

(3) Mr. Goodman was our Chief Operating Officer until October 1998. The options
are exercisable at $2.50 per share. See Option Grants in Year Ended
September 30, 1998 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.

51
<PAGE> 52

We have reserved an aggregate of 2,500,000 shares of common stock for
issuance pursuant to options granted under the Plan ("Plan Options"). As of the
date of this prospectus, 1,062,450 options have been granted under the Plan.
Such options were issued to our directors, employees and consultants at exercise
prices ranging from $2.125 to $16.00 per share. The Board of Directors or a
Committee of the Board of Directors (the "Committee") will administer the Plan
including, without limitation, the selection of the persons who will be granted
Plan Options under the Plan, the type of Plan Options to be granted, the number
of shares subject to each Plan Option and the Plan Option price. As of this
date, the Board of Directors has not established a separate Committee.

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

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

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

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

52
<PAGE> 53

him lapses to the extent unexercised on the earlier of the expiration date of
the option or one year following the date of such disability.

The Board of Directors or the Committee may amend, suspend or terminate the
Plan at any time, except that no amendment shall be made which (i) increases the
total number of shares subject to the Plan or changes the minimum purchase price
therefor (except in either case in the event of adjustments due to changes in
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.

53
<PAGE> 54

CERTAIN TRANSACTIONS

In February 1997, as a bonus for achieving certain performance goals, we
granted each of Messrs. Selman and Saperstein, our executive officers and
directors, options to acquire 137,230 shares of our common stock at an exercise
price of $.00016 per share as a bonus.

In August 1998, Eric Jacobs, a director of both Visual Data 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 and the warrants
were exercised on April 7, 1999.

Beginning March 1999, EDnet has paid to us a management fee in the amount
of approximately $4,167 per month. Based upon the services provided by Randy
Selman and Alan Saperstein, Messrs. Selman and Saperstein are being paid a fee
by us equal to the fee paid by EDnet.

Except as disclosed above or pursuant to an employment agreement, granting
of stock options, or director or consulting fees, there are no other certain
transactions.

In May 1999, Eric Jacobs, a director of both Visual Data and EDnet, lent
EDnet $250,000 under a 90 day unsecured promissory note bearing interest at 1%
per month. Such funds were used by EDnet for general working capital.

54
<PAGE> 55

PRINCIPAL AND SELLING SHAREHOLDERS

The following table contains information regarding beneficial ownership of
our common stock as of May 20, 1999 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.

<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY SHARES OF COMMON STOCK
OWNED PRIOR TO THE BENEFICIALLY OWNED AFTER THE
OFFERING(2) OFFERING(2)
NAME AND ADDRESS OF ---------------------- SHARES ----------------------------
OF BENEFICIAL OWNER(1) NUMBER PERCENTAGE BEING OFFERED(3) NUMBER PERCENTAGE(3)(4)
- ---------------------- --------- ---------- ---------------- --------- ----------------
<S> <C> <C> <C> <C> <C>
Randy S. Selman(5)..... 865,849 11.7% 105,000 760,849 8.7%
Alan M.
Saperstein(6)........ 887,173 12.0 105,000 782,173 8.9
Benjamin Swirsky(7).... 50,000 * 0 50,000 *
Brian K. Service(8).... 110,938 1.6 0 110,938 1.4
Eric Jacobs(9)......... 113,600 1.7 0 113,600 1.4
Robert Wussler(10)..... -- -- -- -- --
Pauline
Schneider(11)........ 41,089 * 0 41,089 *
All Directors and
Officers (7
persons)(12)......... 2,068,649 24.5% 210,000 1,858,649 18.8%
</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
Prospectus 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 of this Prospectus have been exercised. As of May 20,
1999 there were 6,630,019 shares of common stock outstanding.

(3) Assumes the exercise of the underwriters' over-allotment option.

(4) Gives effect to the sale of 1,400,000 shares of common stock we are
offering under this prospectus.

(5) This amount includes options to acquire an aggregate of 137,230 shares of
common stock at an exercise price of $.00016 per share and options to
acquire an aggregate of 625,000 shares of common stock at an exercise price
of $2.125 per share. Excludes options to purchase 250,000 shares of common
stock at an exercise price of $2.125 per share and options to purchase
450,000 shares of common stock at an exercise price of $16.00 per share,
all of which have not yet vested. See "Management -- Executive
Compensation."

(6) This amount includes options to acquire an aggregate of 137,230 shares of
common stock at an exercise price of $.00016 per share and options to
acquire an aggregate of

55
<PAGE> 56

625,000 shares of common stock at an exercise price of $2.125 per share.
Excludes options to purchase 250,000 shares of common stock at an exercise
price of $2.125 per share and options to purchase 450,000 shares of common
stock at an exercise price of $16.00 per share, all of which have not yet
vested. See "Management -- Executive Compensation."

(7) This amount includes options to purchase 50,000 shares at $2.125 per share,
but excludes options to acquire 50,000 shares of common stock at an
exercise price of $2.125 per share which were granted in August 1997
immediately following our initial public offering and options to acquire
50,000 shares of common stock at an exercise price of $16.00 which were
granted in November 1998 and subsequently repriced in June 1999, all of
which have not yet vested. Mr. Swirsky's address is 350 Fairlawn Avenue,
Toronto, Ontario, Canada.

(8) This amount includes options to purchase 50,000 shares at $2.125 per share
and warrants to purchase an additional 25,000 shares at $3.00. Excludes
options to acquire an aggregate of 50,000 shares of common stock at an
exercise price of $2.125 per share which were granted in August 1997
immediately following our initial public offering and options to acquire
50,000 shares of common stock at an exercise price of $16.00 which were
granted in November 1998 and subsequently repriced in June 1999, all of
which have not yet vested. Mr. Service's address is 123 Red Hill Circle,
Tiburon, CA 94920.

(9) This amount includes options to acquire an aggregate of 100,000 shares of
common stock at an exercise price of $2.125 per share of which 50,000 were
granted in January 1998 and 50,000 were granted in November 1998 and
excludes options to purchase 25,000 shares of common stock at $2.125 that
have not vested.

(10) Excludes options to purchase 75,000 shares of common stock at $17.1875 that
have not yet vested.

(11) Includes options to purchase 40,500 shares of common stock at $2.125 per
share and excludes options to purchase 30,000 shares of common stock at
$2.125 that have not yet vested. Does not include 489 shares of common
stock and options to purchase 5,650 shares of common stock at $2.125 per
share owned by Ms. Schneider's husband for which she disclaims beneficial
ownership.

(12) See notes (5) -- (11) above.

DESCRIPTION OF SECURITIES

GENERAL

We are authorized to issue up to 20,000,000 shares of common stock, par
value $.0001 and 5,000,000 shares of preferred stock, par value $.0001 per
share. The following description of our capital stock is not complete and is
qualified in its entirety by our Articles of Incorporation, as amended, and
Bylaws, as amended, copies of which have been filed with the Securities and
Exchange Commission.

COMMON STOCK

As of May 20, 1999, there were 6,630,019 shares of common stock outstanding
held of record by at least 1,000 shareholders of record. All outstanding shares
of common stock are, and all shares of common stock to be outstanding upon
completion of this offering will be, validly authorized and issued, fully paid,
and non-assessable.

56
<PAGE> 57

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Holders of common
stock are entitled to receive ratably such dividends as may be declared by the
Board of Directors out of funds legally available therefor. In the event of our
liquidation, dissolution, or winding up, holders of our common stock are
entitled to share ratably in all of our assets remaining after payment of
liabilities and liquidation preferences of any outstanding shares of preferred
stock. Holders of common stock have no preemptive rights or other subscription
rights to convert their shares into any other securities.

PREFERRED STOCK

Our Board of Directors has the authority, without further action by our
shareholders, to issue 4,999,850 shares of preferred stock, in one or more
series and to fix the privileges and rights of each series. These privileges and
rights may be greater than those of the common stock. We have previously
designated two series of preferred stock consisting of 300 shares designated as
Series A Convertible Preferred Stock, of which 150 shares were issued and
subsequently converted, and 150 shares designated as Series A-1 Convertible
Preferred Stock, all of which were issued and subsequently converted. Upon such
conversions, the shares of preferred stock so designated have been returned to
our treasury and remain preferred stock with no designation. Our Board of
Directors, without further shareholder approval, can issue preferred stock with
voting, conversion or other rights that could adversely affect the voting power
and other rights of the holders of common stock. This type of "blank check
preferred stock" makes it possible for us to issue preferred stock quickly with
terms calculated to delay or prevent a change in our control or make removal of
our management more difficult.

REDEEMABLE COMMON STOCK PURCHASE WARRANTS

As of the date of this prospectus, there were 1,135,000 warrants
outstanding. Each warrant entitles the holder to purchase one share of common
stock at $6.00 per share until July 30, 2002. The warrants are redeemable by us
for $.05 per warrant, upon 30 days written notice, if the closing bid price of
our common stock as reported by the principal exchange on which the common stock
is traded equals or exceeds $7.20 per share for 20 consecutive trading days and
ending 30 days prior to the notice of redemption. As of the date of this
prospectus, we could, if we desire, redeem the warrants which would result in
gross proceeds of $6,810,000 and the issuance of an additional 1,135,000 shares
of common stock. We have agreed for a period of 30 days from the date of this
prospectus not to redeem the warrants.

The warrants can only be exercised when there is a current effective
registration statement covering the shares of common stock underlying the
warrants. If we do not or are unable to maintain a current effective
registration statement, the warrant holders will be unable to exercise the
warrants and the warrants may become valueless. In addition, because the
warrants may be transferred, it is possible that the warrants may be acquired by
persons residing in states where we have not registered, or are not exempt from
registration. In such event, if the shares of common stock underlying the
warrants are not registered or qualified for sale in the state in which a
warrant holder resides, such holder might not be permitted to exercise the
warrants. Moreover, even if the warrants could be transferred, the shares of
common stock underlying the warrants may not be sold or transferred upon
exercise of the warrants. warrant holders residing in those states would have no
choice but to attempt to sell their warrants or to let them expire unexercised.

57
<PAGE> 58

Each warrant may be exercised by surrendering the warrant certificate, with
the form of election to purchase on the reverse side of the warrant certificate
properly completed and executed, together with payment of the exercise price to
the warrant agent. The warrants may be exercised in whole or from time to time
in part. If less than all of the warrants evidenced by a warrant certificate are
exercised, a new warrant certificate will be issued for the remaining number of
warrants.

Holders of the warrants are protected against dilution of the equity
interest represented by the underlying shares of common stock upon the
occurrence of certain events, including, but not limited to, issuance of stock
dividends. If we merge, reorganize or are acquired in such a way as to terminate
the warrants, the warrants may be exercised immediately prior to such action. In
the event of our liquidation, dissolution or winding up, holders of the warrants
are not entitled to participate in the distribution of our assets.

For the life of the warrants, subject to the redemption provision, the
holders thereof are given the opportunity to profit from a rise in the market
price of our common stock. The exercise of the warrants will result in the
dilution of the then book value of the common stock held by the public investors
and would result in a dilution of their percentage ownership of our common
stock. The terms upon which we may obtain additional capital may be adversely
affected through the period that the warrants remain exercisable. The holders of
these warrants may be expected to exercise them at a time when we would, in all
likelihood, be able to obtain equity capital on terms more favorable than those
provided for by the warrants.

ANTI-TAKEOVER PROVISIONS OF FLORIDA LAW

Florida has enacted legislation that may deter or frustrate takeovers of
Florida corporations. The Florida Control Share Act generally provides that
shares acquired in excess of certain specified thresholds will not possess any
voting rights unless such voting rights are approved by a majority of a
corporation's disinterested shareholders. The Florida Affiliated Transactions
Act generally requires super majority approval by disinterested shareholders of
certain specified transactions between a public corporation and holders of more
than 10% of the outstanding voting shares of the corporation (or their
affiliates). Florida law and our articles of incorporation and bylaws also
authorize us to indemnify our directors, officers, employees and agents to the
furthest extent permitted by law. In addition, our articles of incorporation and
Florida law presently limit the personal liability of corporate directors for
monetary damages, except where the directors (i) breach their fiduciary duties
and (ii) such breach constitutes or includes certain violations of criminal law,
a transaction from which the directors derived an improper personal benefit,
certain unlawful distributions or certain other reckless, wanton or willful acts
or misconduct.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is Interwest Stock
Transfer Company, 1981 East Murray Holladay Road, Suite 100, Salt Lake City,
Utah 84117.

58
<PAGE> 59

UNDERWRITING

Subject to the terms and conditions contained in the underwriting
agreement, Visual Data and the selling shareholders have agreed to sell to each
of the underwriters named below, and each of the underwriters, for which
Cruttenden Roth Incorporated and H.C. Wainwright & Co., Inc. are acting as
representatives (the "Representatives"), has severally, and not jointly, agreed
to purchase the number of shares offered in this offering set forth opposite
their respective names below.

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
Cruttenden Roth Incorporated................................ 512,500
H.C. Wainwright & Co., Inc.................................. 512,500
Needham & Company, Inc...................................... 50,000
Pennsylvania Merchant Group................................. 50,000
Sutro & Co. Incorporated.................................... 50,000
Tucker Anthony Cleary Gull.................................. 50,000
C.E. Unterberg, Towbin...................................... 50,000
L.H. Friend, Weinress, Frankson & Presson, Inc.............. 25,000
JWGenesis Securities, Inc................................... 25,000
Lasalle St. Securities, Inc................................. 25,000
Ryan Beck & Co., Inc........................................ 25,000
Schneider Securities, Inc................................... 25,000
---------
Total............................................. 1,400,000
=========
</TABLE>

A copy of the underwriting agreement has been filed as an exhibit to this
registration statement. The underwriting agreement provides that the obligation
of the underwriters to purchase the shares is subject to some conditions. The
underwriters shall be obligated to purchase all of the shares (other than those
covered by the underwriters' over-allotment option described below), if any are
purchased.

The Representatives have advised us that the underwriters propose to offer
the shares to the public at the public offering price on the cover page of this
prospectus and that they may allow some dealers who are members of the NASD, and
some foreign dealers, concessions not in excess of $.45 per share, of which
amount a sum not in excess of $.10 per share may in turn be reallowed by such
dealers to other dealers who are members of the NASD and to some foreign
dealers. After the commencement of this offering, the offering price, the
concession to selected dealers, and the reallowance to other dealers may be
changed by the Representatives.

We and the selling shareholders have agreed to indemnify the underwriters
against some liabilities, including civil liabilities under the Securities Act,
or will contribute to payments the underwriters may be required to make in this
respect thereof.

We have agreed to pay to the Representatives an expense allowance on a non-
accountable basis, equal to 1% of the gross proceeds derived from the sale of
1,400,000 shares offered in this offering, or (1,610,000 shares if the
underwriters' over-allotment option is exercised in full). We paid an advance on
this allowance in the amount of $20,000.

59
<PAGE> 60

The following table provides information regarding the amount of the
discount to be paid to the underwriters by Visual Data and by the selling
shareholders:

<TABLE>
<CAPTION>
TOTAL WITHOUT TOTAL WITH
EXERCISE OF OVER- EXERCISE OF OVER-
DISCOUNT ALLOTMENT ALLOTMENT
PER SHARE OPTION OPTION
---------- ----------------- -----------------
<S> <C> <C> <C>
Visual Data....................... $ .08 $1,120,000 $1,120,000
Selling Shareholders.............. $ .08(1) $ 0 $ 168,000
</TABLE>

- -------------------------
(1) This discount only applies to the selling shareholders if the underwriters'
over-allotment option is exercised.

The following table sets forth the amount and nature of other forms of
compensation to be paid to the Representatives by Visual Data in connection with
the offering:

<TABLE>
<CAPTION>
TYPE OF COMPENSATION TERMS TOTAL AMOUNT
-------------------- ------------------------- -------------------------
<S> <C> <C>
Non-Accountable Expense 1% of the gross proceeds $140,000 ($161,000 if the
Allowance of the offering underwriters'
over-allotment option is
exercised in full)
Underwriter Warrant(1) Warrant to purchase up to Dependent upon the market
140,000 shares at an price of common stock at
exercise price per share the time of exercise
of 165% of the public
offering price
Two Year Consulting Provide financial $175,000 payable upon
Agreement(2) advisory services consummation of this
offering
</TABLE>

- -------------------------
(1) Underwriter Warrant is issued to the Representatives.
(2) Two year consulting agreement is between Visual Data Corporation and
Cruttenden Roth Incorporated.

We have also agreed to pay some of the Representatives' expenses in
connection with this offering, including expenses in connection with qualifying
the shares offered in this offering for sale under the laws of such states as
the Representatives may designate, the placement of tombstone advertisements and
preparing bound volumes of the public offering documents. We estimate that the
total expenses of the offering, excluding the underwriting discount, will be
approximately $550,000.

In connection with this offering, we have agreed to sell to the
Representatives for nominal consideration, the Underwriter Warrant to purchase
up to 140,000 shares of common stock. The Underwriter Warrant is exercisable for
a period of four years commencing one year after the date of this prospectus at
an exercise price per share equal to $16.50 (165% of the public offering price).
The Underwriter Warrant may not be sold, transferred, assigned, pledged, or
hypothecated for a period of 12 months from the date of this prospectus, except
to members of the selling group. The Underwriter Warrant grants to the
Representatives, with respect to the registration under the Securities Act of
the securities directly and indirectly issuable upon exercise of the Underwriter
Warrant, one demand registration right during the exercise period, as well as
piggyback registration rights at any time. The Underwriter Warrant contains
anti-dilution provisions providing for adjustments of the exercise price and
number of shares issuable on exercise of the

60
<PAGE> 61

Underwriters Warrant, upon the occurrence of some events, including stock
dividends, stock splits, and recapitalizations. The holders of the Underwriter
Warrant have no voting, dividend, or other rights as a shareholder with respect
to shares of common stock underlying the Underwriter Warrant, unless the
Underwriter Warrant shall have been exercised.

In connection with this offering, we have granted the Representatives the
right, for the three-year period commencing on the closing date of this
offering, to appoint an observer to attend all meetings of our board of
directors. This designee has the right to notice of all meetings of the board of
directors and to receive reimbursement for all out-of-pocket expenses incurred
to attend these meetings. In addition, the designee will be entitled to
indemnification to the same extent as our directors.

We have agreed to retain the Representatives as financial consultants for a
period of two years to commence on the closing of this offering at an aggregate
fee of $175,000, payable at the closing of this offering. Under this agreement,
the Representatives shall provide advisory services related to mergers and
acquisitions activity, corporate finance and other related matters.

The Representatives have advised us that the underwriters do not intend to
confirm sales of the shares offered in this offering to any account over which
they exercise discretionary authority.

We, and each of our officers, directors, and shareholders, have agreed not
to offer, assign, issue, sell, hypothecate, or otherwise dispose of any shares
of common stock, securities of Visual Data convertible into, or exercisable or
exchangeable for, shares of common stock, or shares of common stock received
upon conversion, exercise, or exchange of these securities, to the public
without the prior written consent of Cruttenden Roth for a period of at least
nine months after the date of this prospectus.

We and each of the selling shareholders have also granted to the
underwriters an option, exercisable during the 45-day period commencing on the
date of this prospectus, to purchase at the public offering price per share,
less the underwriting discount, up to an aggregate of 210,000 shares of common
stock. To the extent this option is exercised, the underwriters will become
obligated, subject to some conditions, to purchase additional shares of common
stock. The underwriters may exercise this right of purchase only for the purpose
of covering over-allotments, if any, made in connection with the sale of shares.
Purchases of shares of common stock upon exercise of the over-allotment option
will result in the realization of additional compensation by the underwriters.

The Representatives have informed us that they do not expect discretionary
sales by the underwriters to exceed five percent of the shares offered by this
prospectus.

Rules of the Securities and Exchange Commission may limit the ability of
the underwriters to bid for or purchase shares before the distribution of the
shares is completed. However, the underwriters may engage in the following
activities in accordance with the rules:

- STABILIZING TRANSACTIONS. The underwriters may make bids or purchases
for the purpose of pegging, fixing or maintaining the price of the
shares, so long as stabilizing bids do not exceed a specified maximum.

- OVER-ALLOTMENTS AND SYNDICATE COVERAGE TRANSACTIONS. The underwriters may
create a short position in the shares by selling more shares than are set
forth on the cover page of this prospectus. If a short position is
created

61
<PAGE> 62

in connection with the offering, the Representatives may engage in
syndicate covering transactions by purchasing shares in the open market.
The Representatives may also elect to reduce any short position by
exercising all or part of the over-allotment option.

- PENALTY BIDS. If the Representatives purchase shares in the open market
in a stabilizing transaction or syndicate coverage transaction, they may
reclaim a selling concession from the underwriters and selling group
members who sold those shares as part of this offering.

Stabilization and syndicate covering transactions may cause the price of
the shares to be higher than it would be in the absence of such transactions.
The imposition of a penalty bid might also have an effect on the price of the
shares if it discourages resales of the shares.

Neither we nor the underwriters makes any representation or prediction as
to the effect that the transactions described above may have on the price of the
shares. These transactions may occur on the Nasdaq National Market or otherwise.
If such transactions are commenced, they may be discontinued without notice at
any time.

We and the underwriters expect that the shares will be ready for delivery
on the fourth business day following the date of this prospectus. Under
Securities and Exchange Commission regulations, secondary market trades are
required to settle in three business days following the trade date (commonly
referred to as "T-3"), unless the parties to the trade agree to a different
settlement cycle. As noted above, the shares will settle in T-3. Therefore,
purchasers who wish to trade on the date of this prospectus or during the next
three succeeding business days must specify an alternate settlement cycle at the
time of the trade to prevent a failed settlement. Purchasers of the shares who
wish to trade shares on the date of this prospectus or during the next 3
succeeding business days should consult their own advisors.

LEGAL MATTERS

The validity of the issuance of the common stock offered hereby will be
passed upon for us by Atlas, Pearlman, Trop & Borkson, P.A., Fort Lauderdale,
Florida. Certain matters will be passed upon for the underwriters by Greenberg
Traurig, New York, New York.

EXPERTS

The Consolidated Financial Statements of Visual Data Corporation as of
September 30, 1997 and 1998 and for the years then ended included in this
prospectus, have been audited by Arthur Andersen LLP, independent certified
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports. The Consolidated Financial Statements of Visual Data Corporation
for the year ended September 30, 1996 included in this prospectus, have been
audited by Goldstein Lewin & Co., independent certified public accounts, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.

The Consolidated Financial Statements of EDnet, Inc. as of June 30, 1997
and 1998 and the years then ended and September 30, 1998 and the three months
ended included in this prospectus, have been audited by Burr, Pilger & Mayer,
independent certified public

62
<PAGE> 63

accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said report.

AVAILABLE INFORMATION

We are subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended, and, therefore, file reports, proxy
statements and other information with the United States Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by us may be inspected at the public reference facilities of
the Commission located at Judiciary Plaza, 450 Fifth Street, N.W., Washington
D.C. 20549; at the New York Regional Office of the Commission, Seven World Trade
Center, Suite 1300, New York, New York 10048; and at the Chicago Regional Office
of the Commission, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621.
Copies of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, 1-800-SEC-0330. The Commission maintains a World Wide
Website on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.

We have filed with the Commission a Registration Statement on Form S-1
under the Securities Act of 1933, as amended, in order to register our common
stock. This prospectus does not contain all of the information set forth in the
registration statement and related exhibits, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission. Statements
as to the contents of any contract or other documents contained in this
prospectus or in any document incorporated by reference herein are not
necessarily complete and, in each instance, reference is made to the copy of
such documents filed as an exhibit to the registration statement or such other
documents, which may be obtained from the Commission as indicated above upon
payment of the fees prescribed by the Commission. Each such statement is
qualified in its entirety by such reference.

63
<PAGE> 64

INDEX TO FINANCIAL STATEMENTS

THE REGISTRANT -- VISUAL DATA CORPORATION

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Introduction to Unaudited Pro Forma Financial Information... F-2
Unaudited Pro Forma Consolidated Statement of Operations for
the year ended September 30, 1998......................... F-3
Notes to Unaudited Pro Forma Consolidated Statement of
Operations................................................ F-4
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants........ F-5
Report of Independent Certified Public Accountants........ F-6
Consolidated Balance Sheets as of September 30, 1997 and
1998................................................... F-7
Consolidated Statements of Operations for the years ended
September 30, 1996, 1997 and 1998...................... F-9
Consolidated Statements of Stockholders' Equity for the
years ended September 30, 1996, 1997 and 1998.......... F-10
Consolidated Statements of Cash Flows for the years ended
September 30, 1996, 1997 and 1998...................... F-11
Notes to Consolidated Financial Statements................ F-13
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet at March 31, 1999
(unaudited)............................................ F-25
Condensed Consolidated Statements of Operations for the
six months ended March 31, 1998 and 1999 (unaudited)... F-27
Condensed Consolidated Statements of Cash Flows for the
six months ended March 31, 1998 and 1999 (unaudited)... F-28
Notes to Unaudited Condensed Consolidated Financial
Statements............................................. F-29
BUSINESS ACQUIRED -- EDNET, INC.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants........ F-31
Consolidated Balance Sheets at September 30, 1998, June
30, 1998 and 1997...................................... F-32
Consolidated Statements of Operations for the three months
ended September 30, 1998 and the years ended June 30,
1998 and 1997.......................................... F-34
Consolidated Statements of Stockholders' Equity for the
three months ended September 30, 1998 and the years
ended June 30, 1998 and 1997........................... F-35
Consolidated Statements of Cash Flows for the three months
ended September 30, 1998 and the years ended June 30,
1998 and 1997.......................................... F-36
Notes to Consolidated Financial Statements................ F-38
</TABLE>

F-1
<PAGE> 65

VISUAL DATA CORPORATION

INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

The following presents the unaudited pro forma condensed consolidated
statement of operations of the Company for the year ended September 30, 1998.
The unaudited pro forma condensed consolidated statement of operations gives
effect to the acquisition of EDnet, Inc. by Visual Data Corporation as if it had
occurred on October 1, 1997. The pro forma consolidated balance sheet is not
presented as the EDnet acquisition was completed on June 20, 1998 and,
accordingly, is included in Visual Data Corporation's September 30, 1998
consolidated balance sheet.

The unaudited pro forma condensed consolidated statement of operations is
based upon available information and certain assumptions considered reasonable
by management. This statement is not necessarily indicative of the actual
results of operations that might have occurred, nor are they necessarily
indicative of expected results in the future.

The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the Company's Consolidated Financial Statements and
management's discussion thereof contained elsewhere in this registration
statement.

F-2
<PAGE> 66

VISUAL DATA CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
PRO FORMA AS
VISUAL DATA ACQUISITION ADJUSTED FOR
CORPORATION EDNET(a) ADJUSTMENTS ACQUISITION
----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue........................ $ 1,880,842 $2,900,910 4,781,752

Cost of Sales.................. 803,784 1,925,688 2,729,472
Sales, marketing &
administrative............... 4,539,929 1,195,938 55,335(b) 5,791,202
----------- ---------- --------- -----------
Total operating
costs............. 5,343,713 3,121,626 55,335 8,520,674
----------- ---------- --------- -----------
Income (loss) from operations
before other income
(expense) and provision
for income taxes and
extraordinary item........ (3,462,871) 392,427 (55,335) (3,738,922)
----------- ---------- --------- -----------
Other income (expenses)
Interest income.............. 68,836 4,166 -- 73,002
Rental income................ 80,671 -- -- 80,671
Interest expense............. (96,362) (55,704) -- (152,066)
Gain on sale of equipment.... -- 3,160 -- 3,160
Gain on sale of investment... -- 422,225 -- 422,225
Forgiveness of debt.......... -- 200,000 -- 200,000
Minority interest............ (24,869) -- (171,858)(c) (196,727)
----------- ---------- --------- -----------
Total other income
(expense)......... 28,276 573,847 (472,298) 430,265
----------- ---------- --------- -----------
Income (loss) before
provision for income taxes
and extraordinary item.... (3,434,595) 966,274 (527,633) 3,308,657
Provision for income taxes..... -- 2,400 -- 2,400
----------- ---------- --------- -----------
Income (loss) before
extraordinary item........ $(3,434,595) $ 963,874 $(527,633) $(3,311,057)
=========== ========== ========= ===========
Weighted average of shares
outstanding.................. 3,253,731 3,314,148
=========== ===========
Loss per Share -- Basic and
Diluted...................... $ (1.06) $ (1.00)
=========== ===========
</TABLE>

F-3
<PAGE> 67

VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED PROFORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

(a) For the period October 1, 1997 through June 19, 1998

(b) Represents the excess of purchase price over net assets acquired amortized
over a fifteen (15) year life.

(c) Represents the minority interest share (49%) of EDnet, Inc. net income for
the period October 1, 1997 through June 19, 1998

F-4
<PAGE> 68

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To Visual Data Corporation and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Visual Data
Corporation and Subsidiaries as of September 30, 1997 and 1998, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our 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, 1997 and 1998, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.

Arthur Andersen LLP

Miami, Florida,
December 4, 1998.

F-5
<PAGE> 69

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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

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

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

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

Goldstein Lewin & Co.

Boca Raton, Florida,
December 4, 1996.

F-6
<PAGE> 70

VISUAL DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------
1997 1998
---------- ----------
<S> <C> <C>
Assets
CURRENT ASSETS:
Cash and cash equivalents........................... $2,554,180 $ 590,848
Restricted cash..................................... -- 20,000
Accounts receivable, net of allowance for doubtful
accounts of $20,898 and $57,941 at September 30,
1997 and 1998, respectively
Prepaid expenses.................................... 62,695 621,546
Other current assets................................ 60,677 347,888
34,337 168,109
---------- ----------
Total current assets........................ 2,711,889 1,748,391
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET.................... 1,861,191 3,535,205
---------- ----------
EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED..... -- 1,097,243
---------- ----------
OTHER................................................. 14,812 13,249
---------- ----------
Total assets................................ $4,587,892 $6,394,088
========== ==========
Liabilities and Stockholders' Equity
CURRENT LIABILITIES:
Accounts payable.................................... $ 142,950 $ 477,764
Accrued expenses.................................... 73,035 353,821
Deferred revenue.................................... 94,295 131,576
Current portion of obligations under capital
leases........................................... 21,856 17,147
Mortgage note payable............................... 33,765 967,023
Notes payable....................................... -- 240,500
---------- ----------
Total current liabilities................... 365,901 2,187,831
---------- ----------
OBLIGATIONS UNDER CAPITAL LEASES, NET OF CURRENT
PORTION............................................. 8,652 15,058
MORTGAGE NOTE PAYABLE, net of current portion......... 966,235 --
---------- ----------
974,887 15,058
---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 13)
MINORITY INTEREST..................................... -- 306,506
---------- ----------
</TABLE>

F-7
<PAGE> 71
VISUAL DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS -- (CONTINUED)

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------
1997 1998
---------- ----------
<S> <C> <C>
STOCKHOLDERS' EQUITY:
Preferred Stock, par value $.0001 per share;
authorized 5,000,000 shares:
Series A Convertible Preferred Stock,
designated 300 shares, issued and
outstanding 0 and 150 at September 30, 1997
and 1998, respectively...................... -- --
Series A-1 Convertible Preferred Stock,
designated 150 shares, issued and
outstanding 0 and 150 at September 30, 1997
and 1998, respectively...................... -- --
Common Stock, par value $.0001 per share; authorized
20,000,000 shares; 3,037,971 and 3,732,100 issued
and outstanding at September 30, 1997 and 1998,
respectively..................................... 304 373
Additional paid in capital.......................... 9,401,789 13,494,945
Accumulated deficit................................. (6,154,989) (9,610,625)
---------- ----------
Total stockholders' equity.................. 3,247,104 3,884,693
---------- ----------
Total liabilities and stockholders'
equity................................... $4,587,892 $6,394,088
========== ==========
</TABLE>

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

F-8
<PAGE> 72

VISUAL DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30,

<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE............................... $ 111,719 $ 193,038 $ 1,880,842
OPERATING COSTS:
Cost of sales....................... -- -- 803,784
Selling, general and
administrative................... 527,692 1,441,173 2,011,815
Compensation and related costs...... 985,441 789,165 1,341,737
Production.......................... 121,239 83,357 22,354
Occupancy........................... 43,875 82,373 157,780
Professional and consulting fees.... 298,815 352,853 1,006,243
----------- ----------- -----------
Total operating costs....... 1,977,062 2,748,921 5,343,713
----------- ----------- -----------
Loss from operations................ (1,865,343) (2,555,883) (3,462,871)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest income..................... 753 30,403 68,836
Rental income....................... -- -- 80,671
Interest expense.................... (27,112) (1,042,227) (96,362)
Loss on write off of property, plant
and equipment.................... -- (6,255) --
Minority interest................... -- -- (24,869)
----------- ----------- -----------
Total other income
(expense)................ (26,359) (1,018,079) 28,276
----------- ----------- -----------
Net loss............................ $(1,891,702) $(3,573,962) $(3,434,595)
=========== =========== ===========
Weighted average shares of common
stock outstanding................ 1,405,228 2,509,249 3,253,731
=========== =========== ===========
Loss per share -- basic and
diluted.......................... $ (1.35) $ (1.42) $ (1.06)
=========== =========== ===========
</TABLE>

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

F-9
<PAGE> 73

VISUAL DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1997 AND 1998
<TABLE>
<CAPTION>
SERIES A SERIES A-1 SERIES B
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL
----------------- --------------- ----------------- ------------------ PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
-------- ------ ------ ------ -------- ------ --------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1995....... 185,716 $ 19 -- $-- -- $ -- 873,306 $ 87 $ 986,815
Issuance of shares for services
and incentives.................. -- -- -- -- -- -- 224,219 23 724,240
Issuance of shares for cash....... -- -- -- -- 113,750 11 -- -- 454,989
Issuance of shares for cash....... -- -- -- -- -- -- 15,625 2 49,998
Discount on convertible notes..... -- -- -- -- -- -- 53,125 5 169,995
Compensation expense on stock
option grants................... -- -- -- -- -- -- -- -- 384,244
Net loss.......................... -- -- -- -- -- -- -- -- --
-------- ---- --- -- -------- ---- --------- ---- -----------
BALANCE, SEPTEMBER 30, 1996....... 185,716 19 -- -- 113,750 11 1,166,275 117 2,770,281
Issuance of shares for services
and incentives.................. -- -- -- -- -- -- 22,500 2 114,500
Issuance of shares for cash....... -- -- -- -- -- -- 1,000,000 100 4,759,559
Conversion of preferred stock..... (185,716) (19) -- -- (113,750) (11) 374,329 37 (7)
Conversion of convertible notes... -- -- -- -- -- -- 212,500 21 584,354
Exercise of warrants.............. -- -- -- -- -- -- 59,688 6 86,682
Exercise of options............... -- -- -- -- -- -- 2,679 1 3,749
Issuance of shares for interest
expense......................... -- -- -- -- -- -- 200,000 20 969,521
Issuance of publicly traded
warrants........................ -- -- -- -- -- -- -- -- 113,150
Net loss.......................... -- -- -- -- -- -- -- -- --
-------- ---- --- -- -------- ---- --------- ---- -----------
BALANCE, SEPTEMBER 30, 1997....... -- -- -- -- -- -- 3,037,971 304 9,401,789
Issuance of shares for services
and incentives.................. -- -- -- -- -- -- 184,785 18 509,017
Issuance of warrants and options
for services and incentives..... -- -- -- -- -- -- -- -- 442,619
Issuance of shares for assets..... -- -- -- -- -- -- 240,000 24 911,226
Issuance of warrants for assets... -- -- -- -- -- -- -- -- 261,680
Issuance of shares for cash....... 150 -- 150 -- -- -- 266,665 27 1,964,864
Exercise of warrants.............. -- -- -- -- -- -- 2,679 -- 3,750
Preferred dividends payable....... -- -- -- -- -- -- -- -- --
Net loss.......................... -- -- -- -- -- -- -- -- --
-------- ---- --- -- -------- ---- --------- ---- -----------
BALANCE, SEPTEMBER 30, 1998....... 150 $ -- 150 $-- -- $ -- 3,732,100 $373 $13,494,945
======== ==== === == ======== ==== ========= ==== ===========

ACCUMULATED
DEFICIT
-----------
<S> <C>
BALANCE, SEPTEMBER 30, 1995....... $ (689,325)
Issuance of shares for services
and incentives.................. --
Issuance of shares for cash....... --
Issuance of shares for cash....... --
Discount on convertible notes..... --
Compensation expense on stock
option grants................... --
Net loss.......................... (1,891,702)
-----------
BALANCE, SEPTEMBER 30, 1996....... (2,581,027)
Issuance of shares for services
and incentives.................. --
Issuance of shares for cash....... --
Conversion of preferred stock..... --
Conversion of convertible notes... --
Exercise of warrants.............. --
Exercise of options............... --
Issuance of shares for interest
expense......................... --
Issuance of publicly traded
warrants........................ --
Net loss.......................... (3,573,962)
-----------
BALANCE, SEPTEMBER 30, 1997....... (6,154,989)
Issuance of shares for services
and incentives.................. --
Issuance of warrants and options
for services and incentives..... --
Issuance of shares for assets..... --
Issuance of warrants for assets... --
Issuance of shares for cash....... --
Exercise of warrants.............. --
Preferred dividends payable....... (21,041)
Net loss.......................... (3,434,595)
-----------
BALANCE, SEPTEMBER 30, 1998....... $(9,610,625)
===========
</TABLE>

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

F-10
<PAGE> 74

VISUAL DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,

<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................ $(1,891,702) $(3,573,962) $(3,434,595)
Adjustments to reconcile net loss to
net cash used in operating
activities --
Depreciation and amortization.... 84,809 64,378 309,458
Write-off of fixed assets........ -- 6,255 --
Provision for doubtful
accounts....................... -- 53,166 103,545
Minority interest................ -- -- 24,869
Write-off of deferred offering
costs.......................... -- 650,000 --
Issuance of equity securities
for:
Interest expense............... -- 969,531 --
Services and incentives........ 458,507 114,500 951,654
Changes in assets and
liabilities:
Accounts receivable............ (42,168) (73,693) (313,085)
Prepaid expenses............... (23,308) (28,532) (228,388)
Other current assets........... -- (34,337) 24,368
Stockholder receivables........ (50,000) 50,000 --
Financing costs................ -- 102,000 --
Accounts payable and accrued
expenses.................... 171,673 (13,058) 37,597
Deferred revenue............... 63,500 23,795 (27,964)
Deferred rent.................. (3,038) (1,772) --
----------- ----------- -----------
Net cash used in operating
activities............... (1,231,727) (1,691,729) (2,552,541)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of land and building....... -- (1,542,949) --
Acquisition of property and
equipment........................ (82,053) (116,288) (383,276)
Acquisitions, net of cash
acquired......................... -- -- (747,627)
Increase in restricted cash......... -- -- (20,000)
(Increase) decrease in deposits..... (2,632) 7,062 15,211
----------- ----------- -----------
Net cash used in investing
activities............... (84,685) (1,652,175) (1,135,692)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage note
payable.......................... -- 1,000,000 --
Payments on mortgage note payable
and note payable................. -- -- (73,477)
</TABLE>

F-11
<PAGE> 75
VISUAL DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, -- (CONTINUED)

<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Payments on capital leases.......... (37,889) (77,927) (33,013)
Issuance of convertible notes....... 850,000 -- --
Proceeds from note payable.......... -- -- 281,000
Conversion of convertible notes..... -- (95,622) --
Finance costs....................... (153,000) -- --
Issuance of preferred stock......... 455,000 -- 1,376,191
Issuance of common stock............ 61,000 4,759,671 170,450
Proceeds from sale of warrants...... -- 113,150 --
Proceeds from exercise of warrants
and options...................... -- 90,435 3,750
Proceeds from stockholder loans..... 100,000 1,000,000 --
Payments on stockholder loans....... (50,000) (1,050,000) --
----------- ----------- -----------
Net cash provided by
financing activities..... 1,225,111 5,739,707 1,724,901
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS.................... (91,301) 2,395,803 (1,963,332)
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR............................. 249,678 158,377 2,554,180
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF
YEAR................................ $ 158,377 $ 2,554,180 $ 590,848
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash payments for interest.......... $ 24,635 $ 72,696 $ 93,687
=========== =========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Issuances of common shares for:
Subscription receivable............. $ 50,000 $ -- $ --
=========== =========== ===========
Services and incentives............. $ 1,108,507 $ 114,500 $ 509,035
=========== =========== ===========
Issuance of warrants and options
for:
Services and incentives............. $ -- $ -- $ 442,619
=========== =========== ===========
Property and equipment financed by
capital leases................... $ 30,068 $ 45,813 $ 13,952
=========== =========== ===========
Accrued dividends payable........... $ -- $ -- $ 21,042
=========== =========== ===========
</TABLE>

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

F-12
<PAGE> 76

VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

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

VDC and its wholly owned subsidiaries are in the business of producing,
marketing and distributing video information libraries intended for use by the
general public through various distribution channels, primarily in the United
States. These distribution channels include the Internet and Interactive
television ("ITV"). The information libraries contain short concise vignettes on
various topics such as travel, medicine, nursing homes, timeshare properties and
business news. Through September 30, 1997, the Company had been engaged
primarily in the production and sale of video vignettes to hotels and their
distribution via laser disc players installed in travel agencies throughout the
United States. During the year ended September 30, 1998, the primary
distribution channel for all of VDC's libraries was the Internet.

EDnet, Inc.("EDnet") 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 U.S. 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.

On August 4, 1997, VDC closed an initial public offering of 1,000,000
shares of its common stock at $6.00 per share and 1,000,000 redeemable warrants
at $0.10 per warrant. In addition, VDC granted the underwriters the option to
purchase up to 150,000 additional warrants to cover over-allotments. During
September 1997, the underwriters exercised the over-allotment option and
purchased an additional 150,000 warrants.

BASIS OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
VDC and its subsidiaries, HotelView Corporation ("HVC"), CareView Corporation
("CVC"), Video News Wire Corp., ResortView Corporation ("RVC") (f/k/a
CondoView), and EDnet, Inc., a 51% owned subsidiary. EDnet was acquired on June
20, 1998. EDnet's results have been included in the accompanying consolidated
financial statements from the date of acquisition. All significant intercompany
accounts and transactions have been eliminated in consolidation.

REVENUE RECOGNITION

Membership fees charged to clients of HotelView, AttractionView, CareView,
and ResortView are recognized ratably over the life of their contracts. Initial
sign up fees and direct production costs are amortized over the estimated life
of the relationship. Deferred revenues for these divisions represent
unrecognized sign up fees. Revenues from Video

F-13
<PAGE> 77
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

News Wire are recognized when the product is delivered. For the year ended
September 30, 1997, the membership revenues were exclusively from HotelView.

A significant component of EDnet's revenue relates to the sale of equipment
which is recognized when the equipment is installed. Installation fees are
recognized when the installation has been completed. Usage fees are recognized
over the period the equipment is used based on the relative usage level.
Deferred revenues represent billings in excess of revenue recognized.

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.

DEFERRED OFFERING COSTS

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

ACCOUNTING ESTIMATES

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

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

F-14
<PAGE> 78
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

has provided a 100% valuation allowance on its deferred tax assets at September
30, 1997 and 1998. Future changes in such valuation allowance would be included
in the provision for deferred income taxes in the period of change.

EARNINGS PER SHARE

For the years ended September 30, 1996, 1997 and 1998, net loss per share
is based on the weighted average number of shares of common stock outstanding.
Since the effect of common stock equivalents was anti-dilutive, all such
equivalents were excluded from the calculation of net loss per share.

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

CONCENTRATION OF CREDIT RISK

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

RECLASSIFICATIONS

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

F-15
<PAGE> 79
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2: PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------ LIVES
1997 1998 (YEARS)
---------- ---------- -------
<S> <C> <C> <C>
Building.................................... $1,542,948 $1,549,782 39
Furniture and fixtures...................... 26,029 270,235 7
Equipment................................... 170,525 194,934 5
Editing and production equipment............ 169,305 527,973 3-10
Computer equipment.......................... 55,918 198,598 3-5
Software.................................... -- 683,980 3-5
Network & related equipment................. -- 918,450 5
Internet hardware & software................ -- 328,413 3-5
Leasehold improvements...................... -- 26,183 7
---------- ----------
1,964,725 4,698,548
Less: Accumulated depreciation and
amortization.............................. (103,534) (1,163,343)
---------- ----------
$1,861,191 $3,535,205
========== ==========
</TABLE>

NOTE 3: PURCHASE OF EDNET, INC.

On July 27, 1998, the Company completed the acquisition of 51% of the
common stock of EDnet, Inc., effective June 20, 1998. The consideration for the
shares consisted of (i) cash in the amount of $698,000; (ii) five year warrants
to purchase 50,000 shares of the Company's common stock at $3.00 per share,
valued at $2.74 per warrant; (iii) 75,000 shares of the Company's common stock
valued at $3.75 per share; and (iv) a secured promissory note in the aggregate
principal amount of approximately $284,000. The note is secured by a mortgage on
VDC's principal executive offices.

In addition, the Company received an option to acquire 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. Based upon the number of convertible securities outstanding, the
Company has the right to purchase up to an aggregate of 6,542,722 shares of
EDnet's common stock. The Company's right to exercise the options shall accrue
on the date of exercise of the corresponding outstanding option and shall expire
on the first anniversary of the exercise date of each such outstanding option.

The acquisition of EDnet has been accounted for under the purchase method
of accounting and the results of operations of EDnet are included in the
historical financial statements from the date of acquisition. The Company's
unaudited pro forma consolidated results of operations assuming the above
acquisition had been consummated as of the beginning of the earliest period
presented are as follows for the years indicated (in 000's,

F-16
<PAGE> 80
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

except per share amounts). The amounts used for EDnet are for the years ended
June 30, 1997 and 1998.

<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Revenue............................................. $ 4,000,408 $ 4,544,581
Loss from operations................................ $(5,882,547) $(4,327,390)
Net loss............................................ $(5,825,210) $(3,251,564)
Net loss per common share --
Basic and diluted................................. $ (2.25) $ (.98)
</TABLE>

This transaction was accounted for as a purchase, and accordingly, the
purchase price was allocated to the net assets acquired based on their estimated
fair market value. As a result of this allocation, $1,115,688 of the purchase
price was allocated to excess of purchase price over net assets acquired.

<TABLE>
<S> <C>
Aggregate purchase price.................................... $1,400,000
Net assets acquired:
Working capital (deficit)................................. (55,933)
Property and equipment.................................... 394,806
Other..................................................... 227,076
Minority interest......................................... (281,637)
----------
284,312
----------
Excess of purchase price over net assets acquired........... $1,115,688
==========
</TABLE>

NOTE 4: CAPITAL LEASE OBLIGATIONS

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

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1997 1998
------- --------
<S> <C> <C>
Year ending September 30,
1998.................................................... $27,403 $ --
1999.................................................... 9,134 20,184
2000.................................................... -- 13,865
2001.................................................... -- 4,237
------- --------
Total minimum lease payments.............................. 36,537 38,286
Less: Amount representing interest........................ (6,029) (6,081)
------- --------
Present value of minimum lease payments................... 30,508 32,205
Current portion......................................... (21,856) (17,147)
------- --------
Long-term portion....................................... $ 8,652 $ 15,058
======= ========
</TABLE>

F-17
<PAGE> 81
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5: NOTES PAYABLE AND OTHER DEBT

NOTES PAYABLE

Notes payable consist of the following as of September 30:

<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Note payable -- related party to a director of VDC, with
original principal of $200,000 at 12% interest. The
principal balance and accrued interest is due on August
3, 1999. Accrued interest payable as of September 30,
1998 is $3,814......................................... $ -- $200,000
Notes payable -- related party to an officer and
employees, interest at 6% per annum, uncollateralized.
Accrued interest payable as of September 30, 1998 is
$15,127. The notes are subordinated to the $250,000
credit line discussed below for a period of six months.
Notes are due on demand thereafter..................... -- 40,500
-------- --------
$ -- $240,500
======== ========
</TABLE>

MORTGAGE NOTE PAYABLE

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

<TABLE>
<CAPTION>
1997 1998
---------- ---------
<S> <C> <C>
Note payable to an unrelated financial institution,
interest payable at 8.75% on a 15 year amortization,
principal balance and any accrued interest due March
31, 1999, secured by a mortgage on VDC's facility in
Pompano Beach Florida................................ $1,000,000 $ 967,023
Less: Current portion............................. (33,765) (967,023)
---------- ---------
$ 966,235 $ --
========== =========
</TABLE>

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

NOTE 6: CONVERTIBLE NOTES

In July and August 1996, the Company issued units ("1996 Units") consisting
of convertible notes ("1996 Notes") aggregating $850,000 and common stock
aggregating 53,125 shares. Each 1996 Unit consisted of a $50,000 note and 3,125
shares of common stock. The 1996 Notes were unsecured and bore interest at 10%.
Each 1996 Note was convertible into 12,500 additional shares of common stock at
$4.00 per share, subject to the conversion provisions of the 1996 Notes and each
1996 Note matured on January 31,

F-18
<PAGE> 82
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

1997 unless a registration statement was filed. If such statement had been
filed, the maturity date became the earlier of two weeks after the effective
date or July 31, 1997. The convertible 1996 Notes were recorded at a discount of
$170,000, reflecting an average per share price of $3.20 for all shares issued
or to be issued upon conversion.

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

NOTE 7: COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

As of September 30, 1998, the Company leases office space and certain
equipment under various noncancelable operating leases. The leases begin to
expire in March 2000. Future minimum lease payments required under the
noncancelable leases are as follows:

<TABLE>
<CAPTION>
OPERATING
LEASES
---------
<S> <C>
Year ending September 30:
1999..................................... $188,052
2000..................................... 149,572
2001..................................... 111,092
2002..................................... 111,092
2003..................................... 86,203
--------
Total minimum lease payments............... $646,011
========
</TABLE>

Rent expense for the years ended September 30, 1996, 1997 and 1998
aggregated $42,071, $72,161 and $52,146, respectively.

EMPLOYMENT CONTRACTS

The Company's President, Vice President and COO have entered into
employment agreements with the Company. The three year contracts provide for the
granting of 375,000 options to the President and the Vice President at an
exercise price of $2.50 to vest at the rate of 125,000 on each anniversary of
the effective date of the amended contract. The COO is to vest in 150,000
options at the first anniversary of the effective date and 125,000 each
anniversary thereafter for a total of 400,000 options. 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.

In addition to the above, EDnet has contracts with several of its key
employees that expire at dates through December 31, 2000. At September 30, 1998,
the commitment under all of the EDnet contracts was approximately $980,000.

UNDERWRITER WARRANTS

In connection with the IPO, the Company granted to the underwriters rights
to purchase from VDC up to 100,000 shares of common stock and 100,000 warrants.
They

F-19
<PAGE> 83
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

are initially exercisable at a price of 140% of the initial public offering
price per share of common stock (or the exercise price per share for the
warrants) for a period of four years commencing one year from the effective date
of the registration statement and are restricted from sale, transfer and
assignment for a specified period. Such warrants continue to be outstanding at
September 30, 1998.

NOTE 8: REVENUE

In March 1998, the Company entered into an agreement with Digital Criteria
Technologies whereby it obtained an exclusive license to market VoiceSelect, a
multimedia database and search technology for professional voice talent, via the
Internet. Under the terms of the agreement, VDC will act as the Internet host
for VoiceSelect and will market the product through VDC's TalentView division to
advertising agencies, talent agencies and voice talent. Upon consummation of the
contract the Company received a non-refundable signing fee of $250,000 which is
included in Revenue in the accompanying statement of operations for the year
ended September 30, 1998. The Company is also entitled to a percentage of the
revenues generated by VDC's development and marketing efforts. VDC was also
given right of first refusal to purchase the product.

Revenue by type for the years ended September 30, 1996, 1997 and 1998 are
as follows:

<TABLE>
<CAPTION>
1996 1997 1998
-------- -------- ----------
<S> <C> <C> <C>
Membership contracts........................ $111,719 $193,038 $ 230,913
Signing fee................................. -- -- 250,000
Sales:
Equipment sales........................... -- -- 376,581
Installation fees......................... -- -- 171,036
Usage fees................................ -- -- 388,681
Web design and consulting................. -- -- 441,081
Other..................................... -- -- 22,550
-------- -------- ----------
$111,719 $193,038 $1,880,842
======== ======== ==========
</TABLE>

NOTE 9: CAPITAL STOCK

PREFERRED STOCK

Series A convertible preferred stock issued in March 1995 was convertible
at the holder's option into two shares of common stock. Accordingly, at
September 30, 1996 232,145 shares of common stock was reserved for this
contingency. Each share of the Series A preferred stock had two votes per share
and votes with the common stock. Holders of Series A preferred stock were
entitled to a liquidation distribution of $3.50 per share before any
distributions were made on any other capital stock of VDC. The shares had no
dividend rights. These shares were converted into 185,716 shares of common stock
during the fiscal year ended September 30, 1997.

Series B convertible preferred stock issued in November 1995 was
convertible at the holder's option into two shares of common stock. Each share
of the Series B preferred stock had two votes per share and votes with the
common stock. Holders of Series B

F-20
<PAGE> 84
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

preferred stock were entitled to a liquidation distribution of $4.00 per share
after the Series A shareholders had been paid their liquidation distribution and
before any other distributions were made on any other capital stock of VDC. The
shares had no dividend rights. These shares were converted into 113,750 shares
of common stock during the fiscal year ended September 30, 1997.

On May 8, 1998, the Company completed the sale of 150 shares of its Series
A Convertible Preferred Stock ("Preferred A") to two institutional investors
resulting in gross proceeds of $750,000. The Preferred A bears interest at five
percent per annum, payable upon conversion of the preferred shares to common
shares and is payable in common shares at the Company's option. Dividends
payable of $15,833 on the Preferred A is included in accrued expenses at
September 30, 1998. The Preferred A is convertible into VDC's Common Stock at a
price equal to the lesser of (i) $3.0428, subject to adjustment, or (ii) a
floating conversion price determined by multiplying a Conversion Percentage in
effect as of such date by the market price for VDC's Common Stock. The
Conversion Percentage is 87.76% for the first one hundred eighty (180) days from
the closing and 82.76% for any day thereafter, subject to adjustment. The market
price for VDC's Common Stock shall be the average of the three lowest closing
bid prices for such Common Stock during the twenty (20) consecutive trading days
immediately preceding such date.

Following the initial closing date, the Buyers shall be obligated to
purchase and VDC will be obligated to sell an additional 150 shares of Preferred
Stock under the same terms and conditions as the initial shares so issued,
provided a series of conditions have been met.

On August 11, 1998 VDC completed the sale of 150 shares of VDC's Series A-1
Convertible Preferred Stock (the "Preferred A-1") to an institutional investor
resulting in gross proceeds of $750,000. The Preferred A-1 bears interest at
five percent per annum, payable upon conversion of the Preferred Stock, and is
payable in kind at VDC's option. Dividends payable of $5,208 related to the
Preferred A-1 is included in accrued expenses at September 30, 1998. The
Preferred A-1 is convertible into VDC's Common Stock at a price equal to the
lesser of (i) $3.0428 per share, or (ii) a floating conversion price determined
by multiplying a Conversion Percentage in effect as of such date by the Market
Price for VDC's Common Stock. The Conversion Percentage shall be 87.76% for the
first 180 days from the issuance date of the Preferred A-1 and 82.76% for any
day thereafter. The Market Price for VDC's Common Stock shall be the average of
the three lowest closing bid prices for such Common Stock during the twenty (20)
consecutive trading days immediately preceding such date. In no event shall any
holder of Preferred A-1 be entitled to convert shares in excess of the number of
shares of Preferred A-1 which, upon conversion, would cause the aggregate number
of shares of Common Stock beneficially owned by such holder and its affiliates
to exceed 4.99% of the outstanding shares of Common Stock following such
conversion.

COMMON STOCK

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

F-21
<PAGE> 85
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

VDC had reserved 1,033,645 and 1,760,451 shares of common stock for
issuance relating to unexpired options and warrants at September 30, 1997 and
1998, respectively.

REVERSE STOCK SPLIT

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

NOTE 10: INCOME TAXES

The deficit accumulated during the development stage (inception through
August 31, 1996) of approximately $2,025,000 is capitalized for income tax
purposes as accumulated start-up costs, and is being amortized over a 60 month
period beginning September 1, 1996. VDC has a net operating loss carryforward as
of September 30, 1998 of approximately $7 million for federal income tax
purposes, inclusive of the amortization of the start-up costs, which expires
September 30, 2001. VDC has recorded a valuation allowance of approximately
$2,800,000 with respect to any future tax benefits arising from any net
operating losses and the amortization of the start-up costs due to the
uncertainty of their ultimate realization.

NOTE 11: RECENTLY ISSUED ACCOUNTING STANDARDS

In 1997, the Financial Accounting Standards Board (the "FASB") issued SFAS
No. 130, "Reporting Comprehensive Income". This Statement requires all items
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement displayed with the
same prominence as other financial statements. The adoption of SFAS No. 130 had
no impact on the Company's financial statements as net loss was the same as
comprehensive income for all periods presented.

In 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". This Statement establishes standards for
the way public business enterprises report information about operating segments
in annual financial statements and requires those enterprises report selected
information about operating segments in interim financial reports. SFAS No. 131
also establishes standards for related disclosures about products and services,
geographic areas of operations and major customers. VDC intends to adopt this
statement for the fiscal year ending 1999. In the opinion of management,
adoption of this standard will not have a material impact on the Company's
reporting disclosures.

In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-5 ("SOP 98-5"), "Reporting on the Costs of
Start-up Activities". SOP 98-5 requires all non-governmental entities to expense
costs of start-up activities, including pre-operating, pre-opening and
organization activities, as those costs are incurred. Adoption of this statement
is not expected to have a material effect on VDC's results of operations.

NOTE 12: STOCK OPTIONS GRANTED TO DIRECTORS AND EMPLOYEES

At September 30, 1998, there were vested options to purchase an aggregate
of 1,296,916 shares of common stock outstanding at exercise prices ranging from
$.00016 to

F-22
<PAGE> 86
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

$5.60 expiring between March 1999 and September 2002. In addition to the
Underwriter Warrants discussed above, at September 30, 1998, there were warrants
to purchase an aggregate of 463,535 shares of common stock outstanding at
exercise prices ranging from $2.80 to $6.60 expiring between May 1999 and June
2003.

The Company adopted Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation," ("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.

VDC has granted options to purchase 1,935,041 shares of Common Stock to
management and directors. Detail of option activity is as follows:

<TABLE>
<CAPTION>
1996 1997 1998
------------------ ------------------ --------------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE OF EXERCISE OF EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- -------- ------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of
year.................. 8,260 $ 4.24 282,720 $ .12 632,720 $3.37
Expired during year..... -- -- -- -- (2,679) $1.40
Granted during year..... 274,460 $.00016 350,000 $6.00 1,305,000 $2.77
------- ------- ------- ----- --------- -----
Balance, end of year.... 282,720 $ .12 632,720 $3.37 1,935,041 $2.97
Exercisable at end of
year.................. 282,720 $ .12 532,720 $2.88 1,135,041 $3.11
</TABLE>

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>
FOR YEAR ENDED
-----------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Pro forma results of operations:
Net loss............................ $(1,891,702) $(4,515,052) $(4,271,717)
Net loss per share.................. $ (1.35) $ (1.80) $ (1.31)
</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 5 years.

NOTE 13: SUBSEQUENT EVENTS

In October 1998, the Company received notification from The Nasdaq Stock
Market that the Company was not in compliance with the net tangible
assets/marketplace capitalization/net income requirement for continued listing
on The Nasdaq SmallCap Market based upon the Company's Quarterly Report on Form
10-QSB for the period ended June 30, 1998. While The Nasdaq Stock Market noted
that the Company provided internal financial statements which demonstrated
compliance with the requirement, as a result of the Company's "burn rate", The
Nasdaq Stock Market concluded that the Company would fall below the minimum
requirement for continued listing after November 1, 1998. In December 1998, at a
Nasdaq Hearing, the Company presented a

F-23
<PAGE> 87
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

definitive plan to The Nasdaq Stock Market to demonstrate its ability to
maintain continued compliance with the Nasdaq net tangible asset requirement.
The Company's plan included the completion of a private placement of its Common
Stock, as well as a guarantee of additional capital contributions through March
31, 1999. Subsequent to the Hearing, the Company has completed the private
placement of its Common Stock as discussed below. As a result, the Company
believes that it is and will continue to be in compliance with all Nasdaq
continued listing requirements, although there can be no assurance that The
Nasdaq Stock Market will concur.

In October 1998 Mr. David E. Goodman, formerly VDC's Executive Vice
President and Chief Operating Officer, resigned his positions with VDC. Under
the terms of Mr. Goodman's severance, VDC agreed to continue his salary and
benefits through January 30, 1999. Other employees of VDC, including Randy S.
Selman, VDC's Chief Executive Officer, have assumed Mr. Goodman's duties.

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.

Also during November and December 1998 VDC sold an aggregate of 482,500
shares of its Common Stock, to a group of accredited or otherwise sophisticated
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 addition, during December 1998 holders of
certain of VDC's warrants exercised such warrants pursuant to their terms,
resulting in gross proceeds to VDC of approximately $214,000. In connection with
such exercises, VDC issued an aggregate of 88,650 shares of its Common Stock.

Also 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 a purchase price of $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.

Subsequent to year end, the Company established a credit line with a
financial institution in the amount of $250,000. The credit line bears interest
at the institution's published reference rate plus 2.5% and has a stated
maturity date of November 1, 1999.

F-24
<PAGE> 88

VISUAL DATA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
1999
------------
(UNAUDITED)
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,919,171
Restricted cash........................................... 100,000
Accounts receivable, net of allowance for doubtful
accounts of $45,749 at March 31, 1999.................. 649,402
Prepaid expenses.......................................... 503,386
Other current assets...................................... 258,023
------------
Total Current Assets.............................. 4,429,982
PROPERTY, PLANT AND EQUIPMENT, NET.......................... 3,285,260
EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED........... 798,203
OTHER....................................................... 208,548
------------
Total assets...................................... $ 8,721,993
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 745,677
Deferred revenue.......................................... 227,690
Current portion of obligations under capital leases....... 13,076
Current portion of mortgage note payable.................. 271,108
Line of credit............................................ 50,000
Notes payable............................................. 40,500
------------
Total Current Liabilities......................... 1,348,051
------------
Obligations under capital leases, net of current
portion................................................ 11,029
Mortgage note payable, net of current portion............. 677,768
------------
688,797
------------
Minority Interest........................................... 657,082
------------

(Continued)
</TABLE>

F-25
<PAGE> 89

<TABLE>
<CAPTION>
MARCH 31,
1999
------------
(UNAUDITED)
<S> <C>
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 at March 31,
1999................................................... --
Series A-1 Convertible Preferred Stock, Designated 150
Shares, None Issued and Outstanding at March 31,
1999................................................... --
Common Stock, Par Value $.0001 Per Share; Authorized
20,000,000 Shares; 5,744,859 and 3,732,100 Issued and
Outstanding at March 31, 1999.......................... 574
Additional paid-in capital................................ 18,461,683
Accumulated deficit....................................... (12,434,194)
------------
Total Stockholders' Equity........................ 6,028,063
------------
Total Liabilities and Stockholders' Equity........ $ 8,721,993
============
</TABLE>

The accompanying notes to unaudited condensed consolidated financial statements
are an integral part of this balance sheet.

F-26
<PAGE> 90

VISUAL DATA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
REVENUE............................................. $ 489,041 $ 2,117,901
OPERATING COSTS
Cost of sales..................................... -- 1,309,766
Selling, general and administrative............... 545,317 1,901,722
Compensation and related costs.................... 580,831 927,232
Production........................................ 31,231 146,968
Occupancy......................................... 72,180 73,614
Professional and consulting fees.................. 401,926 719,573
----------- -----------
Total Operating Costs..................... 1,631,485 5,078,875
----------- -----------
Loss from Operations.............................. (1,142,444) (2,960,974)
----------- -----------
OTHER INCOME (EXPENSE)
Interest income................................... 46,700 33,483
Rental income..................................... 41,428 39,652
Interest expense.................................. (44,180) (57,980)
Minority interest................................. -- 126,250
----------- -----------
Total Other Income........................ 43,948 141,405
----------- -----------
Loss Before Taxes................................. (1,098,496) (2,819,569)
INCOME TAXES........................................ -- 4,000
----------- -----------
Net Loss.......................................... $(1,098,496) $(2,823,569)
=========== ===========
Net Loss Per Share -- Basic and Diluted........... $ (0.36) $ (0.58)
=========== ===========
Weighted Average Shares of Common Stock
Outstanding.................................... 3,078,585 4,893,186
=========== ===========
</TABLE>

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

F-27
<PAGE> 91

VISUAL DATA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
Cash used in operating activities................... $(1,236,991) $(3,002,792)
Cash provided by (used in) investing activities..... (259,598) 528,658
Cash provided by (used in) financing activities..... (42,256) 4,802,457
----------- -----------
Net increase (decrease) in cash and cash
equivalents....................................... (1,538,845) 2,328,323
Cash and cash equivalents:
Beginning of period............................... 2,554,180 590,848
----------- -----------
End of period..................................... $ 1,015,335 $ 2,919,171
=========== ===========
</TABLE>

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

F-28
<PAGE> 92

VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: GENERAL

NATURE OF BUSINESS

Visual Data Corporation ("VDC" or the "Company") (NASDAQ:VDAT) and its
wholly owned subsidiaries are in the business of producing, marketing and
distributing video information libraries intended for use by the general public
through various distribution channels, primarily in the United States. These
distribution channels include the Internet and Interactive television ("ITV").
The information libraries contain short concise vignettes on various topics such
as travel, healthcare and medicine, nursing homes, timeshare properties and
business news. Currently the primary distribution channel for all of VDC's
libraries is the Internet.

EDnet, Inc. ("EDnet") (OTCBB:DNET), a 51% owned subsidiary of VDC purchased
in June 1998, 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 U. S. entertainment,
advertising, newsroom and public relations industries. 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. Ednet's revenues represent $1,891,930 for the
six months ended March 31, 1999 in the accompanying unaudited condensed
consolidated financial statements.

INTERIM FINANCIAL DATA

In the opinion of management, the accompanying unaudited financial
statements have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. These financial
statements do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. The
annual financial statements of the Company as of September 30, 1998 should be
read in conjunction with these statements. The financial information included
herein has not been audited. However, management believes the accompanying
unaudited interim financial statements contain all adjustments, consisting of
only normal recurring adjustments, necessary to present fairly the consolidated
financial position of VDC and subsidiaries as of March 31, 1999 and the results
of their operations and cash flows for the six months ended March 31, 1998 and
1999. The results of operations and cash flows for the period are not
necessarily indicative of the results of operations or cash flows for a full
year.

NOTE 2: REFINANCING OF MORTGAGE

In March 1999, the Company negotiated an extension of its mortgage note
with the lender. The term of the note was extended by forty two (42) months and
is now due on September 30, 2002. The note requires monthly payments of
approximately $10,000 and a balloon payment of approximately $800,000 at
September 30, 2002.

NOTE 3: LINE OF CREDIT

In December 1998, the Company negotiated a $250,000 line of credit for
EDnet with Union Bank of California. The credit line bears interest at the
institution's published reference rate plus 2.5% and has a stated maturity date
of November 1, 1999.

F-29
<PAGE> 93
VISUAL DATA CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4: CONVERSION OF 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
the Company'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.

NOTE 5: PRIVATE PLACEMENT OF COMMON STOCK

In November and December 1998 the Company sold to 20 accredited investors a
total of 532,500 shares of its common stock for gross proceeds of $1,040,000. Of
these shares, a total of 332,500 were granted piggyback registration rights.

In February 1999, the Company completed a private placement of its common
stock to institutional investors. Net proceeds of approximately $2,600,000 were
received in exchange for 333,334 shares. These investors were granted piggyback
registration rights. In connection with the offering, the placement agent
received 8,334 one year warrants with an exercise price of $14.063. Pursuant to
the terms contained in an investment banking agreement executed in November
1998, the placement agent also received a total of 105,000 five year warrants
exercisable at prices ranging from $2.00 to $3.00.

NOTE 6: SALE OF EDNET'S IBS SUBSIDIARY

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 a sale price of $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. EDnet
recognized a gain of approximately $663,000 on the sale. The Company recorded
its portion of the gain, approximately $338,000, as a reduction of excess of
purchase price over net assets acquired.

NOTE 7: NASDAQ COMPLIANCE

In October 1998, the Company received notice that it had not been in
compliance with the net tangible asset requirement of the Nasdaq Stock Market
(the "Nasdaq") at June 30, 1998. While the Nasdaq noted that the Company
provided internal financial statements which demonstrated subsequent compliance
with the requirement, as a result of the Company's "burn rate", they concluded
that the Company would fall below the minimum requirement for continued listing
after November 1, 1998. The Company presented a definitive plan to a Nasdaq
Listing Qualifications Panel in December 1998 to demonstrate its ability to
maintain continued compliance with the Nasdaq net tangible asset requirement and
in January 1999 the Company was informed of the Nasdaq Amex Stock Market's
decision to continue the listing of the Company's securities on The Nasdaq
SmallCap Market.

F-30
<PAGE> 94

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of EDnet, Inc.

We have audited the accompanying consolidated balance sheets of EDnet, Inc.
and subsidiaries as of September 30, 1998, June 30, 1998, and June 30, 1997 and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the three months ended September 30, 1998 and for the years ended
June 30, 1998 and 1997. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 the 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 consolidated financial position of EDnet, Inc. and
subsidiaries as of September 30, 1998, June 30, 1998, and June 30, 1997 and the
consolidated results of their operations and their cash flows for the three
months ended September 30, 1998 and for the years ended June 30, 1998 and 1997,
in conformity with generally accepted accounting principles.

/s/ BURR, PILGER & MAYER
--------------------------------------
Burr, Pilger & Mayer

San Francisco, California
November 6, 1998, except for
Note 14, as to which the
date is December 18, 1998

F-31
<PAGE> 95

EDNET, INC.

CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND
JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- ---------- ----------
<S> <C> <C> <C>
Assets
Current assets:
Cash.................................. $ 88,470 $ 32,911 $ 31,067
Accounts receivable, net of allowance
for doubtful accounts of $8,500,
$17,502 and $31,875 at September
30, 1998 and June 30, 1998 and
1997, respectively (Note 3)........ 574,800 471,341 445,121
Account and interest
receivable -- related party (Note
4)................................. 33,008 -- --
Inventories........................... 122,986 87,157 202,913
Prepaid expenses...................... 4,601 58,823 --
Other current assets.................. 826 16,665 25,523
---------- ---------- ----------
Total current assets.......... 824,691 666,897 704,624
Property and equipment, net (Note 5).... 380,416 391,481 556,533
Investment.............................. -- -- 166,667
Other assets............................ 6,455 13,711 7,237
---------- ---------- ----------
$1,211,562 $1,072,089 $1,435,061
========== ========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable...................... $ 303,628 $ 388,325 $1,648,165
Accrued expenses...................... 239,476 294,980 313,241
Deferred revenue...................... 33,421 21,286 69,193
Line of credit (Note 7)............... 8,214 8,872 34,627
Notes payable -- related party (Note
7)................................. 240,500 40,500 55,500
Notes payable -- other (Note 7)....... -- -- 1,440,000
Current portion of capital lease
obligations (Note 10).............. 17,147 9,288 27,817
---------- ---------- ----------
Total current liabilities..... 842,386 763,251 3,588,543
Capital lease obligations (Note 10)..... 15,058 11,470 20,904
---------- ---------- ----------
Total liabilities............. 857,444 774,721 3,609,447
---------- ---------- ----------
</TABLE>

F-32
<PAGE> 96

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- ---------- ----------
<S> <C> <C> <C>
Commitments and contingency (Notes 10)
Stockholders' equity: (Note 11)
Convertible preferred stock; $1,000
par value; 1,750 shares authorized;
150 shares issued and outstanding
in 1997............................ -- -- 117,541
Common stock; $0.001 par value;
50,000,000 shares authorized;
16,761,836, 16,761,836 and
5,740,465 shares issued and
outstanding at September 30, 1998
and June 30, 1998 and 1997,
respectively....................... 16,761 16,761 5,740
Additional paid-in capital............ 6,755,443 6,755,443 4,411,559
Secured note receivable (Note 4)...... (283,746) (283,746) --
Accumulated deficit................... (6,134,340) (6,191,090) (6,709,226)
---------- ---------- ----------
Total stockholders' equity
(accumulated deficit)...... 354,118 297,368 (2,174,386)
---------- ---------- ----------
$1,211,562 $1,072,089 $1,435,061
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-33
<PAGE> 97

EDNET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
AND FOR THE YEARS ENDED JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- ---------- -----------
<S> <C> <C> <C>
Revenue:
Equipment sales...................... $ 283,573 $ 874,785 $ 961,677
Installation and monthly fees........ 153,423 610,514 541,856
Usage fees........................... 338,671 1,617,291 1,305,992
Web design and consulting............ 348,811 784,528 862,525
Rental fees.......................... 18,275 99,384 117,993
Other................................ 4,275 17,839 17,327
---------- ---------- -----------
1,147,028 4,004,341 3,807,370
Cost of sales.......................... 680,078 2,602,494 2,277,118
---------- ---------- -----------
Gross profit......................... 466,950 1,401,847 1,530,252
Sales and marketing.................... 129,052 666,985 948,549
Research and development............... -- -- 1,017,233
Operating expenses..................... 281,990 1,490,593 2,817,355
---------- ---------- -----------
Income (loss) from operations before
other income (expenses) and
provision for income taxes and
extraordinary
item.............................. 55,908 (755,731) (3,252,885)
---------- ---------- -----------
Other income (expenses):
Interest income...................... 5,993 4,166 1,837
Interest expense..................... (5,151) (63,772) (147,166)
Gain (loss) on sale of equipment..... -- 3,160 (853)
Goodwill write-off, net.............. -- -- (867,214)
Gain on sale of investment........... -- 422,225 --
Forgiveness of debt.................. -- 200,000 --
---------- ---------- -----------
Total other income
(expenses)................ 842 565,779 (1,013,396)
---------- ---------- -----------
Income (loss) before provision for
income taxes and extraordinary
item.............................. 56,750 (189,952) (4,266,281)
Provision for income taxes (Note 8).... -- 2,400 3,266
---------- ---------- -----------
Income (loss) before extraordinary
item.............................. 56,750 (192,352) (4,269,547)
Extraordinary item-gain on
restructuring of debt (no applicable
income taxes)........................ -- 710,488 --
---------- ---------- -----------
Net income (loss).................... $ 56,750 $ 518,136 $(4,269,547)
========== ========== ===========
Basic income (loss) per share (Note 9):
Income (loss) before extraordinary
item.............................. Nil $ (0.02) $ (0.89)
Net income (loss).................... Nil $ 0.07 $ (0.89)
Diluted income (loss) per share (Note
9):
Income (loss) before extraordinary... Nil $ (0.02) $ (0.89)
Net income (loss).................... Nil $ 0.07 $ (0.89)
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-34
<PAGE> 98

EDNET, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
AND FOR THE YEARS ENDED JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK ADDITIONAL SECURED
-------------------- ------------------ PAID-IN NOTE ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT TOTAL
---------- ------- ------ --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JULY 1, 1996.... 4,468,322 $ 4,468 -- -- $2,758,644 $ -- $(2,439,679) $ 323,433
Common shares issued
under IBS earn-out
agreement.............. 125,000 125 -- -- 195,188 -- -- 195,313
Common shares issued
under Regulation D
offerings.............. 582,143 582 -- -- 755,792 -- -- 756,374
Common shares issued
pursuant to consulting
agreement.............. 500,000 500 -- -- 652,000 -- -- 652,500
Common shares issued
under conversion of
Viscorp notes.......... 65,000 65 -- -- 49,935 -- -- 50,000
Preferred shares issued
under Regulation S
offering............... -- -- 150 $ 117,541 -- -- -- 117,541
Net loss................. -- -- -- -- -- (4,269,547) (4,269,547)
---------- ------- ---- --------- ---------- --------- ----------- -----------
Ending balance, June 30,
1997................... 5,740,465 5,740 150 117,541 4,411,559 -- (6,709,226) (2,174,386)
Common shares issued
under Regulation D
offering............... 738,000 738 -- -- 126,382 -- -- 127,120
Common shares issued
under S-8 offering..... 400,000 400 -- -- 399,600 -- -- 400,000
Common shares issued to
Rusell & Onggara....... 1,000,000 1,000 -- -- 374,000 -- -- 375,000
Conversion of preferred
shares to common....... 150,000 150 (150) (117,541) 117,391 -- -- --
Common shares issued
pursuant to consulting
service................ 169,954 170 -- -- 21,074 -- -- 21,244
Common shares issued to
VDC.................... 8,563,417 8,563 -- -- 1,305,437 (283,746) -- 1,030,254
Net income............... -- -- -- -- -- -- 518,136 518,136
---------- ------- ---- --------- ---------- --------- ----------- -----------
Ending balance, June 30,
1998................... 16,761,836 16,761 -- -- 6,755,443 (283,746) (6,191,090) 297,368
Net income............... -- -- -- -- -- -- 56,750 56,750
---------- ------- ---- --------- ---------- --------- ----------- -----------
Ending balance, September
30, 1998............... 16,761,836 $16,761 -- $ -- $6,755,443 $(283,746) $(6,134,340) $ 354,118
========== ======= ==== ========= ========== ========= =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-35
<PAGE> 99

EDNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
AND FOR THE YEARS ENDED JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................... $ 56,750 $ 518,136 $(4,269,547)
Adjustments to reconcile net income
(loss) to cash used in operating
activities:
Stock issued in lieu of
consideration for services....... -- 421,244 847,813
Goodwill write-off.................. -- -- 867,213
Depreciation and amortization....... 52,888 199,458 409,171
(Gain) loss on sale of fixed
assets........................... -- (3,160) 853
Gain on sale of investment.......... -- (422,225) --
Gain on write-off of note payable... -- (200,000) --
Inventory write-off................. -- 49,061 --
Noncash debt restructure............ -- (773,026) --
(Increase) decrease in assets:
Accounts receivable.............. (136,467) (26,220) 32,955
Inventories...................... (35,829) 66,695 (55,504)
Prepaid expenses................. 70,061 (58,823) --
Other current assets............. -- 8,858 (11,225)
Other assets..................... 7,256 (6,474) 72,105
Increase (decrease) in liabilities:
Accounts payable................. (84,697) (868,083) 988,456
Accrued expenses................. (43,141) 16,739 (76,761)
Deferred revenue................. -- (47,907) (430)
--------- ----------- -----------
Net cash used in operating
activities............... (113,179) (1,125,727) (1,194,901)
--------- ----------- -----------
Cash flows from investing activities:
Purchase of property and
equipment........................ (25,849) (31,246) (256,259)
Sale of investment.................. -- 588,892 --
Change in investment from
spin-off......................... -- -- (166,667)
--------- ----------- -----------
Net cash (used in) provided
by investing
activities............... (25,849) 557,646 (422,926)
--------- ----------- -----------
</TABLE>

F-36
<PAGE> 100

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- ----------- -----------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from borrowing............. 200,000 -- 750,000
Principal payments on long-term
debt............................. -- (115,481) (195,491)
Payments on capital leases.......... (4,527) (27,963) (19,394)
Sale of common stock................ -- 739,124 756,374
Sale of preferred stock............. -- -- 117,541
Change in line of credit............ (886) (25,755) 17,989
--------- ----------- -----------
Net cash provided by
financing activities..... 194,587 569,925 1,427,019
--------- ----------- -----------
Net increase (decrease) in
cash..................... 55,559 1,844 (190,808)
Cash at beginning of year............. 32,911 31,067 221,875
--------- ----------- -----------
Cash at end of year................... $ 88,470 $ 32,911 $ 31,067
========= =========== ===========
</TABLE>

Supplemental disclosure of cash flow information (see Note 13).

The accompanying notes are an integral part of these financial statements.
F-37
<PAGE> 101

EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

EDnet, Inc. (the Company), a Colorado corporation, and its subsidiaries
develop and market integrated systems for the delivery, storage, and management
of professional quality digital communications for media-based applications,
including audio and video production for the U.S. entertainment industry. The
Company, 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.
The Company provides engineering services and application-specific technical
advice, audio, video, and networking hardware and software as part of its
business. Additionally, through one of its wholly owned subsidiaries, the
Company provides Internet web site development and hosting services.

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its principal subsidiaries, Entertainment Digital Network ("EDN") and
Internet Worldwide Business Solutions ("IBS"). All material intercompany
transactions have been eliminated in the consolidated financial statements.

Effective June 20, 1998, the Company became 51% owned by Visual Data
Corporation ("VDC"), a public company, through the issuance of 8,563,417
shares of the Company's common stock (See Note 11). Accordingly, the
results of the Company's operations will be consolidated with those of VDC for
periods subsequent to June 20, 1998.

USE OF ESTIMATES

The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect 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 revenues and expenses during the
reporting period. Actual results could differ from those and other estimates.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Bad debts are provided on the allowance method based on historical
experience and management's evaluation of outstanding accounts receivable.

INVENTORIES

Inventories are valued at the lower of cost or market with cost being
determined on the first-in, first-out basis.

PROPERTY AND EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property and equipment are carried at cost and are depreciated on the
straight-line basis over their estimated useful lives which range from five to
seven years. The costs of

F-38
<PAGE> 102
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

leasehold improvements are amortized over the lesser of the lease term or the
life of the improvement. Expenditures for improvement or expansion of property
and equipment are capitalized. Repairs and maintenance are charged to expense as
incurred. When the assets are sold or retired, their cost and related
accumulated depreciation are removed from the accounts with the resulting gain
or loss reflected in the statement of operations.

INCOME TAXES

The Company accounts for income taxes using the liability method. Deferred
income tax assets and liabilities are computed annually for differences between
the financial reporting and tax bases of assets and liabilities that will result
in taxable or deductible amounts in the future based on enacted tax laws and
rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.

FAIR VALUE OF FINANCIAL INSTRUMENTS AND CREDIT RISK

The carrying amounts of certain financial instruments, including cash,
accounts receivable, notes receivable, accounts payable, accrued expenses, notes
payable, and line of credit, approximate fair value because of the relatively
short-term maturity of these instruments. The Company and its subsidiaries
maintain cash in bank deposit accounts at accredited financial institutions. The
balances in these accounts may, at times, exceed federally insured limits.

LONG-LIVED ASSETS

Long-lived assets such as property and equipment and certain intangibles,
are evaluated for impairment when events or changes in circumstances indicate
that the carrying amount of the assets may not be recoverable. When the
indicators of impairment are present and the estimated undiscounted future cash
flows from the use of these assets are less than the assets' carrying value, the
related assets will be written down to fair value.

REVENUE RECOGNITION

A significant component of revenue relates to the sale of equipment which
is recognized when the equipment is installed. Installation fees are recognized
when the installation has been completed. Usage fees are recognized over the
period the equipment is used based on the relative usage level. Deferred
revenues represent billings in excess of revenue recognized.

STOCK-BASED COMPENSATION

The Company has elected to account for stock-based compensation under the
intrinsic value method in accordance with the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION. Under this method, no compensation expense is recorded for stock
options granted when the exercise price of the option granted is equal to or
exceeds the

F-39
<PAGE> 103
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

fair market value of the Company's common stock The Company makes the pro forma
disclosures of stock-based compensation required by SFAS No. 123 (See Note 12).

EARNINGS (LOSS) PER SHARE

Earnings (loss) per share have been computed according to SFAS No. 128,
EARNINGS PER SHARE for all periods presented. Basic earnings per share is
computed using the weighted average number of shares of common stock outstanding
during the periods. Diluted earnings per share is computed using the weighted
average number of common shares and common share equivalents outstanding during
the period.

RECLASSIFICATION

Certain reclassifications have been made to the prior year financial
statements in order for them to conform to the current year presentation.

NEW ACCOUNTING STANDARDS NOT YET ADOPTED

In 1997, the Financial Accounting Standards Board issued a new disclosure
standard, SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, which establishes standards for the reporting and displaying of
operating business segments. This statement requires certain disclosures about
an entity's operating segments in annual and interim financial reports and also
requires certain related disclosures about products and services, geographic
areas and major customers. Application of this statement is required for
financial statements for fiscal years beginning after December 15, 1997. The
Company is currently evaluating whether this new disclosure will have an impact
on its financial statement reporting.

In March 1998 the Accounting Standards Executive Committee issued Statement
of Position ("SOP") 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE
DEVELOPED OR OBTAINED FOR INTERNAL USE. SOP 98-1 requires expenses incurred
during the application development stage of a software implementation project to
be capitalized and amortized over the useful life of the project. Application of
this statement is required for fiscal years beginning after December 15, 1998.
The Company does not expect adoption of this statement to have a material effect
on its financial position or results of operations.

2. ACQUISITION OF INTERNET WORLDWIDE BUSINESS SOLUTIONS

On June 24, 1996, the Company acquired all the outstanding shares of common
stock of IBS in a business combination accounted for as a purchase. IBS is
primarily an Internet service provider specializing in the development and
hosting of web sites. The results of operations of IBS are included in the
accompanying financial statements since the date of acquisition. The purchase
price of $1,162,568 included 311,284 shares of the Company's common stock, notes
payable in the aggregate amount of $500,000 and $40,000 of acquisition related
costs. The purchase price exceeded the estimated fair value of the net tangible
assets of IBS by $1,088,568 (See Note 6). The excess was reflected as goodwill
on the balance sheet and was originally amortized using the straight-line method
over a

F-40
<PAGE> 104
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

five-year period. During fiscal year 1997 the Company reevaluated the recovery
of its goodwill and determined that the remaining balance be written off.

In conjunction with the acquisition, under the terms of its nonstatutory
stock option plan, options to purchase an aggregate of 50,000 shares of common
stock of the Company were granted to certain IBS employees at $1.25 per share
(See Note 11).

On December 31, 1996, the Company amended the terms of its acquisition of
IBS by dividing IBS into two separate corporations. The inherent service
business continues to operate as IBS. IBS licensed the web site software
business to Breakthrough Software, Inc. ("BSI") and agreed to lend up to
$250,000 to BSI. In consideration, IBS issued certain convertible preferred
stock, which, after conversion into BSI nonvoting common stock, represented 40%
of BSI's outstanding common stock. At December 31, 1996, the Company recorded
its net book value allocated to BSI of $166,667 as its investment. Also as part
of the amendment, remaining acquisition notes payable from the Company to the
founders of IBS in the amount of $250,000 were canceled, and the remaining term
of an earn-out plan to such founders was also canceled.

In November 1997, new investors of BSI agreed to purchase the preferred
shares owned by the Company for $415,000 in cash and the assumption of certain
liabilities of $93,892. This transaction was completed in January 1998. In
addition, the Company received $80,000 from another investor from the sale of a
fully reserved note receivable related to BSI. A recap of the total
consideration shown in the June 30, 1998 financial statements is as follows:

<TABLE>
<S> <C>
Cash proceeds............................................... $415,000
Assumption of debt.......................................... 93,892
Note settlement............................................. 80,000
--------
Net proceeds and consideration.............................. 588,892
Net book value of investment................................ 166,667
--------
Gain on sale of investment.................................. $422,225
========
</TABLE>

3. ACCOUNTS RECEIVABLE

Accounts receivable at September 30, 1998, June 30, 1998, and June 30, 1997
comprise the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- -------- --------
<S> <C> <C> <C>
Receivables................................ $353,757 $444,243 $379,529
Unbilled charges........................... 229,543 44,600 97,467
-------- -------- --------
583,300 488,843 476,996
Less allowance for doubtful accounts....... (8,500) (17,502) (31,875)
-------- -------- --------
Total...................................... $574,800 $471,341 $445,121
======== ======== ========
</TABLE>

Additions to the allowance for doubtful accounts are made as a percentage
of sales, adjusted annually based upon review of the individual accounts
receivable. Accounts are written off when deemed to be uncollectible. Total bad
debt expense was $3,218, $1,501

F-41
<PAGE> 105
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and $13,706 for the three months ended September 30, 1998, and the twelve months
ended June 30, 1998 and 1997, respectively.

4. RELATED PARTY TRANSACTIONS

A note receivable, at the face value of $283,746, due from VDC is part of
the payment resulting from VDC's purchase of 8,563,419 shares of the Company's
common stock (See Note 11). The note is secured by the acquired common stock and
a second mortgage. Principal payment of $56,749 plus interest is due annually
commencing July 1, 1999 until July 1, 2003; the note bears a fixed interest rate
of 7% per annum.

At September 30, 1998 VDC owed the Company $27,403 for the purchase of
equipment and $5,605 of accrued interest on the note receivable.

5. PROPERTY AND EQUIPMENT

Property and equipment are summarized by major category as follows at
September 30, 1998, June 30, 1998, and June 30, 1997:

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- ---------- ----------
<S> <C> <C> <C>
Network and related equipment........... $ 918,450 $ 881,473 $ 854,383
Furniture and fixtures.................. 239,804 234,984 245,963
Computer software....................... 16,801 16,802 7,954
Leasehold improvements.................. 26,183 26,183 26,183
---------- ---------- ----------
Subtotal................................ 1,201,238 1,159,442 1,134,483
Depreciation and amortization........... (820,822) (767,961) (577,950)
---------- ---------- ----------
Property and equipment, net............. $ 380,416 $ 391,481 $ 556,533
========== ========== ==========
</TABLE>

Depreciation and amortization included in the statements of income amounted
to $52,888, $199,458 and $409,171 for the three months ended September 30, 1998
and the twelve months ended June 30, 1998 and 1997, respectively.

The Company leases some equipment to customers under terms that are
accounted for as operating leases. Under the operating method, rental revenue
from leases is recognized ratably over the life of the lease and the related
equipment is depreciated over its estimated useful life.

F-42
<PAGE> 106
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. IMPAIRMENT OF LONG-LIVED ASSETS

The Company adopted SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT of
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF during the fiscal
year ended June 30, 1997. The Company recognized an impairment loss of $867,214
in 1997, related to the recoverability of goodwill, where the sum of the
estimated future undiscounted cash flows from IBS were less than the carrying
amount of the tangible and intangible assets. Following is a summary of net
goodwill write-off at June 30, 1997 (See Note 2):

<TABLE>
<S> <C>
Original value of goodwill.................................. $1,088,568
Addition to goodwill for cancellation of options per
earn-out agreement........................................ 195,313
Reduction to goodwill for write-off of debt................. (250,000)
Reduction to goodwill for net book value allocated to
investment for BSI........................................ (166,667)
----------
Remaining net goodwill written off.......................... $ 867,214
==========
</TABLE>

7. NOTES PAYABLE AND OTHER DEBT

NOTES PAYABLE

Notes payable-related party consist of the following

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- -------- ----------
<S> <C> <C> <C>
Note payable to Eric Jacobs, a director of
VDC, with original principal of $200,000 at
12% interest. The principal balance and
accrued interest is due on August 3, 1999.
Accrued interest payable as of September 30,
1998 is $3,814.............................. $200,000 -- --
Notes payable to an officer and employees,
interest at 6% per annum, uncollateralized.
Accrued interest payable as of September 30,
1998 is $15,127. The notes are subordinated
to the $250,000 credit line credit line
discussed below for a period of six months.
Notes are due on demand thereafter.......... 40,500 $40,500 $ 55,500
-------- ------- ----------
Total notes payable-related party............. $240,500 $40,500 $ 55,000
======== ======= ==========
</TABLE>

F-43
<PAGE> 107
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Notes payable-other consist of the following:

<TABLE>
<S> <C> <C> <C>
Notes payable to an outside investor totaling
$200,000. The notes bear no interest and are
uncollateralized. The repayment of these notes
was disputed by the Company and in 1998, when
the debt could no longer be legally collected,
the notes were written off..................... -- -- $ 200,000
Senior notes payable to Morgan Fuller Capital
Group LLC with interest at 18% per annum. The
original amounts were $500,000, $300,000, and
$200,000. The Company repaid $100,000 in
February 1997. The notes were collateralized by
the Company's assets. The balance was settled
and repaid in 1998............................. -- -- 900,000
Notes payable to Mr. Irawan Onggara, a
shareholder and financial advisor, with
original amounts of $250,000, $100,000, and
$75,000 at 7% interest rate, collateralized by
assets of the Company subordinated to equipment
covered by individual capital leases, due
August 8, 1996, October 18, 1996, and November
20, 1996, respectively. The balance plus
accrued interest of $35,000 was converted to
1,000,000 shares of the Company's common stock
and warrants to purchase an additional
1,000,000 shares at $.375...................... -- -- 340,000
-------- ------- ----------
Total notes payable-other........................ -- -- $1,440,000
======== ======= ==========
</TABLE>

LINE OF CREDIT

The Company has a line of credit of $10,000 with a financial institution,
of which $8,214, $8,872 and $34,627 was outstanding as of September 30, 1998 and
June 30, 1998 and 1997, respectively. The line bears interest at 15.25% as of
September 30, 1998.

RESTRUCTURING OF DEBT

During the fiscal year ended June 30, 1998 the Company restructured it
accounts payable and debt which was a contingent requirement of the agreement
whereby VDC

F-44
<PAGE> 108
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

acquired its 51% ownership interest in the Company. The following table
summarizes the adjustments made according to the accounts payable and debt
settlement agreements:

<TABLE>
<CAPTION>
AMOUNT DEBT AMOUNT
DUE DISCHARGE SETTLED
---------- --------- --------
<S> <C> <C> <C>
EDnet, Inc.:
Trade and unsecured claims................ $ 257,376 $137,817 $119,559
Notes payable............................. 904,019 381,269 522,750
Entertainment Digital Network:
Trade and unsecured claims................ 179,664 109,435 70,229
Internet Worldwide Business Solutions:
Trade and unsecured claims................ 201,699 81,967 119,732
---------- -------- --------
Total............................. $1,542,758 $710,488 $832,270
========== ======== ========
</TABLE>

8. INCOME TAXES

The provision for income taxes for the fiscal year ended June 30, 1998
consists of California franchise taxes of $2,400. A reconciliation of the
expected and reported provision for income taxes follows:

<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30
THREE MONTHS ENDED --------------
SEPTEMBER 30, 1998 1998 1997
------------------ ----- -----
<S> <C> <C> <C>
Benefit (provision) expected based on
federal statutory rate.................... 34.0% 34.0% 34.0%
State taxes, net of federal benefit......... 6.1 6.1 6.1
Utilization of net operating loss
carryforwards............................. (40.1) -- --
Valuation allowance, net.................... -- (40.2) (40.2)
----- ----- -----
Net income tax provision.................... 0.0% 0.1% 0.1%
===== ===== =====
</TABLE>

The Company has Federal and California net operating loss (NOL)
carryforwards totaling approximately $6.0 million and $2.6 million,
respectively, as shown below. The utilization of these NOL carryforwards is
limited due to a change of ownership as defined in the Internal Revenue Code. As
a result, the federal and state NOLs can be utilized at the rate of $68,000 a
year through the year 2012.

F-45
<PAGE> 109
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At September 30, 1998 the Company had NOL carryforwards for tax purposes
expiring as follows:

<TABLE>
<CAPTION>
YEAR EXPIRES FEDERAL STATE
- ------------ ---------- ----------
<S> <C> <C>
2009.................................................. $ 204,000 --
2010.................................................. 386,000 --
2011.................................................. 1,181,000 $ 485,000
2012.................................................. 4,262,000 2,131,000
---------- ----------
Total loss carryforwards.............................. $6,033,000 $2,616,000
========== ==========
</TABLE>

The tax effects of significant temporary differences representing deferred
tax assets as of September 30, 1998 and June 30, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- ----------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.... $ 2,208,000 $ 2,231,000 $ 2,445,000
Property and equipment.............. 27,800 28,000 28,000
----------- ----------- -----------
Total deferred tax assets............. 2,235,800 2,259,000 2,473,000
Less: valuation allowance............. (2,235,800) (2,259,000) (2,473,000)
----------- ----------- -----------
Net deferred tax asset...... -- -- --
=========== =========== ===========
</TABLE>

9. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed using the weighted average
number of shares of common stock outstanding during the periods. Diluted
earnings per share is computed using the weighted average number of common
shares and common share equivalents outstanding during the year. The computation
of net income (loss) per share was a follows:

<TABLE>
<CAPTION>
INCOME (LOSS) SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------- ------------- ---------
<S> <C> <C> <C>
Three months ended September 30, 1998:
Basic earnings per share............. $ 56,750 16,761,836 Nil
Effect of dilutive stock options and
warrants.......................... -- 5,344,156
--------- ---------- ------
Diluted earnings per share........... $ 56,750 22,105,992 Nil
========= ========== ======
Twelve months ended June 30, 1998:
Basic and diluted loss before
extraordinary item................ $(192,352) 7,936,358 $(0.02)
Extraordinary item................... 710,488 -- 0.09
--------- ---------- ------
Basic and diluted net loss per
share............................. $ 518,136 7,936,358 $ 0.07
========= ========== ======
</TABLE>

F-46
<PAGE> 110
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
INCOME (LOSS) SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------- ------------- ---------
<S> <C> <C> <C>
Twelve months ended June 30, 1997:
Basic loss per share................. $(4,269,547) 4,797,156 $(0.89)
Effect of dilutive stock options and
warrants.......................... -- -- --
----------- --------- ------
Diluted loss per share............... $(4,269,547) 4,797,156 $(0.89)
=========== ========= ======
</TABLE>

At September 30, 1998 options and warrants, for the purchase of 1,391,643
common shares at prices ranging from $.375 to $2.50 per share, for which the
exercise price was greater than the average market price of common shares were
not included in the computation of diluted earnings per share. At June 30, 1998
and 1997 options and warrants for the purchase of 12,126,944 and 1,536,889
common shares, respectively, at prices ranging from $.10 to $2.50 per share were
antidilutive and therefore not included in the computation of diluted earnings
per share.

10. COMMITMENTS

LEASE COMMITMENTS

As of September 30, 1998, the Company leases office space and certain
equipment under various noncancelable capital and operating leases. The leases
begin to expire in March 2000. Future minimum lease payments required under the
noncancelable leases are as follows:

<TABLE>
<CAPTION>
OPERATING CAPITAL
YEAR ENDING JUNE 30: LEASES LEASES
- -------------------- --------- -------
<S> <C> <C>
1999...................................................... $188,052 $20,183
2000...................................................... 149,572 13,864
2001...................................................... 111,092 4,239
2002...................................................... 111,092 --
2003...................................................... 86,203 --
-------- -------
Total minimum lease payments.................... $646,011 38,286
========
Less amount representing interest......................... 6,081
-------
Present value of net minimum lease payments............... 32,205
Less current portion...................................... 17,147
-------
Long-term portion............................... $15,058
=======
</TABLE>

Total rental expense for all operating leases for the three months ended
September 30, 1998 and June 30, 1998 and 1997 amounted to $52,146, $195,925 and
$192,509, respectively.

EMPLOYMENT CONTRACTS

The Company and its subsidiaries have entered into employment contracts
with several of their key employees that expire at different times through
December 31, 2000.

F-47
<PAGE> 111
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At September 30, 1998 the commitment under all of the contracts was
approximately $980,000.

11. STOCKHOLDERS' EQUITY

INVESTMENT BY VISUAL DATA CORPORATION

On June 20, 1998, the Company entered into an agreement with VDC, a public
company, to sell a 51% (8,563,417 shares) ownership interest in the Company's
common stock. The form of payment consisted of:

<TABLE>
<S> <C>
Cash........................................................ $ 698,004
VDC stock: 75,000 shares (valued at $3.75 per share)........ 281,250
VDS warrants: 50,000 (valued at $2.74 per warrant).......... 137,000
Note receivable -- secured common stock (see Note 4)........ 283,746
----------
1,400,000
Less expenses............................................... 86,000
----------
Net investment......................................... $1,314,000
==========
</TABLE>

In addition, the Company issued a blanket mirror option covering 6,542,722
shares (3,304,979 options and 3,237,743 warrants), which entitles VDC to acquire
shares equal to those actually purchased upon exercise of options and warrants
by others at $.10 per share. In addition, the Company granted the investment
banker who organized the transaction 750,000 warrants at an exercise price of
$.145. The transaction was contingent upon certain restructuring of accounts
payable debt the Company had incurred over the prior three years (See Note 7).

REGULATION D EQUITY PLACEMENTS

The Company has offered three Regulation D equity placements during the two
fiscal years ended June 30, 1998.

In August 1996, the Company offered up to a maximum of 1,000,000 units
(each consisting of one share of its common stock and one warrant) at a price
per unit of the lesser of $3.00 or the average closing bid price of its common
stock during a consecutive 30-day period immediately preceding the termination
date less 30%. Each share of stock came with a warrant to purchase common stock
through July 31, 1999 at a price of the lesser of $4.75 or the average closing
bid price during a consecutive 30-day period immediately preceding the
termination date as explained above. This offering was closed as of November 30,
1996, with 217,143 units sold at a price of $1.75 per share and a warrant
exercise price of $2.50 per share and 100,000 units sold at a price of $1.40 and
a warrant price of $2.50 per share.

In December 1996, the Company offered up to a maximum of 5,000,000 shares
of its common stock at a price of $1.00 per share. The offering terminated in
early 1997 with the sale of 265,000 shares at a price of $1.00 per share.
Holders of this common stock will have piggyback and Form S-3 registration
rights.

F-48
<PAGE> 112
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In July 1997, the Company offered up to a maximum of 3,750,000 units (each
consisting of one share of common stock and one warrant) for T Bar W Ranch
Investments ("T Bar") to purchase shares of the Company at a price of $.20 per
unit. Each warrant is exercisable until the fifth anniversary of the date of its
issuance and entitles the holder to purchase one share at an exercise price of
$1.00 per share. The warrants had an antidilution clause in their terms. T-Bar
invested $147,600 to acquire 738,000 units. The Company negotiated an agreement
with T-Bar in June 1998 to reduce the warrant exercise price to $.10 per share
in exchange for removal of the antidilution clause.

The Regulation D equity placement for these three offerings are summarized
as follows:

<TABLE>
<CAPTION>
COMMON GROSS
OFFERING DATE WARRANTS SHARES PROCEEDS EXPENSES PROCEEDS
- ------------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
August 1996........... 317,143 317,143 $520,000 $26,450 $493,550
December 1996......... -- 265,000 265,000 2,176 262,824
July 1997............. 738,000 738,000 147,600 20,480 127,120
--------- --------- -------- ------- --------
Total................. 1,055,143 1,320,143 $932,600 $49,106 $883,494
========= ========= ======== ======= ========
</TABLE>

REGULATION S EQUITY OFFERING

On February 3, 1997, the Company offered up to $1,750,000 of its Series A
Preferred Stock at $1,000 per share in an offering exempt from registration
under Regulation S of the Securities Act of 1933. The shares were convertible
into common stock at any time until the third anniversary of their issuance at
the lesser of 70% of the market price or the closing price but subject to the
floor of $1.00 per share. One hundred fifty shares were purchased on February
27, 1997 for $150,000. Expenses on the offering amounted to $32,459 resulting in
net proceeds to the Company of $117,541. The Series A Preferred Stock was
converted to 150,000 common shares on May 29, 1998. The discount of 30% off the
market price on the conversion of stock was not recorded because the stock was
converted at $1.00 per share (the minimum), which was greater than the current
price at the conversion rate.

F-49
<PAGE> 113
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

WARRANTS

At September 30, 1998, the Company has reserved 6,475,486 common shares for
potential exercise of outstanding warrants issued in connection with various
equity and debt financing activities as follows:

<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
SEPTEMBER 30, 1998 WARRANTS DATE PRICE
- ------------------ --------- ---------- ------
<S> <C> <C> <C>
Regulation D warrants, June 1996.............. 317,143 1999 $2.500
Conversion of notes, August 1997.............. 1,000,000 2002 .375
Senior note warrants, November 1996........... 432,600 2003 .250
Investment banking warrants, June 1998........ 750,000 2003 .145
Regulation D warrants, July 1997.............. 738,000 2003 .100
VDC mirror warrants........................... 3,237,743 1999-2003 .100
---------
Total warrants...................... 6,475,486
</TABLE>

12. STOCK COMPENSATION PLANS

The Company adopted a stock option plan on April 3, 1998 which allows the
Company to grant incentive or nonqualified options up to three million
(3,000,000) shares of common stock to its employees, board members, and certain
other consultants in order to motivate them to maintain their commitment to the
Company at this stage of its development. Additionally, the Company has stock
options outstanding under two nonqualified stock option plans adopted in 1995.

The Company applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its stock option plans. Accordingly, no
compensation expense has been recognized as the exercise price has equaled the
stock fair value on the date of grant. Had compensation expense been determined
for stock options granted during three months ended September 30, 1998 and the
twelve months ended June 30, 1998 and 1997, based on the fair value at grant
dates consistent with SFAS No. 123, the Company's condensed Pro Forma Statement
of Operations for those periods would have been as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- -------- -----------
<S> <C> <C> <C>
Net income (loss):
As reported........................... $56,750 $518,136 $(4,269,547)
======= ======== ===========
Pro forma............................. $46,998 $505,065 $(4,273,972)
======= ======== ===========
Basic and diluted income (loss) per
share:
As reported........................... Nil $ 0.07 $ (0.89)
======= ======== ===========
Pro forma............................. Nil $ 0.06 $ (0.89)
======= ======== ===========
</TABLE>

F-50
<PAGE> 114
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The pro forma amounts were estimated using the Black-Scholes option pricing
model with the following assumptions for fiscal 1998 and 1997, respectively:
risk-free interest rate of 5.5%, volatility factor of the expected market price
of the Company's common stock of 228%, no dividend growth rate since the Company
does not intend to pay dividends on its common stock; and expected lives equal
to the remaining option terms for both years.

The following table summarizes employee stock option plan activity for the
three months ended September 30, 1998 and the twelve months ended June 30, 1998
and 1997:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 JUNE 30, 1998 JUNE 30, 1997
--------------------- --------------------- ---------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER EXERCISE NUMBER EXERCISE NUMBER EXERCISE
OF OPTIONS PRICE OF OPTIONS PRICE OF OPTIONS PRICE
---------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning
of period............. 5,651,458 $0.12 787,146 $0.92 1,002,479 $0.99
Granted................. 620,000 0.10 5,346,479 0.10 56,667 1.25
Canceled................ -- -- 482,167 1.25 272,000 1.25
Exercised............... -- -- -- -- --
--------- ----- --------- ----- --------- -----
Outstanding............. 6,271,458 0.11 5,651,458 0.12 787,146 0.92
Eligible for exercise,
end of period......... 6,271,458 0.11 5,651,458 0.12 787,146 0.92
Weighted average fair
value of options
granted during the
year.................. -- 0.10 -- 0.10 -- 0.10
</TABLE>

The following table summarizes information regarding stock options
outstanding at September 30, 1998:

<TABLE>
<CAPTION>
WEIGHTED
RANGE OF AVERAGE WEIGHTED NUMBER AVERAGE
EXERCISE NUMBER REMAINING AVERAGE EXERCISABLE EXERCISE
PRICES OUTSTANDING LIFE EXERCISE PRICE AT 9/30/98 PRICE
- -------- ----------- --------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C>
$1.25................ 74,500 2.1 years $1.25 74,500 $1.25
0.11................. 230,479 2.0 years 0.11 230,479 0.11
0.10................. 5,966,479 4.5 years 0.10 5,966,479 0.10
--------- ---------
6,271,458 6,271,458
========= =========
</TABLE>

F-51
<PAGE> 115
EDNET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. SUPPLEMENTAL CASH FLOW INFORMATION

The following table presents additional cash flow information for the three
months ended September 30, 1998 and the twelve months ended June 30, 1998 and
1997:

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1998 1998 1997
------------- -------- --------
<S> <C> <C> <C>
Interest paid............................... $3,317 $97,193 $113,563
Income taxes paid........................... -- 2,400 3,268
Assets and lease obligations capitalized.... 15,974 -- --
Common stock issued for consulting
services.................................. -- 421,244 652,500
Common stock issued for settlement of note
and accrued interest...................... -- 375,000 --
Common stock issued for debt cancelation.... -- -- 50,000
Common stock issued for cancelation of IBS
earn-out plan............................. -- -- 195,313
</TABLE>

14. SUBSEQUENT EVENT

On December 4, 1998, the Company entered into a binding letter of intent
for the sale of assets of its subsidiary IBS. The buyer paid the Company cash
consideration of $1,000,000 on December 18, 1998, the closing date of the
transaction, and assumed certain outstanding liabilities of IBS.

F-52
<PAGE> 116

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

NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR
TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON ANY
UNAUTHORIZED INFORMATION OR REPRESENTATIONS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE UNDER THIS PROSPECTUS IMPLIES THAT THERE HAS BEEN
NO CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS PROSPECTUS OR THAT THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY DATE SUBSEQUENT TO
THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS AN OFFER TO SELL ONLY THE
SECURITIES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND IN JURISDICTIONS
WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
CURRENT ONLY AS OF ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................. 3
Risk Factors....................... 8
Use of Proceeds.................... 17
Price Range of Securities.......... 17
Dividend Policy.................... 18
Capitalization..................... 19
Dilution........................... 20
Selected Consolidated Financial
Data............................. 20
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 22
Business........................... 28
Management......................... 43
Certain Transactions............... 54
Principal and Selling
Shareholders..................... 55
Description of Securities.......... 56
Underwriting....................... 59
Legal Matters...................... 62
Experts............................ 62
Available Information.............. 63
Index to Consolidated Financial
Statements....................... F-1
</TABLE>

- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
1,400,000 SHARES

(VISUAL DATA CORP LOGO)

COMMON STOCK

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

PROSPECTUS
-------------------------

[Cruttenden Roth Logo]
[H.C. Wainwright & Co. Logo]

August 9, 1999
- ------------------------------------------------
- ------------------------------------------------