<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                  FORM 10-KSB

(Mark One)

(X) Annual Report Under Section 13 or 15(d) of the Securities Exchange Act
    of 1934 (Fee required)

For the fiscal year ended December 31, 1996.

( ) Transition report under Section 13 or 15(d) of the Securities Exchange Act
    of 1934 (No fee required)

For the transition period from __________________ to ____________________.

Commission file Number 0-7762.

                      AUDIO COMMUNICATIONS NETWORK, INC.
----------------------------------------------------------------------------
              (Name of Small Business Issuer in Its Charter)

           Florida                                       59-0690530
 ---------------------------                          --------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization

    1000 Legion Place, Suite
     1515, Orlando, Florida                                32801
   ---------------------------                            -------
(Address of principal executive offices)                 (Zip Code)

Issuers Telephone Number, Including Area Code   (407) 649-8877
                                                --------------
Securities registered under Section 12(b) of the Exchange Act:

                                                   Name of each exchange on
         Title of each Class                            which registered
         -------------------                            ----------------
                None                                          None
                ----                                          ----

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

                         Common Stock - $.25 par value
 ------------------------------------------------------------------------------
                               (Title of Class)

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

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

  Issuers revenues for its most recent fiscal year   $11,051,227
                                                      ----------

  As of March 14, 1997, the aggregate market value of the voting stock held by
  non-affiliates of Registrant was $5,058,027.
                                    ----------

  As of March 14, 1997, 2,319,203 shares of Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The Part III information is incorporated by reference to Registrants definitive
proxy statement to be filed under Regulation 14A.

Transitional Small Business Disclosure Format (check one):  Yes     No  X
                                                                ----   ----
<PAGE>

                                                                               2



                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

   Audio Communications Network, Inc. (the "Company" or "Audio") owns and
operates MUZAK\R\ franchises. The Company currently owns franchises located in
Baltimore, Maryland and the Delmarva peninsula area encompassing the Maryland
Eastern Shore, and Kansas City and St. Louis, Missouri, and Fresno, California
and Jacksonville, Florida, which includes Gainesville, Ocala, St. Augustine, and
southern Georgia, including Brunswick. The Company distributes functional
programs of MUZAK(R) and ancillary products and services.

   The Company was incorporated in Florida in 1953, and originally operated as a
manufacturer of various types of electronic equipment used for the transmission
and reception of specialized communications systems used principally by the
background music industry.  In 1989, the Company ceased its manufacturing
efforts.

   In 1985, the Company acquired its first MUZAK(R) franchise when it purchased
the assets of the Maryland Music Corporation, the MUZAK(R) franchise for
Baltimore, Maryland. In 1986, the Company purchased the assets of Delmarva
Music, the MUZAK(R) franchise for the Delmarva peninsula area, and acquired the
stock of Music Services, Inc., the MUZAK(R) franchise for Kansas City, Missouri.
In 1988, the Company continued its expansion with the purchase of the assets of
Wired Music, Inc., the MUZAK(R) franchise for St. Louis, Missouri. In May 1992,
the Company acquired certain assets of Business Music of America in St. Louis,
Missouri. This acquisition was incorporated into the Company's MUZAK(R)
franchise in St. Louis and further strengthened the Company's position in the
St. Louis market.

   In January 1994, the Company purchased additional subscriber accounts in the
Delmarva peninsula area from an independent music supplier for the Baltimore
franchise.  Additionally in March 1994, the Company acquired all the outstanding
stock of American Music Network, Inc. (AMN) in exchange for newly issued shares
of the Company's common stock in a related party transaction.  AMN is based in
Fresno, California and serves central California, including Fresno, Modesto,
Salinas, and the Monterey peninsula.

   On January 2, 1996, the Company acquired the assets of Florida Sound
Engineering Company (Florida Sound) holder of the Jacksonville, Florida MUZAK(R)
franchise.  In addition to the MUZAK(R) franchise, the Company also acquired the
assets of Florida Sound's Pro Sound Division enabling it to install complex and
extensive communication systems, such as the newly completed Jacksonville
Municipal Stadium.  The area of operations extends beyond Jacksonville to
Gainesville, Ocala, St. Augustine, and into southern Georgia, including
Brunswick.

   In November 1996, the Company entered into an Asset Purchase Agreement (the
"Suncom Asset Purchase Agreement") to acquire substantially all of the assets
and assume the liabilities of Suncom Communications, L.L.C. ("Suncom"). Suncom
owns and operates MUZAK(R) franchises in Hillsborough and Charlotte, North
Carolina and Phoenix, Arizona. Management expects the transaction to be
consummated in the second quarter of 1997.
<PAGE>

                                                                               3

   Under the terms of the Suncom Asset Purchase Agreement, the Company will
acquire the business and assume the liabilities of Suncom. In addition to the
assumption of the liabilities of Suncom, the Company will also issue 2.1 million
shares of its common stock as consideration for the acquisition, representing
approximately 48% of the Company's common stock. The transaction was approved by
the Company's Board of Directors, including its independent directors, and the
Board received the opinion of Key Trust Company of Ohio, N.A. that the
transaction contemplated by the asset purchase agreement is fair from a
financial point of view to the shareholders of the Company. Consummation of the
transaction requires the consent of the Company's and Suncoms lenders or the
replacement of the existing banking facilities with a substitute facility or
combined facilities.

   Mr. Schell will remain as Chairman of the Company's Board of Directors after
closing of the transaction.  In addition, as of the closing, Suncom will
designate four persons who will serve on the Company's eight-person Board of
Directors, with four of the current directors remaining on the Company's Board
and four of the current directors resigning their positions.  The Company's
shareholders are expected to vote on a proposal to be submitted at the 1997
annual meeting to increase the size of the Board to nine, with the ninth member
being nominated by Suncom.

   Additionally, Suncom has entered into an agreement with A.J. Schell, the
Company's Chairman and Chief Executive Officer, to acquire Mr. Schell's position
in the Company.  Upon consummation of both transactions, Suncom is expected to
own approximately 2.7 million shares, or approximately 62% of the Company's
outstanding common stock.

   The Suncom Asset Purchase Agreement also provides for the execution of an
Option Agreement between the Company and Suncom.  At closing, the Company will
grant Suncom an option to acquire up to 1,000,000 shares of Company common stock
at an exercise price of $6.00 per share.  The options become exercisable upon
the consummation of a public or private offering of Company common stock, or
securities convertible into such stock, but only with respect to the number of
shares issued in such offering.  In the event that the offering is of securities
convertible into Company common stock, the exercise price of the option
increases to $9.00 per share.  The option expires three years from grant or from
the completion of an offering of convertible securities.

MUZAK(R) PRODUCTS

   Through its network of MUZAK(R) franchises, the Company distributes
functional programs of MUZAK(R) to a wide range of businesses.  MUZAK(R)
is used primarily as a management tool to increase productivity and efficiency
and to enhance sales environments. The programs are distributed by means of
telephone lines, FM SCA (Subsidiary Communication Authorization) radio
transmissions which are special communication systems on the portion of the FM
broadcast signal not normally available to the general public, and direct
broadcast satellite (DBS).  Distribution by radio transmissions permits up to
two programs while DBS distribution enables the dissemination of up to 16 music
programs from environmental to classical, as well as data and video.

   The Company also provides certain ancillary products such as audio/video
systems and equipment, data services whereby a business distributes data to
multiple locations through the Company's communications systems, and messaging
on hold whereby advertisements are delivered while a telephone caller is on
hold. The Company also uses its communications systems to provide in-store
advertising services and advertising services produced by MUZAK(R).
<PAGE>

                                                                               4

   The audio, video and other equipment needed to receive MUZAK(R) and ancillary
products may be provided to the customer by the Company or other suppliers.  The
Company also provides equipment installation services.

MARKETING

   The customer base is approximately 9,600 accounts.  The Company bills its
customers monthly under long-term service agreements which provide the recurring
revenue base for the Company.  The Company is not dependent on one or a few
major customers.

   All MUZAK(R) affiliates operate under an exclusive 10-year agreement with
MUZAK(R) for distribution of products. The Company pays to MUZAK(R) a set market
fee and a royalty based on its gross billings.

COMPETITION

   The Company competes with independent distributors of other music products in
each of its current markets.  The Company is the leading distributor of music
products in these markets.  The Company believes its leading position is
attributable to the superior service and equipment provided to the customer and
the availability of additional audio products.  Also MUZAK(R) has the only
national distribution network through the Company and its other MUZAK(R)
affiliates, and this network provides continuity of product for MUZAK(R)
subscribers with multiple locations.

EMPLOYEES

   The Company employs approximately 82 persons all of whom are full-time
employees.  The service and installation employees of the MUZAK(R) franchise in
Kansas City, Missouri are members of Communications Workers of America AFL/CIO.
These employees are currently working under a negotiated agreement which expires
September 30, 1999.  Additionally, the employees of the St. Louis, Missouri
franchise are working under a negotiated agreement with the International
Brotherhood of Electrical Workers (IBEW).  This agreement became effective on
the 1st day of September 1995 and continues through the 31st day of August 1998
and automatically renews itself from year to year thereafter, unless either the
Company or IBEW serves written notice upon the other party to this agreement 60
days prior to the expiration date or 60 days prior to any subsequent anniversary
date.

ITEM 2.  DESCRIPTION OF PROPERTY

   The offices of the Company are located in Orlando, Florida and occupy
approximately 3,300 square feet of leased space.  MUZAK(R) franchises are
operated from leased facilities within their respective cities.

ITEM 3.  LEGAL PROCEEDINGS

   None.

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

   Not Applicable.
<PAGE>

                                                                               5

PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

   (A)    Price Range of Common Stock

   The Companys Common Stock is traded in the over-the-counter market under the
symbol AUCM.  All over-the-counter prices are quotes supplied by the National
Association of Securities Dealers through the NASD OTC Bulletin Board, its
automated system for reporting non-NASDAQ quotes.  Quotations reflect inter-
dealer prices, without retail markup, markdown or commission, and may not
represent actual transactions.

                                            BID PRICES
                                        ------------------
1995                                         HIGH   LOW
-----                                       -----  -----
     First Quarter                         1-3/8    3/4
     Second Quarter                        1-3/8    7/8
     Third Quarter                         2-1/4  1-1/4
     Fourth Quarter                        2-1/8      1

1996
-----

     First Quarter                         2-1/8  2-1/8
     Second Quarter                        2-3/8    2
     Third Quarter                         2-1/2  2-3/8
     Fourth Quarter                        2-7/8  2-1/2


   (B) Approximate Number of Equity Security Holders


                                Approximate Number of Shareholders
        Title of Class                 As of March 14, 1997
------------------------------  ----------------------------------

Common Stock, $.25 Par Value                   599


   (C)    Dividends
          ---------

   No dividends have been paid on the Companys Common Stock since 1973.


   Payment of dividends are within the discretion of the Company's Board of
Directors and will depend on, among other factors, earnings, capital
requirements and the operating and financial condition of the Company.  Also,
the Companys banking facility prohibits the Company from paying dividends
without the prior written consent of the lender, and the Suncom Asset Purchase
Agreement prohibits the Company from paying dividends pending the closing of the
Suncom transaction without the prior written consent of Suncom (see "Item 1.
Description of Business - General").

ITEM 6.  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

   Set forth below is a discussion of the Companys financial condition, changes
in financial condition and results of operations for the periods indicated.
<PAGE>

                                                                               6

SUMMARY

   The following table sets forth for the periods indicated, certain items from
the Company's Consolidated Statements of Operations expressed as a percentage of
operating revenues.

                             PERCENTAGE OF REVENUES

                                                 YEAR ENDED DECEMBER 31,
                                             1996         1995         1994

Revenues from Operations                    100.0%       100.0%       100.0%

Operating Costs and Expenses                (69.9)%      (69.7)%      (72.3)%
                                            -----        -----        -----

Income from Operations before
  Depreciation and Amortization              30.1%        30.3%        27.7%

Depreciation and Amortization               (14.6)%      (15.4)%      (17.4)%
                                            -----        -----        -----
Income before Other Income (Expense)
  and Income Taxes                           15.5%        14.9%        10.3%

Other Income (Expense), Net                  (8.3)%       (6.2)%       (5.2)%
                                             -----        -----        ----

Income before Income Taxes                    7.2%         8.7%         5.1%

Provision for Income Taxes                   (0.9)%       (0.7)%       (0.5)%
                                             ----         ----         ----

Net Income                                    6.3%         8.0%         4.6%
                                             ----         ----         ----
<PAGE>

                                                                               7

                             RESULTS OF OPERATIONS

GENERAL DISCUSSION

   Again, the year 1996 exceeded the Company's target both in net income and
earnings per share.  The Company is committed to growth through increased
revenues and acquisitions.  It was anticipated that Jacksonville would increase
the Company's revenues to approximately $11,000,000, and we can report that
Audios revenues for the year 1996 were $11,051,000.

REVENUES

   The Company derives its revenues from recurring MUZAK\R\ franchise billings
and equipment sales. As previously mentioned, the Company's 1996 revenues were
$11,051,000 as compared to 1995's revenues of $7,621,000, an increase of
$3,430,000 or 45%. Jacksonvilles contribution was 46%. The slight reduction in
Audio's continuing revenues was due to consolidation and restructuring of
various national recurring revenue accounts. Revenue in 1995 increased in every
category from equipment sales to recurring billing by $708,000 or 10% from
1994's revenues of $6,913,000.

COSTS AND EXPENSES

   Cost of sales increased to $4,718,505 from $3,061,675 or 54% in 1996 over
1995 due to the inclusion of sound equipment sold by the Jacksonville franchise.
Over 50% of the sound equipment revenue is material costs.  There was a slight
decrease in cost of sales as a percentage of sales in 1995 over the previous
year due to various installations not requiring additional materials.

   There was no additional general and administrative expense incurred in the
Jacksonville acquisition, resulting in a decrease in selling, general, and
administrative expenses as a percentage of sales in 1996 over 1995.  In 1995,
there was no additional sales expense due to increasing revenues, resulting in a
slight decrease in selling, general, and administrative expenses as a percentage
of sales in 1995 over 1994.

   Depreciation and amortization as a percentage of sales decreased in 1996 over
1995 and 1995 over 1994 as a result of certain assets and intangibles related to
previous acquisitions becoming fully depreciated and amortized.  The decrease in
1996 was partially offset by an increase in amortization and depreciation
expense incurred by the Florida Sound Engineering Company acquisition.

OTHER INCOME (EXPENSE)

   The increase in interest expense in 1996 over 1995 was due to additional
borrowings for the purchase of the Florida Sound Engineering Company and to
purchase inventory for the Pro Sound Division acquisition.  The increase in
interest expense in 1995 over 1994 was due to the increase in the prime rate and
the reduction of the Company's principal payment when the loan was restructured
in June 1995, thereby increasing interest expense.

   The increase in 1996 over 1995 of other income is due primarily to the
inclusion of the Jacksonville acquisition.  The decrease in 1995 from 1994 was
due to the surrendering in 1994 of a key man insurance policy no longer
required.  Other income is primarily composed of cancelation fees, bad debt
recoveries, commissions earned, and discounts earned as allowed.
<PAGE>

                                                                               8

INCOME TAXES

   At December 31, 1996, the Company had net operating loss carryforwards for
federal tax purposes of approximately $2,066,000.  Such loss carryforwards
expire in 2004 through 2006.

NET INCOME

   Net income for 1996 was $699,000 as compared to $609,000 for the year 1995,
an increase of $90,000 or 15%.  Earnings per share for 1996 were $.30 versus
$.27 for the year 1995, an increase of 11% or $.03 per share.  Net income for
1995 at $609,000 or $.27 per share as compared to 1994's $312,000 or $.15 per
share.  This increase was primarily a result of certain assets and intangibles
related to previous acquisitions becoming fully depreciated and amortized at
December 31, 1994.

LIQUIDITY AND CAPITAL RESOURCES

   Operating cash flows (computed as net income plus interest, taxes,
depreciation, and amortization) were $3,448,000 in 1996 as compared to
$2,376,000 for the year 1995, an increase of $1,072,000 or 45%.  All loan
payments of interest and principal have been made on a timely basis in both
years.

   In July 1993, the bank loans were renewed with SunTrust Bank, Central
Florida, N.A. (SunTrust), with a maturity date of July 1, 1999 and bear interest
at 1-1/4% above prime.  Additionally on January 28, 1994, the Company increased
its bank loans from SunTrust for the purchase of subscriber contracts for the
Baltimore franchise and for DBS equipment to be installed in the locations
purchased.

   On March 4, 1994, the Company assumed, upon its purchase of the California
franchise, its debt of $1,186,000 with an interest rate of 1% above prime and
lease obligations of approximately $71,000.

   On June 7, 1995, the Company and SunTrust entered into an Amendment to its
existing loan agreement.  The new amendment was for $5,200,000 and was called a
"consolidated loan."  It paid off the Company's and AMN's indebtedness of
$4,899,000.  The following covenants supersede all other covenants:  1) Debt
Service Coverage Ratio, 2) Debt to Net Worth Ratio, and 3) a Minimum Monthly
Recurring Billing Required.

   On January 2, 1996, the Company and SunTrust entered into a Second Amended
and Restated Loan Agreement to its existing loan agreement. The new amendment is
for $11,000,000 and is called a "consolidated loan." The new loan paid off the
Company's indebtedness of $4,810,000 at year-end and gave the Company the
ability to purchase for cash the assets of the MUZAK(R) franchise in
Jacksonville, Florida and to purchase additional inventory for the Pro Sound
Division acquired in the acquisition.

ACQUISITIONS

   On January 2, 1996, the Company acquired the assets of Florida Sound, the
Jacksonville, Florida MUZAK(R) franchise holder for $5,750,000.  Included in the
sale, the Company acquired Florida Sound's Pro Sound Division with its accounts
receivable, inventory, and other equipment.  This division allows the Company to
expand its sound system contracting business.  The Jacksonville company's name
remains the same, and it operates as a wholly owned subsidiary of the Company.
<PAGE>

                                                                               9

   As described in "Item 1. Description of Business - General," in November 1996
the Company entered into an agreement to acquire the business of Suncom. In
connection with this transaction, which is expected to be consummated in the
second quarter of 1997, the Company expects that its existing banking facilities
and the current banking facilities of Suncom will be replaced with a combined
banking facility covering both the Company and Suncom.
<PAGE>

                                                                              10

ITEM 7.  FINANCIAL STATEMENTS

              AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES

                               TABLE OF CONTENTS



                                                                   PAGE

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                  11

FINANCIAL STATEMENTS:

  Consolidated Balance Sheets, December 31, 1996 and 1995           12

  Consolidated Statements of Operations for the Years Ended
   December 31, 1996, 1995, and 1994                                14

  Consolidated Statements of Stockholders' Equity for the Years
   Ended December 31, 1996, 1995, and 1994                          15

  Consolidated Statements of Cash Flows for the Years Ended
   December 31, 1996, 1995, and 1994                                16

  Notes to Consolidated Financial Statements for the Years Ended
   December 31, 1996, 1995, and 1994                                18

ITEM 8.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

          Not Applicable
<PAGE>

                                                                              11

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
 Audio Communications Network, Inc.:


We have audited the accompanying consolidated balance sheets of Audio
Communications Network, Inc. and its subsidiaries (the "Company") as of
December 31, 1996 and 1995, and the related consolidated statements of
operations, stockholder's equity and cash flows for each of the three years in
the period ended December 31, 1996. 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, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 1996
and 1995, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.


/S/DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP
Orlando, Florida
February 20, 1997
<PAGE>

                                                                              12

AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
--------------------------------------------------------------------

ASSETS                                            1996          1995

CURRENT ASSETS:
  Cash and cash equivalents (Note 1)       $   995,810   $   590,107
  Accounts receivable - trade (less
   allowance for doubtfuL accounts of
   $189,000 in 1996 and $147,000 in 1995)    1,044,562       519,754
  Inventories (Note 1)                         473,771       359,888
  Prepaid expenses and other current assets     50,138        33,416
                                           -----------   -----------

        Total current assets                 2,564,281     1,503,165
                                           -----------   -----------

PROPERTY - At cost:  (Notes 1 and 2)
  Leasehold improvements                        55,092        49,720
  Machinery and equipment                    8,445,641     6,117,933
  Furniture and fixtures                       430,243       333,563
                                           -----------   -----------

        Total                                8,930,976     6,501,216
  Less accumulated depreciation             (3,969,514)   (3,142,999)
                                           -----------   -----------

        Property - net                       4,961,462     3,358,217
                                           -----------   -----------

OTHER ASSETS:
  Subscriber contract rights and other
   intangible assets (net of accumulated
   amortization of approximately
   $6,383,000 in 1996 and $5,891,000
   in 1995) (Note 1)                         2,487,096     1,541,922
  Goodwill (net of accumulated
   amortization of approximately
    $797,000 in 1996 and $518,000 in
     1995) (Note 1)                          4,408,520     1,994,040
  Deposits and other                           171,761        13,734
                                           -----------   -----------

        Total other assets                   7,067,377     3,549,696
                                           -----------   -----------

TOTAL                                      $14,593,120   $ 8,411,078
                                           ===========   ===========


                                                          (Continued)

<PAGE>

                                                                              13

AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
--------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY              1996          1995

CURRENT LIABILITIES:
  Current portion of long-term debt
   (Note 2)                                $ 1,303,265   $   923,697
  Current portion of obligations under
   capital leases                                    -        12,697
  Accounts payable                             700,276       458,872
  Royalties payable                             80,757        20,825
  Accrued liabilities                           85,079        68,781
                                           -----------   -----------

        Total current liabilities            2,169,377     1,484,872
                                           -----------   -----------

LONG-TERM DEBT (Note 2)                      8,814,969     4,089,019
                                           -----------   -----------

DEFERRED COMPENSATION (Note 1)                       -        50,000
                                           -----------   -----------

COMMITMENTS AND CONTINGENCIES (Note 6)

STOCKHOLDERS' EQUITY (Note 3):
  Common stock, $.25 par value,
   authorized, 8,000,000
    shares; issued and outstanding,
     2,309,203 shares in 1996
    and 2,243,821 shares in 1995               577,301       560,955
  Capital contributed in excess of par
   value                                     5,117,258     5,011,451
  Accumulated deficit                       (2,085,785)   (2,785,219)
                                           -----------   -----------

        Total stockholders' equity           3,608,774     2,787,187
                                           -----------   -----------

TOTAL                                      $14,593,120   $ 8,411,078
                                           ===========   ===========

See notes to consolidated financial statements.

                                                          (Concluded)

<PAGE>

                                                                              14

<TABLE>
<CAPTION>

AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
-----------------------------------------------------------------------------------------------------------------

                                                                       1996          1995             1994

REVENUES                                                           $11,051,227    $ 7,621,495    $     6,912,519
                                                                   -----------   ------------    ---------------
<S>                                                                    <C>            <C>              <C>
COSTS AND EXPENSES:
  Cost of sales                                                      4,718,505      3,061,675          2,825,560
  Selling, general and administrative expenses                       3,011,621      2,252,295          2,173,943
  Depreciation and amortization                                      1,608,870      1,171,670          1,205,191
                                                                   -----------   ------------     --------------

           Total                                                     9,338,996      6,485,640          6,204,694
                                                                   -----------   ------------     --------------
INCOME BEFORE OTHER INCOME (EXPENSE)
  AND INCOME TAXES                                                   1,712,231      1,135,855            707,825
                                                                   -----------   ------------     --------------
OTHER INCOME (EXPENSE):
  Interest income                                                       26,652         22,448             17,463
  Interest expense (Note 2)                                         (1,044,063)      (538,112)          (464,598)
  Other                                                                100,014         46,436             89,035
                                                                   -----------   ------------     --------------
           Other - net                                                (917,397)      (469,228)          (358,100)
                                                                   -----------   ------------     --------------

INCOME BEFORE INCOME TAXES                                             794,834        666,627            349,725

PROVISION FOR INCOME TAXES (Notes 1 and 4)                              95,400         57,500             37,700
                                                                   -----------   ------------     --------------

NET INCOME                                                         $   699,434    $   609,127    $       312,025
                                                                   ===========   ============    ===============

NET INCOME PER COMMON SHARE (Note 1)                                      $.30           $.27               $.15
                                                                   ===========   ============    ===============
</TABLE>

See notes to consolidated financial statements.
<PAGE>

                                                                              15

<TABLE>
<CAPTION>

AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
----------------------------------------------------------------------------------------------------------------
                                                        CAPITAL
                                                      CONTRIBUTED                                       TOTAL
                                           COMMON      IN EXCESS                 ACCUMULATED         STOCKHOLDERS'
                                            STOCK     OF PAR VALUE                 DEFICIT              EQUITY
<S>                                          <C>          <C>                        <C>                 <C>
BALANCE, DECEMBER 31, 1993                 $423,665    $4,190,216                 $(3,706,371)        $  907,510

  Stock issued to directors and
   employees in lieu of cash compensation     2,557         9,592                           -             12,149

  Stock issued for acquisition              132,118       797,184                           -            929,302

  Net income                                      -             -                     312,025            312,025
                                           --------    ----------                ------------      -------------

BALANCE, DECEMBER 31, 1994                  558,340     4,996,992                  (3,394,346)         2,160,986

  Stock issued to directors in lieu of
    cash compensation                         2,002         9,700                           -             11,702

  Stock purchased by employees under
    employee stock purchase plan (Note 3)       613         4,759                           -              5,372

  Net income                                      -             -                     609,127            609,127
                                           --------    ----------                ------------      -------------

BALANCE, DECEMBER 31, 1995                  560,955     5,011,451                  (2,785,219)         2,787,187

  Stock issued to directors and
   employees in lieu of cash compensation     5,495        46,516                           -             52,011

  Stock purchased by employees under
    employee stock purchase plan (Note 3)       826         9,166                           -              9,992

  Stock options exercised                    10,025        50,125                           -             60,150

  Net income                                      -             -                     699,434            699,434
                                           --------    ----------                ------------      -------------

BALANCE, DECEMBER 31, 1996                 $577,301    $5,117,258                 $(2,085,785)        $3,608,774
                                           ========    ==========                ============      =============

</TABLE>
See notes to consolidated financial statements.
<PAGE>

                                                                              16

<TABLE>
<CAPTION>

AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
----------------------------------------------------------------------------------

                                              1996           1995          1994

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                            <C>            <C>           <C>
  Cash received from customers             $10,950,613   $ 7,624,741   $ 6,822,904
  Cash paid to suppliers and employees      (8,682,360)   (6,415,647)   (5,479,138)
  Interest received                             77,974        22,448        17,463
  Interest paid                             (1,044,063)     (536,497)     (452,349)
  Income taxes paid                           (102,800)      (71,101)      (12,742)
  Other - net                                  (19,525)          537         6,049
                                           -----------   -----------   -----------

        Net cash provided by operating       1,179,839       624,481       902,187
         activities                        -----------   -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                         (18,631)      (25,967)      (84,560)
  Purchase of Florida Sound Engineering     (5,750,000)            -             -
  Purchase of subscriber contract rights
    and other intangible assets               (135,000)      (44,385)     (359,063)
                                           -----------   -----------   -----------
        Net cash used in investing
         activities                         (5,903,631)      (70,352)     (443,623)
                                           -----------   -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on capital lease
   obligations                                 (12,697)      (58,936)      (89,500)
  Proceeds from issuance of long-term
   debt                                     11,000,000     5,200,000       494,139
  Repayments of long-term debt              (5,927,950)   (5,619,522)     (717,391)
  Proceeds from sale of stock to employees      70,142         5,372             -
                                           -----------   -----------   -----------
        Net cash provided by (used in)
         financing activities                5,129,495      (473,086)     (312,752)
                                           -----------   -----------   -----------

NET INCREASE IN CASH AND CASH
 EQUIVALENTS                                   405,703        81,043       145,812

CASH AND CASH EQUIVALENTS, BEGINNING
  OF YEAR                                      590,107       509,064       363,252
                                           -----------   -----------   -----------

CASH AND CASH EQUIVALENTS, END OF YEAR     $   995,810   $   590,107   $   509,064
                                           ===========   ===========   ===========

                                                                    (Continued)
</TABLE>
<PAGE>

                                                                              17

AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
--------------------------------------------------------------------------------

                                              1996          1995         1994

RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
  Net income                             $   699,434   $   609,127   $  312,025
                                         -----------   -----------   ----------
  Adjustments to reconcile net income
   to net cash provided by operating
   activities:
    Depreciation and amortization          1,654,017     1,221,134    1,254,226
    Valuation allowances                      41,998        17,000       60,500
    Deferred commissions                     (88,533)      (59,030)     (42,825)
    Stock issued to directors and
     employees in lieu of cash compensation   52,011        11,702       12,149
    (Increase) decrease in operating
     assets and increase (decrease) in
     operating liabilities - net of
     business acquired:
      Accounts receivable                   (191,304)       21,599     (178,650)
      Prepaid and other assets              (140,497)       36,905      107,071
      Inventories                         (1,142,010)   (1,019,492)    (817,319)
      Accounts payable                       191,404      (170,554)     204,171
      Accrued liabilities                     76,232       (48,253)      69,267
      Other - net                             27,087         4,343      (78,428)
                                         -----------   -----------   ----------

        Total adjustments                    480,405        15,354      590,162
                                         -----------   -----------   ----------
NET CASH PROVIDED BY OPERATING
 ACTIVITIES                              $ 1,179,839   $   624,481   $  902,187
                                         ===========   ===========   ==========


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

During the years ended December 31, 1996, 1995, and 1994, approximately
$1,417,000, $887,000, and $864,000, respectively, of inventory was rented to
customers and reclassified to property.

During the year ended December 31, 1995, subscriber contract rights totaling
approximately $111,000 were acquired through the issuance of other long-term
debt.

During the year ended December 31, 1996 and 1995, service vehicles totaling
approximately $33,000 and $130,000, respectively, were acquired through the
issuance of long-term debt.

During the year ended December 31, 1994, the Company acquired assets with a fair
value of approximately $1,544,000, recorded goodwill of approximately $800,000,
and assumed liabilities totaling approximately $1,415,000 for common stock
totaling approximately $929,000 in connection with its acquisition of American
Music Network, Inc.

See notes to consolidated financial statements.

                                                            (Concluded)
<PAGE>

                                                                              18

AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
-------------------------------------------------------------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   DESCRIPTION OF BUSINESS - The company owns and operates MUZAK(R) franchises,
   which provide background music programming and ancillary services to
   customers, in five major metropolitan areas, as its single line of business.

   PRINCIPLES OF CONSOLIDATION AND USE OF ESTIMATION - The consolidated
   financial statements include the accounts of audio communications network,
   inc. and its wholly owned subsidiaries.  All significant intercompany
   accounts and transactions have been eliminated.

   The preparation of financial statements in conformity with generally accepted
   accounting principles requires management to make estimates and assumptions
   that affect the reported amounts of assets and liabilities, 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 estimates.

   FINANCIAL INSTRUMENTS - Management believes the book value of financial
   instruments (cash and cash equivalents, accounts receivable, accounts
   payable, royalties payable, accrued liabilities, and long-term debt)
   approximates fair value.

   INVENTORIES - Inventories, which consist of equipment held for sale or lease
   and supplies, are stated at the lower of cost or market.  Cost is determined
   by the first-in, first-out method.

   PROPERTY - Property is recorded at cost.  Depreciation is provided on the
   straight-line method over  estimated useful lives of 3 to 10 years.

   DEFERRED COMPENSATION - The Company had a deferred compensation agreement
   with an officer providing for benefits payable to such officer.  The
   liability was fully accrued at December 31, 1995, was reclassified to
   accounts payable as of December 31, 1996, and was paid in January 1997.

   GOODWILL AND INTANGIBLE ASSETS - Goodwill, the excess of the purchase price
   over the fair value of net assets of businesses acquired, is amortized over
   20 years using the straight-line method.  Other intangible assets acquired,
   principally subscriber contract rights, are amortized using the straight-line
   method over various periods from three to ten years.  Management evaluates
   the recoverability of goodwill and other intangible assets quarterly and
   annually based on current operating trends in relation to the recorded
   intangible values.
<PAGE>

                                                                              19

   INCOME TAXES - The Company accounts for income taxes in accordance with
   Statement of Financial Accounting Standards No. 109 ("FAS 109"), accounting
   for income taxes. A significant provision of FAS 109 is the use of the
   liability method of computing deferred income taxes. Deferred tax assets and
   liabilities are measured using enacted tax rates expected to apply to taxable
   income in the years in which those temporary differences are expected to be
   recovered or settled. Under FAS 109, the effect on deferred tax assets and
   liabilities of a change in tax rates is recognized in income in the period
   that includes the enactment date. Additionally, under FAS 109, the company
   recognizes, subject to a valuation allowance regarding asset realization, the
   future tax benefits of expenses which have been recognized in the
   consolidated financial statements.

   NET INCOME PER COMMON SHARE - Net income per common share is computed by
   dividing net income by the weighted average number of shares of common stock
   and common stock equivalents outstanding during the year.  Common stock
   equivalents include shares issuable on the exercise of employee stock options
   under the incentive stock option plan adopted in May 1984 and amended in
   February 1991.  The weighted average number of common shares outstanding were
   2,137,611 for 1994, 2,235,108 for 1995, and 2,304,975 for 1996.  Certain
   options have been excluded from the computation since their effect would be
   antidilutive.

   CASH EQUIVALENTS - Cash equivalents include demand and interest-bearing
   deposits due from banks with original maturities of 90 days or less.

   RECLASSIFICATIONS - Certain amounts shown in 1995 and 1994 have been
   reclassified to conform to the 1996 presentation.

2. LONG-TERM DEBT

   Long-term debt consists of the following at December 31, 1996 and 1995:

                                             1996          1995
    Commercial bank loan, interest
     accrues at the banks prime rate
     plus 1.25% (9.5% at December 31,
     1996); principal and interest paid
     monthly, due July 1, 2001            $ 9,988,000   $ 4,810,000


    Truck loans, interest accrues at
     approximately 10%; principal and
     interest payable monthly; due
     through May 1998                         109,548       136,248


    Other long-term debt                       20,686        66,468
                                          -----------   -----------
    Total                                  10,118,234     5,012,716
    Less current portion                    1,303,265       923,697
                                          -----------   -----------
    Long-term portion                     $ 8,814,969   $ 4,089,019
                                          ===========   ===========
<PAGE>

                                                                              20

  Long-term debt matures as follows:

YEAR

1997                                                    $ 1,303,265
1998                                                      1,401,259
1999                                                      1,532,710
2000                                                      1,690,000
2001                                                      4,191,000
                                                        -----------
 Total                                                   $10,118,234
                                                        ===========

   The Company's commercial bank loan is collateralized by substantially all
   assets of the Company and assignment of key man life insurance on the
   Company's President.  These loans also contain certain covenants which, among
   other things, require maintenance of minimum earnings and monthly billings,
   and include restrictions on dividends.

3. STOCKHOLDERS EQUITY

   The Company has two stock-based compensation plans, which are described
   below.  The Company applied APB Opinion 25, Accounting for Stock Issued to
   Employees, and related interpretations in accounting for its plans.
   Accordingly, no compensation cost has been recognized for the plans.  Had
   compensation cost for the Company's two stock-based compensation plans been
   determined based on the fair value at the grant dates for awards under those
   plans consistent with the method of SFAS No. 123, Accounting for Stock-Based
   Compensation, the Company's 1996 and 1995 net income and earnings per common
   share would have changed to the pro forma amounts indicated below:


                                            1996       1995
 Net income:
  As reported                              $699,400   $609,100
  Pro forma                                $680,200   $594,300

Earnings per common share assuming no
 dilution:
  As reported                              $    .30   $    .27
  Pro forma                                $    .30   $    .26


   On May 10, 1984, the Company's stockholders adopted an incentive stock option
   plan (the "Plan") with 100,000 shares of common stock authorized to be
   granted thereunder. The Plan provides for the options to be granted to key
   employees, requires expiration within ten years of date of grant, allows the
   options to be exercised two years from the date of the grant, and requires
   the option price to be at least the fair market value, as determined by the
   Board of Directors, of the common stock on the date of grant. All options
   granted under the plan have been for five-year terms. The Plan was amended in
   February 1991 increasing the number of shares which may be issued from
   100,000 to 200,000 shares. The fair value of each option grant is estimated
   on the date of grant using the Black-Scholes option-pricing model with the
   following weighted-average assumptions: no dividend yield, expected
   volatility of 137%, risk-free interest rate of 5.84%, and expected lives of
   three years.
<PAGE>

                                                                              21

   Stock option activity for each of the three years in the period ended
   December 31, 1996 is as follows:


                                                    Weighted
                                                     Average
                                                     Exercise
                                           Shares     Price

Outstanding at January 1, 1994            123,500     $ 1.50

  Cancelled/expired                       (66,000)    $ 1.50
                                          -------

Outstanding at December 31, 1994           57,500

  Granted                                 101,000     $1.125
                                          -------

Outstanding at December 31, 1995          158,500

  Granted                                  10,000     $2.625
  Exercised                               (40,100)    $ 1.50
  Cancelled/expired                       (17,400)    $ 1.50
                                          -------

Outstanding at December 31, 1996
  (none exercisable at December 31,
   1996)                                  111,000
                                          =======


   The Company also has an employee stock purchase and bonus plan with up to
   500,000 shares of common stock authorized to be issued thereunder.  This plan
   provides for the purchase of up to 200,000 shares of common stock at fair
   value by eligible participants, as defined under the plan (up to 10,000
   shares per participant), and for the remainder of the shares to be awarded as
   bonuses to key employees.  During the years ended December 31, 1996 and 1995,
   3,302 shares and 2,452 shares, respectively, were purchased by participants
   under this plan.

4. INCOME TAXES

   The components of the provision for income taxes are as follows:


                                1996      1995      1994

Current:
  Federal                      $15,400   $ 2,200   $     -
  State                         80,000    55,300    37,700
                               -------   -------   -------

                               $95,400   $57,500   $37,700
                               =======   =======   =======

<PAGE>

                                                                              22

   The Company's effective tax rate differs from the statutory federal income
   tax rate for the following reasons:


                                             1996        1995        1994

Computed statutory amount                 $ 270,000   $ 227,000   $ 119,000
Increases (decreases):
  State income taxes, net of benefit
    of federal taxes                         53,000      36,500      24,900
  Nondeductible expenses                    124,000     125,000      98,000
  Utilization of net operating loss
   carryforwards                           (339,000)   (342,700)   (217,000)
  Other - net                               (12,600)     11,700      12,800
                                          ---------   ---------   ---------
                                          $  95,400   $  57,500   $  37,700
                                          =========   =========   =========


   The components of the Company's net deferred tax asset are as follows:


                                                         1996       1995

Noncurrent liabilities - depreciation                 $ 305,000   $ 225,000
                                                      ---------   ---------

Noncurrent assets:
  Net operating loss carryforwards                      703,000     968,000
  Deferred compensation                                  17,000      17,000
  Other                                                  93,000      54,000
                                                      ---------   ---------

Total noncurrent assets                                 813,000   1,039,000
                                                      ---------   ---------

Net deferred tax asset - before
 valuation allowance                                    508,000     814,000
Valuation allowance for deferred tax                   (508,000)   (814,000)
 asset                                                ---------   ---------

Net deferred tax asset                                $       -   $       -
                                                      =========   =========


   It is more likely than not that realization of the net deferred tax asset
   through future taxable income within the carryforward periods will not occur.
   Accordingly, the net deferred tax asset has been fully reserved with a
   valuation allowance at December 31, 1996.

   At December 31, 1996, the Company has net operating loss carryforwards for
   federal tax purposes approximating $2,066,000.  Such loss carryforwards will
   expire in 2002 through 2006.

5. DEFINED CONTRIBUTION PENSION PLAN

   The Company has a noncontributory defined contribution pension plan covering
   substantially all employees who have met certain age and length of service
   qualifications.  The Company's policy is to fund pension cost with annuity
   contracts.  Pension expense amounted to approximately $12,000 for 1996 and
   approximately $50,000 for 1995 and 1994.
<PAGE>

                                                                              23

6. COMMITMENTS AND CONTINGENCIES

   Certain equipment and office space are held under noncancelable operating
   leases.  The Company has also entered into various agreements with
   broadcasting companies in order to transmit music service to its customers
   through the broadcasting companies' subchannels.  Expense under the operating
   leases and broadcasting agreements was approximately $408,000, $338,000, and
   $268,000 during 1996, 1995, and 1994, respectively.

   Future minimum payments under the leases and broadcasting agreements are as
   follows:


        YEAR

        1997                             $  332,000
        1998                                301,000
        1999                                283,000
        2000                                249,000
        2001                                 60,000
        Thereafter                           88,000
                                         ----------

        Total minimum lease payments     $1,313,000
                                         ==========


   The Company has entered into an employment agreement with its President.
   The agreement provides for the President to receive a stated minimum annual
   salary.  The term of the agreement is through May 1998.

7. ACQUISITIONS

   On January 2, 1996, the Company acquired the assets of Florida Sound
   Engineering Company ("Florida Sound"), including its Pro Sound division, for
   $5,750,000.  The acquisition was funded through a commercial bank loan.
   Florida Sound is a MUZAK(R) franchisee in north Florida and south Georgia.

   The acquisition was accounted for as a purchase, and the excess of the amount
   paid over the fair value of net assets acquired was approximately $2,700,000,
   which is being amortized over 20 years on a straight-line basis.  The other
   intangible assets acquired, principally subscriber contracts, are being
   amortized over 8 years.

   The results of operations of Florida Sound are included with the results of
   the Company from January 2, 1996. Assuming the acquisition had occurred on
   January 1, 1995, the Company's (unaudited) net sales, net income, and
   earnings per share would have been approximately $11,500,000, $612,000, and
   $.27, respectively, for the year ended December 31, 1995.

   In November 1996, the Company entered into an Asset Purchase Agreement to
   acquire substantially all of the assets and assume the liabilities of Suncom
   Communications, L.L.C. ("Suncom") in exchange for approximately 2,100,000
   shares of the Company's common stock.  The acquisition will be accounted for
   as a purchase.  Suncom owns and operates MUZAK/(R) /franchises in
   Hillsborough and Charlotte, North Carolina, and Phoenix, Arizona.  Management
   of the Company expects the transaction to close in April 1997.
<PAGE>

                                                                              24

PART III


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

   The information required by this Item is incorporated by reference to the
Company's definitive proxy statement to be filed under Regulation 14A.

ITEM 10.  EXECUTIVE COMPENSATION

   The information required by this Item is incorporated by reference to the
Company's definitive proxy statement to be filed under Regulation 14A.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   The information required by this Item is incorporated by reference to the
Company's definitive proxy statement to be filed under Regulation 14A.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   The information required by this Item is incorporated by reference to the
Company's definitive proxy statement to be filed under Regulation 14A.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(A)  Exhibits

   2.2    Agreement and Plan of Share Exchange dated March 1, 1994 among
          Registrant, American Music Network, Inc. and A.J. Schell (incorporated
          by reference to Exhibit 2 of Form 8-K/A filed March 17, 1994).
   2.3    Agreement of Sale dated October 19, 1995 among Registrant and Florida
          Sound Engineering Company (incorporated by reference to Exhibit I of
          Form 8-K dated March 15, 1996).
   3.1    Articles of Incorporation, as amended through September 17, 1982
          (incorporated herein by reference to Exhibit 3.1 to Amendment No. 1 on
          Form 8 dated May 9, 1990, amending the Annual Report on Form 10-K for
          the year ended December 31, 1989).
   3.1(a) Amendment to Articles of Incorporation, effective June 11, 1991
          (incorporated herein by reference to Exhibit 3.1(a) of the Annual
          Report on Form 10-K for the year ended December 31, 1991).
   3.2    Bylaws, as amended (incorporated herein by reference to Exhibit 3.2 of
          the Annual Report on Form 10-KSB for the year ended December 31,
          1993).
  10.1    Employment Agreement dated July 18, 1989, with A. J. Schell
          (incorporated herein by reference to Exhibit 10.3 to Amendment No. 1
          on Form 8 dated May 9, 1990, amending the Annual Report on Form 10-K
          for the year ended December 31, 1989).*
  10.3    Deferred Compensation Agreement Dated January 5, 1983 with Doris K.
          Krummenacker (incorporated herein by reference to Exhibit 10.5 to
          Amendment No. 1 on Form 8 dated May 9, 1990, amending the Annual
          Report on Form 10-K for the year ended December 31, 1989).*
<PAGE>

                                                                              25

   10.4   Second Amended and Restated Loan Agreement by and between Registrant
          and SunTrust Bank, Central Florida, N.A. dated December 21, 1995,
          effective January 2, 1996 (incorporated by reference to Exhibit II of
          Form 8-K dated March 15, 1996).
   10.6   Incentive Stock Option Plan (incorporated herein by reference to
          Exhibit 10.8 of the Annual Report on Form 10-K for the year ended
          December 31, 1991).*
   10.7   1993 Employee Stock Purchase and Stock Bonus Plan (incorporated by
          reference to Exhibit 10.7 of Form 10-KSB for the year ended December
          31, 1992).*
   10.8   MUZAK(R) License Agreement by and between MUZAK Limited Partnership
          and Registrant dated January 1, 1992 (incorporated by reference to
          Exhibit 10.8 of Form 10-KSB for the year ended December 31, 1992).
   10.9   MUZAK(R) License Agreement by and between MUZAK Limited Partnership
          and Registrant dated January 1, 1991 (incorporated by reference to
          Exhibit 10.9 of Form 10-KSB for the year ended December 31, 1992).
   10.10  MUZAK(R) License Agreement by and between MUZAK Limited Partnership
          and Registrant dated January 1, 1991 (incorporated by reference to
          Exhibit 10.10 of Form 10-KSB for the year ended December 31, 1992).
   10.11  MUZAK(R) License Agreement by and between MUZAK Limited Partnership
          and American Music Network, Inc. dated March 1, 1991 (incorporated by
          reference to Exhibit 10.11 of the Annual Report on Form 10-KSB for the
          year ended December 31, 1993).
   10.12  MUZAK(R) License Agreement by and between MUZAK Limited Partnership
          and Florida Sound Engineering Company dated January 1, 1991
          (incorporated by reference to Exhibit III of Form 8-K dated March 15,
          1996).
   10.13  Amendment and Supplement to Employment Agreement, dated September 1,
          1993, between the Registrant and A.J. Schell (incorporated by
          reference to Exhibit 1 of Form 10-QSB for the period ended September
          30, 1993).*
   10.14  Asset Purchase Agreement dated as of November 19, 1996 between
          Registrant and Suncom Communications L.L.C. (incorporated by reference
          to Exhibit on Form 8-K dated November 26, 1996)
   21     Subsidiaries of the Registrant.

*  Management contract or compensatory plan or arrangement.

(B)  Reports on Form 8-K

   Form 8-K filed November 26, 1996 reporting the Asset/Purchase Agreement dated
   November 19, 1996 between the Company and Suncom Communications L.L.C.
   providing for the acquisition of Suncoms business.
<PAGE>

                                                                              26

                                   SIGNATURES

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

                                AUDIO COMMUNICATIONS NETWORK, INC.
                                           (Registrant)


                                  By:/s/ A.J. Schell
                                     --------------------------------
                                     A. J. Schell
                                     Chairman of the Board of Directors

Date: March 28, 1997

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

<TABLE>
<CAPTION>

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

/s/Doris K. Krummenacker      Vice President, Secretary/Treasurer    March 28, 1997
--------------------------    (Principal Financial Officer and
Doris K. Krummenacker         Principal Accounting Officer)
                              Director


/s/A. J. Schell               Chairman of the Board, President,      March 28, 1997
---------------------------   Chief Executive Officer (Principal
A.J. Schell                   Executive Officer)

/s/Robert Dyer                Director                               March 28, 1997
---------------------------
Robert Dyer

/s/Nat M. Turnbull            Director                               March 28, 1997
---------------------------
Nat M. Turnbull

/s/Patrick J. Dougherty       Director                               March 28, 1997
--------------------------
Patrick J. Dougherty

</TABLE>

<PAGE>

                                                                              27

<TABLE>
<CAPTION>


        Signature                            Title                       Date
        ---------                           ------                      ------
<S>                           <C>                                   <C>
/s/Ben B. Moss                Director                               March 28, 1997
--------------------------
Ben B. Moss

/s/Ralph L. Weber             Director                               March 28, 1997
-------------------------
Ralph L. Weber

/s/C. Lee Maynard             Director                               March 28, 1997
-------------------------
C. Lee Maynard

</TABLE>