SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]

                   For the fiscal year ended December 31, 1996

                         Commission File Number 0-25364

                                  ANICOM, INC.
                 (Name of small business issuer in its charter)

        Delaware                                        36-3885212
 (State of incorporation)                     (IRS Employer Identification No.)

        6133 North River Road, Suite 1000, Rosemont, Illinois 60018-5171
          (Address of principal executive offices, including zip code)

                                 (847) 518-8700
                (Issuer's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

               Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, par value $.001
                                (Title of Class)

Check  whether the  registrant:  (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 pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained,  to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. |X|

The issuer's revenues for the fiscal year ended December 31, 1996:  $115,993,079

The aggregate market value of the voting stock held by non-affiliates,  based on
the  closing  price  of  the  registrant's  Common  Stock  on  March  14,  1997:
$137,998,275

The number of   shares  outstanding   of  the  registrant's  Common Stock  as of
March 14, 1997: 15,811,105

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain  sections of the issuer's Notice of Annual Meeting of  Stockholders  and
Proxy Statement for its Annual Meeting of Stockholders to be held on May 21 1997
are incorporated by reference into Part III of this report.

Transitional Small Business Disclosure Format (check one):   Yes |_|   No  |X|

<PAGE>





                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

ITEM                                                                                                           PAGE
----                                                                                                           ----

<S>      <C>      <C>                                                                                           <C>
PART I
         ITEM 1.  DESCRIPTION OF BUSINESS.......................................................................  1
         ITEM 2.  DESCRIPTION OF PROPERTY.......................................................................  7
         ITEM 3.  LEGAL PROCEEDINGS.............................................................................  8
         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........................................  8

PART II
         ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS......................................  8
         ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........   9
         ITEM 7.  FINANCIAL STATEMENTS.......................................................................... 13
         ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.......... 13

PART II
         ITEM 9.  DIRECTORS,  EXECUTIVE OFFICERS,  PROMOTERS AND CONTROL PERSONS;  COMPLIANCE WITH SECTION
                           16(a) OF THE EXCHANGE ACT............................................................ 14
         ITEM 10. EXECUTIVE COMPENSATION........................................................................ 14
         ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................................ 14
         ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................ 14
         ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.............................................................. 15

SIGNATURES...................................................................................................... 16

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS......................................................................F-1
</TABLE>
<PAGE>




                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

General

Anicom,   Inc.  ("Anicom"  or  the  "Company")   specializes  in  the  sale  and
distribution of communications  related wire,  cable,  fiber optics and computer
network and connectivity products. The products offered by Anicom generally fall
into four categories:  (i) voice and data  communications and fiber optics, (ii)
sound,  security,  fire, alarm and energy management  systems,  (iii) electronic
cable and (iv) industrial cable, wiring and assemblies for automation, computers
and robotics. The fastest growing products for the Company are in voice and data
communications  and fiber optics,  including an assortment of transmission media
(copper and fiber optic  cable),  components  (blocks,  brackets,  jacks,  patch
cords, patch panels,  connectors and stackable hubs), related hardware and cable
assemblies.

Since its inception in 1993, the Company has grown very rapidly through internal
expansion and  acquisitions.  From its initial public offering in February 1995,
the Company has grown from 7 to 41 locations.

In 1995,  the Company  successfully  acquired two  companies:  Pinnacle Wire and
Cable,  Inc., in July,  1995 and Morgan Hill Supply  Company,  Inc., in October,
1995.  During  1996,  the  Company  successfully  completed  five  acquisitions:
Medisco,  Inc., acquired in February 1996, Northern Wire & Cable, Inc., acquired
in mid-March  1996,  Southern  Alarm  Supply,  Inc.,  acquired in May 1996,  and
Norfolk Wire & Electronics,  Inc., and Western Wire & Alarm Products, Inc., both
acquired in September  1996. In February  1997,  the Company  acquired  Carolina
Cable & Connector,  Inc. Since July 1995,  Anicom has  successfully  consummated
eight  corporate  acquisitions  with  aggregate  sales of  approximately  $126.4
million based on the acquired companies  operating results for their last fiscal
year.

Anicom is a national leader in the sale and  distribution  of multimedia  wiring
products.  The Company has  assembled  an  experienced  management  team and has
invested in the development of an information technology and distribution system
which  management  believes  can  support  substantial  growth.  The five person
management  team  that  formed  Anicom  collectively  has more than 100 years of
experience in the sale and  distribution  of  multimedia  wiring  products.  The
Company's  Chairman of the Board,  Alan B. Anixter,  and Board member William R.
Anixter,   were  the  co-founders  of  Anixter  Bros.,  Inc.,  an  international
specialist in the  distribution  of wire,  cable and related  products.  Alan B.
Anixter  served as the Chairman and Chief  Executive  Officer of Anixter  Bros.,
Inc.,  until  1988.  During his  career at Anixter  Bros.,  Inc.,  that  company
consummated  more than 40 corporate  acquisitions and by 1988, had grown to over
$1.0 billion in annual net sales. In addition,  the Company's Chairman and Chief
Executive Officer, Scott C. Anixter, previously was a director of Anixter Bros.,
Inc.,  and the Company's  President,  Carl E. Putnam,  previously was a Regional
Vice  President  of  Anixter  Bros.,  Inc.,  responsible  for  a  division  with
approximately  $200 million in annual net sales.  The Company  believes that the
extensive  industry  experience of its management  team and sales  personnel has
enabled it to establish and maintain strong relationships with major vendors and
customers and that such experience will continue to serve as a valuable asset in
the implementation of Anicom's integrated growth strategy.
<PAGE>

Background

Several of the industries serviced by Anicom have experienced significant growth
in recent years and are  expected to continue to grow at a rapid pace.  As these
industries continue to evolve,  management believes that the demand for products
offered by the Company will also continue to grow.  Because the Company is not a
manufacturer,  management  believes that it can readily  respond to the changing
demands of the  industries  it serves and is not  reliant  upon the success of a
particular product or product category.  The products distributed by the Company
are components  utilized by  contractors  and end-users in the  installation  or
upgrading of highly  technical  communications  systems.  As such, the Company's
products  often are subject to strict  technical  specifications.  The degree to
which products adhere to these technical specifications,  such as class of cable
or specific  connector  impedance  specifications,  is a  significant  factor in
differentiating among products. Accordingly,  distributors primarily distinguish
themselves by the depth and breadth of products  offered and their  knowledge of
these products. Anicom's sales personnel, who average approximately ten years of
experience in the sale and distribution of multimedia wiring products, work with
Anicom's customers and vendors to match products to the technical specifications
supplied by its  customers.  Management  believes  that this level of service is
important in attracting and retaining customers as well as distinguishing itself
as a provider of products, service and value.

The growing market for the distribution of  communications  related wire, cable,
fiber  optics  and  computer  network  and   connectivity   products  is  highly
fragmented,  with few companies  maintaining  greater than $50 million in annual
net sales.  Management  believes  that no company  accounts  for more than 5% of
total sales of multimedia  wiring  products and the ten largest  distributors of
multimedia  wiring products,  in the aggregate,  represent less than 10% of such
sales.  In  addition  to  a  few  national  companies,  most  of  the  Company's
competitors  are regional  distribution  companies with less than $50 million in
annual net sales.  Anicom's  integrated  growth  strategy  focuses on increasing
revenue  through  acquisitions  and internal  growth into targeted  geographical
markets  while  continuing  to achieve  profitability  in existing  and acquired
operations through the implementation of financial and operational controls.

Voice and Data Communications and Fiber Optics

Anicom's  customer  base  consists  of a wide  array  of  businesses,  including
contractors,  systems integrators,  security/fire alarm companies, regional Bell
operating  companies,  distributors,  utilities,  telecommunications  and  sound
contractors,  wireless  specialists,  construction  companies,  universities and
governmental agencies. These customers utilize the products offered by Anicom in
a multitude of existing  applications.  In  addition,  a large number of leading
telecommunications, computer, computer software and entertainment companies have
committed  significant  resources  to  developing  plans  for  the  delivery  of
broadband  communications  services  which are  expected to increase  the use of
protocols  including  Ethernet(R)  and  Fast  Ethernet(R)  networks,  as well as
asynchronous  transfer mode ("ATM") technology.  New systems and technology such
as these are  anticipated to involve the use of fiber optic cable,  copper cable
or wires  manufactured to specifications  different from those currently in use.
At the same time,  the  proliferation  of  personal  computers  and  advances in
networking technology have resulted in increased demand for interconnected local
area  network  ("LAN") and wide area  network  ("WAN")  systems that utilize the
products  offered by Anicom.  The growth of these types of networks has resulted
in a separate  purchasing  process for electronic  data  transmission  cable and
components  utilized  in these  networks.  Anicom  coordinates  with  end-users,
systems   integrators   and   network   cable   manufacturers   in   determining
specifications of the cable required for a particular network.
<PAGE>


Sound, Security, Fire, Alarm and Energy Management Systems

The demand for the multimedia wiring products offered by Anicom for use in these
types of systems  has  increased  in recent  years as a result of  technological
advances in commercial building automation, greater concern regarding the safety
features  of  commercial  buildings  and the  increased  demand for  residential
security systems.  The growth in this market generally is regarded as the result
of  increased  concern  about  crime,  as well as the  result  of  technological
advances that have allowed  manufacturers  to improve  reliability  and features
while  lowering the  installed  costs of such systems.  Similarly,  publicly and
privately owned buildings,  such as office  buildings,  stadiums,  hospitals and
correctional  facilities,  also  continue  to use more  sophisticated  computer,
security,  communications  and  sound  systems  that  incorporate  the  types of
multimedia  wiring products  offered by Anicom.  The systems used by contractors
and systems  integrators  in these types of  facilities  not only offer  greater
building  automation and more sophisticated  communication  systems but also are
designed to meet the increasingly stringent safety requirements imposed by local
and national building codes.

Electronic and Industrial Cable

Anicom  also  offers  wire  and  cable  products  for use in a wide  variety  of
electrical and electronic  systems.  Anicom sells these products to contractors,
end-users,  systems integrators and original equipment  manufacturers  ("OEMs").
The wire and cable  products are used in the  manufacturing  of  electrical  and
electronic  equipment,  as well as the replacement of wire and cable in existing
systems.  Anicom  also  sells  and  distributes  wire  and  cable  products  for
industrial use in the automotive, mining, marine, petro-chemical, paper and pulp
and other natural resource industries.

The Acquisition  Strategy  Anicom has implemented an integrated  growth strategy
focusing on increasing  revenues  through  acquisitions  and internal  growth in
targeted  geographical  markets  while  continuing to achieve  profitability  in
existing and acquired  operations  through the  implementation  of financial and
operational  controls.  Generally,  Anicom  seeks  to  acquire  an  established,
high-quality company in a targeted  geographical market.  Anicom also may pursue
companies with substantially greater revenues than those of the Company.  Anicom
generally  expects to retain the management and sales  personnel of the acquired
company while seeking to increase its net sales  through the  availability  of a
greater  selection  and depth of inventory and to improve its  profitability  by
achieving  economies  of  scale  through  the  use of the  Company's  integrated
inventory and information  systems.  Anicom believes that management's  industry
experience and Anicom's inventory and information  systems make it an attractive
acquirer,  particularly  for  those  companies  whose  owners  desire  to remain
involved in day-to-day  operations.  As consideration  for future  acquisitions,
Anicom plans to continue to use various  combinations  of cash,  securities  and
notes.

The Products and Services

Anicom offers a wide  selection of  communications  related wire,  cable,  fiber
optics and  computer  network  and  connectivity  products  supplied by over 300
manufacturers. Anicom focuses on carrying quality, name brand products that meet
or exceed industry standards. The products offered by Anicom generally fall into
four categories: (i) voice and data communications and fiber optics, (ii) sound,
security,  fire, alarm and energy management systems, (iii) electronic cable and
(iv)  industrial  cable,  wiring and  assemblies for  automation,  computers and
robotics.


<PAGE>



The fastest growing products for Anicom are in voice and data communications and
fiber  optics.  Management  estimates  that  less than 20% of the voice and data
transmission  systems  currently in  existence  utilize  fiber optic cable,  and
management  believes  that the  replacement  of existing  cable with fiber optic
cable represents a significant opportunity for the Company. Anicom sells single,
duplex and multifiber cables for internal and external data communication use in
the computer network,  computer  interconnect and building automation and safety
markets.

The  Company  also  offers  custom  and  standard  cables,   both  shielded  and
unshielded,  to  transmit  data for LAN and WAN  systems.  Anicom  offers a wide
variety  of  electronic  multiconductor  cables  for  the  computer,   security,
instrumentation and interconnection  markets, wire and cable constructions (such
as a variety of shielded and unshielded  twisted pairs),  and ancillary products
such  as  blocks,  brackets,  jacks,  patch  cords,  patch  panels,  connectors,
stackable hubs, and related hardware and cable assemblies.

The Company  carries a wide selection of wire,  cable,  fiber optics and related
computer network and connectivity  products used in sound,  security,  alarm and
energy  management  systems and  signaling  equipment  for fire and  life-safety
systems.  These products  include many of the same  components used in voice and
data communication. Anicom sells these products to low voltage contractors, OEMs
and commercial end-users.

Anicom  also sells and  distributes  wire and cable  products  for use in a wide
variety of electrical  and  electronic  systems.  Anicom sells these products to
contractors,  end-users,  systems  integrators  and OEMs.  Anicom also sells and
distributes  wire and cable  products for  industrial  use,  including  portable
cords,  power cables,  control and  instrumentation  cables,  mining and welding
cables, armored and high voltage cables and building wire. In addition,  through
certain acquisitions  completed during 1996, the Company acquired three assembly
operations.  These  assembly  operations  produce two lines of  connector  cable
products and a line of copper and fiber optic cable  cutting and splicing  kits.
On December 31,  1996,  the  splicing  kit line and one of the  connector  cable
product lines were sold. On March 7, 1997, the remaining line of connector cable
products was sold.

In addition to  providing  multimedia  wiring  products to customers on a timely
basis,  Anicom  provides  value-added,  specialized  services to its  customers,
including  cutting  and  re-spooling  services,   technical  support  and  cable
assemblies,  in response to specific  customer  requests.  One of Anicom's  more
popular  value-added  features is  Exacpac(R),  which marks  packages of wire or
cable in one foot increments beginning at the base of the package.  This feature
allows  the  end-user  to  monitor  the  remaining  length of wire or cable in a
package without having to keep track of the length of wire or cable used. Anicom
also has the ability to procure selected  specialty items not readily  available
to customers,  and, through its experienced  sales personnel,  Anicom is able to
offer its  customers  technical  assistance  and  support  in the  selection  of
appropriate products.  Certain of Anicom's more experienced sales personnel have
developed  extensive  knowledge  in specific  product  categories  (e.g.,  fiber
optics).  Anicom's sales personnel are trained to seek out assistance from those
salespersons  who have  developed  this degree of  knowledge  in handling  their
customers' accounts.  Management believes that Anicom more aggressively seeks to
capitalize on this  expertise and experience  than some of the larger,  national
and regional distributors of multimedia wiring products with which it competes.


<PAGE>


Sales and Marketing

Anicom  is  committed  to  making it  easier  and more  cost  effective  for its
customers  to acquire  wire,  cable,  fiber  optics  and  computer  network  and
connectivity  products.  Anicom has established  strong  customer  relationships
through an extensive and experienced  sales and marketing force of approximately
260 people operating nationally out of its 41 locations.

Anicom has seven Regional Vice Presidents with an average of  approximately  ten
years of experience in the sale and distribution of multimedia wiring products.

The sales and marketing  force is responsible for  establishing  and maintaining
long-term relationships with customers and industry referral sources, soliciting
new business from prospective customers and responding to incoming inquiries and
orders.  Anicom monitors  customer  satisfaction  through internal  controls and
regular interaction with its customers.

Anicom identifies potential customers through telemarketing  efforts,  responses
to direct marketing  materials,  periodic  advertisements  in trade journals and
industry trade shows. Anicom also receives numerous referrals from customers and
vendors.  Anicom  periodically  provides product and service  information to its
customers  by  distributing  promotional  literature  and  product  catalogs  to
existing and potential customers.  Sales and marketing representatives follow-up
on customer  inquiries  through further  distribution of Anicom's  informational
materials and on-site visits. Once a customer relationship has been established,
Anicom  focuses  on  identifying  opportunities  to  market a  broader  array of
products to the customer.

Anicom rewards its sales and marketing  force through an  incentive-based  bonus
program. Under this program, quantifiable performance goals are established each
year by  Anicom  and  each  employee.  In  addition,  Anicom  seeks  to  achieve
Company-wide  objectives  and encourage a "team"  concept by rewarding its sales
personnel through  supplementary  discretionary bonuses based on Company-wide or
location-based goals.

Suppliers and Inventory

Management  believes  that Anicom is not dependent on any  particular  supplier.
Anicom offers a large number of products  manufactured  by a variety of vendors.
Management believes that vendor  relationships are critical to Anicom's success,
and  Anicom  focuses  sharply  on  maintaining  such  relationships.  Purchasing
decisions  generally are made at Anicom's  headquarters  in the Chicago area and
manufacturers  are  instructed  to ship  inventory  to the sales  and  warehouse
locations  (or,  in some  cases,  directly to  customers)  specified  by Anicom.
Management  believes  that  Anicom  has a good  working  relationship  with  its
existing  suppliers.  Management  believes that Anicom could obtain  competitive
products of  comparable  quality from other  suppliers and does not believe that
the loss of any one supplier  would have a material  adverse  impact on Anicom's
results of operations or financial condition.

Anicom's  objective is to provide its customers  with a continuity of supply and
delivery  scheduling  that responds to their needs without  requiring  excessive
levels of inventory.  Anicom's fully integrated on-line computer network enables
it to customarily  provide same day shipping on any stock item.  Management also
can  generate  real-time  information  on  inventory  levels  using this on-line
system.  While the depth and breadth of products  offered has increased over the
last two years, the emphasis on strict inventory control has allowed the Company
to maintain its order completion rate and to support its increasing sales levels
without increases in relative inventory levels. The Company continues to improve
its  inventory  management  systems,   including  hiring  a  Vice  President  of
Purchasing  with 15  years of  experience,  who  reports  directly  to  Anicom's

<PAGE>

President, Carl Putnam, imposing stricter controls on the discretion of Anicom's
sales personnel and improving the forecasting and monitoring capabilities of its
inventory  management  software.  Anicom  has not  experienced  any  significant
inventory obsolescence.

The Management Information Systems

Anicom utilizes a custom-designed information technology system which integrates
sales,  inventory  control  and  purchasing,   financial  control  and  internal
communications  while  providing  real-time  monitoring of inventory  levels and
shipping status at all of Anicom's sales and distribution  centers.  This system
enables  management to respond quickly and efficiently to customer demands.  All
of Anicom's  locations are networked into the information  technology system and
integrated with Anicom's centralized  processing system. This system has allowed
Anicom to quickly integrate the operations of its acquisitions and generally has
helped maximize  productivity which management  believes translates into a lower
effective cost to customers. This system also contributes to Anicom's ability to
increase  sales  productivity  by enabling the sales force to provide  customers
with personalized service drawing on information contained in the database,  and
allows   non-technically   trained   personnel  to  provide   technical  product
information in marketing the products offered by Anicom.

Customers

Anicom's  customer base consists of a wide array of  businesses,  including auto
manufacturers,  contractors, systems integrators, security/fire alarm companies,
regional Bell operating companies, distributors,  utilities,  telecommunications
and   sound   contractors,   wireless   specialists,   construction   companies,
universities and governmental  agencies. No customer accounted for more than 10%
of  Anicom's  net sales  during  either of the past two  years,  and  management
believes that Anicom is not dependent on any particular customer.  With Anicom's
increasing national presence and inventory  selection,  management will continue
to focus more of its efforts on the  development  of sales to a larger number of
national customers.

Competition

The market for multimedia wiring products is highly  competitive and fragmented.
To compete  successfully,  management  believes  that the  Company  will need to
continue to  distribute  a broad  range of  technologically  advanced  products,
provide  competitive  pricing  while  maintaining  its margins,  provide  prompt
delivery  of  products,  deliver  responsive  customer  service,  establish  and
maintain  strong  relationships  with suppliers and  customers,  and attract and
retain highly qualified  personnel.  Anicom faces  substantial  competition from
several  national  and  regional   distributors  that  have  greater  financial,
technical and marketing resources and distribution capabilities than the Company
and from  manufacturers  who sell directly to end-users for certain  large-scale
projects.

Trade Names

Anicom maintains a number of registered trademarks and trade names in connection
with  its  business   activities,   including   "Anicom(R)",   "Exacpac(R)"  and
"RAPI-Change(R)."  Anicom's  policy  is to file for  trademark  and  trade  name
protection for its trademarks and trade names.

Employees

As of March 14, 1997,  Anicom employed  approximately  490 persons.  None of the
employees are covered by collective bargaining agreements.  Anicom believes that
it has good relations with its employees.
<PAGE>

Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995

The  statements  contained  in  Item 1  (Description  of  Business)  and  Item 6
(Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations) that are not historical facts may be forward-looking statements that
are  subject to a variety of risks and  uncertainties  more fully  described  in
Anicom's filings with the Securities and Exchange Commission including,  without
limitation,  those described under "Risk Factors" in Anicom's Resale  Prospectus
dated  November  15,  1996.   Anicom  cautions  readers  that  these  risks  and
uncertainties  could cause Anicom's  actual results in 1997 and beyond to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, Anicom.  These risks and uncertainties  include,  without limitation,
Anicom's limited  operating history on which  expectations  regarding its future
performance can be based, general economic and business conditions affecting the
industries  of Anicom's  customers  in existing  and new  geographical  markets,
competition  from, among others,  national and regional  distributors  that have
greater   financial,   technical  and  marketing   resources  and   distribution
capabilities  than Anicom,  the  availability  of sufficient  capital,  Anicom's
ability to identify the right product mix and to maintain  sufficient  inventory
to meet customer demand,  Anicom's ability to successfully acquire and integrate
the  operations  of  additional  businesses  and  Anicom's  ability  to  operate
effectively in geographical areas in which it has no prior experience. 
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY

As of  March  14,  1997,  Anicom  conducted  its  operations  from 41  different
locations,  all of which are leased.  Each of its locations  consists of a sales
office and a warehouse,  except for its locations in Tucson, Arizona;  Cerritos,
California;    Rosemont,   Illinois;   Baton   Rouge,   Louisiana;   Framingham,
Massachusetts;  and Tinton Falls,  New Jersey which do not include any warehouse
space. As of March 14, 1997, Anicom operated out of the following locations:


   Baton Rouge, LA           Elk Grove Village, IL        Plano, TX

   Birmingham, AL            Framingham, MA               Pompano Beach, FL

   Bridgeton, MO             Gaithersburg, MD             Raleigh, NC

   Broadview Hts., OH        Greensboro, NC               Richmond, VA

   Cerritos, CA              Greenville, SC               Rochester, NY

   Charleston, SC            Houston, TX                  Rosemont, IL

   Charlotte, NC             Indianapolis, IN             San Diego, CA

   Charlottesville, VA       Kingston, NY                 Tampa, FL

   Cincinnati, OH            Knoxville, TN                Tinton Falls, NJ

   Columbia, SC              Las Vegas, NV                Troy, MI

   Columbus, OH              Nashville, TN                Tucson, AZ

   Denver, CO                Newport News, VA             Tukwila, WA

   Eagan, MN                 Norcross, GA                 Virginia Beach, VA

                             Phoenix, AZ                  Washington, PA


Anicom's aggregate  executive office and sales office space as of March 14, 1997
is  approximately  138,000  square  feet and its  aggregate  warehouse  space is
approximately 310,000 square feet. Generally, Anicom maintains short term leases
for its sales offices and  warehouses,  with options to renew,  where  possible.
Anicom  believes  that its  facilities  are adequate for its current and present
foreseeable  needs in these  geographical  markets;  however,  the Company  will
continue to increase space as the need arises. Management believes that adequate
replacement space is readily available in each market.

ITEM 3.  LEGAL PROCEEDINGS

Anicom  is not a  party  to any  material  legal  proceeding  nor,  to  Anicom's
knowledge, is any material legal proceeding threatened against it.

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

No matters were submitted to a vote of security  holders during  Anicom's fiscal
quarter ended December 31, 1996.
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

On  September  25,  1996,  the number of  authorized  shares of common stock was
increased from 10,000,000 to 30,000,000 following approval of such action by the
Company's  stockholders at a special  meeting.  Following such action, a 2-for-1
stock  split  effected in the form of a 100% stock  dividend  was  declared  for
holders of record as of October 1, 1996,  payable  October 7, 1996.  All periods
and sales prices presented have been restated to retroactively  reflect the 100%
stock dividend.

Since  November  21, 1995,  Anicom's  Common Stock has been quoted on the Nasdaq
National  Market under the symbol  "ANIC".  From February 22, 1995,  the date of
Anicom's  initial public offering,  through  November 20, 1995,  Anicom's Common
Stock was listed on the Nasdaq  SmallCap  Market  under the symbol  "ANIC".  The
following table sets forth, for the periods indicated, the range of high and low
last sale prices for the Common Stock as reported on the Nasdaq  National Market
and on the Nasdaq SmallCap Market:

                                     1996                      1995
                               High        Low           High         Low
         1st quarter           7 5/8      4 3/8           4 1/4      3 3/16
         2nd quarter          10 1/8      6 3/8          5 5/16       3 7/8
         3rd quarter           9 1/8     6 9/16           7 1/4      4 1/16
         4th quarter          10 1/8      7 7/8           6 3/8       4 1/2

As of March 14,  1997,  the  approximate  number of record  holders of  Anicom's
Common Stock was 736.

As an S  Corporation,  Anicom made  annual S  Corporation  distributions  to its
stockholders.  During 1995, cash distributions of $163,032 were declared payable
to the S Corporation Stockholders of Anicom to fund their estimated tax payments
due with respect to the taxable income of Anicom.

Except  for S  Corporation  distributions  in  1995,  Anicom  did not  pay  cash
dividends or  distributions  on its capital  stock  during 1995 or 1996.  Anicom
anticipates  that it will retain any future  earnings to finance the  continuing
growth and development of its business.  Accordingly, Anicom does not anticipate
paying cash dividends on its Common Stock in the foreseeable future. The payment
of any future dividends will be at the discretion of Anicom's Board of Directors
and will  depend  upon,  among other  things,  future  earnings,  the success of
Anicom's development activities, capital requirements, restrictions in financing
arrangements,  the general  financial  condition of Anicom and general  business
conditions.  At present, Anicom's ability to declare or pay dividends is limited
under its bank line of credit, which provides that Anicom may not declare or pay
any dividends on its Common Stock if at the time of such declaration or payment,
any event of default shall have occurred or be continuing.


<PAGE>





ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The  following  table  sets  forth  selected  income  statement  data of  Anicom
expressed as a percentage of net sales for the periods indicated:

                                                          1996        1995
Income Statement Data:
  Net sales........................................       100.0%      100.0%
  Cost of goods sold...............................        75.4        76.3
                                                       ---------    --------
  Gross profit.....................................        24.6        23.7
                                                       ---------    --------
  Operating expenses and other:
    Selling expenses...............................        11.3        10.4
    General and administrative expenses............        10.7         9.6
    Gain on sale of product line...................         (.8)         --     
                                                       ---------    --------
  Operating income.................................         3.4         3.7
  Interest (expense)...............................         (.2)        (.2)
  Interest income..................................          .5          .9
                                                       ---------    --------
  Income before income taxes.......................         3.7         4.3
  Income taxes.....................................         1.4         1.7
                                                       ---------    --------
  Net income.......................................         2.3%        2.6%
                                                       =========    ========


------------------
Note:  Percentages may not sum due to rounding.

Results of Operations

      Year ended December 31, 1996 compared to year ended December 31, 1995

For the year ended December 31, 1996, the Company  established record net sales,
net income and earnings per share ("EPS").  On a comparable basis with 1995, net
sales  increased  by more than  295% to $116.0  million,  net  income  increased
approximately  243% to $2.6  million and EPS  increased  43% to $0.20 per share.
These improvements follow record 1995 results of $29.4 million in net sales, net
income  of  $764,000  and EPS of $0.14 per  share  (based on 46% fewer  weighted
average shares outstanding).

The increase in net sales is primarily  attributed to acquisitions  completed in
the fourth quarter of 1995 and throughout 1996. The remainder of the improvement
is attributed to the Company's  expanding breadth and depth of product offerings
which has lead to  increased  market  share,  expanded  market  penetration  and
increased volume with many existing customers.

For the year ended  December 31, 1996,  Anicom's gross profit as a percentage of
net sales  increased to 24.6%  compared to the 23.7% level achieved in 1995. The
improvement  is  principally  a result of economic  efficiencies  achieved  from
increased  purchasing  volume  with  vendors  and  centralizing  the  purchasing
function.  These factors,  combined with the acquired sales volume,  resulted in
gross profit  increasing more than fourfold to $28.6 million in 1996 as compared
to $7.0 million in 1995.
<PAGE>

Selling  expenses  increased  from $3.1 million or 10.4% of net sales in 1995 to
$13.1 million or 11.3% of net sales in 1996. The Company's  acquisitions in 1996
resulted in an increase in sales headcount and other variable selling  expenses.
For 1996,  the change in selling  expenses as a percentage of net sales resulted
from the historically higher selling expenses of Northern Wire & Cable; however,
selling  expense as a  percentage  of net sales has  decreased  in each  quarter
subsequent to the Northern acquisition.

General and administrative expenses increased from $2.8 million in 1995 to $12.4
million in 1996. The Company's  acquisitions  in 1996 resulted in an increase in
general and administrative  expenses.  As a percentage of net sales, general and
administrative  expenses  increased to 10.7% from 9.6% in 1995 due  primarily to
amortization of goodwill resulting from acquisitions,  non-recurring acquisition
and integration expenses, increased warehousing and distribution costs primarily
associated  with  industrial  cable (a product line the Company  acquired in its
acquisition  of  Northern  Wire & Cable) and  increased  costs  associated  with
Anicom's successful implementation of its integrated growth strategy.

On December  31, 1996,  the Company sold its copper and fiber optic  cutting and
splicing  kit product line and its low voltage  cable and fiber optic  connector
product  line, in two separate  transactions.  Both of these  assembled  product
lines  were  acquired  as a  part  of  the  Norfolk  Wire  &  Electronics,  Inc.
acquisition  and were sold as the Company  continues  to maintain its focus as a
distribution specialist.  The Company recognized a pre-tax gain of approximately
$878,000,   net  of  transaction  expenses  on  these  sales.  As  a  result  of
acquisitions  in 1996,  the  Company  also  incurred  approximately  $823,000 of
non-recurring, post-acquisition integration costs.

Interest income increased by approximately  $308,000 or 120% to $565,000 in 1996
from  $256,000 in 1995 as the Company  invested the funds raised in its November
1995  follow-on  offering and its  September  1996  private  placement of equity
pending  use  of  such  funds  to  finance   acquisitions  and  working  capital
requirements.

In 1996, interest expense rose by $183,000 to $256,000 The increase was a result
of interest  incurred on debt issued in certain  acquisitions  completed  during
1996 and other debt assumed in acquisitions.

The provision  for income taxes  increased to $1.6 million in 1996 from $764,000
in 1995 as a result of the $3.0 million  increase in income before  taxes.  As a
percentage of income before  income taxes,  the provision  decreased to 38.2% in
1996 from 39.2% in 1995.  This  decrease  is  primarily  attributable  to income
earned on tax-exempt securities.

Liquidity and Capital Resources

As of December  31,  1996,  Anicom had working  capital of  approximately  $33.4
million as compared to $34.3  million as of December 31,  1995.  At December 31,
1995,  working  capital was favorably  impacted by funds raised in the Company's
November 1995 follow-on  offering which were not utilized until 1996. The timing
of the use of these amounts accounts for the decrease in working capital.

At December 31, 1996, the Company had cash and cash  equivalents of $195,000 and
marketable  securities  of $4.3  million.  In addition,  the Company has a $10.0
million unsecured revolving credit facility (the "Facility") with Harris Trust &
Savings Bank which expires on July 31, 1998. The Facility's  rate of interest is
LIBOR plus 1.0% or the lender's  Domestic Base Rate, as defined,  less 0.5%. The
Facility contains  customary  representations,  warranties and covenants.  As of
December 31, 1996, the Company had no amount outstanding under the Facility.
<PAGE>

Management believes that existing cash, cash equivalents,  marketable securities
and cash flows  from  operations  supplemented,  if  necessary,  by draws on the
Facility  will  be  sufficient  to fund  current  operations,  and  its  planned
integrated growth strategy.  The Company does not currently have any significant
long-term  capital  requirements  which it  believes  can not be funded from the
sources  discussed  above.  However,  in  connection  with its  acquisition  and
integrated growth strategy,  the Company's capital requirements may change based
upon various  factors,  primarily  related to the timing of acquisitions and the
consideration to be used as purchase price.  Accordingly,  the Company continues
to examine  opportunities  to raise  funds  through the  issuance of  additional
equity or debt securities through private placements or public offerings.

For the year ended  December  31,  1996,  operating  activities  generated  $9.1
million  compared with the use of $30.4 million in 1995. The significant  change
between  years  is  principally  a result  of the  accounting  required  for the
Company's portfolio of marketable securities.  In 1996, the Company liquidated a
significant  portion  of these  investments  to fund  acquisitions  and  working
capital requirements.

Excluding  the  impact  of these  investments,  Anicom  used  $12.1  million  in
operating  activities in 1996 compared with the use of $4.9 million in 1995. The
use of  cash  in  operations  in  1996 is a  result  of the  substantial  growth
experienced during the year, primarily replenishing working capital deficiencies
of acquired companies and funding business integration liabilities. This working
capital expansion resulted in a $6.6 million increase in accounts receivable and
a $5.9  million  increase in  inventory  in 1996 as the Company  integrated  its
acquisitions and expanded the depth of its product offerings.  The investment in
these operating  assets was partially offset by a $2.4 million  increase,  after
excluding non-cash transactions,  in accounts payable.  Finally, the use of cash
attributed to accrued  expenses is  principally a result of the Company  funding
approximately $3.6 million of business  integration  liabilities  established in
connection with the 1996 acquisitions.

Investing  activities  utilized  approximately $15.3 million and $1.8 million in
1996 and 1995,  respectively.  During 1996,  Anicom completed the acquisition of
Medisco,  Inc. of Indianapolis,  Indiana;  Northern Wire & Cable,  Inc. of Troy,
Michigan;  Southern Alarm Supply, Inc. of Nashville,  Tennessee;  Norfolk Wire &
Electronics,  Inc.  of  Virginia  Beach,  Virginia;  and  Western  Wire &  Alarm
Products,  Inc. of Denver,  Colorado.  Cash paid for 1996  acquisitions  totaled
approximately  $14.2 million.  During 1995,  the  acquisition of Pinnacle Wire &
Cable, Inc. of Columbus, Ohio; and Morgan Hill Supply Company of Framingham, New
York used approximately $1.4 million in cash.

For the year ended  December 31, 1996, net financing  activities  generated $6.3
million.  Financing  activities in 1996  included  $15.1 million in net proceeds
generated  from the  issuance of common  stock in a private  placement  and $4.2
million drawn on its Facility.  These proceeds were partially  offset by the use
of cash to repay the $4.2  million draw on the Facility and $8.7 million of bank
debt assumed in the Company's  1996  acquisitions.  In 1995,  the Company raised
approximately $35.6 million in net proceeds from the issuance of common stock in
its initial public offering and its follow-on offering. In addition, the Company
borrowed  $727,000  against its previous  credit  facility  prior to its initial
public  offering.  Uses of cash for  financing  activities  in 1995 included the
repayment of all amounts due under its credit  facility and bank debt assumed as
a part of its 1995 acquisitions.  Also, during the first quarter of 1995, Anicom
issued  distributions  to its Subchapter S Stockholders  totaling  approximately
$163,000. The distribution was used to fund the tax liabilities arising from net
income of the Company prior to the termination of its S corporation election.
<PAGE>

Inflation

Although the operations of Anicom are influenced by general economic conditions,
Anicom does not believe that  inflation had a material  effect on the results of
the operations during 1996.

Seasonality

In the fourth  quarter,  Anicom has  historically  experienced,  and  expects to
experience in future  years,  a modest  decrease in the level of activity  among
many of its customers around the Thanksgiving and Christmas holidays.

Impact of Not Yet Effective Rules

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards No. 128,  Earnings Per Share ("SFAS 128"). SFAS
128 specifies the  computation,  presentation,  and disclosure  requirements for
earnings per share.  SFAS 128 is effective for financial  statements  issued for
periods ending after December 15, 1997,  including interim periods.  The Company
will adopt SFAS 128 for the year ended December 31, 1997. Management has not yet
determined the impact of implementing this standard.


<PAGE>



ITEM 7.  FINANCIAL STATEMENTS
The Financial Statements appear on pages F-1 through F-21.


                                                                       Page
                                                                       ----

Report of Independent Accountants...................................... F-2

Financial Statements:

  Consolidated Balance Sheets as of December 31, 1996 and 1995......... F-3

  Consolidated Statements of Income for the Years Ended
    December 31, 1996 and 1995......................................... F-4

  Consolidated Statements of Stockholders' Equity 
    for the Years Ended December 31, 1996 and 1995..................... F-5

  Consolidated Statements of Cash Flows for the Years Ended
    December 31, 1996 and 1995......................................... F-6

  Notes to Consolidated Financial Statements........................... F-7

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE
 Not applicable.


<PAGE>


                                    PART III

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

Information  with  respect to the  directors  and  officers  of Anicom is hereby
incorporated  herein  by  reference  to  "Election  of  Directors  -  Nominees",
"Election  of  Directors  -  Other   Directors"  and  "Executive   Officers  and
Significant  Employees" in Anicom's Notice of Annual Meeting of Stockholders and
Proxy  Statement for its Annual  Meeting of  Stockholders  to be held on May 21,
1997 (the  "1997  Proxy  Statement"),  which is  expected  to be filed  with the
Commission in definitive form no later than April 30, 1997.

Information  with respect to required  Section 16(a)  disclosure is incorporated
herein  by  reference  to the  section  "Compliance  with  Section  16(a) of the
Securities Exchange Act of 1934," in the 1997 Proxy Statement, which is expected
to be filed with the  Commission  in  definitive  form no later than April 30,
1997.

ITEM 10. EXECUTIVE COMPENSATION

Information with respect to executive compensation is hereby incorporated herein
by reference to "Executive  Compensation" in the 1997 Proxy Statement,  which is
expected to be filed with the Commission in definitive  form no later than April
30, 1997.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information with respect to security  ownership of certain beneficial owners and
management is hereby  incorporated herein by reference to "Security Ownership of
Principal  Stockholders  and Management" in the 1997 Proxy  Statement,  which is
expected to be filed with the Commission in definitive  form no later than April
30, 1997.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to certain  relationships  and related  transactions is
hereby  incorporated  herein by reference to "Certain  Transactions" in the 1997
Proxy Statement, which is expected to be filed with the Commission in definitive
form no later than April 30, 1997.



<PAGE>


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.  The following  exhibits are filed with the report or incorporated
               herein by reference as set forth below.

Exhibit         No.  

2.1**           Agreement  and Plan of Merger, dated as of July 18, 1995, among
                Anicom, Pinnacle Wire & Cable,  Inc.,  Raymond J. Costello and
                Robert A. Holous.
2.2***          Stock  Purchase  Agreement,  dated  September  19,  1995,  among
                Anicom, Morgan Hill, Inc. and Kenneth Jay Burgess.
2.3****         Asset  Purchase  Agreement,  dated as of March  4,  1996,  among
                Anicom,  Inc.,  Northern  Wire &  Cable,  Inc.,  and  Copperhead
                Acquisition Corp.
2.4*****        Agreement and Plan of Reorganization, by and among Anicom, Inc.,
                Anicom-Southeast,  Inc.,  Norfolk Wire & Electronics,  Inc., and
                Ronald A.  Hurley,  Robert H.  Jennings,  Stephen M.  Mobley and
                Vonda M. Hall, dated as of August 30, 1996.
3.1*            Restated Certificate of Incorporation of Anicom.
3.2*            Restated Bylaws of Anicom.
3.3******       Certificate  of Amendment of  Certificate  of  Incorporation  of
                Anicom.
4.1*            Specimen Stock Certificate representing Common Stock.
10.1*           Credit Agreement,  dated June 30, 1993,  between  Registrant and
                Harris Trust and Savings Bank, as amended.
10.2*           Commercial Lease Agreement, dated April 30, 1993, between Anicom
                and Harris Trust and Savings Bank.
10.3*******     Form of 1995 Stock Incentive Plan as Amended and Restated.
10.4*******     Credit Agreement,  dated as of February 6, 1996,  between Anicom
                and Harris Trust and Savings Bank.
10.6*           Shareholders Agreement
10.8*           Form of Tax Indemnification Agreement
10.9*           Form of Employment Agreement between Anicom and Scott C. Anixter
10.10*          Form of Employment Agreement between Anicom and Carl E. Putnam.
10.11*          Form of  Employment  Agreement  between  Anicom  and  Robert  L.
                Swanson
10.12******     Form of Amended and Restated 1995 Directors Stock Option Plan.
10.13****       Form  of  Employment   Agreement   between   Anicom  and  Robert
                Brzustewicz.
10.14****       Form of Employment Agreement between Anicom and Glen Nast.
10.15****       Non-Negotiable Note issued to Northern Wire & Cable, Inc.
10.16****       Guaranty by Anicom to Northern Wire & Cable, Inc.
10.18           1996 Stock Incentive Plan
10.17           Form of Employment Agreement between  Anicom and Donald Welchko
23.1            Consent of Independent Accountants
21              List of Subsidiaries.
27              Financial Data Schedule
------------------

*               Previously   filed  as  an  Exhibit  to  Anicom's   Registration
                Statement  on  Form  SB-2,   registration   no.   33-87736C  and
                incorporated  herein by refrence thereto.  
**              Previously  filed as an Exhibit to  Anicom's  current  report on
                Form 8-K,  dated  August  10,  1995 and  incorporated  herein by
                refrence.
***             Previously  filed as an Exhibit to  Anicom's  current  report on
                Form 8-K,  dated  October  16, 1995 and  incorporated  herein by
                refrence.
****            Previously  filed as an Exhibit to  Anicom's  current  report on
                Form  8-K,  dated  March  12,  1996 and  incorporated  herein by
                reference.
*****           Previously  filed as an Exhibit to  Anicom's  current  report on
                Form 8-K,  dated  August  30,  1996 and  incorporated  herein by
                reference.
******          Previously  filed as an Exhibit to  Anicom's  current  report on
                Form  10-QSB,  for the  quarter  ended  September  30,  1996 and
                incorporated herein by reference.
*******         Previously  filed as an Exhibit to  Anicom's  Annual  report on
                Form  10-KSB,  for the  year  ended  December 31,  1996 and
                incorporated herein by reference.

<PAGE>

         (b)      Reports on Form 8-K.  The  following   Reports  on Form 8-K or
         Form  8-K/A  were filed  during the last quarter of 1996.

         Form 8-K/A, dated November 1, 1996 (Norfolk Wire & Electronics, Inc.)

         Form 8-K, dated November 5, 1996 (Press Release)

         Form 8-K/A, dated November 5, 1996 (Norfolk Wire & Electronics, Inc.)



<PAGE>


                                   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, on the 20th day of March, 1997.

                                  ANICOM, INC.


                                 By:   /s/ SCOTT C. ANIXTER
                                       --------------------
                                       Scott C. Anixter
                                       Chairman and Chief Executive Officer

This  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.

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

                          Chairman and Chief Executive        March 20, 1997
/s/ Scott C. Anixter      Officer (Principal Executive
------------------------  Officer)
    Scott C. Anixter

/s/ Alan B. Anixter       Chairman of the Board               March 20, 1997
------------------------
    Alan B. Anixter

                          President and Chief Operating       March 20, 1997
/s/ Carl E. Putnam        Officer and a Director
------------------------
    Carl E. Putnam

                          Vice President, Chief Financial     March 20, 1997
                          Officer and a Director (Principal
/s/ Donald C. Welchko     Financial and Accounting Officer)
------------------------
    Donald C. Welchko

/s/ Lee B. Stern          Director                            March 20, 1997
------------------------
    Lee B. Stern

/s/ Michael Segal         Director                            March 20, 1997
------------------------
    Michael Segal


<PAGE>



                                  ANICOM, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                   

                                                                       Page
                                                                       ----

Report of Independent Accountants...................................... F-2

Financial Statements:

  Consolidated Balance Sheets as of December 31, 1996 and 1995......... F-3

  Consolidated Statements of Income for the Years Ended
    December 31, 1996 and 1995......................................... F-4

  Consolidated Statements of Stockholders' Equity 
    for the Years Ended December 31, 1996 and 1995..................... F-5

  Consolidated Statements of Cash Flows for the Years Ended
    December 31, 1996 and 1995......................................... F-6

  Notes to Consolidated Financial Statements........................... F-7



<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Stockholders and the Board of Directors of ANICOM, Inc.:

We have audited the accompanying  consolidated balance sheets of Anicom, Inc. as
of December 31, 1996 and 1995 and the related consolidated statements of income,
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 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  policies  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 consolidated  financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Anicom,
Inc.  as of  December  31,  1996 and 1995 and the  consolidated  results  of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.




                            COOPERS & LYBRAND L.L.P.



Chicago, Illinois
January 31, 1997



<PAGE>


                                  ANICOM, INC.
                           Consolidated Balance Sheets
                           December 31, 1996 and 1995

                                                            1996          1995
                                   ASSETS
Current assets:
  Cash and cash equivalents                            $   195,050        $3,250
  Marketable securities                                  4,344,842    25,536,282
  Accounts receivable, less allowance for 
    doubtful accounts of $980,000 and 
    $120,000, respectively                              26,972,035     6,647,632
  Inventory                                             23,452,592     5,245,893
  Prepaid expenses                                         594,113       253,596
  Notes receivable, current portion                        195,069          --
  Deferred income taxes                                  1,557,150        31,000
  Other current assets                                     227,704        19,794
                                                       -----------   -----------
      Total current assets                              57,538,555    37,737,447
                                                       -----------   -----------
                                                                                
Property and equipment, net                              2,819,809       651,900
Notes receivable                                           800,000          --
Goodwill, net of accumulated amortization of 
  $478,000 and $23,260, respectively                    26,770,603     2,770,541
Other assets                                                24,890         9,187
                                                       -----------   -----------
      Total assets                                     $87,953,857   $41,169,075
                                                       ===========   ===========
                                                               
     
                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                     $20,727,152   $ 2,532,714
  Accrued expenses                                       1,818,283       489,226
  Long-term debt, current portion                        1,597,616       409,679
                                                       -----------   -----------
      Total current liabilities                         24,143,051     3,431,619
                                                       -----------   -----------

Long-term debt, net of current portion                   3,012,784       576,529
Deferred income taxes                                      164,835        20,000
Other liabilities                                          773,910          --
                                                       -----------   -----------
      Total liabilities                                 28,094,580     4,028,148
                                                       -----------   -----------

Commitments and Contingencies

Stockholders' Equity:
  Common stock,  par value $.001 per share;             
    30,000,000 and 20,000,000 shares authorized, 
    respectively; 15,559,805 and 12,212,728 shares 
    issued andoutstanding, respectively                      7,530         5,906
  Preferred stock, par value $.01 per share; 
    1,000,000 shares authorized;
    no shares issued and outstanding                          --            --
  Additional paid-in capital                            56,464,954    36,370,738
  Retained earnings                                      3,386,793       764,283
                                                       -----------   -----------
      Total stockholders' equity                        59,859,277    37,140,927
                                                       -----------   -----------
        Total liabilities and stockholders' equity     $87,953,857   $41,169,075
                                                       ===========   ===========
                                                                                


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
<PAGE>
 
                                  ANICOM, INC.
                        Consolidated Statements of Income
                 For the Years Ended December 31, 1996 and 1995

                                                  1996              1995

Net sales                                    $ 115,993,079    $  29,357,597
Cost of sales                                   87,441,698       22,404,331
                                             -------------    -------------
  Gross profit                                  28,551,381        6,953,266
                                             -------------    -------------

Operating expenses and other:
  Selling                                       13,067,855        3,058,268
  General and administrative                    12,425,713        2,821,938
  Gain on sale of assembly product lines          (878,315)            --
                                             -------------    -------------
      Total operating expenses and other        24,615,253        5,880,206
                                             -------------    -------------

Income from operations                           3,936,128        1,073,060
                                             -------------    -------------

Other income (expense):
  Interest income                                  564,560          256,310
  Interest expense                                (256,086)         (72,887)
                                             -------------    -------------
    Total other income (expense)                   308,474          183,423
                                             -------------    -------------


Income before income taxes                       4,244,602        1,256,483
                                             -------------    -------------

Provision for income taxes                       1,622,092          492,200
                                             -------------    -------------

Net income                                   $   2,622,510    $     764,283
                                             =============    =============

Earnings per common share                    $         .20    $        0.14
                                             =============    =============

Weighted average common shares outstanding      13,384,251        5,540,140
                                             =============    =============




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


<PAGE>


                                  ANICOM, INC.
                Consolidated Statements of Stockholders' Equity
                 For the Years Ended December 31, 1996 and 1995

<TABLE>
<CAPTION>


                                                 
                                                       Common Stock                                                
                                                 -------------------------      Additional                       Total
                                                                                 Paid-In        Retained     Stockholders'
                                                   Shares         Amount         Capital        Earnings          Equity
<C>                                             <C>                 <C>       <C>             <C>             <C>    
Balance, January 1, 1995                         2,400,000          $1,000                        $156,075        $157,075

Distribution to former Subchapter S                                           $     (6,957)       (156,075)       (163,032)
  shareholders

Proceeds from issuance of common stock, net
  of offering costs                              9,660,000           4,830      35,577,772                      35,582,602   

Issuance of common stock for acquisitions          152,728              76         799,923                         799,999

Net income                                                                                         764,283         764,283
                                              ------------    ------------    ------------    ------------    ------------

Balance, December 31, 1995                      12,212,728           5,906      36,370,738         764,283      37,140,927

Proceeds from issuance of common stock, net
  of offering costs                              2,423,080           1,212      15,052,920                      15,054,132

Issuance of common stock for acquisitions          871,792             435       5,537,026                       5,537,461

Exercise of stock options                            8,480               4          11,096                          11,100

Exercise of warrants to purchase common             
  stock                                             98,520               _               _                               _

Receipt and cancellation of common stock
  received in sale of a business                   (54,795)            (27)       (506,826)                      (506,853)

Net income                                                                                       2,622,510       2,622,510
                                              ------------    ------------    ------------    ------------    ------------

Balance, December 31, 1996                      15,559,805    $      7,530    $ 56,464,954    $  3,386,793    $ 59,859,277
                                              ============    ============    ============    ============    ============
</TABLE>


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


<PAGE>

                                  ANICOM, INC.
                      Consolidated Statements of Cash Flows
                 For the Years Ended December 31, 1996 and 1995

                                                          1996          1995
Cash flows from operating activities:
   Net income                                         $2,622,507      $764,283
   Adjustments to reconcile net income to 
       net cash provided by (used in)
       operating activities:
   Depreciation                                          441,341       119,678
   Amortization                                          482,475        26,939
   Deferred income taxes                                 527,500       (11,000)
   Gain on sale of product lines                        (878,315)           --
    Increase (decrease) in cash attributable to 
     changes in assets and liabilities
       Marketable securities                          21,191,440   (25,536,282)
       Accounts receivable                            (6,630,839)   (1,729,240)
       Inventories                                    (5,912,104)   (1,936,649)
       Prepaid expenses                                 (205,998)     (179,856)
       Other current assets                              (77,620)       14,389
       Accounts payable                                2,366,149    (1,861,299)
       Accrued expenses                               (4,799,694)      (55,614)
                                                     ------------ -------------
           Net cash provided by  
             (used in) operating activities             9,126,842   (30,384,651)
                                                     ------------ -------------

Cash flows from investing activities:
   Purchase of property and equipment                 (1,105,689)     (394,550)
   Cash paid for acquired companies                  (14,200,545)   (1,433,994)
                                                     ------------ -------------
           Net cash used in investing activities     (15,306,234)   (1,828,544)
                                                     ------------ -------------

Cash flows from financing activities:
   Proceeds from issuance of common stock, 
      net of offering costs                           15,054,132    35,575,644
   Proceeds from long-term debt                        4,190,000       727,448
   Payment of long-term debt and assumed bank debt   (12,884,040)   (3,926,365)
   Exercise of stock options                              11,100            --
   Payment of S corporation distribution                      --      (163,032)
                                                     ------------ -------------
           Net cash provided by financing activities   6,371,192    32,213,695
                                                     ------------ -------------

Net increase in cash and cash equivalents                191,800           500

Cash and cash equivalents, beginning of year               3,250         2,750
                                                     ------------ -------------

Cash and cash equivalents, end of year                  $195,050        $3,250
                                                     ============ =============
Supplemental Cash Flow Information:
   Cash paid for interest                                $80,885       $54,053
                                                     ============ =============

   Cash paid for income taxes                         $1,381,893      $591,701
                                                     ============ =============
 
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


<PAGE>

                                  ANICOM, INC.

                   Notes to Consolidated Financial Statements


1.       Nature of Business and Summary of Significant Accounting Policies

         Nature of Business

         Anicom,  Inc. and Subsidiaries  (the "Company")  specialize in the sale
         and distribution of communications  related wire,  cable,  fiber optics
         and computer network and connectivity products.

         The Company sells to a wide array of customers,  including contractors,
         systems  integrators,  security/fire  alarm  companies,  regional  Bell
         operating companies,  distributors,  utilities,  telecommunications and
         sound  contractors,   wireless  specialists,   construction  companies,
         universities,  governmental  agencies  and  companies  involved  in the
         automotive,  mining, marine,  petro-chemical,  paper and pulp and other
         natural  resource  industries.  The  Company's  customers  are  located
         throughout  the  United  States of  America  and  other  parts of North
         America.  The Company  generally sells to its customers on an unsecured
         basis.

         In connection with certain acquisitions completed during 1996 (See Note
         8), the Company  acquired three assembly  operations.  These operations
         produce two lines of connector  cable products and a line of copper and
         fiber optic cable  cutting and splicing kits which are sold through the
         Company's distribution channels. On December 31, 1996, the splicing kit
         line and one of the connector  cable product lines were sold.  Also see
         Note 12 for subsequent event.

         Consolidation

         The accompanying  consolidated  financial statements consist of Anicom,
         Inc. and its wholly owned  subsidiaries.  All significant  intercompany
         accounts and transactions have been eliminated.

         Use of Estimates

         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 consolidated  financial statements and the reported amounts
         of revenues and expenses  during the reporting  period.  Actual results
         could differ from those estimates.

         Cash and Cash Equivalents
+
         The Company  considers all highly  liquid  investments  purchased  with
         original maturities of three months or less to be cash equivalents.


<PAGE>

                                  ANICOM, INC.

              Notes to Consolidated Financial Statements, continued


                        

1.       Nature of Business and Summary of Significant Accounting Policies, 
         continued

         Marketable Securities

         Management determines the appropriate  classification of its investment
         in debt and equity  securities at the time of purchase and  reevaluates
         such determination at each balance sheet date. The Company's  portfolio
         of marketable  securities is accounted  for as trading  securities,  is
         valued at fair value and  consists  primarily  of  preferred  stock and
         municipal bonds with varying maturities and short term liquidity. These
         securities  generally have  maturities of 28 days or less and are rated
         A1, P1 or AAA as the Company  attempts to reduce its credit risk.  Cost
         approximates fair value for these investments.

         Inventory

         Inventory, which primarily consists of finished goods, is stated at the
         lower of cost or market.  Cost is  determined  by the weighted  average
         method.

         Property and Equipment

         Property  and   equipment   are  stated  at  cost.   Depreciation   and
         amortization  are  computed  using the  straight-line  method  over the
         estimated  useful  life of the  assets  or the  terms of the  lease for
         leasehold improvements, generally 3 to 7 years.

         Major  renewals and  improvements  are  capitalized.  Expenditures  for
         maintenance  and repairs are expensed as incurred.  Upon  retirement or
         other  disposition  of  property,  the  cost  and  related  accumulated
         depreciation  are  removed  from the  accounts  and any gain or loss is
         recognized.

         Goodwill

         Goodwill  arising from  business  combinations  is amortized  using the
         straight-line  method over forty years. The Company's evaluation of the
         recoverability   of  goodwill   includes   operating   performance  and
         undiscounted cash flows of the acquired business units.

         Income Taxes

         Subsequent  to  January  1,  1995,  the  Company  applies  an asset and
         liability approach to accounting for income taxes.  Deferred tax assets
         and   liabilities   are   established   for  the  expected  future  tax
         consequences of temporary  differences  between the financial statement
         and tax bases of assets and liabilities, using enacted tax rates.

         Prior to January  1, 1995,  the  Company's  stockholders  elected to be
         treated  as  a  Subchapter  S  Corporation  for  income  tax  purposes.
         Accordingly the Company's stockholders were responsible for all federal
         and certain  state income tax  liabilities  arising from the  Company's
         operations.  The  Company's S Corporation  status was  terminated as of
         January  1,  1995.  A cash  distribution  of  $163,032  was paid to the
         Subchapter  S  Shareholders  of the Company in 1995,  representing  tax
         payments due with respect to the taxable income of the Company prior to
         the termination of its S Corporation status.
<PAGE>

                                  ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



1.       Nature of Business and Summary of Significant Accounting Policies, 
         continued

         Revenue Recognition

         Sales and the related cost of sales are recognized upon the shipment of
         products.

         Earnings Per Common Share

         The  computation  of earnings per common share is based on the weighted
         average  number of common  shares  and common  equivalents  outstanding
         during each period.

         Stock-Based Compensation

         During 1996,  the Company was required to adopt  Statement of Financial
         Accounting  Standards No 123,  Accounting for Stock-Based  Compensation
         ("SFAS No. 123") which encourages  entities to adopt a fair value based
         method of accounting for stock-based compensation plans in place of the
         provisions of Accounting Principles Board Opinion No. 25 Accounting for
         Stock Issued to  Employees  ("APB No. 25") for all  arrangements  under
         which employees receive shares of stock or other equity  instruments of
         the employer.

         As allowed by SFAS No.  123,  the  Company  will  continue to apply the
         provisions of APB No. 25 in  accounting  for its  stock-based  employee
         compensation  arrangements  and will  disclose pro forma net income and
         earnings per share  information  in its  footnotes as if the fair value
         method suggested in SFAS No. 123 had been applied.

         The Company recognizes  compensation cost for stock-based  compensation
         awards equal to the  difference  between the quoted market price of the
         stock  at the date of grant  and the  price to be paid by the  employee
         upon  exercise in accordance  with the  provisions of APB No. 25. Based
         upon the terms of Company's current stock option plans, the stock price
         on the date of grant and price paid upon exercise are the same, thus no
         compensation charge is required to be recognized.

         Reclassifications

         Certain  1995  amounts  have been  reclassified  to conform to the 1996
         presentation.

<PAGE>

                                 ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



2.       Notes Receivable

         In  connection  with the sale of the cable  cutting  and  splicing  kit
         product  line,  the  Company  accepted  a  $500,000   promissory  note,
         collateralized by the assets of the acquiring  company.  The note bears
         interest at 7.5%. All principal and accrued interest is due and payable
         on December 31, 1998. 

         In connection  with the sale of a connector  cable  product  line,  the
         Company   accepted  a  $375,000   senior   secured   promissory   note,
         collateralized  by the stock of the  acquiring  company and  personally
         guaranteed by its  president.  The note bears  interest at 6%. The note
         contains  scheduled  payments  which are due and  payable in five equal
         installments of principal and interest  beginning on December 31, 1997.
         Payments  may  be  deferred  or  accelerated  based  on  the  Company's
         purchases  from  the  acquiring  company,  as  defined;   however,  all
         outstanding  principal  and  interest  is due  and  payable  in full on
         December 31, 2001.

3.       Property and Equipment

         At December 31,  property  and  equipment  consisted  of the  following
         components:

                                                         1996           1995
         Machinery, equipment and vehicles              $846,714       $233,031
         Office equipment                                928,452        320,279
         Computer equipment and software               1,190,451        242,850
         Leasehold improvements                          410,974         34,296
         Capital lease and other                         139,031         75,916
                                                    -------------  -------------
              Total cost                               3,515,622        906,372
         Less:  accumulated depreciation and 
                amortization                            (695,813)      (254,472)
                                                    =============  =============
               Property and equipment, net            $2,819,809       $651,900
                                                    =============  =============



<PAGE>

                                 ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



4.       Long-Term Debt

         At December 31, long-term debt consisted of the following:

                                                            1996         1995
         Non-collateralized  loans  payable to 
         former  shareholders  of acquired
         companies, each due in equal installments
         (except as noted):
           6.55% note due March 12, 1997 to 1999         $3,000,000
           Prime rate note (8.5% at 12/31/96), 
             payable in monthly installments
             through July 1, 2002                           595,556
           6.00% notes due May 30, 1997 to 1999             250,553
           6.00% note due October 27, 1998                  333,334    $500,000
           6.75% notes due July 28, 1997                    200,000     397,327 
         Other                                              230,958      88,881
                                                         ----------- -----------
                                                          4,610,400     986,208
           Less:  current portion                        (1,597,616)   (409,679)
                                                         ----------- -----------
                                                         $3,012,784    $576,529
                                                         =========== ===========

         The aggregate  maturities in each of the five years ending December 31,
         1997 to 2001 and thereafter  are  $1,597,616,  $1,403,146,  $1,228,139,
         $146,334, $135,415 and $99,750, respectively.

         At December 31,1996, the Company had a $10 million credit facility (the
         "Credit  Agreement").  The  Credit  Agreement  is  unsecured,  contains
         customary financial  covenants (interest coverage,  tangible net worth,
         etc.) and expires on July 31, 1998. The Credit Agreement bears interest
         at an annual rate to be determined  from time to time based upon either
         LIBOR  plus  1.00% or the  bank's  Base Rate  minus  .50%.  The  Credit
         Agreement replaced the Company's revolving line of credit which totaled
         $4 million.  At December 31, 1996 and 1995,  no amount was  outstanding
         under either of these financing arrangements.

5.       Common Stock

         On September 25, 1996, the number of authorized  shares of common stock
         was increased from 10,000,000 to 30,000,000  following approval of such
         action by the Company's  stockholders at a special  meeting.  Following
         such action, a 2-for-1 stock split effected in the form of a 100% stock
         dividend  was  declared  for  holders  of record as of October 1, 1996,
         payable October 7, 1996. All share data and periods presented have been
         restated to retroactively reflect the 100% stock dividend.

         On September  16, 1996,  the Company  completed a private  placement of
         2,423,080  shares of its common stock at $ 6.50 per share. Net proceeds
         to the Company after related  costs and expenses were  approximately
         $15,100,000.


<PAGE>

                                 ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



5.       Common Stock, continued

         On November 27, 1995, the Company completed a follow-on public offering
         of  6,000,000  shares  of its  common  stock  at $ 4.50 per  share.  On
         November 29,  1995,  the  underwriters  exercised  their  overallotment
         option to purchase  900,000 shares of the Company's  common stock.  Net
         proceeds  to  the  Company,  after  underwriting  discounts  and  other
         offering costs and expenses were approximately $28,600,000.

         On March 1, 1995, the Company  completed an initial public  offering of
         2,400,000  shares of its common stock at $3.00 per share.  On March 15,
         1995,  the  underwriters   exercised  their  over-allotment  option  to
         purchase 360,000  additional  shares of the Company's common stock. Net
         proceeds to the Company after underwriting discounts and other offering
         costs were approximately  $7,000,000.  In connection with the offering,
         the Company reincorporated in the State of Delaware.

6.       Income Taxes

         The  provision  for income  taxes for the years  ended  December  31,  
         1996 and 1995 is  comprised  of the following:

                                           1996            1995
           Current:
              Federal                    $879,000         $421,100
              State                       215,592           82,100
                                   ---------------   --------------
                                        1,094,592          503,200
                                   ---------------   --------------
           Deferred:
              Federal                     442,500           (9,100)
              State                        85,000           (1,900)
                                   ---------------   --------------
                                          527,500          (11,000)
                                   ---------------   --------------
                                       $1,622,092         $492,200
                                   ===============   ==============
<PAGE>

                                 ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



6.       Income Taxes, continued

         The  following is a  reconciliation  of the  provision for income taxes
         computed  at the federal  statutory  rate to the  provision  for income
         taxes reported for the years ended December 31, 1996 and 1995:

                                                           1996         1995
           Computed income taxes at federal 
             statutory rate                             $1,485,600    $427,204
           State income taxes, net of federal benefit      190,000      59,811
           Non-deductible goodwill amortization            128,700      26,205
           Other non-deductible expenses                   184,692      24,888
           Non-taxable investment income                  (293,900)    (45,908)
           Other                                           (73,000)         --
                                                      ------------- -----------
                                                     
                                                        $1,622,092    $492,200
                                                      ============= ===========

         At  December  31,  1996  and  1995,  deferred  income  tax  assets  and
         liabilities consisted of the following components:

                                                          1996         1995
           Deferred income tax asset 
            (current):
              Accounts receivable                          $42,600     $31,000
              Inventory                                    401,500
              Business integration liabilities, current  1,117,300
              Other                                        ( 4,250)
                                                      ------------- -----------
                                                         1,557,150      31,000
                                                      ------------- -----------
           Deferred income tax liability
             (non-current):
              Property and equipment                      (126,375)    (20,000)
              Goodwill                                    (309,000)
              Gain on sale of product lines                (51,300)
              Business integration liabilities, 
                 non-current                                321,840
                                                      ------------- -----------
                                                          (164,835)    (20,000)
                                                      ------------- -----------
              Net deferred income tax asset             $1,392,315     $11,000
                                                      ============= ===========


<PAGE>
                                 ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



7.       Stock Options and Warrants

         In January 1995, the Company adopted the 1995 Stock Incentive Plan (the
         "1995  Plan") and the  Directors'  Option Plan (the  "Directors  Plan")
         which authorize the granting of options to officers,  key employees and
         directors to purchase  unissued  common stock of the Company subject to
         certain  conditions,  such as continued service.  The 1995 Plan and the
         Directors  Plan  authorized the granting of up to 1,200,000 and 100,000
         options to purchase  common  stock,  respectively.  The option price of
         options granted under either of these plans is equal to the fair market
         value on the date of grant.

         In February 1996, the Company adopted the 1996 Employee Stock Incentive
         Plan (the "1996 Plan") which  authorized  the granting of an additional
         1,200,000 options to purchase common stock of the Company. The adoption
         of the 1996 Plan was approved by stockholders in May 1996.

         The Company  amended the Directors Plan to increase the total number of
         shares of stock  available for grant to directors to 200,000  shares in
         May 1996.  This  amendment  was approved by  stockholders  in September
         1996.

         All  outstanding  options vest ratably over periods ranging from 3 to 5
         years.

         A summary of information related to these options for the years ended
         December 31, 1996 and 1995 follows:
<TABLE>
<CAPTION>

                                                                     1996                        1995
                                                                          Weighted                    Weighted
                                                                          Average                     Average
                                                                          Exercise                    Exercise
                                                                Shares     Price           Shares      Price
           <S>                                            <C>              <C>       <C>               <C>    
           Outstanding, beginning of year                       364,900     $3.71            --           --
           Granted                                            1,309,495      8.02          364,900      $3.71
           Exercised                                             (6,483)     3.00            --           --
                                                              ----------   -------       ----------    -------
           Outstanding, end of year                           1,667,912     $7.10          364,900      $3.71
                                                              ==========   =======       ==========    =======

           Available for grant, end of year                     925,605                    935,100
                                                              ==========                 ==========

           Price range at end of year                     $3.00 to $9.00             $3.00 to $4.50   
                                                          ==============             ==============

           Price range for exercised shares                        $3.00                         --
                                                              ==========                 ==========       

           Weighted-average fair value of options
           granted during the year                           $3,251,632                    $462,700
                                                             ==========                  ==========
</TABLE>


<PAGE>


                                 ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



     7.   Stock Options and Warrants, continued

         The following table  summarizes  information  about  fixed-price  stock
         options outstanding at December 31, 1996:
<TABLE>
<CAPTION>
                                                                   Weighted         Weighted
                                   Number         Number      Average Remaining      Average
                 Price          Outstanding    Excercisable    Contractual Life   Exercise Price
               <S>             <C>            <C>             <C>                <C> 
               $3.00 to $4.50      359,417         89,367         3.02 years           $3.72
               $5.75 to $6.89      321,000         20,000         2.11 years            6.16
               $7.88 to $9.00      987,495         40,333         3.93 years            8.64
                               ------------   ------------                       ------------
                                 1,667,912        149,700                              $7.10
                               ============   ============                       ============

</TABLE>
         SFAS No. 123  requires the Company to disclose pro forma net income and
         earnings  per share  determined  as if the  Company had  accounted  for
         stock-based  compensation  awards granted after December 31, 1994 under
         the fair value method described in that statement. For purposes of this
         disclosure, the fair value of options under SFAS No. 123 were estimated
         at each grant date using a Black-Scholes option pricing model, the most
         commonly used model, and the following assumptions:  risk-free interest
         rates from 5.66% to 7.2%, a dividend yield of zero, a volatility factor
         of the expected  market price of the Company's  common stock of 25.94%,
         and an expected option life of three to five years.

         The  Black-Scholes  option  valuation  model was  developed  for use in
         estimating  the fair  value of traded  options  which  have no  vesting
         restrictions and are fully  transferable.  The Company's employee stock
         options  have  characteristics  significantly  different  from those of
         traded options,  including  vesting  requirements  and  restrictions on
         transfer.  Because of these differences and the impact of the Company's
         limited history,  lack of comparable  public  companies,  the Company's
         rapid growth and the significant  appreciation in stock price since its
         initial public  offering,  management  believes that the  Black-Scholes
         model  may not  provide a  reliable  measure  of the fair  value of the
         Company's employee stock options.

         The  Company's  results as reported and its pro forma results using the
         valuation model discussed above are as follows:

                                                          1996          1995

         Net income, as reported                       $2,622,510      $764,283
                                                     ============= =============
         Net income (loss), pro forma                 ($  629,122)     $301,583
                                                     ============= =============
         Earnings per common share, as reported              $.20          $.14
                                                     ============= =============
         Earnings (loss) per common share, pro forma       ($.05)          $.05
                                                     ============= =============

         In connection  with the initial  public  offering,  the Company  issued
         warrants  to  purchase  up to  240,000  shares  of  common  stock at an
         exercise  price of $3.60 to the  representatives  of the  underwriters.
         These warrants are  Excercisable  for a five year period  commencing on
         February  22,  1996.  During  1996,  162,000  of  these  warrants  were
         exercised.
<PAGE>
                                ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



     7.  Stock Options and Warrants, continued

         In connection with an  acquisition,  warrants to purchase 36,364 shares
         of common  stock  were  issued  at an  exercise  price of $5.50.  These
         warrants become excercisable ratably over a three year period beginning
         October 2, 1995.

     8.  Acquisitions and Dispositions

         On September 3, 1996,  the Company  acquired  substantially  all of the
         assets  and  assumed  certain  liabilities  of  Western  Wire and Alarm
         Products, Inc. ("Western") of Denver Colorado, a specialist in the sale
         and  distribution of security  devices and wire. The purchase price was
         $300,000  payable  in cash and common  stock.  In  connection  with the
         acquisition,  the  Company  paid  in full  $50,000  of  Western's  bank
         indebtedness.

         On September 1, 1996, the Company  acquired Norfolk Wire & Electronics,
         Inc.  ("Norfolk"),  through the purchase of all issued and  outstanding
         shares of common stock.  Norfolk's operations consisted  principally of
         the sale and  distribution of voice and data wire,  cable and ancillary
         products.  In addition to its four  locations in the state of Virginia,
         Norfolk had  locations in Tinton  Falls,  New Jersey and  Gaithersburg,
         Maryland.  In addition,  Norfolk  assembled low voltage cable and fiber
         optic  connectors and copper and fiber optic cutting and splicing kits.
         The purchase price was $8 million  payable in cash and common stock. At
         the  closing,  the Company paid in full  approximately  $2.6 million of
         Norfolk bank indebtedness.

         On May 30, 1996, the Company acquired  substantially  all of the assets
         and assumed  certain  liabilities  of Southern  Alarm Supply Co.,  Inc.
         ("Southern")  of  Nashville,  Tennessee,  a specialist  in the sale and
         distribution  of security  devices  and wire.  The  purchase  price was
         $350,000 payable in cash and common stock.

         On March 12, 1996, the Company acquired substantially all of the assets
         and  assumed  certain  liabilities  of  Northern  Wire  &  Cable,  Inc.
         ("Northern"), a specialist in the sale and distribution of wire, cable,
         fiber optics and  connectivity  products for structured  wiring,  power
         cables,  cable  connector  assemblies  for  automation,  computers  and
         robotics and  value-added  services for the  Industrial  Management and
         Technology market. In addition to its distribution  business,  Northern
         assembled  certain  computer,  robotics and power cable connectors sold
         through  its  distribution  channels.  Northern  had  branches in Troy,
         Michigan;  Cleveland,  Ohio; Atlanta,  Georgia; Tampa, Florida; and Las
         Vegas,  Nevada.  The purchase price was $13.3 million  payable in cash,
         notes and common stock. In connection with the acquisition, the Company
         assumed  approximately $5.6 million of Northern bank indebtedness which
         was paid in full at closing.

         
<PAGE>
                                ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



     8.   Acquisitions and Dispositions, continued

         On February 22, 1996,  the Company  acquired  substantially  all of the
         assets and assumed certain liabilities of Medisco,  Inc. ("Medisco") of
         Indianapolis,  Indiana,  a distributor of wire and cable products.  The
         purchase price was $837,000 payable in cash.

         On October 2, 1995, the Company  acquired  Morgan Hill Supply Co., Inc.
         ("Morgan  Hill"),  through the purchase of all Morgan Hill's issued and
         outstanding  shares of  common  stock.  Morgan  Hill had  locations  in
         Kingston,  New York and Boston,  Massachusetts.  The purchase price was
         $1.5 million  payable in cash,  notes and common stock.  After closing,
         the Company repaid $200,000 of Morgan Hill bank indebtedness.

         On July 31, 1995, the Company  acquired  Pinnacle Wire and Cable,  Inc.
         ("Pinnacle")  by a merger of Pinnacle  into the  Company.  Pinnacle had
         locations in Columbus,  Ohio and  Cincinnati,  Ohio. The purchase price
         was $1.4  million  payable  in cash,  notes  and  common  stock.  After
         closing,  the Company  repaid  approximately  $226,000 of Pinnacle bank
         indebtedness.

         All  acquisitions  have  been  recorded  under the  purchase  method of
         accounting.  Accordingly,  the results of  operations  of the  acquired
         businesses  are  included  in the  Company's  consolidated  results  of
         operations  from  the  date  of  acquisition.  The  purchase  price  is
         allocated  to assets  acquired  and  liabilities  assumed  based on the
         estimated fair market value on the date of the acquisition.

         The following pro forma condensed  consolidated  financial  information
         assumes   that  all   material   acquisitions   and  the  common  stock
         transactions  discussed in Note 5, which were a  significant  source of
         the funds used in the  acquisitions,  occurred on January 1, 1995.  The
         results do not purport to be indicative of what would have occurred had
         the  acquisitions  been made on January 1, 1995 nor are they indicative
         of the results which may occur in the future.

                                                        1996           1995

         Net sales                                 $148,728,053   $125,986,265
                                                  ==============  =============
         Operating income                            $4,066,849     $3,403,011
                                                  ==============  =============
         Net income                                  $2,390,325     $1,968,833
                                                  ==============  =============
         Earnings per common share                         $.15           $.13
                                                  ==============  ============= 
         Pro forma weighted average common shares    15,475,231     15,475,231
                                                  ==============  =============

         On  December  31,  1996,  the  Company  sold its copper and fiber optic
         cutting  and  splicing  kit  product  line (the "Kit Line") and its low
         voltage cable and fiber optic  connector  product line (the  "Connector
         Line") in two separate  transactions.  The Kit Line was sold to a group
         that  included a former  shareholder  and former  employees  of Norfolk
         while the low voltage  Connector Line was sold to a group that included
         former Norfolk employees.

         The selling price for the Kit Line was approximately $1 million payable
         in notes and  Anicom  common  stock  originally  issued in the  Norfolk
         acquisition.  The $375,000  selling  price for the  Connector  Line was
         payable in notes which are  personally  guaranteed  by the president of
         the  acquiring  company.  The  Company  recognized  a  pre-tax  gain of
         $878,315, net of transaction expenses, on these two sales.
<PAGE>
                                ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



     8.   Acquisitions and Dispositions, continued

         In connection  with these sales,  the Company  entered into Service and
         Supply  Agreements  with  the  acquiring  companies.  These  agreements
         appoint the Company as the primary  distributor  to certain  identified
         customers for certain  product lines to be sold. The agreements run for
         two and five years,  respectively,  and are automatically  extended for
         similar  periods  unless  terminated in accordance  with the respective
         agreements.

9.       Commitments and Contingencies

         Employment Agreements

         The  Company  has  entered  into  employment  agreements  with  certain
         officers.  In the  event  of a  change  in  control,  as  defined,  the
         employment  agreements  provide for severance payments if employment is
         terminated.  The aggregate  base salary payable to these officers under
         the  employment  agreements  in 1996 was  $753,250.  In the  event of a
         change in control, the Company may become obligated to make payments to
         these officers of up to approximately $4,800,000.

         In  connection  with  certain  acquisitions,  the Company  entered into
         employment  agreements  with  certain  former  officers of the acquired
         companies.  The aggregate  base salary  payable to those  employees who
         became officers of the Company, two of which are now executive officers
         of the Company, is approximately $763,000.

         Operating Leases

         The  Company  leases  certain   warehouse  and  office  facilities  and
         equipment under operating  leases.  Rental expense under the leases was
         approximately  $1,418,500 and $364,000 for the years ended December 31,
         1996 and 1995, respectively.  Approximate minimum annual lease payments
         required on  noncancelable  leases  having  initial or remaining  lease
         terms in excess of one year as of December 31, 1996 are as follows:

                            Year          Amount
                        1997              $1,798,500
                        1998               1,353,204
                        1999                 956,483
                        2000                 524,033
                        2001                 232,485
                        Thereafter             2,004
                                       =============
                                          $4,866,709
                                       =============

         The  Company is also  obligated  to pay certain  taxes and  assessments
         relating to these leases. Certain leases contain renewal options.

<PAGE>
                                ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



9.       Commitments and Contingencies, continued

         Retirement Plan

         Effective  January 1, 1995, the Company adopted a defined  contribution
         retirement plan.  Employer  contributions under the plan are limited to
         7% of  compensation.  As a result of the  acquisition  of Norfolk,  the
         Company has an additional  defined  contribution  retirement plan which
         requires Company  contributions up to a maximum of 1% of the employees'
         compensation.   Total   Company   contributions   to  the  plans   were
         approximately $103,800 and $20,300 in 1996 and 1995, respectively.


10.      Supplemental Cash Flow Information


         The  following is a summary of the noncash  investing and financing for
         the years ended December 31, 1996 and 1995:

                                                        1996            1995
           Acquisitions:
              Fair value of assets acquired         $54,871,008      $5,283,644
              Business integration liabilities 
               established                           (5,218,674)             --
              Bank debt assumed                      (9,318,231)       (426,007)
              Other liabilities assumed             (17,455,609)     (1,726,317)
              Long-term debt issued                  (3,000,000)       (799,999)
              Common stock issued                    (5,537,464)       (897,327)
                                                  --------------  --------------
              Cash paid                              14,341,030       1,433,994
              Less:  cash acquired                     (140,485)             --
                                                  --------------  --------------
              Net cash paid for acquisitions        $14,200,545      $1,433,994
                                                  ==============  ==============
           Dispositions:
              Value of assets sold, net of 
               transaction costs                       $403,540              --
                                                  ==============  ==============
              Notes receivable accepted                $875,000              --
                                                  ==============  ==============
              Anicom common stock received             $506,854              --
                                                  ==============  ==============
           Assets acquired through capital lease             --         $76,416
                                                  ==============  ==============


11.      Other Related Party Transactions

         One of the Company's  directors is a Managing Director of an investment
         banking firm which served as one of the  underwriters  of the Company's
         follow-on offering in November 1995.
<PAGE>
                                ANICOM, INC.

              Notes to Consolidated Financial Statements, continued



12.      Subsequent Events (unaudited)

         On February 28, 1997,  the Company  acquired  substantially  all of the
         assets and assumed  certain  liabilities of Carolina Cable & Connector,
         Inc. ("Carolina Cable") of  Raleigh, North Carolina.  Carolina Cable is
         a  specialist  in the sale and  distribution  of wire and cable,  fiber
         optics and computer network and connectivity  products.  Carolina Cable
         has seven  locations in the Carolinas and Tennessee and total  revenues
         of  approximately  $25  million.  The purchase  price  consists of $3.5
         million in cash and common  stock.  In  addition,  the Company  assumed
         approximately $3.5 million of Carolina Cable bank debt and notes.

         On March 7, 1997,  the Company  sold its third  assembled  product line
         which consisted of computer,  robotics and power cable  connectors.  In
         connection with the sale, the Company  entered into a supply  agreement
         to act as the  sole  and  exclusive  distributor  of  certain  products
         assembled by the  acquiring  company.  The selling price was payable in
         cash and notes.

         In February  1997,  the  Financial  Accounting  Standards  Board issued
         Statement of Financial Accounting Standards No. 128, Earnings Per Share
         ("SFAS 128").  SFAS 128 specifies the  computation,  presentation,  and
         disclosure  requirements for earnings per share.  SFAS 128 is effective
         for financial  statements  issued for periods ending after December 15,
         1997,  including  interim periods.  The Company will adopt SFAS 128 for
         the year ended December 31, 1997. Management has not yet determined the
         impact of implementing this standard.
<PAGE>


                                INDEX TO EXHIBITS


Exhibit No.  

2.1**           Agreement  and Plan of Merger, dated as of July 18, 1995, among
                Anicom, Pinnacle Wire & Cable,  Inc.,  Raymond J. Costello and
                Robert A. Holous.
2.2***          Stock  Purchase  Agreement,  dated  September  19,  1995,  among
                Anicom, Morgan Hill, Inc. and Kenneth Jay Burgess.
2.3****         Asset  Purchase  Agreement,  dated as of March  4,  1996,  among
                Anicom,  Inc.,  Northern  Wire &  Cable,  Inc.,  and  Copperhead
                Acquisition Corp.
2.4*****        Agreement and Plan of Reorganization, by and among Anicom, Inc.,
                Anicom-Southeast,  Inc.,  Norfolk Wire & Electronics,  Inc., and
                Ronald A.  Hurley,  Robert H.  Jennings,  Stephen M.  Mobley and
                Vonda M. Hall, dated as of August 30, 1996.
3.1*            Restated Certificate of Incorporation of Anicom.
3.2*            Restated Bylaws of Anicom.
3.3******       Certificate  of Amendment of  Certificate  of  Incorporation  of
                Anicom.
4.1*            Specimen Stock Certificate representing Common Stock.
10.1*           Credit Agreement,  dated June 30, 1993,  between  Registrant and
                Harris Trust and Savings Bank, as amended.
10.2*           Commercial Lease Agreement, dated April 30, 1993, between Anicom
                and Harris Trust and Savings Bank.
10.3*******     Form of 1995 Stock Incentive Plan as Amended and Restated.
10.4*******     Credit Agreement,  dated as of February 6, 1996,  between Anicom
                and Harris Trust and Savings Bank.
10.6*           Shareholders Agreement
10.8*           Form of Tax Indemnification Agreement
10.9*           Form of Employment Agreement between Anicom and Scott C. Anixter
10.10*          Form of Employment Agreement between Anicom and Carl E. Putnam.
10.11*          Form of  Employment  Agreement  between  Anicom  and  Robert  L.
                Swanson
10.12******     Form of Amended and Restated 1995 Directors Stock Option Plan.
10.13****       Form  of  Employment   Agreement   between   Anicom  and  Robert
                Brzustewicz.
10.14****       Form of Employment Agreement between Anicom and Glen Nast.
10.15****       Non-Negotiable Note issued to Northern Wire & Cable, Inc.
10.16****       Guaranty by Anicom to Northern Wire & Cable, Inc.
10.17           Form of Employment Agreement between  Anicom and Donald Welchko
10.18           1996 Stock Incentive Plan
21              List of Subsidiaries.
23.1            Consent of Independent Accountants
27              Financial Data Schedule
------------------

*               Previously   filed  as  an  Exhibit  to  Anicom's   Registration
                Statement  on  Form  SB-2,   registration   no.   33-87736C  and
                incorporated  herein by refrence thereto.  
**              Previously  filed as an Exhibit to  Anicom's  current  report on
                Form 8-K,  dated  August  10,  1995 and  incorporated  herein by
                refrence.
***             Previously  filed as an Exhibit to  Anicom's  current  report on
                Form 8-K,  dated  October  16, 1995 and  incorporated  herein by
                refrence.
****            Previously  filed as an Exhibit to  Anicom's  current  report on
                Form  8-K,  dated  March  12,  1996 and  incorporated  herein by
                reference.
*****           Previously  filed as an Exhibit to  Anicom's  current  report on
                Form 8-K,  dated  August  30,  1996 and  incorporated  herein by
                reference.
******          Previously  filed as an Exhibit to  Anicom's  current  report on
                Form  10-QSB,  for the  quarter  ended  September  30,  1996 and
                incorporated herein by reference.
*******         Previously  filed as an Exhibit to  Anicom's  Annual report on
                Form  10-KSB,  for the year  ended  December 31,  1996 and
                incorporated herein by reference.