<PAGE>   1



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 20-F
|_|           REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       or

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

                   For the fiscal year ended December 31, 1997

                                       or

|_|            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                        For the transition period from ____ to ____

                         Commission File number 0-20738
                            ------------------------

                                   OLICOM A/S
             (Exact name of registrant as specified in its charter)

            N/A                                  THE KINGDOM OF DENMARK
(Translation of Registrant's                (Jurisdiction of incorporation or
     name into English)                               organization)

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

                                  NYBROVEJ 114
                                 DK-2800 LYNGBY
                                     DENMARK
                    (Address of principal executive offices)
                            ------------------------

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

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


                                                 NAME OF EACH EXCHANGE ON
       TITLE OF EACH CLASS                          WHICH REGISTERED
Common Shares, nominal value DKK 0.25 each        Nasdaq National Market 
    Common Stock Purchase Warrants                Nasdaq National Market 

Securities for which there is a reporting obligation pursuant to Section 15(d) 
of the Act:

                   Common Shares, nominal value DKK 0.25 each
                   Common Stock Purchase Warrants
                   
                            ------------------------

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:
                   Common Shares, nominal value DKK 0.25 each: 17,554,931
                   Common Stock Purchase Warrants: 1,022,105

Indicate by check mark whether the Registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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 |_|

Indicate by check mark which financial statement item the Registrant has elected
to follow:

                             Item 17 |_|     Item 18 |X|

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                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.


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ITEM 1.  DESCRIPTION OF BUSINESS.

         Certain statements included in this Report include trend analysis and
are forward-looking statements (within the meaning of Section 27A of the United
States Securities Act of 1933, as amended (the "Securities Act") and Section 21E
of the United States Securities Exchange Act of 1934, as amended (the "Exchange
Act")), including, without limitation, statements containing the words
"believes", "anticipates", "expects" and words of similar import. Such
forward-looking statements relate to future events, the future financial
performance of the Company, and involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Company or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Prospective investors should specifically consider
the various factors identified in this Report that could cause actual results to
differ, including, without limitation, those discussed in the following section,
as well as in the section titled "Management's Discussion and Analysis of
Financial Condition and Results of Operations". The Company disclaims any
obligation to update any such factors or to publicly announce the results of any
revisions to any of the forward-looking statements contained herein to reflect
future events or developments.

         Olicom A/S ("Olicom" or the "Company") develops, markets and supports
network software and hardware products that enable personal and work-group
computer users to communicate, exchange data and share computing resources in
local area networks ("LANs"), in wide area networks ("WANs") and over the
Internet.

         Olicom's target customers include Global 1000 corporations with
mission-critical enterprise networks that require additional bandwidth to
support increasingly demanding applications. The Company believes that its suite
of Token-Ring, ATM and Ethernet solutions offer superior performance, are price
competitive and are fully compatible with applicable industry standards (such as
Institute of Electrical and Electronics Engineers ("IEEE") standards) and
networking products manufactured by other major vendors.

         Olicom's products are marketed worldwide, primarily through
distributors, value-added resellers (including dealers, systems integrators and
other resellers) ("VARs") and original equipment manufacturer customers
("OEMs"). In addition, Lasat Communications A/S ("Lasat"), a majority-owned
subsidiary, develops, markets and supports desktop and mobile modem products
through distributors and Internet service providers.

COMPANY HISTORY

         Lars Stig Nielsen (Olicom's President and Chief Executive Officer)
organized Olicom in the Kingdom of Denmark in 1985. Since 1987, Olicom has been
involved in the design, development and production of high-quality networking
products.

         In 1988, Olicom began marketing an increasingly broader range of
network interface cards ("NICs" or "adapters"), internetworking products, hubs
and cabling components, repeaters, converters, filters and associated software
drivers. In late 1991, Olicom introduced a line of Token-Ring bridging products.
In 1992, an acquisition enabled Olicom to broaden its product line to Ethernet
networks, and in 1995, Olicom began shipping 155 Mbps ATM NICs.

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         In order to provide global support for an increasingly broad product
line, the Company established Olicom, Inc. ("Olicom Americas") in 1990, with its
headquarters in metropolitan Dallas, to coordinate marketing in North and South
America.

         In June 1997, with the acquisition of CrossComm Corporation
("CrossComm"), Olicom acquired a chassis-based integrated networking platform
for its Token-Ring, Ethernet, ATM and routing products, as well as network
management and support solutions.

         In September 1997, Olicom introduced advanced Token-Ring and ATM
switching solutions, including the CrossFire(R) 8600 Token Ring Switch. This
switch allowed Olicom to earn the number one market share position worldwide for
Token-Ring switching in the fourth quarter of 1997, according to Dell'Oro Group,
an industry research group.

PRODUCTS

         The Company's strategic focus is to address the networking needs of
large corporations and organizations, as they transition mission-critical
business applications from legacy hierarchical computing environments to
client/server environments. Olicom offers enterprises using Token-Ring LANs a
comprehensive migration strategy known as ClearStep(TM), to increase LAN
capacity in a controlled, cost-effective manner, while preparing the way for
technologies such as ATM, Fast Ethernet and High-Speed Token-Ring. In addition
to offering superior performance and features, the Company's products are fully
compatible with applicable industry standards, adhere to all relevant IEEE
standards, and provide connectivity among all major PC architectures and network
operating systems.

         The Company selectively broadens its product line as the market for
specific networking and internetworking products develops, working closely with
key end-users to define emerging market requirements and features that should be
addressed.

         Desktop Network Interface Cards. Network Interface Cards ("NICs" or
"adapters") provide connectivity between a PC and the network. Olicom NICs
provide support for industry standard speeds and features, as well as support
for leading network operating systems developed by major vendors. In addition,
the Company continues to develop specially tuned high-performance versions of
its NIC software drivers and Application Specific Integrated Circuit technology
("ASIC"), providing highly competitive performance and features.

         Notebook Connectivity Products. Olicom's GoCard(TM) range of PC Card
(formerly called "PCMCIA") adapters provides network connection for the rapidly
growing portable computing market. Olicom offers GoCard adapters for Token-Ring
and Ethernet networks, as well as combination Token-Ring-modem and
Ethernet-modem PC Cards.

         Network System Products. Olicom's network systems products include
switch products, bridge and router products and network management products.
Together, these products provide the high-speed solutions for implementing the
Company's ClearStep migration strategy.

         The CrossFire(TM) family of switches provides cost-effective solutions
for connecting network links and file servers. The Company's Token-Ring and Fast
Ethernet switches also provide uplinks to high-speed technologies such as ATM,
and eventually, High-Speed Token-Ring. In addition, the CrossFire 


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8000 Chassis solution houses up to 16 modules for flexible networking solutions.
The greater bandwidth and features provided by Olicom switches deliver higher
overall LAN performance, enabling enterprises to extend the usefulness of their
mission-critical Token-Ring investments.

         The Company also markets local and remote bridges, as well as
chassis-based and stand-alone multi-protocol routers for internetwork
communication. In addition, Olicom's hubs and cabling products provide a broad
range of connectivity options, including Controlled Access Units ("CAUs"),
Controlled Attachment Modules ("CAMs") and Multistation Access Units ("MAUs").

         In addition, with the purchase of CrossComm in 1997, Olicom acquired an
advanced network management system. This system, now called the ClearSight(TM)
Network Management System, has been further developed, providing end-to-end
management and diagnostic support for Olicom enterprise products. In addition,
many Olicom products are shipped with Simple Network Management Protocol (SNMP)
software utilities, allowing integration into industry-standard management
systems such as HP OpenView for Windows.

         Network Services. Olicom network services include training,
installation services and on-call, on-site maintenance. In addition, Olicom also
offers ExpertWatch(TM), an extensive 24-hour remote monitoring, diagnostic and
maintenance service.

         Internet Connectivity Products. These products, developed and
manufactured by Lasat, comprise a range of external and internal modems and ISDN
products.

STRATEGIC RELATIONSHIPS

         The Company's strategy of working with third parties to develop new
product capabilities has resulted in either joint-development agreements,
joint-marketing agreements, technology alliances or other types of relationships
with several companies such as Cisco Systems, Inc. ("Cisco"), Texas Instruments
and International Business Machines Corporation ("IBM").

         During 1996, Olicom and Cisco signed a long-term agreement to jointly
develop Token-Ring products and technology. Under this agreement, the two
companies have developed and launched several Token-Ring switches. These
products are offered separately and under each company's respective brand names.
Under the agreement, Cisco is purchasing core Token-Ring technology from Olicom,
including Olicom's Power-MACH(TM) software, for use in present and future Cisco
internetworking products. With this Token-Ring switch, Olicom intends to focus
on delivering industry leading price/performance. In connection with the license
of the Cisco technology, Olicom has agreed not to enter into direct
relationships with certain vendors for the licensing, distribution or
development of products based on, or using, Cisco technology or its derivatives.

PRODUCT SALES AND MARKETING

         Olicom markets and sells its products through carefully targeted
indirect distribution channels that include distributors, resellers (including
dealers, systems integrators, VARs and other resellers) and OEMs. The Company's
sales strategy is to create a demand for its products using a "push-pull"
strategy. The "push" factor is comprised of incentives for distributors and
resellers to sell Olicom products. The 


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"pull" factor describes the Company's efforts to generate demand from end users
through extensive marketing efforts and the creation of product awareness.

         The Company's resellers generally represent other lines of products
that are complementary to, or compete with, those of the Company. While the
Company encourages its resellers to focus on Olicom products through marketing
and support programs, there can be no assurance that these resellers will not
give higher priority to products of other suppliers, thereby reducing the
efforts devoted to selling the Company's products. As distributors, resellers
and OEMs have no long-term obligations to purchase products from the Company,
there is a risk of unanticipated declines in sales to the Company's material
customers for competitive reasons or because of the internalization of the
manufacture of products purchased from the Company on an OEM basis.

         The Company's marketing programs include generating sales leads for its
resellers, as well as supporting the efforts of its distributors, resellers and
OEMs. To this end, the Company provides sales tools, including demand creation
through telemarketing, an extensive training and support certification program,
and the creation of brand name recognition for Olicom and its products. Brand
name recognition is enhanced through frequent participation in industry trade
shows, seminars and meetings, advertisement in major trade and other
publications, ongoing communication with end users of Olicom products, and
participation in public benchmark testing. The Company undertakes mailings of
sales literature, technical articles and product evaluations, and provides sales
manuals and demonstration kits to end-users. In addition, the Company assists
its distributors, resellers and OEMs with on-site support by way of sales
presentations and product demonstrations.

         The Company's distributors, resellers and OEMs generally have
non-exclusive agreements with the Company, and purchase the Company's products
at discounts that are typical in the industry. As is common in the LAN industry,
distributor inventory is protected with respect to price as to inventories that
a distributor may have on hand at the time of a change in the published list
price, and with respect to the rotation of slow-moving inventory in exchange for
other products of equal value.

         The Company has also developed a marketing presence on the Internet and
promotes its products and services through its own World Wide Web server. This
medium allows publicly available Olicom literature to be accessible to anyone
who has an Internet connection.

         The Company markets its products worldwide, with established
distribution channels in North and South America, Europe and the Asia-Pacific
region. The Company has sales representatives in the major metropolitan areas of
North America and on the major continents, including the key Western European
markets. The Company intends to further increase its presence in various local
markets.

         During 1997, approximately 47% of the Company's total sales were
concentrated in North and South America (the "Americas"), while sales outside
the Americas accounted for approximately 53% of total sales. See note 11 to the
Consolidated Financial Statements for information relating to net sales during
1995 1996 and 1997 by geographical market, as well as information regarding net
sales during 1995, 1996 and 1997 to major customers.

         The Company's international sales headquarters is located in greater
Copenhagen, Denmark. The marketing of products in North and South America is
coordinated through Olicom, Inc., which is headquartered in Richardson, Texas.
The Company also maintains regional sales offices in Austria, 


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Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Poland,
Spain, Singapore, South Africa, Sweden and the United Kingdom.

         As the Company conducts its business world-wide, the Company's sales
may be affected by changes in demand resulting from fluctuations in currency
exchange rates, as well as by governmental controls and other risks associated
with international sales (such as export licenses, political instability, trade
restrictions and changes in tariff and freight rates). The Company generates
sales primarily in U.S. dollars and incurs expenses in a number of currencies,
principally in U.S. dollars and Danish kroner. Although the Company seeks to
manage its foreign currency exposures by matching non-dollar revenues and
expenses and by entering into hedging transactions, there can be no assurance
that exchange rate fluctuations will not have a material adverse effect on the
Company's business, financial condition or results of operations.

         The Company operates with a relatively short-term backlog, and
substantially all of its net sales in each quarter result from orders booked
within a generally short cycle between order and shipment (typically less than
45 days). Consequently, if near-term demand for the Company's products weakens
or if significant anticipated sales in any quarter are not realized as expected,
the Company's net sales for that quarter could be adversely affected. The
Company does not believe that its backlog as of a particular date is indicative
of future sales levels.

         The Company's net sales may fluctuate as a result of other factors,
including increased price and other competition, the timing of significant
orders, announcements of new products by the Company or its competitors,
variations in net revenues by product and distribution channel, decisions by
distributors and OEMs as to the quantity of the Company's products to be
maintained in inventories, delays in shipment of existing or new products, and
capital spending patterns of end-users.

PRODUCT SUPPORT

         The Company's distribution partners, who, in turn, have access to the
Company's sales support engineers, field engineers and training specialists for
end-user support, support the Company's products. The Company's resellers and
large accounts receive sales and technical training from the Company at its
training centers in greater Copenhagen, Denmark and Richardson, Texas, as well
as at resellers' offices. The Company conducts product courses for partners and
large end-users of its products, in which features of such products and their
installation, aspects of networking principles and solutions are addressed. The
Company provides on-line information access through the World Wide Web;
electronic bulletin boards, CompuServe and the Internet, as well as additional
technical support, available by telephone and telefax during extended business
hours. Olicom also offers a number of maintenance and support contracts that
include on-site service and 24-hour telephone dial-in support.

         Depending on the distribution channel, the Company's products generally
are warranted free of defects in materials and workmanship for one to three
years. Before and after the expiration of the product warranty period, the
Company offers factory-based support, parts replacement and repair services. To
date, the Company has not encountered any significant product maintenance
problems. During 1995, the Company introduced a limited lifetime warranty to
registered users of NIC products.


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RESEARCH AND DEVELOPMENT

         Olicom is very focused on research and development and believes that
its future success depends in substantial part on the timely enhancement of
existing products, together with the development of new products that continue
to offer technological excellence. Included among the core technologies the
Company develops are advanced ASICs for Token-Ring switch and NIC products, as
well as ATM LAN emulation and signaling software. The Company is currently
developing new products and enhancements to existing products, with the goal of
further improving performance, increasing price competitiveness, assuring
continued interoperability and increasing market share.

         During 1997, the Company completed the development of a number of new
products, including a stackable Token-Ring switch and an ATM switch, as well as
switching devices to interconnect Token-Ring and ATM. The Company also developed
a 155 Mbps ATM PCI adapter with full Available Bit Rate ("ABR") support. In
1998, the Company anticipates continuing the development of products for
Token-Ring, High-Speed Token-Ring, Ethernet, Fast Ethernet and ATM networks.
This will include the development of Token-Ring and Fast Ethernet PCI adapters
with advanced power management support.

         During 1995, 1996 and 1997, the Company incurred expenses of
$9,193,000, $12,852,000 and $17,748,000, respectively, with respect to research
and development activities. In 1995, 1996 and 1997, the Company's research and
development expenditures were 7.2%, 7.6% and 7.4% of net sales, respectively.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

         Although the Company believes that it has certain technological and
other advantages over its competitors, maintaining such advantages will require
continued investment by the Company in product development and marketing. There
can be no assurance that the Company will be able to make the technological
advances necessary to maintain such competitive advantages. Further, there can
be no assurance that the Company's products will not be rendered obsolete by new
industry standards or changing technology.

         The Company's testing laboratories in Copenhagen, Denmark, Richardson,
Texas and Gdansk, Poland perform product benchmark testing, compatibility
certification and conduct ongoing tests for interoperability with other vendors'
products. The Company is a beta partner of IBM, Novell, Inc., and Microsoft
Corporation, which provides the Company with timely access to new versions of
these vendors' LAN operating system software while facilitating Olicom's
development of interoperable software drivers. The Company also participates in
interoperability testing sessions at several venues, including UNH (University
of New Hampshire) for ATM and Token-Ring testing, as well as PCI SIG (Special
Interest Group) interoperability testing.

         Schedules for the development of high technology products are
inherently difficult to predict, and there can be no assurance that the Company
will achieve its scheduled initial customer shipment dates. In addition, as the
Company's strategy is driven in significant part by customer demand, its product
development schedules are inherently subject to revision as a result of
indications of change in the requirements of its customers. The Company's
business, financial condition or results of operations could be adversely
affected if the Company were to incur significant delays or be unsuccessful in
developing 


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these or other new products or enhancements, or if any such products or
enhancements did not gain market acceptance.

MANUFACTURING AND DISTRIBUTION

         Olicom outsources all of its manufacturing needs. Its products are
manufactured in fully automated, high-quality production lines utilizing Surface
Mounting Technology techniques, and are manufactured to meet Olicom
specifications on a turnkey basis. Olicom utilizes multiple manufacturers for
high volume products in order to decrease dependence on any single manufacturer.
Olicom requires that all its manufacturers be ISO 9002 certified.

         The Company's manufacturing strategy is to combine Far East-based
low-cost manufacturing with U.S.-compliant manufacturing for sales to
governmental agencies in the United States. The Company's manufacturing strategy
and goal is to achieve short time-to-market cycles of 7-12 weeks from completion
of product design to start of volume production. The Company manages quality
assurance of its products through extensive quality control procedures (which
the Company believes have been instrumental in achieving the superior
performance and reliability of its products).

         The Company's distribution strategy is to maintain finished goods
inventories at the Company's distribution centers at a minimum level of
typically 1-2 months of equivalent sales volume. Distribution effectiveness is
optimized through direct customer delivery and factory shipments to the
Company's distribution centers in Copenhagen, Denmark and Richardson, Texas.

         The Company's manufacturers procure components and sub-assemblies for
the Company's products directly from third party vendors, except for certain
critical components, including chipsets and ASICs. The Company has entered into
a number of Volume Purchase Agreements ("VPAs") with major material vendors in
order to secure material availability and the most favorable worldwide terms and
conditions for material procurement.

         The Company has not experienced any significant problems in obtaining
required supplies of sole or limited source components. However, the inability
to develop alternative sources of supply, if required, or a reduction or
interruption in supply or a significant increase in the price of one or more
critical components, could materially and adversely affect the Company's
business, financial condition or results of operations and could negatively
impact customer relationships.

         The Company has granted certain customers a non-exclusive license to
use, manufacture and sell products currently being manufactured and sold by the
Company on an OEM basis. Such licenses generally become effective in the event
that the Company discontinues manufacturing the products being purchased by such
customer, or is unable to provide specified quantities of products or levels of
quality, and/or upon the bankruptcy or insolvency of the Company. The grants of
manufacturing rights are not subject to payment of royalties.

COMPETITION

         Olicom's competition in the market for network interconnection products
is primarily derived from other vendors and manufacturers of LAN products (such
as IBM, Bay Networks, Inc., Cisco, Cabletron Systems, Inc., Madge Networks N.V.
and 3Com Corporation).

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         The LAN industry is intensely competitive and is characterized by rapid
technological advances and evolving industry standards. The industry can be
significantly affected by new product introductions, increased product
capabilities, and improvements in the relative price and performance of
networking products, as well as by the market activities of industry
participants.

         The Company believes that, in order to successfully differentiate
Olicom from its competitors, Olicom products and systems must excel in product
quality and functionality, compatibility, interoperability, performance,
reliability, product support, customer satisfaction and price.

         IBM is both the dominant supplier of Token-Ring network products and an
established vendor of computer and networking systems and products to a
substantial number of existing and potential end-users of the Company's
products. As a result, the Company believes that, in order to compete
successfully in the market for Token-Ring network products, the Company's
products and systems must have more features, greater functionality and
performance, and/or lower prices than those offered by IBM. In addition, from
time to time IBM establishes strategic working relationships with independent
networking vendors relating to IBM's long-term product development programs. If
IBM were to select, on a preferential basis, one or more of the Company's
competitors for such relationships, the Company's business, financial condition
or results of operations could be materially and adversely affected.

         The principal competitive factors in the markets served by the Company
include product quality and functionality, compatibility, interoperability,
performance, reliability, product support, customer satisfaction, price and
vendor reputation. While the Company believes that it has competed effectively
to date, competition in the industry is likely to intensify as current
competitors expand their product lines and new companies enter the market.

         An increase in competition could have a material adverse effect on the
Company's business, financial condition or results of operations because of
price reductions and/or loss of market share. There can be no assurance that the
Company will be able to compete successfully in the future with these existing
or potential competitors. The Company believes that price competition has been
increasing and will continue to increase. Such price competition is the result,
in part, of price decreases announced by IBM and other competitors on
competitive products, as well as the success of the Company and its competitors
in successfully engineering cost reductions into their products and the entrance
of new competitors into the market. The Company's ability to compete
successfully with current and potential competitors will depend to a significant
extent on its ability to continue developing technologically superior products
and to adapt to changes in the marketplace. There can be no assurance that price
competition will not have a material adverse effect on the Company's business,
financial condition or results of operations.

LASAT COMMUNICATIONS A/S

         Lasat became a majority-owned subsidiary of Olicom during the first
quarter of 1996. Lasat's principal products include desktop modems and PC-Card
modems for mobile computers. Lasat also produces modems for ISDN-based
communication.

         Lasat markets and sells its products through carefully targeted
indirect distribution channels that include distributors, OEMs and co-branding
agreements with Internet service providers. Lasat is currently 


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developing new products and enhancements to existing products, with the goal of
further improving performance, increasing price competitiveness, assuring
continued interoperability, and increasing market share.

         Lasat outsources its entire production volume, which are manufactured
to meet Lasat specifications on a turnkey basis in fully automated, high-quality
production lines utilizing Surface Mounting Technology techniques.

         The modem industry is intensely competitive and is characterised by
rapid technological advances and evolving industry standards. The industry can
be significantly affected by new product introductions, increased product
capabilities, and improvements in the relative price and performance of modem
products, as well as by the market activities of industry participants. Lasat's
competition is primarily derived from other vendors and manufacturers of modem
products (including the U.S. Robotics Division of 3Com Corporation, among
others).

PATENTS

         The Company does not hold any patents and relies upon a combination of
copyright and trade secret laws to establish and maintain proprietary rights to
its products. There can be no assurance that such measures are or will be
adequate to protect the Company's proprietary technology. However, Olicom
believes that these measures should be sufficient to protect the Company's
technology. Although the Company believes that its products and technology do
not infringe the proprietary rights of others, and the Company does not have any
knowledge that its products infringe the proprietary rights of any third
parties, there can be no assurance that third parties will not assert
infringement claims in the future or that such claims will not be successful.

         In addition, the Company generally enters into confidentiality
agreements with its customers, suppliers and industry partners, and limits
access to sensitive information. Despite these precautions, it may be
technologically possible for competitors of the Company to "reverse engineer" or
otherwise obtain information regarding aspects of the Company's products that
the Company regards as proprietary. The laws of some foreign countries in which
the Company sells or may sell its products do not protect the Company's
proprietary rights in its products to the same extent, as do the laws of the
Kingdom of Denmark and/or the United States.

         The Company believes that, due to the rapid pace of innovation within
the LAN industry, factors such as the technological and creative skills of its
personnel and ongoing product support are as important in establishing and
maintaining a leadership position within the industry as are the various legal
protections of its technology.

         Many of the Company's products are designed to include software or
other intellectual property licensed from third parties, and the loss of such
software or other rights might require significant changes in, or otherwise
disrupt or delay the distribution of, such products. While it may be necessary
in the future to seek or renew licenses relating to various aspects of its
products, the Company believes that, based upon past experience and standard
industry practice, such licenses generally could be obtained on commercially
reasonable terms. From time to time the Company receives communications from
third parties asserting that its use of trademarks, or that its products,
infringe or may infringe the rights of third parties. There can be no assurance
that any such claims will not result in protracted and 


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costly litigation; however, based upon general practice in the industry, the
Company believes that such matters can ordinarily be resolved without any
material adverse impact on its business, financial condition or results of
operations. Nevertheless, there can be no assurance that the necessary licenses
would be available on acceptable terms, if at all, or that the Company would
prevail in any such challenge. The inability to obtain certain licenses or other
rights or to obtain such licenses or rights on favorable terms, or litigation
arising out of such other parties' assertion, could have a material adverse
effect on the business, financial condition or results of operation of the
Company.

TRADEMARK AGREEMENT

         The trademark "Olicom" (the "Trademark") is a registered trademark of
Ing. C. Olivetti & C., S.p.A., which has granted the Company a worldwide,
royalty-free license to use the Trademark pursuant to a Trademark Agreement
effective September 2, 1992. During such period as the Company is the licensee
of the Trademark and for a period of one year after any termination of the
license thereof, Olivetti has agreed not to use itself or grant to a third party
any rights to use the Trademark on products of the type manufactured or marketed
by the Company. The initial term of the license was three years, and the license
automatically renews on a yearly basis, unless either party gives the other 12
months' notice of termination.

         The Company has recently received notification from Olivetti that it
intends to terminate the Trademark Agreement effective September 2, 1999.
Subsequently, the Company received correspondence from Olivetti in which it has
indicated its receptivity to negotiating an extension of the Trademark Agreement
on mutually-agreeable terms. While the Company intends to negotiate with
Olivetti relative to an extension of the Trademark Agreement, there can be no
assurance that the Company will be able successfully to negotiate an extension,
or that the Company's rights to use the Trademark will not terminate on
September 2, 1999. In the event that the license of the Trademark is terminated,
the Company would be required to change its name and cease using the Trademark
on its products. A change in the Company's name and the creation of a new
trademark could involve significant expense and the possibility of customer
confusion, which in turn could have a material adverse effect on the Company's
business, financial condition or results of operations.

         Olicom has trademarks on several selected products, such as
PowerMACH(TM), CrossFire(R), RapidFire(TM), GoCard(TM), and on the main products
included in the ClearStep(TM) strategy.

EMPLOYEES

         As of April 1, 1998, the Company employed or retained (as employees or
independent contractors) approximately 885 persons, including 290 in sales and
marketing, 250 in product research and development, 210 in operations/production
(including quality assurance), and 135 in administration and finance. Of these
employees and independent contractors, approximately 285 were located in the
United States, 80 were located in the Company's offices in Europe, South Africa,
Singapore, Australia and Japan, and the remainder were located in Denmark. Lasat
employed approximately 60 persons of the 885.

         Competition in the recruiting of highly qualified personnel in the
computer and communications industry is intense. The Company believes that its
future success will depend, in part, on its continued ability to hire, motivate
and retain qualified management, marketing and technical personnel. To date, the
Company has not experienced significant difficulty in attracting and retaining
qualified employees. The 


                                       12
<PAGE>   13

Company has entered into a local labor agreement covering its warehouse
employees in Denmark, a group comprised of approximately 20 persons. No other
employees are represented by a labor union. The Company has not experienced any
work stoppages and considers its relations with its employees to be good.


ITEM 2.  DESCRIPTION OF PROPERTY.

         The Company's principal administrative, marketing, product development,
support facilities, and training center, as well as a warehouse and distribution
facility, are located in a modernized three-story building and newly-constructed
adjacent buildings in Lyngby in the greater Copenhagen area where the Company
presently leases a total of approximately 125,000 square feet of floor space as
its international headquarters.

         The Company leases its international headquarters from a third-party
lessor pursuant to a lease that may be terminated by either party commencing in
2008, upon six months' notice, and which provides for increases in annual
rentals based on the increase in the Danish net price index, with an agreed
annual minimum increase of 2.5%. An immediately adjacent building that forms
part of the Company's headquarters complex is leased from a third party lessor
pursuant to a lease that may be terminated by either party commencing in 2006,
upon 12 months' notice, and which provides for an increase in annual rental
payments based on the increase in the Danish net price index, with an agreed
annual minimum increase of 2.5%. During 1996, the Company leased additional
space adjacent to its international headquarters from a third party lessor
pursuant to a lease that may be terminated by either party commencing in 2006,
upon 12 months' notice, and which provides for an increase in annual rental
payments based on the increase in the Danish net price index, with an agreed
annual minimum increase of 2.5%. The Company believes that its existing
facilities are adequate for its current needs. The Company believes that
suitable space is available in the Copenhagen area and that the three facilities
should provide sufficient additional space for foreseeable future expansion in
Copenhagen.

         The Company currently leases from third-party lessors an aggregate of
approximately 40,400 square feet of office space, together with warehouse space,
in metropolitan Dallas, Texas, to support North and South American sales and
marketing. Furthermore, the Company leases office space in numerous cities in
Europe to support sales and marketing. The Company also leases space for sales
offices in Singapore; Tokyo, Japan; Sydney, Australia; and Sandton, South
Africa. The Company believes that suitable additional space will be available in
such locations as required.


ITEM 3.  LEGAL PROCEEDINGS.

         From time to time, the Company is involved in litigation relating to
claims arising out of its operations in the normal course of business. As of the
date of this Report, the Company was not a party to any legal proceedings, the
adverse outcome of which, in management's opinion, would have a material adverse
effect on the Company's business, results of operations or financial position.
See also "Description of Business -- Proprietary Rights."

         On or about September 13, 1996, Datapoint Corporation ("Datapoint")
commenced litigation in the United States District Court for the Eastern
District of New York against CrossComm Corporation (now 


                                       13
<PAGE>   14

known as Olicom, Inc.), Cisco Systems, Inc., Plaintree Systems Corporation,
Accton Technology Corporation, Cabletron Systems, Inc., Bay Networks, Inc. and
Asante Technologies, Inc., individually, and as representatives of a putative
class of all manufacturers, vendors and users of Fast Ethernet dual protocol
local-area network products. In its complaint, Datapoint alleges that the
defendants have been, and still are, directly infringing U.S. Patent No.
5,077,732 by making, using, selling and/or offering for sale products embodying
inventions claimed in that patent, and that the defendants are also infringing
U.S. Patent No. 5,008,879 by using or selling products encompassed within that
patent's claims. On or about December 30, 1996, CrossComm filed its Answer and
Counterclaims to Datapoint's complaint by denying the essential allegations;
asserting defenses that the cited patents are invalid and void; and seeking
declaratory judgement of patent non-infringement and invalidity under applicable
sections of the United States Code. As no party has initiated any discovery
activities, the outcome remains uncertain; however, the Company does not believe
that an adverse outcome to such litigation would have a material adverse effect
on the Company's business, financial condition or results of operations.


ITEM 4. CONTROL OF REGISTRANT.

        As of May 8, 1998, the Company was not aware of any person who was the
beneficial owner of more than 10% of the outstanding shares of the Company,
nominal value DKK 0.25 per share ("Common Shares"). The following table sets
forth as of such date the number of Common Shares beneficially owned by all
directors and executive officers of the Company as a group:


<TABLE>
<CAPTION>
                                                              Amount of                      Percent
                                                             Beneficial                        of
                                                              Ownership                     Class (1)
                                                              ---------                     ---------
<S>                                                            <C>                           <C> 
All directors and executive officers
   as a group (consisting of 10 persons) (2)                    1,578,630                     8.9%
</TABLE>

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

     (1) Percentages in the foregoing table are based on 17,632,212 Common
         Shares issued and outstanding as of May 8, 1998.

     (2) Includes 1,053,000 Common Shares owned by Nilex Systems ApS ("Nilex"),
         as to which Mr. Stig Nielsen, the Company's Managing Director and Chief
         Executive Officer, has shared voting and investment power. Includes an
         aggregate of 187,500 Common Shares which are issuable pursuant to
         options exercisable within 60 days from the date hereof.


ITEM 5. NATURE OF TRADING MARKET.

         The Common Shares are traded on the Nasdaq National Market (under the
symbol OLCMF) and, since November 4, 1997, have been traded on the Copenhagen
Stock Exchange ("CSE"). The following table sets forth the high and low sales
prices of the Common Shares for the periods indicated, as reported by the Nasdaq
National Market ("Nasdaq") and the Copenhagen Stock Exchange.



                                       14
<PAGE>   15


<TABLE>
<CAPTION>
                                                                     Nasdaq (1)                      CSE (1)
                                                               -----------------------           --------------
                                                                 High              Low            High      Low
                                                                 ----              ---            ----      ---
<S>                                                             <C>              <C>             <C>        <C>
Calendar 1998
   First Quarter                                                30 3/4           24 13/16        214        177
   Second Quarter (through May 8, 1998)                         30 13/16         27 1/8          210        188
Calendar 1997
   First Quarter                                                19 5/8           14 1/2
   Second Quarter                                               18 3/4           13 1/2
   Third Quarter                                                30               15 1/2
   Fourth Quarter (2)                                           34 5/8           25              212        175
Calendar 1996
   First Quarter                                                15 1/2           11 1/2
   Second Quarter                                               14 1/4           10
   Third Quarter                                                15 1/8           10 7/16
   Fourth Quarter (2)                                           19 1/8           14 5/8
</TABLE>

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

     (1) Prices reported for Nasdaq are expressed in U.S. dollars; prices
         reported for the CSE are expressed in Danish kroner.

         As of May 8, 1998, there were approximately 150 United States record
holders of Common Shares, who held approximately 84.0% of the outstanding Common
Shares as of such date. The foregoing includes 14,769,198 Common Shares held of
record by Depository Trust Company, as nominee for various beneficial holders.

         In connection with the Company's acquisition of CrossComm on June 12,
1997, the Company issued three-year warrants ("Warrants") to purchase Common
Shares at an exercise price of $19.74 per whole Common Share. The Warrants are
traded only on the Nasdaq National Market (under the symbol OLCWF). The
following table sets forth the high and low sales prices of the Warrants for the
periods indicated, as reported by the Nasdaq National Market.


<TABLE>
<CAPTION>
                                                                         Nasdaq
                                                                  -------------------
                                                                  High            Low
                                                                  ----            ---
<S>                                                             <C>              <C> 
Calendar 1998
   First Quarter                                                12 3/4           8 1/8
   Second Quarter (through  May 8, 1998)                        12               8 15/16
Calendar 1997
   Second Quarter (1)                                           4                3
   Third Quarter                                                12               3 1/2
   Fourth Quarter                                               15 1/4           8 1/4
</TABLE>





                                       15
<PAGE>   16




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

     (1) The warrants began trading on the Nasdaq National Market on June 13,
         1997.

         As of May 8, 1998, there were approximately 100 United States record
holders of Warrants, who held approximately 99.9% of the outstanding Warrants as
of such date. The foregoing includes 965,491 Warrants held of record by
Depository Trust Company, as nominee for various beneficial holders.


ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS.

         There are no governmental laws, decrees or regulations of the Kingdom
of Denmark that restrict the export or import of capital (including, without
limitation, foreign exchange controls), or that affect the remittance of
dividends, interest or other payments to nonresident holders of Common Shares.
There are no limitations imposed by the laws of the Kingdom of Denmark or the
Company's Articles of Association (except for the Share Ownership Limit
described below) on the right of nonresident or foreign holders to hold or vote
Common Shares.

         The Articles of Association provide that no person, firm or entity
(each, a "person") may, without obtaining the approval of the Company's Board of
Directors, own more than 33% of the Company's share capital or votes at any time
(the "Share Ownership Limit"). The Company's Board of Directors may condition
its approval on the satisfaction of such conditions that it determines to be
appropriate. For the purpose of determining ownership of Common Shares or votes,
a person will generally be deemed to own Common Shares or votes which are
considered to be beneficially owned by such person under Rule 13d-3 under the
Exchange Act. A person who owns more than 33% of the Company's share capital or
votes at any time who has not obtained the approval of the Board of Directors
cannot be registered or otherwise accepted as a shareholder, and such person
will have no voting rights, rights to dividends or distributions, or any other
rights as a shareholder for the portion of such person's shareholding that
exceeds 33%. The Board of Directors may approve the ownership by a person of
more than 33% of the Company's share capital or votes in (i) the event that such
person has, prior to purchasing more than 33% of the Company's share capital or
votes, requested the approval by the Board of Directors to own more than the
Share Ownership Limit, (ii) the event that such person has made a legally
binding and irrevocable bona fide offer to all shareholders of the Company
(other than such person, to the extent that he or she is a shareholder) to
purchase all the Common Shares and votes in the Company at a price deemed
favorable by the Board of Directors, in its discretion or (iii) in such other
circumstances, as determined by the Company's Board of Directors. The Board of
Directors has given its approval to the ownership by Nilex, Olivetti Realty
N.V., Lars Stig Nielsen and Asbj0rn Smitt of Common Shares in excess of the
Share Ownership Limit.

         Other than the foregoing, there are no limitations by the Company's
Articles of Association on the right of holders to hold or vote Common Shares.





                                       16
<PAGE>   17




ITEM 7.  TAXATION.

         The following summary of certain United States federal and Danish tax
matters is based on tax laws of the United States and Denmark as in effect on
the date of this Report, and is subject to changes in United States and Danish
law, including changes that could have retroactive effect. The following summary
is also based on the current United States-Denmark Double Taxation Convention,
and the proposed convention signed on June 17, 1980, and modified by a protocol
signed on August 23, 1983, all of which are subject to change. This discussion
is based on current laws and interpretations thereof, and there can be no
assurance that future legislation, regulations, administrative rulings or court
decisions will not adversely affect the accuracy of the statements contained
herein.

         The following summary does not consider or discuss the tax laws of any
country other than the United States or Denmark. This summary does not describe
United States federal estate and gift tax considerations, nor state, local or
provincial tax considerations. Furthermore, this summary does not address United
States federal income tax or Danish tax considerations relevant to United States
holders of Common Shares or Warrants subject to taxing jurisdictions other than
or in addition to the United States, and does not address all possible
categories of United States holders, some of whom (such as financial
institutions, trusts, estates, insurance companies, dealers in securities,
certain retirement plans and tax exempt organizations) may be subject to special
rules.

         This summary contains a description of the material United States
federal income tax and Danish tax consequences of the purchase, ownership and
disposition of Common Shares and Warrants by a beneficial owner that (i) is an
individual citizen or resident in the United States (for United States federal
income tax purposes), a corporation or partnership organized under the laws of
the United States or any state thereof, or estates or trusts the income of which
is subject to United States federal income tax regardless of its source, (ii) is
not also a resident or corporation of Denmark and is not domiciled in Denmark,
(iii) does not hold Common Shares or Warrants in connection with any permanent
establishment or fixed base in Denmark, (iv) does not own, and has not owned
(directly, indirectly or by attribution) at any time, 10% or more of the total
combined voting power of the Company, and (v) holds Common Shares or Warrants as
capital assets. The term "United States holder," as used in this summary, means
a beneficial owner of Common Shares or Warrants meeting these requirements.
UNITED STATES HOLDERS OF COMMON SHARES OR WARRANTS SHOULD CONSULT THEIR OWN TAX
ADVISORS AS TO THE UNITED STATES, DANISH OR OTHER TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF COMMON SHARES AND WARRANTS.

UNITED STATES TAX CONSEQUENCES OF OWNERSHIP OF COMMON SHARES

         Dividends. For United States federal income tax purposes, the gross
amount of all dividends (that is, the amount before reduction for Danish
withholding tax) paid with respect to Common Shares out of the current or
accumulated earnings and profits of Olicom ("E&P") to a United States holder
will be subject to United States federal income taxation as foreign source
dividend income. United States corporations that hold Common Shares will not be
entitled to the dividends received deduction available for dividends received
from United States corporations. To the extent that a distribution exceeds E&P,
it will be treated first as a return of capital to the extent of the United
States holder's basis, and then, as gain from the sale of a capital asset.

                                       17
<PAGE>   18

         For United States federal income tax purposes, the amount of any
dividend paid in Danish kroner will be the United States dollar value of the
kroner at the exchange rate in effect on the date of receipt, whether or not the
kroner is converted into United States dollars at that time.

         The withholding tax imposed by Denmark generally is a creditable
foreign tax for United States federal income tax purposes. Therefore, a United
States holder generally will be entitled to include the amount withheld as
foreign tax paid in computing a foreign tax credit (or in computing a deduction
for foreign income taxes paid, if the United States holder does not elect to use
the foreign tax credit provisions of the Internal Revenue Code of 1986, as
amended (the "Code")). The Code, however, imposes a number of limitations on the
use of foreign tax credits, based on the particular facts and circumstances of
each taxpayer. United States holders who hold Common Shares should consult their
tax advisors regarding the availability of the foreign tax credit.

         A United States holder also may be subject to backup withholding at the
rate of 31% with respect to dividends paid on or proceeds from the sale or other
disposition of Common Shares, unless the United States holder (i) is a
corporation or comes within certain other exempt categories or (ii) provides a
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules.

         Sale or Other Disposition of Common Shares. Gain or loss recognized by
a United States holder on the sale or other disposition of Common Shares will be
subject to United States federal income taxation as capital gain or loss in an
amount equal to the difference between such United States holder's basis in the
Common Shares and the amount realized upon such disposition. The capital gain or
loss will be long term, "mid term," or short term depending on whether the
holder has held the Common Shares for (i) more than 18 months (which is subject
to a maximum United States federal income tax rate of 20% for certain
non-corporate taxpayers), (ii) more than one year but not more than 18 months
(which is subject to a maximum United States federal income tax rate of 28% for
certain non-corporate taxpayers) or (iii) not more than one year (which is
subject to a maximum United States federal income tax rate of 39.6% for certain
non-corporate taxpayers). Capital losses are generally deductible only against
capital gains and not against ordinary income.

         Capital gain recognized by a United States holder on the sale or other
disposition of Common Shares will be United States source gain. The source of a
loss attributable to the sale of Common Shares is not certain at the present
time. However, Treasury Regulations have been proposed under which losses from
the sale of Common Shares would be sourced in the same manner as gains from the
sale of such Common Shares. United States holders of Common Shares should
consult their tax advisors regarding the proper treatment of such losses.

UNITED STATES TAX CONSEQUENCES OF OWNERSHIP OF WARRANTS

         Exercise of Warrants. Generally, no gain or loss will be recognized for
United States federal income tax purposes upon exercise of a Warrant. A holder's
initial tax basis in a Warrant will be equal to the value of the Warrant at the
time the holder receives such Warrant. The tax basis of the Common Shares
acquired upon exercise of a Warrant will be equal to the sum of (i) the holder's
tax basis in such Warrant and (ii) the exercise price. The holding period of the
Common Shares acquired upon exercise of a Warrant will begin on the date of the
exercise of the Warrant.

                                       18
<PAGE>   19

         Disposition of Warrants. In general, the sale, exchange or other
taxable disposition of a Warrant will result in gain or loss to the holder in an
amount equal to the difference between the amount realized on such sale,
exchange or other disposition and the holder's tax basis in the Warrant. Such
gain or loss generally will be capital gain or loss (so long as the Warrant is a
capital asset in the hands of the holder) and such capital gain or loss will be
long term, "mid term," or short term depending on whether the holder has held
the Warrant for (i) more than 18 months (which is subject to a maximum United
States federal income tax rate of 20% for certain non-corporate taxpayers), (ii)
more than one year but not more than 18 months (which is subject to a maximum
United States federal income tax rate of 28% for certain non-corporate
taxpayers) or (iii) not more than one year (which is subject to a maximum United
States federal income tax rate of 39.6% for certain non-corporate taxpayers).

         Expiration. The expiration of a Warrant should generally result in a
capital loss to the holder equal to the holder's tax basis in the Warrant if the
Common Shares issuable upon exercise of the Warrant would have been a capital
asset if acquired by such holder.

         Adjustments to Conversion Ratio. Adjustments made to the number of
Common Shares that may be acquired upon the exercise of a Warrant, or the
failure to make such adjustments, may result in a taxable distribution to the
holder of a Warrant pursuant to Section 305 of the Code.

DANISH TAX CONSEQUENCES OF OWNERSHIP OF COMMON SHARES

         Dividends. For Danish income tax purposes, the gross amount of all
distributions made by the Company to its shareholders prior to the fiscal year
in which the Company is completely liquidated and dissolved is taxed as a
dividend, including distributions that otherwise exceed the Company's E&P.
Distributions made by the Company to its shareholders during the fiscal year in
which the Company is completely liquidated and dissolved are taxed as capital
gain. In addition, the gross amount paid by the Company to redeem Common Shares
owned by a shareholder generally is taxed as a dividend. However, a shareholder
may apply to Danish tax authorities for an exemption from the dividend tax. If
the exemption request is granted, the redemption will be taxed as capital gain.
The granting of bonus shares to shareholders, and the right of shareholders to
subscribe for Common Shares at a price that is less than the current trading
value of such Common Shares, are not considered taxable distributions to
shareholders.

         In general, a Danish withholding tax of 25% is levied on all dividends.
However, a United States holder may apply to the Danish tax authorities for a
partial refund of the dividends tax that has been withheld. If this refund
request is granted, the Danish withholding tax on such dividends is effectively
reduced to 15%. The Company does not presently contemplate the payment of any
cash dividends on Common Shares. However, should the Company decide to make
payment of a cash dividend, the Company will apply to the Danish tax authorities
for a blanket exemption that would allow the Company to withhold only 15% of all
dividends paid to a United States holder. While the Company believes that such
an exemption will be granted, there can be no assurance that this will occur.

         Sale or Other Disposition of Common Shares. Capital gains realized by
United States holders upon the sale or other disposition of Common Shares should
be exempt from Danish taxation.




                                       19
<PAGE>   20




DANISH TAX CONSEQUENCES OF OWNERSHIP OF WARRANTS

         Exercise of Warrants. Generally, a United States holder should not
recognize taxable gain or loss for Danish income tax purposes upon the exercise
of a Warrant.

         Sale of Warrants. Generally, a United States holder should not
recognize taxable gain or loss for Danish income tax purposes upon the sale of a
Warrant.

         Expiration. Upon the expiration of a Warrant, a United States holder
should not recognize taxable gain or loss for Danish income tax purposes.

DANISH ESTATE AND GIFT TAXES.

         Generally, if a United States holder acquires or disposes of Common
Shares or Warrants by inheritance, legacy or gift, such holder will not be
subject to Danish gift or inheritance taxes. If a United States holder should
make a gift of such Common Shares or Warrants to a Danish resident, the United
States holder will be liable for the Danish gift tax. However, if the gift is
made to a close relative of the United States holder, a lower tax rate applies.


ITEM 8. SELECTED FINANCIAL DATA.

         The following table sets forth certain financial information with
respect to the Company for the five years ended December 31, 1997. This
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Company's
Consolidated Financial Statements and related notes included elsewhere herein.



                                       20
<PAGE>   21



<TABLE>
<CAPTION>
                                                                           YEAR ENDED DECEMBER 31,
                                                  -------------------------------------------------------------------
                                                     1993         1994           1995          1996          1997
                                                  ---------     ---------      ---------      ---------     ---------
                                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                               <C>           <C>            <C>            <C>           <C>      
STATEMENT OF OPERATIONS DATA:
   Net sales                                      $  93,927     $ 113,604      $ 127,469      $ 168,228     $ 238,229
   Cost of sales                                     52,887        61,198         65,191         95,236       123,195
                                                  ---------     ---------      ---------      ---------     ---------
   Gross profit                                      41,040        52,406         62,278         72,992       115,034
                                                  ---------     ---------      ---------      ---------     ---------
OPERATING EXPENSES:
   Sales and marketing                               13,244        23,783         31,660         40,496        53,754
   Research and development                           5,870         7,531          9,193         12,852        17,748
   General and administrative                         3,094         4,440          5,662          6,848        11,032
   Acquisition-related expenses                           0             0              0          3,787        40,917
   Special charge re. mgmt. change                        0             0              0          1,402             0
                                                  ---------     ---------      ---------      ---------     ---------
       Total operating expenses                      22,208        35,754         46,515         65,385       123,451
                                                  ---------     ---------      ---------      ---------     ---------
INCOME FROM OPERATIONS                               18,832        16,652         15,763          7,607        (8,417)
   Interest income, net                               1,928         2,462          3,297          1,531         2,966
   Foreign currency gains (losses)                       27            19            (31)           675        (1,736)
   Related party gains on sale of
      investment                                          0             0              0          2,878             0
   Settlement of litigation                               0        (4,200)             0              0             0
                                                  ---------     ---------      ---------      ---------     ---------
INCOME BEFORE INCOME TAXES                           20,787        14,933         19,029         12,691        (7,187)
   Provision for income taxes                         7,340         5,026          6,223          4,727        10,689
                                                  ---------     ---------      ---------      ---------     ---------
NET INCOME BEFORE CHANGE IN
  ACCOUNTING METHOD                                  13,447         9,907         12,806          7,964       (17,876)
   Minority interest in income of
      consolidated subsidiary                             0             0              0            539           245
   Cumulative effect of change in
     accounting methods, net of taxes                     0           161              0              0             0
                                                  ---------     ---------      ---------      ---------     ---------
NET INCOME                                        $  13,447     $  10,068      $  12,806      $   7,425     $ (18,121)
                                                  =========     =========      =========      =========     =========
DILUTED EARNINGS PER SHARE                        $    0.85     $    0.66      $    0.87      $    0.50     $   (1.15)
                                                  =========     =========      =========      =========     =========
WEIGHTED AVERAGE SHARES OUTSTANDING
    EXCLUDING COMMON STOCK EQUIVALENTS
    IN 1997                                          15,873        15,298         14,748         14,786        15,821
                                                  =========     =========      =========      =========     =========

<CAPTION>
                                                                             DECEMBER 31,
                                                  -------------------------------------------------------------------
                                                      1993         1994          1995          1996          1997
                                                  ---------     ---------      ---------      ---------     ---------
                                                                            (IN THOUSANDS)

BALANCE SHEET DATA:
<S>                                               <C>           <C>           <C>           <C>           <C>      
     Working capital                              $  68,481     $  66,427     $  78,600     $  86,407     $ 100,552
     Total assets                                    90,240       108,917       127,327       127,924       162,331
     Current portion of long-term
       obligations                                        7             0             0             0             0
     Long-term obligations, less
       current portion                                  152             0             0             0             0
     Total shareholders' equity                      77,885        78,191        90,127        97,509       125,559
</TABLE>



                                       21
<PAGE>   22





ITEM 9.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

         Certain statements included in this Report include trend analysis and
are forward-looking statements (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act), including, without
limitation, statements containing the words "believes", "anticipates", "expects"
and words of similar import. Such forward-looking statements relate to future
events, the future financial performance of the Company, and involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Prospective investors
should specifically consider the various factors identified in this Report that
could cause actual results to differ, including, without limitation, those
discussed in the following section, as well as in the section titled
"Description of Business". The Company disclaims any obligation to update any
such factors or to publicly announce the results of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments. The following discussion should be read in conjunction with the
Consolidated Financial Statements and related notes.

OVERVIEW

         The Company's wholly-owned subsidiaries include Olicom Ventures A/S
("Olicom Ventures"), Olicom Finance Limited and Olicom Trading A/S. Olicom, Inc.
is a wholly-owned subsidiary of Olicom Trading A/S. Prior to the date of this
Report, Olicom Enterprise Products, Inc. (which formerly operated CrossComm)
merged with Olicom, Inc. The Company's interest in Lasat Communications A/S is
held by Olicom Ventures.

         The Company's functional currency is the U.S. dollar. The Company
prepares its financial statements in U.S. dollars and in accordance with
accounting principles generally accepted in the United States ("U.S. GAAP").
References herein to "U.S. dollars" or "$" are references to United States
currency, and references to "Danish kroner," "kroner" or "DKK" are references to
Danish currency.

RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, certain
financial data as percentages of the Company's net sales. The Company believes
that period to period comparisons of its financial results are not necessarily
meaningful and should not be relied upon as an indicator of future performance:



                                       22
<PAGE>   23



<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                         ------------------------------------
                                                           1995          1996           1997
                                                         --------      --------      --------

<S>                                                         <C>           <C>           <C>   
Net sales ........................................          100.0%        100.0%        100.0%
Cost of sales ....................................           51.1          56.6          51.7
                                                         --------      --------      --------
   Gross profit ..................................           48.9          43.4          48.3
Operating expenses:
   Sales and marketing ...........................           24.8          24.1          22.6
   Research and development ......................            7.2           7.6           7.4
   Purchased research and development ............             --            --            --
   General and administrative ....................            4.4           4.1           4.6
   Acquisition-related expenses ..................             --           2.3          17.2
   Special charge regarding management
       change ....................................             --           0.8            --
                                                         --------      --------      --------
   Total operating expenses ......................           36.4          38.9          51.8
                                                         --------      --------      --------
Income from operations ...........................           12.5           4.5          (3.5)
   Interest income, net ..........................            2.4           0.9           1.2
   Foreign currency gains (losses) ...............             --           0.4          (0.7)
   Related party gain on sale of investment ......             --           1.7            --
   Settlement of litigation ......................             --           1.7            --
                                                         --------      --------      --------
Income before income taxes .......................           14.9           7.5          (3.0)
   Provision for income taxes ....................            4.9           2.8           4.5
                                                         --------      --------      --------
Net income before change in
  accounting method and minority interest in
  income of consolidated subsidiary ..............           10.0           4.7         (-7.5)
Minority interest in income of consolidated
  subsidiary .....................................             --           0.3           0.1
Cumulative effect of change in
  accounting methods, net of taxes ...............             --           0.3            --
                                                         --------      --------      --------
Net income .......................................           10.0%          4.4%         (7.6)%
                                                         ========      ========      ========
</TABLE>



    YEARS ENDED DECEMBER 31, 1997 AND 1996

         Net sales. Net sales increased from $168.2 million in 1996 to $238.2
million in 1997. Net sales in North and South America (the "Americas") increased
from $62.1 million in 1996 to $112.6 million in 1997, while sales outside of the
Americas increased from $106.1 million in 1996 to $125.6 million in 1997. The
increase in net sales in 1997 was primarily due to the inclusion, since June 12,
1997, of the net sales of the former CrossComm, as well as increase in the sales
of Olicom products particularly in the Americas. During fiscal 1997, Olicom
brand-name sales (which increased 18% and 25% during 1996 and 1997,
respectively) constituted 70% of net sales, sales of the products and services
generated from the former CrossComm constituted 10% of net sales, Lasat
brand-name sales constituted 11% of net sales, while sales to OEMs (which
decreased 37% in 1996 and increased 90% in 1997) accounted for 9% of net sales.

         During 1997, the Company's revenues were favorably influenced by the
sales of Network Systems Products where net sales increased from $17.0 million
in 1996 to $49.3 million in 1997. This product group includes the recently
launched Token-Ring and ATM switches and the product portfolio acquired from the
former CrossComm. Also the Company experienced increasing demand for its main
product group, Desktop Network Interface Cards, where net sales increased by 18%
from $108.7 million to $128.3 


                                       23
<PAGE>   24

million in 1997. The Notebook Connectivity product group, which includes Network
Interface Cards for laptop PCs, showed an increase in net sales of 32.4% to
$33.5 million. Sales of the Internet Connectivity products, which encompass
modems, increased by 19.8% to $20.6 million, while sales of Network Services, a
new business area that was part of the CrossComm acquisition, amounted to $6.5
million.

         Sales to a single distributor were $24.7 million, or 10.4% of net
sales, in 1997, compared to $12.8 million, or 7.6% of net sales during 1996.

         Gross Profit. Gross profit increased by 57.5%, from $73.0 in 1996 to
$115.0 million in 1997 and increased as a percentage of net sales from 43.4% in
1996 to 48.3% in 1997. The increase in gross margins was due to a more favorable
product mix and the inclusion of the former CrossComm in the results of the
Company's operations, as CrossComm operated at a higher average gross margin
than the Company has historically experienced. Also, gross margins were
favorable impacted by cost reductions resulting primarily from cost improved
product designs, volume-based component purchasing efficiencies, large-scale
manufacturing, and continued reductions in other material costs.

         The Company believes that gross margins may decline in the future,
despite increased sales of higher margin Network Infrastructure Products, as the
Company's products face increased price pressures. The Company will continue to
seek reductions in manufacturing costs to enable it to remain price competitive
and to temper the impact that price reductions may have on gross margins.

         Sales and Marketing. Sales and marketing expenses increased from $40.5
million in 1996 to $53.8 million in 1997, but decreased as a percentage of net
sales from 24.1% in 1996 to 22.6% in 1997. The increase in the amount of sales
and marketing expenses during 1997 was primarily due to increased marketing
activities in the United States, Europe and the Far East, including increased
travel, office and personnel expenses and due to the inclusion of the former
CrossComm's operations within the Olicom group. During the year, the Company
committed significant additional resources to support its direct sales
organization and expand its marketing organization and programs both in the
United States and in Europe.

         Research and Development. Research and development expenses increased
from $12.9 million in 1996 to $17.7 million in 1997, but decreased as a
percentage of net sales from 7.6% in 1996 to 7.4% in 1997. The increase in
research and development expenses was primarily attributable to increased
personnel expenses associated with enhancements of current products and to
expenditures related to new product development, including ATM and LAN
switching.

         The Company considers research and development expenditures to be
critical to future net sales and intends to continue these expenditures at a
level that constitutes a significant percentage of net sales.

         All of the Company's research and development expenses have been
charged to operations as incurred, net of a $1.2 million subsidy received from a
Danish government agency in support of ATM and LAN switching activities. The
subsidy will be repaid from 1998 onwards in the form of a royalty as revenue
from such switching products is realized.

         General and Administrative. General and administrative expenses
increased from $8.3 million in 1996 to $11.0 million in 1997, but decreased as a
percentage of net sales from 4.9% in 1996 to 4.6% in 1997. These increased
expenses reflected the inclusion of the former CrossComm's operations within the


                                       24
<PAGE>   25

Company, together with the expense of salaries for additional personnel and
costs related to increases in volume.

         Acquisition Related Expenses and Other Charges and Income. During the
second quarter of 1997, the Company purchased the former CrossComm. For fiscal
1997, a $40.9 million non-recurring charge was taken as a result of the
write-off of in-process research and development projects of the former
CrossComm and other transaction related expenses.

         During 1997 the Company also exercised its option to acquire a 35%
interest in Digianswer A/S, a Danish high tech development company.

         Income Taxes. The Company's income tax increased from $4.7 million
during 1996 to $10.7 for 1997 despite the net loss for the year, as the one time
charges in 1997 relating to the CrossComm acquisition were not deductible for
tax purposes.

    YEARS ENDED DECEMBER 31, 1995 AND 1996

         Net sales. Net sales increased from $127.5 million in 1995 to $168.2
million in 1996. Net sales in the Americas increased from $52.2 million in 1995
to $61.7 million in 1996, while sales outside of the Americas increased from
$75.3 million in 1995 to $106.5 million in 1996. The increase in net sales in
1996 was principally due to the inclusion since January 1, 1996, of the net
sales (almost exclusively in Europe) of Lasat, as well as increases in sales of
the Company's network interface cards. In addition to these factors, the
increase in the Company's net sales during 1996 resulted from greater market
penetration across most of the Company's geographic regions, as well as from
increased unit sales to a broad range of customers and expansion of the
Company's distribution channels, as a result in substantial part of refinements
in marketing and product strategies implemented by the Company. As a result
thereof, Olicom brand-name sales (which increased 28% and 18% during 1995 and
1996, respectively) constituted 79% of net sales during fiscal year 1996, Lasat
brand-name sales constituted 15% of net sales, while sales to OEMs (which
decreased 43% in 1995 and 37% in 1996) accounted for 6% of net sales.

         During 1996, the Company's revenues were favorably influenced by
several other factors, including the continued success of the Company's main
products, Token Ring NICs, and in general, the continued demand for LANs and the
networking and internetworking products marketed by the Company. During the
year, the Company continued to increase unit sales of NICs.

         Starting in 1997, and partially due to the integration of the former
CrossComm and Lasat into the Company, the Company's product portfolio has been
reorganized into the following segments: Desktop Network Infrastructure
Products, Notebook Connectivity, Network Systems Products, Network Services and
Internet Connectivity. The sales segmentation information provided for 1996 and
1995 in this section has been restated accordingly. Sales of Desktop Network
Infrastructure Products, decreased from $18.5 million in 1995 to $17.2 million
in 1996. Sales of Desktop Network Infrastructure Products represented 78% and
65% of net sales in 1995 and 1996, respectively. Notebook Connectivity
represented 7% and 15% of net sales in 1995 and 1996, respectively. There were
no sales of Network Services or Internet Connectivity products in 1995 or 1996.

         Sales to a single distributor were $12.8 million, or 7.6% of net sales,
in 1996, compared to $13.9 million, or 10.9% of net sales during 1995.

                                       25
<PAGE>   26

         Gross Profit. Gross profit increased by 17.2%, from $62.3 million in
1995 to $73.0 million in 1996, but decreased as a percentage of net sales from
48.9% in 1995 to 43.4% in 1996. The decrease in gross margins was primarily due
to the inclusion of Lasat in the Company's results of operations, as Lasat
operates at a lower average gross margin than the Company has historically
experienced. However, gross margins were favorably impacted by cost reductions
resulting primarily from cost improved product designs, volume-based component
purchasing efficiencies, large-scale purchasing and manufacturing, and continued
reductions in other material costs. Gross margins during 1996 continued to
benefit from a higher percentage of sales to distributors, on which the Company
typically realizes higher margins than on sales to OEMs.

         Sales and Marketing. Sales and marketing expenses increased from $31.7
million in 1995 to $40.5 million in 1996, but decreased as a percentage of net
sales from 24.8% in 1995 to 24.1% in 1996. The increase in the amount of such
expenses during 1996 was primarily due to increased marketing activities in the
United States, Europe and the Far East, including increased travel, office and
personnel expenses and due to the inclusion of Lasat's operations within the
Olicom group. During the year, the Company committed significant additional
resources to support its direct sales organization and expand its marketing
organization and programs both in the United States and in Europe.

         Research and Development. Research and development expenses increased
from $9.2 million in 1995 to $12.9 million in 1996 and increased as a percentage
of net sales from 7.2% in 1995 to 7.6% in 1996. The increase in such expenses
was primarily attributable to increased personnel associated with enhancements
of current products and to expenditures related to new product development,
including ATM and LAN switching. The inclusion of Lasat's operations within the
Olicom group also contributed to higher research and development expenses during
1996.

         All of the Company's research and development expenses have been
charged to operations as incurred, net of a $953,000 subsidy received from a
Danish government agency in support of ATM and LAN switching activities. The
subsidy will be repaid from 1998 onwards in the form of a royalty as revenue
from such switching products is realized.

         General and Administrative. General and administrative expenses
increased from $5.7 million in 1995 to $6.8 million in 1996, but decreased as a
percentage of net sales from 4.4% in 1995 to 4.1% in 1996. These increased
expenses reflected the inclusion of Lasat's operations within the Olicom group,
together with the expense of salaries for additional personnel and costs related
to increases in volume.

         Transaction-Related Expenses and Other Charges and Income. During the
first quarter of 1996, the Company purchased an additional 40% interest in
Lasat, which resulted in the Company holding 75% of Lasat's share capital.
During 1996 the Company also made a subordinated convertible loan to a Danish
ISDN hardware and software development company. For fiscal 1996, a $3.8 million
non-recurring charge was taken as a result of the write-off of in-process
engineering and development projects of Lasat, other transaction-related
expenses in connection with these investments, and the creation of a reserve
with respect to the convertible loan.

         Also during 1996 the Company implemented certain management changes
primarily in its U.S. operations, which resulted in a special charge of $1.4
million.



                                       26
<PAGE>   27



         During 1996 the Company also completed the sale of its minority holding
in Contex A/S to Nilex Systems ApS, a significant shareholder in the Company and
affiliate of its managing director, resulting in a gain of $2.9 million net of
taxes. See "Interest of Management in Certain Transactions -- Contex A/S."

         Income Taxes. The Company's effective income tax rate increased from
32.7% during 1995 to 37.2% for 1996. The increase in the effective tax rate was
primarily due to the fact that charges relating to transactions were not
deductible for tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

         During 1997, Olicom funded its operations with cash from operations.
The Company's available cash and short-term investments totaled $46.5 million as
of December 31, 1997, and represented 28.6% of total assets.

         The Company had unsecured line of credit facilities for an aggregate
amount of $10.7 million at December 31, 1997, of which no advances were
outstanding at such date. These facilities support working capital requirements.

         The increase, during 1997, in net cash from operating activities of
$12.0 million was due in significant part to net income (excluding acquisition
related expenses) of $22.8 million and depreciation and amortization of $6.2
million, being offset in part by an increase in accounts receivable of $15.7
million.

         Capital expenditures, less proceeds from sale of property and
equipment, during 1996 and 1997 were $8.2 million and $8.1 million,
respectively. These capital expenditures were associated with the expansion of
sales and marketing, research and development, and general and administrative
activities (including further implementation of the Company's integrated
management information system). Proceeds from sale of investments were $42.1
million, and net cash used for business acquisitions was $40.2 million. At
December 31, 1997, the Company had no material commitments for capital
expenditures.

         The Company believes that cash presently at its disposal and cash
generated from operations will be sufficient to finance the Company's operations
and currently projected capital expenditures through at least 1998.

         In June 1997, the Company consummated its acquisition of CrossComm, a
provider of ATM and multi-protocol router technology for mission-critical
SNA/Token-Ring environments. The consideration, which was a combination of cash,
Common Shares, and three-year warrants to purchase Common Shares, totalled
approximately $96.0 million. The acquisition was accounted for using the
purchase accounting method. Accordingly, the results of operations of the
acquired business and the fair market values of the acquired assets and assumed
liabilities were included in the Company's financial statements as of the
effective date. This accounting treatment resulted in approximately $9.7 million
of intangible assets that will be amortized over their estimated period of
benefit. Approximately $40.9 million of acquisition cost primarily represented
purchased in-process research and development projects, which was determined
through known valuation techniques in the high-technology communications
industry and was 


                                       27
<PAGE>   28

immediately expensed in the period of acquisition because technological
feasibility had not been established and no alternative commercial use had been
identified.

         To date, inflation has not had a material impact on the Company's
financial results.

         The Company presently intends to retain any earnings for use in its
business and, therefore, does not anticipate paying any cash dividends in the
foreseeable future. If and when dividends are paid, such payment will be made in
Danish kroner.

BUSINESS ENVIRONMENT AND RISK FACTORS

      The Company's future operating results may be affected by various trends
and factors, which the Company must successfully manage in order to achieve
favorable operating results. In addition, there are trends and factors that are
beyond the Company's control that may affect its operations.

      Such trends and factors include, without limitation, the following:
conditions within the networking industry, and economic conditions generally;
rapid technological change, frequent product introductions, changes in customer
needs and evolving industry standards, which require that the Company continue
to add engineering refinements to its existing products and develop and
introduce new products which achieve market acceptance; difficulties or delays
in the development, production and marketing of products, including, without
limitation, any failure to ship new products and technologies when anticipated
and a failure of manufacturing economies to develop when planned; fluctuations
in the Company's revenues and operating results from quarter to quarter, due to
a variety of factors, including, among others, the timing of significant orders,
the timing of product introductions by the Company or its competitors,
variations in net revenues by product and distribution channel, increased price
and other competition, and decisions by distributors and OEMs as to the quantity
of the Company's products to be maintained in inventories; pricing, purchasing,
operational and promotional decisions by distributors, value added resellers and
OEMs, which could affect their supply of, or end-user demand for, the Company's
products; the absence of long-term obligations on the part of distributors and
OEMs to purchase products from the Company (and the implicit risk of any
unanticipated declines in sales to any of the Company's material customers for
competitive reasons or because of the internalization of production of products
purchased from the Company on an OEM basis); the Company's shipment of products
shortly after receipt of a purchase order, with the result that a substantial
portion of the Company's revenues for any quarter results from orders received
during such quarter, and minor shifts in the timing of purchase orders can have
a significant effect on net sales for any quarter; the Company's failure to
accurately anticipate the demand for its products, due to, among other things,
the fact that the Company's expectations of future net sales as well as its
expenditures are based largely on its own estimate of future demand and not on
firm customer orders; declines in the demand for Desktop Network Interface
cards, which accounted for approximately 53.9% of the Company's net sales during
1997; the effect that consolidation in the LAN industry may have on the
competitive position of the Company and its revenues and operating results; the
acquisition of assets and businesses and the making or incurring of any
expenditures and expenses in connection therewith, including, without
limitation, any research and development expenses relating thereto; the ability
of the Company to reduce product and other costs; the activities of any parties
with whom the Company has an agreement or understanding, including, without
limitation, issues affecting joint development projects in which the Company is
a participant; unexpected changes in regulatory requirements, tariffs and other
trade barriers, longer accounts receivable payment cycles and other risks
associated with international operations; the ability or inability of the
Company to 


                                       28
<PAGE>   29

hedge against foreign currency, exchange rates and fluctuations in such rates;
and a change in the value of the U.S. dollar (the Company's functional currency)
relative to other currencies.

      In light of the foregoing factors, as well as other factors affecting the
Company's operating results, past trends should not be used by investors or
others to anticipate future trends, and prior operating performance may not be
an accurate indicator of future performance.


ITEM 10. OFFICERS AND DIRECTORS OF THE REGISTRANT.

         As of May 8, 1998, the members of the Company's Board of Directors, the
executive officers of the Company, and other key employees are as follows:

<TABLE>
<CAPTION>
Name                                      Age       Position
----                                      ---       --------
<S>                                      <C>       <C>
Jan Bech...........................       58        Chairman of the Board of Directors
Bo F. Vilstrup.....................       55        Deputy Chairman of the Board of Directors
Lars Stig Nielsen..................       56        President, Chief Executive Officer
                                                    and Member of the Board of Directors
Frank G. Petersen..................       65        Member of the Board of Directors
Michael J. Peytz...................       41        Member of the Board of Directors
Anders Knutsen.....................       51        Member of the Board of Directors
Soren Bjerre-Nielsen...............       45        Member of the Board of Directors

Boje Rinhart.......................       49        Executive Vice President and Chief Financial Officer
Niels Christian Furu...............       41        Executive Vice President and Chief Operating Officer
Niels E.L. Jorgensen...............       41        Chief Technology Officer and Vice-President of
                                                    Research, Development and Engineering
Per Bruno Larsen ..................       46        Executive Vice President of Global Marketing of the
                                                    Company and President of Olicom, Inc.
David F. Burkey....................       39        Chief Operating Officer and Chief Financial Officer of
                                                    Olicom, Inc.
Jorgen Hog.........................       51        Vice-President of Network Product Marketing
Steen B. Lohse.....................       36        Vice-President of Sales, Europe, Middle East & Africa
Prem Athwal .......................       39        Vice-President of Sales, Asia-Pacific
Mette R.L. Fogt....................       35        Director of Legal Affairs
Kristian Thyregod..................       36        Vice-President of Corporate Marketing

Claus Christensen..................       36        President of Lasat Communications A/S
</TABLE>


         Mr. Bech has been Chairman of the Company's Board of Directors since
1985. He serves as Chairman of the Board and Managing Director of ARCO-TECH
Ltd., a company engaged in the business of consulting in strategic marketing.
Mr. Bech previously served as a Vice-President of Ing. C. Olivetti & C., S.p.A.,
with responsibility for its commercial activities in Scandinavia (from 1985 to
1992).

                                       29
<PAGE>   30

         Mr. Vilstrup has been a member of the Board of Directors since 1992 and
Deputy Chairman of the Board since 1994. He is an attorney and has been a
partner in the law firm of Lett, Vilstrup & Partnere, Copenhagen, Denmark, since
1972.

         Mr. Stig Nielsen is the founder of the Company and has held the
positions of President, Chief Executive Officer and member of the Board of
Directors since 1985.

         Mr. Petersen has been a director of the Company since 1996. He was
employed by IBM from 1957 until his retirement in 1994. At the time of his
retirement, he served as Chairman and President of IBM Nordic AB, with
responsibility for IBM's commercial activities in Scandinavia.

         Mr. Peytz has been a director of the Company since 1996. He has served
as Managing Director and Chief Executive Officer of EuroCom Industries A/S since
1997. Mr. Peytz previously served as Division Director for Alcatel Kirk A/S,
with responsibility for Alcatel's space electronics business in Denmark (from
1994 to 1997). He previously was a management consultant with McKinsey & Company
(from 1985 to 1994).

         Mr. Knutsen has been a director of the Company since 1997. He has
served as Managing Director and Chief Executive Officer of Bang & Olufsen A/S
since 1991, a company that develops and markets audio and visual products.

         Mr. Bjerre-Nielsen has been a director of the Company since May 7,
1998. He has served as Vice Executive Officer and Chief Financial Officer of
Danisco A/S (since 1995), a food ingredients conglomerate. Prior thereto, he was
a state-authorised Public Accountant and has been a partner in Deloitte & Touche
(from 1982 to 1995) and managing partner from 1986 to 1995. Mr. Bjerre-Nielsen
is also a director of Velux Industri A/S and Velux A/S, companies engaged in the
business of global manufacturing of skylights.

         Mr. Rinhart has been employed by the Company since 1995, as Executive
Vice President and Chief Financial Officer. Prior to joining the Company, Mr.
Rinhart was a partner in the management consulting firm of Hjorth & Rinhart
(from 1986 to 1995).

         Mr. Furu has been employed by the Company since May 4, 1997 as
Executive Vice President and Chief Operating Officer. Prior to joining the
Company, Mr. Furu served as Vice-President of IBM Denmark A/S and Director of
Nordic PC Sales (from 1995 to 1997). Prior thereto, he served as Director of
Sales for Finance and Telecommunications for IBM Denmark A/S (from 1993 to 1995)
and as Assistant to the General Manager of Marketing, IBM Europe (from 1991 to
1993).

         Mr. Jorgensen has been employed by the Company since 1988 and became
Chief Technology Officer in April 1998. He has had primary responsibility for
the Company's Project Development Group since joining the Company, and served as
Director of Engineering from 1990 and became Vice-President of Research,
Development and Engineering in November 1994.

         Mr. Larsen has been employed by the Company since April 1998, as
Executive Vice President of Global Marketing, and President of Olicom, Inc.
Prior to joining the Company, he served as Vice-President, Brand Marketing,
Mobile Computing with IBM Corporation (from 1994 to 1998). Prior thereto, he
held various positions within IBM.

                                       30
<PAGE>   31

         Mr. Burkey has served as Chief Financial Officer (since 1996), and as
Chief Operating Officer (since April 1998) of Olicom, Inc. Prior to joining the
Company, Mr. Burkey served as Senior Operations Finance Manager of Northern
Telecom, USA (from 1993 to 1994), and as Senior Finance Manager of Northern
Telecom, USA (from 1994 to 1996).

         Mr. Hog has been employed by the Company since 1994, having served as
its Director of Business Development. In May 1996, Mr. Hog became Vice-President
of Strategic Marketing. Prior to joining the Company, Mr. Hog was the President
of CR Systems A/S, a Danish data communications company.

         Mr. Lohse has been employed by the Company since June 1994 and became
Vice-President of Sales for Europe, Middle East & Africa (EMEA) in October 1997
after serving as Vice-President of Marketing since 1994. Prior to joining the
Company, Mr. Lohse served as Director of Marketing of DDI Communications, a
Danish networking company.

         Mr. Athwal was appointed Vice-President of Sales for Asia-Pacific
(APAC) in January 1998. He has been with the Company since January 1994 and has
previously served as Assistant Vice-President of Corporate Marketing and earlier
as Director of Commercial Marketing. Prior to joining the Company, Mr. Athwal
held various marketing positions at Cray Communications in the UK and NEC in
Germany.

         Ms. Fogt has served as Director of Legal Affairs since August 1997.
Prior to joining the Company, Ms. Fogt served as Secretary to the Management at
Jacob Holm & Sons A/S, a Danish manufacturer of fiber products, primarily for
the hygiene industry (from 1995 to 1997). Prior thereto, Ms. Fogt was an
attorney at the law firm Kromann & Munter (from 1988 to 1995).

         Mr. Thyregod was employed by the Company as Vice-President of Corporate
Marketing in May 1998. Prior to joining the Company, Mr. Thyregod served as
Vice-President Commercial Operations and Marketing Manager International
Operations at Navision Software A/S, an enterprise resource planning software
company (from 1995 to 1998). From 1991 to 1995, Mr. Thyregod was Marketing
Manager at Datateam/Ingram Micro A/S, a network products distributor.

         Mr. Christensen has served as President of Lasat Communications A/S
since 1992. Lasat Communications A/S became a subsidiary of the Company in 1996.

         All directors and members of corporate management, except Mr. Burkey,
are Danish citizens. There are no family relationships among directors and
executive officers of the Company or its subsidiaries.

         The Company's Articles of Association provide for a Board of Directors
of four to eight members, to be elected by the shareholders to serve one-year
terms. In addition, directors may be elected for four-year terms by the
Company's employees, in accordance with Danish law. The statutory rights of the
Company employees to elect directors have not been exercised to date. Officers
of the Company serve at the discretion of the Board of Directors.

LIMITATION OF LIABILITY AND INDEMNIFICATION AGREEMENTS

         The Company has entered into Indemnification Agreements with its
directors, executive officers and key employees. Each such Indemnification
Agreement provides for indemnification of the 


                                       31
<PAGE>   32

Company's directors, executive officers and key employees to the fullest extent
permitted by the Companies Act of the Kingdom of Denmark (the "Companies Act").
Additionally, Olicom, Inc., has entered into Indemnification Agreements with its
directors, executive officers and key employees. Each such Indemnification
Agreement provides for indemnification of the directors, executive officers and
key employees of Olicom, Inc., to the fullest extent permitted by the Delaware
General Corporation Law. Further, such Indemnification Agreements permit
advancing attorney's fees and all other costs, expenses, obligations, fines and
losses paid or incurred by a director, executive officer or key employee
generally in connection with the investigation, defense or other participation
in any threatened, pending or completed action, suit or proceeding or any
inquiry or investigation thereof, whether conducted by or on behalf of the
Company or any other party. If it is later determined that the director,
executive officer or key employee is or was not entitled to indemnification
under applicable law, the Company will be entitled to reimbursement by the
director, executive officer or key employee.

         The Indemnification Agreements further provide that in the event of a
change in control of the Company or Olicom, Inc., with respect to all matters
thereafter arising concerning the rights of directors, executive officers and
key employees to indemnity payments and expense advances, all determinations
regarding claims will be made only by a court of competent jurisdiction or by
special independent legal counsel selected by the director, executive officer or
key employee and approved by the Company or Olicom, Inc., as appropriate.

         To the extent that the Board of Directors of the Company or Olicom,
Inc., or their respective shareholders may in the future wish to limit or repeal
the ability of the Company or Olicom, Inc., to indemnify directors, executive
officers and key employees, such repeal or limitation may not be effective as to
directors, executive officers and key employees who are parties to such
Indemnification Agreements, because their rights to full protection will be
contractually assured by the Indemnification Agreements. It is anticipated that
similar contracts may be entered into, from time to time, with future directors,
executive officers and key employees of the Company and Olicom, Inc.


ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS.

         An aggregate of approximately $1,185,000 was paid by the Company to its
directors and executive officers as a group (10 persons) for services rendered
during fiscal year 1997 in all capacities, and approximately $775,000 was paid
by the Company during fiscal year 1997 to its senior management, consisting of
the Company's President and Chief Executive Officer, its Chief Financial Officer
and its Chief Operating Officer, registered with the Commercial and Companies
Agency of the Kingdom of Denmark.


ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES.

         At May 8, 1998, the Company had issued options to its employees and
directors, and employees and directors of Olicom, Inc., to purchase an aggregate
of 1,946,869 Common Shares. (The foregoing includes options assumed by the
Company in connection with the acquisition of CrossComm.) The exercise price for
such options ranges from $3.36 to $29.50. Such options terminate on various
dates through May 1, 2003.


                                       32
<PAGE>   33

         At May 8, 1998, options to purchase an aggregate of 360,000 Common
Shares were held by the directors and executive officers of the Company.


ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS.

         Contex A/S. Pursuant to a Share Purchase Agreement between the Company
and Nilex dated January 23, 1996, the Company transferred and assigned to Nilex
the Company's minority interest in Contex A/S (the "Contex Interest"). The
purchase price for the Contex Interest was DKK 41 million (approximately $7.2
million), which resulted in a gain to the Company of approximately $2.9 million,
net of taxes. The purchase price for the Contex Interest was approved by a
disinterested majority of the Company's Board of Directors, on the basis of an
appraisal of the value of the Contex Interest by a third party.

         See also "Officers and Directors of the Registrant -- Limitation of
Liability and Indemnification Agreements."

         The Company's policy is to require that all transactions between the
Company and its officers, directors and other affiliates be on terms no less
favorable to the Company than could be obtained from unaffiliated third parties,
and that all such transactions be approved by a majority of the disinterested
members of the Company's Board of Directors.




                                       33
<PAGE>   34




                                     PART II

         Not applicable.


                                    PART III


ITEM 15. DEFAULTS UPON SENIOR SECURITIES

         Not applicable.


ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
         SECURITIES.

         Not applicable.


                                     PART IV


ITEM 17. FINANCIAL STATEMENTS.

         The Company has responded to Item 18 in lieu of responding to this
Item.



                                       34
<PAGE>   35




ITEM 18. FINANCIAL STATEMENTS.



                          Independent Auditors' Report


The Board of Directors and Shareholders,
Olicom A/S


We have audited the accompanying consolidated balance sheets of Olicom A/S and
subsidiaries as of December 31, 1996 and 1997, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Olicom A/S and
subsidiaries at December 31, 1996 and 1997, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles in the United States of America.


/s/ Ernst & Young

Ernst & Young
Statsautoriseret Revisionsaktieselskab

Copenhagen, January 28, 1998





                                       35
<PAGE>   36




                                   Olicom A/S
                           Consolidated Balance Sheets


<TABLE>
<CAPTION>
                                                                       DECEMBER 31
                                                                   1996           1997
                                                                 ---------      ---------
ASSETS                                                                (In thousands)
<S>                                                              <C>            <C>      
Current assets:
  Cash and cash equivalents                                      $  41,663      $  45,591
  Short-term investments (Note 4)                                    9,887            915
  Accounts receivable, less allowance of
    $1,055 in 1996 and $3,326 in 1997                               37,712         57,967
Inventories:
  Finished goods                                                    13,967         17,704
  Raw materials                                                      8,285          7,959
                                                                 ---------      ---------
                                                                    22,252         25,663

Deferred income taxes (Note 6)                                         945          1,925
Prepaid expenses and other current assets                            3,682          4,337
                                                                 ---------      ---------

Total current assets                                               116,141        136,398

Investments in affiliated companies                                      0            733

Property and equipment:
  Leasehold improvements                                             2,280          2,970
  Equipment                                                         17,740         31,809
                                                                 ---------      ---------
                                                                    20,020         34,779
Accumulated depreciation                                            (8,988)       (18,751)
                                                                 ---------      ---------

                                                                    11,032         16,028

Goodwill, net of accumulated amortization of
   $376 in 1996 and $1,262 in 1997                                     751          9,172
                                                                 ---------      ---------
Total assets                                                     $ 127,924      $ 162,331
                                                                 =========      =========
</TABLE>


See accompanying notes



                                       36
<PAGE>   37




                                   Olicom A/S
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                           DECEMBER 31
                                                                      1996            1997
                                                                    ---------      ---------
                                                                         (In thousands)

<S>                                                                 <C>            <C>      
LIABILITIES AND SHAREHOLDERS' EQUITY 
Current liabilities:
  Accounts payable                                                  $  16,469      $  18,815
  Accrued payroll and related expenses                                  3,424          4,092
  Accrued product warranty expense                                        823          1,118
  Deferred revenue                                                          0          2,942
  Other accrued expenses                                                6,448          8,834
  Income taxes payable                                                  2,570             45
                                                                    ---------      ---------
Total current liabilities                                              29,734         35,846

Minority interest                                                         681            926

Shareholders' equity:
 Common stock, DKK 0.25 nominal value
  Authorized and issued - 15,938 in 1996 and 18,495 in 1997               614            712
  Additional paid-in capital                                           52,348        102,633
  Retained earnings                                                    56,849         38,728
  Treasury stock - 1,255 in 1996 and  940 in 1997                     (11,831)       (14,988)
  Unearned compensation                                                     0         (1,594)
  Currency translation adjustments                                          0              0
  Unrealized gains/(losses) (Note 4)                                     (471)            68
                                                                    ---------      ---------

Total shareholders' equity                                             97,509        125,559
                                                                    ---------      ---------

Total liabilities and shareholders' equity                          $ 127,924      $ 162,331
                                                                    =========      =========
</TABLE>



See accompanying notes



                                       37
<PAGE>   38




                                   Olicom A/S
                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                           YEAR ENDED DECEMBER 31
                                                                      1995            1996           1997
                                                                    ---------      ---------      ---------
                                                                                (In thousands
                                                                           except per share amounts)

<S>                                                                 <C>            <C>            <C>      
Net sales                                                           $ 127,469      $ 168,228      $ 238,229
Cost of sales                                                          65,191         95,236        123,195
                                                                    ---------      ---------      ---------
Gross profit                                                           62,278         72,992        115,034
                                                                    ---------      ---------      ---------
Operating expenses:
Sales and marketing                                                    31,660         40,496         53,754
Research and development                                                9,193         12,852         17,748
General and administrative                                              5,662          8,250         11,032
Acquisition-related expenses                                                0          3,787         40,917
                                                                    ---------      ---------      ---------
Total operating expenses                                               46,515         65,385        123,451
                                                                    ---------      ---------      ---------
Income from operations                                                 15,763          7,607         (8,417)

Interest and other financial income                                     4,580          2,446          3,663
Interest and other financial expense                                   (1,283)          (915)          (697)
Foreign currency gains/(losses)                                           (31)           675         (1,736)
Related party gain on sale of investment (Note 10)                          0          2,878              0
                                                                    ---------      ---------      ---------
Income before income taxes                                             19,029         12,691         (7,187)

Income taxes (Note 6)                                                   6,223          4,727         10,689
                                                                    ---------      ---------      ---------
Income before minority interest in income
of consolidated subsidiary                                             12,806          7,964        (17,876)

Minority interest in income of consolidated subsidiary                      0            539            245
                                                                    ---------      ---------      ---------

Net income                                                          $  12,806      $   7,425      $ (18,121)
                                                                    =========      =========      =========

Basic earnings per share                                            $    0.88      $    0.51      $   (1.15)
                                                                    =========      =========      =========
Weighted average shares outstanding                                    14,582         14,653         15,821
                                                                    =========      =========      =========
Diluted earnings per share                                          $    0.87      $    0.50      $   (1.15)
                                                                    =========      =========      =========
Weighted average shares outstanding including
common stock equivalents in 1995 and 1996                              14,748         14,786         15,821
                                                                    =========      =========      =========
</TABLE>


See accompanying notes



                                       38
<PAGE>   39




                                   Olicom A/S
                           Consolidated Statements of
                              Shareholders' Equity


<TABLE>
<CAPTION>
                                                                                              Currency
                                            Additional                            Unearned    transla-      Unrealized
                                    Common     paid-in    Retained    Treasury     Compen-    tion ad-          gains/
                                    stock      capital    earnings       stock      sation   justments        (losses)     Total
----------------------------------------------------------------------------------------------------------------------------------
                                                                          (In thousands)

<S>                                  <C>      <C>         <C>        <C>         <C>            <C>         <C>         <C>      
BALANCE AT DEC. 31, 1994             $ 610    $ 51,758    $ 36,618   $ (9,903)   $      0       $ 186       $ (1,078)   $  78,191

Net income for 1995                                         12,806                                                         12,806
Purchase of treasury stock -
   257 common stock                                                    (2,400)                                             (2,400)
Options exercised -
   31 common stock                                  (4)                   283                                                 279
Change in unrealized gains/(losses)                                                                              820          820
Currency translation adjustments                                                                  431                         431
                                -------------------------------------------------------------------------------------------------
BALANCE AT DEC. 31, 1995             $ 610    $ 51,754    $ 49,424  $ (12,020)   $      0       $ 617       $   (258)   $  90,127

Net income for 1996                                          7,425                                                          7,425
Purchase of treasury stock -
   3 common stock                                                         (28)                                                (28)
Options and warrants exercised -
   23 common stock                                 (10)                   217                                                 207
Warrants exercised -
   101 common stock                      4         604                                                                        608
Change in unrealized gains/(losses)                                                                             (213)        (213)
Currency translation adjustments                                                                 (617)                       (617)
                                --------------------------------------------------------------------------------------------------
BALANCE AT DEC. 31, 1996             $ 614    $ 52,348    $ 56,849  $ (11,831)   $      0       $   0       $   (471)   $  97,509

Net income/(loss) for 1997                                 (18,121)                                                       (18,121)
Issuance of 2,537 common stock to
   acquire CrossComm                    97      38,691                                                                     38,788
Issuance of 1,023 warrants to
   acquire CrossComm                             3,806                                                                      3,806
Exchange of vested CrossComm
   options for Olicom options                    3,834                                                                      3,834
Exchange of unvested CrossComm
   options for Olicom options                    1,859                             (1,859)                                      0
Purchase of treasury stock -
   630 common stock                                                   (15,716)                                            (15,716)
320 common stock sold through offering
   at Copenhagen Stock Exchange                  5,295                  3,030                                               8,325
Options exercised -
   626 common stock                             (3,326)                 9,529                                               6,203
Warrants exercised -
   20 common stock                       1         126                                                                        127
Change in unrealized gains/(losses)                                                                              539         539
Amortization of unearned compensation                                                 265                                     265
                                     ---------------------------------------------------------------------------------------------
BALANCE AT DEC. 31, 1997             $ 712   $ 102,633    $ 38,728  $ (14,988)   $ (1,594)      $   0       $     68    $ 125,559
                        ----------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes



                                       39
<PAGE>   40


                                   Olicom A/S
                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31
                                                                   1995          1996          1997
                                                                 --------      --------      --------
                                                                           (In thousands)
OPERATING ACTIVITIES
<S>                                                              <C>           <C>           <C>      
Net income                                                       $ 12,806      $  7,425      $(18,121)
Adjustments to reconcile net income to net
  cash provided by (used in) operating activities:
   Depreciation and amortization                                    2,478         3,585         6,216
   Non cash compensation                                                0             0           265
   Gain on sale of investment                                           0        (2,878)         (121)
   Deferred income taxes                                            1,588          (930)         (980)
   Minority interest in earnings                                        0           539           245
   Equity in net income of affiliates                                (692)            0          (206)
   Acquisition-related expenses                                         0         2,170        40,917
   Changes in operating assets and liabilities:
     Accounts receivable                                           (2,494)        2,572       (15,716)
     Inventories                                                  (16,117)       12,375           (98)
     Prepaid expenses and other current assets                     (1,924)         (303)       (2,198)
     Accounts payable                                              10,486        (6,285)       (4,757)
     Accrued payroll and related expenses                             584        (3,298)          241
     Accrued product warranty expense                                (427)          119          (886)
     Deferred revenue                                                   0             0          (638)
     Other accrued liabilities                                     (5,367)        2,509         8,180
     Income taxes payable                                             209           901          (371)
                                                                 --------      --------      --------
Net cash provided by operating activities                           1,130        18,501        11,972

INVESTING ACTIVITIES
Capital expenditures                                              (13,780)       (8,199)       (8,132)
Proceeds from sale of property and equipment                       12,666             0           136
Proceeds from sale of investments                                       0         7,193        42,089
Business acquisitions - net of cash acquired
  and other investments                                                 0        (2,545)      (40,161)
                                                                 --------      --------      --------
Net cash used in investing activities                              (1,114)       (3,551)       (6,068)
</TABLE>


See accompanying notes



                                       40
<PAGE>   41


                                   Olicom A/S
                Consolidated Statements of Cash Flows (continued)


<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31
                                                                     1995          1996          1997
                                                                   --------      --------      --------
                                                                            (In thousands)

FINANCING ACTIVITIES
<S>                                                                <C>           <C>           <C>     
Change in short-term borrowings                                    $    549      $ (6,451)     $      0
Proceeds from sale of treasury stock -
  Copenhagen Stock Exchange                                               0             0         8,325
Proceeds from options and warrants exercised                            279           816         6,330
Purchase of treasury stock                                           (2,400)          (28)      (15,716)
                                                                   --------      --------      --------

Net cash used in financing activities                                (1,572)       (5,663)       (1,061)
Effects of exchange rates on cash                                        76          (689)         (915)
                                                                   --------      --------      --------
Net increase (decrease) in cash and cash equivalents                 (1,480)        8,598         3,928
Cash and cash equivalents at beginning of year                       34,545        33,065        41,663
                                                                   --------      --------      --------


Cash and cash equivalents at end of year                           $ 33,065      $ 41,663      $ 45,591
                                                                   ========      ========      ========

Interest paid during the year                                      $    321      $    187      $     58
                                                                   ========      ========      ========
Income taxes paid during the year                                  $  4,730      $  4,819      $ 10,645
                                                                   ========      ========      ========
</TABLE>

     In 1997, the Company exercised an option to acquire 35% of the equity in
Digianswer A/S, through conversion of a note receivable, recorded at December
31, 1996, at $681. The acquisition of CrossComm Corporation was completed partly
as a non-cash transaction. See Note 2.



See accompanying notes



                                       41
<PAGE>   42




                                   Olicom A/S

                   Notes to Consolidated Financial Statements

1. ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS
     The Company is a world-wide vendor of Asynchronous Transfer Mode, Token
Ring, Ethernet and multi-protocol routing products used in local area and wide
area networks. The Company designs, develops, markets and supports software and
hardware products which permit computer users operating different types of
equipment to communicate, exchange data and share computing resources.

REPORTING CURRENCY
     Although the Company and its subsidiaries maintain their books and records
in local currencies, as required by law, the Consolidated Financial Statements
have been prepared in U.S. dollars because the U.S. dollar is the currency of
the primary economic environment in which the Company and its subsidiaries
conduct their operations.

     The majority of the Company's sales are billed and collected in U.S.
dollars, and the majority of the Company's purchases of raw materials and
finished goods inventories are invoiced and paid in U.S. dollars.

PRINCIPLES OF CONSOLIDATION
     The consolidated financial statements include the accounts of Olicom A/S
and its majority- owned subsidiaries (the Company). The Company's investments in
20-50% owned companies are accounted for by the equity method of accounting.

USE OF ESTIMATES
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions, which affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

     The Company's inventories and capitalized technologies consist primarily of
items which are susceptible to technological obsolescence, a fact which has been
considered in determining asset valuation reserves as of December 31, 1997.
However, in the event of certain circumstances, such as the emergence of
otherwise unforeseen new technologies and significant changes in anticipated
market requirements and conditions, additional reserves related to assets held
as of December 31, 1997 could be required in the future.

CASH AND CASH EQUIVALENTS
     Cash and cash equivalents represent cash and short-term deposits with
maturities of less than three months at the time of purchase.

SHORT-TERM INVESTMENTS
     Management determines the appropriate classification of securities at the
time of purchase and reevaluates such designation as of each balance sheet date.
Short-term investments not classified as held-to-maturity are classified as
available-for-sale. Short-term investments available-for-sale are carried at
fair value, with the unrealized gains and losses, net of tax, reported in a
separate component of shareholders' 


                                       42
<PAGE>   43

equity. Realized gains and losses and declines in value judged to be other than
temporary on available-for-sale short-term investments are included in interest
income. The cost of short-term investments is based on the average cost method.
Interest and dividends on short-term investments classified as
available-for-sale are included in interest income.

INVENTORIES
     Inventories are stated as the lower of cost or market with cost determined
on the basis of the first in, first out method. Raw materials inventories are
sold at the Company's cost to subcontractors who assemble products to the
Company's specifications. Finished goods inventories include completed products
purchased from subcontractors.

LEASEHOLD IMPROVEMENTS AND EQUIPMENT
     Leasehold improvements and equipment are carried at cost. Depreciation is
charged on a straight-line basis to costs and expenses over the expected useful
lives of the assets. Equipment is depreciated over four years, and leasehold
improvements are amortized over the shorter of their estimated lives or
non-cancelable term of the lease.

GOODWILL
     Cost in excess of net assets of businesses acquired (goodwill) represents
the unamortized excess of the cost of acquiring a business over the fair value
of the assets acquired at the date of acquisition. Amortization is computed by
the straight-line method over the estimated life of the benefit received, which
is five to seven years.

     On an annual basis, an impairment test is performed on the basis of future
undiscounted operating cash-flows expected in respect of the assets to which the
goodwill relates. Should the amount of these undiscounted operating cash-flows
exceed the carrying amount of the related assets, an impairment write-off would
be recorded based on discounted expected operating cash-flows.

REVENUE RECOGNITION
     Revenue is recognized when products are shipped. Service revenues are
deferred and recognized ratably over the contractual periods. Certain sales have
been made allowing a limited right of return; however, the Company has not
experienced any significant amounts of such returns.

ACCRUED PRODUCT WARRANTY EXPENSE
     The Company provides for the estimated cost of warranty at the time of
product shipment.

RESEARCH AND DEVELOPMENT COSTS
     Research and development costs, including costs of developing software
products, are expensed as incurred. Application of Statement of Financial
Accounting Standards No. 86, "Accounting for the Costs of Computer Software to
Be Sold, Leased, or Otherwise Marketed," has not had any material effect on the
Company's consolidated financial position or results of operations.

FOREIGN CURRENCY TRANSLATION
     Gains and losses resulting from non-U.S. dollar transactions, and the
remeasurement of foreign currency balances and accounts denominated in
currencies other than the U.S. dollar, are included in the determination of net
income in the period in which they occur, in accordance with the requirements of
Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation".

                                       43
<PAGE>   44

     Gains and losses resulting from translation of the Company's equity
investments into U.S. dollars are included as a separate component of equity.

INCOME TAXES
     The Company accounts for income taxes by the liability method, as required
by Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes".

EARNINGS PER SHARE
     In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share". The
Standard is effective for both interim and annual periods ending after December
15, 1997. The Company has adopted SFAS 128, retroactively. Accordingly, the
Company has disclosed both Basic earnings per share and Diluted earnings per
share for all periods presented.

     Diluted earnings per share are computed based on the weighted average
number of common stock and common stock equivalents outstanding during each
year. Common stock equivalents are determined under the assumption that
outstanding warrants and options are exercised. Outstanding warrants and options
have been included in earnings per share computations based on the treasury
stock method.

      Basic earnings per share are computed based on the weighted average shares
outstanding during each year.

ADVERTISING
     Costs associated with advertising the Company's products and services are
expensed as incurred. Advertising costs for the years ended December 31, 1995,
1996 and 1997 approximated $1,656,000, $1,380,000 and $1,485,000, respectively.

RECENT ACCOUNTING STANDARDS
     In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 (SFAS 130), "Accounting for Reporting
Comprehensive Income" and Statement of Financial Accounting Standards No. 131
(SFAS 131), "Accounting for Segment Reporting". The Standards are both effective
for fiscal years beginning after December 15, 1997. SFAS 130 and SFAS 131 are
not expected to have any material impact on the financial statement
presentation.

2. BUSINESS COMBINATIONS
      In June 1997, the Company consummated its acquisition of CrossComm
Corporation, a provider of ATM and multi-protocol router technology for
mission-critical SNA/Token-Ring environments. The consideration, which was a
combination of $47.6 million in cash, 2,537,423 Common Shares and 1,022,771
three-year warrants to purchase Common Shares, totalled approximately $96.0
million.

      The acquisition was accounted for as a purchase. Accordingly, the results
of operations of the acquired business and the fair market values of the
acquired assets and assumed liabilities were included in the Company's financial
statements as of the effective date. This accounting treatment resulted in
approximately $9.7 million of intangible assets that will be amortized over
their estimated period of benefit. Approximately $40.9 million of the
acquisition cost represented purchased in process research and development,
which was determined through known valuation techniques in the high-technology
communications industry and was immediately expensed in the period of
acquisition because technological feasibility had not been established and no
alternative commercial use had been identified.

      The following summary, prepared on a pro forma basis, combines the results
of operations as if CrossComm had been acquired as of the beginning of the
periods presented. The summary includes the 


                                       44
<PAGE>   45

impact of certain adjustments such as goodwill amortization and estimated
changes in interest income because of cash outlays associated with the
transaction and the related income tax effect:

<TABLE>
<CAPTION>
                                                    DECEMBER 31
                                              1996                 1997
                                          -------------------------------
                                      (In thousands, except per share amounts)
                                                   (Unaudited)

<S>                                      <C>              <C>        
Net sales                                $   213,102      $   254,781
Net income                                    (1,433)          18,832
Basic earnings per share                       (0.08)            1.11
Diluted earnings per share                     (0.08)            1.06
</TABLE>

      The pro forma results are not necessarily indicative of what actually
would have occurred if the acquisition had been in effect for all periods
presented. In addition, they are not intended to be a projection of future
results and do not reflect any synergies that might or might not be achieved
from the combined operations.

3. WARRANTS
        In connection with the acquisition of CrossComm Corporation, the
Company's shareholders approved the issuance of three-year warrants, each whole
warrant being the right to acquire a Common Share at a price of $19.74 per each
full Common Share. As of December 31, 1997, the Company had issued warrants to
purchase 1,022,771 Common shares. During 1997, 666 warrants were exercised at a
price of $19.74 per share. The holders of the remaining 1,022,105 outstanding
warrants as of December 31, 1997, may exercise a warrant, at a price of $19.74
per share, no later than June 12, 2000. In the event that all or any part of the
warrants are not exercised by June 12, 2000, then such warrants will expire. The
warrants are listed on the Nasdaq National Market (OLCWF).

4. SHORT-TERM INVESTMENTS
     The following is a summary of available-for-sale securities held as current
assets:

<TABLE>
<CAPTION>
                                                          GROSS      GROSS
                                                          UNREALIZED UNREALIZED  BOOKED
                                              COST        GAINS      LOSSES      VALUE
                                             -------     -------     -------     -------
                                                            (In thousands)

<S>                                          <C>         <C>         <C>         <C>    
Private US Mutual Fund                       $10,357     $ 1,050     $ 1,521     $ 9,887
                                             -------     -------     -------     -------
December 31, 1996                            $10,357     $ 1,050     $ 1,521     $ 9,887
                                             =======     =======     =======     =======
Equity securities                            $   847     $   127     $    59     $   915
                                             -------     -------     -------     -------
December 31, 1997                            $   847     $   127     $    59     $   915
                                             =======     =======     =======     =======
</TABLE>

                                       45
<PAGE>   46

     The net adjustment to unrealized holding gains/(losses) on
available-for-sale short-term investments included as a separate component of
shareholders' equity totalled $(258,000), $(471,000) and $68,000 in 1995, 1996
and 1997, respectively.

5. LINES OF CREDIT
     The Company has unsecured lines of credit with two banks, providing maximum
facilities as of December 31, 1996 and 1997 of $11.0 million and $10.7 million,
respectively. The unused element thereof as of December 31, 1996 and 1997,
amounted to $11.0 million and $10.7 million, respectively.

6. INCOME TAXES
     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of December 31, 1996 and
1997 are as follows:


<TABLE>
<CAPTION>
                                                                   1996          1997
                                                                 --------      --------
                                                                     (In thousands)
<S>                                                              <C>           <C>     
Deferred tax liabilities
  Tax over book depreciation                                     $  1,105      $  1,497
  Inventory write down                                                223           646
  Other                                                                55           819
                                                                 --------      --------
                                                                    1,383         2,962
                                                                 --------      --------
Deferred tax assets
  Book over tax depreciation                                          318           735
  Allowance for uncollectible receivables                             410           935
  Inventory valuations                                                940         3,205
  Net operating losses carried forward (NOL)                            0         9,877
  Tax credit carryforwards                                              0         1,207
  Other accruals                                                      660         3,829
                                                                 --------      --------
Deferred tax assets, gross                                          2,328        19,788
                                                                 --------      --------
  Net deferred tax liabilities (assets) before
  valuation allowance                                            $   (945)     $(16,826)
  Valuation allowance                                            $      0      $ 14,901
                                                                 --------      --------
  Net deferred tax liabilities (assets)                          $   (945)     $ (1,925)
                                                                 ========      ========
</TABLE>



      The deferred tax asset valuation allowance, taken over at the acquisition
of CrossComm, is primarily attributed to U.S. federal and state deferred tax
assets. Management believes sufficient uncertainty exists regarding the
realizability of these items that a valuation allowance is required.

      At December 31, 1997, the Company has net operating loss and tax credit
carry forwards of approximately $25.5 million and $1.2 million, respectively,
for U.S. federal income tax purposes that expire in 2009 through 2011.

                                       46
<PAGE>   47

      For financial reporting purposes, income before income taxes includes the
following components:

<TABLE>
<CAPTION>
                                     1995          1996          1997
                                   --------      --------      --------
                                            (In thousands)
Pretax income:
<S>                                <C>           <C>           <C>      
  Denmark                          $ 19,167      $  9,034      $(31,813)
  United States                        (138)        3,657        24,626
                                   --------      --------      --------
                                   $ 19,029      $ 12,691      $ (7,187)
                                   ========      ========      ========
</TABLE>




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

<TABLE>
<CAPTION>
                                     1995          1996          1997
                                   --------      --------      --------
                                              (In thousands)
Current:
<S>                                <C>           <C>           <C>     
  Denmark                          $  4,312      $  3,468      $  1,090
  United States                         323         2,189        10,579
                                   --------      --------      --------
                                      4,635         5,657        11,669
                                   --------      --------      --------

Deferred:
  Denmark                             1,822          (101)        1,312
  United States                        (234)         (829)       (2,292)
                                   --------      --------      --------
                                      1,588          (930)         (980)
                                   --------      --------      --------
                                   $  6,223      $  4,727      $ 10,689
                                   ========      ========      ========
</TABLE>

      The reconciliation of income tax computed at the Danish statutory tax
rates to income tax expense is:

<TABLE>
<CAPTION>
                                                       1995                        1996                        1997
                                             ----------------------      ----------------------      ----------------------
                                                                              (In thousands)
                                                                 %                           %                           %

<S>                                          <C>                 <C>     <C>                 <C>     <C>                <C> 
Danish tax                                   $  6,470            34      $  4,315            34      $ (2,444)          (34)
Goodwill amortization                             125             1           247             2           411             6
Acquisition-related expenses                        0             0           336             2        12,827           179
Benefit of foreign tax relief                     (58)           (0)         (117)           (1)         (112)           (2)
United States taxes net of credits                 44             0           118             1             0             0
Other net                                        (358)           (2)         (172)           (1)            7             0
                                             --------      --------      --------      --------      --------      --------


                                             $  6,223            33      $  4,727            37      $ 10,689           149
                                             ========      ========      ========      ========      ========      ========
</TABLE>


     Undistributed earnings of the Company's United States subsidiaries amounted
to $71.5 million in 1997. Those earnings are considered to be indefinitely
reinvested. Upon distribution of those earnings in the form of dividends, the
amount thereof would be subject only to withholding tax at a rate of 5% in
accordance with the provisions of the Denmark/United States double tax treaty.





                                       47
<PAGE>   48




7. EMPLOYEE STOCK OPTION PLANS
     The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, "Accounting for Stock-Based Compensation", requires use of
option valuation models that were not developed for use in valuing employee
stock options and warrants. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.

1994, 1996 AND 1997 SHARE INCENTIVE PLANS
     The Company's 1994, 1996 and 1997 Share Incentive Plans have authorized the
grant of options to directors, executives and key employees for up to 425,000,
1,000,000 and 2,000,000 shares, respectively, of the Company's common stock. The
majority of options granted have 5 year terms and vest and become fully
exercisable at the end of 4 years of continued employment. Some options have
been granted with a half year term and vest and become fully exercisable at the
end of a half year of continued employment.

CROSSCOMM STOCK OPTIONS EXCHANGED FOR OLICOM STOCK OPTIONS
     At the acquisition of CrossComm approximately 1,500,000 CrossComm stock
options were exchanged for 905,511 Olicom stock options ("CrossComm options"),
with comparable exercise prices and terms.

     Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1995, 1996 and 1997; risk-free interest rates of 5.0%; dividend
yields of 0%; volatility factors of the expected market price of the Company's
common stock of 0.4; 25% of these options granted are expected to expire without
being exercised; and weighted-average expected life of the options of 5 years.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of fair value of its employee stock options.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows:


<TABLE>
<CAPTION>
                                                          1995           1996            1997
                                                       ----------     ----------     ----------
                                                       (In thousands, except earnings per share)

<S>                                                    <C>            <C>            <C>        
Net income - as reported                               $   12,806     $    7,425     $  (18,121)
Net income - pro forma                                 $   12,791     $    7,156     $  (20,307)
Basic earnings per share - as reported                 $     0.88     $     0.51     $    (1.15)
Basic earnings per share - pro forma                   $     0.88     $     0.49     $    (1.28)
Diluted earnings per share - as reported               $     0.87     $     0.50     $    (1.15)
Diluted earnings per share - pro forma                 $     0.87     $     0.48     $    (1.28)
                                                       ----------     ----------     ----------
</TABLE>



                                       48
<PAGE>   49




      A summary of the Company's stock option activity, and related information
for the three years ended December 31, 1997, follows:

<TABLE>
<CAPTION>
                                       Outstanding      Exercisable       Weighted-average   Weighted-average
                                       number  of       number of             exercise        fair value of
                                         options          options               price         option granted
                                         -------          -------              -------        --------------

<S>                                       <C>                               <C>                <C>
      January 1, 1995                     323,500                           $       9
      Granted                              30,000                                   9             $ 3.24
      Exercised                           (31,000)                                  9
      Expired                             (31,000)                                  9
                                         --------                                   -
      December 31, 1995                   291,500           47,250                  9

      Granted                             466,100                               11.49             $ 3.63
      Exercised                           (23,000)                                  9
      Expired                             (68,875)                                  9
                                         --------                                   -
      December 31, 1996                   665,725           77,875              10.74

      CrossComm options                   905,511                               10.52
      Granted                             710,200                               14.79             $ 6.36
      Exercised                          (589,794)                               9.98
      Expired                            (170,814)                              16.87
                                        ---------                           ---------
      December 31, 1997                 1,520,828          326,699          $   12.11
                                        =========        =========          =========
</TABLE>

The following table summarizes the status of the Company's stock options,
outstanding and exercisable at December 31, 1997:

<TABLE>
<CAPTION>
                                   Outstanding    Weighted-average Weighted-average  Exercisable   Weighted-average
      Range of                     number  of        remaining         exercise       number of       exercise
      Exercise Prices                shares       contractual life       price          shares          price
      ---------------              --------------------------------------------------------------------------------
<S>                                <C>              <C>                  <C>         <C>              <C>    
      $  1.00 - $  3.50                  268         3.73 years           $  3.36           268        $  3.36
      $  8.00 - $  9.00              344,813         8.19 years           $  8.43       168,314        $  8.43
      $  9.00 - $  9.50              138,175         0.50 years           $  9.00        82,250        $  9.00
      $  9.50 - $ 10.00               34,060         9.03 years           $  9.87        17,991        $  9.87
      $ 11.00 - $ 17.50              984,174         2.18 years           $ 14.06        48,525        $ 11.44
      $ 14.50 - $ 16.00               10,414         9.16 years           $ 14.71         1,749        $ 14.66
      $ 19.00 - $ 23.50                8,924         7.18 years           $ 22.18         7,602        $ 22.29
                                   ---------                                          ---------
                                   1,520,828                                            326,699
</TABLE>

8. EMPLOYEE BENEFIT PLANS

        The Company's subsidiaries in the U.S. have a 401(k) Plan. The Plan has
been in place since May 1, 1993. Effective January 1, 1997, the Plan allows for
both the Company and eligible employees to contribute. All employees over 21
years of age are eligible to participate. The Company's contribution equals 50%
of an employee's contribution that does not exceed 6% of compensation. The
Company's contribution expenses for 1996 and 1997, were $0 and $255,759,
respectively.

        The Company does not provide its employees with other post-retirement
and post-employment benefits.




                                       49
<PAGE>   50




9. LEASE COMMITMENTS
      The Company leases its headquarters and main warehouse facility under
noncancellable operating leases which expire during the period from 2006 to
2008. The leases contain escalation clauses. Additionally, the Company and its
subsidiaries are lessees in other noncancellable lease arrangements for office
buildings and warehouses, expiring on different dates.

       The total future minimum lease payments under the foregoing leases at
December 31, 1997, are:

<TABLE>
<CAPTION>
                                        Headquarters     Other         Total
                                        ------------     -----         -----
                                                (In thousands)

<S>                                      <C>          <C>           <C>    
              1998                       $ 1,996        $ 1,896       $ 3,892
              1999                         2,041          2,128         4,169
              2000                         1,852          1,936         3,788
              2001                         1,899          1,556         3,455
              2002                         1,947          1,862         3,809
              Remaining                   10,900          4,834        15,734
                                        --------       --------      --------

                                        $ 20,635       $ 14,212      $ 34,847
                                        ========       ========      ========
</TABLE>


Total lease amounts charged to expense are $ 1,420,000 in 1995, $ 2,469,000 in
1996 and $3,594,000 in 1997.

10. RELATED PARTY TRANSACTIONS
      On January 23, 1996 the Company completed the sale of its 35.6% investment
in Contex A/S to Nilex Systems ApS, a related party, for a cash consideration of
$7.2 million (DKK 41.0 million). The sale resulted in a gain of $2,878,000 net
of taxes.

11. SEGMENT INFORMATION, EXPORT SALES AND MAJOR CUSTOMERS
      The Company currently operates in one principal industry segment: the
design and marketing of Asynchronous Transfer Mode, Token-Ring, Ethernet and
multi-protocol routing products. Export sales to unaffiliated customers were
divided as follows:



                                       50
<PAGE>   51





<TABLE>
<CAPTION>
                                                               1995           1996           1997
                                                              -------        -------        -------
                                                                          (In thousands)
        INCLUDED IN US OPERATIONS:
<S>                                                           <C>            <C>            <C>    
        Canada                                                $ 2,147        $ 1,181        $ 2,804
        South America                                         $     0        $ 1,710        $ 1,707
        Europe                                                $     0        $     0        $ 3,925
        Pacific Basin & other                                 $     0        $   223        $   246

        INCLUDED IN DANISH OPERATIONS:
        United States                                         $     0        $   637        $ 4,519
        United Kingdom                                        $20,517        $19,437        $20,477
        Europe (other than Denmark and United Kingdom)        $38,434        $58,323        $69,456
        Pacific Basin & other                                 $ 7,717        $ 8,628        $ 8,429
</TABLE>

      Sales to one customer exceeded 10% of sales in the year 1995, amounting to
$13.9 million. In the year 1996, no single customer exceeded 10% of sales. In
the year 1997, sales to a single customer exceeded 10% of sales, amounting to
$24.7 million.

      Information about the Company's operations by geographic areas is as
follows:


<TABLE>
<CAPTION>
                                      DANISH            US               ELIMI-             CONSO-
                                      OPERATIONS        OPERATIONS       NATIONS            LIDATED
                                      ---------         ---------        ---------         ---------
                                                              (In thousands)
1997
Net sales:

<S>                                   <C>               <C>              <C>               <C>      
Customers                             $ 125,960         $ 112,269        $       0         $ 238,229
Intercompany                             63,128             6,076          (69,204)                0
                                      ---------         ---------        ---------         ---------

Total                                 $ 189,088         $ 118,345        $ (69,204)        $ 238,229
                                      =========         =========        =========         =========


Operating income                      $ (30,181)        $  22,955        $  (1,191)        $  (8,417)
                                      =========         =========        =========         =========


Identifiable assets                   $ 130,325         $  74,162        $ (42,156)        $ 162,331
                                      =========         =========        =========         =========
</TABLE>




                                       51
<PAGE>   52



<TABLE>
<CAPTION>
                                      DANISH            US               ELIMI-             CONSO-
                                      OPERATIONS        OPERATIONS       NATIONS            LIDATED
                                      ---------         ---------        ---------         ---------
                                                              (In thousands)
1996
Net sales:

<S>                                   <C>             <C>             <C>              <C>     
Customers                             $106,507        $ 61,721        $      0         $168,228
Intercompany                            34,136               0         (34,136)               0
                                      --------        --------        --------         --------

Total                                 $140,643        $ 61,721        $(34,136)        $168,228
                                      ========        ========        ========         ========



Operating income                      $  4.918        $  3,657        $   (968)        $  7,607
                                      ========        ========        ========         ========


Identifiable assets                   $102,938        $ 29,840        $ (4,854)        $127,924
                                      ========        ========        ========         ========
</TABLE>


<TABLE>
<CAPTION>
                                      DANISH            US               ELIMI-             CONSO-
                                      OPERATIONS        OPERATIONS       NATIONS            LIDATED
                                      ---------         ---------        ---------         ---------
                                                              (In thousands)
1995
Net sales:

<S>                                   <C>             <C>              <C>              <C>     
Customers                             $ 75,307        $ 52,162         $      0         $127,469
Intercompany                            41,382               0          (41,382)               0
                                      --------        --------         --------         --------


Total                                 $116,689        $ 52,162         $(41,382)        $127,469
                                      ========        ========         ========         ========



Operating income                      $ 17,896        $   (138)        $ (1,995)        $ 15,763
                                      ========        ========         ========         ========


Identifiable assets                   $110,904        $ 29,722         $(13,299)        $127,327
                                      ========        ========         ========         ========
</TABLE>



                                       52
<PAGE>   53





12. FINANCIAL INSTRUMENTS


A. FAIR VALUE OF FINANCIAL INSTRUMENTS

      The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:

              Cash and cash equivalents: The carrying amount reported in the
         balance sheet for cash and cash equivalents approximates its fair
         value.

              Short-term investments: The fair values for short-term investments
         are based on quoted market prices.

              Foreign currency exchange contracts: The fair value of the
         Company's foreign currency exchange contracts are based on quoted
         market prices.

              Foreign currency options: The fair value of the Company's foreign
         currency options are based on quoted market prices.

The carrying amounts and fair values of the Company's financial instruments at
December 31, 1996 and 1997 are as follows:

<TABLE>
<CAPTION>
                                                           1996                           1997
                                                  -----------------------        -----------------------
                                                  Carrying        Fair          Carrying         Fair
                                                   amount         value          amount          value
                                                  --------       --------        --------       --------
                                                                       (In thousands)

<S>                                               <C>            <C>             <C>            <C>     
    Cash and cash equivalents                     $ 41,663       $ 41,663        $ 45,591       $ 45,591
    Short-term investments                           9,887          9,887             915            915
    Foreign currency exchange contract                   0          (259)               0          (222)
    Foreign currency options                             0              0               0              0
</TABLE>



B. OFF-BALANCE SHEET RISK
      The Company enters into forward currency exchange contracts and options to
hedge foreign currency transactions on a continuing basis for periods consistent
with its foreign currency exposures. The objective of this practice is to reduce
the impact of foreign exchange movements on the Company's operating results. The
Company's hedging activities do not create exchange rate risk because gains and
losses on these contracts generally offset losses and gains on the assets,
liabilities and transactions being hedged.






                                       53
<PAGE>   54




      At December 31, 1996 and 1997 the stated or notional amounts of the
Company's outstanding off-balance sheet financial instruments were as follows:

<TABLE>
<CAPTION>
                                                            1996           1997
                                                          --------       --------
                                                                (In thousands)

<S>                                                       <C>            <C>     
      Forward currency exchange contracts                 $ 12,000       $ 12,000
      Foreign currency purchased options                         0              0
      Foreign currency sold options                              0              0
</TABLE>



C. CONCENTRATIONS OF CREDIT RISK
      The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and cash equivalents, short-term
investments and accounts receivable.

      Cash is maintained with major banks in Denmark and the United States.
Foreign currency exchange contracts and options are entered into with a major
bank in Denmark.

      The Company markets its products principally to distributors, value added
resellers and original equipment manufacturers in the computer industry.

      Concentrations of credit risk with respect to accounts receivable from
customers located outside Denmark are limited under the terms of an agreement
entered into with the company "EKR CreditInsurance A/S". This agreement
guarantees up to 90% of the amount of the related receivables. The amounts so
covered at December 31, 1996 and 1997 were $19,645,000 and $23,791,000,
respectively.

13. LITIGATION
      From time to time, the Company is involved in litigation relating to
claims arising out of its operations in the normal course of business. As of
December 31, 1997, the Company is not a party to any legal proceedings, the
adverse outcome of which, in management's opinion, would have a material adverse
effect on the Company's results of operations or financial position.





                                       54
<PAGE>   55





ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS

              (a) The following consolidated financial statements are filed as
         part of this Annual Report:


<TABLE>
<CAPTION>
                                                                                                         Page no
                                                                                                         -------
<S>                                                                                                          <C>
1.  Consolidated Financial Statements
    Report of Independent Auditors                                                                           35
    Consolidated Balance Sheets at December 31, 1996 and 1997                                                36
    Consolidated Statements of Income for the years
         ended December 31, 1995, 1996 and 1997                                                              38
    Consolidated Statements of Shareholders' Equity for the years
         ended December 31, 1995, 1996 and 1997                                                              39
    Consolidated Statements of Cash Flows for the years
         ended December 31, 1995, 1996 and 1997                                                              40
    Notes to Consolidated Financial Statements                                                               42
</TABLE>


         All other supplementary schedules relating to the Company are omitted
because they are not required or because the required information, where
material, is contained in the Consolidated Financial Statements or Notes
thereto.

              (b) The following exhibits are filed as part of this Annual
         Report:

<TABLE>
<CAPTION>
      Exhibit
      Number                      Description of Exhibits
      ------                      -----------------------
<S>        <C>  <C>
       1.1 --   Articles of Association of the Company, as amended (1).

       1.2 --   Rules of Procedure for the Board of Directors.

       2.1 --   1994 Share Incentive Plan, as amended (2).

       2.2 --   1996 Share Incentive Plan (3).

       2.3 --   1997 Share Incentive Plan (3).

       3.1 --   Agreement of Substitution (License Agreement) dated as of
                September 1, 1990, between Willemijn Houdstermaatschappij BV
                and the Company (4).+

       3.2 --   Form of Indemnification Agreement between the Company
                and/or Olicom, Inc.) and Jan Bech, Lars Stig Nielsen, Bo Vilstrup,
                Frank G. Petersen, Michael Peytz, Soren Bjerre-Nielsen, Boje Rinhart,
                Niels Jorgensen, Jorgen Hog, Steen B. Lohse, Per Bruno Larsen,
                David F. Burkey, Claus Christensen and Niels Christian Furu (4).
</TABLE>

                                       55
<PAGE>   56

<TABLE>
<S>       <C>   <C>
       3.3 --   Service Contract dated August 31, 1992, between the
                Company and Lars Stig Nielsen (4).

       3.4 --   Trademark Agreement effective as of September 2, 1992, between
                the Company and Ing. C. Olivetti & C., S.p.A. (4).

       3.5 --   Amendment to Trademark Agreement dated June 10, 1993,
                between the Company and Ing. C. Olivetti & C., S.p.A. (5).

       3.6 --   License Agreement dated October 19, 1988, between the Company
                and Texas Instruments France, as amended by Amendment to
                License Agreement dated November 29, 1989, together with
                Texas Instruments Program License Agreement dated October 11,
                1989, between the Company and Texas Instruments A/S,
                Amendment to License Agreements dated October 6, 1992,
                between the Company and Texas Instruments France, and
                Amendment to License Agreement(s) dated January 1, 1992,
                between the Company and Texas Instruments Trade Corporation (4).+

       3.7 --   Share Purchase Agreement dated January 23, 1996, between the Company
                and Nilex Systems ApS.(1).

       3.8 --   Agreement and Plan of Reorganization dated as of March
                20, 1997, among the Company, PW Acquisition Corporation and
                CrossComm Corporation (1).
</TABLE>

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

       (1) Incorporated herein by reference to the Company's registration
           statement on Form F-4, registration no. 333-24655.

       (2) Incorporated herein by reference to the Company's registration
           statement on Form S-8, registration no. 33-93684.

       (3) Incorporated herein by reference to the Company's Annual Report on
           Form 20-F for the fiscal year ended December 31, 1996, file no.
           0-20738.

       (4) Incorporated herein by reference to the Company's registration
           statement on Form F-1, registration no. 33-51818.

       (5) Incorporated herein by reference to the Company's Annual Report on
           Form 20-F for the fiscal year ended December 31, 1993, file no.
           0-20738.

       +   Confidential treatment granted as to portions thereof.



                                       56
<PAGE>   57





                                   SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                   OLICOM A/S


                                   By:    /s/   Lars Stig Nielsen
                                          -------------------------------------
                                          Lars Stig Nielsen
                                          President and Chief Executive Officer


June 14, 1998



                                       57


<PAGE>   58
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
      Exhibit
      Number                      Description of Exhibits
      ------                      -----------------------
<S>        <C>  <C>
       1.1 --   Articles of Association of the Company, as amended (1).

       1.2 --   Rules of Procedure for the Board of Directors.

       2.1 --   1994 Share Incentive Plan, as amended (2).

       2.2 --   1996 Share Incentive Plan (3).

       2.3 --   1997 Share Incentive Plan (3).

       3.1 --   Agreement of Substitution (License Agreement) dated as of
                September 1, 1990, between Willemijn Houdstermaatschappij BV
                and the Company (4).+

       3.2 --   Form of Indemnification Agreement between the Company
                and/or Olicom, Inc.) and Jan Bech, Lars Stig Nielsen, Bo Vilstrup,
                Frank G. Petersen, Michael Peytz, Soren Bjerre-Nielsen, Boje Rinhart,
                Niels Jorgensen, Jorgen Hog, Steen B. Lohse, Per Bruno Larsen,
                David F. Burkey, Claus Christensen and Niels Christian Furu (4).

       3.3 --   Service Contract dated August 31, 1992, between the
                Company and Lars Stig Nielsen (4).

       3.4 --   Trademark Agreement effective as of September 2, 1992, between
                the Company and Ing. C. Olivetti & C., S.p.A. (4).

       3.5 --   Amendment to Trademark Agreement dated June 10, 1993,
                between the Company and Ing. C. Olivetti & C., S.p.A. (5).

       3.6 --   License Agreement dated October 19, 1988, between the Company
                and Texas Instruments France, as amended by Amendment to
                License Agreement dated November 29, 1989, together with
                Texas Instruments Program License Agreement dated October 11,
                1989, between the Company and Texas Instruments A/S,
                Amendment to License Agreements dated October 6, 1992,
                between the Company and Texas Instruments France, and
                Amendment to License Agreement(s) dated January 1, 1992,
                between the Company and Texas Instruments Trade Corporation (4).+

       3.7 --   Share Purchase Agreement dated January 23, 1996, between the Company
                and Nilex Systems ApS.(1).

       3.8 --   Agreement and Plan of Reorganization dated as of March
                20, 1997, among the Company, PW Acquisition Corporation and
                CrossComm Corporation (1).
</TABLE>

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

       (1) Incorporated herein by reference to the Company's registration
           statement on Form F-4, registration no. 333-24655.

       (2) Incorporated herein by reference to the Company's registration
           statement on Form S-8, registration no. 33-93684.

       (3) Incorporated herein by reference to the Company's Annual Report on
           Form 20-F for the fiscal year ended December 31, 1996, file no.
           0-20738.

       (4) Incorporated herein by reference to the Company's registration
           statement on Form F-1, registration no. 33-51818.

       (5) Incorporated herein by reference to the Company's Annual Report on
           Form 20-F for the fiscal year ended December 31, 1993, file no.
           0-20738.

       +   Confidential treatment granted as to portions thereof.