<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, 1996.

                                       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:

<TABLE>
<CAPTION>
                                                    NAME OF EACH EXCHANGE ON
                 TITLE OF EACH CLASS                    WHICH REGISTERED
<S>                                                 <C>
Common Shares, nominal value DKK 0.25 each Common    Nasdaq National Market
Stock Purchase Warrants                              Nasdaq National Market
</TABLE>

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: 14,682,695
             Common Stock Purchase Warrants: -0-

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]

<PAGE>   2
                      DOCUMENTS INCORPORATED BY REFERENCE

                                     None.




                                      1
<PAGE>   3
ITEM 1. DESCRIPTION OF BUSINESS.

     Olicom A/S ("Olicom" or the "Company") develops and markets local area
network ("LAN") software and hardware products that enable computer users to
communicate, exchange data and share computing resources in workgroup and
enterprise LANs or in wide area networks ("WANs").  The Company believes that
its products offer superior performance, are price competitive and are fully
compatible with Institute of Electrical and Electronics Engineers ("IEEE")
standards and networking and internetworking products manufactured by
International Business Machines Corporation ("IBM") and other 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").
Lasat Communications A/S ("Lasat"), a majority-owned subsidiary, develops and
markets through distributors and Internet service providers desktop and mobile
modem products.

THE LAN INDUSTRY

     Since the early 1980's, the computing environments of many organizations
have evolved from a single vendor, mainframe or minicomputer orientation to
multi-vendor environments having a greater number of workstations and personal
computers ("PCs").  This trend has resulted in the development of sophisticated
local area network and wide area network hardware and software products.

     To provide local interoperability among computer devices, two primary
industry standards -- Ethernet and Token Ring -- were developed by computer
vendors and adopted as standards by the IEEE.  More recently, asynchronous
transfer mode ("ATM"), a broadband technology for transmitting voice, video and
data over LANs and WANs, was developed by the International Telecommunications
Union ("ITU") and the ATM Forum and adopted as a standard by ITU, the American
National Standards Institute ("ANSI"), the European Telecommunications
Standards Institute ("ETSI") and other standard bodies.  All three standards
define the method of connectivity to, the physical characteristics of, and the
management of information on the network.  Ethernet operates at 10 and 100 mega
bits per second ("Mbps"), while Token Ring operates at 4 and 16 Mbps. ATM is
capable of operating at 25 and 155 Mbps.

COMPANY HISTORY

     Olicom was organized in the Kingdom of Denmark in 1985 by Lars Stig
Nielsen (Olicom's Managing Director and Chief Executive Officer).  Since 1987,
Olicom has been involved in designing, developing and producing high-quality
Token Ring 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, followed by the introduction in 1990
of Token Ring NICs for Industrial Standard Architecture ("ISA"), Extended
Industrial Standard Architecture ("EISA") and Micro Channel Architecture
("MCA") busses.  Commencing in late 1991 with its introduction of local and
remote bridges, Olicom was able to supply all components necessary for total
enterprise-wide LAN networking. In 1992, a wholly-owned

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<PAGE>   4

subsidiary of Olicom purchased substantially all of the assets of Dico 1992 A/S
(formerly known as Connect International A/S, a Danish corporation), thereby
enabling Olicom to further broaden its product line to take advantage of the
demand for Ethernet networks from small- and medium-sized enterprises. In 1994,
Olicom began developing ATM products and in 1995 began shipping 155 Mbps ATM
NICs. In 1996, the Company began shipping a Token Ring switch. See
"--Products."

     In order to provide global support of an increasingly broad product line,
the Company established Olicom, Inc., a Delaware corporation ("Olicom, Inc."),
with its headquarters in Plano, Texas, to coordinate marketing in North and
South America.

     On June 12, 1997, the Company acquired CrossComm Corporation
("CrossComm")(see "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Subsequent Event").  CrossComm develops,
manufactures, markets and supports advanced networking products, which
concurrently support bridging, multi-protocol routing and high speed LAN
switching functions and ATM switching.  CrossComm has marketed these products
to customers transitioning mission-critical business applications from legacy
hierarchical computing environments, typically dominated by IBM mainframe
systems with Systems Network Architecture ("SNA"), to client/server
environments, where computing power is distributed throughout the organization
and interconnected by an enterprise-wide network.  CrossComm's product line,
which consists of a family of multi-protocol routers and high speed LAN and ATM
switches, supports a variety of LAN and WAN connections and LAN communications
protocols and can be readily integrated with a customer's existing computer
equipment.  As the closing of the Company's acquisition of CrossComm occurred
as of the date of this Report and subsequent to the fiscal year covered by this
Report, the description of the Company's business does not include a discussion
of the acquired business of CrossComm or, except as set forth in "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Subsequent Event" and "-- Business Environment and Risk Factors," the effect or
potential effect of such acquisition on the Company's business, financial
condition or results of operations.

PRODUCTS

     The Company's principal goal has been to develop a leadership position
among those companies that develop and market products that are completely
interoperable with devices marketed by IBM and others, while at the same time
providing superior performance and additional features at competitive prices.
The Company's products are fully compatible with IBM products, 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.  Further, in
expanding its product line, Olicom works closely with key end-users to define
emerging market requirements and features which should be addressed.

                                       3
<PAGE>   5


     TOKEN RING PRODUCTS

     The Company's Token Ring products include NICs, internetworking products,
HUBs and cabling components, switch products, repeaters, converters, filters
and associated software drivers for use in LANs using the Token Ring protocol.
Within these categories, the Company provides a broad product range of Token
Ring network products.

     Network Interface Cards.  Olicom Token Ring NICs are compatible with
standard PC bus architectures (including ISA, EISA, MCA, PC Card (formerly
called "PCMCIA") and Peripheral Component Interface ("PCI")).  Olicom Token
Ring NICs support both types of standard wiring systems (unshielded twisted
pair or type 3 cabling ("UTP") and shielded twisted pair or type 1 cabling
("STP")), both standard speeds (4 Mbps and 16 Mbps), and the leading network
operating systems developed by the major vendors (IBM, Novell, Inc. ("Novell"),
Microsoft Corporation ("Microsoft") and Banyan Systems Incorporated ("Banyan"),
together with UNIX System V of American Telephone & Telegraph Co. ("AT&T") and
UNIX System V of Santa Cruz Operation ("SCO")).  At the end of 1993, the
Company addressed the portable computer market sector through the introduction
of its pocket and PCMCIA adapter products. Olicom's Token Ring PCI NIC was a
significant introduction in the second half of 1994, with a second generation
PCI NIC introduced in the first half of 1995.

     The Company has developed a specially-tuned high-performance version of
the Media Access Control ("MAC") code from Texas Instruments ("TI") and has
also developed a Logical Link Control ("LLC") protocol.  Both the MAC code and
the LLC protocol interface with chipsets that are manufactured by TI and used
by Olicom in its TI-based Token Ring NICs.   The Company's engineering
expertise in analog LAN front-end design, together with the MAC code and LLC
protocol developed by Olicom's software engineers for the TI chipsets, have
enabled Olicom to produce extremely reliable Token Ring products.

     The Company's drivers include a number of special intelligent frame
handling functions which are designed to handle each frame of data in native
mode in a manner that enhances performance.  In addition, by performing data
path analysis of all critical program sections, Olicom minimizes data transfer
delay in its Token Ring products.

     To meet additional performance demands, an increasing number of the
Company's NICs also include "bus master" capability to provide direct memory
access ("DMA") for faster data transfers and higher overall performance.
Olicom's Token Ring adapter card products currently consist of the following
NICs:

     ISA 16/4 Adapter: a selectable 16 and 4 Mbps bus mastering NIC that is
     compatible with AT or XT bus-based PCs.

     MCA 16/4 Adapter: a selectable 16 and 4 Mbps bus mastering NIC that is
     compatible with Micro Channel bus-based PCs.


                                       4
<PAGE>   6


     EISA 16/4 Workstation Adapter: a selectable 16 and 4 Mbps bus mastering
     NIC that is compatible with EISA bus-based PCs.

     EISA 16/4 Server Adapter: a selectable 16 and 4 Mbps shared RAM NIC that
     is compatible with EISA bus-based PCs used as network servers.

     PCI 16/4 Adapter: a selectable 16 and 4 Mbps NIC that is compatible with
     PCI bus-based PCs.

     PC Card (or PCMCIA) GoCard(TM) Adapter: a selectable 16 and 4 Mbps credit
     card sized adapter for notebook PCs equipped with PCMCIA expansion slots.

     PC Card (or PCMCIA) GoCard(TM) LAN/Modem Adapter: a selectable 16 and 4
     Mbps adapter and 33.6 Kbps modem for notebook PCs equipped with PCMCIA
     expansion slots.

     Token Ring Switch Products.  Token Ring switching is seen as a way to
boost the capacity of traditional shared Token Ring LANs.  Olicom's
CrossFire(TM) Token Ring switch provides eight ports for connecting eight
separate rings or file servers. Featuring a fast multi-processor architecture,
the CrossFire(TM) switch provides greater aggregate bandwidth compared to
traditional two-port bridges used for connecting rings (or LAN segments). The
greater bandwidth delivers higher overall LAN performance and enables Token
Ring networks to extend the usefulness of Token Ring LANs.

     Internetworking Components.  An increasing number of departmental LANs are
being connected to one another by the use of internetworking components such as
bridges and routers. To address this market, the Company has developed and
markets a range of products that includes local and remote bridges for PCs as
well as stand alone products. In addition, Olicom markets a multi-protocol
router adapter that can be used in Novell's NetWare multi-protocol router.
Olicom's internetworking products currently consist of the following:

     Local Bridge 16/4: connects two closely located LAN Token Rings into one
     logical network and is available in ISA and MCA bus versions.

     Wire Speed Local Bridge 16/4: connects two closely located LAN Token Rings
     into one logical network and has a frame forwarding rate which is very
     close to wire speed.

     Remote Bridge: connects two geographically remote Token Rings into one
     logical network, and integrates the features of an intelligent HUB. The
     remote bridge can connect up to 40 workstations through two STP or UTP
     type Lobe Attachment Modules ("LAMs) and is available in stand alone and
     rack mountable product designs.

     Remote Multiport Bridge: connects up to four geographically remote Token
     Rings to a central site, forming one logical network. This product is
     available in stand alone and rack mountable product designs.

                                       5
<PAGE>   7


     Multi-protocol Router Adapter: ISA, EISA and MCA Token Ring NICs that use
     Novell's NetWare multi-protocol router software to create a low-cost
     router product which allows the interconnection of Token Ring and Ethernet
     networks.

     The connected rings for all bridges can be any combination of 4 Mbps and
16 Mbps Token Ring networks.  The bridges are IBM-compatible, and manageable by
IBM LAN Manager, LAN Network Manager, HP OpenView for Windows and NetView. In
addition to running under the DOS operating system, the Remote Bridge 16/4 is
also capable of operating under IBM OS/2 LAN Server. The stand alone and rack
mountable bridges can also be managed through an out-of-band management
facility in case of network link failure, which maximizes network availability
for the end-user.

     Included with all Token Ring bridge products is Olicom's Bridge Manager
utility software, which is an application interface program developed by Olicom
for use in conjunction with IBM LAN Network Manager for bridge configuring and
monitoring.  Olicom's Bridge Manager software programs for PC-based and
integrated bridges support IBM LAN Network Manager protocol and Simple Network
Management Protocol ("SNMP"), use integrated, remotely managed filters, and
include WAN link utilization calculation and log performance counters for trend
analysis.  In addition to being provided with Olicom bridges, this software is
marketed by the Company to selected large OEMs, who integrate the Company's
software into their own customers' products.

     HUBs and Cabling Components.  Olicom's Token Ring HUBs and cabling
products provide a broad range of connectivity options.  Olicom's cabling
components currently include the following:

     Controlled Access Unit ("CAU"): available with either UTP or STP cabling
     support, the CAU connects the main ring and up to four LAMs, each of which
     can have up to 20 nodes; the CAU and associated LAMs comprise an
     IBM-compatible intelligent cabling system for Token Ring LANs that allows
     the user to control ports on a network and perform automatic Token Ring
     error recovery.

     10-Port Controlled Attachment Module ("CAM"): integrates the features of a
     CAU and LAM into one compact intelligent HUB that provides connectivity
     for up to twenty UTP nodes; the CAM can connect up to two 20-port UTP or
     STP LAMs and provides a cost-effective solution for remote branch offices
     and small workgroups. Olicom also markets a 20-Port CAM.

     8-Port Multistation Access Unit ("MAU"): available with either UTP or STP
     cabling support, the MAU has integrated diagnostic test circuitry which,
     together with lobe activity light emitting diodes ("LEDs"), indicates the
     status of relays and provides an easy and efficient way to reset relays
     and test the operation of the MAU.

     All HUB products feature extensive network management support for IBM LAN
Network Manager, NetView and SNMP, as well as out-of-band management.

                                       6
<PAGE>   8


     Repeaters, Converters and Filters. To extend the physical wiring lengths
in Token Ring networks, the Company's product line includes a Fiber Converter
16/4 (which converts electrical signals to optical signals, and optical signals
back to electrical signals) and a copper signal Repeater 16/4 (which
regenerates signals traveling on copper wiring). Further, the Company also
markets a UTP Media Filter 16/4, which is a low-cost filter assembly that
limits the amount of electro-magnetic noise radiated across unshielded cable.

     ETHERNET PRODUCTS

     Olicom's Ethernet products have enabled the Company to further extend its
product line to products demanded by enterprises with mixed networking
environments comprised of both Token Ring and Ethernet products.

     Network Interface Cards.  Olicom Ethernet NICs are compatible with most
standard PC architectures (including ISA, EISA, MCA and PCI), and support UTP
and Coaxial (RG 58) cabling systems (as well as 10Base5 cable through
AUI-interface). Ethernet NICs are compatible with the de facto standard set by
Novell, which provides end-users with ease of installation in all major network
operating systems by utilizing standard software drivers supplied by the
network operating systems. Additionally, the Company's ISA/II products support
standard NE2000 drivers and also offer fiber connectivity. Olicom's Ethernet
products currently include the following:

     Ethernet MCA Adapter: a 16-bit NIC which is fully compatible with IBM PS/2
     systems and compatibles, with connectivity for UTP, Coaxial (RG 58) and
     AUI.

     Ethernet EISA 32 Adapter: a 32-bit EISA bus-based NIC, with connectivity
     for UTP, Coaxial (RG 58) and AUI.

     Ethernet ISA Adapter: a 16-bit ISA bus-based NIC, with connectivity for
     UTP, Coaxial (RG 58), AUI and fiber.

     Ethernet GoCard(TM) PC Card Adapter: a credit card sized adapter for
     notebook PCs equipped with PCMCIA expansion slots.

     Ethernet GoCard(TM) LAN/Modem PC Card: an Ethernet adapter and 14.4 Kbps
     modem for notebook PCs equipped with PCMCIA expansion slots.

     Ethernet PCI 32 Adapter: a 32-bit PCI bus-based NIC, with connectivity for
     UTP, Coaxial (RG 58) and AUI.

     HUBs and Cabling Components: Olicom provides managed and unmanaged 16-port
     and 9-port workgroup HUBs for Ethernet cabling systems.

                                       7
<PAGE>   9


      FAST ETHERNET PRODUCTS

     To meet the rapidly growing demand for better Ethernet LAN performance due
to the proliferation of high-usage workgroup and multimedia applications as
well as LAN-based Internet access, Olicom introduced a comprehensive range of
Fast Ethernet adapters during 1996, as follows:

     Fast Ethernet MCA 10/100 Adapter: a 16-bit NIC which is fully compatible
     with IBM PS/2 systems and compatibles, with connectivity for RJ45
     connectors. This NIC functions at either 10 Mbps or 100 Mbps.

     Fast Ethernet ISA 10/100 Adapter: a 16-bit ISA bus-based NIC, with
     connectivity for RJ45 connectors. This NIC functions at either 10 Mbps or
     100 Mbps.

     Fast Ethernet PCI 10/100 Adapter: a 32-bit PCI bus-based NIC, with
     connectivity for RJ45 connectors. This NIC functions at either 10 Mbps or
     100 Mbps.

     ATM PRODUCTS

     ATM has emerged as a high-speed standard in deploying a new generation of
client/server and multimedia applications in enterprise networks.  ATM provides
the increased speed and greater bandwidth required at the desktop for these new
applications. In 1995, Olicom began shipping the first adapter in the
RapidFire(TM) family of 155 Mbps NICs:

     RapidFire(TM) PCI ATM 155 Adapter: this adapter provides high bandwidth
     and high network data throughput for high-demand workstations and servers,
     and supports full duplex 155 Mbps communication. There are two versions of
     this adapter: a multiport fiber version and a UTP 5 version.

     CellDriver(TM) LAN Emulation Software: this driver technology for the
     RapidFire(TM) family of Olicom ATM adapters enables existing,
     off-the-shelf application software, such as Lotus Notes, to be used over
     ATM networks. CellDriver(TM) technology has been licensed from Olicom by
     Microsoft.
 
STRATEGIC RELATIONSHIPS

     The Company's strategy of working with third parties to develop new
product capabilities has resulted in relationships with Cisco Systems, Inc.
("Cisco"), Fujitsu Microelectronics Ltd. ("Fujitsu"), TI, Intel Corporation
("Intel"), Novell, Ing. C. Olivetti & C., S.p.A. ("Olivetti S.p.A.") and its
affiliates (collectively, "Olivetti"), and Hewlett-Packard France
("HP-France").  In addition, the Company's strategic relationship with Lasat
has now evolved into a majority-ownership interest in Lasat. See "-- Lasat
Communications."  The Company works jointly with these parties in the exchange
of technical information and the mutual development of products of common
interest and benefit.  These strategic relationships provide the Company with
significant market feedback, which the Company utilizes in new product
planning.  These relationships are

                                       8
<PAGE>   10

undertaken by the Company pursuant to agreements which do not involve the
sharing of revenue or the payment of license royalties.

     Cisco.  During 1996, Olicom and Cisco signed a long-term agreement to
jointly develop Token Ring products and technology.  As part of the agreement,
the two companies will co-develop a number of Token Ring switch products and
subsequently offer these products separately under each company's respective
brand name.  Under the agreement, Cisco will also license core Token Ring
technology from Olicom, including the Company's PowerMACH(TM) software, for use
in future Cisco internetworking products.  Among the first products from the
alliance is a Token Ring switch that the Company intends to focus on delivering
industry leading price/performance. In connection with the license of the Cisco
technology, the Company has agreed not to enter into direct relationship with
certain vendors for the license, distribution or development of products based
on, or using, Cisco technology or its derivatives.

     Fujitsu.  The Company has entered into a strategic cooperation agreement
with Fujitsu with respect to the development of ATM NIC chipsets.

     TI.  The Company has worked closely with TI in the development and testing
of 4 Mbps and 16/4 Mbps Token Ring adapter cards and in the development of
optimized software drivers for these adapters to provide full 16 Mbps
performance.

     Intel.  The Company has entered into an OEM agreement with Intel, whereby
the Company sells to Intel 16/4 Mbps EISA, ISA and MCA NICs, together with UTP
Media Filters 16/4.

     Novell.  The Company and Novell are cooperating in developing and
marketing PC bridge and router technology.  Part of the cooperation is the
Company's licensing of its Bridge Manager utility software program to Novell,
and Novell's licensing of its NetWare multi-protocol router software to the
Company on an OEM basis.

     Olivetti.  The Company has entered into a strategic development contract
with Olivetti pursuant to which the Company will develop a network management
system for Token Ring LANs.  In addition, the Company and Olivetti have entered
into additional agreements for the development of software products such as
Ethernet drivers, an Error Rate Manager software management product, and UNIX
stream-based protocol software.

     HP-France.  As part of an OEM agreement, HP-France has purchased the
Company's Ethernet ISA adapter cards to integrate into PCs with remote program
load, for the purpose of marketing LAN-ready workstations.

     Lasat.  The Company initially purchased a minority stake in Lasat, a modem
and ISDN developer, in 1994. Since the Company's initial investment, Lasat has
supplied core technology for Olicom's GoCard(TM) combo LAN/modem PC Cards.
During the first quarter of 1996, the Company increased its investment in Lasat
and now holds 75% of the share capital in Lasat. See "-- Lasat Communications."

                                       9
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SALES AND MARKETING

     The Company markets and sells its products through carefully targeted
indirect distribution channels that include distributors, VARs (including
dealers, systems integrators and other resellers) and OEMs.

     The Company's resellers generally represent other lines of products that
are complemen-tary 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, VARs 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 sells its products through distributors (such as Gateway 2000
Inc., Dell Computer Corporation, Ingram Micro Inc., Tech Data Corporation,
Computer 2000 AG and Azlan Ltd.)  As brand name awareness creates demand for
products from end-users, this channel relies heavily on vendor activity,
promotional materials, advertising, show participation, direct marketing, joint
selling and similar activities to create demand, especially at the dealer
level.

     The Company's products are sold through VARs, who are experienced in the
sale and support of complex networking solutions in vertical markets.
Resellers generally provide a more basic level of systems integration and
support than is available from OEMs or VARs. VARs typically integrate Olicom
products into complex host environments, as well as into internetworking
connectivity, and provide comprehensive training and direct technical support
to end-users.  The provision of such services often plays an important role in
large end-user accounts. The Company has been increasingly successful in
selling its Token Ring and Ethernet products through VARs and intends to build
on this success by extending VAR programs.

     The Company's products are sold through OEMs, who sell the Company's
products under their own private label and/or who license the Company's
technology to integrate it into their own proprietary hardware systems or
special platforms.

     The Company's marketing programs include generating sales leads for its
resellers, supporting the efforts of its distributors, VARs and OEMs through
sales tools, including demand creation through telemarketing, and extensive
training, and creating brand name recognition of 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, on-going communication with end-users of Olicom products, and
participation in public benchmark testing.  In addition, the Company undertakes
mailings of sales literature, technical articles and product evaluations, and
provides sales manuals and demonstration kits.  Further, the Company assists
its distributors, VARs and OEMs with on-site support by way of sales
presentations and product demonstrations. The Company has also developed a
significant marketing presence on the Internet and promotes its products and
services through its own World

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<PAGE>   12

Wide Web server. This medium allows all publicly available Olicom literature to
be accessible to anyone who has an Internet connection.

     The Company's distributors, VARs 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 markets its products worldwide, having established
distribution channels in North and South America, Eastern and Western Europe,
Australia, South Africa, Southeast Asia and elsewhere.  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 1996, approximately 37% of the Company's total sales were
concentrated in North America, European sales accounted for approximately 58%
of total sales, and Australia and other markets were responsible for
approximately 5% of total sales.  See note 12 to the Consolidated Financial
Statements for information relating to net sales during 1994, 1995 and 1996 by
geographical market, as well as information regarding net sales during 1994,
1995 and 1996 to major customers.

     The Company's international sales headquarters are located in greater
Copenhagen.  The marketing of products in North and South America is
coordinated through Olicom, Inc., which is headquartered in Plano, Texas.  The
Company also maintains regional sales offices in Austria, Australia, France,
Germany, Italy, Japan, the Netherlands, Spain, Singapore, South Africa and the
United Kingdom.

     As the Company conducts its business worldwide, 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). As a result, 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.

                                       11
<PAGE>   13


     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.

SUPPORT

     The Company's products are supported by 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. The Company's
resellers and large accounts receive sales and technical training from the
Company at its training centers in greater Copenhagen and Plano, Texas, as well
as at resellers' offices.  The Company conducts refresher/new products courses
for resellers and large end-users of its products, in which features of such
products and their installation, aspects of networking principles, and
solutions to known problems 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.

     Depending on the distribution channel, the Company's products generally
are warranted to be 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.

RESEARCH AND DEVELOPMENT

     The Company believes that its future success depends in substantial part
on the timely enhancement of existing products, together with the development
of new products that maintain technological excellence. The Company is
currently developing new products and enhancements to existing products, to
further improve performance, increase price competitiveness, assure continued
interoperability, and increase market share. During 1994, 1995 and 1996, the
Company incurred expenses of $7,531,000, $9,193,000 and $12,852,000,
respectively, with respect to research and development activities. In 1994,
1995 and 1996, the Company's research and development expenditures were 6.6%,
7.2% and 7.6% 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.

                                       12
<PAGE>   14



     The Company's testing laboratories in Copenhagen and Plano conduct ongoing
tests for interoperability with IBM and other vendors' products and perform
benchmark testing. The Company is a beta partner of IBM, Novell and Microsoft,
which provides the Company with timely access to new versions of  these
vendors' LAN operating system software and facilitates Olicom's development of
interoperable software drivers for its NICs.  During 1996 the Company also
participated in a large number of interoperability testing sessions at several
venues, such as the University of New Hampshire (UNH) ATM and Token Ring
testing, the PCI SIG (Special Interest Group) interoperability testing and
others.

     During 1996, the Company introduced a complete new set of Ethernet 10/100
PC adapters including NICs for PCI, ISA and MCA busses. Included with the
products are drivers for both Windows 95, Windows NT and Novell NetWare. The
Company is currently developing LAN products for Token Ring, Ethernet and ATM.
Included are both adapter products and switch products.  It is the intention of
the Company to maintain its position as a quality supplier of LAN products
including the newest technologies, such as Dedicated Token Ring and adapters
supporting the newest PC BUS standards such as PCI and Cardbus.

     Among the Company's current development projects is a Token Ring switch
co-development project with Cisco.  By combining Cisco's switching technology
with Olicom's Token Ring technology, including development of ASIC-based Token
Ring protocol handlers, the two companies plan to launch competitive and
state-of-the-art Token Ring switching products during 1997.  The Company is
also continuing its investment in ATM technology and plans to release a number
of new ATM switching products during 1997.

     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 result of operations could be adversely
affected if the Company were to incur significant delays or be unsuccessful in
developing these or other new products or enhancements, or if any such products
or enhancements did not gain market acceptance.

MANUFACTURING AND DISTRIBUTION

     The Company outsources the entire production volume in its three basic
product areas: NICs, internetworking products and wiring components.  The
products are manufactured in fully automated, high-quality production lines
utilizing Surface Mounting Technology techniques.  The products are
manufactured to meet Olicom specifications on a turnkey basis by three
different manufacturers:

     GSS/Array.  GSS/Array Technology Inc. manufactures Token Ring NICs and
wiring components.  GSS/Array utilizes two production sites for deliveries to
the Company, one in Thailand and one in the United States.

                                       13
<PAGE>   15



     SCI.  SCI Thailand Ltd. manufactures Ethernet and Token Ring NICs, certain
modem products and wiring components. SCI utilizes two production sites for
deliveries to the Company, one in Thailand and one in the United States.

     DOVatron.  DOVatron Ireland Ltd. manufactures Ethernet NICs and wiring
components in its plant in Ireland.

     While the Company believes that additional capacity is available from
other manufacturers, an interruption in its existing subcontract manufacturing
arrangements could have a material adverse effect on the Company's business,
financial condition or results of operations.

     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 and Plano, Texas.

     Components and sub-assemblies for the Company's products are procured by
the Company's manufacturers 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 world-wide 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.


                                       14
<PAGE>   16


COMPETITION

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

     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 to 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.

                                       15
<PAGE>   17

LASAT COMMUNICATIONS

     Lasat became a majority-owned subsidiary of the Company 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 developing new
products and enhancements to existing products, to further improve performance,
increase price competitiveness, assure continued interoperability, and increase
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 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 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 U.S. Robotics Corporation, among others).

PROPRIETARY RIGHTS

     The Company does not hold any patents and relies upon a combination of
copyright and trade secret laws to establish and maintain proprietary rights in
its products.  There can be no assurance that such measures are or will be
adequate to protect the Company's proprietary 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.

                                       16
<PAGE>   18


     Certain technology used in the Company's products is licensed, generally
on a non-exclusive basis, by the Company from third parties.  These license
agreements generally require the Company to pay royalties and to fulfill
confidentiality obligations in order to maintain the licenses.  The Company has
entered into a non-exclusive license agreement under certain patents relating
to Token Ring technology that were issued to Olaf Soderblom in the United
States and a number of foreign countries, and have been assigned to Willemijn
Houdstermaastschappij BV. During 1996, the Company settled litigation commenced
by the Company against Willemijn regarding the license agreement and its
obligations thereunder.

TRADEMARK AGREEMENT

     The trademark "Olicom" (the "Trademark") is a registered trademark of
Olivetti 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 (the "Effective Date").  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 S.p.A. 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.
In the event that the license of the Trademark were 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.

EMPLOYEES

     As of April 1, 1997, the Company employed or retained (as employees or
independent contractors) approximately 495 persons, including 205 in sales and
marketing, 115 in product research and development, 100 in
operations/production including quality assurance, and 75 in administration and
finance  Of these employees and independent contractors, approximately 130 were
located in the United States, 45 were located in the Company's offices in
Europe, South Africa, Singapore, Australia and Japan, and the remainder were
located in Denmark.  Approximately 60 persons of the 495 were employed by
Lasat.

     None of the Company's employees is represented by a labor union.  The
Company has not experienced any work stoppages and considers its relations with
its employees to be good.

     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 any difficulty in attracting and retaining
qualified employees.


                                       17
<PAGE>   19


     The Company has experienced significant growth in the past, which has
required that the Company continue to improve its operational and financial
systems, and train, motivate and manage its employees.  If management is unable
to manage the Company's growth effectively, or if the productivity of its sales
force falls below expectations, the Company's business, financial condition or
results of operations could be materially and adversely affected.  There can be
no assurance that the Company will be able to sustain growth.


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 a
newly-constructed adjacent building 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 an aggregate of approximately 29,000 square
feet of office and warehouse space in metropolitan Dallas, Texas, to support
North and South American sales and marketing.  Furthermore, the Company leases
office space in the following cities to support sales and marketing in Europe:
Milan, Italy; Middlesex, U.K.; Munich and Morfelden, Germany; 's-Hertogenbosch,
the Netherlands; Nanterre, France; Madrid, Spain; and Vienna, Austria.  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.


                                       18
<PAGE>   20


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
May 27, 1997, 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."

     In March 1995, the Company settled a consolidated class action lawsuit In
re Olicom Securities Litigation, case no. 3-94-CV-0511-D, filed in the United
States District Court for the Northern District of Texas, alleging violations
of United States securities laws.  The Stipulation of Settlement acknowledged
that the Company denied liability.  The Company's Consolidated Financial
Statements at December 31, 1994, included a charge of $4.2 million, net of
insurance coverage, in connection with this settlement (see "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
note 14 to the Consolidated Financial Statements).  On August 30, 1996, the
court entered a final judgment of dismissal with prejudice with respect to the
consolidated action.


ITEM 4. CONTROL OF REGISTRANT.

     The following table sets forth certain information as of May 27, 1997,
concerning beneficial ownership of each person known to the Company to own
beneficially more than 10% of the outstanding shares of the Company, nominal
value DKK 0.25 per share ("Common Shares"), and 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
Name                                    Ownership        Class (1)
--------------------------------        ---------        ---------
<S>                                     <C>              <C>
                                                         
Lars Stig Nielsen  (2)(3) ........      2,066,330            14.0%
Asbjorn Smitt (4) ................      1,970,080            13.4
Nilex Systems ApS (5) ............      1,753,000            11.9
The Lake Fund (6) ................      2,394,201            16.2
All directors and executive                              
 officers as a group (consisting                         
 of 9 persons) (7) ...............      2,208,830            14.9%
</TABLE>                                                  

________________

(1)  Sole voting and investment power, unless other wise indicated.
     Percentages in the fore-going table are based on 14,749,095 Common Shares
     issued and outstanding as of May 27, 1997.


                                       19
<PAGE>   21


(2)  Mr. Stig Nielsen is the Managing Director and Chief Executive Officer, as
     well as a director, of the Company.  Includes 1,753,000 Common Shares
     owned by Nilex Systems ApS ("Nilex"), as to which Mr. Stig Nielsen has
     shared voting and investment power.  See Note 5.

(3)  Includes 46,250 Common Shares which may be issued to Mr. Stig Nielsen
     pursuant to options exercisable within 60 days from the date hereof.

(4)  Includes 1,753,000 Common Shares owned by Nilex, as to which Mr. Smitt
     has shared voting and investment power.  See Note 5.

(5)  Mr. Stig Nielsen is an officer and director of, and (through Eutronic
     Systems ApS ("Eutronic"), a corporation of which he holds 70% of the share
     capital) a principal shareholder in, Nilex.  Mr. Smitt is an officer and
     director of, and (through Astronic ApS ("Astronic"), a corporation of
     which he holds 70% of the share capital) a principal shareholder in Nilex.
     Eutronic is the holder of the share capital in Astronic (a 30% interest)
     not owned by Mr. Smitt, and Astronic is the holder of the share capital in
     Eutronic (a 30% interest) not owned by Mr. Stig Nielsen.

(6)  Based on information set forth in a Schedule 13D dated March 3, 1997,
     filed with the Securities and Exchange Commission by The Lake Fund.

(7)  Includes Common Shares held by Nilex. Includes an aggregate of 104,000
     Common Shares which are issuable pursuant to options exercisable within 60
     days from the date hereof.

ITEM 5. NATURE OF TRADING MARKET.

     The following table sets forth the high and low sales prices of the Common
Shares for the periods indicated, as repeated by Nasdaq National Market.


<TABLE>
<CAPTION>
                                           High      Low
                                          ------   -------
<S>                                       <C>      <C>
Calendar 1997
  First Quarter                           19 5/8    14 1/2
  Second Quarter (through May 27, 1997)   18 3/4    13 1/2
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                          19 1/8    14 5/8
Calendar 1995
  First Quarter                           11 5/8     8 5/8
  Second Quarter                          14 1/8     8 7/8
  Third Quarter                           16 1/8    12 3/8
  Fourth Quarter                          15 1/2    11 3/4
</TABLE>


                                       20
<PAGE>   22


     The Common Shares are traded on the Nasdaq National Market under the
symbol OLCMF. As of May 27, 1997, there were approximately 65 United States
record holders of Common Shares, who held approximately 77.4% of the
outstanding Common Shares as of such date.  The foregoing includes 11,987,755
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 on the Nasdaq National Market under the symbol OLCWF.


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 U.S. Securities Exchange Act of 1934, as amended (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 Asbjorn Smitt of Common Shares in excess of the
Share Ownership Limit.


                                       21
<PAGE>   23


     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.


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 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.




                                       22
<PAGE>   24


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.

     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 short-term or long-term, depending on whether the United States
holder has held the Common Shares for more than one year.  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.  Under the Code, the Internal Revenue Service has authority to issue
additional regulations addressing the treatment of losses.  Regulations have

                                       23
<PAGE>   25

not yet been issued under this authority and may not be issued.  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.

     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 long-term capital gain or loss if the Warrant is held by the
holder for more than one year at the time of the disposition and the Common
Shares issuable upon exercise of such Warrant would have been a capital asset
if acquired by the holder.

     Expiration.  The expiration of a Warrant should generally result in a
long-term capital loss to the holder equal to the holder's tax basis in the
Warrant if (i) the Warrant is held by the holder for more than one year at the
time of the expiration and (ii) 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.


                                       24
<PAGE>   26


     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.

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.

DENMARK 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, 1996.  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.

                                       25
<PAGE>   27



<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                              ------------------------------------------------------------
                                                1992         1993        1994         1995         1996
                                              ---------    ---------   ---------    ---------    ---------
                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                           <C>          <C>         <C>          <C>          <C>      
STATEMENT OF OPERATIONS DATA:
   Net sales                                  $  68,411    $  93,927   $ 113,604    $ 127,469    $ 168,228
   Cost of sales                                 38,717       52,887      61,198       65,191       95,236
                                              ---------    ---------   ---------    ---------    ---------
   Gross profit                                  29,694       41,040      52,406       62,278       72,992
                                              ---------    ---------   ---------    ---------    ---------
OPERATING EXPENSES:
   Sales and marketing                            9,060       13,244      23,783       31,660       40,496
   Research and development                       4,484        5,870       7,531        9,193       12,852
   Purchased research and development             1,000            0           0            0            0
   General and administrative                     1,893        3,094       4,440        5,662        6,848
   Transaction-related expenses                       0            0           0            0        3,787
   Special charge regarding mgmt. change              0            0           0            0        1,402
                                              ---------    ---------   ---------    ---------    ---------
      Total operating expenses                   16,437       22,208      35,754       46,515       65,385
                                              ---------    ---------   ---------    ---------    ---------
INCOME FROM OPERATIONS                           13,257       18,832      16,652       15,763        7,607
   Interest income, net                             276        1,928       2,462        3,297        1,531
   Foreign currency gains (losses)                 (412)          27          19          (31)         675
   Related party gain on sale of investment           0            0           0            0        2,878
   Settlement of litigation                           0            0      (4,200)           0            0
                                              ---------    ---------   ---------    ---------    ---------
INCOME BEFORE INCOME TAXES                       13,121       20,787      14,933       19,029       12,691
   Provision for income taxes                     4,777        7,340       5,026        6,223        4,727
                                              ---------    ---------   ---------    ---------    ---------
NET INCOME BEFORE CHANGE IN
 ACCOUNTING METHOD                                8,344       13,447       9,907       12,806        7,964
   Minority interest in income of
    consolidated subsidiary                           0            0           0            0          539
   Cumulative effect of change in
    accounting methods, net of taxes                  0            0         161            0            0
                                              ---------    ---------   ---------    ---------    ---------
NET INCOME                                    $   8,344    $  13,447   $  10,068    $  12,806    $   7,425
                                              =========    =========   =========    =========    =========
EARNINGS PER SHARE                            $    0.67    $    0.85   $    0.66    $    0.87    $    0.50
                                              =========    =========   =========    =========    =========
   Cash dividends declared per share(1)       $    0.06    $      --   $      --    $      --    $      --
WEIGHTED AVERAGE SHARES OUTSTANDING              12,475       15,873      15,298       14,748       14,786
                                              =========    =========   =========    =========    =========
</TABLE>

<TABLE>
<CAPTION>
                                                       DECEMBER 31,
                                  ----------------------------------------------------
                                                     (IN THOUSANDS)
                                    1992       1993       1994       1995       1996
                                  --------   --------   --------   --------   --------
BALANCE SHEET DATA:
<S>                               <C>        <C>        <C>        <C>        <C>     
   Working capital                $ 53,237   $ 68,481   $ 66,427   $ 78,600   $ 86,407
   Total assets                     84,690     90,240    108,917    127,327    127,924
   Current portion of long-term
    obligations                         97          7          0          0          0
   Long-term obligations, less
    current portion                    323        152          0          0          0
   Total shareholders' equity       62,117     77,885     78,191     90,127     97,509
</TABLE>



---------
(1)  In June, 1992, the Company paid a dividend of DKK 0.3509 ($0.06) per
     Common Share.

                                       26
<PAGE>   28


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

     With the exception of historical information, certain of the matters
discussed in this Report contain trend analysis and other 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 Exchange
Act. Such forward-looking statements involve risks and uncertainties,
including, without limitation, the risks and uncertainties described under the
caption "Business Environment and Risk Factors," together with such risks and
uncertainties as are described in registration statements, reports and other
documents filed by Olicom from time to time with the Securities and Exchange
Commission pursuant to the Securities Act and the Exchange Act. Such risks and
uncertainties could cause Olicom's actual consolidated results for 1997 and
beyond to differ materially from those expressed in any statements made by, or
on behalf of, Olicom. 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
(Connect International A/S) ("Olicom Ventures"), Olicom Finance Limited and
Olicom Trading A/S. Olicom, Inc., is a wholly-owned subsidiary of Olicom
Trading A/S, and 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.  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.


                                       27
<PAGE>   29
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:



<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31,
                                                       ---------------------------
                                                        1994       1995      1996
                                                       ------     ------    ------
<S>                                                    <C>        <C>       <C>   
Net sales ..........................................    100.0%     100.0%    100.0%
Cost of sales ......................................     53.9       51.1      56.6
                                                       ------     ------    ------
   Gross profit ....................................     46.1       48.9      43.4
Operating expenses:
   Sales and marketing .............................     20.9       24.8      24.1
   Research and development ........................      6.6        7.2       7.6
   Purchased research and development ..............       --         --        --
   General and administrative ......................      3.9        4.4       4.1
   Transaction-related expenses ....................       --         --       2.3
   Special charge regarding management change ......       --         --       0.8
                                                       ------     ------    ------
   Total operating expenses ........................     31.4       36.4      38.9
                                                       ------     ------    ------
Income from operations .............................     14.7       12.5       4.5
   Interest income, net ............................      2.2        2.4       0.9
   Foreign currency gains (losses) .................       --         --       0.4
   Related party gain on sale of investment ........       --         --       1.7
   Settlement of litigation ........................     (3.7)        --       1.7
                                                       ------     ------    ------
Income before income taxes .........................     13.2       14.9       7.5
   Provision for income taxes ......................      4.4        4.9       2.8
                                                       ------     ------    ------
Net income before change in
 accounting method and minority interest in
 income of consolidated subsidiary .................      8.8       10.0       4.7
Minority interest in income of consolidated
 subsidiary ........................................       --         --       0.3
Cumulative effect of change in
 accounting methods, net of taxes ..................      0.1         --       0.3
                                                       ------     ------    ------
Net income .........................................      8.9%      10.0%      4.4%
                                                       ======     ======    ======
</TABLE>


                                       28
<PAGE>   30
     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 North and South America (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. This trend reflects a continuation of the Company's emphasis
on brand-name sales, as such sales accounted for 89% of net sales in 1995,
while sales to OEMs constituted 11% of net sales during the same period. While
the Company is unable to predict the relative mix of brand-name and OEM sales
during 1997, it is possible that sales of private label products to OEMs may
continue to decrease during 1997.

     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.

     Sales of infrastructure products, which include switches, intelligent HUBs
and bridge products, decreased from $18.5 million in 1995 to $17.2 million in
1996. Sales of all adapter card products represented 85.5% and 74.4% of net
sales in 1995 and 1996, respectively. The Company anticipates that a
significant portion of its revenues during 1997 will continue to be derived
from sales of NICs.

     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.

     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.

                                       29
<PAGE>   31



     The Company believes that gross margins may decline in the future, as the
Company's products face increased price pressures and to the extent that the
Company's product mix shifts toward lower margin Ethernet and modem products.
The Company will continue to seek reductions in manufacturing costs to enable
it to remain price competitive and to lessen the impact that price reductions
may have on gross margins.

     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.

     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 $953,000 subsidy received from a Danish
government agency in support of ATM and LAN switching activities. The subsidy
will be repaid in the form of a royalty if and when 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

                                       30
<PAGE>   32

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.

     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.

YEARS ENDED DECEMBER 31, 1994 AND 1995

     Net Sales. Net sales increased from $113.6 million in 1994 to $127.5
million in 1995. The growth in net sales in 1995 was principally the result of
increases in sales of NICs, as well as increased sales of the Company's
intelligent HUB products. Sales of infrastructure products increased from $11.0
million in 1994 to $18.5 million in 1995, representing 9.7% and 14.5% of net
sales in 1994 and 1995, respectively. Sales of all adapter card products
represented 90.3% and 85.5% of net sales in 1994 and 1995, respectively. In
addition to these factors, the increase in the Company's net sales during 1995
resulted from greater market penetration across all of the Company's geographic
regions, except the U.S., where sales declined 8.7% from $57 million in 1994 to
$52 million in 1995.

     The growth in sales in 1995 was due primarily to increased unit sales to a
broad range of customers and expansion of the Company's distribution channels,
as a result in substantial part of marketing and product strategies previously
implemented by the Company that placed greater emphasis on brand-name sales. As
a result of the success of this marketing program, brand-name sales (which
increased 84% and 28% during 1994 and 1995, respectively) constituted 89% of
net sales during fiscal year 1995, while sales to OEMs (which decreased 48% in
1994 and 43% in 1995) accounted for 11% of net sales. This trend reflected a
continuation of the Company's increased emphasis on brand-name sales, as such
sales accounted for 79% of net sales in 1994, while sales to OEMs constituted
21% of net sales during the same period.

     During 1995, the Company's revenues were favorably influenced by many
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.

     During 1995, sales to a single OEM customer were $7.0 million, or 5.5% of
net sales, compared to $13.4 million, or 11.8% of net sales, during 1994. Sales
to a single distributor were

                                       31
<PAGE>   33

$13.9 million, or 10.9% of net sales, in 1995, compared to $6.7 million, or
5.9% of net sales during 1994.

     Gross Profit. Gross profit increased by 18.8%, from $52.4 million in 1994
to $62.3 million in 1995, and increased as a percentage of net sales from 46.1%
in 1994 to 48.9% in 1995. The improvement in gross margin was due to 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. Moreover, a higher percentage
of sales during 1995 were to distributors, on which the Company typically
realizes higher margins than on sales to OEMs.

     Sales and Marketing. Sales and marketing expenses increased substantially
from $23.8 million in 1994 to $31.7 million in 1995, and increased as a
percentage of net sales from 20.9% in 1994 to 24.8% in 1995. The significant
increase in these expenses during 1995 was primarily due to increased marketing
activities in the United States, Europe and the Far East, including increased
travel, office and personnel expenses. During the year, the Company committed
significant additional resources to support its 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
$7.5 million in 1994 to $9.2 million in 1995, and increased as a percentage of
net sales from 6.6% in 1994 to 7.2% in 1995. 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.

     All of the Company's research and development expenses have been charged
to operations as incurred, net of a $598,000 subsidy received from a Danish
government agency in support of ATM and LAN switching activities. The subsidy
will be repaid in the form of a royalty if and when revenue from such switching
products is realized.

     General and Administrative. General and administrative expenses increased
from $4.4 million in 1994 to $5.7 million in 1995, and increased as a
percentage of net sales from 3.9% in 1994 to 4.4% in 1995. These increased
expenses reflected salaries for additional personnel and costs related to the
growth in the Company's revenues.

     Income Taxes. The Company's effective income tax rate decreased from 33.7%
during 1994 to 32.7% for 1995.

LIQUIDITY AND CAPITAL RESOURCES

     During 1996, the Company funded its operations with cash from operations.
The Company's available cash and short-term investments totaled $51.6 million
as of December 31, 1996, and represented 40.3% of total assets.


                                       32
<PAGE>   34


     The Company had unsecured line of credit facilities for an aggregate
amount of $11.0 million at December 31, 1996, of which no advances were
outstanding at such date. These facilities support foreign currency hedging and
working capital requirements.

     The increase during 1996 in net cash from operating activities of $18.5
million was primarily due to cash from net income, a significant decrease in
inventory of $12.4 million and decreases in accounts receivable of $2.6
million. Current liabilities were reduced by $7.5 million during 1996.
Management believes that the reductions in accounts receivable and in
inventories were the results of improved operating procedures.

     Capital expenditures, less proceeds from sale of property, equipment and
businesses, during 1995 and 1996 were $1.1 and $1.0 million, respectively.
Capital expenditures, other than the purchase of an additional interest in
Lasat, were associated with the expansion of sales and marketing, research and
development and general and administrative activities (including a new
integrated management information system). At December 31, 1996, the Company
had no material commitments for capital expenditures. See "-- Subsequent
Event."

     The Company believes that cash presently at its disposal and cash
generated from operations will be sufficient to finance its operations and
currently projected capital expenditures through at least the next 12 months.
The Company expects to continue to make investments in the future to support
its overall growth. Currently, it is anticipated that ongoing operations will
be financed primarily from internally generated funds. However, as indicated
herein and in the Company's periodic filings with the Commission, there are
several factors that could affect the Company's ability to generate cash from
operations in the future, including general economic conditions, market
competition and changes in working capital requirements. See also "--
Subsequent Event" and "-- Business Environment and Risk Factors."  The Company
believes that its anticipated cash flows from operations and access to debt and
equity markets will permit the financing of its business requirements in an
orderly manner for at least the 12-month period thereafter.

     During the first quarter of 1996, the Company purchased an additional 40%
interest in Lasat. The purchase price for this shareholding, net of cash
acquired, was $2.5 million.

     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 kroner.

SUBSEQUENT EVENT

     On June 12, 1997, the Company acquired CrossComm. In connection therewith,
the Company exchanged each outstanding share of common stock in CrossComm for
$5.00 in cash, 0.2667 shares of Common Shares and three-year Warrants to
acquire 0.1075 Common Shares at an exercise price of $19.74 per full Common
Share. No fractional Common Shares and no Warrants to purchase fractional
Common Shares were issued in connection with such acquisition. The Company
issued approximately 2,535,000 Common Shares, Warrants to

                                       33
<PAGE>   35

purchase approximately 1,023,000 additional Common Shares, and in addition,
assumed options to purchase approximately 943,000 additional Common Shares.
The acquisition will be accounted for using purchase accounting, and the
Company anticipates recognizing a significant non-recurring expense during the
second quarter of 1997 in order to write off in-process research and
development and certain other acquisition-related expenses. There can be no
assurance that the Company will not incur additional charges to reflect costs
associated with such transaction.  The Company funded the cash portion of the
consideration (net of acquired liquid assets) from available working capital.
See "-- Subsequent Event" and "-- Business Environment and Risk Factors" for a
discussion of numerous issues that must be successfully managed to obtain the
anticipated benefits from such transaction. The inability of management to
successfully integrate the operations of the Company and CrossComm could have
an adverse effect on the business, financial condition or results of operations
of the combined company.

BUSINESS ENVIRONMENT AND RISK FACTORS

     Certain statements included in this Report are forward-looking, such as
statements regarding potential synergies in connection with the acquisition of
CrossComm by the Company, expected transaction charges and expenses relating to
the integration of the two companies, new product introductions and
enhancements to existing products, rapidly changing technology, improvement of
manufacturing efficiencies and availability of licenses with respect to
intellectual property.

     Such forward-looking statements, in addition to other information included
in this Report, are based on current expectations and are subject to a number
of risks and uncertainties that could cause actual results in the future to
differ significantly from results expressed or implied in any forward-looking
statements by, or on behalf of the Company.  Further, 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 business, financial condition or results
of operations.

     Such trends and factors include, without limitation, the following:
overall demand for communications and networking products, economic and other
considerations specific to the computer and networking industries, and general
economic conditions; rapid technological change, frequent new product
introductions, changes in customer requirements, continued emergence of
industry standards, and evolving methods of building and operating networks,
which require that the Company identify, develop, manufacture and market, on a
cost-effective and timely basis, new products and enhancements to existing
products that meet changing customer requirements and emerging industry
standards, and take advantage of technological advances; difficulties or delays
in the development, production and marketing of products, including, without
limitation, any failure to ship new products and technologies when anticipated,
the failure of manufacturing economies to develop when planned, customer delays
in purchasing products in anticipation of new product introductions or for
other reasons, and the activities of parties with whom the Company has joint
development projects; continued compatibility and interoperability of the
Company's products with products and architectures

                                       34
<PAGE>   36

offered by various vendors; fluctuations in the Company's revenues and
operating results from quarter to quarter, due to a variety of factors,
including, without limitation, increased competition, capital spending patterns
of end-users, the timing and amount of significant orders from distributors,
VARs and OEMs (including decisions by such customers as to the quantity of
products to be maintained in inventories), the mix of distribution channels and
products, and pricing, purchasing, operational and promotional decisions by
distributors, VARs 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, VARs 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); declining average selling prices and short product life cycles, both of
which could adversely impact the sales and operating margins of the Company;
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; unanticipated
declines in the demand for network interface cards, which accounted for
approximately 74.4% of the Company's net sales during 1996; 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, including, without limitation, the making or incurring of any
expenditures and expenses in connection therewith (including, without
limitation, any research and development expenses relating thereto) and expense
attendant to the integration of personnel, operations and products associated
therewith; the Company's ability to continue to improve its operational,
management and financial systems and controls, and to integrate new employees;
any interruption in the supply of any sole or limited source components, or the
inability of the Company to procure these components from alternate sources at
acceptable prices and within a reasonable time; product supply disruption and
increased costs as a result of the subcontracting of product assembly and
aspects of component procurement, or in the event of political unrest, unstable
economic conditions or developments that are adverse to trade in the countries
in which certain of the Company's subcontractors conduct operations; 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; the continued
efficacy of steps taken by the Company to protect its proprietary rights, or
the independent development by competitors of technologies that are
substantially equivalent or superior to the Company's technologies; the loss of
software or other intellectual property licensed from third parties; claims
from third parties asserting that trademarks used by the Company, or technology
used in the Company's products, infringe or may infringe the rights of third
parties; risks associated with international operations, including, without
limitation, longer payment cycles, unexpected changes in regulatory
requirements and tariffs, export licenses, political instability, difficulties
in staffing and managing foreign operations, greater difficulty in accounts
receivable collection, potentially adverse tax consequences, and seasonal
fluctuations resulting from lower sales that typically occur during the summer
months in Europe and other parts of the world; the

                                       35
<PAGE>   37

ability or inability of the Company to hedge against foreign currency, foreign
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 addition, there are certain factors and risks relating to the
acquisition of CrossComm by the Company, including, without limitation, whether
the integration of the two companies' businesses is accomplished in an
efficient manner, without diversion of resources from new product development,
confusion or dissatisfaction among existing customers of the combined company,
or temporary distraction of management attention from the day-to-day business
of the combined company; the ability of the combined company to realize
anticipated synergies; the continuation by distributors, VARs and OEMs of their
current buying patterns without regard to the acquisition; the Company's
success in implementing its distribution model in connection with the sale of
CrossComm products; the incurrence of additional unanticipated expenses
relating to the integration of CrossComm into the Company's operations; the
completion by the Company of in-process technologies acquired in connection
with the CrossComm transaction; and the ability of the Company to exploit the
new technologies as they are developed. Further, unfavorable changes in the
current political and economic environment in Poland (where CrossComm conducts
significant research and development activities) or the imposition of
restrictions on travel or technology transfers between Poland and the United
States could have a material adverse effect on the business, financial
condition or results of operations of the combined company

     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 June 12, 1997, 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 ..............  57   Chairman of the Board and
                                  Member of the Board of Directors
   Bo F. Vilstrup ........  54   Deputy Chairman of the Board of Directors
   Lars Stig Nielsen .....  55   Managing Director, Chief Executive Officer
                                  and Member of the Board of Directors
   Kurt Anker Nielsen ....  51   Member of the Board of Directors
   Frank G. Petersen .....  64   Member of the Board of Directors
   Michael J. Peytz ......  40   Member of the Board of Directors
   Anders Knutsen ........  49   Member of the Board of Directors

   Boje Rinhart ..........  48   Chief Financial Officer
</TABLE>


                                       36
<PAGE>   38

<TABLE>
<CAPTION>
   Name                     Age  Position
   ----                     ---  --------
   <S>                      <C>  <C>
   J. Michael Camp .......  47   President of Olicom, Inc.
   Niels Christian Furu ..  40   Executive Vice President and Chief Operating
                                  Officer
   Niels E.L. Jorgensen ..  40   Vice-President of Engineering
   Tyge Trier ............  34   Vice-President of Legal Affairs and
                                  Director of Investor Relations
   Soren Seerup ..........  37   Vice-President of Operations
   Jorgen Hog ............  50   Vice-President of Strategic Marketing
   Steen B. Lohse ........  35   Vice-President of Marketing
   David F. Burkey .......  38   Chief Financial Officer, Olicom, Inc.
   Claus Christensen .....  35   President of Lasat Communications A/S
</TABLE>



     Mr. Bech has been Chairman of the Company's Board of Directors since 1985.
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).

     Mr. Vilstrup has been a director of the Company since 1992.  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 Olicom and has held the position of
Managing Director and Chief Executive Officer since 1985.

     Mr. Anker Nielsen has been a director of the Company since 1993.  He has
served as Chief Financial Officer (since 1985) and Deputy Managing Director
(since 1996) of Novo Nordisk A/S, a company which develops, produces and
markets pharmaceutical and biochemical products.

     Mr. Petersen has been a director of the Company since May 1996.  He was
employed by International Business Machines Corporation 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 May 1996.  He has
served as Division Director for Alcatel Kirk A/S (since 1994), with
responsibility for Alcatel's space electronics business in Denmark.  He
previously was a management consultant with McKinsey & Company (from 1985 to
1994).

     Mr. Knutsen has been a director of the Company since May 29, 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.


                                       37
<PAGE>   39


     Mr. Rinhart has been employed by the Company since 1995, as its 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. Camp has served as President and Chief Executive Officer of Olicom,
Inc., since May 1996.  Prior to joining the Company, Mr. Camp served as a
Vice-President and General Manager of the Multimedia Business Applications
Division at Northern Telecom Ltd. (from 1993 to 1996).  Prior thereto, he
served as a Vice-President at Northern Telecom, where he served as General
Manager of its Data Networks Division (from 1992 to 1993), and as General
Manager of its Network Integration Division (from 1991 to 1992).

     Mr. Furu has been the Company's Executive Vice President and Chief
Operating Officer since May 1, 1997.  Prior to joining the Company, Mr. Furu
served as Vice-President of IBM Denmark 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 (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
Vice-President of Engineering in November 1994.  He has had primary
responsibility for Olicom's Project Development Group since joining the
Company, and served as Director of Engineering since 1990.  From 1980 to 1988,
Mr. Jorgensen was employed as a systems engineer for the development of large
data networks.

     Mr. Trier has been employed by the Company since 1993.  He has served as
its Director of Legal Affairs and Investor Relations since 1994, and became
Vice-President of Legal Affairs in May 1996.  Prior to joining the Company, he
served as Vice-President in the Investment Bank Department of Den Danske Bank
A/S.  Prior thereto, he was admitted to the Bar in Denmark and employed by the
law firm of Gorrissen & Federspiel.

     Mr. Seerup has been employed by the Company since 1995 as its Director of
Operations.  Mr. Seerup became Vice-President of Operations in May 1996.  Prior
to joining the Company Mr. Seerup served as Operations Manager with Ferrosan
A/S, a Danish medical company.

     Mr. Hog has been employed by the Company since 1994, having served as its
Director of Business Development and as Chief Operating Officer at Olicom, Inc.
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 as its
Vice-President of Marketing.  Prior to joining the Company, Mr. Lohse served as
Director of Marketing of DDI Communications, a Danish networking company.

     Mr. Burkey has served as Chief Financial Officer of Olicom, Inc., since
September 1996.  Prior to joining the Company, Mr. Burkey served as Senior
Operations Finance Manager of

                                       38
<PAGE>   40

Northern Telecom, USA (from 1993-1994), and as Senior Finance Manager of
Northern Telecom, USA (from 1994 to 1996).

     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 Messrs. Camp and
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 Olicom's
employees, in accordance with Danish law. The statutory rights of Olicom
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 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 Americas
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 Americas 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 Americas, 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 Olicom or Olicom Americas, as
appropriate.

     To the extent that the Board of Directors of Olicom or Olicom Americas or
their respective shareholders may in the future wish to limit or repeal the
ability of the Company or Olicom Americas 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

                                       39
<PAGE>   41

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 Olicom and
Olicom Americas.


ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS.

     An aggregate of approximately $900,000 was paid by the Company to its
directors and executive officers as a group (eight persons) for services
rendered during fiscal year 1996 in all capacities, and approximately $560,000
was paid by the Company during fiscal year 1996 to its senior management,
consisting of the Company's Managing Director and its Chief Financial 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 27, 1997, the Company had issued warrants and options to its
employees and directors, and employees and directors of Olicom Inc. to purchase
an aggregate of 633,345 Common Shares. The exercise price for such warrants and
options ranges from $5.98 to $12.00. Such warrants and options terminate on
various dates through May 1, 2001.

     At May 27, 1997, warrants and options to purchase an aggregate of 160,000
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 Systems ApS 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 Olicom 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.

                                       40
<PAGE>   42


                                    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.

                                       41
<PAGE>   43


ITEM 18. FINANCIAL STATEMENTS.



                          Independent Auditors' Report




The Board of Directors and Shareholders,
Olicom A/S


We have audited the consolidated financial statements of Olicom A/S and
subsidiaries listed in the accompanying Index to Financial Statements (item
19(a)). 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 listed in the accompanying Index to
Financial Statements (item 19(a)) present fairly, in all material respects, the
consolidated financial position of Olicom A/S and subsidiaries at December 31,
1995 and 1996, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles in the United States
of America.


Ernst & Young
Statsautoriseret Revisionsaktieselskab

Copenhagen, April 2, 1997


                                       42
<PAGE>   44
                                   Olicom A/S
                          Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                              DECEMBER 31
                                                          1995          1996
                                                       ----------    ----------
ASSETS                                                       (In thousands)
<S>                                                    <C>           <C>       
Current assets:
 Cash and cash equivalents                             $   33,065    $   41,663
 Short-term investments (Note 3)                           10,099         9,887
 Accounts receivable, less allowance of
  $490 in 1995 and $1,055 in 1996                          37,137        37,712
 Accounts receivable, other                                 2,155         1,913
Inventories:
  Finished goods                                           22,497        13,967
  Raw materials                                             9,762         8,285
                                                       ----------    ----------
                                                           32,259        22,252
Deferred income taxes (Note 6)                                 15           945
Prepaid expenses                                            1,070         1,769
                                                       ----------    ----------
Total current assets                                      115,800       116,141

Investments in affiliated companies (Notes 4 and 9A)        5,889             0

Property and equipment:
Leasehold improvements                                        649         2,280
 Equipment                                                  9,954        17,740
                                                       ----------    ----------
                                                           10,603        20,020
Accumulated depreciation                                   (5,564)       (8,988)
                                                       ----------    ----------
                                                            5,039        11,032

Goodwill, net of accumulated amortization of
  $1,506 in 1995 and $2,832 in 1996                           599           751
                                                       ----------    ----------

Total assets                                           $  127,327    $  127,924
                                                       ==========    ==========
</TABLE>


See accompanying notes

                                       43
<PAGE>   45
                                   Olicom A/S
                          Consolidated Balance Sheets


<TABLE>
<CAPTION>
                                                                  DECEMBER 31
                                                                1995         1996
                                                             ---------    ---------
                                                                 (In thousands)
<S>                                                          <C>          <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks (Note 5)                              $   6,430    $       0
Accounts payable                                                25,746       21,083
Accrued payroll and related expenses                             2,572        3,424
Accrued product warranty expense                                   704          823
Other accrued expenses                                             285        1,834
Income taxes payable                                             1,463        2,570
                                                             ---------    ---------
Total current liabilities                                       37,200       29,734

Minority interest in equity of consolidated subsidiary               0          681

Shareholders' equity:
Common stock, DKK 0.25 nominal value
 Authorized and issued - 15,837 in 1995 and 15,938 in 1996         610          614
 Additional paid-in capital                                     51,754       52,348
 Retained earnings                                              49,424       56,849
 Treasury stock - 1,275 in 1995 and  1,255 in 1996             (12,020)     (11,831)
 Currency translation adjustments                                  617            0
 Unrealized gains/(losses) (Note 3)                               (258)        (471)
                                                             ---------    ---------
Total shareholders' equity                                      90,127       97,509
                                                             ---------    ---------

Total liabilities and shareholders' equity                   $ 127,327    $ 127,924
                                                             =========    =========
</TABLE>


See accompanying notes



                                       44
<PAGE>   46


                                   Olicom A/S
                       Consolidated Statements of Income


<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                            1994          1995          1996
                                                         ----------    ----------    ----------
                                                                    (In thousands
                                                              except per share amounts)
<S>                                                      <C>           <C>           <C>       
Net sales
  Related parties (Note 9E)                              $   12,127    $    5,134    $        0
  Other                                                     101,477       122,335       168,228
                                                         ----------    ----------    ----------
Total net sales                                             113,604       127,469       168,228
Cost of sales                                                61,198        65,191        95,236
                                                         ----------    ----------    ----------
Gross profit                                                 52,406        62,278        72,992

Operating expenses:
Sales and marketing                                          23,783        31,660        40,496
Research and development                                      7,531         9,193        12,852
General and administrative                                    4,440         5,662         6,848
Transaction-related expenses                                      0             0         3,787
Special charge regarding management change                        0             0         1,402
                                                         ----------    ----------    ----------
Total operating expenses                                     35,754        46,515        65,385
                                                         ----------    ----------    ----------
Income from operations                                       16,652        15,763         7,607

Interest and other financial income                           3,307         4,580         2,446
Interest and other financial expense                           (845)       (1,283)         (915)
Foreign currency gains (losses)                                  19           (31)          675
Related party gain on sale of investment (Note 9A)                0             0         2,878
Settlement of litigation (Note 12)                           (4,200)            0             0
                                                         ----------    ----------    ----------
Income before income taxes                                   14,933        19,029        12,691
Income taxes (Note 6)                                         5,026         6,223         4,727
                                                         ----------    ----------    ----------
Net income before change in accounting method and
minority interest in income of consolidated subsidiary   $    9,907    $   12,806    $    7,964

Minority interest in income of consolidated subsidiary            0             0           539
Cumulative effect of change in accounting method,
 net of tax $0 (Note 2)                                         161             0             0
                                                         ----------    ----------    ----------
Net income                                               $   10,068    $   12,806    $    7,425
                                                         ==========    ==========    ==========

Net income per share                                     $     0.66    $     0.87    $     0.50
                                                         ==========    ==========    ==========

Weighted average shares outstanding                          15,298        14,748        14,786
                                                         ==========    ==========    ==========
</TABLE>


See accompanying notes


                                       45
<PAGE>   47


                                   Olicom A/S
                           Consolidated Statements of
                              Shareholders' Equity

<TABLE>
<CAPTION>
                                                                                              Currency
                                                    Additional                                transla-    Unrealized
                                        Common       paid-in      Retained      Treasury      tion ad-      gains/
                                         stock       capital       earnings      stock        justments     (losses)        Total
                                       ----------   ----------    ----------   ----------    ----------    ----------    ----------
                                                                           (In thousands)
<S>                                    <C>          <C>           <C>          <C>           <C>           <C>           <C>       
BALANCE AT DECEMBER 31, 1993           $      610   $   51,789    $   26,550   $     (853)   $     (211)   $        0    $   77,885
                                       ----------   ----------    ----------   ----------    ----------    ----------    ----------
Adjustment to opening balance for
change in accounting method, net
of tax $0 (Note 2)                              0            0             0            0             0          (161)         (161)
Net income for 1994                             0            0        10,068            0             0             0        10,068
Purchase of treasury stock -
997 common stock                                0            0             0       (9,141)            0             0        (9,141)
Warrants exercised -
10 treasury stock                               0          (31)            0           91             0             0            60
Change in unrealized gains/(losses)0            0            0             0            0          (917)         (917)
Currency translation adjustments                0            0             0            0           397             0           397
                                       ----------   ----------    ----------   ----------    ----------    ----------    ----------
BALANCE AT DECEMBER 31, 1994           $      610   $   51,758    $   36,618   $   (9,903)   $      186    $   (1,078)   $   78,191
Net income for 1995                             0            0        12,806            0             0             0        12,806
Purchase of treasury stock -
257 common stock                                0            0             0       (2,400)            0             0        (2,400)
Options exercised -
31 common stock                                 0           (4)            0          283             0             0           279
Change in unrealized gains/(losses)0            0            0             0            0           820           820
Currency translation adjustments                0            0             0            0           431             0           431
                                       ----------   ----------    ----------   ----------    ----------    ----------    ----------
BALANCE AT DECEMBER 31, 1995           $      610   $   51,754    $   49,424   $  (12,020)   $      617    $     (258)   $   90,127
Net income for 1996                             0            0         7,425            0             0             0         7,425
Purchase of treasury stock -
3 common stock                                  0            0             0          (28)            0             0           (28)
Options and warrants exercised -
23 common stock                                 0          (10)            0          217             0             0           207
Warrants exercised -
101 common stock                                4          604             0            0             0             0           608
Change in unrealized gains/(losses)0            0            0             0            0          (213)         (213)
Currency translation adjustments                0            0             0            0          (617)            0          (617)
                                       ----------   ----------    ----------   ----------    ----------    ----------    ----------
BALANCE AT DECEMBER 31, 1996           $      614   $   52,348    $   56,849   $  (11,831)   $        0    $     (471)   $   97,509
                                       ----------   ----------    ----------   ----------    ----------    ----------    ----------
</TABLE>

See accompanying notes


                                      46
<PAGE>   48


                                   Olicom A/S
                     Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31
                                                     1994       1995      1996
                                                   -----------------------------
                                                           (In thousands)
<S>                                                <C>        <C>        <C>
OPERATING ACTIVITIES
Net income                                         $ 10,068   $ 12,806   $ 7,425
Adjustments to reconcile net income to net
 cash provided by (used in) operating activities:
 Depreciation and amortization                        1,862      2,478     3,585
 Related party gain on sale of investment                 0          0    (2,878)
 Deferred income taxes                               (1,506)     1,588      (930)
 Minority interest in earnings                            0          0       539
 Equity in net income of affiliates                    (366)      (692)        0
 Purchased research and development                       0          0     2,170
 Changes in operating assets and liabilities:
  Accounts receivable                               (14,433)    (2,494)    2,572
  Other receivables                                     159     (1,938)      242
  Inventories                                         1,875    (16,117)   12,375
  Prepaid expenses                                      (32)        14      (545)
  Accounts payable                                    3,445     10,486    (6,285)
  Accrued payroll and related expenses                1,661        584    (3,298)
  Accrued product warranty expense                      153       (427)      119
  Other accrued liabilities                           1,179     (1,167)    2,509
  Net liability of settlement                         4,200     (4,200)        0
  Income taxes payable                                1,200        209       901
                                                   -----------------------------
Net cash provided by operating activities             9,465      1,130    18,501


INVESTING ACTIVITIES
Capital expenditures                                 (1,526)   (13,780)   (8,199)
Proceeds from sale of property and equipment              0     12,666         0
Proceeds from sale of investment                          0          0     7,193
Acquisition of Lasat Communications - net of
cash acquired (Note 4)                               (1,786)         0    (2,545)
Short-term investments                                 (287)         0         0
                                                   -----------------------------
Net cash used in investing activities                (3,599)    (1,114)   (3,551)
</TABLE>

See accompanying notes.

                                       47



<PAGE>   49

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


<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31
                                                      1994       1995        1996
                                                      ----------------------------
                                                             (In thousands)
   <S>                                               <C>        <C>        <C>

FINANCING ACTIVITIES
Change in short-term borrowings                       $ 5,857   $   549)   $(6,451)
Long-term debt and capital lease obligations             (166)        0          0
Sale (purchase) of treasury stock                      (9,141)   (2,400)       180
Proceeds from options and warrants exercised               60       279        608
                                                      ----------------------------

Net cash used in financing activities                  (3,390)   (1,572)    (5,663)
Effects of exchange rates on cash                         655        76       (689)
                                                      ----------------------------

Net increase (decrease) in cash and cash equivalents    3,131    (1,480)     8,598
Cash and cash equivalents at beginning of year         31,414    34,545     33,065
                                                      ----------------------------

Cash and cash equivalents at end of year              $34,545   $33,065    $41,663
                                                      ============================

Interest paid during the year                         $   183   $   321    $   187
                                                      ============================

Income taxes paid during the year                     $ 5,392   $ 4,730    $ 4,819
                                                      ============================
</TABLE>





See accompanying notes


                                       48



<PAGE>   50
                                   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 and Ethernet products used in local area networks 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 Danish subsidiaries maintain their books and
records in Danish kroner, as required by Danish 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's investments in affiliated
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, that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

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' 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.

                                       49



<PAGE>   51



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 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. 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

                                       50



<PAGE>   52



requirements of Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation".

     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".

NET INCOME PER SHARE

     Net income per share is 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.

OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS

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

ADVERTISING

     Advertising costs are expensed as incurred.

2. ACCOUNTING CHANGES

     In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". The Company adopted the provisions of the new
standard for short-term investments held as of or acquired after January 1,
1994. In accordance with the Statement, prior period financial statements have
not been restated to reflect the change in accounting principle. The cumulative
effect as of January 1, 1994 of adopting Statement 115 increased net income by
$161,000 net of $0 in deferred income taxes, or $0.01 per share. The opening
balance of shareholders' equity was reduced by $161,000 net of $0 in deferred
income taxes to reflect the net unrealized holding losses on securities
classified as available-for-sale previously carried at aggregate lower cost or
market value.


                                       51



<PAGE>   53

3. 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     $  820       $1,078      $10,099
                              --------------------------------------------
     December 31, 1995        $10,357     $  820       $1,078      $10,099
                              ============================================


     Private US Mutual Fund   $10,357     $1,050       $1,521      $ 9,887
                              --------------------------------------------
     December 31, 1996        $10,357     $1,050       $1,521      $ 9,887
                              ============================================
</TABLE>

     Unrealized holding losses on available-for-sale short-term investments
included as a separate component of shareholders' equity totaled $1,078,000,
$258,000 and $471,000 on December 31, 1994, 1995 and 1996, respectively.

4. INVESTMENTS IN LASAT COMMUNICATIONS A/S

     In 1994 the Company acquired 35% of the equity in Lasat Communications A/S
("Lasat"), a Danish company whose business is the development and marketing of
modems. The investment includes $0.6 million (net book value) representing
goodwill which was being amortized on a straight-line basis over five years.

     In 1996 the Company exercised an option to acquire 40% of the equity in
Lasat, for $3.5 million (DKK 20.0 million). The acquisition was funded with
existing cash.

     The acquisition of additional equity was accounted for using the purchase
method of accounting. Accordingly, a portion of the purchase price was
allocated to the net assets acquired based on their estimated fair values. The
fair value of tangible assets acquired was $3.8 million (cash $0.8 million,
accounts receivable $1.4 million, inventory $1.4 million, and fixed assets $0.2
million) and the fair value of liabilities assumed $3.0 million (accounts
payable $1.5 million and loan and other liabilities $1.5 million). In addition,
$2.3 million of the purchase price was allocated to in-process engineering and
development projects that had not reached technological feasibility and had no
probable alternative future use. The Company expensed such amount at the date
of acquisition. The balance of the purchase price, $0.5 million, was recorded
as excess of cost over net assets acquired (goodwill) and is being amortized
over five years on a straight-line basis.

     Lasat has been included in the consolidation from January 1, 1996, with
preacquisition earnings being charged to minority interest in income of
consolidated subsidiary.

5. NOTES PAYABLE TO BANKS

     The Company has unsecured lines of credit with two banks, providing
maximum facilities as of December 31, 1995 and 1996 of $11.2 million and $11.0
million, respectively. The unused element thereof as of  December 31, 1995 and
1996, amounted to $4.8 million and $11.0 million, respectively.

                                       52



<PAGE>   54


     Interest rates fluctuate with the market rates of major banks. The
weighted average interest rates as of December 31, 1995 and 1996 were 6.5% and
5.8%, 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, 1995
and 1996 are as follows:

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

      <S>                                           <C>     <C>
      Deferred tax liabilities
        Tax over book depreciation                  $  273  $ 1,105
        Inventory write down                           729      223
        Other                                            0       55
                                                     --------------
                                                     1,002    1,383
                                                     --------------

      Deferred tax assets
        Book over tax depreciation                     232      318
        Allowance for uncollectible receivables        251      410
        Inventory valuations                           407      940
      Other accruals                                   127      660
                                                     --------------
                                                     1,017    2,328
                                                     --------------
      Net deferred tax liabilities (assets)          $ (15)  $ (945)
                                                     ==============
</TABLE>


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

<TABLE>
<CAPTION>
                            1994     1995      1996
                          ---------------------------
                                (In thousands)
<S>                       <C>       <C>       <C>
      Pretax income:
        Denmark           $ 9,888   $19,167   $ 9,034
        United States       5,045      (138)    3,657
                          ---------------------------
                          $14,933   $19,029   $12,691
                          ===========================

</TABLE>

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

<TABLE>
<CAPTION>
                            1994     1995      1996
                          ---------------------------
                               (In thousands)
<S>                       <C>       <C>       <C>
     Current:
       Denmark            $ 3,840   $ 4,312   $ 3,468
       United States        2,692       323     2,189
                          ---------------------------
                            6,532     4,635     5,657
                          ---------------------------
     Deferred:
       Denmark               (765)    1,822      (101)
       United States         (741)     (234)     (829)
                          ---------------------------
                           (1,506)    1,588      (930)
                          ---------------------------
                          $ 5,026   $ 6,223   $ 4,727
                          ===========================
</TABLE>

                                   53


<PAGE>   55




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

<TABLE>
<CAPTION>
                                          1994              1995            1996
                                       -------------------------------------------
                                                   (In thousands)
<S>                                    <C>       <C>    <C>       <C>  <C>     <C>
                                                    %              %             %
Danish tax                             $  5,077    34   $6,470    34   $4,315   34
Goodwill  amortization and purchased
 research and development written off        98     1      125     1      247    2
Acquisition-related expenses                  0     0        0     0      336    2
Benefit of foreign tax relief              (636)   (3)     (58)   (0)    (117)  (1)
United States taxes net of credits          213     1       44     0      118    1


   Tax on USD currency gains following
    Danish tax rules                         68     0        0     0        0    0
   Other net                                206     1     (358)   (2)    (172)  (1)
                                       -------------------------------------------

                                          5,026    34   $6,223    33   $4,727   37
                                       ===========================================
</TABLE>

     Undistributed earnings of the Company's United States subsidiary amounted
to $16.2 million in 1996. 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.

7. EMPLOYEE WARRANT AND 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 and warrants
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 and warrants equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.

1992 WARRANT PLAN

     On May 5, 1992, the Company's shareholders approved a reserve of 1,600,000
common shares in connection with the issuance of warrants for the benefit of
employees, officers and directors of the Company and its subsidiaries. As of
December 31, 1992, warrants to purchase 565,000 shares at an exercise price of
$5.98 had been issued. During 1993 8,000 warrants were cancelled, and 426,680
warrants were exercised. During 1994 10,000 warrants were exercised, and during
1996 101,300 warrants were exercised.

     The holders of the remaining 19,020 outstanding warrants as of December
31, 1996 may exercise their rights in whole or part, at a price of $5.98 per
share, during the period from April 21 to May 5, 1997. In the event that all or
any part of the warrants are not exercised by May 5, 1997, then such warrants
will expire.



                                       54



<PAGE>   56




1994 AND 1996 WARRANT AND STOCK OPTION PLANS

     The Company's 1994 and 1996 Share Incentive Plan authorized the grant of
options and warrants to directors, executives and key employees for up to
425,000 and 1,000,000 shares, respectively, of the Company's common stock. The
majority of options and warrants granted have 5-year terms and vest and become
fully exercisable at the end of 5 years of continued employment.

     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  and warrants was estimated at the
date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 1995 and 1996; risk-free interest rates of
5.5% to 6.0%; dividend yields of 0%; volatility factors of the expected market
price of the Company's common stock of 0.4; 25% of these options and warrants
granted are expected to expire without being exercised; and weighted-average
expected life of the options and warrants of 3 years.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. 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 and warrants have
characteristics significantly different from those of traded options and
warrants, 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 and warrants.

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



<TABLE>
<CAPTION>
                                           1995        1996
                                         -------      ------
                              (In thousands except for earnings per share)
<S>                                     <C>           <C>

  Net income - as reported               $12,806      $7,425
  Net income - pro forma                 $12,791      $7,156
  Earnings per share - as reported       $  0.87      $ 0.50
  Earnings per share - pro forma         $  0.87      $ 0.48
                                         -------      ------
</TABLE>


                                       55



<PAGE>   57




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


<TABLE>
<CAPTION>
                                     1995                                             1996
                                    --------------------------  --------------------------
                 (In thousands except for price  per share)

                                                   Options  Weighted-Average  Options Weighted-Average
                                                             Exercise Price             Exercise Price
<S>                                                  <C>         <C>           <C>        <C>
Outstanding-beginning of year                        323.5       $9.00         291.5      $ 9.00
Granted                                               30.0        9.00         466.1       11.49
Exercised                                            (31.0)       9.00         (23.0)       9.00
Expired                                              (31.0)       9.00         (68.9)       9.00
                                                   ---------------------------------------------------
Outstanding-end of year                              291.5       $9.00         665.7      $10.74
                                                   ===================================================

Exercisable at end of year                            47.3       $9.00          77.9      $ 9.00

      Weighted-average fair value of options
      granted during the year                                    $3.24                    $ 3.63
</TABLE>


Exercise prices for options outstanding as of December 31, 1996 ranged from $9
to $12. The weighted-average remaining contractual life of those options is 4
years.

8. LEASE COMMITMENTS

     As of October 1, 1995 the Company entered into a noncancellable operating
lease with a public property investment company for office space, as its
international headquarters.


     The lease may be cancelled by either party commencing April 1, 2008 with
six months' notice. The lease provides for increases in annual rental payments
based upon the increase in the Danish net price index, with an agreed annual
minimum increase of 2.5%.

     During June 1995 the Company entered into a noncancellable operating lease
starting January 22, 1996, with a property investment partnership for
additional office space at its international headquarters.

     The lease may be cancelled by either party commencing January 22, 2006
with 12 months' notice. If the lease is not cancelled by either party at that
time, the agreement provides for a new five year noncancellable term under the
same rental conditions. The lease provides for an increase in annual rental
payments based upon the increase in the Danish net price index, with an agreed
annual minimum increase of 2.5%.

     During December 1996 the Company entered into a noncancellable operating
lease starting January 1, 1998, with a property investment partnership for an
expansion of office space at its international headquarters.


                                       56



<PAGE>   58




     The lease may be cancelled by either party commencing January 1, 2007 with
12 months' notice. If the lease is not cancelled by either party at that time,
the agreement provides for a new five year noncancellable term under the same
rental conditions. The lease provides for an increase in annual rental payments
based upon the increase in the Danish net price index, with an agreed annual
minimum increase of 2.5%.

     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 rental payments under the foregoing leases at
December 31, 1996 are:


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

       1997                               $ 1,422         $   800   $ 2,222
       1998                                 2,042             641     2,683
       1999                                 2,093             614     2,707
       2000                                 2,146             475     2,621
       2001                                 2,199             293     2,492
       Remaining                           13,743             508    14,251
                                          ---------------------------------


       Total minimum lease payments       $ 23,645        $ 3,331   $26,976
                                           =================================
</TABLE>
Total lease amounts charged to expense are $ 1,118,000 in 1994, $ 1,420,000 in
1995 and $2,469,000 in 1996.

9.   RELATED PARTY TRANSACTIONS

     A. Contex A/S

     On January 23, 1996 the Company completed the sale of its 35.6% investment
in Contex A/S to Nilex 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.

     B. K/S Ulrikkenborg

     K/S Ulrikkenborg was a limited liability partnership, the partners of
which were Lars S. Nielsen, Asbjorn Smitt, and three other officers and
employees of the Company. Messrs. Nielsen and Smitt collectively controlled 75%
of the partnership. The partnership was formed for the purpose of purchasing,
and leasing to the Company, real property and improvements thereon, in Greater
Copenhagen for operation as the Company's international headquarters. In July
1995 the Company purchased the real property and improvements from K/S
Ulrikkenborg for an amount of $10.5 million, including leasehold improvements.

     The Company paid $767,000 in 1994, $441,000 in 1995 and $0 in 1996, in
rent to the partnership.


                                       57



<PAGE>   59




     C. Olivetti

     Olivetti Realty N.V. a corporation registered in the Netherlands Antilles,
owned 8.7% of the share capital of the Company as of December 31, 1994. In June
1995, Olivetti Realty N.V. sold all of its shares in the Company. As a related
party the Company purchased and sold products to affiliates of Olivetti Realty
N.V. ("Olivetti group") in the normal course of business as described in
paragraph E below.

     D. Management

     In December 1995 the Company sold the residential building, previously
rented by Lars S. Nielsen in accordance with the terms of the lease for
$570,000.

     E. Transactions

     The Company had no transactions with related parties during 1996.
Transactions with related parties in 1994 and 1995 are shown below:


<TABLE>
<CAPTION>
                                                  1994     1995
                                                ----------------
                                                 (In thousands)
                  <S>                            <C>      <C>
                  Sales
                   Olivetti group                $12,115   $5,104
                   Contex A/S                         12        0
                   Lasat Communications A/S            0       30
                                                 ----------------
                                                 $12,127   $5,134
                  Purchases
                   Olivetti group                 $   72       $  6
                   Contex A/S                         78         75
                   Lasat Communications A/S            6        644
                                                  -----------------
                                                  $  156    $   725
                  Accounts receivable
                      Olivetti group              $3,642   $      0
                      Lasat Communications A/S         0         27
                      Contex A/S                       0          0
                                                  -----------------
                                                  $3,642   $     27

                  Accounts payable
                       Olivetti group             $   35       $  0
                       Contex A/S                      0          0
                       Lasat Communications A/S        4          0
                       K/S Ulrikkenborg               14          0
                                                  ------       ----
                                                  $   53       $  0
</TABLE>



10. 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 and Ethernet
products. Export sales to unaffiliated customers were divided as follows:


                                       58



<PAGE>   60
<TABLE>
<CAPTION>
                                              1994     1995     1996
                                           -------  -------  -------
           <S>                             <C>      <C>      <C>
                                                    (In thousands)
           INCLUDED IN US OPERATIONS:
           Canada                          $ 4,429  $ 2,147  $ 1,181
           South America                   $     0  $     0  $ 1,710
           Pacific Basin & other           $     0  $     0  $   223

           INCLUDED IN DANISH OPERATIONS:
           United States                   $   560  $     0  $   637
           United Kingdom                  $11,641  $20,517  $19,437
           Europe (other than Denmark and
           the United Kingdom)             $34,558  $38,434  $58,323
           Pacific Basin & other           $ 4,550  $ 7,717  $ 8,628
</TABLE>


     As disclosed in Note 9E, sales to Olivetti group accounted for more than
10% of sales in 1994. Sales to one other customer exceeded 10% of sales in
1994, amounting to $13.4 million. Sales to one other customer exceeded 10% of
sales in 1995, amounting to $13.9 million. In 1996, no single customer
accounted for more than 10% of sales.

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


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

          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>



                                       59

 

<PAGE>   61




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

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


                                      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


     1994
     Net sales:


<TABLE>
              <S>           <C>             <C>     <C>       <C>
              Customers     $56,502$57,102  $0 $113,604
              Intercompany          36,182       0  (36,182)    0
                            --------------  ------  -------   ---
</TABLE>


                                     Total $ 92,684 $ 57,102 $ (36,182) $113,604


                       Operating income $ 11,215 $   5,995 $     (558) $  16,652


                       Identifiable assets $ 90,760 $ 21,708 $  (3,551) $108,917

Intercompany sales between geographic areas are accounted for at cost plus
amounts to cover handling and other similar expenses.

11. 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 and notes payable to banks: The carrying
    amount reported in the balance sheet for cash and cash equivalents and
    notes payable to banks approximates its fair value.


                                       60

 

<PAGE>   62




         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 are as follows:


<TABLE>
<CAPTION>
                                                         1995               1996
                      Carrying                         Fair    Carrying    Fair
                                         amount        value    amount    value
                                    ----------------  -------  --------  --------
<S>                                 <C>               <C>      <C>       <C>
                                                      (In thousands)

Cash and cash equivalents$33,065                      $33,065   $41,663  $41,663
Short-term investments                        10,099   10,099     9,887    9,887
Notes payable to banks                         6,430    6,430         0        0
Foreign currency exchange contract                92       92         0     (259)
Foreign currency options                          47       47         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.

     At December 31, 1995 and 1996 the stated or notional amounts of the
Company's outstanding off-balance sheet financial instruments were as follows:


<TABLE>
<CAPTION>
                                                     1995     1996
                                                  -------  -------
             <S>                                  <C>      <C>
                                                  (In thousands)

             Forward currency exchange contracts  $16,260  $12,000
             Foreign currency purchased options    12,000        0
             Foreign currency sold options          6,000        0
</TABLE>




                                       61

 

<PAGE>   63




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. Short-term investments are shares in a US mutual fund. The
fund's investment policy is to invest a major part of its assets in US
Government bonds and other securities rated AAA by Standard & Poor's. The
expected average maturity is approximately three to five years.

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

     Concentrations of credit risk with respect to accounts receivable of
customers located outside Denmark are limited under the terms of an agreement
entered into with the company "EKR Credit Insurance A/S". This agreement
guarantees up to 90% of the amount of the related receivables. The amounts so
covered at December 31, 1995 and 1996 were $19,692,000 and $19,645,000,
respectively.

12. 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, 1996, 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.

     During fiscal year 1994 three lawsuits were filed against the Company in
the United States District Court for the Northern District of Texas, and were
subsequently consolidated into one action. The Company's Consolidated Financial
Statements at December 31, 1994, include a charge of $4,200,000, net of
insurance coverage, in connection with the settlement of the consolidated
action. This represents the Company's anticipated total liability with regard
to the settlement and was paid into an escrow account in 1995. The settlement
was approved by the court, and on August 30, 1996, the court entered a final
judgement of dismissal with prejudice with respect to the consolidated action.

13. SPECIAL CHARGE REGARDING MANAGEMENT CHANGE

     In the first quarter of 1996, the Company recorded certain special charges
of $1.4 million, consisting primarily of severance pay and other costs incurred
relating to the Company's management reorganization of its U.S. operations and
other senior management changes.

14. SUBSEQUENT EVENT

     On March 20, 1997, the Company entered into an Agreement and Plan of
Reorganization under which the Company would exchange each outstanding share of
common stock in CrossComm Corporation for $5.00 in cash, .2667 shares of common
stock in the Company and three year warrants evidencing the right to acquire
 .1075 shares of common stock in the Company at an exercise price of $19.74 per
full share of common stock. Pursuant to the agreement, the

                                       62

 

<PAGE>   64



Company expects to issue approximately 2,700,000 shares of its common stock,
warrants to purchase an additional 1,100,000 shares of common stock, and in
addition, to issue options for approximately 575,000 shares of its common
stock. The number of shares of common stock in the Company may be adjusted
upward and downward under certain circumstances, based on the high and low
sales prices for common stock in Olicom during a period prior to closing. The
acquisition, if consummated, will be accounted for using purchase accounting,
and the Company anticipates recognizing a significant non-recurring expense
during the second quarter of 1997 in order to write off in-process research and
development and certain other acquisition- and integration-related expenses.
The acquisition is subject to approval by the shareholders of both the Company
and CrossComm, as well as other conditions, and if such approvals are obtained
and the other conditions are satisfied, the transaction is expected to become
effective in June, 1997. CrossComm is a publicly-held corporation that develops
and markets ATM and multi-protocol router technology for mission-critical
SNA/Token Ring environments. The Company anticipates that the cash portion of
the consideration (net of acquired liquid assets) will be funded from available
working capital.

                                       63

 

<PAGE>   65




ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS

     (a) The following consolidated financial statements are filed as part of
this Annual Report:
           Page no

1. Consolidated Financial Statements

<TABLE>
       <S>                                                            <C>
       Report of Independent Auditors                                  42
       Consolidated Balance Sheets at December 31, 1995 and 1996       43
       Consolidated Statements of Income for the years
           ended December 31, 1994, 1995 and 1996                      45
       Consolidated Statements of Shareholders' Equity for the years
           ended December 31, 1994, 1995 and 1996                      46
       Consolidated Statements of Cash Flows for the years
           ended December 31, 1994, 1995 and 1996                      47
       Notes to Consolidated Financial Statements                      49
</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>

*1.1--     Articles of Association of the Company, as amended.

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

**2.1--    1994 Share Incentive Plan, as amended.

2.2--      1996 Share Incentive Plan.

2.3--      1997 Share Incentive Plan.

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

***3.2--   Form of Indemnification Agreement between the Company
           (and/or Olicom, Inc.) and Jan Bech, Lars Stig Nielsen, Bo Vilstrup,
           Kurt Anker Nielsen, Frank G. Petersen, Michael Peytz, Boje Rinhart,
           Michael Camp, Niels Jorgensen, Tyge Trier, Soren Seerup, Jorgen Hog,

</TABLE>


                                       64

 

<PAGE>   66



<TABLE>
<S>        <C>
           Steen B. Lohse, David F. Burkey, Claus Christensen and
           Niels Christian Furu.

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

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

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

***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.+

*3.7 --    Share Purchase Agreement dated January 23, 1996, between the Company
           and Nilex Systems ApS.
*3.8   --   Agreement and Plan of Reorganization dated as of March 20, 1997, among
           the Company, PW Acquisition Corporation and CrossComm Corporation.
</TABLE>


_____________

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

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

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

     **** 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.

                                       65

 

<PAGE>   67




                                   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
                                                               Managing Director


June 12, 1997






                                       66