<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-Q
 
          /X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 
                           SECURITIES EXCHANGE ACT OF 1934
 
              FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 1997, OR
 
         / /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 
                           SECURITIES EXCHANGE ACT OF 1934
 
             FOR THE TRANSITION PERIOD FROM          TO           .
                        COMMISSION FILE NUMBER: 0-26952
 
                            ------------------------
 
                              SYNC RESEARCH, INC.
             (Exact name of Registrant as specified in its charter)
 
           DELAWARE                             33-0676350
 (State or other jurisdiction
              of                             (I.R.S. Employer
incorporation or organization)             Identification No.)
 
                                   40 PARKER
                                IRVINE, CA 92618
                    (Address of principal executive offices)
       Registrant's telephone number, including area code: (714) 588-2070
 
                            ------------------------
 
    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") 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 ___
 
    As of November 10, 1997, 17,282,153 shares of the Registrant's Common Stock
were issued and outstanding.
 
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<PAGE>
                              SYNC RESEARCH, INC.
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                             ---------
<S>          <C>                                                                                             <C>
Part I.      Financial Information.........................................................................          3
 
  Item 1.    a)  Condensed consolidated balance sheets at September 30, 1997 (unaudited) and December 31,
                 1996......................................................................................          3
 
             b)  Condensed consolidated statements of operations (unaudited) for the three and nine months
                 ended September 30, 1997 and September 30, 1996...........................................          4
 
             c)  Condensed consolidated statements of cash flows (unaudited) for the
                nine months ended September 30, 1997 and September 30, 1996................................          5
 
             d)  Notes to condensed consolidated financial statements......................................          6
 
  Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.........          8
 
Part II.     Other Information.............................................................................         19
 
  Item 1.    Legal Proceedings.............................................................................         19
 
  Item 2.    Changes in Securities and Use of Proceeds.....................................................         19
 
  Item 3.    Defaults upon Senior Securities...............................................................         19
 
  Item 4.    Submission of Matters to a Vote of Security Holders...........................................         19
 
  Item 5.    Other Information.............................................................................         20
 
  Item 6.    Exhibits and Reports on Form 8-K..............................................................         20
</TABLE>
 
                                       2
<PAGE>
PART I.  FINANCIAL INFORMATION
 
ITEM 1.  FINANCIAL STATEMENTS
 
                                SYNC RESEARCH, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                                      SEPTEMBER 30,  DECEMBER 31,
                                                                                          1997           1996
                                                                                      -------------  ------------
<S>                                                                                   <C>            <C>
                                                                                       (UNAUDITED)
Current assets:
  Cash and cash equivalents.........................................................   $    23,777    $   35,874
  Accounts and other receivables, net...............................................         4,786         7,587
  Inventories.......................................................................         8,005         7,139
  Prepaid expenses and other current assets.........................................           648           479
                                                                                      -------------  ------------
 
Total current assets................................................................        37,216        51,079
 
Furniture, fixtures and equipment, net..............................................         4,486         4,570
Other assets........................................................................            44            43
                                                                                      -------------  ------------
    Total assets....................................................................   $    41,746    $   55,692
                                                                                      -------------  ------------
                                                                                      -------------  ------------
 
                                      LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
  Accounts payable and accrued liabilities..........................................   $     5,173    $    5,902
  Bank borrowings and current maturities of capitalized lease obligations...........            46           841
  Severance and related liabilities.................................................           838            --
                                                                                      -------------  ------------
Total current liabilities...........................................................         6,057         6,743
 
Capitalized lease obligations, less current maturities..............................           122           146
 
Stockholders' equity:
  Common stock, $.001 par value:
    Authorized shares--50,000
    Issued and outstanding shares 17,277 at September 30, 1997 and
    16,946 at December 31, 1996.....................................................            17            17
  Additional paid-in capital........................................................        71,823        71,385
  Deferred compensation.............................................................           (82)         (156)
  Accumulated deficit...............................................................       (36,191)      (22,443)
                                                                                      -------------  ------------
Total stockholders' equity..........................................................        35,567        48,803
                                                                                      -------------  ------------
Total liabilities and stockholders' equity..........................................   $    41,746    $   55,692
                                                                                      -------------  ------------
                                                                                      -------------  ------------
</TABLE>
 
                            See accompanying notes.
 
                                       3
<PAGE>
                              SYNC RESEARCH, INC.
 
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
                                  (UNAUDITED)
 
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED     NINE MONTHS ENDED
                                                                        SEPTEMBER 30,          SEPTEMBER 30,
                                                                     --------------------  ---------------------
                                                                       1997       1996        1997       1996
                                                                     ---------  ---------  ----------  ---------
<S>                                                                  <C>        <C>        <C>         <C>
Net revenues.......................................................  $   5,675  $   9,251  $   17,048  $  25,915
Cost of sales......................................................      3,623      4,976      10,918     14,395
                                                                     ---------  ---------  ----------  ---------
  Gross profit.....................................................      2,052      4,275       6,130     11,520
 
Operating expenses:
  Research and development.........................................      1,761      1,921       5,514      5,400
  Selling and marketing............................................      3,697      3,832      11,323     10,674
  General and administrative.......................................        791      2,534       2,954      4,777
  Severance and lease rationalization costs........................        735         --       1,241         --
                                                                     ---------  ---------  ----------  ---------
  Total operating expenses.........................................      6,984      8,287      21,032     20,851
                                                                     ---------  ---------  ----------  ---------
Operating loss.....................................................     (4,932)    (4,012)    (14,902)    (9,331)
Interest income, net...............................................        345        531       1,153      1,766
                                                                     ---------  ---------  ----------  ---------
Loss before income taxes...........................................     (4,587)    (3,481)    (13,749)    (7,565)
Provision for income taxes.........................................         --          2          --          2
                                                                     ---------  ---------  ----------  ---------
Net loss...........................................................  $  (4,587) $  (3,483) $  (13,749) $  (7,567)
                                                                     ---------  ---------  ----------  ---------
                                                                     ---------  ---------  ----------  ---------
Net loss per share.................................................  $   (0.27) $   (0.23) $    (0.80) $   (0.52)
                                                                     ---------  ---------  ----------  ---------
                                                                     ---------  ---------  ----------  ---------
Shares used in computing net loss per share........................     17,251     16,183      17,137     16,068
                                                                     ---------  ---------  ----------  ---------
                                                                     ---------  ---------  ----------  ---------
</TABLE>
 
                            See accompanying notes.
 
                                       4
<PAGE>
                              SYNC RESEARCH, INC.
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                  (UNAUDITED)
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                              NINE MONTHS ENDED
                                                                                                SEPTEMBER 30,
                                                                                            ----------------------
                                                                                               1997        1996
                                                                                            ----------  ----------
<S>                                                                                         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss................................................................................  $  (13,749) $   (7,567)
  TyLink net loss for the three months ended March 31, 1996...............................          --         711
  Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation and amortization.........................................................       1,267         699
    Provision for losses on accounts receivable...........................................         140         347
    Deferred compensation expense.........................................................          74         224
    Changes in operating assets and liabilities, net......................................       1,738      (2,190)
                                                                                            ----------  ----------
Net cash used in operating activities.....................................................     (10,530)     (7,776)
 
CASH FLOWS FROM INVESTING ACTIVITIES
  Investments in marketable securities, net...............................................          --     (12,751)
  Purchases of furniture, fixtures and equipment, net.....................................      (1,183)     (1,966)
                                                                                            ----------  ----------
Net cash used in investing activities.....................................................      (1,183)    (14,717)
 
CASH FLOWS FROM FINANCING ACTIVITIES
  Repurchase of Series B preferred stock..................................................          --      (4,000)
  Net bank borrowings.....................................................................        (802)        802
  Payments on capitalized lease obligations...............................................         (21)       (400)
  Proceeds from common stock options exercised and employee stock purchase plan...........         439         216
                                                                                            ----------  ----------
Net cash used in financing activities.....................................................        (384)     (3,382)
                                                                                            ----------  ----------
Net decrease in cash and cash equivalents.................................................     (12,097)    (25,875)
Cash and cash equivalents at beginning of period..........................................      35,874      50,633
                                                                                            ----------  ----------
Cash and cash equivalents at end of period................................................  $   23,777  $   24,758
                                                                                            ----------  ----------
                                                                                            ----------  ----------
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Interest paid...........................................................................  $       30  $       90
                                                                                            ----------  ----------
                                                                                            ----------  ----------
  Income taxes paid.......................................................................  $        8  $       41
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>
 
                            See accompanying notes.
 
                                       5
<PAGE>
                              SYNC RESEARCH, INC.
 
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
                                  (UNAUDITED)
 
ITEM 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
1.  BASIS OF PRESENTATION
 
    On August 23, 1996, Sync Research, Inc. ("Sync" or the "Company") acquired
TyLink Corporation ("TyLink"), pursuant to a merger (the "Merger") of a
wholly-owned subsidiary of the Company with and into TyLink. In the Merger, the
Company exchanged 2,148,168 shares of its common stock for all of the
outstanding shares of TyLink common and Series A preferred stock and reserved
423,155 shares of Sync common stock for issuance upon exercise of TyLink
options, which were assumed by the Company. In addition, Sync acquired all of
the issued and outstanding Series B preferred stock for $4 million in cash and
208,677 shares of Sync common stock. The merger has been accounted for as a
pooling of interests. Accordingly, the accompanying financial statements reflect
the combination of Sync and Tylink for all periods presented. In the third
quarter of 1996, Sync and TyLink incurred direct transaction costs of
approximately $1.3 million associated with the Merger, consisting of transaction
fees for investment banking, legal and accounting firms, financial printing and
other related charges.
 
    The condensed consolidated balance sheet as of September 30, 1997, the
condensed consolidated statements of operations for the three and nine months
ended September 30, 1997 and 1996 and the condensed consolidated statements of
cash flows for the nine months ended September 30, 1997 and 1996 have been
prepared without audit. In the opinion of management, the unaudited financial
statements include all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the Company's financial position at September 30,
1997, the results of its operations for the three and nine months ended
September 30, 1997 and 1996 and its cash flows for the nine months ended
September 30, 1997 and 1996. The condensed financial statements should be read
in conjunction with the audited financial statements of Sync Research, Inc. and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996. The results of operations for the three and nine months
ended September 30, 1997 are not necessarily indicative of the operating results
to be expected for the full year.
 
    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 accompanying financial
statements. Actual results could differ from those estimates.
 
2.  CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
 
    The Company invests its excess cash in money market funds and debt
instruments of U.S. corporations with strong credit ratings. The Company has
established guidelines with respect to the diversification and maturities in
order to maintain safety and liquidity. The Company considers all highly liquid
investments with an original maturity of three months or less to be cash
equivalents. The Company considers investments with original maturities between
three and twelve months to be short-term investments. Management determines the
appropriate classification of such securities at the time of purchase and
reevaluates such classification as of each balance sheet date. Based on its
intent, the Company's investments are classified as available-for-sale and are
carried at fair value, with unrealized gains and losses, net of tax, reported as
a separate component of stockholders' equity. The investments are adjusted for
amortization of premiums and discounts to maturity and such amortization is
included in interest income. Realized gains and losses and declines in value
judged to be other than temporary are determined based on the specific
identification method and are reported in the consolidated statements of
operations. There were no significant unrealized gains or losses at September
30, 1997.
 
                                       6
<PAGE>
                              SYNC RESEARCH, INC.
 
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                                  (UNAUDITED)
 
3.  INVENTORIES
 
    Inventories consist primarily of computer hardware and components and are
stated at the lower of cost (first-in, first-out) or market, as follows (in
thousands):
 
<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,  DECEMBER 31,
                                                                      1997           1996
                                                                  -------------  -------------
<S>                                                               <C>            <C>
Raw Materials...................................................    $   4,300      $   3,973
Work in Process.................................................          998          1,043
Finished Goods..................................................        2,707          2,123
                                                                       ------         ------
                                                                    $   8,005      $   7,139
                                                                       ------         ------
                                                                       ------         ------
</TABLE>
 
4.  PER SHARE INFORMATION
 
    Net loss per share is computed using the weighted average number of common
shares and common share equivalents outstanding during the periods presented.
Common share equivalents result from the dilutive effect, if any, of outstanding
options and warrants to purchase common stock. The weighted average number of
common shares outstanding for all periods also reflects the issuance of .1576
shares of the Company's common stock for each share of TyLink Series A preferred
and common stock. Net loss applicable to common and common equivalent shares
reflects the accretion of dividends and liquidation value related to TyLink
mandatorily redeemable preferred stock. Such accretion aggregated $242,000 and
$775,000 during the three and nine months ended September 30, 1996.
 
5.  LINE OF CREDIT
 
    In June 1997, the Company amended its $5 million unsecured bank credit
agreement to revise certain financial covenants. As of September 30, 1997, there
were no amounts outstanding under this agreement. As a result of the third
quarter losses, the Company is not currently in compliance with certain
financial covenants in the loan agreement. The Company and the bank are in the
process of negotiating a new loan agreement with revised financial covenants in
line with current expectations.
 
6.  IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 
    In February 1997, Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" was issued and is effective for interim and annual periods
ended after December 15, 1997. The statement requires presentation of both basic
and diluted earnings per share. As a result of the Company's net loss, basic and
diluted earnings per share will not differ materially from the earnings per
share amounts in the accompanying financial statements.
 
7.  LITIGATION
 
    On November 5, 1997, an action entitled Dalarne Partners, Ltd. v. Sync
Research, Inc., et al., No SACV97-877 AHS(EEx) was filed against the Company and
certain of its directors and officers. The action was filed in the U.S. District
Court for the Central District of California, Southern Division. The action
purports to be a class action lawsuit brought on behalf of purchasers of the
Company's common stock during the period from November 18, 1996 through March
20, 1997. The complaint asserts claims for violation of the Securities Exchange
Act of 1934. The complaint seeks to recover damages in an unspecified amount. No
trial date or other deadline has been established. The Company intends to defend
this lawsuit vigorously.
 
                                       7
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 
    The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included in Part
I--Item 1 of this Quarterly Report. In addition, except for the historical
statements contained herein, the following discussion contains forward-looking
statements. The Company wishes to alert readers that the factors set forth in
the Company's Annual Report on Form 10-K for the year ended December 31, 1996,
and in the section of this Item 2 titled "Additional Factors That May Affect
Future Results," as well as other factors, could in the future affect, and in
the past have affected, the Company's results. The Company's actual results for
future periods could differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company.
 
OVERVIEW
 
    Sync commenced operations in 1981 and shipped its first commercial product
in 1989. Over the past several years, the Company has expanded its operations
through its internal field sales organization and has entered into various OEM,
marketing and sales arrangements with communications and networking companies
such as International Business Machines ("IBM") and 3Com Corporation ("3Com"),
as well as telephone service carriers such as Sprint, MCI, Ameritech and AT&T.
Starting in the first half of 1995, the Company added senior management
personnel and built its sales and other organizations in order to support
anticipated growth in its business. In addition, the Company increased its
manufacturing capacity through the expansion of its relationships with contract
manufacturers and its internal manufacturing resources.
 
    On August 23, 1996, Sync acquired TyLink, pursuant to a merger of a
wholly-owned subsidiary of the Company with and into TyLink. In the merger, the
Company exchanged 2,148,168 shares of its common stock for all of the
outstanding shares of TyLink common and Series A preferred stock and reserved
423,155 shares of Sync common stock for issuance upon exercise of TyLink
options, which were assumed by the Company. In addition, Sync acquired all of
the issued and outstanding Tylink Series B preferred stock for $4 million in
cash and 208,677 shares of Sync common stock. The merger has been accounted for
as a pooling of interests. Accordingly, the accompanying financial statements
reflect the combination of Sync and TyLink for all periods presented.
 
    In March 1997, the Company implemented significant expense reductions,
including a reduction in force and certain lease terminations, with the goal of
enabling the Company to achieve profitability at lower revenue levels. In
September 1997, the Company implemented additional expense reduction strategies,
primarily consisting of workforce reductions. There can be no assurance that
Sync's products will achieve significant market penetration, either through its
channel partners and other resellers or its direct sales force, or that the
Company will successfully introduce new and enhanced products or compete
effectively in its market, or that its efforts to implement expense reductions
will enable it to become profitable at lower revenue levels, if at all.
 
RESULTS OF OPERATIONS
 
    NET REVENUES
 
    The Company derives its revenues primarily from sales of advanced wide-area
networking products. Product revenues are recognized upon shipment and the
Company generally does not have any significant remaining obligations upon
shipment of its products. Product returns and sales allowances are provided for
at the date of sale. Service revenues from customer maintenance fees for ongoing
customer support and product updates, which have not been material to date, are
recognized ratably over the term of the maintenance period, which is typically
12 months.
 
                                       8
<PAGE>
    Net revenues for the third quarter of 1997 were $5.7 million, compared to
net revenues of $9.3 million for the quarter ended September 30, 1996. Net
revenues for the nine months ended September 30, 1997 were $17.0 million,
compared to $25.9 million for the comparable period in 1996. The lower net
revenues during 1997 reflected decreased sales of all of the Company's product
groups, as well as lower average selling prices.
 
    Net revenues by product group for the three months ended September 30, 1997
and 1996 were as follows ($ in thousands):
 
<TABLE>
<CAPTION>
                                                     1997       PERCENTAGE       1996       PERCENTAGE
                                                   ---------  ---------------  ---------  ---------------
<S>                                                <C>        <C>              <C>        <C>
Frame relay access...............................  $   2,187            39%    $   4,521            49%
Circuit management...............................      1,543            27         1,882            20
Transmission.....................................      1,007            18         1,206            13
Other............................................        938            16         1,642            18
                                                   ---------           ---     ---------           ---
                                                   $   5,675           100%    $   9,251           100%
                                                   ---------           ---     ---------           ---
                                                   ---------           ---     ---------           ---
</TABLE>
 
    Net revenues by product group for the nine months ended September 30, 1997
and 1996 were as follows ($ in thousands):
 
<TABLE>
<CAPTION>
                                                  1997       PERCENTAGE       1996       PERCENTAGE
                                                ---------  ---------------  ---------  ---------------
<S>                                             <C>        <C>              <C>        <C>
Frame relay access............................  $   6,973            41%    $  10,647            41%
Circuit management............................      3,655            21         4,685            18
Transmission..................................      3,198            19         3,841            15
Other.........................................      3,222            19         6,742            26
                                                ---------           ---     ---------           ---
                                                $  17,048           100%    $  25,915           100%
                                                ---------           ---     ---------           ---
                                                ---------           ---     ---------           ---
</TABLE>
 
    The decrease in net revenues from sales of frame relay access products
during the nine months ended September 30, 1997 as compared to the same period
of 1996 was, in part, due to the loss of Racal-Datacom, Inc. ("Racal") and
Network Equipment Technologies, Inc. ("NET") as channel partners. Racal and NET
have developed competing products and no longer purchase frame relay products
from the Company.
 
    The Company expects that average selling prices will continue to decline and
that sales through channel partners and other resellers will continue to account
for a substantial majority of net revenues, however, the mix of sales to channel
partners and other resellers may change from period to period. Sales of frame
relay access products and circuit management products may grow as a percentage
of net revenues and revenues from the sale of transmission and other products
are expected to decline. International sales represented approximately 20% of
the Company's total sales during the nine months ended September 30, 1997.
 
    GROSS PROFIT
 
    Cost of sales primarily consists of purchased materials used in the assembly
of the Company's products and compensation paid to employees in the Company's
manufacturing organization. Gross profit decreased to $2.1 and $6.1 million for
the three and nine months ended September 30, 1997, respectively, from $4.3 and
$11.5 million in the corresponding prior year periods. Gross profit as a
percentage of net revenues decreased to 36.2% and 36.0% for the three and nine
months ended September 30, 1997, respectively, as compared to 46.2% and 44.5%
for the three and nine months ended September 30, 1996, respectively. The
decreases in 1997 as compared to 1996 were due primarily to lower sales volume,
changes in channel distribution and customer mix, and lower average selling
prices.
 
                                       9
<PAGE>
    OPERATING EXPENSES
 
    Research and development expenses primarily consist of compensation paid to
personnel, including consultants, engaged in research and development, amounts
paid for outside development services, and costs of materials utilized in the
development of hardware products, including prototype units. It is the Company's
policy to expense all research and development costs as incurred and to
capitalize certain software development costs subsequent to the establishment of
technological feasibility. To date, no significant costs have been capitalized.
Research and development expenses decreased to $1.8 million for the third
quarter of 1997, as compared to $1.9 million for the third quarter of the prior
year. For the nine months ended September 30, 1997, research costs were $5.5
million, as compared to $5.4 million for the nine months ended September 30,
1996. The decreased expenses in the third quarter of 1997 were primarily due to
the Company's March 1997 expense reductions. The increase in research and
development expenses for the nine months ended September 30, 1997 as compared to
the prior year period was due to the higher compensation costs incurred in the
first quarter of 1997 related to the development of new products and the
continued enhancement of existing products. The Company believes that
significant research and development efforts are necessary in order for it to
compete in the evolving marketplace in which it operates.
 
    Selling and marketing expenses consist primarily of base and incentive
compensation paid to sales and marketing personnel, travel and related expenses,
and costs associated with promotional and trade show activities. Selling and
marketing expenses decreased to $3.7 million for the quarter ended September 30,
1997, as compared to $3.8 million in the quarter ended September 30, 1996, and
increased to $11.3 million for the nine months ended September 30, 1997, as
compared to $10.7 million in the prior year period. The decrease in selling and
marketing expenses in the third quarter resulted primarily from the Company's
March 1997 expense reductions and lower incentive compensation due to lower
sales. The increased expenses for the first nine months of 1997 principally
reflected increased hiring and personnel-related expenses associated with the
build-up of the Company's sales organization in the latter part of 1996.
 
    General and administrative expenses consist primarily of compensation paid
to administrative personnel, payments to consultants, professional services and
costs related to public company activities. General and administrative
expenditures decreased to $791,000 for the three months ended September 30,
1997, as compared to $2.5 million for the third quarter of 1996, and decreased
to $3.0 million for the nine months ended September 30, 1997, as compared to
$4.8 million during the prior year period. The expenses were lower in the 1997
periods because of the Company's expense reductions in March 1997 and $1.3
million in non-recurring costs associated with the Company's merger with TyLink
in the third quarter of 1996.
 
    Severance and lease rationalization costs include expenses related to the
reduction in employees and the elimination or reduction of certain lease
obligations undertaken at the end of March 1997 and similar costs related to the
Company's expense reduction efforts undertaken at the end of September 1997.
 
    Net interest income was $345,000 and $1.2 million for the three and nine
month periods ended September 30, 1997, respectively, as compared to $531,000
and $1.8 million in the three and nine month periods ended September 30, 1996.
The lower net interest income resulted from lower average cash balances.
 
    INCOME TAXES
 
    The Company did not have provisions for income taxes in 1997 and 1996 as a
result of its losses during those periods.
 
                                       10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
 
    As of September 30, 1997, the Company's principal sources of liquidity
consisted of $23.8 million of cash and cash equivalents. During the nine months
ended September 30, 1997, cash utilized by operating activities was $10.5
million, compared to $7.8 million for the nine months ended September 30, 1996.
Cash utilized during the nine-month period ended September 30, 1997 primarily
reflected the Company's net loss. Capital expenditures during the first nine
months of 1997, consisting primarily of computer hardware and software
purchases, were $1.2 million, compared to $2.0 million for the same period of
1996.
 
    In June 1997, the Company amended its $5 million unsecured bank credit
agreement to revise certain financial covenants. As of September 30, 1997, there
were no amounts outstanding under this agreement. As a result of third quarter
losses, the Company is not currently in compliance with certain financial
covenants in the loan agreement. The Company and the bank are in the process of
negotiating a new loan agreement with revised financial covenants in line with
current expectations.
 
    The Company entered into a new seven-year real estate lease and relocated
its primary operations during the fourth quarter of 1996. Therefore, lease,
operating and maintenance costs have been and will continue to be greater in
1997 than in 1996.
 
    The Company believes that its available cash and cash equivalents will be
sufficient to meet its working capital requirements at least through 1998.
 
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
 
    The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. Specifically, the Company
wishes to alert readers that, except for the historical information contained
therein, the previous discussion under "Results of Operations" and "Liquidity
and Capital Resources" constitutes forward-looking statements that are dependent
on certain risks and uncertainties which may cause actual results to differ
materially from those expressed in any forward-looking statements made by or on
behalf of the Company. The following is a description of certain of the major
risks and uncertainties.
 
    HISTORY OF LOSSES; SIGNIFICANT FLUCTUATIONS IN OPERATING RESULTS; UNCERTAIN
     PROFITABILITY
 
    The Company has experienced operating losses since inception, with, in
recent years, operating losses of $1.2 million in 1994, $2.4 million in 1995,
$11.7 million in 1996 and $13.7 million for the nine months ended September 30,
1997. As of September 30, 1997, the Company had an accumulated deficit of
approximately $36.2 million. The Company has experienced, and may in the future
experience, significant fluctuations in revenues and operating results from
quarter to quarter and from year to year due to a combination of factors.
Factors that have in the past caused, or may in the future cause, the Company's
revenues and operating results to vary significantly from period to period
include: the timing of significant orders; the relatively long length of the
sales cycles for certain of the Company's products; the market conditions in the
networking industry; the rate at which Tylink operations become integrated with
Sync operations; the timing of capital expenditures by Sync's target market
customers; competition and pricing in the industry; the Company's success in
developing, introducing and shipping new products; new product introductions by
the Company's competitors; announcements by IBM relating to products, services
or pricing relevant to the Company; the rate of migration of large IBM customers
to frame relay; production or quality problems; changes in material costs;
disruption in sources of supply; and general economic conditions. In addition,
revenues and gross margins may fluctuate due to the mix of distribution channels
employed and the mix of products sold. For example, the Company generally
realizes a higher gross margin on direct sales than on sales through its channel
partners and other resellers. Accordingly, as channel partners and other
resellers continue to account for a substantial majority of the Company's net
revenues, gross profit as a percentage of net revenues may decline.
 
                                       11
<PAGE>
    The Company's future revenues are difficult to predict. Revenues and
operating results in any quarter depend on the volume and timing of, and the
ability to fulfill, orders received within the quarter. Sales of the Company's
products typically involve a sales cycle of several months or over a year from
the point of initial customer contact until receipt of the first system order,
and, in addition, the Company has in the past encountered, and may in the future
encounter, subsequent delays between initial orders and network-wide deployment.
There can be no assurance that average sales cycles will not increase in future
periods. Further, due to the Company's focus on its channel partner marketing
strategy, the Company's revenues in any period are highly dependent upon the
sales efforts and success of Sync's channel partners and other resellers, which
are not within the control of the Company. There can be no assurance that the
Company's channel partners and other resellers will give a high priority to the
marketing of the Company's products as compared to competitive products or
alternative networking solutions or that Sync's channel partners and other
resellers will continue to offer the Company's products. Significant portions of
the Company's expenses are relatively fixed in advance, based in large part on
the Company's forecasts of future sales. If sales are below expectations in any
given period, the adverse effect of a shortfall in sales on the Company's
operating results may be magnified by the Company's inability to adjust spending
to compensate for such shortfall. The Company has in the past and may in the
future reduce prices or increase spending to respond to competition or to pursue
new product or market opportunities. Accordingly, there can be no assurance that
the Company will be able to attain or sustain profitability on a quarterly or an
annual basis. In addition, if the Company's operating results fall below the
expectations of public market analysts and investors, the price of the Company's
common stock would likely be materially and adversely affected.
 
    UNCERTAIN MARKET ACCEPTANCE OF FRAME RELAY FOR MISSION-CRITICAL APPLICATIONS
 
    The market for SNA-over-frame relay products is relatively new and still
evolving. The success of the Company and its channel partners in generating
significant sales of frame relay access products will depend in part on their
ability to educate end users about the benefits of the Company's technology and
convince end users to switch their mission-critical applications to frame relay.
In addition, broad acceptance of frame relay services will also depend upon the
tariffs for such services, which are determined by carriers. If the tariff
structure for dedicated leased lines becomes more favorable relative to tariffs
for a comparable network utilizing frame relay, the market for frame relay
networking products could be adversely affected. There can be no assurance that
the market will adopt frame relay for mission-critical applications to any
significant extent. The failure of such adoption to occur could have a material
adverse effect on the Company's business, operating results and financial
condition.
 
    UNCERTAIN MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS; PRODUCT CONCENTRATION
 
    The Company currently derives substantially all of its revenues from its
frame relay access, circuit management, transmission and other products and
expects that revenues from these products will continue to account for
substantially all of its revenues for the foreseeable future. Broad market
acceptance of, and continuing demand for, these products, is, therefore,
critical to the Company's future success. Factors that may affect the market
acceptance of the Company's products include the extent to which frame relay is
adopted for mission-critical applications, the availability and price of
competing products and technologies, announcements by IBM relating to products,
services or pricing relevant to the Company, the success of the sales efforts of
the Company and its resellers and tariff rates for carrier services. Moreover,
the Company's operating history in the WAN internetworking market and its
resources are limited relative to those of certain of its current and potential
competitors. The Company's future performance will also depend in part on the
successful development, introduction and market acceptance of new and enhanced
products. Failure of the Company's products to achieve market acceptance could
have a material adverse effect on the Company's business, operating results and
financial condition.
 
                                       12
<PAGE>
    DEPENDENCE ON CHANNEL PARTNERS AND OTHER RESELLERS
 
    The Company's channel partners and other resellers currently account, and
are expected to continue to account, for a substantial majority of the Company's
net revenues, including virtually all of its sales outside of the United States.
Sales through channel partners and other resellers accounted for 85.7%, 88.1%,
and 79.6% of net revenues of the Company in 1996, 1995 and 1994, respectively.
The Company currently maintains OEM, marketing and sales arrangements with
communications and networking companies such as IBM and 3Com, as well as
carriers such as Sprint, Ameritech, MCI and AT&T. The Company's agreements with
its channel partners and other resellers do not restrict the sale of products
that compete with those of the Company. In addition, these agreements generally
provide for discounts based on expected or actual volumes of products purchased
or resold by the reseller in a given period, do not require minimum purchases,
and prohibit distribution of certain products by the Company through certain
categories of third parties under certain conditions. The agreements also
specify that the channel partners and certain other resellers will be provided
manufacturing rights and access to certain of the Company's source code upon the
occurrence of specified conditions or default.
 
    Certain of the Company's channel partners offer alternative solutions,
designed by themselves or third parties, for SNA internetworking or have
pre-existing relationships with current or potential competitors of the Company.
Certain of the Company's channel partners have in the past developed competitive
products and terminated their relationships with the Company, and such
developments could occur in the future. Many of the Company's resellers offer
competitive products manufactured either by third parties or by themselves. For
example, NET and Racal, which accounted for, respectively, 6.6% and 4.4% of the
Company's net revenues in 1996, have developed competitive products and product
strategies. Moreover, the product lines acquired in the TyLink merger compete
with certain Racal products. Thus, Sync expects product revenues from NET and
Racal to continue to decline. Sales to 3Com accounted for 19.2%, 17.9% and 6.5%
of net revenues of the Company in 1996, 1995 and 1994, respectively. The Company
believes the amount of revenues derived from sales to 3Com will likely decline
as competitive products impact the conversion product business.
 
    The Company generally realizes a higher gross margin on direct sales than on
sales through its channel partners and other resellers. Accordingly, as channel
partners and other resellers continue to account for a substantial majority of
the Company's net revenues, gross profit as a percentage of net revenues may
decline. Each of the Company's channel partners or other resellers can cease
marketing the Company's products at the reseller's option, under certain
conditions, with limited notice and with little or no penalty. There can be no
assurance that the Company will retain its current channel partners or other
resellers or that it will be able to recruit additional or replacement channel
partners. The loss of one or more of the Company's channel partners or other
resellers could have a material adverse effect on the Company's business,
operating results and financial condition. In addition, there can be no
assurance that the Company's channel partners and other resellers will give
priority to the marketing of the Company's products as compared to competitive
products or alternative networking solutions or that Sync's channel partners and
other resellers will continue to offer the Company's products. Any reduction or
delay in sales of the Company's products by its channel partners could have a
material adverse effect on the Company's business, operating results and
financial condition.
 
    RAPID TECHNOLOGICAL CHANGE AND NEW PRODUCTS
 
    The market for the Company's products is characterized by rapidly changing
technology, evolving industry standards and frequent new product introductions.
The Company's success will depend to a substantial degree upon its ability to
develop and introduce in a timely fashion enhancements to its existing products
and new products that meet changing customer requirements and emerging industry
standards. The development of new, technologically advanced products is a
complex and uncertain process requiring high levels of innovation, as well as
the accurate anticipation of technological and market trends. There can be no
assurance that the Company will be able to identify, develop, manufacture,
market or support
 
                                       13
<PAGE>
new products successfully, that such new products will gain market acceptance or
that the Company will be able to respond effectively to technological changes,
emerging industry standards or product announcements by competitors. In
addition, the Company has on occasion experienced delays in the introduction of
product enhancements and new products. There can be no assurance that in the
future the Company will be able to introduce product enhancements or new
products on a timely basis. Further, from time to time, the Company may announce
new products, capabilities or technologies that have the potential to replace or
shorten the life cycle of the Company's existing product offerings. There can be
no assurance that announcements of product enhancements or new product offerings
will not cause customers to defer purchasing existing Company products or cause
resellers to return products to the Company. Failure to introduce new products
or product enhancements effectively and on a timely basis, customer delays in
purchasing products in anticipation of new product introductions and any
inability of the Company to respond effectively to technological changes,
emerging industry standards or product announcements by competitors could have a
material adverse effect on the Company's business, operating results and
financial condition.
 
    PRODUCT ERRORS
 
    Products as complex as those offered by the Company may contain undetected
software or hardware errors when first introduced or as new versions are
released. Such errors have occurred in the past, and there can be no assurance
that, despite testing by the Company and by current and potential customers,
errors will not be found in new or enhanced products after commencement of
commercial shipments. Moreover, there can be no assurance that once detected,
such errors can be corrected in a timely manner, if at all. Software errors may
take several months to correct, if they can be corrected at all, and hardware
errors may take even longer to rectify. The occurrence of such software or
hardware errors, as well as any delay in correcting them, could result in the
delay or loss of market acceptance of the Company's products, additional
warranty expense, diversion of engineering and other resources from the
Company's product development efforts or the loss of credibility with Sync's
channel partners and other resellers, any of which could have a material adverse
effect on the Company's business, operating results and financial condition.
 
    INTENSE COMPETITION
 
    The market for communications products is intensely competitive and subject
to rapid technological change and emerging industry standards. The Company's
current competitors include internetworking companies, such as Cisco and Bay
Networks; FRAD providers, such as Hypercom, Motorola ISG and Cabletron; and
circuit management providers such as Visual Networks and Frontier Software.
Competitors for the TyLink group of digital transmission products include
Digital Link, Racal, AT&T Paradyne and Adtran, among others. Potential
competitors include other internetworking and WAN access and transmission
companies, frame relay switch providers, IBM and the Company's other channel
partners. Certain of these companies have recently announced products and
intentions to enter the frame relay access or circuit management market. Many of
the Company's current and potential competitors have longer operating histories
and greater financial, technical, sales, marketing and other resources, as well
as greater name recognition and a larger customer base, than does the Company.
As a result, they may be able to respond more quickly to new or emerging
technologies and changes in customer requirements or may be able to devote
greater resources to the development, promotion, sale and support of their
products than the Company. Many also have long-standing customer relationships
with large enterprises that are part of the Company's target market, and these
relationships may make it more difficult to complete sales of the Company's
products to these enterprises. Further, certain of the Company's channel
partners have in the past developed competitive products and terminated their
relationships with the Company, and such developments could occur in the future.
As a consequence of all these factors, the Company expects increased
competition, particularly in the frame relay market. Increased competition could
result in significant price competition, reduced profit margins or loss of
market share, any of which could have a
 
                                       14
<PAGE>
material adverse effect on the Company's business, operating results and
financial condition. There can be no assurance that the Company will be able to
compete successfully in the future.
 
    DEPENDENCE ON THE IBM CUSTOMER BASE
 
    The Company's products are targeted at the large installed base of IBM
customers utilizing SNA networks. Thus, the Company faces the risks associated
with a relatively concentrated customer base, including the possibility that
larger IBM customers may migrate to frame relay at a slower-than-expected rate,
if at all, and the possibility that IBM customers may purchase IBM-sponsored
frame relay products other than Sync products. There can be no assurance that
IBM will continue to support frame relay, that IBM will not develop or promote
SNA-over-frame relay products competitive with the Company's products, that the
relationship between the Company and IBM will be successful, that IBM will not
terminate the relationship or that IBM will not endorse the products of
competitors or networking solutions not offered by the Company. Any of these
events could have a material adverse effect on the Company's business, operating
results and financial condition.
 
    DEPENDENCE ON CONTRACT MANUFACTURERS
 
    The Company's manufacturing operations consist primarily of materials
planning and procurement, light assembly, system integration, testing and
quality assurance. The Company entered into an arrangement with a contract
manufacturer in 1995 to outsource substantial portions of its procurement,
assembly and system integration operations. The Company has contracted with a
second supplier to diversify purchasing commitments while maintaining the
outsource strategy. There can be no assurance that these independent contract
manufacturers will be able to meet the Company's future requirements for
manufactured products or that such independent contract manufacturers will not
experience quality problems in manufacturing the Company's products. The
inability of the Company's contract manufacturers to provide the Company with
adequate supplies of high quality products could have a material adverse effect
upon the Company's business, operating results and financial condition. The loss
of any of the Company's contract manufacturers could cause a delay in Sync's
ability to fulfill orders while the Company attempts to identify a replacement
manufacturer. Such an event could have a material adverse effect on the
Company's business, operating results and financial condition.
 
    The Company's manufacturing procedures may in certain instances create a
risk of excess or inadequate inventory if orders do not match forecasts. The
Company increased manufacturing capacity in 1995 and 1996 through the expansion
of its relationships with contract manufacturers and internal manufacturing
resources. Any manufacturing delays, excess manufacturing capacity or
inventories or inability to increase manufacturing capacity, if required, could
have a material adverse effect on the Company's business, operating results and
financial condition.
 
    DEPENDENCE ON SUPPLIERS
 
    Certain key components used in the manufacture of the Company's products are
currently purchased only from single or limited sources. At present,
single-sourced components include programmable integrated circuits, selected
other integrated circuits and cables, custom-molded plastics and custom-tooled
sheet metal, and limited-sourced components include flash memories, DRAMs,
printed circuit boards and selected integrated circuits. The Company generally
relies upon contract manufacturers to buy component parts that are incorporated
into board assemblies. The Company buys directly final assembly parts, such as
plastics and metal covers, cables and other parts used in final configurations.
The Company generally does not have long-term agreements with any of these
single or limited sources of supply. Any loss in a supplier, increase in
required lead times, increase in price of component parts, interruption in the
supply of any of these components, or the inability of the Company to procure
these components from alternate sources at acceptable prices and within a
reasonable time, could have a material adverse effect upon the Company's
business, operating results and financial condition. If orders do not match
forecasts, the Company may
 
                                       15
<PAGE>
have excess or inadequate inventory of certain materials and components, and
suppliers may demand longer lead times, higher prices or termination of
contracts. From time to time the Company has experienced shortages of certain
components and has paid above-market prices to acquire such components on an
accelerated basis or has experienced delays in fulfilling orders while waiting
to obtain the necessary components. Such shortages may occur in the future and
could have a material adverse effect on the Company's business, operating
results and financial condition.
 
    DEPENDENCE ON AND RISKS ASSOCIATED WITH INTERNATIONAL SALES
 
    Sales to customers outside of the United States accounted for approximately
19.9%, 12.7%, 10.7% and 6.3% of the Company's net revenues in the nine months
ended September 30, 1997 and in fiscal years 1996, 1995 and 1994, respectively.
However, these percentages may understate sales of the Company's products to
international end users because certain of the Company's U.S.-based channel
partners market the Company's products abroad. The Company currently anticipates
that international sales may continue to account for a significant percentage of
the Company's net revenues in future periods. Historically, the Company's
international sales have been conducted primarily through independent
country-specific distributors. The Company intends to market its products in
foreign countries in the future increasingly through its channel partners.
Failure of these resellers to market the Company's products internationally or
the loss of any of these resellers could have a material adverse effect on the
Company's business, operating results and financial condition. In addition, the
Company's ability to increase sales of its products to international end users
may be limited if the carrier services, such as frame relay, or protocols
supported by the Company's products are not widely adopted internationally. A
number of additional risks are inherent in international transactions. The
Company's international sales currently are U.S. dollar-denominated. As a
result, an increase in the value of the U.S. dollar relative to foreign
currencies could make the Company's products less competitive in international
markets. International sales may also be limited or disrupted by the imposition
of governmental controls, export license requirements, restrictions on the
export of critical technology, currency exchange fluctuations, political
instability, trade restrictions and changes in tariffs. In addition, sales in
Europe and certain other parts of the world typically are adversely affected in
the third quarter of each year as many customers and end users reduce their
business activities during the summer months. These international factors could
have a material adverse effect on future sales of the Company's products to
international end users and, consequently, the Company's business, operating
results and financial condition.
 
    DEPENDENCE ON PROPRIETARY TECHNOLOGY
 
    The Company's future success depends, in part, upon its proprietary
technology. The Company does not hold any patents and currently relies on a
combination of contractual rights, trade secrets and copyright laws to establish
and protect its proprietary rights in its products. There can be no assurance
that the steps taken by the Company to protect its intellectual property will be
adequate to prevent misappropriation of its technology or that the Company's
competitors will not independently develop technologies that are substantially
equivalent or superior to the Company's technology. In the event that protective
measures are not successful, the Company's business, operating results and
financial condition could be materially and adversely affected. In addition, the
laws of some foreign countries do not protect the Company's proprietary rights
to the same extent as do the laws of the United States. The Company is also
subject to the risk of adverse claims and litigation alleging infringement of
intellectual property rights of others. There can be no assurance that third
parties will not assert infringement claims in the future with respect to the
Company's current or future products or that any such claims will not require
the Company to enter into license arrangements or result in litigation,
regardless of the merits of such claims. No assurance can be given that any
necessary licenses will be available or that, if available, such licenses can be
obtained on commercially reasonable terms. Should litigation with respect to any
such claims commence, such litigation could be extremely expensive and
time-consuming and could have a material adverse effect
 
                                       16
<PAGE>
on the Company's business, operating results and financial condition regardless
of the outcome of such litigation.
 
    TARIFF AND REGULATORY MATTERS
 
    Rates for public telecommunications services, including features and
capacity of such services, are governed by tariffs determined by carriers and
subject to regulatory approval. Future changes in these tariffs could have a
material effect on the Company's business. For example, should tariffs for frame
relay services increase in the future relative to tariffs for dedicated leased
lines, the cost-effectiveness of the Company's products could be reduced, which
could have a material adverse effect on the Company's business, operating
results and financial condition. In addition, the Company's products must meet
industry standards and receive certification for connection to certain public
telecommunications networks prior to their sale. In the United States, the
Company's products must comply with various regulations defined by the Federal
Communications Commission and Underwriters Laboratories. Internationally, the
Company's products must comply with standards established by telecommunications
authorities in various countries as well as with recommendations of the
Consultative Committee on International Telegraph and Telephony. In addition,
carriers require that equipment connected to their networks comply with their
own standards, which in part reflect their currently installed equipment. Some
public carriers have installed equipment that does not fully comply with current
industry standards, and this noncompliance must be addressed in the design of
the Company's products. Any future inability to obtain on a timely basis or
retain domestic or foreign regulatory approvals or certifications or to comply
with existing or evolving industry standards could have a material adverse
effect on the Company's business, operating results and financial condition.
 
    DEPENDENCE ON KEY PERSONNEL
 
    The Company's success depends, to a significant degree, upon the continued
contributions of its key management, sales, marketing, research and development
and manufacturing personnel. The Company does not maintain key person life
insurance policies on any of its employees. The Company believes its future
success will also depend in large part upon its ability to attract and retain
highly skilled engineering, managerial, sales and marketing personnel, and
development engineers. Competition for such personnel is intense, and there can
be no assurance that the Company will be successful in attracting and retaining
such personnel. In March 1997 and in September 1997, the Company implemented
significant expense reductions, including reductions in force, with the goal of
enabling the Company to achieve profitability at lower revenues. In addition,
three senior executives, Roger Dorf, Chief Executive Officer, Dominic Genovese,
Vice President of Sales and Otto Berlin, Vice President of International Sales,
recently resigned from the Company. The loss of the services of these or any of
the Company's other key personnel or the failure to attract or retain qualified
personnel in the future could have a material adverse effect on the Company's
business, operating results or financial condition.
 
    GENERAL ECONOMIC CONDITIONS
 
    Demand for the Company's products depends in large part on the overall
demand for communications and networking products, which has in the past and may
in the future fluctuate significantly based on numerous factors, including
capital spending levels and general economic conditions. There can be no
assurance that the Company will not experience a decline in demand for its
products due to general economic conditions. Any such decline could have a
material adverse effect on the Company's business, operating results and
financial condition.
 
    VOLATILITY OF STOCK PRICE
 
    Factors such as announcements of technological innovations or the
introduction of new products by the Company or its competitors, as well as
market conditions in the technology sector, may have a
 
                                       17
<PAGE>
significant effect on the market price of the Company's common stock. Further,
the stock market has experienced volatility which has particularly affected the
market prices of equity securities of many high technology companies and which
often has been unrelated to the operating performance of such companies. These
market fluctuations may have an adverse effect on the price of the Company's
common stock.
 
    ANTI-TAKEOVER PROVISIONS
 
    The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In addition, certain provisions
of the Company's charter documents, including provisions eliminating cumulative
voting, eliminating the ability of stockholders to take actions by written
consent and limiting the ability of stockholders to raise matters at a meeting
of stockholders without giving advance notice, may have the effect of delaying
or preventing a change in control or management of the Company, which could have
an adverse effect on the market price of the Company's common stock. Certain of
the Company's stock option and purchase plans provide for assumption of such
plans, or, alternatively, immediate vesting upon a change of control or similar
event. In addition, the Company has entered into severance agreements with its
officers, pursuant to which they are entitled to specified severance payments if
they are actually or constructively terminated within specified time periods
following a change of control of the Company. In April 1997, the Board approved
an amendment to these agreements to provide that upon a change of control of the
Company, fifty percent (50%) of the officer's unvested options shall immediately
vest. The Board of Directors has authority to issue up to 2,000,000 shares of
preferred stock and to fix the rights, preferences, privileges and restrictions,
including voting rights, of these shares without any further vote or action by
the stockholders. The rights of the holders of the common stock will be subject
to, and may be adversely affected by, the rights of the holders of any preferred
stock that may be issued in the future. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company, thereby delaying, deferring or preventing a change in control of the
Company. Furthermore, such preferred stock may have other rights, including
economic rights senior to the common stock, and as a result, the issuance of
such preferred stock could have a material adverse effect on the market value of
the common stock. The Company has no present plan to issue shares of preferred
stock.
 
                                       18
<PAGE>
                              SYNC RESEARCH, INC.
 
PART II.  OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS
 
    On November 5, 1997, an action entitled Dalarne Partners, Ltd. v. Sync
Research, Inc., et al., No SACV97-877 AHS(EEx) was filed against the Company and
certain of its directors and officers. The action was filed in the U.S. District
Court for the Central District of California, Southern Division. The action
purports to be a class action lawsuit brought on behalf of purchasers of the
Company's common stock during the period from November 18, 1996 through March
20, 1997. The complaint asserts claims for violation of the Securities Exchange
Act of 1934. The complaint seeks to recover damages in an unspecified amount. No
trial date or other deadline has been established. The Company intends to defend
this lawsuit vigorously.
 
ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
 
    (d)  USE OF PROCEEDS
 
    In connection with its initial public offering in 1995, the Company filed a
Registration Statement on Form S-1, SEC File No. 33-96910 (the "REGISTRATION
STATEMENT"), which was declared effective by the Commission on November 8, 1995.
Pursuant to the Registration Statement, the Company registered and sold
2,585,000 shares of its Common Stock, $0.001 par value per share, for its own
account. The offering was completed on November 9, 1995. The aggregate offering
price of the registered shares was $51,700,000. The managing underwriters of the
offering were Robertson, Stephens & Company, Alex. Brown & Sons Incorporated and
Wessels, Arnold & Henderson.
 
    From November 9, 1995 to September 30, 1997, the Company incurred the
following expenses in connection with the offering:
 
<TABLE>
<S>                                                 <C>
Underwriting discounts and commissions............  $  3,619,000
Other expenses....................................       912,471
                                                    ------------
  Total Expenses..................................  $  4,531,471
                                                    ------------
                                                    ------------
</TABLE>
 
    All of such expenses were direct or indirect payments to others.
 
    The net offering proceeds to the Company after deducting the total expenses
above were $47,168,529. From November 9, 1995 to September 30, 1997, the Company
used such net offering proceeds, in direct or indirect payments to others, as
follows:
 
<TABLE>
<S>                                                 <C>
Construction of plant, building and facilities....  $     824,249
Purchase and installment of machinery and
  equipment.......................................      2,961,603
Acquisition of other business(es).................      5,338,000
Working capital...................................      4,725,521
Operating losses..................................     19,767,000
                                                    -------------
  Total...........................................  $  33,616,373
                                                    -------------
                                                    -------------
</TABLE>
 
    In addition, the Company used aggregate proceeds of $228,583 to make
departing payments to departing officers. This use of proceeds does not
represent a material change in the use of proceeds described in the prospectus
of the Registration Statement.
 
                                       19
<PAGE>
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
 
    None.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    None.
 
ITEM 5.  OTHER INFORMATION
 
    None.
 
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
 
    (A) EXHIBITS
 
<TABLE>
<C>        <S>
    10.28  Letter Agreement dated June 6, 1997 with William K. Guerry
    11.1   Computation of Earnings (Loss) per Share.
    27.1   Financial Data Schedule.
</TABLE>
 
    (B) REPORTS ON FORM 8-K
 
        No Reports on Form 8-K were filed during the quarter ended September 30,
    1997.
 
                                       20
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
 
                                SYNC RESEARCH, INC.
 
Date: November 14, 1997         By:            /s/ WILLIAM K. GUERRY
                                     -----------------------------------------
                                                 William K. Guerry
                                           VICE PRESIDENT OF FINANCE AND
                                                   ADMINISTRATION
                                            AND CHIEF FINANCIAL OFFICER
                                      (DULY AUTHORIZED SIGNATORY AND PRINCIPAL
                                         FINANCIAL AND ACCOUNTING OFFICER)
 
                                       21
<PAGE>
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER   DESCRIPTION
------   -------------------------------------------------------------------------------------------------------
<C>      <S>
 10.28   Letter Agreement dated June 6, 1997 with William K. Guerry.
 
 11.1    Computation of Net Loss per Share.
 
 27.1    Financial Data Schedule.
</TABLE>
 
                                       22