<PAGE>
 
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                ---------------
 
                                  FORM 10-K/A
                                AMENDMENT NO. 3
 
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended September 30, 1996
 
                                       OR
 
          [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
 
                        COMMISSION FILE NUMBER: 0-19674
 
                            SYQUEST TECHNOLOGY, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
               DELAWARE                               94-2793941
    (STATE OR OTHER JURISDICTION OF                (I.R.S. EMPLOYER
    INCORPORATION OR ORGANIZATION)               IDENTIFICATION NO.)
 
    47071 BAYSIDE PARKWAY, FREMONT,                     94538
              CALIFORNIA                              (ZIP CODE)
    (ADDRESS OF PRINCIPAL EXECUTIVE
               OFFICES)
 
                                 (510) 226-4000
              (REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE)
 
                                ---------------
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                    COMMON STOCK, PAR VALUE $.001 PER SHARE
                                (TITLE OF CLASS)
 
  Indicate by checkmark 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 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 checkmark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.[_]
 
  The aggregate market value of the voting stock held by nonaffiliates of the
registrant, based upon the closing price of Common Stock on November 30, 1996,
as reported by Nasdaq, was approximately $78,663,000. Shares of Common Stock
held by each officer and director and by each person who owns 5% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
 
  The number of outstanding shares of the registrants' Common Stock on November
30, 1996, was 15,830,753.
 
                   DOCUMENTS INCORPORATED BY REFERENCE: NONE.
 
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<PAGE>
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
  For the years ended September 30, 1996, 1995, and 1994
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<S>                                                                         <C>
Report of Ernst & Young LLP, Independent Auditors..........................  1
Consolidated Balance Sheets--September 30, 1996, and 1995..................  2
Consolidated Statements of Operations--Years Ended September 30, 1996,
 1995, and 1994............................................................  3
Consolidated Statements of Stockholders' Equity--Years Ended September 30,
 1996, 1995, and 1994......................................................  4
Consolidated Statements of Cash Flows--Years Ended September 30, 1996,
 1995, and 1994............................................................  5
Notes to Consolidated Financial Statements.................................  7
</TABLE>
<PAGE>
 
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
The Board of Directors and Stockholders SyQuest Technology, Inc.
 
     We have audited the accompanying consolidated balance sheets of SyQuest
Technology, Inc. and subsidiaries as of September 30, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 1996. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     Since the date of completion of our audit of the accompanying consolidated 
financial statements and initial issuance of our report thereon dated December 
11, 1996, the Company, as discussed in Note 15, paragraph 11, has experienced 
operating losses and a reduction in revenues that has adversely affect the 
Company's reported results of operations for the first two fiscal quarters of 
1997.  Note 15, paragraph 11, describes management's plans to address these 
issues.
 
     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of SyQuest Technology, Inc. and subsidiaries at September 30, 1996 and 1995,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended September 30, 1996, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
 
                                          Ernst & Young LLP
 
San Jose, California
December 11, 1996, except for Note 15, paragraph 11
as to which the date is June 27, 1997
 
                                       1
<PAGE>
 
                            SYQUEST TECHNOLOGY, INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                             SEPTEMBER 30,
                                                           -------------------
                                                             1996       1995
                                                           ---------  --------
                                                             (IN THOUSANDS,
                                                           EXCEPT SHARE DATA)
<S>                                                        <C>        <C>
                          ASSETS
Current assets:
  Cash and cash equivalents............................... $   3,470  $ 29,248
  Short-term investments..................................       200       400
  Accounts receivable.....................................    30,341    55,653
  Inventories.............................................    10,538    34,213
  Prepaid expenses and deposits...........................     2,471     2,066
  Deferred income taxes...................................       --     13,254
                                                           ---------  --------
Total current assets......................................    47,020   134,834
Property, equipment and leasehold improvements:
  Equipment...............................................    49,340    47,291
  Furniture and fixtures..................................     2,710     2,667
  Property and leasehold improvements.....................     9,896     7,832
                                                           ---------  --------
                                                              61,946    57,790
  Accumulated depreciation and amortization...............    34,765    31,070
                                                           ---------  --------
                                                              27,180    26,720
Other assets..............................................       981     3,130
                                                           ---------  --------
                                                           $  75,181  $164,684
                                                           =========  ========
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable........................................ $  23,917  $ 41,213
  Bank borrowings.........................................    19,268       --
  Accrued compensation and benefits.......................     3,811     5,206
  Provision for losses on purchase commitments............       --     10,510
  Accrued expenses and other liabilities..................    14,860    15,210
  Income taxes payable....................................     1,966       355
  Current portion, long-term debt.........................    20,549       --
                                                           ---------  --------
Total current liabilities.................................    84,371    72,494
Deferred rent.............................................       192       276
Long-term debt............................................    20,971       --
Deferred income taxes.....................................       --      8,726
Commitments and contingencies.............................       --        --
Stockholders' equity (deficit):
  Preferred stock, $.001 par value:
    Authorized shares--4,000,000; issued and outstanding
     shares--19,193 in 1996 and none in 1995..............        18       --
    Liquidation preference--$19,208
  Common stock, $.001 par value:
    Authorized shares--60,000,000; issued and outstanding
     shares--12,312,769 in 1996 and 11,323,974 in 1995....        14        13
  Additional paid-in capital..............................   102,580    79,489
  Treasury common stock at cost--1,225,000 shares in 1996
   and 1995...............................................   (12,855)  (12,855)
  Retained earnings (deficit).............................  (120,110)   16,541
                                                           ---------  --------
Total stockholders' equity (deficit)......................   (30,353)   83,188
                                                           ---------  --------
                                                           $  75,181  $164,684
                                                           =========  ========
</TABLE>
 
                            See accompanying notes.
 
                                       2
<PAGE>
 
                            SYQUEST TECHNOLOGY, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                              YEARS ENDED SEPTEMBER 30,
                                       -----------------------------------------
                                           1996           1995          1994
                                       -------------  ------------  ------------
                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                    <C>            <C>           <C>
Net revenues.........................  $ 200,407      $299,544      $221,001
Cost of revenues.....................    248,693       248,497       160,342
                                       ---------      --------      --------
Gross profit(loss)...................    (48,286)       51,047        60,659
Operating expenses:                                                         
  Selling, general, and                                                     
   administrative (includes provision                                       
   for losses on accounts receivable                                        
   of $5,839 in 1996, $2,008 in 1995,                                       
   and $3,151 in 1994)...............     51,743        44,264        37,566
  Research and development...........     25,920        23,892        17,967
  Restructuring charges..............      4,727           --            -- 
                                       ---------      --------      --------
Total operating expenses.............     82,390        68,156        55,533
                                       ---------      --------      --------
Income (loss) from operations........   (130,676)      (17,109)        5,126
Other income and (expense)...........     (1,938)          468           337
  Interest income....................        192         1,134         1,193
Interest (expense)...................     (1,229)          --            -- 
                                       ---------      --------      --------
Income (loss) before income taxes and                                       
 cumulative effect of accounting                                            
 change..............................   (133,651)      (15,507)        6,656
  Provision (benefit) for income                                            
   taxes.............................      3,000        (3,721)        1,597
                                       ---------      --------      --------
  Income (loss) before cumulative                                           
   effect of accounting change.......   (136,651)      (11,786)        5,059
  Cumulative effect of change in                                            
   method of accounting for income                                          
   taxes.............................        --            --            346
                                       ---------      --------      --------
  Net income (loss)..................  $(136,651)     $(11,786)     $  5,405
                                       =========      ========      ========
  Income (loss) per share:                                                  
Primary:                                                                    
  Income(loss) before cumulative                                            
   effect of accounting change.......  $  (12.38)     $  (1.07)     $    .43
  Cumulative effect of accounting                                           
   change............................        --            --            .03
                                       ---------      --------      --------
  Net income (loss) per share........  $  (12.38)     $  (1.07)     $    .46
                                       =========      ========      ========
  Common and common equivalent shares                                       
   used in computing per share                                              
   amounts...........................     11,497        11,063        11,647
                                       =========      ========      ========
</TABLE>
 
 
                            See accompanying notes.
 
                                       3
<PAGE>
 
                            SYQUEST TECHNOLOGY, INC.
 
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
 
<TABLE>
<CAPTION>
                          PREFERRED STOCK       COMMON STOCK
                          -------------------   --------------
                                                               ADDITIONAL TREASURY  RETAINED
                                                                PAID-IN    COMMON   EARNINGS
                          SHARES     AMOUNT     SHARES  AMOUNT  CAPITAL    STOCK    (DEFICIT)    TOTAL
                          -------    --------   ------  ------ ---------- --------  ---------  ---------
                                                     (IN THOUSANDS)
<S>                       <C>        <C>        <C>     <C>    <C>        <C>       <C>        <C>
BALANCE AT OCTOBER 1,
 1993...................       --          --   11,283   $12    $ 72,221  $ (5,611) $  22,922  $  89,544
Stock options exercised.       --          --       88   --          497       --         --         497
Shares issued under the
 Employee Stock Purchase
 Plan...................       --          --       79   --          736       --         --         736
Purchase of treasury
 stock at cost..........       --          --     (625)  --          --     (6,044)       --      (6,044)
Income tax benefit from
 stock options
 exercised..............       --          --      --    --          642       --         --         642
Stock option
 compensation...........       --          --      --    --           65       --         --          65
Net income..............       --          --      --    --          --        --       5,405      5,405
                           -------    --------  ------   ---    --------  --------  ---------  ---------
BALANCE AT SEPTEMBER 30,
 1994...................       --          --   10,825    12      74,161   (11,655)    28,327     90,845
Stock options exercised.       --          --      502     1       2,932       --         --       2,933
Shares issued under the
 Employee Stock Purchase
 Plan...................       --          --       97   --        1,061       --         --       1,061
Purchase of treasury
 stock at cost..........       --          --     (100)  --          --     (1,200)       --      (1,200)
Income tax benefit from
 stock options
 exercised..............       --          --      --    --        1,321       --         --       1,321
Stock option
 compensation...........       --          --      --    --           14       --         --          14
Net income (loss).......       --          --      --    --          --        --     (11,786)   (11,786)
                           -------    --------  ------   ---    --------  --------  ---------  ---------
BALANCE AT SEPTEMBER 30,
 1995...................       --          --   11,324    13      79,489   (12,855)    16,541     83,188
Stock options exercised.       --          --      386     1       1,421       --         --       1,422
Shares issued under the
 Employee Stock Purchase
 Plan...................       --          --       64   --          350       --         --         350
Issuance of preferred
 stock..................        20          19     --    --       18,981       --         --      19,000
Debt to equity
 conversion.............       --          --      371   --        2,338       --         --       2,338
Conversion of preferred
 stock to common stock..        (1)         (1)    168   --            1       --         --         --
Net income (loss).......       --          --      --    --          --        --    (136,651)  (136,651)
                           -------    --------  ------   ---    --------  --------  ---------  ---------
BALANCE AT SEPTEMBER 30,
 1996...................        19    $     18  12,313   $14    $102,580  $(12,855) $(120,110) $ (30,353)
                           =======    ========  ======   ===    ========  ========  =========  =========
</TABLE>
 
                            See accompanying notes.
 
                                       4
<PAGE>
 
                            SYQUEST TECHNOLOGY, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                  YEARS ENDED SEPTEMBER 30,
                                                 -----------------------------
                                                   1996       1995      1994
                                                 ---------  --------  --------
                                                       (IN THOUSANDS)
<S>                                              <C>        <C>       <C>
OPERATING ACTIVITIES
Net income (loss)..............................  $(136,651) $(11,786) $  5,405
Adjustments to reconcile net income (loss) to
 net cash provided by (used in) operating
 activities:
  Depreciation and amortization................     10,578     8,052     7,129
    Deferred income taxes......................      4,528    (4,227)   (1,675)
    Stock option compensation..................        --         14        65
    Deferred rent..............................        (84)       12        34
    Loss on disposal of equipment and leasehold
     improvements..............................      6,782        99        63
  Changes in operating assets and liabilities:
    Accounts receivable........................     25,312    (8,934)  (14,569)
    Inventories................................     23,675   (22,065)   (1,487)
    Prepaid expenses and deposits..............       (405)     (359)     (991)
    Accounts payable...........................     13,413    15,161    11,036
    Accrued compensation and benefits..........     (1,395)    1,677      (437)
    Provision for losses on purchase
     commitments...............................      2,282    10,510       --
    Accrued expenses and other liabilities.....       (350)    5,455     2,058
    Income taxes payable (refundable)..........      1,611    (1,144)    3,462
                                                 ---------  --------  --------
Net cash provided by (used in) operating
 activities....................................    (50,704)   (7,535)   10,093

INVESTING ACTIVITIES
Purchase of property, equipment and leasehold
 improvements..................................        --    (12,509)   (7,743)
Purchase of short-term investments.............        200    (3,178)   (7,603)
Proceeds from sale of short-term investments...    (17,820)    4,493     5,895
Investment in Silmag...........................        --     (2,100)      --
Other..........................................         (5)    1,301        44
                                                 ---------  --------  --------
Net cash used in investing activities..........    (18,295)  (11,993)   (9,407)

FINANCING ACTIVITIES
Purchase of treasury stock.....................        --     (1,200)   (6,044)
Payments of long-term debt.....................       (426)      --        --
Net borrowings under line of credit agreements.     22,875       --        --
Proceeds from sale of common stock and exercise
 of stock options and warrants.................      1,772     3,994     1,233
Proceeds from sale of preferred stock..........     19,000       --        --
                                                 ---------  --------  --------
Net cash provided by (used in) financing
 activities....................................     43,221     2,794    (4,811)
                                                 ---------  --------  --------
Decrease in cash and cash equivalents..........    (25,778)  (16,734)   (4,125)
Cash and cash equivalents at beginning of year.     29,248    45,982    50,107
                                                 ---------  --------  --------
Cash and cash equivalents at end of year.......  $   3,470  $ 29,248  $ 45,982
                                                 =========  ========  ========
</TABLE>
 
                            See accompanying notes.
 
                                       5
<PAGE>
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 
  Supplemental information on noncash investing and financing activities, in
thousands:
 
<TABLE>
     <S>                                                                 <C>
     Conversion of preferred to Common Stock............................ $  738
     Conversion of accounts payable to Common Stock..................... $2,338
</TABLE>
 
  A number of suppliers converted approximately $31 million of net accounts
payable and purchase commitment liabilities into notes payable. The notes are
payable over six to thirty-six months and bear interest at approximately 10%.
 
  One supplier converted approximately $7.3 million of net accounts payable
and purchase commitment liabilities into a long-term, 6% Convertible
Subordinated Debenture.
 
  In the third quarter of fiscal 1996, the Company exchanged 4,155 common
shares of Silmag S.A. for a reduction of accounts payable in the amount of
$2.8 million with one of its suppliers. The Company realized a gain of $0.7
million on the exchange which is classified as other income.
 
  In the quarter ended September 30, 1996, the Company entered into a
Securities Purchase Agreement with a supplier to exchange 370,000 shares of
common stock for $2.3 million of debt.
 
  Cash paid for interest expense in fiscal year 1996 was approximately $0.9
million.
 
                                       6
<PAGE>
 
                           SYQUEST TECHNOLOGY, INC.
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                              SEPTEMBER 30, 1996
 
1. SIGNIFICANT ACCOUNTING POLICIES
 
BASIS OF CONSOLIDATION
 
  The consolidated financial statements include the accounts of SyQuest
Technology, Inc. (the "Company" or "SyQuest") and its wholly owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.
 
BASIS OF PRESENTATION
 
  The Company's consolidated financial statements have been presented on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Over the last
two years the Company has experienced aggregate consolidated losses of
$148,437,000 including a net loss of $136,651,000 for the year ended September
30, 1996. Working capital (deficit) at September 30, 1996 was $(37,426,000) as
compared to $62,340,000 at September 30, 1995. Management's financial plans
for fiscal 1997 anticipate raising additional equity capital in order to
stimulate business and take advantage of market opportunities. As discussed in
Note 15, during the first quarter of fiscal 1997, the Company raised
approximately $38 million of additional equity from investors. Management is
currently pursuing other investment opportunities and expects to raise
additional financing during the second quarter of fiscal 1997. There can be no
assurance, however, that such financing would be available when needed, if at
all, or on favorable terms. If results of operations for fiscal 1997 do not
meet management's expectations, or additional capital is not available,
management has the ability and intent to reduce certain expenditures so as not
to require additional capital resources.
 
  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. Certain
prior year amounts have been restated to conform to the 1996 presentation.
 
CASH EQUIVALENTS
 
  The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. Certain of the Company's
balances of cash and cash equivalents are subject to usage restrictions. See
Note 4.
 
SHORT-TERM INVESTMENTS
 
  The Company considers investments with an original maturity of more than
three months but less than twelve months to be short-term investments. Short-
term investments consist primarily of certificates of deposit, bankers
acceptances, commercial paper, and US Government agency debt securities.
 
  The Company classified its entire investment portfolio at September 30, 1996
and 1995 as available-for-sale. Available for sale securities are stated at
fair value with unrealized gains and losses included in stockholder's equity.
The amortized cost of debt securities is adjusted for amortization of premiums
and accretion of discounts to maturity. Such amortization is included in
interest income. Realized gains and losses are included in other income
(expense). The cost of securities is based on the specific identification
method. Short term investments at September 30, 1996 and 1995 are comprised of
certificates of deposit.
 
INVENTORIES
 
  Inventories are stated at the lower of cost (first-in, first-out method) or
market.
 
                                       7
<PAGE>
 
                           SYQUEST TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
                              SEPTEMBER 30, 1996
 
 
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
 
  Property, equipment and leasehold improvements are stated on the basis of
cost. Equipment is depreciated over the estimated useful lives (three to five
years) of the assets using the straight-line method. Property and leasehold
improvements are amortized by the straight-line method over the shorter of the
life of the related asset or the term of the lease.
 
  In 1995, the Financial Accounting Standards Board released the Statement of
Financial Accounting Standards No. 121 (SFAS 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of".
SFAS 121 requires the recognition of impairment of long-lived assets in the
event that the net book value of such assets exceeds the future undiscounted
cash flows attributable to such assets. SFAS 121 is effective for fiscal years
beginning after December 15, 1995. Adoption of SFAS 121 is not expected to
have a material impact on the Company's financial position or results of
operations.
 
FOREIGN CURRENCY TRANSLATION AND FOREIGN CURRENCY TRANSACTIONS
 
  The functional currency of the Company's foreign subsidiaries is the US
dollar. Subsidiary financial statements are remeasured into US dollars for
consolidation. Foreign currency transaction gains (losses) of ($573,000),
$468,000, and $337,000 are included in other income and expense for 1996,
1995, and 1994, respectively.
 
REVENUE RECOGNITION
 
  The Company recognizes revenue upon shipment to customers and provides an
estimated allowance for returns based on the historical return history
experienced by the Company.
 
WARRANTY
 
  The Company generally warrants its products for one to five years. A
provision for estimated future warranty costs is recorded at the time of
shipment.
 
INCOME (LOSS) PER SHARE
 
  At September 30, 1996, the Company had 19,193 shares of convertible
preferred stock issued and outstanding with an assured incremental yield
embedded in the conversion terms. Included in the computation of earnings per
share is a $5.7 million charge for the embedded yield for the discount from
the average fair market value of the common stock for the five trading days
prior to September 30, 1996 times the number of common shares reserved for
conversion.
 
  Income per share for the year ended September 30, 1994 is based on the
weighted average number of shares of common stock outstanding and dilutive
common equivalent shares from stock options (using the treasury stock method).
Loss per share for years ending September 30, 1996 and 1995 is based on the
weighted average number of shares of common stock outstanding. All other
common equivalant shares would be antidilutive.
 
DERIVATIVE FINANCIAL INSTRUMENTS
 
  During fiscal 1995, the Company adopted Statement of Financial Accounting
Standards No. 119, "Disclosure about Financial Instruments and Fair Value of
Financial Instruments" (FAS 119).
 
                                       8
<PAGE>
 
                           SYQUEST TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
                              SEPTEMBER 30, 1996
 
 
FAIR VALUES OF FINANCIAL INSTRUMENTS
 
  For certain of the Company's financial instruments, including cash and
equivalents, accounts receivable, notes payable, and accrued liabilities, the
carrying amounts approximate fair value due to their short maturities. The
Company further believes that the carrying amounts of its long-term
obligations approximate fair value due to the stability of interest rates
since the Company entered into the agreements.
 
OFF BALANCE SHEET RISK
 
  The Company may enter into foreign currency forward exchange contracts to
manage exposure related to certain foreign currency commitments and certain
foreign currency denominated balance sheet positions. The Company does not
enter into derivative financial instruments for trading purposes. At September
30, 1996, the Company had no forward exchange contracts. At September 30,
1995, the Company had forward exchange contracts totaling $12,300,000 for the
purchase of Singapore dollars, $2,313,000 of forward exchange contracts for
the purchase of Malaysian Ringgits and $830,000 of forward exchange contracts
for the purchase of Japanese Yen. All forward exchange contracts entered into
by the Company had maturities of 60 days or less.
 
  While the contract or notional amounts of the Company's forward exchange
contracts provide one measure of the volume of these transactions, they do not
represent the amount of the Company's exposure to credit risk. The amounts
potentially subject to credit risk (arising from the possible inability of
counterparties to meet the terms of their contracts) are generally limited to
the amounts, if any, by which the counterparties obligations exceed the
obligations of the Company. The Company controls credit risk through credit
approvals, limits and monitoring procedures. Credit rating criteria for off-
balance sheet transactions are similar to those for investments.
 
EMPLOYEE STOCK PLANS
 
  The Company accounts for its stock option plans and the Employee Stock
Purchase Plan in accordance with provisions of the Accounting Principles
Board's Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees".
In 1995, the Financial Accounting Standards Board released Statement of
Financial Accounting Standard No. 123 (SFAS 123), "Accounting for Stock Based
Compensation". SFAS 123 provides an alternative to APB 25 and is effective for
fiscal years beginning after December 15, 1995. The Company will adopt FAS 123
in fiscal 1997, however, the Company will continue to account for its employee
stock purchase plans in accordance with the provisions of APB 25. Accordingly,
SFAS 123 is not expected to have any material impact on the Company's
financial position or results of operations.
 
2. BUSINESS SEGMENT AND CONCENTRATION OF CREDIT RISK
 
  The Company operates in one business segment, the development, production
and marketing of removable cartridge Winchester disk drives and associated
cartridges. The Company has a manufacturing facility in Penang, Malaysia which
produces the majority of the Company's drives and cartridges. The Company
sells primarily to distributors in the personal computer market. The Company
performs ongoing credit evaluations of its customers' financial condition and
generally requires no collateral.
 
  One customer accounted for approximately 10% of revenues in 1996 and another
customer accounted for approximately 10% of revenues in 1995. Export sales by
domestic operations accounted for approximately 10%, 1%, and 3% of net
revenues in 1996, 1995, and 1994, respectively, and are made primarily to
Europe and Far East customers.
 
                                       9
<PAGE>
 
                            SYQUEST TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
                               SEPTEMBER 30, 1996
 
 
  The following tables summarize the Company's operations in different
geographic areas:
 
<TABLE>
<CAPTION>
                                                      ADJUSTMENTS
                           NORTH                          AND
                          AMERICA   EUROPE  FAR EAST  ELIMINATIONS CONSOLIDATED
                         ---------  ------- --------  ------------ ------------
                                            (IN THOUSANDS)
<S>                      <C>        <C>     <C>       <C>          <C>
1996
Sales to unaffiliated
 customers.............. $ 131,122  $57,235 $ 12,050   $     --     $ 200,407
Transfers between
 geographic locations... $  27,060  $21,718 $228,288   $(277,066)   $     --
Income (loss) from
 operations............. $(107,274) $   452 $(20,187)  $  (3,667)   $(130,676)
Identifiable assets..... $  33,837  $ 2,536 $ 49,626   $ (10,818)   $  75,181

1995
Sales to unaffiliated
 customers.............. $ 186,276  $   --  $113,268   $     --     $ 299,544
Transfers between
 geographic locations... $   8,590  $   --  $256,106   $(264,696)   $     --
Income (loss) from
 operations............. $ (20,973) $   --  $  5,618   $  (1,754)   $ (17,109)
Identifiable assets..... $  97,008  $   --  $ 73,483   $  (5,807)   $ 164,684

1994
Sales to unaffiliated
 customers.............. $ 144,123  $   --  $ 76,878   $     --     $ 221,001
Transfers between
 geographic locations... $  31,142  $   --  $166,037   $(197,179)   $     --
Income (loss) from
 operations............. $     793  $   --  $  4,395   $     (62)   $   5,126
Identifiable assets..... $ 106,411  $   --  $ 37,228   $  (4,138)   $ 139,501
</TABLE>
 
  Sales and transfers between geographic areas generally provide a profit after
coverage of all manufacturing costs. Income from operations is total net
revenues less operating expenses.
 
  The identifiable assets by geographic area are those assets used in the
Company's operations in each area.
 
3. SUPPLEMENTARY BALANCE SHEET INFORMATION
 
<TABLE>
<CAPTION>
                                                                SEPTEMBER 30,
                                                               ----------------
                                                                1996     1995
                                                               -------  -------
                                                               (IN THOUSANDS)
<S>                                                            <C>      <C>
Accounts receivable:
  Accounts receivable......................................... $36,035  $58,488
  Less allowance for doubtful accounts........................  (5,694)  (2,835)
                                                               -------  -------
                                                               $30,341  $55,653
                                                               =======  =======
Inventories:
  Raw materials............................................... $ 5,005  $22,258
  Work-in-process.............................................   4,481    8,564
  Finished goods..............................................   1,052    3,391
                                                               -------  -------
                                                               $10,538  $34,213
                                                               =======  =======
Accrued expenses and other liabilities:
  Accrued warranty............................................ $ 6,757  $ 5,676
  Co-op advertising/Market development funds..................   2,999    5,314
  Other.......................................................   5,104    4,220
                                                               -------  -------
                                                               $14,860  $15,210
                                                               =======  =======
</TABLE>
 
                                      10
<PAGE>
 
                           SYQUEST TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
                              SEPTEMBER 30, 1996
 
 
4. BORROWINGS
 
  At September 30, 1996, the Company had a line of credit agreement with a
financial institution, expiring January 31, 1997. Borrowings under the
agreement bear interest at the highest "LIBOR" (London Interbank Offered Rate)
rate during the month plus 4.825% (10.25% at September 30, 1996) and are
subject to the higher of a minimum interest rate of 8% per annum or $10,000 of
interest per month, regardless of borrowings. The total borrowings are limited
to the lesser of $30 million or 75 percent of the Company's eligible accounts
receivable and a compensating balance, included in cash and cash equivalents,
of $282,000 is required on the loan. The Agreement places limitations on
additional borrowings and payment of cash dividends. As of September 30, 1996,
approximately $14.7 million of borrowings were outstanding and approximately
$5.3 million was available for borrowing under the agreement.
 
  In March 1996, the Company entered into a loan agreement with a bank in
Penang, Malaysia. The line of credit, which is denominated in Malaysian
Ringgits, provides for a term loan equivalent to approximately $4.2 million
and an overdraft facility of approximately $.8 million. The term loan is
repayable in 120 monthly installments and bears interest at the rate of 1.0%
over the bank's base lending rate (9.15% at September 30, 1996). Amounts drawn
on the overdraft line are payable on demand. The line of credit is secured by
factory buildings owned by SyQuest Technology (M) SDN BHD. The term loan is
also covered by a corporate guarantee from SyQuest Technology, Inc. A
compensating balance, included in short-term investments, of approximately
$0.2 million is required on the loan. At September 30, 1996, there were
approximately $3.6 million of borrowings outstanding under this term loan, and
$0.5 million outstanding against the overdraft facility, bearing an interest
rate of 9.15%.
 
  On May 29, 1996, the Company entered into a loan agreement based on
inventories with the same bank in Penang, Malaysia and is due on demand. The
agreement, which is denominated in Malaysian Ringgits, provides for borrowing
equivalent to approximately $ 4.0 million and is due on demand. This loan is
also secured by factory buildings owned by SyQuest Technology, (M) SDN BHD,
and is covered by a corporate guarantee from SyQuest Technology, Inc. As of
September 30, 1996 there were approximately $4.0 million of borrowings
outstanding under this agreement at an interest rate of 8.275%.
 
  During fiscal 1996, the Company converted accounts payable and purchase
commitments with certain suppliers to notes payable. The aggregate amount due
on those notes as of September 30, 1996, was approximately $30.7 million. The
notes are payable over six to thirty-six months and bear interest of 10%.
 
  On July 15, 1996, the Company issued a 6% Convertible Subordinated Debenture
to a supplier in the amount of $7.7 million repayable in thirty-six (36)
equal monthly installments. The debenture agreement allows the holder to
convert up to $2,775,000 of the principal amount of the debenture into no more
than 400,000 shares of the Company's Common Stock at the conversion price of
$6.9375 per share. As of September 30, 1996, none of the principal of the
debenture had been converted to Common Stock.
 
                                      11
<PAGE>
 
                            SYQUEST TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
                               SEPTEMBER 30, 1996
 
 
  Lines of credit, term loan and notes payable obligations consist of the
following:
 
<TABLE>
<CAPTION>
                                                    SEPTEMBER 30, SEPTEMBER 30,
                                                        1996          1995
                                                    ------------- -------------
                                                          (IN THOUSANDS)
<S>                                                 <C>           <C>
BANK BORROWINGS
  Line of Credit, interest payable at the rate of
   highest LIBOR rate plus 4.825% (10.25% at
   September 30, 1996).............................    $14,729        $--
  Line of Credit, principal and interest due on
   demand, interest rate 8.275%, secured by land
   and buildings...................................      4,010         --
  Overdraft rider to term loan.....................        529         --
                                                       -------        ----
    Total bank borrowings..........................     19,268         --
LONG-TERM DEBT
  Term Loan, principal payments deferred until July
   1997, interest rate 9.15% at September 30, 1996;
   secured by land and buildings...................      3,607         --
  Subordinated Debenture, $2,775,000 of principal
   can be converted to Common Stock................      7,252         --
  Notes Payable to suppliers, principal and
   interest payable over six to thirty-six months,
   interest rate 10%...............................     30,661         --
                                                       -------        ----
    Total long-term debt...........................     41,520         --
                                                       -------        ----
Total Debt.........................................     60,788         --
Less amounts due within one year...................     39,817         --
                                                       -------        ----
Due after one year.................................    $20,971        $--
                                                       -------        ----
</TABLE>
 
  Future minimum payments on lines of credit, term loan and notes payable are
as follows (in thousands):
 
<TABLE>
     <S>                                                                 <C>
     1997............................................................... $39,817
     1998...............................................................  15,260
     1999...............................................................   3,187
     2000...............................................................     361
     2001...............................................................     361
     Due after 2001.....................................................   1,802
                                                                         -------
     Total minimum payments............................................. $60,788
                                                                         =======
</TABLE>
 
                                      12
<PAGE>
 
                           SYQUEST TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
                              SEPTEMBER 30, 1996
 
 
5. INCOME TAXES
 
  The income tax provisions for fiscal 1996, 1995, and 1994 consist of the
following:
 
<TABLE>
<CAPTION>
                                                        1996     1995     1994
                                                       -------  -------  ------
                                                           (IN THOUSANDS)
   <S>                                                 <C>      <C>      <C>
   FEDERAL:
     Current.......................................... $(1,528) $  (421) $1,455
     Deferred.........................................   3,197   (2,578)     79
                                                       -------  -------  ------
                                                         1,669   (2,999)  1,534
   STATE:
     Current..........................................     --       181     324
     Deferred.........................................   1,331     (928)   (279)
                                                       -------  -------  ------
                                                         1,331     (747)     45
   FOREIGN:
     Current..........................................     --        25      18
                                                       -------  -------  ------
   PROVISION (BENEFIT) FOR INCOME TAXES............... $ 3,000  $(3,721) $1,597
                                                       =======  =======  ======
</TABLE>
 
  Deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax basis of assets and liabilities and
are measured by applying enacted tax rates and laws to the taxable years in
which such differences are expected to reverse. The significant components of
the Company's deferred tax assets and liabilities were as follows:
 
<TABLE>
<CAPTION>
                                                     SEPTEMBER 30, SEPTEMBER 30,
                                                         1996          1995
                                                     ------------- -------------
                                                           (IN THOUSANDS)
<S>                                                  <C>           <C>
DEFERRED TAX ASSETS
  Credit carryforwards..............................   $  1,894       $ 1,773
  Receivable reserves...............................      2,979           879
  Warranty reserves.................................      1,575         1,152
  Inventory valuation reserve.......................      7,142         7,668
  Accrued expenses..................................      2,496         1,561
  Depreciation of property, plant and equipment.....        560           --
  Domestic and foreign tax net operating losses.....     38,997           728
  Other.............................................        --            221
                                                       --------       -------
Total deferred tax assets...........................     55,643        13,982
Valuation allowance.................................    (50,061)         (728)
                                                       --------       -------
Net deferred tax assets.............................      5,582        13,254
DEFERRED TAX LIABILITIES
  Unremitted income of foreign subsidiaries.........     (5,582)       (8,417)
  Depreciation of property, plant and equipment.....        --           (309)
                                                       --------       -------
Total deferred tax liabilities......................     (5,582)       (8,726)
                                                       --------       -------
Net deferred tax assets.............................   $    --        $ 4,528
                                                       ========       =======
</TABLE>
 
  Realization of deferred tax assets is dependent on future earnings, if any,
the timing and amount of which are uncertain. Accordingly, a valuation
allowance, in an amount equal to the net deferred tax asset as of
 
                                      13
<PAGE>
 
                           SYQUEST TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
                              SEPTEMBER 30, 1996
 
September 30, 1996 has been established to reflect these uncertainties. The
September 30, 1995 valuation allowance was provided for deferred tax assets
related to foreign net operating loss carryforwards.
 
  Approximately $702,000 of the deferred tax assets subject to the valuation
allowance at September 30, 1996 relates to the tax benefit of stock option
deductions. These benefits when realized, will be credited directly to
stockholders' equity and will not reduce the provision for income taxes. The
valuation allowance increased by $49,333,000 in fiscal 1996 and by $428,000 in
fiscal 1995.
 
  The reconciliation of income taxes provided at the federal statutory rate to
the income tax provision follows:
 
<TABLE>
<CAPTION>
                                                        1996     1995     1994
                                                      --------  -------  ------
                                                          (IN THOUSANDS)
   <S>                                                <C>       <C>      <C>
   Income taxes (benefit) computed at the federal
    statutory rate..................................  $(46,610) $(5,272) $2,263
   State income taxes (benefit) net of federal
    income taxes effect.............................       --      (511)     30
   Foreign losses for which no current tax benefit
    is recognizable.................................     1,366      --      --
   Taxes provided on earnings of foreign
    subsidiaries previously considered to be
    permanently invested in non-US operations.......       --     1,768     --
   Benefit from net earnings of foreign subsidiaries
    considered to be permanently invested in non-US
    operations......................................       --       --     (652)
   Utilization of tax credits.......................       --      (566)   (227)
   Valuation allowance for deferred tax assets......    48,244      427     300
   Other............................................       --       433    (117)
                                                      --------  -------  ------
                                                      $  3,000  $(3,721) $1,597
                                                      ========  =======  ======
</TABLE>
 
  Income taxes paid (refunded) were ($3,139,000), $1,600,000, and ($670,000),
in fiscal 1996, 1995, and 1994, respectively.
 
  The Company's manufacturing operations in Singapore operated under a tax
holiday that expired at the end of fiscal 1996. The tax holiday had no impact
on the net loss in fiscal 1996 and 1995. The net impact of the tax holiday in
fiscal 1994 was to increase net income by $518,130 ($0.04 per share). At
September 30, 1996, the Company no longer had any manufacturing operations in
Singapore.
 
  The Company has approximately $4,256,000 in foreign net operating loss
carryforwards. These carryforwards will expire in fiscal 1999 through fiscal
2001.
 
  At September 30, 1996, the Company had federal net operating loss
carryforwards of approximately $99,845,000. These carryforwards will expire in
2010 and 2011 if not utilized. The Company had state net operating loss
carryforwards of approximately $30,000,000 that will expire in 2001 if not
utilized. In addition, the Company had research and development tax credit
carryforwards for federal and state tax purposes of approximately $1,212,000
and $400,000, respectively. The federal tax credit carryforwards will expire
beginning in fiscal 2007 if not utilized. The Company anticipates that in
fiscal 1997, it may experience a "change of ownership" for tax purposes that
would result in an annual limitation on the utilization of domestic net
operating loss and tax credit carryforwards in future periods. The limitation
amount is determined at the point in time when the "ownership change" occurs.
 
6. RESTRUCTURING CHARGES
 
  In the quarter ended March 31, 1996, the Company developed and began
implementation of a plan to relocate the manufacturing capabilities in
Singapore to Penang, Malaysia. The relocation was completed in the
 
                                      14
<PAGE>
 
                           SYQUEST TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
                              SEPTEMBER 30, 1996
 
third quarter of fiscal 1996. The Company recorded a $3.6 million charge for
direct costs related to exiting manufacturing facilities in Singapore. The
charge consisted of $1.6 million for the write-off of leasehold improvements,
$0.6 million for site closure and related costs and $1.4 million for staff
severance and retrenchment. As of September 30, 1996, substantially all of
these costs had been incurred, and no additional accrual was recorded.
 
  In the quarter ended June 30, 1996 the Company recorded a $1.9 million
charge for restructuring costs associated with the consolidation and closure
of several of its administrative support locations. Actual charge in the
quarter ended September 30, 1996, were approximately $0.5 million associated
with the write-off of fixed assets, $0.5 million of severance compensation,
and $0.1 million for remaining lease obligations. As of September 30, 1996,
the consolidation of one location was substantially complete, $0.8 million of
the charge was reversed due to the Company's decision to continue operations
at one of the locations, and $0.6 million remains accrued to cover remaining
exit costs.
 
7. REDEEMABLE CONVERTIBLE PREFERRED STOCK
 
  In the quarter ended June 30, 1996 the Company issued 20,000 shares of 7%
Cumulative Convertible Preferred Stock for approximately $19 million net of
issuance costs. The Preferred Stock is convertible into Common Stock at the
lesser of $11 per share or 77% of the average market price of the Common Stock
on the five trading days prior to the conversion, which conversion price is
subject to downward adjustment under certain circumstances. Rights relating to
the Common Stock issuable upon conversion and certain shares were negotiated
pursuant to Registration No. 333-7369. If the Common Stock is trading below $5
per share when the Preferred Stock converts, the Company may redeem the
Preferred Stock at 130% of the original purchase price, except that the
redemption price is reduced to 110% of the original purchase price to the
extent that the original purchase price of the Preferred Stock being redeemed
(plus one half the amount previously converted by the holders) exceeds $10
million. The Company must redeem all Preferred Shares which remain outstanding
on May 31, 1999, at 100% of original purchase price in cash or, at the
Company's option, in Common Stock. Should the Company's Common Stock no longer
be listed on the Nasdaq National Market, Small Cap or Electronic Bulletin
Board, the New York Stock Exchange or the American Stock Exchange, then the
repurchase price is 130% of the original purchase price. Under certain
circumstances, additional shares may be issued with any terms and without
stockholder approval.
 
  The preferred stockholders are entitled to receive cash dividends at the
rate of 7% of the stated value per annum. Dividends accrue from the date of
issuance through and including the date that the shares are converted or
redeemed. Dividends may be paid in cash or, at the Company's option, in Common
Stock based on the average closing market price on the five trading days
preceding the date of conversion.
 
  Holders of preferred shares have no voting rights. In the event of voluntary
or involuntary liquidation, the holders of the preferred shares are entitled
to receive in cash, before any amount is paid to holders of common stock, an
amount equal to the stated value of preferred share, plus any accrued and
unpaid dividends. As of September 30, 1996, 807 shares of Preferred Stock had
been converted into 168,311 shares of Common Stock in accordance with the
preferred stock agreement.
 
  As of September 30, 1996, warrants to purchase 100,000 shares of the
Company's Common Stock at an exercise price of $10.88 per share had been
issued as partial compensation for value received in the placement of the
Company's 7% Cumulative Convertible Preferred Stock. Those warrants are
exercisable at the option of the holders on or before July 30, 1999.
 
                                      15
<PAGE>
 
                           SYQUEST TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
                              SEPTEMBER 30, 1996
 
 
8. TREASURY STOCK
 
  In 1993, the Board of Directors authorized the Company to repurchase up to
one million shares of the Company's Common Stock. In April 1994, the Board of
Directors authorized the Company to repurchase up to an additional 500,000
shares of the Company's Common Stock. There were no treasury stock
transactions during fiscal 1996. The Company acquired 100,000 and 625,000
shares of its Common Stock for approximately $1.2 million and $6.0 million
through open market transactions during fiscal 1995 and 1994, respectively.
The Company has acquired a total of 1,225,000 shares of its Common Stock as of
September 30, 1996. These shares are held as treasury stock at September 30,
1996.
 
9. STOCK OPTION PLANS AND COMMON STOCK RESERVED
 
  In 1991, the Company adopted the SyQuest Technology, Inc. 1991 Stock Option
Plan (the "Plan") covering 3,403,524 shares of Common Stock for issuance under
the Plan and assumed stock options currently outstanding under predecessor
stock option plans. The Plan provides for the issuance of incentive stock
options and non statutory stock options to officers, employees (including
directors who are also employees), consultants, independent contractors and
advisors to or of the Company or any parent, subsidiary or affiliate of the
Company. Options granted under the Plan are granted at fair value on the date
of grant and become exercisable within the times or upon the events determined
by the Stock Option Committee as set forth in the grant and expire within ten
years from the date of the grant. In 1995, the Company adopted an amendment to
the Plan to increase the authorized number of shares for the plan to
4,428,524. On September 26, 1996, the shareholders approved an amendment to
the Plan to increase the number of shares issuable under the Plan to
6,000,000. Other minor changes were made to the Plan to comply with changes in
Rule 16B3 under the Securities and Exchange Act of 1934. These changes did not
affect the terms of any existing options.
 
  In 1992, the Company adopted the 1992 Nonemployee Director Stock Option Plan
(the "Director Plan") and reserved 150,000 shares of Common Stock for
issuance. The Director Plan was amended in 1994 to increase the size of the
annual option grants. The Board of Directors administers the Director Plan. In
1995, the Company adopted an amendment to the Nonemployee stock option plan to
increase the authorized number of shares for the plan to 250,000. On September
26, 1996, the shareholders approved an amendment to the Director Plan to
increase the authorized number of shares to 500,000. Options are granted at
fair value on the grant date and options may only be granted to Directors who
are not employees of the Company or its subsidiaries (Outside Directors). All
option grants are automatic and nondiscretionary. After each annual meeting of
stockholders at which directors are elected, reelected, or continuing as
directors, each Outside Director shall be automatically granted an option or
options. These options are to purchase such number of shares of Common Stock
as necessary so that during each of the four immediately following twelve-
month periods of July 1 through June 30, such Outside Directors will have
stock options (including Company stock options granted under plans other than
the Director Plan) which become exercisable with respect to a minimum of
10,000 shares during each such period. Prior to 1994 the minimum was 2,500
shares during each such period. On September 26, 1996, the stockholders
approved a one-time grant of 30,000 options for each new Outside Director
which were not counted in determining annual grants in the future. Other minor
changes were made to the Director Plan to comply with changes in Rule 16 of
the Securities and Exchange Commission Act of 1934. As of September 30, 1996,
options to purchase 160,000 shares of Common Stock were outstanding under the
Director plan.
 
                                      16
<PAGE>
 
                           SYQUEST TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
                              SEPTEMBER 30, 1996
 
 
  The following table summarizes stock option activity under the Plan and the
Director Plan:
 
<TABLE>
<CAPTION>
                                                 OPTION PRICE
                                  --------------------------------------------
                                   SHARES     PER SHARE (RANGE)     AGGREGATE
                                  --------  ---------------------- -----------
                                               LOW        HIGH
                                            ---------- -----------
                                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
   <S>                            <C>       <C>        <C>         <C>
   Outstanding at September 30,
    1993.........................    1,999  $      .30 $     28.25 $   17,433
     Granted.....................      750        9.00       11.63      7,189
     Exercised...................      (88)        .30       18.00       (497)
     Canceled....................     (360)       1.25       28.25     (5,948)
                                  --------  ---------- ----------- ----------
   Outstanding at September 30,
    1994.........................    2,301         .30       27.25     18,177
                                  --------  ---------- ----------- ----------
     Granted.....................      833       11.50       16.75     11,865
     Exercised...................     (502)        .30       12.50     (2,933)
     Canceled....................     (431)       7.50       27.25     (6,176)
                                  --------  ---------- ----------- ----------
   Outstanding at September 30,
    1995.........................    2,201         .30       24.25     20,933
                                  --------  ---------- ----------- ----------
     Granted.....................    2,247        4.94       11.38     13,877
     Exercised...................     (386)        .30       12.50     (1,421)
     Canceled....................   (1,306)        .30       24.25    (12,923)
                                  --------  ---------- ----------- ----------
   Outstanding at September 30,
    1996.........................    2,756  $      .30 $     24.25 $   20,466
                                  ========  ========== =========== ==========
</TABLE>
 
  At September 30, 1996, options to purchase 627,538 shares were exercisable,
and 1,813,926 shares were available for grant.
 
  The following table summarizes shares of Common Stock reserved for future
issuance by the Company under the Company's stock option and purchase plans as
of September 30, 1996:
 
<TABLE>
     <S>                                                               <C>
     1991 stock option plan........................................... 4,070,232
     Director stock option plan.......................................   500,000
      Shares reserved for conversion of preferred stock............... 4,020,318
      Shares reserved for conversion of warrants......................   100,000
     Employee stock purchase plan.....................................   203,133
                                                                       ---------
                                                                       8,893,683
                                                                       =========
</TABLE>
 
10. EMPLOYEE STOCK PURCHASE PLAN
 
  In 1992, the Company adopted the 1992 Employee Stock Purchase Plan (the
"Purchase Plan"), and 500,000 shares of Common Stock were reserved for
issuance under the Purchase Plan. The Purchase Plan is intended to qualify
under Section 423 of the Internal Revenue Code of 1986, as amended.
 
  The Purchase Plan is implemented by a single offering for each six- month
period commencing on approximately February 1 and August 1 of each year. The
Purchase Plan is administered by the Board of Directors or a committee
appointed by the Board of Directors. The Purchase Plan permits eligible
employees to purchase common stock through payroll deductions, which may not
exceed 15% of an employee's compensation, at a price equal to 85% of the lower
of the fair market value of the common stock as of the first day or as of the
last day of each offering period. As of September 30, 1996, 296,867 shares of
common stock had been issued under the Purchase Plan.
 
                                      17
<PAGE>
 
11.  BONUS, PROFIT SHARING AND 401(K) SAVINGS AND RETIREMENT PLANS

          The Company has bonus and profit sharing plans that provide additional
     compensation to substantially all employees.  The profit sharing
     compensation is determined on an annual basis based principally on a
     percentage of income after taxes, before profit sharing, and the Company
     meeting certain objectives for the year.  Bonuses for officers and key
     management personnel are determined annually at the discretion of the Board
     of Directors.  Such determination considers the extent to which individuals
     and the Company meet objectives for the year.  The Company did not incur
     bonus or profit sharing expenses in 1996 or 1995.  The Company recorded
     bonus and profit sharing expenses of $455,000 in 1994.

          The Company adopted a 401(k) Savings and Retirement Plan (the "Savings
     Plan") to provide for voluntary salary deferral contributions on a pretax
     basis in accordance with Section 401(k) of the Internal Revenue Code of
     1986, as amended.  The Company has the option of matching a certain percent
     of each participant's contribution to the Savings Plan.  The Company's
     maximum contribution per participant was limited to $1,000 in 1996 and 1995
     and $500 in 1994.  The Company made matching contributions of $254,000,
     $242,000 and $135,000 in 1996, 1995, and 1994, respectively.

12.  COMMITMENTS

          The Company leases its United States facilities under noncancelable
     operating lease agreements. These leases terminate through 2001, and
     certain leases include five-year renewal options as well as provisions for
     adjustments to lease payments based on the fair market value of similar
     properties. The Company leases its Singapore facility under noncancelable
     lease agreements expiring in 1997. The Company leases its facilities in
     Amsterdam, Netherlands under a noncancelable lease agreement expiring in
     2000. The Company is in the process of assigning that lease, and expects
     the assignment to be completed no later than the second quarter of fiscal
     1997. Notwithstanding the anticipated assignment, the future lease payments
     for the Amsterdam facility have been included in the commitments schedule
     below.

          Total rent expense amounted to $2,507,000, $3,250,000, and $3,001,000
     for 1996, 1995, and 1994, respectively.  Future minimum rental commitments
     under non-cancelable operating leases are as follows (in thousands):
<TABLE>
   <S>                               <C>    
     1997                             $2,445                                  
     1998                              2,230                                  
     1999                              1,425                                  
     2000                                197                                  
     2001                                 13                                   
                                      ------                                  
     Total minimum lease payments     $6,310                                  
                                      ======                                   
</TABLE>

                                      18
<PAGE>
 
13.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
                                                       Three Months Ended
                                        -------------------------------------------------
                                              (in thousands, except per share data)
                                         Dec. 31,    March 31,     June 30,    Sept. 30,
                                           1995         1996         1996         1996
                                        ----------   ----------   ----------   ----------
    <S>                                 <C>          <C>          <C>          <C>

     Net revenues                        $ 78,667     $ 47,445     $ 29,459     $ 44,836
     Gross profit (loss)                   (9,262)     (25,391)     (23,699)      10,066
     Income (loss) from operations        (30,886)     (50,702)     (41,604)      (7,484)
     Net income (loss)                    (33,801)     (51,105)     (41,317)     (10,428)

     Net income (loss) per share         $  (2.98)    $  (4.49)    $  (3.61)    $  (1.29)

<CAPTION> 
                                         Dec. 31,     March 31,    June 30,     Sept. 30,
                                             1994         1995         1995         1995
                                         --------     --------     --------     --------
<S>                                      <C>          <C>          <C>          <C> 
     Net revenues                        $ 65,892     $ 76,490     $ 68,787     $ 88,375
     Gross profit (loss)                   15,927       21,460       18,427       (4,767)
     Income (loss) from operations          2,088        4,695        1,355      (25,247)
     Net Income (loss)                      1,923        3,686        1,711      (19,106)

     Net income (loss) per share         $   0.16     $   0.31     $   0.15     $  (1.70)

</TABLE>
14.  LITIGATION

          The Company has been named as a defendant in four putative class
     action lawsuits.  Two of the actions, Ravens, et al. v. Iftikar, et al.
                                           ---------------------------------
     (filed April 2, 1996) and Bellezza, et al. v. Iftikar, et al. (filed May 
                               ----------------------------------- 
     24, been brought in the United States District Court for the Northern
     District of California and have been assigned to the Honorable Vaughn
     Walker (collectively, the "Federal Lawsuit").  Certain current and former
     officers and directors also have been named as defendants in the Federal
     Lawsuit. Plaintiffs have petitioned the Court to consolidate the foregoing
     complaints into one consolidated action.  That request, as well as other
     procedural matters which arose during a July 18, 1996, case management
     conference, is under consideration.  The plaintiffs in the Federal Lawsuit
     purport to represent a class of all persons who purchased the Company's
     Common Stock between October 21, 1994 and February 1, 1996.  The Federal
     Lawsuit alleges that the defendants violated the federal securities laws
     through material misrepresentations and omissions.  The third suit is a
     purported class action entitled Gary S. Kaufman v. SyQuest Technology Inc.,
                                     -------------------------------------------
     et al. was filed on March 25, 1996, in the Superior Court of the State of
     ------
     California for the County of Alameda (the "Kaufman Lawsuit"). Certain
     current and former executive officers and directors of the Company are also
     named as defendants in the Kaufman Lawsuit.  The plaintiffs in the Kaufman
     Lawsuit purport to represent a class of all persons who purchased the
     Company's Common Stock between May 2, 1995, and February 2, 1996.  The
     Kaufman Lawsuit alleges that defendants violated various California laws
     through material misrepresentations and omissions.  Unspecified damages are
     sought.  The fourth purported class action entitled Ravens, et al. v.
                                                         -----------------
     Iftikar, et al., was filed on October 11, 1996 in the Superior Court of the
     ---------------
     State of California for the County of Alameda (the "Ravens Lawsuit").  The
     Ravens Lawsuit alleges that the Company and certain of its former officers
     and directors violated various California laws through material
     representations and omissions between October 21, 1994 and February 2,
     1996, and is purportedly brought on behalf of persons who purchased stock
     during that period.  Unspecified damages are sought.  The Ravens Lawsuit
     has been consolidated with the Kaufman Lawsuit.  Plaintiffs are preparing a
     consolidated complaint. The Company intends to defend the cases vigorously.

                                      19

<PAGE>
 
          The Company has certain insurance coverage with respect to the above
     claims, however, the amount of any ultimate claims on these actions and
     related insurance coverage is not presently determinable.

          On May 14, 1996, the Company was served with a shareholder's
     derivative action filed in Alameda County, California, Superior Court
     entitled John Nitti, et al. v. Syed Iftikar, et al.  On July 22, 1996,
              ------------------------------------------
     plaintiffs filed an amended complaint.  The action seeks to recover
     unspecified damages and punitive damages on behalf of the Company from
     current and former officers and directors of the Company for alleged breach
     of fiduciary duty, unjust enrichment and waste of corporate assets.  The
     Company is a nominal defendant in the action.  The complaint alleges that
     the officers and directors issued false and misleading information and sold
     shares of the Company's stock at artificially inflated prices.  The
     allegations are essentially the same as those in the putative class
     actions.  The Company intends to defend this case vigorously.

          The Company has filed suit against Nomai, S.A. (Nomai) and Maxell in
     France for copyright and patent infringement, and though it did not obtain
     the temporary injunction sought against Nomai prohibiting the sale and
     distribution of Nomai's 200 megabyte cartridges, the underlying suit
     continues.  The Company has also initiated an arbitration proceeding
     against Nomai seeking payment of outstanding royalties of approximately $1
     million.  The arbitration process began in May 1995, in San Jose,
     California.

          A third party has notified the Company that it believes the Company
     infringes on six U.S. patents. It is the Company's belief that the claims
     are without merit or that the infringement claims related to component
     parts purchased from vendors. The Company also believes that in the event
     the third party prevails on its claims, the Company will be indemnified by
     its vendor for any liability arising from the alleged infringements and
     that this matter will not have a material adverse effect upon its financial
     condition or results of operations.

          From time to time, the Company is involved in litigation that it
     considers to be in the normal course of its business. Other than set forth
     above, the Company is not engaged in any legal proceedings as of the date
     hereof which the Company expects individually or in the aggregate to have a
     material adverse effect on the Company's financial condition or results of
     operations.

15.  SUBSEQUENT EVENTS

          Between October 1, 1996 and October 31, 1996, the Company exchanged
     approximately $9.2 million of notes payable held by creditors for
     1,504,000 shares of Common Stock and associated registration rights.

          On October 8, 1996, the Company issued 5,500 shares of its Convertible
     Preferred Stock, Series 1, $.001 par value per share at a price of $1,000
     per share, to certain accredited investors. Net proceeds to the Company
     were approximately $5,225,000. The Convertible Preferred Stock is
     convertible into Common Stock at the option of the holders at any time
     after December 15, 1996.

                                      20

<PAGE>
 
          The Convertible Preferred Stock is convertible into a number of Common
     Stock equal to $1,000 plus $50 for each year between October 25, 1996, and
     the conversion date, divided by a conversion price which is the lesser of
     $6.50 per share or 85% of the average closing market price of the Common
     Stock on the five trading days preceding the date of conversion. The
     Convertible Preferred Stock cannot be converted if the converting holder
     and its respective affiliates would beneficially own more than 4.9% of the
     Company's Common Stock at the time of conversion. Any Convertible Preferred
     Stock outstanding on October 31, 1998 will automatically convert to Common
     Stock on that date. In the event of liquidation, the holders of the
     Convertible Preferred Stock receive their Stated Value before the holders
     of Common Stock receive any cash or assets on liquidation. If the Company
     consolidates, merges or reclassifies its outstanding Common Stock, the
     holders of the Convertible Preferred Stock are entitled to receive the
     greater of their share of any consideration on an as-converted basis, or
     $1,250 per share of the Convertible Preferred Stock. The Convertible
     Preferred Stock is nonvoting, except as required by law. The holders of the
     Convertible Preferred Stock are not entitled to dividends. The Company also
     has certain redemption rights.

          The Company has filed a registration statement covering resale of
     shares of Common Stock issuable in connection with such conversions, and
     will make its best efforts to have the registration statement declared
     effective with respect to certain holders of the Convertible Preferred
     Stock no later than January 9, 1997, or with respect to other holders, no
     later than other subsequent dates. If the registration statement is not
     effective by such dates, or if sales cannot be made pursuant to the
     registration statement at any time after such dates, the conversion
     percentage shall be reduced 3% per month (prorated on a daily basis) and
     the fixed conversion price shall be reduced by $0.195 per month (prorated
     on a daily basis) for each month of delayed effectiveness or inability to
     sell.

          In accordance with the preferred stock agreement, the proceeds were
     placed in an escrow account. Terms of the escrow agreement require that the
     funds be used only for specific purposes and require that only certain of
     the Company's officers may request withdrawals and must certify that usage
     is in accordance with the escrow agreement.

          On October 8, 1996, the Company issued 24,500 shares of its 5%
     Cumulative Convertible Preferred Stock, Series 2, $.001 par value per share
     at a price of $1,000 per share to certain accredited investors.  Net
     proceeds to the Company were approximately $23,275,000.  The Convertible
     Preferred Stock is convertible into Common Stock at the option of the
     holders, any time after December 15, 1996.

          The Series 2 Preferred Stock is convertible to Common Stock at a
     conversion price which is the lesser of $6.50 per share or 85% of the
     average market price of the Common Stock on the five trading days prior to
     conversion. The Convertible Preferred Stock cannot be converted if the
     converting holder and its respective affiliates would beneficially own more
     than 4.9% of the Company's Common Stock at the time of conversion. In the
     event of liquidation, the holders of the Convertible Preferred Stock
     receive their original purchase price plus any accrued but unpaid
     dividends, before the holders of Common Stock receive any cash or assets on
     liquidation. If the Company consolidates, merges or reclassifies its
     outstanding Common Stock, the holders of the Convertible Preferred Stock
     are entitled to receive their share of consideration on an as-converted
     basis. The Convertible Preferred Stock is nonvoting, except as required by
     law. Dividends accrue on the Series 2 Preferred stock at an annual rate of
     5%. Such dividends are payable quarterly in cash or stock, at the Company's
     option. The Company also has certain redemption rights.

          The Company has filed a registration statement covering shares of
     Common Stock issuable in connection with the conversion of, or payable as
     dividends upon, the Convertible Preferred Stock and will make its best
     efforts to have the registration statement declared effective with respect
     to certain holders of the 5% Cumulative Convertible Preferred Stock no
     later than January 9, 1997, or with respect to other holders, no later than
     other subsequent dates. If the registration statement is not effective by
     such dates, or if sales cannot be made pursuant to the registration
     statement at any time after such dates, the conversion percentage and the
     fixed conversion rate shall be reduced at the rate of three percentage
     points per month (prorated on a daily basis) of delayed effectiveness or
     inability to sell.

          In accordance with the preferred stock agreement, the proceeds were
     placed in an escrow account. Terms of the escrow agreement require that the
     funds be used only for specific purposes and require that only certain of
     the Company's officers may request withdrawals and must certify that usage
     is in accordance with the escrow agreement.

                                      21

<PAGE>
 
    On November 13, 1996, the Company issued 1,500,000 shares of common stock,
par value $.001 per share, at a price of $5.6875 to a company (the "Purchaser").
Net proceeds to the Company were $8,531,300. At the same time, the Company also
granted the Purchaser a warrant to purchase additional shares of common stock at
the same price per share. The number of Warrant Shares available for purchase
will not be less than 375,000 or more than 1,875,000. The Warrant will expire
November 13, 2001.

    As disclosed in Forms 10-Q filed with the SEC for the first and second
fiscal quarters of 1997, the Company has released its results from continuing
operations and its financial condition through March 31, 1997. Such Forms 10-Q
address the Company's operating losses, decrease in revenues, subsequent
financing and management's plans to continue to reduce costs, increase revenues
and obtain additional financing.




                                      22

<PAGE>
 
 
                                    PART IV
                                        

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

               (a)  The following documents are filed as a part of this Report:

                    (1)  Financial Statements.  The following Consolidated 
                         --------------------   
                         Financial Statements of SyQuest Technology, Inc. and
                         subsidiaries are included in Item 8 of this Annual
                         Report on Form 10-K: 
<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         ----
                         <S>                                                                             <C>
                         Report of Ernst & Young LLP, Independent Auditors                                1

                         Consolidated Balance Sheets - September 30 1996 and 1995                         2

                         Consolidated Statements of Operations - Years Ended September 30,
                         1996, 1995, and 1994                                                             3

                         Consolidated Statements of Stockholders' Equity (Deficit)  -- Years Ended
                         September 30, 1996,1995, and 1994                                                4

                         Consolidated Statements of Cash Flows -- Years Ended
                         September 30, 1996, 1995 and 1994                                                5

                         Notes to Consolidated Financial Statements                                       7
</TABLE>
                    (2)  Financial Statement Schedule.  The following 
                         ----------------------------   
                         consolidated financial statement schedule of the
                         Company and subsidiaries are filed as part of this
                         Report and should be read in conjunction with the
                         Consolidated Financial Statements of SyQuest
                         Technology, Inc. and subsidiaries.

<TABLE> 
<CAPTION> 
 Schedule                                        Page
 --------                                        ----
<S>                                              <C> 
 VIII - Valuation and Qualifying Accounts          62
</TABLE> 

               Schedules not listed above have been omitted because they are not
          applicable or are not required or the information required to be set
          forth therein is included in the Consolidated Financial Statements or
          Notes thereto.

                                      23

<PAGE>
 
 
     (3)
--------------------------------------------------------------------------------
                                   EXHIBITS
 
Exhibit
Number                      Description of Document
--------------------------------------------------------------------------------
     3.1  Restated Certificate of Incorporation of the Company. Incorporated by
          reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K
          for the fiscal period ended September 30, 1995.

     3.2  Amendment to Restated Certificate of Incorporation of the Company.
          Incorporated by reference to Exhibit 3.2 of the Company's Form S-3
          Registration Statement filed December 2, 1996 (File No. 333-17119), as
          amended and to be amended.

     3.3  By-Laws of the Company. Incorporated by reference to the Company's
          Registration Statement on Form S-1 (File No. 33-43656) filed on
          November 9, 1991.

     4.1  Specimen stock certificate, $.001 par value. Incorporated by reference
          to Amendment No. 2 to the Company's Registration Statement on Form S-1
          (File No. 33-43656) filed on December 10, 1991.

     4.2  Corrected Certificate of Designations, Preferences and Rights of 7%
          Cumulative Convertible Preferred Stock, Series 1.  Incorporated by
          reference to Exhibit 3.1 of the Company's Current Report on Form 8-K
          dated June 14, 1996.

     4.3  Securities Purchase Agreement, dated as of May 31, 1996, by and among
          the Company and holders of 7% Cumulative Convertible Preferred Stock,
          Series 1. Incorporated by reference to Exhibit 10.1 of the Company's
          Current Report on Form 8-K dated June 14, 1996.

     4.4  Registration Rights Agreement dated as of May 31, 1996, by and among
          the Company and holders of 7% Cumulative Convertible Preferred Stock,
          Series 1.  Incorporated by reference to Exhibit 10.2 of the Company's
          Current Report on Form 8-K dated June 14, 1996.

     4.5  6% Convertible Subordinated Debenture dated July 15, 1996.
          Incorporated by reference to Exhibit 10.3 of the Company's Form S-3
          Registration Statement No. 333-7369 ("Registration 333-7369").

     4.6  Registration Agreement dated July 15, 1996, among the Company and
          WISRS (Malaysia) SDN.BMP.  Incorporated by reference to Exhibit 10.4
          of Registration 333-7369.

     4.7  Certificate of Designations, Preferences and Rights of Convertible
          Preferred Stock, Series 1, as amended and agreed to be amended.
          Incorporated by Reference to Exhibit 3.1 to the Company's Current
          Report on Form 8-K/A dated October 31, 1996.

     4.8  Certificate of Designations, Preferences and Rights of 5% Cumulative
          Preferred Stock, Series 2.  Incorporated by Reference to Exhibit 3.2
          to the Company's Current Report on Form 8-K/A dated October 31, 1996.

     4.9  Securities Purchase Agreement dated as of October 8, 1996, among the
          Company and the buyers of the Convertible Preferred Stock, Series 1
          including the following exhibits:  Form of Warrant, Form of
          Registration Rights Agreement, Form of Escrow Agreement and certain
          Schedules to the representations.  Incorporated by Reference to
          Exhibit 10.1 to the Company's Current Report on Form 8-K/A dated
          October 31, 1996.

                                      24

<PAGE>
 
 
      4.10     Securities Purchase Agreement dated as of October 8, 1996, among
               the Company and certain buyers of the Series 2 Preferred Stock,
               including the following exhibits:  Form of Escrow Agreement, Form
               of Warrant, Form of Registration Rights Agreement and certain
               Schedules to the representations.  Incorporated by Reference to
               Exhibit 10.2 to the Company's Current Report on Form 8-K/A dated
               October 31, 1996.
               
      4.11     Securities Purchase Agreement dated as of October 8, 1996, among
               the Company and certain buyers of the Series 2 Preferred Stock,
               including the following exhibits:  Form of Escrow Agreement, Form
               of Warrant, Form of Registration Rights Agreement and certain
               Schedules to the representations.  Incorporated by Reference to
               Exhibit 10.3 to the Company's Current Report on Form 8-K/A dated
               October 31, 1996.
         
      4.12     Securities Purchase Agreement dated as of October 8, 1996, among
               the Company and certain buyers of the Series 2 Preferred Stock,
               including the following exhibits:  Form of Escrow Agreement, Form
               of Warrant, Form of Registration Rights Agreement and certain
               Schedules to the representations.  Incorporated by Reference to
               Exhibit 10.4 to the Company's Current Report on Form 8-K/A dated
               October 31, 1996.
               
      4.13     Securities Purchase Agreement dated as of October 8, 1996, among
               the Company and certain buyers of the Series 2 Preferred Stock,
               including the following exhibits:  Form of Escrow Agreement, Form
               of Warrant, Form of Registration Rights Agreement and certain
               Schedules to the representations.  Incorporated by Reference to
               Exhibit 10.5 to the Company's Current Report on Form 8-K/A dated
               October 31, 1996.
         
      4.14     Securities Purchase Agreement dated as of September 27, 1996,
               between the Company and Atmel Corporation, including the exhibit
               Form of Registration Rights Agreement.  Incorporated by Reference
               to Exhibit 10.6 to the Company's Current Report on Form 8-K/A
               dated October 31, 1996.
         
      4.15     Securities Purchase Agreement dated as of October 18, 1996,
               between the Company and Petronic International, Inc., including
               the exhibit Form of Registration Rights Agreement.  Incorporated
               by Reference to Exhibit 10.7 to the Company's Current Report on
               Form 8-K/A dated October 31, 1996.
         
      4.16     Securities Purchase Agreement dated as of October 24, 1996,
               between the Company and SAE Magnetics (HK) Ltd., including the
               exhibit Form of Registration Rights Agreement.  Incorporated by
               Reference to Exhibit 10.8 to the Company's Current Report on Form
               8-K/A dated October 31, 1996.
         
      4.17     Securities Purchase Agreement dated as of October 25, 1996,
               between the Company and Freight Solutions International,
               including the exhibit Form of Registration Rights Agreement.
               Incorporated by Reference to Exhibit 10.9 to the Company's
               Current Report on Form 8-K/A dated October 31, 1996.
         
      4.18     Subscription Agreement dated November 12, 1996, between SyQuest
               Technology, Inc. and Fletcher International Limited, including
               the Annex Warrant Certificate issued November 13, 1996.**

     10.1      Form of Indemnification Agreement between the Company and its
               directors*. Incorporated by reference to the Company's
               Registration Statement on Form S-1 (File No. 33-43656) filed on
               November 9, 1991.
        
     10.2      Form of Indemnification Agreement between the Company and its
               executive officers*. Incorporated by reference to Amendment No. 2
               to the Company's Registration Statement on Form S-1 (File No. 33-
               43656) filed on December 10, 1991.

                                      25

<PAGE>
 
 
     10.3      Industrial Space Lease dated May 15, 1990, between SyQuest
               Technology and Renco Investment Company covering property located
               at 47100 Bayside Parkway in Fremont, California, with other
               documents related thereto. Incorporated by reference to the
               Company's Registration Statement on Form S-1 (File No. 33-43656)
               filed on November 9, 1991.
         
     10.4      Industrial Space Lease dated July 30, 1991, between SyQuest
               Technology and Renco Investment Company covering property located
               at Building #47, Bayside Parkway in Fremont, California with
               other documents related thereto. Incorporated by reference to the
               Company's Registration Statement on Form S-1 (File No. 33-43656)
               filed with on November 9, 1991.
         
     10.5      Tenancy of Flatted Factory Unit dated July 18, 1990, between
               SyQuest Technology (c) and Jurong Town Corporation covering
               property located at 30 Kallang Place, Singapore. Incorporated by
               reference to the Company's Registration Statement on Form S-1
               (File No. 33-43656) filed on November 9, 1991.
         
     10.6      Tenancy of Flatted Factory Unit dated June 26, 1991, between
               SyQuest Technology International and Jurong Town Corporation
               covering property located at 19 Kallang Avenue, Singapore.
               Incorporated by reference to the Company's Registration Statement
               on Form S-1 (File No. 33-43656) filed on November 9, 1991.
         
     10.7      Revolving Credit Agreement dated January 1, 1991, among SyQuest
               Technology, First Interstate Bank of California and Silicon
               Valley Bank, together with First Amendment related thereto.
               Incorporated by reference to the Company's Registration Statement
               on Form S-1 (File No. 33-43656) filed on November 9, 1991.
         
     10.8      Product License Agreement dated April 1, 1990, between SyQuest
               Technology and PrairieTek Corporation. Incorporated by reference
               to the Company's Registration Statement on Form S-1 (File No. 33-
               43656) filed on November 9, 1991.
         
     10.9      SyQuest Technology, Inc. 1991 Stock Option Plan, as amended*.
               Incorporated by reference to the Company's Quarterly Report on
               Form 10-Q for the quarter ended March 31, 1995.
         
     10.10     Form of Stock Option Grant for SyQuest Technology, Inc 1991 Stock
               Option Plan*. Incorporated by reference to the Company's
               Registration Statement on Form S-8 (File No. 33-46460) filed on
               March 18, 1992.
          
     10.11     Policy Regarding Options and Cash Bonuses to be Awarded to
               Employees of Iota Memories Corporation*. Incorporated by
               reference to the Company's Registration Statement on Form S-1
               (File No. 33-43656) filed on November 9, 1991.
          
     10.12     1992 Non-Employee Director Stock Option Plan, as amended*.
               Incorporated by reference to the Company's Quarterly Report on
               Form 10-Q for the quarter ended March 31, 1995.
          
     10.13     1992 Employee Stock Purchase Plan, as amended. Incorporated by
               reference to the Company's Registration Statement on Form S-8
               (File No. 33-48273) filed on June 9, 1992.
          
     10.14     Credit Agreement dated January 17, 1992, among the Company and
               Silicon Valley Bank and First National Bank of Boston.
               Incorporated by reference to the Company's Registration Statement
               on Form S-1 (File No. 33-47361) filed on April 21, 1992.
          
     10.15     Bonus Arrangements for Executive Officers*. Incorporated by
               reference to the Company's Annual Report on Form 10-K for the
               fiscal period ended September 30, 1995.

                                      26

<PAGE>
 
     10.16     Amendment No. 2 to Credit Agreement made as of June 10, 1993,
               among the Company, Silicon Valley Bank and First National Bank of
               Boston. Incorporated by reference to the Company's Quarterly
               Report on Form 10-Q for the quarter ended June 30, 1993.
          
     10.17     Line of Credit Agreement dated February 28, 1995, with Silicon
               Valley Bank, and Amendment No. 1 thereto. Incorporated by
               reference to the Company's Quarterly Report on Form 10-Q for the
               quarter ended March 31, 1995.
          
     10.18     Line of Credit Agreement with Bank of America. Incorporated by
               reference to the Company's Quarterly Report on Form 10-Q for the
               quarter ended March 31, 1995.
          
     10.19     Amendment No. 2 to Silicon Valley Bank Credit Agreement and
               Limited Waiver dated November 21, 1995. Incorporated by reference
               to the Company's Current Report on Form 8-K dated November 21,
               1995.
          
     10.20     Amendment No. 3 to Silicon Valley Bank Credit Agreement and
               Limited Waiver dated December 27, 1995. Incorporated by reference
               to the Company's Annual Report on Form 10-K for the fiscal period
               ended September 30, 1995.
          
     11.1      Computation of Earnings Per Share.**
          
     21.1      Subsidiaries of the Company. Incorporated by reference to the
               Company's Registration Statement on Form S-1 (File No. 33-43656)
               filed on November 9, 1991.

     22.1      Published Report Regarding Special Stockholders Meeting on
               September 26, 1996. Incorporated by reference to the Company's
               Current Report on Form 8-K/A dated October 31, 1996.
          
     23.1      Consent of Ernst & Young LLP.
          
     27        Financial Data Schedule.**
 
*  A management contract or compensatory plan or arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.

** Previously Filed

     (b)  Reports on Form 8-K:

          A current report on Form 8-K, dated December 2, 1996, was filed by the
     Company reporting under Item 5 the Filing of a Registration Statement on
     Form S-3.

          A current report on Form 8-K, dated November 25, 1996, was filed by
     the Company reporting under Item 5 the Company's discontinuation of plans
     to acquire a controlling interest in Nomai.

          A current report on Form 8-K, dated November 11, 1996, was filed by
     the Company reporting under Item 5 the continuation of the Company's Nasdaq
     National Market listing and the execution of a Letter of Intent to acquire
     a controlling interest in Nomai, and under Item 9 the sale by the Company
     of equity securities pursuant to Regulation S.

          A current report on Form 8-K, dated October 31, 1996, and an amendment
     thereto were filed by the Company reporting under Item 5 the results of the
     Company's Special Meeting of Stockholders held September 26, 1996, the
     Company's filing with Nasdaq of a pro forma balance sheet evidencing the
     Company's compliance with the listing requirements of the Nasdaq National
     Market, and the Company's exchange of debt for equity with certain vendors,
     sale of Convertible Preferred Stock, Series 1 and sale of 5% Cumulative
     Convertible Preferred Stock, Series 2 and related warrants.

                                      27

<PAGE>
 
                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.
 
                                 SYQUEST TECHNOLOGY, INC.


                                 By: /s/ Henry C. Montgomery
                                     ________________________________
                                     Henry C. Montgomery
                                     Executive Vice President, Finance and 
                                     Chief Financial Officer



Dated:   July 2, 1997