<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 10-Q


                                QUARTERLY REPORT


        Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


                      FOR THE QUARTER ENDED JULY 4, 1998



                               Hayes Corporation
                             A Delaware Corporation
                   IRS Employer Identification No. 52-1987873
                 5854 Peachtree Corners East, Norcross, GA 30092
                 Telephone - (770) 840-9200


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
                               the past 90 days.


                                Yes  X         No
                                    ---           ---

                          Common Stock, par value $.01 per share
             The Company had 19,991,690 shares of its Common Stock
                          outstanding on July 4, 1998.

<PAGE>   2

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                       HAYES CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                           July 4,     January 3,
                                                            1998         1998
                                                          --------     --------
                                                         (unaudited)
<S>                                                      <C>           <C>      
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                               $   3,880    $  15,240
  Restricted cash                                                50          530
  Accounts receivable, less allowance for doubtful
   accounts and product returns of $5,969 and $4,241         39,435       36,706
  Receivables from related parties                            1,191        2,705
  Inventories, net                                           37,342       32,250
  Prepaid expenses and other current assets                   6,131        1,890
                                                          ---------    ---------
     Total current assets                                    88,029       89,321
  Property and equipment, net                                 7,046        9,436
  Computer software costs, net                                2,924          623
  Intangibles and other long-term assets, net                13,144       15,948
                                                          ---------    ---------
     TOTAL ASSETS                                         $ 111,143    $ 115,328
                                                          =========    =========

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Current debt                                            $  20,204    $  11,363
  Accounts payable                                           24,307       23,462
  Amounts due to related parties                             19,251       15,029
  Accrued liabilities                                        26,868       30,561
  Income taxes payable                                          352          295
                                                          ---------    ---------
     Total current liabilities                               90,982       80,710
Long-term debt, less current                                  5,253          580
                                                          ---------    ---------
      TOTAL LIABILITIES                                      96,235       81,290

Redeemable preferred stock, series A, no par value,
 authorized, issued and outstanding 1,217,931 shares          5,455        5,455
6% cumulative preferred stock                                44,444       47,459

STOCKHOLDERS' DEFICIT
   Common Stock, $.01 par value; authorized 100,000,000
    shares; issued and outstanding 19,991,690 and
    19,497,882 shares                                           198          193
   Paid-in capital                                           93,881       92,279
   Accumulated deficit                                     (128,968)    (111,401)
   Accumulated other comprehensive income                      (102)          53
                                                          ---------    ---------
      TOTAL STOCKHOLDERS' DEFICIT                           (34,991)     (18,876)
                                                          ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT               $ 111,143    $ 115,328
                                                          =========    =========
</TABLE>

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


                                       2


<PAGE>   3

                       HAYES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                    UNAUDITED
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                            Three months ended       Six months ended
                                            July 4,    June 30,     July 4,    June 30,
                                           --------------------    --------------------
                                             1998        1997        1998        1997
                                           --------    --------    --------    --------
<S>                                        <C>         <C>         <C>         <C>     
Net sales                                  $ 33,038    $ 55,721    $ 77,210    $ 94,897
Cost of sales                                35,974      41,746      69,017      70,965
                                           --------    --------    --------    --------
 Gross profit                                (2,936)     13,975       8,193      23,932
                                           --------    --------    --------    --------
Operating expenses:
 Sales and marketing                          7,412       9,585      14,667      17,444
 General and administrative                   4,162       4,598       7,345       8,930
 Research and development                     4,216       3,059       7,774       5,981
                                           --------    --------    --------    --------
Total operating expense                      15,790      17,242      29,786      32,355
                                           --------    --------    --------    --------
Operating loss                              (18,726)     (3,267)    (21,593)     (8,423)
Interest expense, net                           328       1,352         787       2,375
Other income, net                             1,215       2,193       1,189       3,025
Unrealized gain on trading securities         3,681          --       3,681          --
                                           --------    --------    --------    --------
 Loss before income tax expense             (14,158)     (2,426)    (17,510)     (7,773)
Income tax expense                               31          50          57          62
                                           --------    --------    --------    --------
 Net loss                                  $(14,189)   $ (2,476)   $(17,567)   $ (7,835)
                                           --------    --------    --------    --------

Preferred stock dividend                        851          --       1,489          --
                                           --------    --------    --------    --------
Loss applicable to common
  shareholders                             $(15,040)   $ (2,476)   $(19,056)   $ (7,835)
                                           ========    ========    ========    ========
Basic and diluted loss per
  common share                             $   (.75)   $   (.32)   $   (.96)   $  (1.01)
                                           ========    ========    ========    ========
Weighted average number of
  common shares outstanding                  19,988       7,701      19,866       7,701
                                           ========    ========    ========    ========
</TABLE>

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


                                       3
<PAGE>   4

                       HAYES CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                    UNAUDITED
                                 (in thousands)

<TABLE>
<CAPTION>
                                                            Six Months Ended
                                                          July 4,       June 30,
                                                         -----------------------
                                                           1998           1997
                                                         --------       --------
<S>                                                     <C>             <C>     
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                $(17,567)       $(7,835)
Adjustments to reconcile net loss to net cash
 used in operating activities:
    Depreciation and amortization                          7,850          3,198
    Unrealized gain on trading securities                 (3,681)            --
    Other                                                    959            663
Changes in assets and liabilities:
    Accounts receivable                                   (1,329)       (19,342)
    Inventories                                           (5,937)       (11,471)
    Prepaid expenses and other current assets             (2,160)           (89)
    Accounts payable                                         845         17,629
    Amounts due to related parties                         4,222          1,347
    Accrued liabilities                                   (3,677)        (1,138)
    Income taxes payable                                      57             62
    Other long-term liabilities                               --            374
                                                         -------        -------
     Total adjustments                                    (2,851)        (8,767)
                                                         -------        -------
    Net cash used in operating activities                (20,418)       (16,602)
                                                         -------        -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                                      (2,173)        (1,916)
Other                                                     (1,142)         2,167
                                                         -------        -------
    Net cash provided by(used in) investing activities    (3,315)           251
                                                         -------        -------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of preferred stock                                   --          5,455
Payments on debt                                          (4,745)       (60,271)
Proceeds from debt                                        18,259         65,263
Issuance of convertible notes                                 --          4,000
Other                                                       (986)          (675)
                                                         -------        -------
    Net cash provided by financing activities             12,528         13,772
                                                         -------        -------
Effect of exchange rate changes on cash                     (155)          (326)
                                                         -------        -------
Net decrease in cash and cash equivalents                (11,360)        (2,905)
Cash and cash equivalents at beginning of period          15,240          5,687
                                                         -------        -------
Cash and cash equivalents at end of period               $ 3,880        $ 2,782
                                                         =======        =======
</TABLE>

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


                                       4
<PAGE>   5

                       HAYES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1. General

       The accompanying consolidated financial statements have been prepared on
the same basis as those included in the Company's Form 10-K for the year ended
January 3, 1998. This basis assumes the orderly satisfaction of liabilities in
the normal course of business, which is dependent upon the Company's ability to
implement and execute the restructuring plan announced by the Board of Directors
on August 13, 1998.

       On December 30, 1997, Hayes Corporation (the "Company" or "Hayes"),
formerly known as Access Beyond, Inc. ("Access Beyond"), completed a reverse
triangular merger (the "Merger") with Hayes Microcomputer Products, Inc. ("Hayes
Microcomputer"). In the Merger, the Company issued 15,261,763 shares of Common
Stock and 1,217,931 shares of Series A Preferred Stock, after giving effect to a
one for three reverse stock split effected February 25, 1998 (the "reverse stock
split"). The stock issued in the transaction represented 79% of the outstanding
stock immediately after the Merger excluding the effect of warrants, stock
options and the 6% Cumulative Convertible Preferred Stock. Immediately following
the Merger, the Company changed its name to Hayes Corporation. Since the Hayes
Microcomputer shareholders received a substantial majority of the shares of
stock of the Company, the transaction is treated as a reverse acquisition of the
Company by Hayes Microcomputer for accounting purposes. As a result, the
historical financial statements of the surviving company for the periods prior
to the Merger are those of Hayes Microcomputer rather than those of Access
Beyond.

       The accompanying consolidated financial statements, should be read in
conjunction with Form 10-K of Hayes Corporation and its wholly-owned
subsidiaries for the year ended January 3, 1998. The accompanying consolidated
financial statements reflect all adjustments which are in the opinion of
management, necessary for a fair presentation of the Company's consolidated
financial position as of July 4, 1998 and the results of operations for the
three and six months ended July 4, 1998 and June 30, 1997. The results of
operations for such periods, however, are not necessarily indicative of the
results to be expected for a full fiscal year.

       Certain reclassifications have been made to prior period consolidated
financial statements to conform to the July 4, 1998 presentation.

2. Inventories

       Inventories, net of reserves, consist of (in thousands):

<TABLE>
<CAPTION>
                                                July 4,        January 3,
                                                 1998            1998
                                               ---------       ---------
                           <S>                 <C>             <C>      
                           Raw materials       $  13,437       $  12,047
                           Work in process         4,079           5,205
                           Finished goods         19,826          14,998
                                               ---------       ---------
                                               $  37,342       $  32,250
                                               =========       =========
</TABLE>

3. Acquisitions

(a) Cardinal Technologies, Inc.

          During April 1997, the Company acquired 100% of the outstanding common
stock of Cardinal, a private manufacturer of modems and ISDN adapters, for $2.5
million. The acquisition has been accounted for utilizing the purchase method of
accounting. The estimated fair values assigned to the assets and liabilities
acquired were as follows (in thousands):

<TABLE>
<S>                                                                    <C>     
Total consideration paid (including acquisition costs of $595)         $  3,095
Fair value of tangible and identifiable assets acquired                 (15,350)
Fair value of liabilities assumed                                        17,055
                                                                       --------
Goodwill                                                               $  4,800
                                                                       ========
</TABLE>


                                        5

<PAGE>   6

       Pro forma results of operations of Cardinal from the beginning of the
period through the acquisition date are not presented as they are not
significant to the Company's consolidated results of operations.

(b) Access Beyond, Inc.

       The estimated fair values assigned to assets and liabilities acquired in
the Merger were as follows (in thousands):

<TABLE>
       <S>                                                                    <C>      
       Fair value of stock issued                                             $  62,255
       Other acquisition costs                                                    1,550
       Fair value of liabilities assumed                                         14,808
       Fair value of tangible and identifiable assets acquired                  (13,622)
       Acquired product line technology                                          (4,772)
       Acquired in-process research and development                             (54,990)
                                                                              ---------
       Goodwill                                                               $   5,229
                                                                              =========
</TABLE>

       Approximately $55.0 million of the total purchase price represented the
value of in-process research and development based on an appraisal of the
product line technology that had not yet reached technological feasibility and
had no alternative future use. The amount was determined using the income
forecast method and was charged to the Company's operations in the fourth
quarter of 1997.

       The following pro forma results of operations have been prepared as
though the Merger had occurred as of the beginning of the periods presented. The
pro forma information does not purport to be indicative of the results of
operations that would have been attained had the Merger been in effect on the
dates indicated, nor of future results of operations of the Company.

<TABLE>
<CAPTION>
                                                        Three months ended    Six months ended
                                                             June 30,             June 30,
                                                               1997                 1997
                                                             --------             --------
                  (In thousands, except per share data) 
                  <S>                                   <C>                   <C>     
                  Statement of operations data:
                  Net revenues                               $ 58,127             $101,389
                  Net loss                                     (9,143)             (16,544)
                  Loss per share                             $   (.47)            $  (0.85)
</TABLE>

4. Restructuring Terms With Certain 6% Preferred Shareholders

       On April 3, 1998, the Company filed a Complaint for breach of implied
covenant of good faith and fair dealing, breach of warranty, breach of fiduciary
duty and tortious misappropriation of a corporate asset in the Supreme Court of
the State of New York, County of New York, against the Company's 6% Cumulative
Convertible Preferred Stockholders and their investment managers. In the
Complaint, the Company claims damages from the Defendants, jointly and
severally, in an amount in the millions of dollars to be determined at trial,
plus punitive damages. The litigation arises out of conduct by the Defendants
following entry into a Preferred Stock Investment Agreement with certain of the
Defendants pursuant to which such Defendants purchased the Company's 6%
Cumulative Convertible Preferred Stock from the Company.

       The Company has signed definitive restructuring agreements with two of
the four fund managers representing seven of the eleven 6% Convertible Preferred
Shareholders (approximately 50% of the outstanding preferred stock). Under the
terms of the restructuring, the outstanding 6% Convertible Preferred Stock would
convert into a new preferred convertible instrument, featuring a fixed
conversion price of $9.00 and a dividend rate of 8% payable in cash or as a
payment in kind (PIK). At the end of November 1998, to the extent that a
preferred balance remains, the instrument would convert into a subordinated
convertible debenture with an interest rate of 14%, maturing on January 3, 2000.
At any time during the term of the Convertible Preferred or the Convertible
Debenture, the Company would have the right, upon prior notice, to redeem at
face value plus any accrued interest, any or all of the outstanding principal in
either instrument. The restructuring agreements also would allow the
shareholders of the 6% Convertible Preferred Stock who are parties to the
agreements to propose one independent candidate for a position on the Board of
Directors, who the Company would have the right to reasonably approve before
election to the Board of Directors. Upon the effectiveness of the restructuring,
the parties to the agreements would end their pending litigation and provide for
mutual releases. The Company also has agreed that it would step-up the remaining
balance of the Convertible Preferred Stock by 25% as part of the restructuring.
As a result of the step-up in principal value, the Company would recognize a
dividend of approximately $8 million upon the completion of the restructuring.

       The restructuring is subject to third party consents on or before July
30, 1998.


                                        6

<PAGE>   7

As of August 14, 1998, the holder of the Company's Series A Preferred Stock had
not consented to the restructuring. As a result, the stockholders who have
executed the agreements have the right to elect to terminate the agreements at
any time. There can be no assurance that the Series A stockholder will consent
or that the stockholders who are parties to the agreements will not terminate
the agreements.

       Negotiations are continuing with the holders of the 6% Convertible
Preferred Stock who have not agreed to the foregoing terms and the Company is
continuing its litigation against such holders. The Company has rejected
requests for conversions and redemptions of shares of the 6% Preferred Stock
because of the breaches of the Stockholders set forth in the litigation. The
stockholders have asserted counterclaims against the Company.

5. Net Loss Per Common Share

       In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share" ("FAS 128"). This statement establishes
standards for computing and presenting earnings per share ("EPS"). Basic EPS
excludes dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. FAS 128 requires restatement of all prior-period
EPS data presented.

       Potential common stock equivalents such as preferred stock conversions,
stock options and warrants have an antidilutive effect on net loss per common 
share calculations for the three and six month periods ended July 4, 1998 and 
June 30, 1997.

6. Comprehensive Income

       During the first quarter of 1998, the Company adopted the provisions of
FAS No. 130, "Reporting Comprehensive Income." The standard requires that
entities include within their financial statements information on comprehensive
income, which is defined as all activity impacting equity from nonowner sources.
For the Company, comprehensive income is comprised exclusively of changes in
cumulative exchange rate adjustments. Other comprehensive loss for the three
months ended July 4, 1998 and June 30, 1997 was $0.2 million and four thousand
dollars, respectively. Other comprehensive loss for the six months ended July 4,
1998 and June 30, 1997 was $0.2 million and $0.3 million, respectively.

7. Restructuring Plan

       Based on the Company's operating results for the second quarter and the
commodity nature of the analog modem market, on August 13, 1998, the Company's
Board of Directors approved a downsizing and restructuring plan that is
designed to improve its liquidity and long-term results of operations. The plan
focuses the Company's resources on the expansion of its technology and market
position within the broadband, RAS and voice-over-IP markets. The analog modem
business will continue but will not be managed as a growth business.

       As part of the restructuring plan, the Company intends to sell its
Norcross, Georgia manufacturing operation during the third quarter to a
contract manufacturer, although no binding agreements have been executed and no
terms have been established. The sale of these manufacturing assets and
inventories would generate substantial cash and reduce operating expenses but
also would result in substantial restructuring charges to current earnings at
the time of sale.

       Other elements of the plan include restructuring the Company's other
operations to reduce expenses and working with the Company's lenders to expand
its borrowing capacity. These actions may result in additional restructuring
charges.

       In order to meet its anticipated cash requirements over the remainder of
the year and the next 12 months, the Company must be successful in implementing
this restructuring plan.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

FORWARD LOOKING STATEMENTS AND RISK FACTORS

       This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created thereby. These statements are subject to numerous risks
and uncertainties and the Company's actual results may differ significantly from
the results discussed in the forward looking statements. Although the Company
believes that the assumptions underlying the forward looking statements
contained herein are reasonable, any of the assumptions could prove inaccurate,
and therefore, there can be no assurance that the forward looking statements
included herein will prove to be accurate. Factors that might cause such a
difference include, but are not limited to, market acceptance of the Company's
products and services and other factors discussed in "Business Risks" of the
Company's Annual Report on Form 10-K for the fiscal year ended January 3, 1998
and in "Risk Factors" of the Company's Proxy Statement and Prospectus (included
in its Registration Statement on Form S-4, Registration No. 333-37993), as well
as in the Company's subsequent filings and reports with the Securities and
Exchange Commission, including this Form 10-Q report.

       In addition to the foregoing risks, the Company's Common Stock has failed
to meet the requirements for continued listing on the NASDAQ National Market
System ("NASDAQ/NMS"), the principal market in which the Common Stock is traded,
and has been


                                        7
<PAGE>   8

notified that the Common Stock will be delisted if such criteria are not met.
The Company has requested a hearing with The NASDAQ Stock Market, which is
expected to occur in September 1998. However, there can be no assurance that the
Common Stock will not be delisted from the NASDAQ/NMS. If the Common Stock is
delisted, it is anticipated that trading in the Company's Common Stock would
thereafter be conducted on the NASDAQ Small Cap Market. As a result of any
delisting from the NASDAQ/NMS, an investor may find it more difficult to dispose
of, and to obtain accurate quotations as to the value of the Common Stock.

BUSINESS UNITS

       Hayes is comprised of three business units: the Modem Products business,
the Access Systems business and the Broadband Products business. The Modem
Products business designs, manufactures and markets analog and ISDN modem
products. The Modem Products business distributes its products under the Optima,
Accura, Practical Peripherals and Cardinal brands. The Access Systems business
designs and markets modem pool and remote access server products. These products
are distributed under the Century brand. The Broadband Products business designs
and markets ADSL and cable modem products and was formed in June 1997. The
Broadband Products business markets its products under the Ultra brand.

LIQUIDITY AND CAPITAL RESOURCES

       General. Hayes' primary capital requirements are for working capital,
acquisitions and other capital expenditures. Hayes has historically met its
capital requirements through a combination of equity transactions, cash flow
from operations, bank lines of credit and credit terms from suppliers.

       Cash Flows. Cash and cash equivalents decreased by approximately $11.3
million to $3.9 million at July 4, 1998 as compared to $15.2 million at January
3, 1998. The decrease in cash primarily resulted from the Company's net losses
and inventory increases.

       Cash used in operations was $20.4 million and $16.6 million for the six
months ended July 4, 1998 and June 30, 1997, respectively. The increase in cash
usage for the six months ended July 4, 1998 is primarily due to a lower increase
in accounts payable and a greater net loss offset by lower increases in
inventory and accounts receivable and less of a decrease in accrued liabilities
as compared to the six months ended June 30, 1997.

       Cash used in investing activities was $3.3 million for the six months
ended July 4, 1998 as compared to cash provided by investing activities of $0.3
million for the comparable period in 1997. The increase in cash usage is
primarily attributable to the new information systems software package purchased
by the Company.

       On February 20, 1998, the Company entered into a new credit facility with
the Commercial Funding Division of NationsCredit ("NationsCredit"). The
NationsCredit facility consists of two term loans and a revolving loan. The
revolving loan provides for financing based upon eligible receivables and
inventory. The term loans are based upon appraised values of equipment and
intangibles. The term loans and the revolving loans bear interest at prime plus
0.75%. The NationsCredit facility replaced a credit facility provided by The CIT
Group/Credit Finance, Inc. (the "CIT Facility"). The Company is in violation of
a covenant of the NationsCredit facility relating to its cumulative net losses
for the current fiscal year. As a result, $2.0 million of the term loan has
become payable on demand by the lender and has been reclassified as a current
liability. The Company has no available borrowings under the NationsCredit
facility. As of July 4, 1998 the Company has $25.3 million borrowings
outstanding under the NationsCredit facility.

       Cash provided by financing activities was $12.5 million and $13.8 million
for the six months ended July 4, 1998 and June 30, 1997, respectively. The cash
provided by financing activities for the first six months of 1998 is primarily
related to the new NationsCredit facility. The cash provided by financing for
the first six months of 1997


                                        8
<PAGE>   9

is primarily related to the CIT Facility and issuance of convertible notes.

       As further described below, the Company's Board of Directors has approved
a downsizing and restructuring plan designed to improve its liquidity and
long-term results of operations. In order to meet its anticipated cash
requirements over the remainder of the year and the next 12 months, the Company
must be successful in implementing this restructuring plan.

INFLATION

       Hayes believes that inflation has not had a material impact on its
operating results and does not expect inflation to have a material impact on its
operating results in the foreseeable future.

RESULTS OF OPERATIONS-THREE MONTHS ENDED JULY 4, 1998 VS. THREE MONTHS ENDED
JUNE 30, 1997

       NET SALES

<TABLE>
<CAPTION>
                   July 4,       As a %        June 30,      As a %
                    1998       of revenue        1997      of revenue     Change
                  --------     ----------      --------    ----------    --------
<S>               <C>          <C>             <C>         <C>           <C>      
Modem Products    $ 29,117       88.1%         $ 53,748      96.5%       $(24,631)
Access Systems       3,737       11.3%            1,973       3.5%          1,764
Broadband Products     184        0.6%               --        --             184
                  --------     ------          --------    ------        --------
                  $ 33,038      100.0%         $ 55,721     100.0%       $(22,683)
                  ========     ======          ========    ======        ========
</TABLE>

       Net sales for the three months ended July 4, 1998 decreased by $22.7
million, or 40.7%, from the same period in 1997. The quarter to quarter revenue
decrease is attributed to declining sales of modems industry wide resulting from
consumer delay in upgrading to newer modem technologies partially offset by
sales of recently available Access Systems products.

       GROSS PROFIT

<TABLE>
<CAPTION>
                   July 4,      As a %        June 30,     As a %
                    1998      of revenue        1997     of revenue     Change
                  --------    ----------      --------   ----------    --------
<S>               <C>         <C>             <C>        <C>           <C>      
Gross profit      $ (2,936)       (8.9)%      $ 13,975       25.1%     $(16,911)
                  ========    ========        ========   ========      ========
</TABLE>

       Gross profit as a percentage of net revenues declined to a negative 8.9%
in the second quarter of 1998 as compared to 25.1% in the second quarter of 1997
resulting from worldwide margin compression, unfavorable product mix and
manufacturing variances. In response to declining sales, production in the
Company's Norcross facility was substantially reduced. As a result,
approximately $9.6 million of unfavorable manufacturing variances have been
included in cost of sales for the quarter. The Company expects manufacturing
variances to continue to have a negative impact on gross margins in the third
quarter.

       OPERATING EXPENSES

<TABLE>
<CAPTION>
                          July 4,        As a %       June 30,      As a %
                           1998        of revenue       1997      of revenue   Change
                         --------      ----------     --------    ----------  --------
<S>                      <C>           <C>            <C>         <C>         <C>       
Sales & marketing        $  7,412         22.4%       $  9,585       17.2%    $  (2,173)
General & administrative    4,162         12.6%          4,598        8.2%         (436)
Research & development      4,216         12.8%          3,059        5.5%        1,157
                         --------      -------        --------    -------     ---------
                         $ 15,790         47.8%       $ 17,242       30.9%    $  (1,452)
                         ========      =======        ========    =======     =========
</TABLE>


                                        9
<PAGE>   10

       Selling, general and administrative expenses decreased by $2.6 million in
the second quarter of 1998 from the comparable period in 1997. This decrease is
the result of the Company's ongoing strategy targeted at reducing operating
expenses and improving operating efficiencies.

       Research and development expenses increased by $1.2 million in the second
quarter of 1998 from the comparable period in 1997. This increase is due to
investments by the Company in product and business development for its Access
Systems and Broadband Products businesses partially offset by lower spending in
its Modem Products business.

       OPERATING LOSS

<TABLE>
<CAPTION>
                          July 4,        As a %       June 30,      As a %
                           1998        of revenue       1997      of revenue    Change
                         --------      ----------     --------    ----------   --------
<S>                      <C>           <C>            <C>         <C>          <C>      
Operating loss           $(18,726)        (56.7)%     $ (3,267)      (5.9)%    $(15,459)
</TABLE>

       Operating loss for the quarter ended July 4, 1998 increased by $15.5
million as compared to the quarter ended June 30, 1997. This increase is due to
declining sales and unfavorable manufacturing variances as described above.

       MISCELLANEOUS

<TABLE>
<CAPTION>
                         July 4,        As a %        June 30,     As a %
                          1998        of revenue        1997     of revenue     Change
                         -------      ----------      --------   ----------    --------
<S>                      <C>          <C>             <C>        <C>           <C>      
Interest expense, net    $   328          1.0%         $ 1,352       2.4%      $ (1,024)
Other income               1,215          3.7%           2,193       3.9%          (978)
Income tax expense            31          0.1%              50       0.1%           (19)
Unrealized gain on
  trading securities       3,681         11.1%              --        --          3,681
</TABLE>

       Interest expense for the second quarter of 1998 decreased $1.0 million
compared to the second quarter of 1997. This is primarily due to the lower
interest rate on the Company's new credit facility with NationsCredit.

       During the second quarter of 1998, as restrictions on sale were removed,
the Company transferred certain equity securities to its trading category. This
transfer resulted in an unrealized gain of approximately $3.7 million.
Subsequent to July 4, 1998 these securities were sold which resulted in a
realized gain approximating the amount reflected in the Company's statement of
operations.

       NET LOSS

<TABLE>
<CAPTION>
                          July 4,        As a %       June 30,      As a %
                           1998        of revenue       1997      of revenue      Change
                         --------      ----------     --------    ----------     --------
<S>                      <C>           <C>            <C>         <C>            <C>      
Net loss                 $(14,189)       (42.9)%       $(2,476)      (4.4)%      $(11,713)
</TABLE>

       Net loss increased by $11.7 million for the three months ended July 4,
1998 as compared to the three months ended June 30, 1997. This increase is due
to declining sales and unfavorable manufacturing variances partially offset by
the unrealized gain of $3.7 million on trading securities.

       Hayes reported a net loss applicable to common shareholders of $15.0
million for the three month period ended July 4, 1998 as compared to $2.5
million for the similar period in 1997. The net loss applicable to common
shareholders includes a preferred stock dividend of $0.9 million for the second
quarter of 1998. On a per share basis the net loss was $(0.75) and $(0.32) for
the second quarter of 1998 and 1997, respectively.

       The Company has entered into definitive agreements with the holders of
approximately 50% of its 6% Convertible Preferred Stock that would restructure
the Preferred Stock held by such stockholders and, among other things, step up
the principal value of such Preferred Stock by 25%. As a result, if transactions
contemplated by the agreements are consummated, the Company would recognize a
dividend of


                                       10
<PAGE>   11

approximately $8 million. The agreements are subject to third party consents,
all of which have not been obtained. As a result, the stockholders have the
right to terminate the agreements. In addition the Company is negotiating with
the remaining holders of the 6% Convertible Preferred Stock to agree to similar
terms which, if consummated, would result in additional dividend payments. See
Part II "Legal Proceedings."

RESULTS OF OPERATIONS-SIX MONTHS ENDED JULY 4, 1998 VS. SIX MONTHS ENDED
JUNE 30, 1997

       NET SALES

<TABLE>
<CAPTION>
                   July 4,      As a %      June 30,      As a %
                    1998      of revenue      1997      of revenue     Change
                  --------    ----------    --------    ----------    --------
<S>               <C>         <C>           <C>         <C>           <C>      
Modem Products    $ 69,934       90.6%      $ 91,436       96.4%      $(21,502)
Access Systems       7,080        9.2%         3,461        3.6%         3,619
Broadband Products     196        0.2%            --         --            196
                  --------    -------       --------    -------       --------
                  $ 77,210      100.0%      $ 94,897      100.0%      $(17,687)
                  ========    =======       ========    =======       ========
</TABLE>

       Net sales for the six months ended July 4, 1998 decreased by $17.7
million, or 18.6%, from the same period in 1997. The revenue decrease is
attributed to declining sales of modems industry wide resulting from consumer
delay in upgrading to newer modem technologies partially offset by recently
available Access Systems products.

       GROSS PROFIT

<TABLE>
<CAPTION>
                   July 4,      As a %      June 30,     As a %
                    1998      of revenue      1997     of revenue       Change
                  --------    ----------    --------   ----------      --------
<S>               <C>         <C>           <C>        <C>             <C>      
Gross profit      $  8,193        10.6%     $ 23,932       25.2%       $(15,739)
                  ========    ========      ========   ========        ========
</TABLE>

       Gross profit as a percentage of net revenues declined to 10.6% in the six
month period ended July 4, 1998 as compared to 25.2% in the similar period for
1997 resulting from worldwide margin compression, unfavorable product mix and
manufacturing variances. In response to declining sales, production in the
Company's Norcross facility was substantially reduced. As a result,
approximately $9.6 million of unfavorable manufacturing variances have been
included in cost of sales for the second quarter. The Company expects
manufacturing variances to continue to have a negative impact on gross margins
in the third quarter.


       OPERATING EXPENSES

<TABLE>
<CAPTION>
                          July 4,      As a %      June 30,      As a %
                           1998      of revenue      1997      of revenue      Change
                         --------    ----------    --------    ----------     --------
<S>                      <C>         <C>           <C>         <C>            <C>      
Sales & marketing        $ 14,667       19.0%      $ 17,444       18.4%       $ (2,777)
General & administrative    7,345        9.5%         8,930        9.4%         (1,585)
Research & development      7,774       10.1%         5,981        6.3%          1,793
                         --------    -------       --------    -------        --------
                         $ 29,786       38.6%      $ 32,355       34.1%       $ (2,569)
                         ========    =======       ========    =======        ========
</TABLE>

       Selling, general and administrative expenses decreased by $4.4 million
resulting from the Company's ongoing strategy targeted at reducing operating
expenses and improving operating efficiencies.

       Research and development expenses increased by $1.8 million. This
increase is due to investments by the Company in product and business
development for its Access Systems and Broadband Products businesses partially
offset by lower spending in its Modem Products business.


                                       11
<PAGE>   12
       OPERATING LOSS

<TABLE>
<CAPTION>
                          July 4,        As a %       June 30,      As a %
                           1998        of revenue       1997      of revenue     Change
                         --------      ----------     --------    ----------    --------
<S>                      <C>           <C>            <C>         <C>           <C>      
Operating loss           $(21,593)       (28.0)%       $(8,423)      (8.9)%     $(13,170)
</TABLE>


       Operating loss for the six month period ended July 4, 1998 increased by
$13.2 million as compared to the comparable period in 1997. This increase is due
to decreased sales and unfavorable manufacturing variances.


       MISCELLANEOUS

<TABLE>
<CAPTION>
                          July 4,       As a %       June 30,      As a %
                           1998       of revenue       1997      of revenue     Change
                         --------     ----------     --------    ----------    --------
<S>                      <C>          <C>            <C>         <C>           <C>      
Interest expense, net    $    787         1.0%       $  2,375       2.5%       $ (1,588)
Other income                1,189         1.5%          3,025       3.2%         (1,836)
Income tax expense             57         0.1%             62       0.1%             (5)
Unrealized gain on
  trading securities        3,681         4.8%             --        --           3,681
</TABLE>


       Interest expense decreased by $1.6 million primarily due to the lower
interest rate on the Company's new credit facility with NationsCredit.

       During the second quarter of 1998, as restrictions on sale were removed,
the Company transferred certain equity securities to its trading category. This
transfer resulted in an unrealized gain of approximately $3.7 million.
Subsequent to July 4, 1998 these securities were sold which resulted in a
realized gain approximating the amount reflected in the Company's statement of
operations.

       NET LOSS

<TABLE>
<CAPTION>
                          July 4,        As a %      June 30,     As a %
                           1998        of revenue      1997     of revenue     Change
                         --------      ----------    --------   ----------    --------
<S>                      <C>           <C>           <C>        <C>           <C>      
Net loss                 $(17,567)       (22.8)%     $ (7,835)     (8.3)%     $ (9,732)
</TABLE>


       Net loss increased by $9.7 million for the six months ended July 4, 1998
as compared to the six months ended June 30, 1997. This increase is due to
decreased sales and unfavorable manufacturing variances partially offset by the
unrealized gain on trading securities.


       Hayes reported a net loss applicable to common shareholders of $19.1
million for the six month period ended July 4, 1998 as compared to $7.8 million
for the similar period in 1997. The net loss applicable to common shareholders
includes a preferred stock dividend of $1.5 million. On a per share basis the
net loss was $(0.96) and $(1.01) for the first six months of 1998 and 1997,
respectively.


       The Company has entered into definitive agreements with the holders of
approximately 50% of its 6% Convertible Preferred Stock that would restructure
the Preferred Stock held by such stockholders and, among other things, step up
the principal value of such Preferred Stock by 25%. As a result, if transactions
contemplated by the agreements are consummated, the Company would recognize a
dividend payment of approximately $8 million. The agreements are subject to
third party consents, all of which have not been obtained. As a result, the
stockholders have the right to terminate the agreements. In addition, the
Company is negotiating with the remaining holders of the 6% Convertible
Preferred Stock to agree to similar terms which, if consummated, would result in
additional dividend payments. See Part II "Legal Proceedings."


                                       12


<PAGE>   13
Year 2000


       The Company has assessed the impact of the Year 2000 issue on its
internal systems and believes that the costs to upgrade its information and
operating systems to address this issue are not material. In 1997, the Company
commenced efforts to replace its information systems with software from Oracle
Corporation which is Year 2000 compliant. These efforts are expected to be
completed in fiscal 1998. The Company has not assessed whether any of its
vendors and suppliers are Year 2000 compliant nor what the potential impact on
the Company of any such noncompliance might be. The Company expects to begin
this evaluation process during the third quarter of the current fiscal period.


Restructuring Plan


       Based on the Company's operating results for the second quarter and the
commodity nature of the analog modem market, on August 13, 1998, the Company's
Board of Directors approved a downsizing and restructuring plan that is designed
to improve its liquidity and long-term results of operations. The plan focuses
the Company's resources on the expansion of its technology and market position
within the broadband, RAS and voice-over-IP markets. The analog modem business
will continue but will not be managed as a growth business.


       As part of the restructuring plan, the Company intends to sell its
Norcross, Georgia manufacturing operation during the third quarter to a contract
manufacturer, although no binding agreements have been executed and no terms
have been established. The sale of these manufacturing assets and inventories
would generate substantial cash and reduce operating expenses but also would
result in substantial restructuring charges to current earnings at the time of
sale.

       Other elements of the plan include restructuring the Company's other
operations to reduce expenses and working with the Company's lenders to expand
its borrowing capacity. These actions may result in additional restructuring
charges.

       There can be no assurance that the Company will be successful in
implementing any of the elements of its plan.


                                       13

<PAGE>   14


  NEW DEVELOPMENTS

Item 3. Quantitative and Qualitative Disclosures About Market Risk

        Not Applicable.

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

       On April 3, 1998, the Company filed a Complaint for breach of implied
covenant of good faith and fair dealing, breach of warranty, breach of fiduciary
duty and tortious misappropriation of a corporate asset in the Supreme Court of
the State of New York, County of New York, against the Company's 6% Cumulative
Convertible Preferred Stockholders and their investment managers, which include
Elliot Associates, L.P., Westgate International, L.P., Montrose Investments
Ltd., Westover Investments, L.P., Stark International, Shepherd Investments
International, Ltd., Ramius Fund, Ltd., GAM Arbitrage Investments, Inc.,
Leonardo, L.P., Raphael, L.P., AG Super Fund International Partners, L.P.,
Stonington Management Corporation, Staro Asset Management and Angelo, Gordon &
Co., L.P. In the Complaint, the Company claims damages from the Defendants,
jointly and severally, in an amount in the millions of dollars to be determined
at trial, plus punitive damages. The litigation arises out of conduct by the
Defendants following entry into a Preferred Stock Investment Agreement with
certain of the Defendants pursuant to which such Defendants purchased the
Company's 6% Cumulative Convertible Preferred Stock from the Company.

     The Company has signed definitive restructuring agreements with two of the
four fund managers representing seven of the eleven 6% Convertible Preferred
Shareholders (approximately 50% of the outstanding preferred stock). Under the
terms of the restructuring, the outstanding 6% Convertible Preferred Stock would
convert into a new preferred convertible instrument, featuring a fixed
conversion price of $9.00 and a dividend rate of 8% payable in cash or as a
payment in kind (PIK). At the end of November 1998, to the extent that a
preferred balance remains, the instrument would convert into a subordinated
convertible debenture with an interest rate of 14%, maturing on January 3, 2000.
At any time during the term of the Convertible Preferred or the Convertible
Debenture, the Company would have the right, upon prior notice, to redeem at
face value plus any accrued interest, any or all of the outstanding principal in
either instrument. The restructuring agreements also would allow the
shareholders of the 6% Convertible Preferred Stock who are parties to the
agreements to propose one independent candidate for a position on the Board of
Directors, who the Company would have the right to reasonably approve before
election to the Board of Directors. Upon the effectiveness of the restructuring,
the parties to the agreements would end their pending litigation and provide for
mutual releases. The Company also has agreed that it would step-up the remaining
balance of the Convertible Preferred Stock by 25% as part of the restructuring.
As a result of the step-up in principal value, the Company would recognize a
dividend of approximately $8 million upon the completion of the restructuring.

     The restructuring is subject to third party consents on or before July 30,
1998. As of August 14, 1998, the holder of the Company's Series A Preferred
Stock had not consented to the restructuring. As a result, the stockholders who
have executed the agreements have the right to elect to terminate the agreements
at any time. There can be no assurance that the Series A stockholder will
consent or that the stockholders who are parties to the agreements will not
terminate the agreements.

     Negotiations are continuing with the holders of the 6% Convertible
Preferred Stock who have not agreed to the foregoing terms and the Company is
continuing its litigation against such holders. The Company has rejected
requests for conversions and redemptions of shares of the 6% Preferred Stock
because of the breaches of the stockholders set forth in the litigation. The
stockholders have asserted counterclaims against the Company. 

                                       14
<PAGE>   15
   

Item 2. Changes in Securities and Use of Proceeds.

        Not Applicable.

Item 3. Defaults Upon Senior Securities.

        Not Applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

          The Annual Meeting of Stockholders of the Company was held on May 7,
     1998. The proposals voted upon and the results of the voting were as
     follows:

<TABLE>
<CAPTION>
     1. Election of Class II directors for a three year term.
                      For          Withheld          Abstentions and Broker Nonvotes
                      ---          --------          -------------------------------
        <S>        <C>             <C>               <C>
        S.P. Quek  16,983,322       35,871                       --
        M.C. Tam   16,983,488       35,705                       --
</TABLE>

<TABLE>
<CAPTION>
     2. Proposal to approve the Hayes Corporation 1998 Stock Incentive Plan.
                      For          Against           Abstentions and Broker Nonvotes
                      ---          -------           -------------------------------
                   <S>             <C>               <C>
                   13,893,980       89,278                     13,004
</TABLE>

<TABLE>
<CAPTION>
     3. Proposal to approve the Hayes Corporation Employee Stock Purchase Plan.
                      For          Against           Abstentions and Broker Nonvotes
                      ---          -------           -------------------------------
                   <S>             <C>               <C>
                   13,939,956       45,606                     10,700
</TABLE>

<TABLE>
<CAPTION>
     4. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as
        independent auditors for the fiscal year ending January 2, 1999.
                      For          Against           Abstentions and Broker Nonvotes
                      ---          -------           -------------------------------
                   <S>             <C>               <C>
                   17,004,492       10,543                      4,158
</TABLE>

Item 5. Other Information.

        Not Applicable.

Item 6. Exhibits and Reports on Form 8-K

Exhibits

3.1*     Amended and Restated Certificate of Incorporation of the Company (filed
         as Exhibit 3.2 to the Company's Form 10-K for the year ended January 3,
         1998).

3.2*     Amended and Restated Bylaws of the Company (filed as Exhibit 3.3 to the
         Company's Form 10-K for the year ended January 3, 1998).

4.1*     Specimen Common Stock Certificate (filed as Exhibit 4.6.1 to the
         Company's registration statement on Form S-4, as amended (Commission
         File Number 333-37993)).

4.2*     Specimen Series A Stock Certificate (filed as Exhibit 4.6.2 to the
         Company's registration statement on Form S-4, as amended (Commission
         File Number 333-37993)).

10.1     Preferred Stock Exchange Agreement dated as of June 22, 1998
         between the Company and certain investors.

10.2     First Amendment to Preferred Stock Exchange Agreement dated July 22,
         1998 between the Company and certain investors.

10.3     Registration Rights Agreement dated June 22, 1998 between the Company
         and certain investors.

27       Financial Data Schedule (for SEC use only).
--------------------------
*Incorporated by reference.

Reports on Form 8-K

  Not Applicable.


                                       15
<PAGE>   16

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                 Hayes Corporation
                                      (Registrant)




DATE: August 18, 1998            BY: /s/ Ronald A. Howard
                                    ----------------------------------
                                    Ronald A. Howard
                                    Chief Executive Officer and
                                    Vice Chairman of the Board of Directors
                                    (Principal Executive Officer)




DATE: August 18, 1998            BY: /s/ Charles S. Marantz
                                    ----------------------------------
                                    Charles S. Marantz
                                    Vice President and
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


                                       16