<PAGE>   1
 
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
 
                            ------------------------
 
                                   FORM 10-K
 
                                 ANNUAL REPORT
 
     PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
                    FOR THE FISCAL YEAR ENDED JULY 31, 1997
 
                           COMMISSION FILE NO. 21697
 
                              ACCESS BEYOND, INC.
 
                             A DELAWARE CORPORATION
                   IRS EMPLOYER IDENTIFICATION NO. 52-1987873
            1300 QUINCE ORCHARD BLVD., GAITHERSBURG, MARYLAND 20878
                          TELEPHONE -- (301) 921-8600
 
          Securities registered pursuant to Section 12(b) of the Act:
 
                                      NONE
 
          Securities registered pursuant to Section 12(g) of the Act:
 
                              Title of each class:
                          Common Stock, $.01 par value
 
     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 [ ]
 
     Indicate by check mark 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 registrant's 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. [X]
 
     As of October 3, 1997 the aggregate market value of the Company's voting
Common Stock held by non-affiliates of the Company was approximately $76
million.
 
     As of October 3, 1997 there were 12,495,291 shares of the registrant's
Common Stock, $.01 par value outstanding.
 
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<PAGE>   2
 
                                     PART I
 
ITEM 1.  BUSINESS
 
GENERAL DEVELOPMENT
 
     Access Beyond, Inc. (the "Company") is in the business of developing and
marketing products which enable local, remote or mobile users to access network
resources (the "Remote Access Business"). The Company was incorporated on July
23, 1996 and, as described more fully in Note 1 to the Consolidated Financial
Statements, was spun-off from Penril DataComm Networks, Inc. ("Penril") on
November 18, 1996 pursuant to the distribution (the "Distribution") to the
Penril stockholders on such date of shares of the Company's Common Stock. As the
successor company to Penril, the Company retains the historical financial
information of Penril through November 18, 1996 when Penril was merged into Bay
Networks, Inc. ("Bay"). For accounting purposes, the disposition of Penril's
modem business, as a result of the merger agreement with Bay has been accounted
for as a reduction of paid in capital. The Company's product lines consists of
the product line called Access Beyond, serving the remote access market, and
products which serve the LAN and Host Access Markets.
 
     Restructuring:  In the fourth quarter of fiscal 1996, Penril took actions
to strategically restructure its business to reduce costs and improve
competitiveness for the long term. As a result of this plan, Penril recorded a
charge of approximately $9.7 million in the fourth quarter of fiscal 1996. The
restructuring included a plan to focus the Company's business operations on the
remote access server and remote connectivity markets and away from the data
transmission markets. See Note 2 to the Consolidated Financial Statements.
 
     Reduction in Work Force:  In August 1997, the Company completed a reduction
in work force and other cost-saving measures which will result in an annual
savings of approximately $2.0 million and is expected to improve
competitiveness. The cost of such reduction in work force was immaterial.
 
     Acquisitions:  On May 2, 1997, the Company and Paradyne Corporation, a
Delaware corporation ("Paradyne"), entered into the 2290 Remote Access Gateway
("Hawk") Technology Transfer Agreement (the "Technology Agreement") pursuant to
which Paradyne (i) transferred to the Company technology relating to certain
open remote dial access cards (in the form of a comprehensive set of
specifications, technical information, hardware and software) (the "Hawk
Technology"), (ii) sold to the Company certain inventory, tools and equipment
used in the application of the Hawk Technology to develop and manufacture
products, ("Hawk Products") which include the Hawk Technology, (iii) licensed to
the Company certain intellectual property in connection with the Hawk
Technology, and (iv) agreed to provide the Company with technical, engineering,
manufacturing and marketing support, for an aggregate purchase price of 503,704
shares of the Common Stock (the "Paradyne Shares"), and $425,000 in cash. The
Company and Paradyne also entered into a Stock Purchase Agreement, dated as of
May 2, 1997 (the "Purchase Agreement"), pursuant to which the Company sold and
issued the Paradyne Shares to Paradyne. The Company is required to register the
Paradyne Shares for Paradyne under the Securities Act by December 31, 1997 and
use its best efforts to maintain the effectiveness of the Registration
Statement. See Note 7 to the Consolidated Financial Statements.
 
     Pending Transaction.  On July 29, 1997, the Company entered into an
Agreement and Plan of Reorganization (the "Merger Agreement") with Hayes
Microcomputer Products, Inc. ("Hayes"). Under the terms of the Merger Agreement,
Hayes will become a wholly owned subsidiary of the Company and the shareholders
of Hayes at the time the Merger becomes effective will own approximately 79% of
the outstanding equity securities of the Company. The Company will amend its
certificate of incorporation to (i) change its name to Hayes Communications
Inc., (ii) increase the number of authorized shares of capital stock, and (iii)
create Series A Preferred Stock, and the Board of Directors of the Company will
be increased to seven members, five of whom will be designated by the Hayes
shareholders. The Merger Agreement is intended to qualify as a purchase for
accounting and financial reporting purposes. The transaction is subject to
regulatory and the Company's stockholders' approval and certain conditions to
closing as set forth in the Merger Agreement. At the time of the consummation of
the Merger, the Company will be responsible for payment of investment
 
                                        1
<PAGE>   3
] 
banking fees of approximately $1.0 million and for a change of control payment
of $437,500 to Ronald A. Howard, President of the Company. Mr. Howard has
advised the Company that in lieu of receiving such cash payment, he will accept
shares of Common Stock having a value equal to such amount.
 
PRINCIPAL PRODUCTS
 
  Access Beyond Product Line
 
     The Company's Access Beyond product family is targeted at the remote access
market, providing a scalable modular platform combining advanced modem, ISDN
BRI/PRI, remote access, internet working and terminal connectivity capabilities
within a single family of products. The Access Beyond products currently use
three chassis configurations supporting from one to eight interface modules for
end users to choose from, based on current needs and anticipated future growth.
Interface modules are then selected based upon WAN and LAN technology and port
density requirements. The result is a fully integrated solution that effectively
solves the end user's specific remote access needs.
 
     The Access Beyond advanced remote access software delivers complete IP, IPX
and Appletalk routing, remote node and remote control capabilities including
NACS/NASI, all combined with full support for PPP, SLIP, CSLIP, LAT, Telnet, and
a wealth of security and management capabilities. In addition to full support
for SNMP, it provides an advanced, easy to use Windows based management and
configuration utility.
 
     The Company recently introduced a new class of remote access solutions that
integrates both T1 and PRI-ISDN directly within Microsoft Windows NT servers.
This new technology, dubbed "Hawk", supports either digital or analog (modem or
ISDN) remote access transmission and can be easily plugged into any Microsoft
Windows NT(R) or Novell Netware Connect(R) and Border Manager configured server.
Servers can be configured to simultaneously support existing network
applications as well as remote access, with the Dynamic Access Switching
available in the Hawk solution. This substantially reduces network traffic by
connecting users directly into the server hosting the network applications.
 
  LAN and Host Access Products
 
     The LAN and Host Access products currently sold by the Company include
statistical multiplexers and host access servers (VCX), and Ethernet terminal
servers (CSX). Each of the LAN and Host Access products provides the Company
with an existing revenue stream as well as an installed base.
 
     The VCX product line of multiplexers ranges from 4-port remote site
multiplexers to enterprise solutions providing up to 304 ports or 36 trunk lines
and multipurpose communication servers that combine both WAN and LAN
capabilities. These products can function as a data PBX, X.25 PAD, statistical
multiplexer, terminal server or any combination of these. Although the market
for these products is in decline, the Company continues to serve the installed
base and fulfill customer applications.
 
     The CSX Ethernet communications server family provides local and dialup
access to Ethernet LANs. Available as either 8-port or 16-port stand alone units
or as a modular chassis based solution, the CSX server provides terminal and
dialup access for TCP/IP networks.
 
DISCONTINUED OPERATIONS
 
     In fiscal 1995, the Board of Directors of Penril decided to sell
Technipower, Inc. ("TPI"), a subsidiary manufacturing uninterruptible power
supplies and power regulating equipment. In October 1996, the Company completed
the sale of TPI business for $1.6 million in cash and a $2.8 million note. As of
July 31, 1997, a balance of $980,000 remained unpaid on the note which was due
July 31, 1997. The Company reserved the unpaid balance of this note with a
charge of $980,000 to loss on disposal of discontinued operations.
 
     In fiscal 1996, the Board of Directors of Penril decided to sell EMI, a
subsidiary manufacturing test equipment and systems for analysis of
electromagnetic interference and communications security including
 
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<PAGE>   4
 
applications in satellite communications. In June 1997, the Company completed
the sale of the EMI business to EMI Holding Corp. (the "Borrower"), for $2.0
million in cash, $1.5 million in subordinated term notes, and $500,000 in
warrants. The subordinated term notes include a $1.0 million note with payments
of principal and interest to be made in seven (7) quarterly installments of
$50,000 each, beginning on June 30, 1997, and one final installment together
with accrued interest being due on June 30, 1999. Interest on the $1.0 million
note is at 3% above the highest interest rate being charged to the Borrower by
the Borrower's principal bank lender ("Bank Rate"). The remaining subordinated
term note of $500,000 accrues interest at 2% above the Bank Rate, accruing from
June 30, 1997 and payable in monthly installments beginning on July 1, 1999. The
principal shall be paid in one (1) installment on June 30, 2002. The warrants
are exercisable on June 30, 2002, wherein the Borrower issues to the Company
shares of preferred stock of the Borrower equal to 19.678% of the shares of the
Borrower outstanding immediately after the exercise of these warrants. In
accordance with the Securities and Exchange Commissions Staff Accounting
Bulletin No. 81, "Gain Recognition on the Sale of a Business or Operating Assets
to a Highly Leveraged Entity," a provision was charged to Loss from Disposal of
Discontinued Operations for the outstanding balance of the subordinated term
notes and warrants at July 31, 1997 of $1,950,000. The Company fully expects to
collect these notes and warrants, however the repayments will be recorded as
income when received due to the highly leveraged structure of the Borrower.
 
SUPPLIERS
 
     Material and components for the Company's products are purchased from
outside suppliers. While most components are available from several suppliers, a
few are provided from sole-source vendors. The Company believes that in most
cases alternative sources of supply could be obtained within a reasonable time
period; however, an interruption in the supply of such components could have a
temporary adverse effect on the Company's operations. In March 1997, the Company
entered into an agreement (the "Hibbing Agreement") with Hibbing Electronics
Corporation ("Hibbing") pursuant to which Hibbing manufactures and sells printed
circuit card products to the Company. The Hibbing Agreement expires August 31,
1998 at which time Hibbing shall have the option to purchase for nominal
consideration all of the equipment covered under the agreement and the Company
will assign all right, title, and interest in the covered leases and equipment
to Hibbing in exchange for Hibbing's agreement to pay and perform the Company's
obligations under those leases.
 
PATENTS, COPYRIGHTS AND LICENSES
 
     The Company owns, or is licensed or otherwise possesses legally enforceable
rights to use, several patents, patent applications, trademarks, trade names,
service marks, copyrights, schematics, technology, know-how, computer software
programs or applications, and tangible or intangible proprietary information or
material essential and necessary to the business of the Company. The Company may
desire in the future to obtain additional licenses related to its products and
believes, based on industry practice, that any necessary licenses could be
obtained. The costs of such licenses may vary significantly depending on the
nature of the technology involved.
 
     The United States trademarks, trade names and service marks owned by Access
Beyond include ACCESS BEYOND.
 
     The Company may license much of its technology including integrated access
software; CSU/DSU technology; frame relay assembler disassembler technology;
PC/TCP SNMP technology; terminal emulation software; remote access software;
router card technology and software; network management software; and basic
frame relay software for LAN interconnect products.
 
     On June 16, 1996, Penril and Bay entered into a Development and License
Agreement on behalf of Access Beyond whereby Bay licensed to Penril on behalf of
Access Beyond certain intellectual property, software, and technical know-how
related to certain 24-port Digital Modem Cards. The agreement contemplates that
Bay will develop a 24-port Digital Modem Card for Access Beyond, train Access
Beyond's personnel in the underlying technology, and provide technical
assistance where necessary to permit Access Beyond to market this digital
technology.
 
                                        3
<PAGE>   5
 
BACKLOG
 
     A significant portion of data communications revenues are based on customer
purchase orders with immediate shipment requirements. Backlog, which tends not
to be significant in data communications products, is a result of the occasional
customer order with future scheduled shipment requirements or misalignment of
demand and production of a particular product. Because data communications
revenues constitute such a significant portion of the revenues of the Company,
it is the opinion of the Company's management that the dollar amount of backlog
at any given time is not indicative of the actual level of revenues which will
ultimately be realized during future periods. Consequently, the Company's
management believes that the amount of backlog is not a material consideration
in understanding the Company's business operations.
 
COMPETITION
 
     The Company encounters substantial competition in the marketing of its
products and many of its competitors have greater financial, marketing and
technical resources. Important competitive factors in the markets for the
Company's products are established customer base, product performance and
features, service and support as well as price. The Company believes that it
competes favorably with respect to these factors. There can be no assurance that
the Company's products will compete successfully with competitive products that
may be offered in the future or that aggressive pricing will not negatively
impact the profitability of the Company.
 
RESEARCH AND DEVELOPMENT
 
     Under its own sponsorship, the Company is continuously engaged in the
development of new products as well as the development and enhancement of its
existing products. The Company expensed approximately $6.2 million (34% of
consolidated revenues) for product development and engineering during fiscal
1997 compared to $7.4 million (19% of consolidated revenues) in fiscal 1996 and
$7.4 million (14% of consolidated revenues) in fiscal 1995.
 
ENVIRONMENTAL MATTERS
 
     The Company's compliance with federal, state and local environmental laws
had no material effect upon the Company's capital expenditures, earnings or
competitive position.
 
SALES AND MARKETING
 
     The Company's distribution channel is composed of value-added resellers
(VARs), original equipment manufacturers (OEMs) and distributors in more than 40
countries. Sales to end-user customers account for less than 10% of the
Company's revenues. This multi-channel strategy allows the Company to meet
specific customer needs while giving coverage to the worldwide markets.
 
     Value Added Resellers.  VARs integrate the Company's products with products
of other vendors, into networking systems that are sold directly to end-users.
VARs also sell the Company's products as stand-alone units. Sales to VARs are
made at discounts based on purchase volumes and other incentive programs.
 
     Original Equipment Manufacturers.  The Company also customizes its product
for sale through OEMs. This customization may range from simple private labeling
of existing products to complete customization of software and/or hardware to
fit the product lines of the OEM.
 
     Distributors.  The Company also sells its products to distributors who
generally resell to VARs and other dealers. Distributors generally provide a
minimal level of systems integration. The Company offers sales and marketing
programs to assist distributors in promoting, selling and supporting the
Company's products.
 
     Many of the Company's VARs and distributors carry products which are
complementary to, or compete with, those of the Company, and may choose to give
higher priority to products of other suppliers or competitors of the Company.
 
                                        4
<PAGE>   6
 
CUSTOMER SUPPORT, SERVICE AND WARRANTY
 
     The Company services, repairs and provides technical support for its
products. A large portion of these support activities, provided through a 24
hour United States support center, are related to software and hardware
configuration. The Company sells products with end-user warranty periods of up
to sixty months. Following the expiration of the warranty period, if any, the
Company offers services on a time and materials basis, or under maintenance
contracts.
 
EMPLOYEES
 
     The Company had 120 full time employees as of July 31, 1997. The Company
believes that its future success will depend largely on its ability to retain
certain key personnel and to recruit and retain additional highly skilled
employees who are in great demand. The Company has an employment contract with
Ronald A. Howard, President and CEO, but does not have employment contracts with
its other employees. The Company has experienced no work stoppages and believes
that its employee relations are satisfactory.
 
INTERNATIONAL OPERATIONS
 
     The Company has a subsidiary (Access Beyond, Ltd) located in the United
Kingdom. Financial information about foreign and domestic operations and export
sales is more fully described in Note 10 of the Consolidated Financial
Statements.
 
ITEM 2.  PROPERTIES
 
     The Company's executive offices are located in Gaithersburg, Maryland in
facilities which had previously been leased to Penril. The lease between the
Company and Real Estate Income Partners III was assigned to the Company by
Penril as part of the spin-off, is for 54,874 square feet and expires on
September 30, 1999. The Company has an option to extend the term of the lease
for a period of 119 months and may exercise the option by giving written notice
to the landlord prior to the end of the initial term of the lease. Approximately
50% of the premises is subleased to Hibbing, which pays the Company an amount
equal to 50% of the rent and other charges payable by the Company.
 
     The Company leases a research and development facility in Carlstadt, New
Jersey. The lease is for approximately 44,403 square feet and expires in
September 2001. As more fully described in Note 5 to the Company's Consolidated
Financial Statements, the Company has sublet to other parties a substantial
portion of such premises.
 
     In addition to the facilities mentioned above, the Company and its
subsidiaries lease manufacturing, warehouse and office facilities in
Basingstoke, England. The lease is for approximately 6,800 square feet and
expires in December 2001.
 
     The Company believes its properties are adequate for its needs for the
foreseeable future.
 
ITEM 3.  LEGAL PROCEEDINGS
 
     The Company initiated a lawsuit in December 1994 against Network Systems
Corporation ("NSC") for breach of contract, fraudulent inducement and
defamation. The suit is seeking specific performance, compensatory damages of
$2.0 million and punitive damages of $5.0 million. The litigation arises out of
a contract in which the Company agreed to develop certain computer hardware and
software to NSC's specifications. NSC subsequently brought a counterclaim
alleging negligent misrepresentation, fraud and breach of contract by the
Company. NSC is seeking recision of the contract, restitution of monies paid by
NSC to the Company, compensatory damages of $5.0 million and punitive damages in
an unspecified amount. As of September 23, 1997, the Company was in settlement
discussions with NSC.
 
     In 1993 the Company had initiated a lawsuit against Standard Microsystems
Corp. ("SMC") for breach of contract including failure to transfer technology,
unfair competition and false representations. In September 1996, the Company and
SMC agreed to drop the charges of false representation and settle the
contractual
 
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<PAGE>   7
 
dispute. In October 1996, the Company received from SMC, in settlement of the
litigation, $3.5 million cash, net of legal payments.
 
     Digital Equipment Corporation ("DEC") has claimed, through a series of
written communications, that the Company has violated DEC patents related to DEC
LAT technology. In August 1997, the Company and DEC entered into a license
agreement including a specific release whereby the Company acquired a
non-exclusive license to develop, manufacture, and market specified products
which are compatible with Digital's LAT technology.
 
     The Company is involved in other routine litigation. Management believes
none of the litigation will have a material adverse effect on the Company's
financial position or results of operations.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     A Special Meeting of Shareholders of Penril was held on November 15, 1996,
at which time the shareholders elected to approve and adopt (i) the Plan and
Agreement of Merger dated as of June 16, 1996, as amended on August 5, 1996 (the
"Penril/Bay Merger"), among Bay Networks, Inc., and Penril and (ii) the
distribution to the Company of substantially all of Penril's assets not related
to Penril's modem business and Distribution by Penril of all of the outstanding
capital stock of Access Beyond, Inc. to the shareholders of Penril, as a
dividend. The vote was:
 
<TABLE>
<CAPTION>
                          ABSTAIN/
IN FAVOR      AGAINST     NOT VOTED
---------     -------     ---------
<S>           <C>         <C>
7,548,199      20,628       18,694
</TABLE>
 
     On March 6, 1997, a Special Meeting of Stockholders of Access Beyond was
held, at which time the stockholders voted to approve and adopt (i) the
Company's Amended and Restated 1996 Long Term Incentive Plan and (ii) the
Company's Amended and Restated 1996 Non-employee Directors' Stock Option Plan.
The vote was:
 
<TABLE>
<CAPTION>
                                                                                         ABSTAIN/
                                                               IN FAVOR      AGAINST     NOT VOTED
                                                               ---------     -------     ---------
<S>                                                            <C>           <C>         <C>
1996 Long Term Incentive Plan................................  7,987,110      80,055       33,064
1996 Non-employee Directors' Stock Option Plan...............  8,149,189      96,848       43,067
</TABLE>
 
ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
 
     On November 18, 1996, Penril's Common Stock stopped trading
over-the-counter on the NASDAQ National Market System under the symbol PNRL. The
following table sets forth the high and low sales prices for Penril Common Stock
as reported by NASDAQ for the fiscal quarters indicated prior to the last day of
trading.
 
<TABLE>
<CAPTION>
                                                               1997             1996
                                                           ------------     ------------
                          QUARTER ENDED                    HIGH     LOW     HIGH     LOW
        -------------------------------------------------  ----     ---     ----     ---
        <S>                                                <C>      <C>     <C>      <C>
        October 31.......................................  15 1/2   12 3/8   8 3/8    4 3/8
        January 31.......................................   17      13 7/8  11 1/4   5 1/4
        April 30.........................................   --       --      9 1/4    5 1/2
        July 31..........................................   --       --     14 1/8   8 3/8
</TABLE>
 
     On November 18, 1996, Access Beyond's Common Stock began trading
over-the-counter on the NASDAQ under the symbol ACCB. The following table sets
forth the high and low sales prices for Access Beyond Common Stock as reported
by NASDAQ for the fiscal quarters indicated.
 
<TABLE>
<CAPTION>
                                                                             1997
                                                                         ------------
                                 QUARTER ENDED                           HIGH     LOW
        ---------------------------------------------------------------  ----     ---
        <S>                                                              <C>      <C>
        January 31.....................................................  8 7/8      6
        April 30.......................................................  7 1/8      3
        July 31........................................................  6 1/8    3 1/4
</TABLE>
 
                                        6
<PAGE>   8
 
     The current quoted price of the stock is listed daily in the Wall Street
Journal in the NASDAQ National Market System section. The number of holders of
record of the Company's Common Stock as of October 3, 1997 was 803.
 
ITEM 6.  SELECTED FINANCIAL DATA
 
     Data from the Consolidated Statements of Operations included in the
following table pertain to the Company's continuing and discontinued operations
(in thousands except per share amounts). The results include the operations of
Penril through November 18, 1996 when the Company was spun off, and Datability,
Inc. ("Datability") from May 6, 1993, the date of acquisition. The Spin-off and
Penril/Bay Merger transaction is described more fully in Note 1 to the
accompanying Consolidated Financial Statements.
 
<TABLE>
<CAPTION>
                                                            FISCAL YEAR ENDED JULY 31,
                                                 -------------------------------------------------
                                                   1997       1996      1995      1994      1993
                                                 --------   --------   -------   -------   -------
                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                              <C>        <C>        <C>       <C>       <C>
HISTORICAL STATEMENT OF OPERATIONS DATA:
Net Revenues...................................  $ 18,000   $ 39,435   $52,611   $61,838   $44,108
Net Income (Loss)
  Continuing operations........................   (13,890)   (20,668)   (4,614)    2,345     1,027
  Discontinued operations......................        --        404    (1,661)     (828)     (896)
  Loss on disposal of discontinued                 (3,735)      (640)   (1,400)       --        --
     operations................................
Earnings (loss) per share
  Continuing operations........................     (1.16)     (2.14)    (0.61)     0.30      0.15
  Discontinued operations......................        --       0.04     (0.22)    (0.11)    (0.13)
  Loss on disposal of discontinued                  (0.31)     (0.07)    (0.19)       --        --
     operations................................
Cash dividends per share.......................        --         --        --      0.02        --
HISTORICAL BALANCE SHEET DATA:
Total assets...................................  $ 13,906   $ 33,780   $44,388   $51,061   $49,178
Long-term debt.................................       743        905     5,681     8,890    10,217
Stockholders' equity...........................     7,311     18,215    21,723    28,580    27,501
</TABLE>
 
  Quarterly Financial Data
 
     A summary of the Company's consolidated results of continuing operations
for each of the fiscal quarters for the years ended July 31, 1997 and 1996 is
shown in the table below. This data includes the revenue, gross profit, and net
loss of Penril for the period August 1, 1995 through November 18, 1996. The net
loss from continuing operations for the fourth quarter of fiscal 1996 includes a
charge of $9.7 million for restructuring charges, which are more fully described
in Note 2 of the Consolidated Financial Statements and $500,000 for costs
incurred related to the Penril/Bay Merger Agreement with Bay. In the first
quarter of fiscal 1997 the Company recorded a one time gain on the settlement of
its lawsuit with SMC of $3.5 million. In the first and second quarters of fiscal
1997, the Company paid one time merger related expenses totaling $4.0 million.
 
<TABLE>
<CAPTION>
                                                   OCTOBER 31,     JANUARY 31,     APRIL 30,     JULY 31,
           FISCAL 1997 QUARTERS ENDED:                1996            1997           1997          1997
-------------------------------------------------  -----------     -----------     ---------     --------
<S>                                                <C>             <C>             <C>           <C>
Revenues.........................................    $ 6,915         $ 4,593        $  3,673     $  2,819
Gross profit.....................................      2,323           1,279           1,768          631
Net loss.........................................     (1,040)         (6,232)         (1,997)      (4,621)
Net loss per share...............................       (.12)           (.52)           (.17)        (.35)
</TABLE>
 
                                        7
<PAGE>   9
 
<TABLE>
<CAPTION>
                                                   OCTOBER 31,     JANUARY 31,     APRIL 30,     JULY 31,
           FISCAL 1996 QUARTERS ENDED:                1995            1996           1996          1996
-------------------------------------------------  -----------     -----------     ---------     --------
<S>                                                <C>             <C>             <C>           <C>
Revenues.........................................    $ 9,656         $ 7,691        $  8,973     $ 13,115
Gross profit.....................................      4,757           2,691           3,304        6,274
Net loss.........................................     (1,597)         (3,999)         (3,168)     (11,904)
Net loss per share...............................      (0.19)          (0.43)          (0.31)       (1.11)
</TABLE>
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 
LIQUIDITY AND CAPITAL RESOURCES
 
     In the fourth quarter of fiscal 1996, Penril took actions to strategically
restructure the business to focus on the remote access connectivity products, to
reduce costs and improve competitiveness for the long-term. This restructuring
plan included the elimination of the VCP and BRX product lines and the
introduction of the new remote access product line. As described more fully in
Note 2 to the Company's Consolidated Financial Statements, Penril recorded a
restructuring charge in the fourth quarter of fiscal 1996 of $9.7 million. As of
July 31, 1997, the Company had completed all phases of the restructuring plan
and does not anticipate any additional cost associated with this plan.
 
     In the first quarter of fiscal 1997, prior to the spin-off of the Company,
Penril received approximately $6.1 million from the exercise of employee and
director stock options. The cash generated from these exercises was used for the
expenditures related to the merger and spin-off of the Company. These
expenditures included legal and accounting fees of approximately $700,000,
investment banker fees of $1.6 million, and change of control payments to
certain officers of Penril of $1.8 million. Also in the first quarter of fiscal
1997, prior to the spin-off of the Company, Penril received the following; $3.5
million in cash from Standard Micro Systems Corp. for settlement of the law suit
with Penril, and $1.6 million in cash and $2.8 million in notes from the sale of
its TPI subsidiary. As of July 31, 1997, a balance of $980,000 on the TPI note
was past due. The Company reserved the unpaid balance of this note with a charge
in the fourth quarter of fiscal 1997 of $980,000 to loss on disposal of
discontinued operations.
 
     On November 18, 1996, as a result of the merger between Penril and Bay,
certain assets and liabilities related to the modem business were transferred to
Bay. The assets included $2.5 million in accounts receivables, $2.7 million in
inventory, $1.7 million in deferred tax assets, and $761,000 in other assets.
The liabilities included a $4 million line of credit, $1.5 million in accounts
payables, and $887,000 in other liabilities. All cash and rights to future cash
from the sale of TPI were spun-off to the Company pursuant to the merger
agreement with Bay. In addition, the Company received $1.5 million in cash from
Bay pursuant to the Transitional Services Agreement between Penril and the
Company.
 
     In March 1997, the Company entered into an agreement with Hibbing in which
Hibbing will manufacture and sell printed circuit card products to the Company.
Under the agreement, Hibbing has the right to use the lower level of the
Company's Gaithersburg, Maryland, facility as well as certain equipment needed
for the manufacturing process. Hibbing will pay the Company 50% of the monthly
rent and utilities associated with that facility, and will pay the current
installment amounts on the equipment that the Company leases. This agreement
expires August 31, 1998 at which time Hibbing shall have the option to purchase
all of the equipment covered under the agreement and the Company will assign all
right, title and interest in the covered leases and equipment to Hibbing in
exchange for Hibbing's agreement to pay and perform the Company's obligations
under those leases.
 
     In May 1997, the Company and Paradyne Corporation, a Delaware corporation
("Paradyne"), entered into the 2290 Remote Access Gateway ("Hawk") Technology
Transfer Agreement (the "Technology Agreement") pursuant to which Paradyne (i)
transferred to the Company technology relating to certain open remote dial
access cards (in the form of a comprehensive set of specifications, technical
information, hardware and software)(the "Hawk Technology"), (ii) sold to the
Company certain inventory, tools and equipment used in the application of the
Hawk Technology to develop and manufacture products, ("Hawk Products") which
include the Hawk Technology, (iii) licensed to the Company certain intellectual
property in connection with the Hawk Technology, and (iv) agreed to provide the
Company with technical, engineering, manufactur-
 
                                        8
<PAGE>   10
 
ing and marketing support, for an aggregate purchase price of 503,704 shares of
the Common Stock (the "Paradyne Shares"), and $425,000 in cash. The Company and
Paradyne also entered into a Stock Purchase Agreement, dated as of May 2, 1997
(the "Purchase Agreement"), pursuant to which the Company sold and issued the
Paradyne Shares to Paradyne. Pursuant to the Purchase Agreement, the Company is
required to register the Paradyne Shares for resale by Paradyne under the
Securities Act.
 
     On June 30, 1997, the Company sold the assets of its EMI subsidiary to a
company principally owned by the former president of EMI and received $2.0
million in cash, $1.5 million in subordinated term notes, and $500,000 in
warrants (repayment terms of the notes and warrants are more fully described in
Note 3 to the Company's Consolidated Financial Statements). In accordance with
the Securities and Exchange Commissions' Staff Accounting Bulletin No. 81, "Gain
Recognition on the Sale of a Business or Operating Assets to a Highly Leveraged
Entity", a provision was charged to Loss from Disposal of Discontinued
Operations for the outstanding balance of the subordinated term notes and
warrants at July 31, 1997 of 2.0 million. The Company fully expects to collect
these notes and warrants, however the repayments will be recorded as income when
received due to the highly leveraged structure of the buyer. The purchase price
was determined by arms-length negotiation.
 
     The cash received from the sources described above was used to fund the
Company's loss from continuing operations for fiscal 1997 of $13.9 million.
Contributing to the Company's cash flow in fiscal 1997 was the reduction of
accounts receivable of $1.4 million (after adjusting for the transfer of
accounts receivable to Bay). This reduction was the result of lower sales
volumes in fiscal 1997 compared to fiscal 1996.
 
     The Company's inventories and accounts payables declined by $600,000 and
$1.1 million respectively (after adjusting for the transfer of inventory and
accounts payable to Bay), as a result of the lower level of business and the
outsourcing of its board level manufacturing to Hibbing Electronics, Inc.
 
     In August 1997, the Company completed a reduction in force of 19 employees
which, in combination with reductions in other expenses, is expected to result
in an annual savings of approximately $2.0 million.
 
     In September 1997, the Company obtained a commitment for a secured working
capital facility of $3.0 million with borrowings based on qualified accounts
receivable and inventory.
 
     The ability of the Company to generate adequate cash for operational and
capital needs is dependent on the success of the Company to increase sales of
its new Access Beyond products including the AB2400/4400 and the "Hawk," coupled
with the collection of cash from notes received in the sale of its TPI and EMI
subsidiaries. In addition it may seek to raise cash from other sources including
sales of securities or other assets of the Company.
 
RESULTS OF OPERATIONS
 
     The Company was incorporated on July 23, 1996, and filed a Form S-1
Registration Statement with the Securities and Exchange Commission which became
effective October 17, 1996. On November 18, 1996 Penril distributed a dividend
to its stockholders of record of one share of common stock of Access Beyond for
each share of Penril common stock held. Penril transferred all of the assets and
liabilities of Penril's remote access business to Access Beyond before becoming
a wholly owned subsidiary of Bay on November 18, 1996. As the successor company
to Penril, the Company retains the historical financial information of Penril
through November 18, 1996, when Penril was merged into Bay. For accounting
purposes, the disposition of the modem business, as a result of the merger
agreement with Bay, has been accounted for as a reduction of paid in capital.
For purposes of this discussion, revenue and expenses that could be specifically
identified with the modem business ("Modem Products") are shown separately from
the Company's Access Beyond and LAN/Host Access Products ("the Company's
Products"). Certain expenses that could not be specifically identified with the
modem business were included with the Company's business, consequently the
expenses reported for the Company's business in fiscal 1996 and 1995 are in
excess of those that would have been incurred had the Company been a stand alone
entity at that time. The results of operations from the discontinued operations
of the EMI and TPI subsidiaries are not included in this discussion. Dollar
amounts are reported in thousands.
 
                                        9
<PAGE>   11
 
FISCAL 1997 COMPARED TO FISCAL 1996
 
<TABLE>
<CAPTION>
                                                            JULY        JULY
                                                             31,         31,
                                                            1997        1996        CHANGE
                                                           -------     -------     --------
    <S>                                                    <C>         <C>         <C>
    Revenues:
      The Company's Products.............................  $13,772     $19,916     $ (6,144)
      Modem Products.....................................    4,228      19,519      (15,291)
                                                           -------     -------     --------
                                                           $18,000     $39,435     $(21,435)
                                                           =======     =======     ========
</TABLE>
 
     Revenues from the Company's Products declined in fiscal 1997 as a result of
the delay in launching the new Access Beyond products including the AB2400/4400
models. These models were released in the fourth quarter of fiscal 1997. In
addition, there was a continued decline in the market demand for the Company's
CSX terminal servers and VCX multiplexers which represent older technology. The
Company believes that the new Access Beyond products are competitively priced
and will generate revenues over the next fiscal year to offset the decline in
revenues from the older LAN and Host Access products. Revenues from Modem
Products declined because of the sale of the modem product business to Bay in
November 1996.
 
     Exports represented 21% of the Company's total revenues in fiscal 1997 and
32% of the Company's revenues in fiscal 1996. Revenues from the Company's
foreign subsidiary, which is primarily a sales and marketing operation in
England, represented 20% of the Company's total revenues in fiscal 1997 and 19%
of the Company's total revenues in fiscal 1996. The Company does not believe it
has any significant exposure to exchange rate risk.
 
     In the three years ended July 31, 1997, 1996, and 1995, foreign operations
have generated net losses after eliminations of $164,000, $401,000, and $49,000
respectively, while domestic operations generated net losses of $13.7 million,
$20.3 million and $5.1 million respectively. The Company's foreign operation
consists of a sales and distribution facility. The net losses from the Company's
foreign operation is due to greater price competitiveness, which has caused a
decline in gross profit margins. The net losses from the Company's domestic
operations in fiscal 1996 included a restructuring charge of $9.7 million and
merger related expenses of $500,000. The net losses from the Company's domestic
operations in fiscal 1997 and 1996 were due to lower sales volumes and higher
absorption of manufacturing variances and other fixed charges related to the
Company's domestic manufacturing operation. The Company's domestic manufacturing
operation performs all manufacturing for the Company and consequently must
absorb all of the unfavorable manufacturing variances resulting from the lower
sales volumes.
 
<TABLE>
<CAPTION>
                                                               JULY 31,     JULY 31,
                                                                 1997         1996       CHANGE
                                                               --------     --------     -------
    <S>                                                        <C>          <C>          <C>
    Gross Profit Margin:
      The Company's Products.................................     36%          37%          (1%)
      Modem Products.........................................     23%          49%         (26%)
</TABLE>
 
     Gross profit margins for the Company's Products declined slightly in fiscal
1997 because of manufacturing inefficiencies due to lower sales volumes and
because of delays in launching the new Access Beyond product line. Gross profit
margins for Modem Products declined sharply as a result of the sale of the modem
business to Bay and the efforts prior to the closing to reduce inventory of
Modem Products with discounted pricing.
 
<TABLE>
<CAPTION>
                                                             JULY        JULY
                                                              31,         31,
                                                             1997        1996       CHANGE
                                                            -------     -------     -------
    <S>                                                     <C>         <C>         <C>
    Selling, general and administrative expenses:
      The Company's Products..............................  $12,253     $16,417     $(4,164)
      Modem Products......................................      634       2,694      (2,060)
                                                            -------     -------     -------
                                                            $12,887     $19,111     $(6,224)
                                                            =======     =======     =======
</TABLE>
 
                                       10
<PAGE>   12
 
     Selling, general and administrative expenses for the Company's Products
declined as a result of the restructuring plan implemented in fiscal 1997.
Expenses related to the Modem Products declined as a result of the sale of the
modem business to Bay.
 
<TABLE>
<CAPTION>
                                                               JULY       JULY
                                                               31,        31,
                                                               1997       1996      CHANGE
                                                              ------     ------     -------
    <S>                                                       <C>        <C>        <C>
    Product development expenses:
      The Company's Products................................  $5,644     $5,624     $    20
      Modem Products........................................     520      1,765      (1,245)
                                                              ------     ------     -------
                                                              $6,164     $7,389     $(1,225)
                                                              ======     ======     =======
</TABLE>
 
     Product development expenses increased slightly in fiscal 1997 due to the
continued development of the new Access Beyond product line including the
AB2400/4400 and the "Hawk" products which were launched in the fourth quarter of
fiscal 1997. Modem Product development expenses declined due to the sale of the
modem business to Bay in November 1996.
 
<TABLE>
<CAPTION>
                                                               JULY       JULY
                                                               31,        31,
                                                               1997       1996      CHANGE
                                                              ------     ------     -------
    <S>                                                       <C>        <C>        <C>
    Other Operating expenses:
      Merger related expenses...............................  $4,077     $   --     $ 4,077
      Write-down of assets..................................     864         --         864
      Provision for restructuring...........................     238      9,718      (9,480)
    Other Income(expenses):
      Interest income.......................................     380         --         380
      Interest expense......................................     200        698        (498)
    Other: Settlement of Lawsuit............................   3,547         --       3,547
</TABLE>
 
     Pursuant to the merger of Penril and Bay in the first quarter of fiscal
1997, Penril incurred merger related expenses of $4.2 million. In the fourth
quarter of fiscal 1997, the Company determined that as a result of the
introduction of its new AB2400/4400 products, an additional reserve for
inventory obsolescence of $864,000 needed to be recorded. Also in the fourth
quarter, the Company recorded a charge to restructuring of $238,000 for
additional inventory that was disposed of as part of the original restructuring
plan. Interest income was generated from the short-term investments that the
Company made in fiscal 1997 with its excess cash. Interest expense resulted from
the Company's capital equipment leases. The decline in interest expense resulted
from the elimination of the line of credit as part of the merger and spin-off
transaction with Bay in fiscal 1997.
 
     In 1993 the Company had initiated a lawsuit against Standard Microsystems
Corp. ("SMC") for breach of contract including failure to transfer technology,
unfair competition and false representations. In September 1996, the Company and
SMC agreed to drop the charges of false representation and settle the
contractual dispute. In October 1996, the Company received from SMC, in
settlement of the litigation, $3.5 million cash, net of legal payments.
 
FISCAL 1996 COMPARED TO FISCAL 1995
 
<TABLE>
<CAPTION>
                                                           JULY 31,     JULY 31,
                                                             1996         1995        CHANGE
                                                           --------     --------     --------
    <S>                                                    <C>          <C>          <C>
    Revenues:
      The Company's Products.............................  $ 19,916     $ 33,637     $(13,721)
      Modem Products.....................................    19,519       18,974          545
                                                            -------      -------     --------
                                                           $ 39,435     $ 52,611     $(13,176)
                                                            =======      =======     ========
</TABLE>
 
     The decrease in revenues for the Company's Products was primarily
attributable to the continued decline in market demand for terminal servers and
multiplexers which resulted in lower volumes and more competitive pricing.
 
                                       11
<PAGE>   13
 
     In the fourth quarter of fiscal 1996, Penril and Bay entered into a License
Agreement whereby Bay acquired a license to certain intellectual property rights
related to Penril's modem technology, and Penril was paid $4.5 million. Revenues
for Modem Products without this license agreement would have been $15.0 million
in fiscal 1996 compared with $19.0 million in fiscal 1995. The decrease in
revenue from the sale of Modem Products was due to slower than expected sales of
Penril's V.34 modems, and a decline in sales of older Modem Products.
 
<TABLE>
<CAPTION>
                                                                JULY 31,     JULY 31,
                                                                  1996         1995       CHANGE
                                                                --------     --------     ------
    <S>                                                         <C>          <C>          <C>
    Gross Profit Margin:
      The Company's Products..................................     37%          46%         (9)%
      Modem Products..........................................     49%          41%          8%
</TABLE>
 
     The decrease in the gross profit margins for the Company's Products was due
to reductions in product pricing in order to remain competitive in the market
place, and increases in manufacturing inefficiencies due to lower sales volumes.
As noted above, Penril entered into a License Agreement with Bay in the fourth
quarter of fiscal 1996 for $4.5 million. Gross profit margins without this
License Agreement would have been 34% in fiscal 1996 compared to 41% in fiscal
1995. The decrease in gross profit margins for modem products was due to higher
costs of materials in the V.34 modem product line as well as pricing competition
and lower manufacturing efficiencies related to the lower sales volume.
 
<TABLE>
<CAPTION>
                                                              JULY 31,     JULY 31,
                                                                1996         1995       CHANGE
                                                              --------     --------     ------
    <S>                                                       <C>          <C>          <C>
    Selling, general and administrative expenses:
      The Company's Products................................  $ 16,417     $ 16,479      $(62)
      Modem Products........................................     2,694        2,286       408
                                                               -------      -------      ----
                                                              $ 19,111     $ 18,765      $346
                                                               =======      =======      ====
</TABLE>
 
     Selling, general and administrative expenses decreased for the Company's
Products primarily from lower commissions paid due to lower sales volume. There
was also a reduction in personnel costs as a result of eliminating several
administrative positions in Penril's Gaithersburg, Maryland facilities during
fiscal 1995. This reduction was partially offset by a charge of $500,000 during
the fourth quarter of fiscal 1996, for costs incurred related to the Penril/Bay
Merger. All expenses which could not be specifically identified with the modem
products were included with the Company's Products. Consequently the expenses
for the Company's Products are in excess of those that would have been incurred
had the Company been a stand alone company.
 
<TABLE>
<CAPTION>
                                                                JULY 31,     JULY 31,
                                                                  1996         1995       CHANGE
                                                                --------     --------     ------
    <S>                                                         <C>          <C>          <C>
    Product development expenses:
      The Company's Products..................................   $ 5,624      $ 5,520     $ 104
      Modem Products..........................................     1,765        1,918      (153) 
                                                                  ------       ------     -----
                                                                 $ 7,389      $ 7,438     $ (49) 
                                                                  ======       ======     =====
</TABLE>
 
     Product development expenses for the Company's Products increased because
of an increase in personnel costs related to development of the new Access
Beyond product line. Modem Product development expenses decreased because of
reductions in personnel costs as a result of Penril's cost reduction efforts in
fiscal 1995. All expenses which could not be specifically identified with the
Modem Products were included with the Company's Products. Consequently the
expenses for the Company's Products are in excess of those that would have been
incurred had the Company been a stand alone company.
 
<TABLE>
<CAPTION>
                                                                JULY 31,     JULY 31,
                                                                  1996         1995       CHANGE
                                                                --------     --------     ------
    <S>                                                         <C>          <C>          <C>
    Interest expense..........................................    $698        $ 1,228     $(530) 
</TABLE>
 
                                       12
<PAGE>   14
 
     During fiscal 1996, Penril sold Penril Stock in private placements which
generated approximately $14.7 million in cash. A portion of the proceeds was
used to repay all of Penril's term debt during fiscal 1996, which resulted in
decreased interest expense.
 
     Portions of this report contain certain "forward looking" statements which
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward looking statements.
Factors that might cause such a difference include, but are not limited to,
market acceptance of the Company's products and services, other factors
discussed in the report as well as factors discussed in other filings made with
the Securities and Exchange Commission. 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.
 
                                       13
<PAGE>   15
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                          INDEPENDENT AUDITORS' REPORT
 
Board of Directors and Shareholders
Access Beyond, Inc.
Gaithersburg, Maryland
 
     We have audited the accompanying consolidated balance sheets of Access
Beyond, Inc. and subsidiaries (the successor company to Penril DataComm
Networks, Inc.) as of July 31, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended July 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Access Beyond, Inc. and
subsidiaries as of July 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended July 31,
1997 in conformity with generally accepted accounting principles.
 
                                          Deloitte & Touche LLP
Washington, D.C.
August 29, 1997
  (September 15, 1997 as to Note 11)
 
                                       14
<PAGE>   16
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                     YEAR ENDED JULY 31,
                                                              ---------------------------------
                                                                1997         1996        1995
                                                              --------     --------     -------
<S>                                                           <C>          <C>          <C>
NET REVENUES FROM CONTINUING OPERATIONS.....................  $ 18,000     $ 39,435     $52,611
 
COSTS AND EXPENSES
Cost of revenues............................................    11,999       22,409      29,394
Selling, general and administrative.........................    12,887       18,611      18,765
Product development and engineering.........................     6,164        7,389       7,438
Merger related expenses.....................................     4,077          500          --
Write-down of assets........................................       864           --          --
Provision for restructuring costs...........................       238        9,718          --
Amortization of cost over net assets acquired...............        --          734         834
                                                              --------     --------     -------
                                                                36,229       59,361      56,431
 
OPERATING LOSS FROM CONTINUING OPERATIONS...................   (18,229)     (19,926)     (3,820)
 
OTHER INCOME (EXPENSE)
Interest income.............................................       380           --          --
Interest expense............................................      (200)        (698)     (1,228)
Other: settlement of lawsuit................................     3,547           --          --
Other income (expenses), net................................       612          (44)       (144)
                                                              --------     --------     -------
                                                                 4,339         (742)     (1,372)
 
LOSS FROM CONTINUING OPERATIONS
Before Income Taxes.........................................   (13,890)     (20,668)     (5,192)
  Benefit For Income Taxes..................................        --           --         578
                                                              --------     --------     -------
LOSS FROM CONTINUING OPERATIONS.............................   (13,890)     (20,668)     (4,614)
 
INCOME (LOSS) FROM DISCONTINUED OPERATIONS,
  net of income taxes.......................................        --          404      (1,661)
LOSS ON DISPOSAL OF DISCONTINUED OPERATIONS,
  net of income taxes.......................................    (3,735)        (640)     (1,400)
                                                              --------     --------     -------
NET LOSS....................................................  $(17,625)    $(20,904)    $(7,675)
                                                              ========     ========     =======
 
NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
  Continuing operations.....................................  $  (1.16)    $  (2.14)    $ (0.61)
  Discontinued operations...................................        --         0.04       (0.22)
  Loss on disposal of discontinued operations...............     (0.31)       (0.07)      (0.19)
                                                              --------     --------     -------
                                                              $  (1.47)    $  (2.17)    $ (1.02)
                                                              ========     ========     =======
Shares used in per share calculation........................    11,956        9,650       7,559
                                                              ========     ========     =======
</TABLE>
 
THE CONSOLIDATED FINANCIAL STATEMENTS OF ACCESS BEYOND, INC. INCLUDE THE
FINANCIAL INFORMATION OF PENRIL DATACOMM NETWORKS, INC. FOR THE PERIODS PRIOR TO
NOVEMBER 18, 1996 WHEN ACCESS BEYOND, INC. WAS SPUN-OFF FROM PENRIL DATACOMM
NETWORKS, INC. SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                       15
<PAGE>   17
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                               JULY 31,
                                                                         ---------------------
                                                                           1997         1996
                                                                         --------     --------
<S>                                                                      <C>          <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents..............................................  $    578     $  4,237
Accounts receivable, less allowance for doubtful accounts of $215 in
  1997 and $554 in 1996................................................     3,050        7,044
Inventories............................................................     5,678        9,684
Deferred income taxes..................................................        --        1,700
Net assets of discontinued operations..................................        --        7,337
Other current assets...................................................       167          249
                                                                         --------     --------
TOTAL CURRENT ASSETS...................................................     9,473       30,251
Property and equipment, net............................................     3,484        2,457
Other assets...........................................................       949        1,072
                                                                         --------     --------
TOTAL ASSETS...........................................................  $ 13,906     $ 33,780
                                                                         ========     ========
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings..................................................  $     --     $  4,000
Current portion of capital lease obligations...........................       287          272
Accounts payable.......................................................     3,458        6,076
Accrued compensation and commissions...................................       630        1,347
Other accrued expenses.................................................     1,467        1,758
                                                                         --------     --------
TOTAL CURRENT LIABILITIES..............................................     5,842       13,453
Long-Term portion of capital lease obligations.........................       456          633
Other Noncurrent Liabilities...........................................       297        1,479
                                                                         --------     --------
TOTAL LIABILITIES......................................................     6,595       15,565
                                                                         --------     --------
Commitments and Contingencies (See Note 7)                                     --           --
SHAREHOLDERS' EQUITY
Serial preferred stock, $.01 par value; authorized, 100,000 shares;
  issued, none.........................................................        --           --
Common stock, $.01 par value; authorized, 30,000,000 shares; issued and
  outstanding, 12,495,291 shares in 1997 and 10,849,647 shares in
  1996.................................................................       125          109
Additional paid-in capital.............................................    46,431       39,837
Accumulated deficit....................................................   (39,206)     (21,581)
Accumulated foreign currency translation adjustment....................       (39)        (150)
                                                                         --------     --------
TOTAL SHAREHOLDERS' EQUITY.............................................     7,311       18,215
                                                                         --------     --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............................  $ 13,906     $ 33,780
                                                                         ========     ========
</TABLE>
 
THE CONSOLIDATED FINANCIAL STATEMENTS OF ACCESS BEYOND, INC. INCLUDE THE
FINANCIAL INFORMATION OF PENRIL DATACOMM NETWORKS, INC. FOR THE PERIODS PRIOR TO
NOVEMBER 18, 1996 WHEN ACCESS BEYOND, INC. WAS SPUN-OFF FROM PENRIL DATACOMM
NETWORKS, INC. SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                       16
<PAGE>   18
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                       YEAR ENDED JULY 31,
                                                                  -----------------------------
                                                                    1997       1996      1995
                                                                  --------   --------   -------
<S>                                                               <C>        <C>        <C>
CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES
  loss from operations..........................................  $(13,890)  $(20,668)  $(4,614)
  Adjustments to reconcile net loss to net cash provided by
     operating activities:
     Depreciation and amortization..............................     1,269      3,452     4,418
     Benefit from deferred taxes................................        --         --      (578)
     Provision for restructuring costs..........................       238      9,718        --
     Other......................................................        20        (93)       25
  (Increase) decrease in assets:
     Accounts receivable........................................     1,406      6,477     2,508
     Inventories................................................       559       (472)    1,122
     Other current assets.......................................        19        529      (287)
  Increase (decrease) in liabilities:
     Accounts payable...........................................    (1,093)    (2,080)    1,792
     Other liabilities..........................................      (793)      (731)     (291)
                                                                  --------   --------   -------
Net cash provided by (used in) continuing operating
  activities....................................................   (12,265)    (3,868)    4,095
CASH FLOWS FROM DISCONTINUED OPERATIONS
  Proceeds from the sale of discontinued operations.............     5,411         --        --
  Loss from discontinued operations.............................    (3,735)      (236)   (3,061)
  Non-cash charges and changes in working capital...............    (1,809)    (2,832)      285
  Provision for loss on disposal of discontinued operations.....     3,735        640     1,400
                                                                  --------   --------   -------
Net cash provided by (used in) discontinued operations..........     3,602     (2,428)   (1,376)
Net cash used in provided by (used in) operations...............    (8,663)    (6,296)    2,719
CASH FLOWS FROM INVESTING ACTIVITIES
  Expenditures for purchased technology.........................      (352)      (800)   (1,049)
  Expenditures for property, equipment and other................      (714)      (747)     (417)
                                                                  --------   --------   -------
Net cash used in investing activities...........................    (1,066)    (1,547)   (1,466)
CASH FLOWS FROM FINANCING ACTIVITIES
  Net borrowings under line of credit...........................        --     (1,095)    1,870
  Payments on long-term debt....................................      (282)    (5,210)   (3,300)
  Issuance of common stock......................................     6,241     17,486        74
  Other.........................................................       111        (93)       94
                                                                  --------   --------   -------
Net cash provided by (used in) financing activities.............     6,070     11,088    (1,262)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR..........     4,237        992     1,001
                                                                  --------   --------   -------
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR................  $    578   $  4,237   $   992
                                                                  ========   ========   =======
SUPPLEMENTAL INFORMATION
  Cash payments for income taxes................................  $     --   $     20   $   113
                                                                  ========   ========   =======
  Cash payments for interest....................................  $    200   $    783   $ 1,103
                                                                  ========   ========   =======
</TABLE>
 
THE CONSOLIDATED FINANCIAL STATEMENTS OF ACCESS BEYOND, INC. INCLUDE THE
FINANCIAL INFORMATION OF PENRIL DATACOMM NETWORKS, INC. FOR THE PERIODS PRIOR TO
NOVEMBER 18, 1996 WHEN ACCESS BEYOND, INC. WAS SPUN-OFF FROM PENRIL DATACOMM
NETWORKS, INC. SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                       17
<PAGE>   19
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED JULY 31, 1997, 1996 AND 1995
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                  COMMON STOCK        ADDITIONAL                    RETAINED
                              --------------------     PAID-IN        UNEARNED      EARNINGS     CURRENCY
                                SHARES      AMOUNT     CAPITAL      COMPENSATION    (DEFICIT)   ADJUSTMENT
                              ----------    ------    ----------    ------------    --------    ----------
<S>                           <C>           <C>       <C>           <C>             <C>         <C>
BALANCE AUGUST 1, 1994......   7,442,368     $ 74      $ 21,720         $(16)       $  6,998      $ (196)
Net loss....................                                                          (7,675)
Issuance of common stock-
  Upon exercise of stock
     options................      33,067        1            73
  Upon exercise of
     warrants...............      80,000        1           194
For acquisition of patent
  rights....................      50,000        1           118
Shares retired in connection
  with options, warrants,
  and awards................     (62,620)      (1)         (194)          16
Deferred tax benefit from
  exercise of options.......          --                    473
Foreign currency translation
  adjustment................          --                                                             136
                              ----------     ----       -------         ----        --------       -----
BALANCE JULY 31, 1995.......   7,542,815       76        22,384           --            (677)        (60)
Net loss....................                                                         (20,904)
Issuance of common stock-
  Upon sale in private
     placements.............   2,607,267       26        14,718
  Upon exercise of stock
     options................     687,284        7         2,735
  Upon exercise of
     warrants...............      25,000       --            --
Shares retired in connection
  with options, warrants and
  awards....................     (12,719)      --            --
Foreign currency translation
  adjustment................          --                                                             (90)
                              ----------     ----       -------         ----        --------       -----
BALANCE JULY 31, 1996.......  10,849,647      109        39,837           --         (21,581)       (150)
Net loss....................          --                                             (17,625)
Issuance of common stock-
  Upon exercise of stock
     options................   1,124,951       11         6,124
  Upon sale of stock........      16,989       --           115
For purchase of technology
  from Paradyne.............     503,704        5         1,695
For the effect of the merger
  of Penril and Bay
  Networks, and the spin-off
  of Access Beyond..........          --       --        (1,340)
Foreign currency translation
  adjustment................                                                                         111
                              ----------     ----       -------         ----        --------       -----
BALANCE JULY 31, 1997.......  12,495,291     $125      $ 46,431         $ --        $(39,206)     $  (39)
                              ==========     ====       =======         ====        ========       =====
</TABLE>
 
THE CONSOLIDATED FINANCIAL STATEMENTS OF ACCESS BEYOND, INC. INCLUDE THE
FINANCIAL INFORMATION OF PENRIL DATACOMM NETWORKS, INC. FOR THE PERIODS PRIOR TO
NOVEMBER 18, 1996 WHEN ACCESS BEYOND, INC. WAS SPUN-OFF FROM PENRIL DATACOMM
NETWORKS, INC. SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                       18
<PAGE>   20
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
     Effects of the Spin-off and Merger Transactions:  Access Beyond, Inc.
("Access Beyond" or "the Company") was incorporated on July 23, 1996, and filed
a Form S-1 Registration Statement with the Securities and Exchange Commission
which became effective October 17, 1996. On November 18, 1996 Penril DataComm
Networks, Inc. ("Penril") distributed a dividend to its stockholders of record,
one share of common stock of Access Beyond for each share of Penril common stock
held. Penril transferred all of the assets and liabilities of Penril's remote
access business to Access Beyond before becoming a wholly owned subsidiary of
Bay Networks, Inc.("Bay") on November 18, 1996. As the successor company to
Penril, Access Beyond retains the historical financial information of Penril
through November 18, 1996, when Penril was merged into Bay. For accounting
purposes, the disposition of the modem business, as a result of the merger
agreement with Bay, has been accounted for as a reduction of paid in capital.
 
     On November 18, 1996 Penril transferred all of its remote access business
assets and liabilities to Access Beyond as part of its spin-off of Access
Beyond. Assets and liabilities related to the modem business remained with
Penril and Penril became a wholly-owned subsidiary of Bay as part of the Merger
Agreement with Bay. Revenues from the modems prior to the sale of the modem
business to Bay were $4.2 million in fiscal 1997. Under the terms of the Merger
Agreement with Bay, assets and liabilities related to the modem business that
were acquired by Bay included the following at the date of the closing.
 
<TABLE>
<CAPTION>
                                                                        NOVEMBER 18,
                                                                            1996
                                                                  -------------------------
                                                                  (IN THOUSANDS OF DOLLARS)
        <S>                                                       <C>
        Assets:
          Accounts receivable, net..............................           $ 2,542
          Inventory, net........................................             2,740
          Deferred tax asset....................................             1,700
          Other assets..........................................               761
                                                                            ------
                  Total Assets..................................             7,743
                                                                            ------
        Liabilities:
          Line of credit........................................           $ 4,000
          Accounts payable......................................             1,525
          Other liabilities.....................................               887
                                                                            ------
                  Total Liabilities.............................             6,412
                                                                            ------
                  Net assets related to the modem business......           $ 1,331
                                                                            ======
</TABLE>
 
     As a result of the merger with Bay, the Company paid performance and
severance payments to certain employees. In addition, the Company incurred
investment banking legal, and consulting fees. The total merger related expenses
were approximately $4.1 million.
 
     Business:  The Company is in the business of developing and marketing
products which enable local remote or mobile users to access network resources
(remote access business).
 
     Principles of Consolidation:  The consolidated financial statements include
the accounts of the Company and its subsidiaries, all of which are wholly owned.
All significant intercompany accounts and transactions have been eliminated.
 
     Cash and Cash Equivalents:  The Company considers cash on hand, deposits in
banks, and highly liquid investments with an original maturity of three months
or less as cash and cash equivalents.
 
                                       19
<PAGE>   21
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
     Fair Value of Financial Instruments:  The carrying values of cash and cash
equivalents, accounts receivable, and accounts payable approximate fair value
due to the short maturities of such instruments. Capital lease obligations are
carried at amounts approximating fair values based on current rates offered to
the Company for debt with similar collateral and guarantees, if any, and
maturities.
 
     Inventories:  Inventories are stated at the lower of cost (first-in,
first-out method) or market. The inventories include the cost of material and,
when applicable, labor and manufacturing overhead. During the fourth quarter of
fiscal 1997 as a result of the introduction of the new AB2400/4400 product line,
the Company reviewed its reserve for obsolescence of VCS and CSX product
inventory. Based on this review, the Company recorded a charge of $864,000. The
following table shows the detail in the inventory account for the years ending
July 31, 1997 and 1996.
 
<TABLE>
<CAPTION>
                         (IN THOUSANDS OF DOLLARS)                    1997       1996
                                                                     ------     ------
        <S>                                                          <C>        <C>
        Raw Materials and component parts..........................  $3,433     $5,823
        Work in process............................................      42        541
        Finished goods.............................................   2,203      3,320
                                                                     ------     ------
        Total inventories..........................................  $5,678     $9,684
                                                                     ======     ======
</TABLE>
 
     Property, Equipment, and Depreciation:  Additions to property and equipment
are recorded at cost. The Company provides depreciation for financial reporting
purposes using primarily the straight-line method over the estimated useful
lives of the assets which range from 3 to 10 years. Leasehold improvements are
amortized over the term of the related lease or their estimated useful lives,
whichever is shorter. The following table shows the detail in property,
equipment and depreciation for the years ending July 31:
 
<TABLE>
<CAPTION>
                 (IN THOUSANDS OF DOLLARS)               USEFUL LIVES       1997         1996
                                                         ------------     --------     --------
    <S>                                                  <C>              <C>          <C>
    Machinery, and equipment...........................   3-5 years       $  7,385     $ 10,875
    Purchased software and technology..................    3 years           6,544        5,486
    Leasehold improvements.............................   3-5 years            949          879
                                                                          --------     --------
    Total property and equipment, at cost..............                     14,878       17,240
    Less accumulated depreciation and amortization.....                    (11,394)     (14,783)
                                                                          --------     --------
    Total property and equipment, net..................                   $  3,484     $  2,457
                                                                          ========     ========
</TABLE>
 
     Revenue Recognition:  Revenues are recognized at the time of shipment of
the product or performance of product-related services. Revenues from the
license of product technology is recorded upon delivery of the technology
specification and the fulfilment of the other material obligations.
 
     Accounting Estimates:  The preparation of financial statements in
conformity with generally accepted accounting principles (GAAP) requires
management to make estimates and assumptions. These estimates and assumptions
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
 
     Impairment of Long-Lived Assets:  During fiscal 1996, the Company adopted
the provisions of 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", which requires the Company to review long-lived
assets, certain identifiable intangibles, and goodwill related to those assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. As a result of events
occurring in the fourth quarter of fiscal 1996, the Company decided to
restructure and refocus its remaining business. Due to these events, the Company
determined that the Excess of Costs over Net
 
                                       20
<PAGE>   22
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
Assets Acquired would not be recoverable, and a charge of $4,952,000 was taken
in the fourth quarter of fiscal 1996 against the carrying value of this asset.
 
     Income Taxes:  Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future.
A valuation allowance is established to reduce deferred tax assets to the amount
expected to be realized.
 
     Earnings Per Share:  Earnings per share for the three years ended July 31,
1997 are calculated based on the weighted average common shares outstanding.
 
     Software Development Costs:  Certain acquired software development costs
are being amortized over their estimated economic life, principally five years,
commencing when each product is available for general release. Internal software
development are expensed as incurred, except those costs applicable to third
party contracts.
 
     Stock-Based Compensation:  Effective August 1, 1996, the Company adopted
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The Company has elected to continue to account for stock-based
compensation in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees." Accordingly, pro forma net income
and earnings per share information has been presented in Note 7 as required
under SFAS 123.
 
     Related Party Transactions:  As described in Note 5, the Company entered
into a consulting agreement with Henry Epstein, the former CEO of Penril.
 
     In November 1996, John Howard was appointed as a member of the Board of
Directors of the Company. Mr. Howard is the brother of Ronald A. Howard,
President and CEO of the Company.
 
     Concentration of Risk:  Material and components for the Company's products
are purchased from outside suppliers. While most components are available from
several suppliers, a few are provided from sole-source vendors. The Company
believes that in most cases alternative sources could be obtained within a
reasonable time period; however, an interruption in the supply of such
components could have a temporary adverse effect on the Company's operations.
 
     New Accounting Pronouncements:  During fiscal 1997, the Financial
Accounting Standards Board issued Statements of Financial Accounting Standards
No. 128, 129, 130, and 131. These statements establish standards for computing
and presenting earnings per share, disclosing information about an entity's
capital structure, reporting and displaying comprehensive income and its
components in financial statements, and reporting information about operating
segments in annual financial statements, respectively. Each of these statements 
are effective for financial statements for periods beginning after December 15, 
1997. The effect of adopting these statements in fiscal 1998 is not deemed to 
be material.
 
     Reclassifications:  Certain reclassifications have been made to prior
period consolidated financial statements to conform to the July 31, 1995
presentation.
 
2.  RESTRUCTURING
 
     In the fourth quarter of fiscal 1996, Penril took actions to strategically
restructure its business to improve Penril's financial performance. The
restructuring included a plan to focus Penril's business operations on the
remote access server and remote connectivity markets ("Remote Access") and away
from the data transmission markets. As a result of this plan Penril recorded a
charge of $9,718,000 in the fourth quarter of fiscal 1996 and the Company
recorded a charge of $238,000 in the fourth quarter of fiscal 1997. These
charges were for the following costs.
 
                                       21
<PAGE>   23
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
          a. The excess of costs over the fair value of net assets acquired
     through the Datability, Inc. acquisition in fiscal 1993, was related to
     data transmission techniques and, due to the restructuring plan, has no net
     realizable value. Accordingly the remaining book value of $4,952,000 was
     written off in fiscal 1996.
 
          b. A charge of $2,339,000 was taken for the write-off of inventory and
     fixed assets related to the data transmission business. In fiscal 1997 an
     additional charge of $238,000 was taken for the write-off of inventory
     related to the data transmission business, and substantially all inventory
     related to the data transmission business was disposed of.
 
          c. A charge of $1,012,000 was taken for contractual obligations and
     settlement costs incurred for leased facilities in Carlstadt, New Jersey,
     Hong Kong and Malaysia. Under the restructuring plan the Hong Kong and
     Malaysia facilities were vacated at the end of fiscal 1996, and
     substantially all of the leased space in the Carlstadt, New Jersey facility
     was vacated. As of July 31, 1997 a provision of $300,000 remained for the
     future contractual obligations and settlement costs associated with the
     Carlstadt, New Jersey facility.
 
          d. A charge of $979,000 was taken for computer software related to the
     data transmission business that was capitalized in accordance with FAS86,
     which had no realizable value under the restructuring plan. In fiscal 1997
     the remaining book value of this computer software was written off.
 
          e. A charge of $436,000 was taken for severance costs associated with
     employees terminated in connection with the restructuring plan. All costs
     associated with these terminations were paid in fiscal 1997.
 
3.  DISCONTINUED OPERATIONS
 
     In fiscal 1995, the Board of Directors decided to sell Technipower, Inc.
("TPI"), a subsidiary manufacturing uninterruptible power supplies and power
regulating equipment. In October 1996, the Company completed the sale of TPI
business for $1,591,000 in cash and a $2,750,000 note. As of July 31, 1997, a
balance of $980,000 remained unpaid on the note which was due July 31, 1997. The
Company reserved the unpaid balance of this note with a charge of $980,000 to
loss on disposal of discontinued operations.
 
     In fiscal 1996, the Board of Directors decided to sell Electro-Metrics,
Inc. ("EMI"), a subsidiary manufacturing test equipment and systems for analysis
of electromagnetic interference and communications security including
applications in satellite communications. In June 1997, the Company completed
the sale of the EMI business to EMI Holding Corp. (the "Borrower"), for
$2,000,000 in cash, $1,500,000 in subordinated term notes, and $500,000 in
warrants. The subordinated term notes include a $1,000,000 note with payments of
principal and interest to be made in seven (7) quarterly installments of $50,000
each, beginning on June 30, 1997, and one final installment together with
accrued interest being due on June 30, 1999. Interest on the $1,000,000 note is
at 3% above the highest interest rate being charged to the Borrower by the
Borrower's principal bank lender ("Bank Rate"). The remaining subordinated term
note of $500,000 accrues interest at 2% above the Bank Rate, accruing from June
30, 1997 and payable in monthly installments beginning on July 1, 1999. The
principal shall be paid in one (1) installment on June 30, 2002. The warrants
are exercisable on June 30, 2002, wherein the Borrower issues to the Company
shares of preferred stock of the Borrower equal to 19.678% of the shares of the
Borrower outstanding immediately after the exercise of these warrants.
 
     In accordance with the Securities and Exchange Commissions Staff Accounting
Bulletin No. 81, "Gain Recognition on the Sale of a Business or Operating Assets
to a Highly Leveraged Entity", a provision was charged to Loss from Disposal of
Discontinued Operations for the outstanding balance of the subordinated
 
                                       22
<PAGE>   24
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
term notes and warrants at July 31, 1997 of $1,950,000. The Company fully
expects to collect these notes and warrants, however the repayments will be
recorded as income when received due to the highly leveraged structure of the
Borrower. As a result, the Company recorded a loss on the disposition of the EMI
business of approximately $2.8 million.
 
     The following table sets forth the selected financial data of both
discontinued operations for the three years ended July 31, 1997, 1996 and 1995:
 
<TABLE>
<CAPTION>
                                                             1997        1996        1995
                                                            -------     -------     -------
                                                               (IN THOUSANDS OF DOLLARS)
    <S>                                                     <C>         <C>         <C>
    Revenues..............................................  $ 4,743     $10,469     $ 8,960
                                                            -------     -------     -------
    Income (loss) from operations, net of income taxes....       --         404      (1,661)
                                                            -------     -------     -------
    Loss on disposal, net of income taxes.................   (3,735)       (640)     (1,400)
                                                            -------     -------     -------
    Total loss from discontinued operations...............  $(3,735)    $  (236)    $(3,061)
                                                            =======     =======     =======
    Depreciation and amortization.........................  $   153     $   431     $   415
                                                            -------     -------     -------
    Capital expenditures..................................  $   114     $   275     $   245
                                                            =======     =======     =======
</TABLE>
 
     The Company disposed of both TPI and EMI operations through the sale of the
subsidiary companies net assets. Therefore at July 31, 1997 there were no
identifiable assets or income tax benefits for either discontinued operation.
 
4.  FINANCING
 
     Bank Financing:  On November 18, 1996, pursuant to the Spin-off and Merger
transactions, Bay assumed the $4,000,000 outstanding line of credit which the
Company had prior to the transaction. As of July 31, 1997, the Company had no
line of credit with its principal bank.
 
5.  LONG-TERM OBLIGATIONS
 
     The accompanying Consolidated Statements of Operations include net rental
expense for the fiscal years 1997, 1996, and 1995 of $1,103,000, $1,673,000 and
$1,941,000 respectively. At July 31, 1997, the aggregate future minimum rental
commitments under all noncancelable operating lease agreements are as follows:
 
<TABLE>
<CAPTION>
                                                         GROSS         RENTAL           NET
                                                        RENTAL          FROM          RENTAL
             FOR THE YEARS ENDING JULY 31,            COMMITMENTS     SUBLEASES     COMMITMENTS
    ------------------------------------------------  -----------     ---------     -----------
                                                              (IN THOUSANDS OF DOLLARS)
    <S>                                               <C>             <C>           <C>
    1998............................................    $ 1,841        $ 1,011        $   830
    1999............................................      1,678             87          1,591
    2000............................................        855             --            855
    2001............................................        671             --            671
    2002............................................        106             --            106
                                                         ------         ------         ------
                                                        $ 5,151        $ 1,098        $ 4,053
                                                         ======         ======         ======
</TABLE>
 
                                       23
<PAGE>   25
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
     As described more fully in Note 7, the Company entered into an agreement
with Hibbing Electronics Corporation ("Hibbing") in March 1997 which allows
Hibbing to use certain of the Company's leased manufacturing equipment. Capital
lease obligations at July 31, 1997 and 1996 consisted of:
 
<TABLE>
<CAPTION>
                                                                      1997      1996
                                                                      -----     -----
                                                                       (IN THOUSANDS
                                                                        OF DOLLARS)
        <S>                                                           <C>       <C>
        Capital leases..............................................  $ 743     $ 905
          less current portion......................................   (287)     (272)
                                                                      -----     -----
        Long-term capital lease obligations.........................  $ 456     $ 633
                                                                      =====     =====
</TABLE>
 
     On November 18, 1996, the Company entered into a noncancelable four (4)
year consulting agreement with Henry Epstein/d.b.a. Ideonics, former CEO and
chairman of the board of Penril, which has a minimum commitment of $137,500 per
year.
 
6.  INCOME TAXES
 
     In November 1996, as a result of the merger of Penril DataComm Networks,
Inc. with Bay Networks, Inc., all federal net operating losses and general
business and other tax credits of Penril DataComm Networks, Inc., of
approximately $15.2 million and $1.2 respectively remained with Penril after the
Spin-off of the Company.
 
     The following table sets forth the differences between the tax provision
(benefit) from continuing operations calculated at the statutory federal income
tax rate and the actual tax benefit for the fiscal years ended July 31, 1996 and
1995 for Penril:
 
<TABLE>
<CAPTION>
                                                                     AS OF JULY 31,
                                                                   -------------------
                                                                    1996        1995
                                                                   -------     -------
                                                                       (AMOUNTS IN
                                                                      THOUSANDS OF
                                                                        DOLLARS)
        <S>                                                        <C>         <C>
        Tax provision at federal statutory rate..................  $(7,027)    $(1,724)
        Amortization of non-deductible intangibles...............    1,931         283
        State & foreign taxes, net of federal benefit............   (1,137)       (218)
        Change in valuation allowance............................    6,093       1,134
        Other....................................................      140         (53)
                                                                   -------     -------
        Income tax benefit.......................................  $    --     $  (578)
                                                                   =======     =======
</TABLE>
 
                                       24
<PAGE>   26
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
     The primary components of the temporary differences which give rise to
Penril's net deferred tax asset at July 31, 1996 are shown below:
 
<TABLE>
<CAPTION>
                                                                          AS OF JULY 31,
                                                                               1996
                                                                          --------------
        <S>                                                               <C>
        Deferred tax assets:
          Reserves and other contingencies..............................     $  1,500
          Depreciation and amortization.................................           65
          Restructuring Reserve.........................................        1,859
          Net operating loss............................................        6,780
          General Business and other tax credits........................        1,248
          Loss on discontinued operations...............................          546
          Valuation reserve.............................................       (9,837)
                                                                             --------          
          Total deferred tax assets.....................................        2,161
        Deferred tax liabilities:
          Amortization of technologies..................................         (461)
                                                                             --------
        Net deferred tax assets.........................................     $  1,700
                                                                             ========
</TABLE>
 
     Access Beyond, Inc., will file its first tax return for the period from
November 18, 1996 until the end of the fiscal year ended July 31, 1997. Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying value of assets and liabilities for financial reporting purposes and
the amounts reported for income tax purposes. Significant components of the
Company's deferred income tax liabilities and assets are shown in the following
table.
 
<TABLE>
<CAPTION>
                                                                          JULY 31,
                                                                            1997
                                                                  -------------------------
                                                                  (IN THOUSANDS OF DOLLARS)
        <S>                                                       <C>
        Deferred Tax Assets:
          Reserves and other contingencies......................           $   721
          Note receivable reserves..............................             1,137
          Net operating losses..................................             5,247
          Excess tax depreciation over book.....................                65
                                                                           -------
        Net deferred tax assets.................................             7,170
        Valuation Allowance.....................................            (7,170)
                                                                           -------
        Net Deferred Tax Assets Reported........................           $    --
                                                                           =======
</TABLE>
 
     No income tax provision or benefit was recorded in fiscal 1997.
 
     The reconciliation of the effective income tax rates to the Federal
statutory rate is as follows:
 
<TABLE>
<CAPTION>
                                                                      JULY 31,
                                                                        1997
                                                                      --------
                <S>                                                   <C>
                Statutory federal rate..............................    -34.0%
                State income taxes, net of federal income tax
                  benefit...........................................     -1.6%
                Transaction Merger..................................    -13.7%
                Miscellaneous.......................................      2.5%
                Change in valuation allowance.......................     46.8%
                                                                        -----
                Effective tax rates.................................      0.0%
                                                                        =====
</TABLE>
 
                                       25
<PAGE>   27
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
     At July 31, 1997 the Company had a net operating loss carryforward
(including EMI and TPI) of approximately $13.8 million which expires in 2012.
The Company has made no income tax payments for the year ended July 31, 1997.
 
7.  COMMITMENTS AND CONTINGENCIES
 
     Pending Transaction:  On July 29, 1997, the Company entered into an
Agreement and Plan of Reorganization (the "Merger Agreement") with Hayes
Microcomputer Products, Inc. Under the terms of the Merger Agreement with Hayes
Microcomputer Products (the "Hayes Merger"), Hayes will become a wholly owned
subsidiary of the Company and the shareholders of Hayes at the time the Merger
becomes effective will own approximately 79% of the outstanding equity
securities of the Company. The Company will amend its certificate of
incorporation to (i) change its name to Hayes Communications Inc., (ii) increase
the number of authorized shares of capital stock, and (iii) create Series A
Preferred Stock, and the Board of Directors of the Company will be increased to
seven members, five of whom will be designated by the Hayes shareholders. The
transaction is subject to regulatory and the Company's stockholders' approval
and certain conditions to closing as set forth in the Hayes Agreement. At the
time of the consummation of the merger, the Company is responsible for payment
of the investment banking fees of approximately $1.0 million and for change of a
control payment of $437,500 to Ronald Howard (president of the Company). Mr.
Howard has advised the Company that in lieu of receiving such cash payment, he
will accept shares of Common Stock having a value equal to such amount.
 
     Possible loss of Hawk Technology:  On May 2, 1997, the Company and Paradyne
Corporation, A Delaware corporation ("Paradyne"), entered into the 2290 Remote
Access Gateway ("Hawk") Technology Transfer Agreement (the "Technology
Agreement") pursuant to which Paradyne (i) transferred to the Company technology
relating to certain open remote dial access cards (in the form of a
comprehensive set of specifications, technical information, hardware and
software)(the "Hawk Technology"), (ii) sold to the Company certain inventory,
tools and equipment used in the application of the Hawk Technology to develop
and manufacture products, ("Hawk Products") which include the Hawk Technology,
(iii) licensed to the Company certain intellectual property in connection with
the Hawk Technology, and (iv) agreed to provide the Company with technical,
engineering, manufacturing and marketing support, for an aggregate purchase
price of 503,704 shares of Common Stock (the "Paradyne Shares"), and
$425,000 in cash. The shares of Common Stock were valued at the fair value at
date of issuance, approximately $1.7 million. The Company and Paradyne also
entered into a Stock Purchase Agreement, dated as of May 2, 1997 (the "Purchase
Agreement"), pursuant to which the Company sold and issued the Paradyne Shares
to Paradyne. Pursuant to the Purchase Agreement, the Company is required to
register the Paradyne Shares for Paradyne under the Securities Act within one
hundred twenty (120) days after the closing, with the right to extend such date
by 60 days, under certain circumstances.
 
     Paradyne's transfer of Hawk Technology, license of Intellectual Property
and, to a certain extent, the inventory of Hawk Product are subject to an
"Unwind" provision in the Technology Agreement. Paradyne may elect to rescind
the Technology Agreement if the Company (a) fails to timely register the
Paradyne Shares or (b) fails to use its best efforts to maintain the
effectiveness of the registration statement, and does not cure such failure
within 30 days after Paradyne gives written notice. Such election would result
in the termination of the license of the Intellectual Property, the transfer of
the Hawk Technology and unsold Hawk Products to Paradyne, and the return to the
Company of the value of the consideration paid, subject to certain adjustments.
 
     Hibbing Agreement:  In March 1997, the Company entered into an agreement
with Hibbing Electronics Corporation in which Hibbing manufactures and sells
printed circuit card products to the Company. Under the Agreement, Hibbing has
the right to use the lower level of the Company's Gaithersburg, Maryland
facility as well as certain equipment needed for the manufacturing process.
Hibbing pays the Company 50% of the monthly rent and utilities associated with
the facility and pays the current installment amounts on the
 
                                       26
<PAGE>   28
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
manufacturing equipment that Hibbing uses and that the Company leases. This
agreement expires August 31, 1998 at which time Hibbing shall have the option to
purchase all of the equipment covered under the agreement and the Company will
assign all right, title, and interest in the covered leases and equipment to
Hibbing in exchange for Hibbing's agreement to pay and perform the Company's
obligations under those leases.
 
     Legal Proceedings:  The Company initiated a lawsuit in December 1994
against Network Systems Corporation ("NSC") for breach of contract, fraudulent
inducement and defamation. The suit is seeking specific performance,
compensatory damages of $2,000,000 and punitive damages of $5,000,000. The
litigation arises out of a contract in which the Company agreed to develop
certain computer hardware and software to NSC's specifications. NSC subsequently
brought a counterclaim alleging negligent misrepresentation, fraud and breach of
contract by the Company. NSC is seeking recision of the contract, restitution of
monies paid by NSC to the Company, compensatory damages of $5,000,000 and
punitive damages in an unspecified amount. As of July 31, 1997, the Company was
in discussions with NSC.
 
     In 1993 the Company initiated a lawsuit against Standard Microsystems Corp.
("SMC") for breach of contract including failure to transfer technology, unfair
competition and false representations. In September 1996, the Company and SMC
agreed to drop the charges of false representation and settle the contractual
dispute. In October 1996, the Company received from SMC, in settlement of the
litigation, $3,500,000 cash, net of legal payments.
 
     Digital Equipment Corporation ("DEC") has claimed, through a series of
written communications, that the Company has violated DEC patents related to DEC
LAT technology. In August 1997, the Company and DEC entered into an license
agreement including a specific release whereby the Company acquired a non-
exclusive license to develop, manufacture, and market specified products which
are compatible with Digital's LAT technology.
 
     The Company is involved in other routine litigation.
 
     Management believes none of the litigation will have a material adverse
effect on the Company's financial position or results of operations.
 
8.  SHAREHOLDERS' EQUITY
 
     Common Stock:  In the first quarter of fiscal 1997, as part of the Spin-off
and Merger with Bay described in Note 1, Penril issued 1,124,951 shares of its
common stock in connection with the accelerated vesting of Penril's outstanding
employee stock options and non-employee stock options. Penril received
approximately $6,135,000 from the exercise of those options. Also prior to the
Spin-off and Merger with Bay, Penril issued 16,989 shares of its common stock to
Ronald Howard for $115,000. Subsequently, Penril issued 11,991,587 shares of the
Company's common stock in a stock dividend which is described more fully in Note
1, and completed the Spin-off and Merger with Bay. The Company's common stock
began trading on
 
                                       27
<PAGE>   29
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
the NASDAQ on November 18, 1996. A summary of stock option transactions for
Penril during the three years ended July 31, 1997 is as follows:
 
<TABLE>
<CAPTION>
                                   1986 INCENTIVE PLAN         DIRECTORS' PLAN       1995 INCENTIVE PLAN
                                  ----------------------    ---------------------    --------------------
                                   NUMBER       AVERAGE      NUMBER      AVERAGE     NUMBER      AVERAGE
                                     OF          PRICE         OF         PRICE        OF         PRICE
                                   SHARES      PER SHARE     SHARES     PER SHARE    SHARES     PER SHARE
                                  ---------    ---------    --------    ---------    -------    ---------
<S>                               <C>          <C>          <C>         <C>          <C>        <C>
Outstanding August 1, 1994......  1,037,419      $4.15       204,000      $3.64           --      $  --
  Granted.......................    348,000      $3.12        18,000      $3.25           --         --
  Exercised.....................    (33,067)     $2.23            --         --           --         --
  Canceled......................   (233,617)     $4.15            --         --           --         --
                                  ---------      -----      --------      -----      --------     -----
Outstanding July 31, 1995.......  1,118,735      $3.89       222,000      $3.61           --         --
                                  ---------      -----      --------      -----      --------     -----
  Granted.......................    494,000      $7.34        18,000      $5.69       70,000      $6.77
  Exercised.....................   (539,284)     $4.02      (148,000)     $3.87           --         --
  Canceled......................   (110,500)     $4.32            --         --           --         --
                                  ---------      -----      --------      -----      --------     -----
Outstanding July 31, 1996.......    962,951      $5.54        92,000      $3.59       70,000      $6.77
                                  ---------      -----      --------      -----      --------     -----
  Exercised.....................   (962,951)     $5.54       (92,000)     $3.59      (70,000)     $6.77
                                  ---------      -----      --------      -----      --------     -----
Outstanding July 31, 1997.......         --         --            --         --           --         --
                                  =========      =====      ========      =====      ========     =====
</TABLE>
 
     Employee Stock Options and Stock Awards:  On November 18, 1996, the Company
adopted the 1996 Long Term Incentive Plan (the "1996 Plan"). Under the 1996
Plan, which will terminate on November 18, 2006, awards may be granted to key
employees of the Company and its subsidiaries in one or more of the following
forms: (i) Incentive Stock Options; (ii) Non-qualified Stock Options; and (iii)
a combination of the foregoing. The option price per share of any option granted
under the 1996 Plan is the fair market value of a share of Common Stock on the
date the option is granted. No option will be exercisable more than ten years
from the date of grant and vest over three years. An aggregate of 2,000,000
shares of the Company's common stock were reserved for issuance at July 31, 1997
 
     Non-Employee Director Stock Options:  On November 18, 1996, the Company
adopted the 1996 Non-Employee Directors' Stock Option Plan ("Directors Plan").
Under the Directors Plan an option to purchase 25,000 shares is automatically
granted to each non-employee director on the first day of his initial term. In
addition, options to purchase 5,000 shares are automatically granted to each
non-employee director on the fifth business day after the Annual Report on Form
10-K is filed with the Securities and Exchange Commission. The option price per
share of any option granted under the Directors Plan is the fair market value of
a share of Common Stock on the date the option is granted. No option will be
exercisable more than ten years from the date of grant and vest over three
years. An aggregate of 250,000 shares were reserved for issuance under the
Directors Plan at July 31, 1997.
 
     A summary of the stock option transactions for the Company for the year
ended July 31, 1997 is as follows (amounts in thousands):
 
<TABLE>
<CAPTION>
                                                       1996 LONG TERM
                                                       INCENTIVE PLAN             DIRECTORS' PLAN
                                                   -----------------------     ---------------------
                                                    NUMBER        AVERAGE      NUMBER       AVERAGE
                                                      OF           PRICE         OF          PRICE
                                                    SHARES       PER SHARE     SHARES      PER SHARE
                                                   ---------     ---------     -------     ---------
<S>                                                <C>           <C>           <C>         <C>
Granted..........................................  1,469,000       $6.08       100,000       $7.74
Canceled.........................................   (100,000)      $6.63            --          --
                                                   ---------       -----       -------       -----
Outstanding at July 31, 1997.....................  1,369,000       $6.04       100,000       $7.74
                                                   =========       =====       =======       =====
</TABLE>
 
                                       28
<PAGE>   30
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
     Change of Control Provision:  In the case of a "change in control" of the
Company, an option holder will generally have the right, commencing at least
five days prior to the "change in control" and subject to any other limitation
on the exercise of the option in effect on the date of exercise, to immediately
exercise any options in full to the extent not previously exercised, without
regard to any vesting limitations.
 
     SFAS No. 123:  For the purposes of following pro forma disclosures required
by SFAS No. 123, the estimated fair value of the options is expensed in the year
that the options are granted using the Black-Scholes option valuation model. The
Black-Scholes model was developed for use in estimating the fair value of traded
options that have no vesting restriction and are fully transferable. In
addition, option valuation models, such as Black-Scholes model, require the
input of highly subjective assumptions including the expected stock price
volatility which are subject to change from time to time. For this reason, and
because SFAS No. 123 fair value-based method of accounting has not been applied
to options granted prior to August 1, 1995, the resulting pro forma compensation
costs are not necessarily indicative of costs to be expected in future years.
 
     In preparing the pro forma information, the following assumptions were
made: risk-free weighted average interest rate was 5.5%; volatility factors of
the expected market price of the Company's common stock of 61.12% in fiscal 1997
and 86.2% for Penril's common stock in fiscal 1996, and option lives of less
than 12 months for both years. The following pro forma information has been
prepared as if the Company had accounted for its employee stock options using
the fair value-based method of accounting established by SFAS No. 123.
 
<TABLE>
<CAPTION>
                                                                  FOR THE YEAR ENDED
                                                                       JULY 31,
                                                                 ---------------------
                                                                   1997         1996
                                                                 --------     --------
                                                                      (DOLLARS IN
                                                                 THOUSANDS, EXCEPT PER
                                                                        SHARE)
        <S>                                                      <C>          <C>
        Net loss from continuing operations:
          As reported..........................................  $(13,890)    $(20,668)
          Pro forma............................................  $(16,138)    $(21,954)
        Loss per share from continuing operations:
          As reported..........................................  $  (1.16)    $  (2.14)
          Pro forma............................................  $  (1.35)    $  (2.28)
</TABLE>
 
     Serial Preferred Stock:  The Company's Serial Preferred Stock may be issued
in one or more series. The shares of any series may be convertible into Common
Stock, may have priority over Common Stock in the payment of dividends and in
the distribution of assets in the event of liquidation or dissolution of the
Company, and may have preferential or other voting rights, all as determined by
the Board of Directors at the time it approves the series.
 
     Warrants:  In March, 1987, Henry D. Epstein joined Penril as President and
Chief Executive Officer and was issued Class A warrants to purchase 400,000
shares of Penril's Common Stock at $2.23 per share and Class B warrants to
purchase 80,000 shares of Penril's Common Stock at $2.34 per share. Mr. Epstein
exercised 220,000 Class A warrants in January 1993, 80,000 Class A warrants in
January 1994 and 100,000 Class A warrants in February 1994. In February 1995,
Mr. Epstein exercised all 80,000 Class B warrants. All exercises were
accomplished by delivery of shares previously held.
 
     In October 1992, Penril issued a warrant to purchase 166,000 shares of
common stock at $4.50 per share, the fair market value on the date of issuance,
to Coast Federal Savings Bank ("Coast") in settlement of a law suit brought
against the Company. In addition, Penril issued Class E warrants to purchase
25,000 shares of common stock at $3.625 per share, the fair market value on the
date of issuance, to Mr. Henry Epstein in consideration for Mr. Epstein, in his
capacity as a stockholder of Penril, assisting Penril in settling the
 
                                       29
<PAGE>   31
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
litigation with Coast. The Coast warrant expired June 7, 1995. The Class E
warrants were exercised subsequent to July 31, 1995.
 
9.  RETIREMENT AND SAVINGS PLAN
 
     On November 18, 1996, the Company adopted the Penril Retirement and Savings
Plan as part of the Spin-off and Merger transaction with Bay described in Note
1. The Company's Retirement and Savings Plan ("401(k) Plan") is a defined
contribution plan including provisions of section 401(k) of the Internal Revenue
Code. Employees of the Company who have completed 90 days of service
("Participants") are eligible to participate in the 401(k) Plan. The 401(k) Plan
permits, but does not require, the Company to match employee contributions. In
addition, the Company may make discretionary contributions to the 401(k) Plan
which will be allocated to each Participant based on the ratio of such
Participant's eligible compensation to the total of all Participants' eligible
compensation. Amounts contributed by the Company vest as to 30% after 1 year of
eligible service, 60% after 2 years of eligible service and 100% after 3 years
of eligible service. Participants may elect to direct the investment of their
contributions in accordance with the provisions of the 401(k) Plan. The Company
made matching contributions of $46,000 in fiscal 1997 and Penril made matching
contributions of $61,000 and $45,000 during fiscal 1996 and 1995,
respectively. There were no additional Company contributions in any year. The
Company provides no post-employment or post-retirement benefits.
 
10.  GEOGRAPHIC AREA INFORMATION
 
     The Company's foreign operations for fiscal 1997 consisted principally of
sales and marketing activities through its Access Beyond, Ltd subsidiary located
in the United Kingdom. Certain information, including the effect of intercompany
transactions, relating to the Company's operations on a geographic basis for the
year
 
                                       30
<PAGE>   32
 
                      ACCESS BEYOND, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                    YEARS ENDED JULY 31, 1997, 1996 AND 1995
 
ended July 31, 1997 and Penril's operations on a geographic basis for the years
ended July 31, 1996, and 1995 are as follows:
 
<TABLE>
<CAPTION>
                                                                1997         1996        1995
                                                              --------     --------     -------
                                                                  (IN THOUSANDS OF DOLLARS)
<S>                                                           <C>          <C>          <C>
REVENUES
U.S. Revenue
  Domestic..................................................  $ 10,724     $ 19,350     $26,190
                                                              --------     --------     -------
  Exports:
     Europe.................................................     1,993        8,808       9,326
     Pacific Rim............................................     1,465        3,868       6,402
     Central and South America..............................       973        2,393       3,487
     Other International....................................     1,191        2,235       4,403
                                                              --------     --------     -------
  Total Exports.............................................     5,622       17,304      23,618
                                                              --------     --------     -------
Total U.S. Revenue..........................................    16,346       36,654      49,808
                                                              --------     --------     -------
Revenue from foreign subsidiaries...........................     3,537        7,392       6,839
Adjustments and eliminations................................    (1,883)      (4,611)     (4,036)
                                                              --------     --------     -------
Total Revenues..............................................  $ 18,000     $ 39,435     $52,611
                                                              ========     ========     =======
 
Income (loss) from continuing operations before taxes
U.S.........................................................  $(13,726)    $(20,267)    $(5,143)
Foreign.....................................................      (457)        (531)        688
Eliminations................................................       293          130        (737)
                                                              --------     --------     -------
Total loss from continuing operations.......................  $(13,890)    $(20,668)    $(5,192)
                                                              ========     ========     =======
 
Identifiable Assets
U.S.........................................................  $ 12,785     $ 31,325     $40,946
Foreign subsidiaries........................................     1,121        2,455       3,441
                                                              --------     --------     -------
Total Identifiable Assets...................................  $ 13,906     $ 33,780     $44,387
                                                              ========     ========     =======
</TABLE>
 
11.  SUBSEQUENT EVENTS
 
     On September 15, 1997, the Company received a commitment from a third party
lending institution approving a working capital facility of $3,000,000 with
borrowing based on qualified accounts receivable. Interest will be one half
percentage point ( 1/2%) above the Reference Rate publicly announced by Norwest
Bank. A fee of 1% of the total line and term loan commitment will be due and
payable at closing and at each annual anniversary date thereafter. The facility
will be for a two year period. In the event of the Hayes Merger, the Company may
prepay the line of credit by providing the lender with sixty days written
notice, and payment of the service charge (a monthly charge equal to the greater
of $2,000 or  1/3% of the average daily outstanding balance on all loans) times
the remaining months of the two year term. In all other cases the prepayment
penalty will be equal to 3% of the total line commitment in the first year and
2% of the line commitment in all subsequent years thereafter.
 
                                       31
<PAGE>   33
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
 
     None.
 
                                    PART III
 
     Part III is omitted in its entirety because, not later than November 28,
1997, the Company intends to file a definitive proxy statement with the
Securities and Exchange Commission pursuant to Regulation 14A.
 
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
(a)1.  Financial Statements
 
       Included in Part II of this report:
        Independent Auditors Report......................................... 14
          Consolidated Statements of Operations for each of the years ended
           July 31, 1997, 1996 and 1995..................................... 15
        Consolidated Balance Sheets as of July 31, 1997 and 1996............ 16
          Consolidated Statements of Cash Flows for each of the years ended
           July 31, 1997, 1996 and 1995..................................... 17
          Consolidated Statements of Stockholders' Equity for the years ended
           July 31, 1997, 1996, and 1995.................................... 18
          Notes to the Consolidated Financial Statements for the years ended
           July 31, 1997, 1996, and 1995.................................... 19
 
2.     Financial Statement Schedules
 
       Included in Part IV of this report:
        Independent Auditors' Report on Schedule............................ 36
        Schedule II -- Valuation and Qualifying Accounts.................... 37

 
     Other schedules are omitted because of the absence of conditions under
which they are required or because they required information is given in the
Financial Statements or notes thereto.
 
3.     Exhibits
 
     The exhibits are set forth on the attached Exhibit Index which is
incorporated by reference. Exhibits are included only in the copies of this Form
10-K filed with the Securities and Exchange Commission and NASDAQ.
 
4.  Reports on Form 8-K
 
     None
 
                                       32
<PAGE>   34
 
                               INDEX TO EXHIBITS
 
(a) Exhibits
 
<TABLE>
<CAPTION>
EXHIBIT
  NO.                                         DESCRIPTION
-------   -----------------------------------------------------------------------------------
<C>       <S>
   2.1    Plan and Agreement of Merger dated as of June 16, 1996 among Penril DataComm
          Networks, Inc. ("Penril"), Bay Networks, Inc. ("Bay"), and Beta Acquisition Corp.
          ("Beta") (filed as Exhibit 2.1 to the registration statement on Form S-1, as
          amended (Commission File Number 333-10741)).
   2.2    Amended Plan and Agreement of Merger dated August 5, 1996 among Penril, Bay and
          Beta (filed as Exhibit 2.2 to the Penril Form 10-K filed October 7, 1996)
   2.3    Agreement and Plan of Reorganization between Access Beyond, Inc. (the "Company")
          and Hayes Microcomputer Products, Inc. dated July 29, 1997 (filed as Exhibit 10.1
          to the Form 8-K filed August 7, 1997).
   3.1    Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the
          registration statement on Form S-1, as amended (Commission File Number 333-10741)).
   3.2    By-Laws of the Company (filed as Exhibit 3.2 to the registration statement on Form
          S-1, as amended (Commission File Number 333-10741)).
  10.1    Technology License Agreement dated as of November 16, 1996 between Penril and the
          Company (filed as Exhibit 10.1 to the registration statement on Form S-1, as
          amended (Commission File Number 333-10741)).
  10.2    Development and License Agreement dated as of June 16, 1996 between Bay and Penril,
          on behalf of the Company (filed as Exhibit 10.2 to the registration statement on
          Form S-1, as amended (Commission File Number 333-10741)).
  10.3    Indemnification Agreement dated as of November 16, 1996 between Penril and the
          Company (filed as Exhibit 10.3 to the registration statement on Form S-1, as
          amended (Commission File Number 333-10741)).
  10.4    Transitional Services Agreement dated as of November 16, 1996 between the Company
          and Penril (filed as Exhibit 10.7 to the registration statement on Form S-1, as
          amended (Commission File Number 333-10741)).
 *10.5    1986 Incentive Plan of Penril, as amended (filed as Exhibit 4.1 to 
          Penril Form S-8 filed April 29, 1991).
 *10.6    1995 Long-Term Incentive Plan of Penril (filed as Exhibit
          4.4 to the Penril Form S-8 filed May 31, 1996).
 *10.7    1987 Non-Employee Directors' Stock Option Plan of Penril,
          as amended (filed as Exhibit 4.1 to Penril Form S-8 filed April 29, 1991).
  10.8.1  Lease Agreement between the Company and Real Estate Income Partners dated as of
          March 31, 1989, as amended on May 14, 1990 and November 15, 1996.
  10.8.2  Assignment and Assumption of Lease between Penril and the Company, dated as of
          November 18, 1996.
 *10.9    The Company's Amended and Restated 1996 Long-Term Incentive Plan.
 *10.10   Form of Option Agreement for the grant of non-qualified options under the Amended
          and Restated 1996 Long-Term Incentive Plan.
 *10.11   The Company's Amended and Restated 1996 Non-Employee Directors' Stock Option Plan.
 *10.12   Form of Option Agreement for the grant of options under the Amended and Restated
          1996 Non-Employee Directors' Stock Option Plan.
</TABLE>
 
                                       33
<PAGE>   35
 
<TABLE>
<CAPTION>
EXHIBIT
  NO.                                         DESCRIPTION
-------   -----------------------------------------------------------------------------------
<C>       <S>
  10.13   2290 Remote Access Gateway ("Hawk") Technology Transfer Agreement dated as of May
          2, 1997 entered into between the Company and Paradyne Corporation.
  10.14   Stock Purchase Agreement dated as of May 2, 1997 between the Company and Paradyne
          Corporation, as amended in September 1997.
 *10.15   Employment Agreement dated as of November 18, 1996 entered into between the Company
          and Ronald A. Howard.
 
  10.16   Manufacturing Agreement dated as of March 1, 1997 between the Company and Hibbing
          Electronics Corporation.
  10.17   Agreement between the Company and EMI Holding Corp., dated November 13, 1996,
          relating to the sale of Electro-Metrics, Inc., as amended on January 6, 1997,
          February 26, 1997 and April 17, 1997.
  21.     List of subsidiaries of the Company.
  27.     Financial Data Schedule.
</TABLE>
 
---------------
 
*   Management contract, compensation plan or arrangement
 
(b) Financial Statement Schedules
     Independent Auditor's Report on Schedule
     Schedule II -- Valuation and Qualifying Accounts
 
                                       34
<PAGE>   36
                                   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, in Gaithersburg,
Maryland on October 14, 1997.
 
                                          Access Beyond, Inc.
 
                                          By /s/    RONALD A. HOWARD
 
                                            ------------------------------------
                                                      Ronald A. Howard
                                            President, Chief Executive Officer,
                                                and Chairman of the Board of
                                                          Directors
                                                   Date: October 14, 1997
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
 
<TABLE>
<CAPTION>
                SIGNATURE                               TITLE                      DATE
------------------------------------------  ------------------------------  -------------------
<C>                                         <S>                             <C>
 
           /s/ BARBARA PERRIER              Director                        October 14, 1997
------------------------------------------
             Barbara Perrier
 
            /s/ PAUL SCHALLER               Director                        October 14, 1997
------------------------------------------
              Paul Schaller
 
             /s/ JOHN HOWARD                Director                        October 14, 1997
------------------------------------------
               John Howard
 
            /s/ ARTHUR SAMBERG              Director                        October 14, 1997
------------------------------------------
              Arthur Samberg
 
           /s/ RONALD A. HOWARD             President, Chief Executive      October 14, 1997
------------------------------------------    Officer, and Chairman of the
             Ronald A. Howard                 Board of Directors
 
            /s/ MARK R. FIELDS              Controller and Acting Chief     October 14, 1997
------------------------------------------    Financial Officer
              Mark R. Fields
</TABLE>
 
                                       35
<PAGE>   37
 
                          INDEPENDENT AUDITORS' REPORT
 
Board of Directors and Stockholders
Access Beyond, Inc.
Gaithersburg, Maryland
 
     We have audited the consolidated financial statements of Access Beyond,
Inc. and subsidiaries (the successor company to Penril DataComm Networks, Inc.)
as of July 31, 1997 and 1996, and for each of the three years in the period
ended July 31, 1997, and have issued our report thereon dated August 29, 1997
(September 15, 1997 as to Note 11), included herein. Our audits also included
the financial statement schedule of Access Beyond, Inc. listed in Item 14. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in reaction to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
 
                                          Deloitte & Touche LLP
 
Washington, D.C.
August 29, 1997 (September 15, 1997 as to Note 11)
 


                                      36
<PAGE>   38
 
                                  SCHEDULE II
 
                       VALUATION AND QUALIFYING ACCOUNTS
 
<TABLE>
<CAPTION>
                                                             COLUMN C               COLUMN D
                                        COLUMN B      -----------------------     -------------      COLUMN E
                                       ----------     CHARGES TO     RECOVERY       WRITE-OFF       ----------
   ALLOWANCE FOR DOUBTFUL ACCOUNTS     BALANCE AT      S, G & A       OF BAD      OF BAD DEBTS,     BALANCE AT
  APPLICABLE TO ACCOUNTS RECEIVABLE    AUGUST 1,       EXPENSES      DEBTS(A)       OTHER(B)         JULY 31,
-------------------------------------  ----------     ----------     --------     -------------     ----------
                                                              (IN THOUSANDS OF DOLLARS)
<S>                                    <C>            <C>            <C>          <C>               <C>
Fiscal 1997..........................    $  554          $462          $ 91          $  (893)          $215
Fiscal 1996..........................    $1,067          $502          $ 20          $(1,035)          $554
</TABLE>
 
---------------
(a) Included in the fiscal 1997 recovery of bad debts was and exchange rate
    adjustment of $8,000 and a transfer of bad debt reserves of $66,000 related
    to the Spin-off and Merger transaction with Bay Networks, Inc.
 
(b) Included in the fiscal 1997 write-off of bad debts was $250,000 of reserves
    transferred to Bay Networks, Inc. related to the Spin-off and Merger
    transaction with Bay Networks, Inc.
 
                                      37
<PAGE>   39
                                EXHIBIT INDEX
 
<TABLE>
<CAPTION>
EXHIBIT
  NO.                                         DESCRIPTION
-------   -----------------------------------------------------------------------------------
<C>       <S>
   2.1    Plan and Agreement of Merger dated as of June 16, 1996 among Penril DataComm
          Networks, Inc. ("Penril"), Bay Networks, Inc. ("Bay"), and Beta Acquisition Corp.
          ("Beta") (filed as Exhibit 2.1 to the registration statement on Form S-1, as
          amended (Commission File Number 333-10741)).
   2.2    Amended Plan and Agreement of Merger dated August 5, 1996 among Penril, Bay and
          Beta (filed as Exhibit 2.2 to the Penril Form 10-K filed October 7, 1996)
   2.3    Agreement and Plan of Reorganization between Access Beyond, Inc. (the "Company")
          and Hayes Microcomputer Products, Inc. dated July 29, 1997 (filed as Exhibit 10.1
          to the Form 8-K filed August 7, 1997).
   3.1    Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the
          registration statement on Form S-1, as amended (Commission File Number 333-10741)).
   3.2    By-Laws of the Company (filed as Exhibit 3.2 to the registration statement on Form
          S-1, as amended (Commission File Number 333-10741)).
  10.1    Technology License Agreement dated as of November 16, 1996 between Penril and the
          Company (filed as Exhibit 10.1 to the registration statement on Form S-1, as
          amended (Commission File Number 333-10741)).
  10.2    Development and License Agreement dated as of June 16, 1996 between Bay and Penril,
          on behalf of the Company (filed as Exhibit 10.2 to the registration statement on
          Form S-1, as amended (Commission File Number 333-10741)).
  10.3    Indemnification Agreement dated as of November 16, 1996 between Penril and the
          Company (filed as Exhibit 10.3 to the registration statement on Form S-1, as
          amended (Commission File Number 333-10741)).
  10.4    Transitional Services Agreement dated as of November 16, 1996 between the Company
          and Penril (filed as Exhibit 10.7 to the registration statement on Form S-1, as
          amended (Commission File Number 333-10741)).
 *10.5    1986 Incentive Plan of Penril, as amended (filed as Exhibit 4.1
          to Penril Form S-8 filed April 29, 1991).
 *10.6    1995 Long-Term Incentive Plan of Penril (filed as Exhibit 4.4
          to the Penril Form S-8 filed May 31, 1996).
 *10.7    1987 Non-Employee Directors' Stock Option Plan of Penril, as amended
          (filed as Exhibit 4.1 to Penril Form S-8 filed April 29, 1991).
  10.8.1  Lease Agreement between the Company and Real Estate Income Partners dated as of
          March 31, 1989, as amended on May 14, 1990 and November 15, 1996.
  10.8.2  Assignment and Assumption of Lease between Penril and the Company, dated as of
          November 18, 1996.
 *10.9    The Company's Amended and Restated 1996 Long-Term Incentive Plan.
 *10.10   Form of Option Agreement for the grant of non-qualified options under the Amended
          and Restated 1996 Long-Term Incentive Plan.
 *10.11   The Company's Amended and Restated 1996 Non-Employee Directors' Stock Option Plan.
 *10.12   Form of Option Agreement for the grant of options under the Amended and Restated
          1996 Non-Employee Directors' Stock Option Plan.
  10.13   2290 Remote Access Gateway ("Hawk") Technology Transfer Agreement dated as of May
          2, 1997 entered into between the Company and Paradyne Corporation.
  10.14   Stock Purchase Agreement dated as of May 2, 1997 between the Company and Paradyne
          Corporation, as amended in September 1997
 *10.15   Employment Agreement dated as of November 18, 1996 entered into between the Company
          and Ronald A. Howard. 
  10.16   Manufacturing Agreement dated as of March 1, 1997 between the Company and Hibbing
          Electronics Corporation.
  10.17   Agreement between the Company and EMI Holding Corp., dated November 13, 1996,
          relating to the sale of Electro-Metrics, Inc., as amended on January 6, 1997,
          February 26, 1997 and April 17, 1997.
  21.     List of subsidiaries of the Company.
  27.     Financial Data Schedule.
</TABLE>
 
---------------
 
*   Management contract, compensation plan or arrangement