MOLDFLOW CORP, S-1/A, 2000-02-11

MOLDFLOW CORP
S-1/A, 2000-02-11
PREPACKAGED SOFTWARE

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 11, 2000

REGISTRATION STATEMENT NO. 333-95289

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------------

MOLDFLOW CORPORATION
(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 7372 04-3406763
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>

------------------------

91 HARTWELL AVENUE
LEXINGTON, MA 02421
(781) 674-0085
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive office)
------------------------------

MARC J. L. DULUDE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MOLDFLOW CORPORATION
91 HARTWELL AVENUE
LEXINGTON, MA 02421
(781) 674-0085
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------

COPIES TO:

<TABLE>
<S> <C>
STUART M. CABLE, P.C. KEITH F. HIGGINS, ESQ.
ANDREW F. VILES, ESQ. JOEL F. FREEDMAN, ESQ.
GOODWIN, PROCTER & HOAR LLP ROPES & GRAY
EXCHANGE PLACE ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02109-2881 BOSTON, MASSACHUSETTS 02110-2624
(617) 570-1000 (617) 951-7000
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective. If any of the
securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. / /
- ---------------

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
- ---------------

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ---------------

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ---------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
- ---------------
------------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(2)
<S> <C> <C>
Common Stock, $.01 par value per share.. $48,300,000 $12,752
</TABLE>

(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.

(2) Includes $12,144 paid prior to the initial filing of this registration
statement and $608 being paid in connection with this pre-effective
amendment no. 1 to the registration statement.

------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2000

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE IN WHICH THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>

3,000,000 SHARES

[LOGO]

COMMON STOCK
------------------

This is an initial public offering of common stock of Moldflow Corporation.
We are offering 3,000,000 shares of common stock in this offering. We expect the
initial public offering price will be between $12.00 and $14.00 per share.

Prior to this offering, there has been no public market for our common
stock. We have applied to list our common stock on the Nasdaq National Market
under the symbol MFLO.

------------------------

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. PLEASE SEE THE
SECTION ENTITLED "RISK FACTORS" STARTING ON PAGE 7 TO READ ABOUT RISKS YOU
SHOULD CONSIDER CAREFULLY BEFORE BUYING SHARES OF OUR COMMON STOCK.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

------------------------

<TABLE>
<CAPTION>
PER SHARE TOTAL
----------- -----------
<S> <C> <C>
Public offering price................................... $ $
Underwriting discounts.................................. $ $
Proceeds to Moldflow.................................... $ $
Proceeds to selling stockholders........................ $ $
</TABLE>

The underwriters have an option to purchase additional shares of
common stock from Moldflow and shares of common stock from several
stockholders identified in this prospectus at the initial public offering price
less the underwriting discount to cover any over-allotments of shares. We will
not receive any of the proceeds from the sale of shares by the selling
stockholders.

------------------------

Adams, Harkness & Hill, Inc. A.G. Edwards & Sons, Inc.

Prospectus dated , 2000
<PAGE>

[EDGAR Graphics Descriptions]

(Inside Front Cover)

Three pages of graphics follow:

- - Page 1: The first page has the words "Process Wide Plastics Solutions" at
the top. The following paragraph is below next to a chart: "Our products work
together to optimize the process of designing and producing injection molded
plastic parts. Moldflow's software technology delivers solutions that
provide valuable information and advice at the product design, mold design
and part production phases of the process -- and this information can be
shared with colleagues down the hall or around the world." The chart has four
columns labeled "Conceptual Design," "Part Design," "Mold Design" and "Part
Production." Across the rows are arrows labeled "Insight," "Advisers" and
"Xpert." The Insight arrow runs from part design through part production.
The Advisers arrow runs from conceptual design through mold design. The Xpert
arrow crosses part production only.

Lower on the page are the MPA, MPI and MPX logos with the following
respective words beside them: (i) "Moldflow Plastics Advisers helps design
engineers to create their initial product designs knowing that these designs
will be manufacturable and meet the design requirements," (ii) "Moldflow
Plastics Insight allows a specialist to perform comprehensive product reviews
to solve complex part and mold design problems and optimize these designs,"
and (iii) "Moldflow Plastics Xpert removes trial-and-error approaches to
pre-production mold set-up in the injection molding machine and monitors and
controls subsequent production." At the bottom of the page is Moldflow's logo
and Moldflow's website address "www.moldflow.com."

- - Pages 2 and 3: Gatefold has words "Global Concurrent Product Development"
at the top. Picture of planet Earth is in center with arrows pointing in
from and out to four corners of page. Each corner depicts a separate step
in the design and production process for plastic parts. The upper left
corner has the words "Initial Design" and a picture of a man and a woman
viewing a computer monitor depicting a three dimensional image of cell
phone outer casings as well as two computer screens with closer views of
these casings. Above this picture are the words "The Problem" and the
following paragraph: "The creation of injection molded plastic parts is a
complex, fragmented global process. Manufacturers in many industries are
facing increasing pressure to reduce the time required to bring a plastic
part from initial design to production." The upper right corner has the
words "In-Depth Analysis" and a picture of man working at a computer as well
as two computer screens depicting three dimensional images of cell phone
outer casings. The bottom right corner has the words "Mold Design" and a
picture of a metal mold as well as two computer screens depicting cell phone
outer casings within a mold. The bottom left corner has the words
"Production" and picture of a large injection molding machine as well as a
picture of a computer and a computer screen displaying pages of Moldflow's
MPX product. Below this picture are the words "The Moldflow Solution" and
the following paragraph: "Our approach, called Process Wide Plastics
Solutions, provides our customers with a software tool for each step in
the process, from part design through production monitoring. Using our
products can significantly reduce the time it takes to design plastic parts,
improve their quality and decrease the cost of production." The bottom
center has an arrow pointing down to a picture of cell phone.

There is a column on the left side with the words "Selected Industries and
Customers" at the top and the following list:

AUTOMOTIVE
----------
DaimlerChrysler AG
DENSO Corporation
Ford Motor Company
Hyundai Business Group
Solvay SA
Valeo SA
Volkswagen AG

TOYS
----
Hasbro Inc.
The Lego Group
Mattel, Inc.

MATERIAL SUPPLIERS
------------------
Bayer AG
The Dow Chemical Company
Eastman Chemical Company
E.I. duPont de Nemours and Co.
M.A. Hanna Company

ELECTRONICS
-----------
AMP Incorporated
The Framatome Group
Fuji Xerox Co., Ltd
Hewlett-Packard Company
Lucent Technologies, Inc.
Motorola, Inc.
Nokia Corporation
Siemens AG

MEDICAL
-------
Abbott Laboratories
Baxter International, Inc.
Becton Dickinson and Co.

OTHER/MULTIPLE INDUSTRIES
-------------------------
Fisher & Paykel Industries Ltd.
Honeywell International, Inc.
LG Group
Minnesota Mining and Manufacturing (3M)
Montblanc-Simplo GmbH
Polaroid Corporation
Samsung Group

<PAGE>
You should rely only on information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or any sale of our common stock.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.......................................... 3

Risk Factors................................................ 7

Use of Proceeds............................................. 14

Dividend Policy............................................. 14

Capitalization.............................................. 15

Dilution.................................................... 16

Selected Financial Data..................................... 17

Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 19

Business.................................................... 30

Management.................................................. 44

Certain Relationships and Related Transactions.............. 51

Principal and Selling Stockholders.......................... 52

Description of Capital Stock................................ 54

Shares Eligible for Future Sale............................. 58

Underwriting................................................ 60

Validity of Common Stock.................................... 62

Experts..................................................... 62

Where You Can Find More Information......................... 62

Index to Consolidated Financial Statements.................. F-1
</TABLE>

------------------------

Until , all dealers that buy, sell or trade in our common
stock, whether or not participating in this offering, may be required to deliver
a prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as an underwriter and with respect to its unsold
allotments or subscriptions.

2
<PAGE>
PROSPECTUS SUMMARY

YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION AND OUR CONSOLIDATED FINANCIAL STATEMENTS, THE NOTES TO THOSE
STATEMENTS AND THE OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS.

MOLDFLOW CORPORATION

We believe we are the world's leading developer of software solutions that
enhance the design, analysis and manufacture of injection molded plastic parts.
We have developed a suite of software applications that address the difficulties
and variables inherent in the design and production of injection molded plastic
parts. We believe we have the widest and most advanced range of software
solutions and proprietary technology to address the problems that arise in each
phase of the process of designing and manufacturing injection molded plastic
parts. Our products enable our customers to speed their products to market,
decrease manufacturing costs and reduce costly design and manufacturing errors
with an automated and integrated process. Our products are used by more than
2,200 customers at more than 2,500 sites in over 50 countries around the world.
Representative customers include Baxter International, DaimlerChrysler, DuPont,
Fuji Xerox, Hewlett-Packard, Lego, Lucent Technologies, Motorola, Nokia and
Samsung.

The use of plastics as a manufacturing material is widespread because
plastic parts can be formed into an almost limitless number of shapes, are
relatively inexpensive to manufacture in volume and are easy to assemble.
Injection molding, the dominant method by which plastic parts are produced, is
extremely complex due to the inherent difficulties and the many variables
encountered in transforming various molten plastic materials into sophisticated
part shapes. Common consumer products that make extensive use of injection
molded plastic parts include cellular telephones, personal digital assistants,
pagers, automobiles, televisions, cameras, toys and personal computers. As
product life cycles shrink and the importance of time to market increases,
successful manufacturers in these industries must design and build products
quickly. In particular, product delays or high product defect rates for
manufacturers in rapidly changing industries can result in significant economic
and opportunity costs.

We believe a substantial portion of companies producing injection molded
plastic parts continue to employ trial-and-error at most steps of the design and
production process. We believe this condition exists today primarily because of
the limited availability of specific software tools which are capable of
addressing many of the complex and unique issues involved in designing injection
molded plastic parts and their molds. Further, the trend toward outsourcing and
supply chain management across multiple geographic time zones has exacerbated
the inefficiencies and costs occurring in the design and manufacturing of
plastic parts.

Prior to 1997, our products were designed to be used by highly specialized
engineers conducting in-depth plastics simulation. Since then, we have developed
two new product lines that can be used by design engineers and injection molding
machine operators who do not specialize in plastic part design. We believe a
large untapped market exists for these new product lines. In particular, we
believe that up to 750,000 injection molding machines are currently in use and
are being operated without integrated software solutions that can analyze and
improve the efficiency of their production.

We intend to exploit the universal accessibility of the Internet to further
grow our business. For example, we are currently configuring our products for
use in an application service provider or ASP model, which would permit our
customers to use our products on demand over the Internet. We also intend to
create an Internet portal to enable our customers to use our production set-up
and monitoring product to remotely monitor the injection molding manufacturing
process, including machine efficiency and production data, from anywhere in the
world. We believe this global

3
<PAGE>
availability of software solutions addressing each stage of the plastics product
development process will provide an environment for continuous collaboration
across all participants in a supply chain for every plastic part made.

We operate facilities in nine countries. We sell our products worldwide
primarily through our direct sales force in North America, Europe and Asia and,
to a lesser extent, through original equipment manufacturers and distributors.
We have distribution arrangements with Parametric Technology Corporation,
Structural Dynamics Research Corporation or SDRC, Unigraphics Solutions and
CoCreate and resellers of products of SolidWorks, a subsidiary of Dassault
Systemes, and Autodesk. Our research and development efforts involve
approximately 50 research and development personnel located at our United
States, Australia and United Kingdom facilities. As a result, our research and
development continues on an around-the-clock basis.

On February 11, 2000, we entered into a definitive agreement to acquire
C-Mold, a developer of software solutions for the design and analysis of
injection molded plastic parts headquartered in Ithaca, New York. C-Mold has
developed software that is complementary to our current product offerings in the
areas of part design and in-depth plastics simulation. In particular, we believe
the acquisition of C-Mold will enhance our development capabilities and enable
us to broaden our product lines into adjacent markets more quickly. C-Mold had
$7.7 million in revenue for the fiscal year ended September 30, 1999. The
purchase price will be $11.0 million in cash. We anticipate that the acquisition
will close on or prior to May 31, 2000. However, our acquisition of C-Mold may
not be completed.

------------------------

We were reincorporated in Delaware as Moldflow Corporation on January 15,
1997. From 1994 to 1997, we existed as an Australian corporation under the name
Moldflow International Pty. Ltd. From 1980 to 1994, we existed as an Australian
corporation under the name Moldflow Pty. Ltd. Our principal executive offices
are located at 91 Hartwell Avenue, Lexington, MA 02421. Our telephone number at
that location is (781) 674-0085 and our Internet address is www.moldflow.com.
The information contained on our Website is not part of this prospectus.

The name Moldflow and our logo are names and trademarks that belong to us.
We have registrations for other names and marks used in this prospectus. This
prospectus also contains the trademarks and trade names of other entities that
are the property of their respective owners.

4
<PAGE>
THE OFFERING

Shares offered by Moldflow................... 3,000,000 shares

Common stock to be outstanding after this
offering................................... 9,069,610 shares

Use of proceeds.............................. To fund our pending acquisition of C-Mold and
for general corporate purposes, including
research and development, expansion of our
direct sales operations, working capital,
capital expenditures and any other
acquisitions. See "Use of Proceeds."

Proposed Nasdaq National Market symbol....... MFLO

Risk factors................................. See "Risk Factors" for discussion of factors
you should carefully consider before deciding
to invest in shares of our common stock.
</TABLE>

The number of shares of our common stock that will be outstanding after this
offering excludes 605,071 shares of common stock issuable upon exercise of stock
options outstanding at January 20, 2000 at a weighted average exercise price of
$3.79 per share.

------------------------

EXCEPT AS OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO
EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. IN ADDITION, WE HAVE
ADJUSTED ALL OF THE INFORMATION IN THIS PROSPECTUS, EXCEPT AS OTHERWISE NOTED,
TO REFLECT:

- A 2.4-TO-1 REVERSE STOCK SPLIT OF OUR COMMON STOCK TO BE EFFECTED IN
CONNECTION WITH THIS OFFERING,

- THE CONVERSION OF ALL OUTSTANDING SHARES OF OUR CLASS C PREFERRED STOCK
INTO SHARES OF COMMON STOCK UPON THE CLOSING OF THIS OFFERING,

- THE EXERCISE OF THE OUTSTANDING WARRANT TO PURCHASE 20,833 SHARES OF OUR
COMMON STOCK AT AN AGGREGATE EXERCISE PRICE OF $150,000 UPON THE CLOSING
OF THIS OFFERING, AND

- THE AMENDMENT AND RESTATEMENT OF OUR CERTIFICATE OF INCORPORATION IN
CONNECTION WITH THIS OFFERING.

5
<PAGE>
SUMMARY FINANCIAL DATA

The tables below present our summary consolidated financial data which you
should read together with our consolidated financial statements and related
notes and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" presented elsewhere in this prospectus. The pro forma
combined statement of operations data reflects the combined results of Moldflow
and C-Mold as if the acquisition of C-Mold had been completed at the beginning
of the applicable period. Pro forma net income per common share reflects the
assumed conversion of all convertible preferred stock and the exercise of an
outstanding warrant into shares of common stock upon the closing of this
offering as if they had occurred at the beginning of the applicable period. The
as adjusted balance sheet data at January 1, 2000 reflects the automatic
conversion of all outstanding shares of preferred stock into an aggregate of
5,488,450 shares of common stock and the exercise of the outstanding warrant to
purchase 20,833 shares of common stock upon the closing of this offering, as
well as the sale of the 3,000,000 shares of common stock in this offering,
assuming an initial public offering price of $13.00 per share and after
deducting underwriting discounts and commissions and our estimated offering
expenses. The pro forma combined as adjusted balance sheet data further reflects
the acquisition of C-Mold as if it had occurred on January 1, 2000.

<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS ENDED SIX MONTHS
FISCAL YEAR ENDED ENDED ----------------------- ENDED
JUNE 30, JUNE 30, 1999 JANUARY 1, 2000
------------------------------ PRO FORMA JANUARY 2, JANUARY 1, PRO FORMA
1997 1998 1999 COMBINED 1999 2000 COMBINED
-------- -------- -------- -------------- ---------- ---------- ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Software licenses................ $ 6,743 $ 8,514 $12,238 $16,010 $5,275 $ 6,651 $ 8,483
Services......................... 8,080 7,875 7,983 11,879 3,969 4,853 6,957
------- ------- ------- ------- ------ ------- -------
Total revenue.................. 14,823 16,389 20,221 27,889 9,244 11,504 15,440
Operating expenses, excluding
amortization and litigation...... 16,230 15,734 18,675 26,578 8,877 10,610 14,324
Amortization of goodwill and other
intangible assets................ 2,370 84 -- 1,543 -- -- 772
Litigation......................... -- -- 620 -- -- 530 --
------- ------- ------- ------- ------ ------- -------
Income (loss) from operations...... (3,777) 571 926 (232) 367 364 344
Net income (loss).................. (4,270) 189 351 73 433

Pro forma net income per common
share:
Basic............................ $ 0.06 $ 0.07
Diluted.......................... $ 0.06 $ 0.07

Shares used in computing pro forma
net income per common share:
Basic............................ 5,717 5,855
Diluted.......................... 6,166 6,311
</TABLE>

<TABLE>
<CAPTION>
AS OF JANUARY 1, 2000
--------------------------------------
PRO FORMA
COMBINED
ACTUAL AS ADJUSTED AS ADJUSTED
-------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 1,328 $36,248 $27,188
Total assets................................................ 10,564 45,484 49,513
Stockholders' equity........................................ 1,763 36,683 36,683
</TABLE>

6
<PAGE>
RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND ALL OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING OUR COMMON STOCK. IF ANY OF THE
FOLLOWING RISKS OCCUR, OUR BUSINESS, PROSPECTS, RESULTS OF OPERATIONS OR
FINANCIAL CONDITION COULD BE HARMED. IN THAT CASE, THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE, AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.

IF WE EXPERIENCE DELAYS IN INTRODUCING NEW PRODUCTS OR IF OUR EXISTING OR NEW
PRODUCTS DO NOT ACHIEVE MARKET ACCEPTANCE, WE MAY LOSE REVENUE.

Our industry is characterized by:

- rapid technological advances,

- evolving industry standards,

- changes in end-user requirements,

- intense competition,

- technically complex products,

- frequent new product introductions, and

- evolving offerings by product manufacturers.

We believe our future success will depend, in part, on our ability to
anticipate or adapt to these factors and to offer on a timely basis products
that meet customer demands. For example, the introduction of new products and
services embodying new technologies and the emergence of new industry standards
can render our existing products obsolete. The development of new or enhanced
products is a complex and uncertain process requiring the anticipation of
technological and market trends. We may experience design, manufacturing,
marketing and other difficulties that could delay or prevent our development,
introduction or marketing of new products and enhancements and result in
unexpected expenses.

Our growth and profitability also will depend upon our ability to expand the
use and market penetration of our existing product lines as well as new products
we introduce. Market acceptance of our products will depend in part on our
ability to demonstrate the cost-effectiveness, ease of use and technological
advantages of our products over competing products.

WE DO NOT HAVE EXTENSIVE EXPERIENCE IN INTERNET-ENABLED PRODUCTS AND WE MAY BE
UNABLE TO SUCCESSFULLY DEVELOP AN INTERNET-BASED PRODUCT.

Our business strategy includes providing additional Internet-related
functions to our products to exploit the trend toward worldwide collaborative
product development and manufacturing and to explore new pricing and packaging
strategies made possible by the Internet. We have limited experience in
developing and marketing Internet-based products. We may be unable to capitalize
on the rapid transformation of the Internet as a computing platform,
communications vehicle and distribution channel.

IF INTERNET USAGE DOES NOT CONTINUE TO GROW, WE MAY NOT BE ABLE TO SUCCESSFULLY
IMPLEMENT OUR INTERNET STRATEGY.

Widespread use of the Internet is a relatively recent phenomenon. The future
success of our Internet strategy depends, in part, on the continued development
of the Internet as a viable commercial medium. We cannot be certain that the
Internet will continue to be developed or accessible for free or at nominal cost
to users. In this event, our future growth may be adversely impacted.

7
<PAGE>
OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO ATTRACT OR RETAIN KEY PERSONNEL.

In order to grow our business, we will have to hire additional employees in
various countries. Our future success, therefore, will depend, in part, on
attracting and retaining additional qualified management, marketing and
technical personnel. We do not know whether we will be successful in hiring or
retaining qualified personnel. Competition for personnel throughout the software
industry is intense.

IF WE ARE FORCED TO DEFEND AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WE
COULD INCUR SIGNIFICANT EXPENSES AND OUR BUSINESS COULD BE ADVERSELY AFFECTED.

Our products include proprietary intellectual property. We may become
subject to claims that we infringe on the proprietary rights of others. In the
United States, a significant number of software and business method patents have
been issued over the past decade and the holders of these patents have been
actively seeking out potential infringers. If any element of our products or
services violates third-party proprietary rights, we might not be able to obtain
licenses on commercially reasonable terms to continue offering our products or
services without substantial re-engineering and any effort to undertake such
re-engineering might not be successful. In addition, any claim of infringement
could cause us to incur substantial costs defending against the claim, even if
the claim is invalid, and could distract our management from our business. Any
judgment against us could require us to pay substantial damages and could also
include an injunction or other court order that could prevent us from offering
our products and services.

OUR BUSINESS MAY SUFFER IF WE ARE NOT ABLE TO PROTECT IMPORTANT INTELLECTUAL
PROPERTY.

Our ability to compete effectively against other companies in our industry
will depend, in part, on our ability to protect our proprietary rights in our
technology. We may be unable to maintain the proprietary nature of our
technology. While we have attempted to safeguard and maintain our proprietary
rights, we do not know whether we have been or will be completely successful in
doing so.

We rely, in part, on contractual provisions to protect our trade secrets and
proprietary knowledge. These agreements may be breached, and we may not have
adequate remedies for any breach. Our trade secrets may also become known
without breach of such agreements or may be independently developed by
competitors. In addition, foreign countries, including some of those in which we
do business, may reduce or limit the protection of our intellectual property
rights.

WE MAY BE ADVERSELY AFFECTED BY INTERNATIONAL BUSINESS RISKS.

The majority of our employees, including sales, support and research and
development personnel, are located outside of the United States. Conducting
business outside of the United States is subject to numerous risks, including:

- longer accounts receivable collection cycles typical of foreign countries,

- possible foreign currency exchange and conversion issues,

- difficulties in managing operations across many countries,

- difficulties associated with enforcing agreements and collecting
receivables through foreign legal systems,

- changes in a specific country's or region's political or economic
conditions,

- global employment issues and the ability to attract and retain qualified
personnel,

- the imposition by foreign governments of trade protection measures, and

- import or export licensing requirements.

8
<PAGE>

OUR PENDING ACQUISITION OF C-MOLD AS WELL AS ANY FUTURE ACQUISITIONS AND
STRATEGIC RELATIONSHIPS MAY RESULT IN DISRUPTIONS TO OUR BUSINESS AND THE
DISTRACTION OF OUR MANAGEMENT.

On February 11, 2000, we entered into a definitive agreement to acquire
Advanced CAE Technology, Inc., a software company doing business as C-Mold. We
may not complete the acquisition. The value of C-Mold may not be greater than or
equal to the purchase price. If we are unable to effectively integrate C-Mold's
products, personnel and systems, our business and operating results will likely
suffer. We expect this integration to place a significant burden on our
management team. Further, we cannot guarantee that we will realize any of the
benefits or strategic objectives we are seeking to obtain by acquiring C-Mold.
In connection with accounting for the acquisition of C-Mold, we will record a
significant amount of goodwill and other intangible assets, the amortization of
which will adversely affect our results of operations in future periods.

Additionally, we may engage in other acquisitions and strategic
relationships in the future. We may not be able to identify suitable acquisition
candidates, and, if we do identify suitable candidates, we may not be able to
make such acquisitions on commercially acceptable terms or at all. If we acquire
another company, we will only receive the anticipated benefits if we
successfully integrate the acquired business into our existing business in a
timely and non-disruptive manner. We may have to devote a significant amount of
time and management and financial resources to do so. Even with this investment
of management and financial resources, an acquisition may not produce the
revenues, earnings or business synergies that we anticipated. If we fail to
integrate the acquired business effectively or if key employees of that business
leave, the anticipated benefits of the acquisition would be jeopardized. The
time, capital, management and other resources spent on an acquisition that
failed to meet our expectations could cause our business and financial condition
to be materially and adversely affected. In addition, acquisitions can involve
non-recurring charges and amortization of significant amounts of goodwill and
other acquired intangible assets that could adversely affect our results of
operations.

WE MAY BE ADVERSELY AFFECTED BY PENDING LITIGATION INVOLVING A FORMER EMPLOYEE
AND ONE OF OUR COMPETITORS.

We are pursuing a lawsuit against both a former Moldflow employee and C-Mold
alleging theft and misappropriation of some of our trade secrets. In response to
our lawsuit, C-Mold filed counterclaims against us alleging antitrust
violations, defamation and trade libel and tortious interference. We may suffer
adverse consequences as a result of this lawsuit or the counterclaims which we
cannot now predict. If the lawsuit or the counterclaims are decided against us,
we could suffer monetary damages, lose our product development advantage and
face enhanced competition. Continuation of the lawsuit or the counterclaims will
result in additional litigation expenses. This litigation is currently being
held in abeyance in connection with our pending acquisition of C-Mold. If the
acquisition is completed, this litigation will be dismissed with prejudice by
the agreement of all parties. If for any reason our acquisition of C-Mold is not
completed, we expect that the litigation will resume.

WE MAY BE ADVERSELY AFFECTED BY INCREASED COMPETITION IN OUR INDUSTRY AND MAY BE
UNABLE TO COMPETE SUCCESSFULLY.

We operate in a highly competitive environment and may not be able to
successfully compete. Entities in similar industries could decide to focus on
the development of software solutions for the design, analysis, and
manufacturing of injection molded plastic parts. Many of these entities have
substantially greater financial, research and development, manufacturing and
marketing resources than we do. Increased competition may result in price
reductions, reduced profitability and loss of market share.

9
<PAGE>
OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS AND AS A
RESULT PERIOD-TO-PERIOD COMPARISONS OF OUR RESULTS OF OPERATIONS ARE NOT
NECESSARILY MEANINGFUL AND SHOULD NOT BE RELIED UPON AS INDICATORS OF FUTURE
PERFORMANCE.

We have experienced significant fluctuations in our results of operations on
a quarterly basis. We expect to continue to experience significant fluctuations
in our future quarterly results of operations due to a variety of factors, many
of which are outside of our control, including:

- seasonal slowdowns, in particular, in our first fiscal quarter, in many of
the markets in which we sell our products,

- demand for and market acceptance of our products and services,

- customer retention,

- developments in the litigation that we are pursuing against our former
employee and our competitor, and in the nature and extent of proceedings
and findings related to the counterclaims pending against us,

- the timing and magnitude of capital expenditures, including costs relating
to the expansion of our operations and infrastructure,

- introductions of new services or enhancements by us and our competitors,

- increased competition in our industry,

- changes in our and our competitors' pricing policies,

- currency fluctuations,

- general economic conditions affecting our industry, and

- timing and integration of acquisitions.

WE MAY HAVE DIFFICULTY MANAGING THE EXPANSION OF OUR OPERATIONS.

The implementation of our business strategy could result in a period of
rapid growth in the number of our employees and the scope of our operations. In
addition, if we complete the acquisition of C-Mold, we will be further expanding
the number of employees and facilities. Rapid expansion could place a
significant strain on our senior management team and our operational, financial
and other resources as we attempt to expand our operations in multiple locations
around the world. We may have difficulty effectively managing the budgeting,
forecasting, global hiring and other business control issues presented by such a
rapid expansion. This could, among other things, adversely affect our
relationships with our customers and result in delays in billing and collections
of revenue from our customers and increased costs.

IF WE ARE UNABLE TO MAINTAIN AND LEVERAGE OUR STRATEGIC ALLIANCES, WE MAY BE
UNABLE TO GROW AS PLANNED.

We are, and will continue to be, dependent to some extent on distribution
arrangements and strategic partnerships with third-parties because we sell a
portion of our products through these third parties. In addition, we may sell
other products through third-party distributors in the future. These third
parties may not fulfill their agreements with us. In particular, third-party
distributors may breach or terminate their distribution agreements with us or
fail to devote sufficient time and resources to successfully commercialize, or
increase sales of, our products. As a result, our revenues from these
arrangements depend, in part, on third parties' sales of our products.

10
<PAGE>
DISRUPTION OF OPERATIONS AT OUR MELBOURNE, AUSTRALIA FACILITY COULD INTERFERE
WITH OUR PRODUCT DEVELOPMENT AND PRODUCTION CYCLES.

A significant portion of our computer equipment, source code and personnel,
including critical resources dedicated to research and development, is presently
located at a single operating facility in a suburb of Melbourne, Australia. The
occurrence of a natural disaster or other unanticipated catastrophe at this
facility could cause interruptions in our operations and services. Extensive or
multiple interruptions in our operations at this facility could severely disrupt
our product development.

OUR MOLDFLOW PLASTICS XPERT (MPX) PRODUCT LINE MAY LEAD TO PRODUCT LIABILITY
CLAIMS AGAINST US.

We have designed our Moldflow Plastics Xpert (MPX) product line to be
installed directly on our customers' injection molding machines and to
automatically adjust the operation of these machines. As a result, it is
possible that our customers may claim that our product interfered with the
proper operation of their machines and may seek reimbursement for consequential
and other damages from us. Although we expressly disclaim any liability for
consequential or other damages in connection with our sale of the MPX product,
this disclaimer may not protect us from claims for damages from our customers
and these claims may adversely affect our relationships with our customers or
our reputation generally. In addition, our insurance coverage limits may not be
adequate to protect us against any product liability claims that arise. This
insurance is expensive and may not be available on acceptable terms, or at all.

ANY DISRUPTION OF OUR RELATIONS WITH OUR SUPPLIERS COULD INCREASE OUR COSTS OR
CAUSE DELAYS IN ORDER FULFILLMENT.

We purchase some of the software components and all of the hardware
components included in our product offerings from limited sources. Any
disruption in our relationships with any of the suppliers of these components
could increase our costs, adversely affect our ability to timely fill customer
orders and disrupt our product development efforts.

OUR EXISTING STOCKHOLDERS WILL HAVE SUBSTANTIAL INFLUENCE OVER MATTERS REQUIRING
A STOCKHOLDER VOTE.

Upon the closing of this offering, funds associated with Ampersand Ventures
will own approximately 44.5% of our outstanding common stock. Ampersand will,
therefore, have the ability to exert significant influence over our board of
directors and the outcome of stockholder votes. Furthermore, officers, directors
and their affiliates, including Ampersand, will own approximately 60.7% of our
outstanding common stock. If all of these stockholders were to vote together as
a group, they would have the ability to elect our board of directors and control
the outcome of stockholder votes.

AN ACTIVE TRADING MARKET FOR OUR COMMON STOCK MAY NOT DEVELOP.

Before this offering, there has been no public market for our common stock.
Although we expect our common stock to be quoted on the Nasdaq National Market,
an active trading market for our shares may not develop or be sustained
following this offering. You may not be able to resell your shares at prices
equal to or greater than the initial public offering price. The initial public
offering price will be determined through negotiations between us and the
underwriters and may not be indicative of the market price for these shares
following this offering. You should read "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price.

11
<PAGE>
OUR STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE.

The stock market has, from time to time, experienced extreme price and
volume fluctuations. Many factors may cause the market price for our common
stock to decline, perhaps substantially, following this offering, including:

- a decrease in the demand for our common stock,

- revenues and operating results failing to meet the expectations of
securities analysts or investors in any quarter,

- downward revisions in securities analysts' estimates or changes in general
market conditions,

- technological innovations by competitors or in competing technologies,

- investor perception of our industry or our prospects, and

- general technology or economic trends.

In the past, companies that have experienced volatility in the market price
of their stock have been the subject of securities class action litigation. We
may be involved in a securities class action litigation in the future. Such
litigation often results in substantial costs and a diversion of management's
attention and resources and could harm our business, financial condition and
results of operations.

SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY AFFECT OUR
STOCK PRICE.

The market price of our common stock could decline as a result of sales of
shares by our existing stockholders after this offering, or the perception that
such sales will occur. These sales also might make it difficult for us to sell
equity securities in the future at a time and at a price that we deem
appropriate. After this offering, we will have 9,069,610 shares of common stock
outstanding. All of the shares sold in this offering will be freely tradeable.
Of the remaining shares, over 99% are subject to 180-day lock-up agreements. At
least 6,069,610 shares will generally be available for sale in the public market
180 days after the date of this prospectus. In addition, approximately 180 days
after this offering, we intend to register 2,000,000 shares of common stock for
issuance under our 2000 Stock Option and Incentive Plan and promptly following
this offering we intend to register 500,000 shares of common stock for issuance
under our Employee Stock Purchase Plan.

WE WILL HAVE BROAD DISCRETION AS TO THE USE OF THE PROCEEDS FROM THIS OFFERING.

Our board of directors and management will have broad discretion over the
use of the net proceeds of this offering. You may disagree with the judgment of
our board of directors and management regarding the application of the proceeds
of this offering.

PROVISIONS OF DELAWARE LAW AND OF OUR CHARTER AND BY-LAWS MAY MAKE A TAKEOVER
MORE DIFFICULT.

Provisions in our certificate of incorporation and by-laws and in the
Delaware corporate law may make it difficult and expensive for a third party to
pursue a tender offer, change in control or takeover attempt which is opposed by
our management and board of directors. Public stockholders who might desire to
participate in such a transaction may not have an opportunity to do so. We also
have a staggered board of directors which makes it difficult for stockholders to
change the composition of the board of directors in any one year. These
anti-takeover provisions could substantially impede the ability of public
stockholders to change our management and board of directors.

12
<PAGE>
YOU WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.

The initial public offering price per share will be substantially higher
than the net tangible book value per share immediately after the offering. If
you purchase common stock in this offering, you will incur immediate and
substantial dilution in the net tangible book value per share of the common
stock from the price you paid. We also have a large number of outstanding stock
options to purchase our common stock with exercise prices significantly below
the initial public offering price of the common stock. To the extent that the
holders of these options exercise them, you will experience further dilution.

WE DO NOT INTEND TO PAY DIVIDENDS.

We have never declared or paid any cash dividends on our common stock. We
currently intend to retain our future earnings, if any, to finance the expansion
of our business and do not expect to pay any cash dividends in the foreseeable
future. In addition, our existing credit facility does not permit us to pay cash
dividends.

OUR BUSINESS MAY BE ADVERSELY AFFECTED BY YEAR 2000 PROBLEMS.

In conducting our business, we rely on computer systems to manage our
business and to serve our customers. Further, all of our products include
computer software or hardware components or both. Year 2000 problems may
adversely affect our operations and increase our costs. Among other things, Year
2000 problems could cause us to:

- fail to fulfill our contractual obligations with our customers,

- face substantial claims by our customers and loss of revenue,

- fail to bill our customers accurately and on a timely basis, and

- be subject to the inability by customers and others to pay, on a timely
basis or at all, obligations owed to us.

Although the effects of any or all of these events are not quantifiable at
this time, any of these events could have a material adverse effect on our
business and operating results.

FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN.

Some statements about us and our industry under the captions "Prospectus
Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business" and
elsewhere in this prospectus are "forward-looking statements." These
forward-looking statements include, but are not limited to, statements about our
plans, objectives, expectations, intentions and assumptions, the industry in
which we operate and other statements in this prospectus that are not historical
facts. When we use the words "estimate," "project," "believe," "anticipate,"
"intend," "plan," "expect" and similar expressions in this prospectus, we
generally intend to identify forward-looking statements. Because these forward-
looking statements involve risks and uncertainties, including those described in
this "Risk Factors" section, actual results could differ materially from those
expressed or implied by these forward-looking statements. We caution you not to
place undue reliance on these forward-looking statements.

13
<PAGE>
USE OF PROCEEDS

We estimate that the net proceeds to us from our sale of 3,000,000 shares of
our common stock in this offering will be approximately $34.8 million, assuming
an initial public offering price of $13.00 per share and after deducting the
underwriting discounts and commissions and our estimated offering expenses. If
the underwriters exercise their over-allotment option in full, we estimate that
our net proceeds will be approximately $ . We intend to use
approximately $11.2 million of our net proceeds to fund our pending acquisition
of C-Mold and related transaction expenses and the remainder for general
corporate purposes, including research and development, expansion of our direct
sales operations, working capital, capital expenditures and any other
acquisitions. We will not receive any proceeds from the sale of shares by
selling stockholders in this offering in connection with the exercise of the
over-allotment option.

Until used, we intend to invest these proceeds in government securities and
other short-term, investment-grade securities.

DIVIDEND POLICY

14
<PAGE>
CAPITALIZATION

The following table sets forth our capitalization as of January 1, 2000 on
an actual basis and as adjusted for the following:

- the filing prior to the effective date of this offering of an amended
certificate of incorporation authorizing 60,000,000 shares of common stock
and 5,000,000 shares of undesignated preferred stock,

- the conversion of all outstanding shares of preferred stock into an
aggregate of 5,488,450 shares of common stock upon the closing of this
offering,

- the exercise of the outstanding warrant to acquire 20,833 shares of common
stock at an aggregate exercise price of $150,000 upon the closing of this
offering, and

- the receipt of the estimated net proceeds of $34.8 million from our sale
in this offering of 3,000,000 shares of common stock assuming an initial
public offering price of $13.00 per share.

<TABLE>
<CAPTION>
AS OF JANUARY 1, 2000
-----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Convertible preferred stock, $0.01 par value per share:
Series C-1; 4,918,616 shares authorized, issued and
outstanding, actual; no shares authorized, issued and
outstanding, as adjusted................................ $ 1,151 $ --
Series C-2; 1,855,688 shares authorized, issued and
outstanding, actual; no shares authorized, issued and
outstanding, as adjusted................................ 8,382 --
Series C-3; 1,480,082 shares authorized, 1,365,275 issued
and outstanding, actual; no shares authorized, issued
and outstanding, as adjusted............................ 2,963 --
------- --------
Total convertible preferred stock....................... 12,496 --
Undesignated preferred stock, $0.01 par value per share; no
shares authorized, issued and outstanding, actual;
5,000,000 shares authorized, no shares issued and
outstanding, as adjusted.................................. -- --
Common stock, $0.01 par value per share; 20,000,000 shares
authorized, 560,327 shares issued and outstanding, actual;
60,000,000 shares authorized, 9,069,610 shares issued and
outstanding, as adjusted.................................. 6 91
Additional paid-in capital.................................. 285 47,616
Deferred compensation....................................... (57) (57)
Notes receivable from stockholders.......................... (198) (198)
Accumulated deficit......................................... (11,410) (11,410)
Accumulated other comprehensive income...................... 641 641
------- --------
Total stockholders' equity................................ 1,763 36,683
------- --------
Total capitalization.................................... $ 1,763 $ 36,683
======= ========
</TABLE>

The above table excludes 574,234 shares of common stock issuable upon
exercise of stock options outstanding as of January 1, 2000 at a weighted
average exercise price of $3.35 per share. The above table also assumes no
exercise of the underwriters' over-allotment option.

15
<PAGE>
DILUTION

As of January 1, 2000, we had a pro forma net tangible book value of $1.9
million, or $0.32 per share of common stock. Pro forma net tangible book value
per share is equal to our total tangible assets less total liabilities, divided
by the number of shares of our outstanding common stock assuming the conversion
of all outstanding preferred stock into common stock and the exercise of the
outstanding warrant to purchase common stock.

After giving effect to the sale of the 3,000,000 shares of common stock
offered by us at an assumed initial public offering price of $13.00 per share,
and after deducting our underwriting discounts and commissions and our estimated
offering expenses, our pro forma net tangible book value as of January 1, 2000
would have been $36.7 million, or $4.04 per share of common stock. This
represents an immediate increase in pro forma net tangible book value of $3.72
per share to our existing stockholders and an immediate dilution of $8.96 per
share to new investors in this offering. If the initial public offering price is
higher or lower than $13.00 per share, the dilution to new stockholders will be
higher or lower. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $13.00
------
Pro forma net tangible book value per share before this $0.32
offering................................................
Increase per share attributable to new investors.......... 3.72
-----
Pro forma net tangible book value per share after this
offering.................................................. 4.04
------
Dilution per share to new investors......................... $ 8.96
======
</TABLE>

In addition, after giving effect to the acquisition of C-Mold, our pro forma
net tangible book value after this offering as of January 1, 2000 would have
been $28.9 million, or $3.19 per share of common stock.

The following table summarizes, on a pro forma basis as of January 1, 2000,
the number of shares of common stock purchased, the total consideration paid and
the average price per share paid by existing stockholders and new investors in
this offering assuming the conversion of all outstanding preferred stock into
common stock and the exercise of the outstanding warrant to purchase common
stock. The table assumes that the initial public offering price will be $13.00.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- -------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.............. 6,069,610 66.9% $12,937,000 24.9% $ 2.13
New investors...................... 3,000,000 33.1 39,000,000 75.1 13.00
--------- ----- ----------- -----
Total.......................... 9,069,610 100.0% $51,937,000 100.0%
========= ===== =========== =====
</TABLE>

The tables above exclude:

- shares which may be issued by us pursuant to the underwriters'
over-allotment option,

- 574,234 shares of common stock issuable upon exercise of outstanding
options at January 1, 2000 at a weighted average exercise price of $3.35
per share, and

- an aggregate of 2,500,000 shares available for future grant under our 2000
Stock Option and Incentive Plan and our Employee Stock Purchase Plan.

To the extent our outstanding options are exercised, new investors may
experience further dilution.

16
<PAGE>
SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and related
notes included elsewhere in this prospectus. The statement of operations data
for the years ended June 30, 1997, 1998 and 1999 and the balance sheet data at
June 30, 1998 and 1999 are derived from our audited consolidated financial
statements appearing elsewhere in this prospectus. The balance sheet data at
June 30, 1997 are derived from our audited consolidated financial statements not
included in this prospectus. The statement of operations data for the years
ended June 30, 1995 and 1996 and the balance sheet data at June 30, 1995 and
1996 are derived from our unaudited consolidated financial statements not
included in this prospectus. The unaudited consolidated financial statements, in
the opinion of management, have been prepared on the same basis as the audited
consolidated financial statements and reflect all adjustments necessary for a
fair presentation of that data. The interim statement of operations data for the
six-month periods ended January 2, 1999 and January 1, 2000 and the interim
balance sheet data at January 1, 2000 are derived from our unaudited
consolidated interim financial statements appearing elsewhere in this prospectus
which, in the opinion of management, have been prepared on the same basis as the
audited consolidated financial statements and reflect all adjustments necessary
for a fair presentation of that data. The data for the six-month period ended
January 1, 2000 are not necessarily indicative of results for the year ending
June 30, 2000 or any future period. Pro forma net income per common share
reflects the assumed conversion of all outstanding convertible preferred stock
and the exercise of the outstanding warrant into shares of common stock upon
completion of this offering as if such conversion had occurred at the beginning
of the applicable period.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED JUNE 30, -----------------------
---------------------------------------------------- JANUARY 2, JANUARY 1,
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Software licenses.................... $ 5,374 $ 6,531 $ 6,743 $ 8,514 $12,238 $5,275 $ 6,651
Services............................. 6,162 7,472 8,080 7,875 7,983 3,969 4,853
------- ------- ------- ------- ------- ------ -------
Total revenue...................... 11,536 14,003 14,823 16,389 20,221 9,244 11,504
------- ------- ------- ------- ------- ------ -------
Costs and expenses:
Cost of software licenses revenue.... 215 261 377 397 378 168 322
Cost of services revenue............. 1,676 2,615 1,904 1,685 1,319 605 491
Research and development............. 2,234 3,535 3,527 3,062 3,466 1,754 1,709
Selling and marketing................ 4,541 6,094 6,703 7,287 9,673 4,615 5,811
General and administrative........... 2,486 2,550 3,719 3,303 3,839 1,735 2,277
Litigation........................... -- -- -- -- 620 -- 530
Amortization of intangible assets.... 2,440 2,904 2,370 84 -- -- --
------- ------- ------- ------- ------- ------ -------
Total operating expenses........... 13,592 17,959 18,600 15,818 19,295 8,877 11,140
------- ------- ------- ------- ------- ------ -------

Income (loss) from operations........ (2,056) (3,956) (3,777) 571 926 367 364
Interest income (expense), net......... 156 135 (139) (238) (177) (85) (39)
Other income (loss), net............... 766 (24) 17 19 (92) (22) (64)
------- ------- ------- ------- ------- ------ -------
Income (loss) before income taxes and
extraordinary loss................. (1,134) (3,845) (3,899) 352 657 260 261
Provision for income taxes............. 466 414 371 163 176 57 (172)
Extraordinary loss from early
extinguishment of debt, net of
taxes................................ -- -- -- -- 130 130 --
------- ------- ------- ------- ------- ------ -------
Net income (loss).................... (1,600) (4,259) (4,270) 189 351 73 433
Accretion on convertible preferred
stock................................ 146 482 741 80 -- -- --
------- ------- ------- ------- ------- ------ -------
Net income (loss) available to common
stockholders....................... $(1,746) $(4,741) $(5,011) $ 109 $ 351 $ 73 $ 433
======= ======= ======= ======= ======= ====== =======
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
AS OF JUNE 30,
---------------------------------------------------- AS OF JANUARY 1,
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................... $ 564 $ 1,638 $ 1,009 $ 1,700 $ 1,240 $ 1,328
Total assets................................. 16,184 16,432 13,940 14,336 10,247 10,564
Long-term debt, net of current portion....... -- -- 524 890 -- --
Redeemable convertible preferred stock....... 1,608 9,582 10,322 -- -- --
Stockholders' equity (deficit)............... 3,461 (5,340) (10,584) 34 1,270 1,763
</TABLE>

The computation of basic and diluted net income (loss) per common share has
been adjusted retroactively for all periods presented to reflect the
redesignation of our common and preferred stock in March 1998. As a result of
the treatment of this redesignation, we had no common stock outstanding prior to
June 30, 1998 for purposes of computing net income (loss) per common share.
Accordingly, basic net income (loss) per common share was zero for the years
ended June 30, 1995, 1996, 1997 and 1998.

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS.

OVERVIEW

Our primary business is the development, sale and support of software
applications for the design and manufacture of plastic injection molded parts.
Our products allow a product designer or engineer to simulate the manufacture of
a plastic part to determine and maintain the optimal part design and
manufacturing conditions throughout the manufacturing process.

We develop software products internally and through cooperative research
relationships with a number of public and private educational and research
organizations around the world. Prior to June 1997, our products consisted
solely of our Moldflow Plastics Insight (MPI) Series for in-depth mold design.
Since then, we have introduced two new product lines. Our Moldflow Plastics
Advisers (MPA) Series for part design and high level mold design was introduced
in fiscal 1997 and our Moldflow Plastics Xpert (MPX) Series for production
set-up and production monitoring was introduced in fiscal 1999. We have also
introduced additional modules of our MPI product series since June 1997.

We sell our products and services internationally through our direct sales
operations in nine countries. In addition, we sell through a network of
distributors and value-added resellers and through distribution arrangements
with developers of other design software products.

We generate revenue from two principal sources:

- license fees for our packaged software products, and

- services revenue derived from maintenance and support services related to
our software products, consulting, training and material testing.

SOFTWARE LICENSES REVENUE. Typically, our customers pay an up-front,
one-time fee for a perpetual license of our software products. The amount of the
fee depends upon the number and type of software modules purchased and the
number of the customers' employees or other users who can access the software
product simultaneously. Sales of our MPA product are initiated upon receipt of a
customer purchase order and are subject to the terms of a "shrink-wrapped" or
"click-wrapped" software license agreement which is pre-packaged with the
software and is also included as part of customers' installation process. For
sales of our MPI and MPX products, we generally require a signed license
agreement. In addition, we receive royalty payments from original equipment
manufacturers related to the bundling of our software with their design software
programs.

We recognize software licenses revenue when evidence of a purchase
commitment exists, delivery of the product has occurred, no significant
installation obligations remain, the license fee is fixed and determinable, and
collectibility is probable.

SERVICES REVENUE. Most of our customers enter into maintenance and support
contracts, which require us to provide customer technical support services and
unspecified product upgrades and enhancements on a when-and-if-available basis.
Services revenue is primarily comprised of revenue derived from these
maintenance and support contracts. We also provide consulting services, training
of customers' employees, and material testing services. Maintenance and support
contract revenue is invoiced in advance and is recognized ratably over the term
of the corresponding maintenance agreement, which typically is twelve months.
Other services revenue is recognized as the services are performed.

19
<PAGE>
COST OF SOFTWARE LICENSES REVENUE. Cost of software licenses revenue
consists primarily of the costs associated with compact discs and related
packaging material, duplication and shipping costs and the salaries of our
distribution personnel. In some cases, we pay royalties to third parties for
usage-based licenses of their products that are embedded in our software
programs. Product royalties are expensed when the related obligation arises,
which is generally upon the sale of our products, and are included in cost of
software licenses revenue.

COST OF SERVICES REVENUE. Cost of services revenue consists primarily of
salary, fringe benefit and facility related costs of our maintenance and
support, consulting and training activities and of our material testing
laboratory in Australia, and is expensed when incurred. Additionally, from time
to time, we engage outside consultants to meet peaks in customer demand for our
consulting services.

RESEARCH AND DEVELOPMENT. We maintain an in-house development staff to
enhance our existing products and to develop new ones. Product development
expenditures are generally charged to operations as incurred. Statement of
Financial Accounting Standards No. 86 requires the capitalization of certain
software development costs subsequent to the establishment of technological
feasibility. We typically establish technological feasibility upon the
completion of a working model. Accordingly, due to the minimal level of software
development costs incurred subsequent to the establishment of technological
feasibility, costs eligible for capitalization have not been significant to
date.

SELLING AND MARKETING. We sell our products primarily through our direct
sales force and indirect distribution channels. Selling and marketing expenses
consist primarily of personnel costs, commissions to employees, sales office
facilities, travel and promotional events such as trade shows, advertising,
print and Web-based collateral materials, and public relations programs.

GENERAL AND ADMINISTRATIVE. General and administrative expenses include our
personnel, routine legal, audit and other costs of our executive management,
finance and administrative support activities.

LITIGATION. In February 1999, we filed suit in U.S. District Court against
a former employee and C-Mold in which we allege theft and misappropriation of
our trade secrets related to the development of a three-dimensional plastic
simulation and modeling product. The U.S. District Court has issued a
preliminary injunction precluding the defendants from using or disclosing our
trade secrets and prohibiting our former employee from working for our
competitor in this area. In January 2000, the court denied C-Mold's motion to
have this injunction lifted. In April 1999, C-Mold filed counterclaims against
us in which they allege that we engaged in anti-competitive practices including,
among other things, restraint of trade, attempt to monopolize, price
discrimination, libel and defamation. Certain of the counterclaims have been
dismissed. This litigation is currently being held in abeyance pending the
completion of our acquisition of C-Mold, at which time it will be dismissed. In
the event that the litigation resumes, we intend to vigorously pursue our claims
and defend the counterclaims asserted against us. We are unable to determine the
ultimate outcome of these matters. Litigation expenses reflect our costs for
pursuing our claims and for defending against the counterclaims.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net includes our
cost of borrowings, including interest cost incurred on our working capital
lines of credit and stockholder loans, offset in part by interest income earned
on invested cash balances.

OTHER INCOME (LOSS), NET. Other income (loss), net includes realized and
unrealized gains and losses arising from translation of foreign currency
denominated asset and liability balances and other non-operating income and
expense items.

20
<PAGE>
PROVISION FOR INCOME TAXES. Our provision for income taxes includes
federal, state and foreign taxes on our income in the countries in which we do
business. Because we have incurred significant operating losses in prior years,
we have significant net operating loss carryforwards available to offset our
future tax obligations in the U.S. and Australia, and to a lesser extent,
certain other countries. At June 30, 1999, we had available federal, state and
foreign net operating loss carryforwards of approximately $4.5 million,
$3.2 million and $7.8 million. Use of net operating losses to reduce future
taxable income is subject to a number of limitations. We expect that our income
taxes will increase in the future once our net operating loss carryforwards and
other deferred tax assets are fully utilized.

Our fiscal year end is June 30. References to 1997, 1998 or 1999 mean the
fiscal year ended June 30, unless otherwise indicated. During the fiscal year,
we follow a schedule in which each interim quarterly period ends on the Saturday
of the thirteenth full week of the reporting period.

RESULTS OF OPERATIONS

The following table sets forth statement of operations data for the periods
indicated as a percentage of total revenue:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, --------------------
-------------------------------- JAN. 2, JAN. 1,
1997 1998 1999 1999 2000
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenue:
Software licenses.............................. 45.5% 51.9% 60.5% 57.1% 57.8%
Services....................................... 54.5 48.1 39.5 42.9 42.2
----- ----- ----- ----- -----
Total revenue................................ 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Costs and expenses:
Cost of software licenses revenue.............. 2.6 2.4 1.9 1.8 2.8
Cost of services revenue....................... 12.8 10.3 6.5 6.5 4.3
Research and development....................... 23.8 18.7 17.1 19.0 14.9
Selling and marketing.......................... 45.2 44.4 47.8 49.9 50.5
General and administrative..................... 25.1 20.2 19.0 18.8 19.8
Litigation..................................... -- -- 3.1 -- 4.6
Amortization of intangible assets.............. 16.0 0.5 -- -- --
----- ----- ----- ----- -----
Total operating expenses..................... 125.5 96.5 95.4 96.0 96.9
----- ----- ----- ----- -----
Income (loss) from operations.................. (25.5) 3.5 4.6 4.0 3.1

Interest income (expense), net................... (0.9) (1.5) (0.9) (0.9) (0.4)
Other income (loss), net......................... 0.1 0.1 (0.5) (0.2) (0.6)
----- ----- ----- ----- -----
Income (loss) before income taxes and
extraordinary loss........................... (26.3) 2.1 3.2 2.9 2.1
Provision for income taxes....................... 2.5 1.0 0.9 0.6 (1.5)
Extraordinary loss from early extinguishment of
debt, net of taxes............................. -- -- 0.6 1.4 --
----- ----- ----- ----- -----
Net income (loss).............................. (28.8)% 1.1% 1.7% 0.9% 3.6%
===== ===== ===== ===== =====
</TABLE>

SIX MONTHS ENDED JANUARY 1, 2000 COMPARED TO SIX MONTHS ENDED JANUARY 2, 1999

REVENUE. Total revenue increased by 24.4%, or $2.3 million, to
$11.5 million for the six months ended January 1, 2000 from $9.2 million for the
six months ended January 2, 1999. In the same period, software licenses revenue
increased by 26.1%, or $1.4 million, to $6.7 million. The increase in software
licenses revenue was attributable to an increase in the number of our direct
sales representatives, improvement in the economic conditions in Asia, and new
MPA and MPX

21
<PAGE>
product releases in March 1999 and September 1999. Software licenses revenue
accounted for 57.8% of total revenue for the six months ended January 1, 2000
compared to 57.1% for the six months ended January 2, 1999. Services revenue
increased by 22.3%, or $884,000, to $4.9 million for the six months ended
January 1, 2000 from $4.0 million for the six months ended January 2, 1999. This
increase was due primarily to an increase in the amount of revenue derived from
maintenance and support contracts resulting from the growth in our software
licenses revenue and installed user base in fiscal 1999. No customer accounted
for more than 10% of total revenue for the six months ended January 1, 2000 and
January 2, 1999.

COST OF REVENUE. Cost of software licenses revenue increased 91.7%, or
$154,000, to $322,000 for the six months ended January 1, 2000 from $168,000 for
the six months ended January 2, 1999. This increase was primarily attributable
to higher costs for third-party royalties and increased personnel and hardware
costs related to MPX product sales. Cost of services revenue decreased 18.8%, or
$114,000, from $605,000 for the six months ended January 2, 1999 to $491,000 for
the six months ended January 1, 2000. This decrease resulted from the continued
redirection of field technical personnel from largely passive roles of customer
hotline and maintenance services to active field roles in pre-sales and customer
retention programs, which costs are included in selling and marketing.

RESEARCH AND DEVELOPMENT. Research and development expenses decreased 2.6%,
or $45,000, to $1.7 million for the six months ended January 1, 2000 from
$1.8 million for the six months ended January 2, 1999. This decrease was the
result of lower research sponsorship costs in the six months ended January 1,
2000.

SELLING AND MARKETING. Selling and marketing expenses increased 25.9%, or
$1.2 million, to $5.8 million for the six months ended January 1, 2000 from
$4.6 million for the six months ended January 2, 1999. This growth was due
principally to the establishment in July 1999 of a direct sales subsidiary in
Sweden, an increase in the number of direct sales representatives and pre-sales
application support engineers, and an increase in spending for promotional
activities.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
31.2%, or $542,000, to $2.3 million for the six months ended January 1, 2000
from $1.7 million for the six months ended January 2, 1999. This resulted from
the cost of additional finance and administrative personnel hired in the second
half of fiscal 1999, an increase in costs of pursuing business development
opportunities, and an increase in general corporate insurance and facility
costs.

LITIGATION. Litigation expenses were $530,000 for the six months ended
January 1, 2000. There were no litigation expenses for the six months ended
January 2, 1999. These litigation expenses consist of the legal costs incurred
to pursue our claims regarding theft of our trade secrets and to defend against
the counterclaims.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net decreased
54.1%, or $46,000, to a net expense of $39,000 in the six months ended
January 1, 2000 from a net expense of $85,000 for the six months ended
January 2, 1999. This was due primarily to a decrease in interest expense
resulting from the reduction in the amount of outstanding borrowings under our
domestic and foreign revolving credit facilities.

OTHER INCOME (LOSS), NET. Other income (loss), net increased $42,000 to a
loss of $64,000 in the six months ended January 1, 2000 from a loss of $22,000
for the six months ended January 2, 1999. This change was primarily due to
unrealized foreign exchange losses incurred on the translation of intercompany
foreign currency denominated obligations.

PROVISION FOR INCOME TAXES. The provision for income taxes was a benefit of
$172,000 in the six months ended January 1, 2000 compared to a provision of
$57,000 for the six months ended

22
<PAGE>
January 2, 1999. This change reflects the impact of a refund received in
September 1999 of foreign taxes that we paid in prior years.

COMPARISON OF FISCAL YEARS 1999 AND 1998

REVENUE. Total revenue increased 23.4%, or $3.8 million, to $20.2 million
for 1999 from $16.4 million for 1998. The increase was attributable principally
to growth in software licenses revenue, including the impact of the release of
three new products, MPI/Fusion, MPI/FLOW 3D and MPA/Mold Adviser in
August 1998, September 1998 and March 1999. A portion of the increase resulted
from the continued implementation of our direct selling model, including the
addition of sales representatives and the improvement of sales productivity.
Software licenses revenue increased 43.7%, or $3.7 million, to $12.2 million for
1999 from $8.5 million for 1998. Software licenses revenue accounted for 60.5%
of total revenue in 1999, compared to 51.9% during 1998. Services revenue
increased slightly by $108,000, or 1.4%, as the increase in maintenance and
support contract revenue was offset, in part, by a reduction in consulting
revenue resulting from our decision to de-emphasize our simulation consulting
and analysis business. No customer accounted for more than 10% of our total
revenue during 1999 and a distributor in Japan, ISI-Dentsu, Ltd., accounted for
12.7% of our total revenue in 1998.

COST OF REVENUE. Cost of software licenses revenue decreased by 4.8%, or
$19,000, to $378,000 for 1999 from $397,000 for 1998. This decrease was due
primarily to lower packaging and freight costs in 1999. Cost of services revenue
decreased by 21.7%, or $366,000, to $1.3 million for 1999 from $1.7 million for
1998. This was due primarily to lower personnel costs resulting from the
centralization of U.S.-based customer support activities, the implementation of
a worldwide customer support management system, and the continued redirection of
technical and consulting employees into pre-sales support activities, which
costs are included in selling and marketing.

RESEARCH AND DEVELOPMENT. Research and development expenses increased by
13.2%, or $404,000, to $3.5 million for 1999 from $3.1 million for 1998. This
increase was attributable to the addition of software development engineers in
Australia and the United Kingdom, and increased costs of travel and outside
consultants primarily engaged in MPX product development activities.

SELLING AND MARKETING. Selling and marketing expenses increased by 32.7%,
or $2.4 million, to $9.7 million for 1999 from $7.3 million for 1998. These
expenses increased as a percentage of total revenue from 44.4% to 47.8% due
principally to the hiring of additional direct sales representatives, pre-sales
support and product marketing employees, and the establishment of a marketing
communications function. Further, we increased our spending for promotional
activities including collateral materials, direct mailings and public relations
in connection with the rollout of new products introduced during 1999.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
by 16.2%, or $536,000, to $3.8 million for 1999 from $3.3 million for 1998.
These expenses increased in 1999 due primarily to the addition of financial and
administrative management personnel, improvements in information systems and
increases in routine legal and audit fees.

LITIGATION. Litigation expenses were $620,000 in 1999. This was
attributable to the legal costs incurred in 1999 to pursue our claims regarding
theft of our trade secrets and to defend against the other parties'
counterclaims. There were no such expenses in 1998.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net decreased by
25.6%, or $61,000, to a net expense of $177,000 in 1999 from a net expense of
$238,000 in 1998 due primarily to a reduction in the amount of interest expense
incurred as a result of a reduction in the level of bank and stockholder debt
outstanding in 1999. Outstanding debt was reduced through

23
<PAGE>
repayment with funds generated from operations in 1999 and through the
conversion of $890,000 of stockholder debt into preferred stock.

OTHER INCOME (LOSS), NET. Other income (loss), net decreased by $111,000,
to a loss of $92,000 in 1999 from income of $19,000 in 1998 due primarily to
unrealized foreign exchange losses incurred on the translation of intercompany
foreign currency denominated obligations.

PROVISION FOR INCOME TAXES. The provision for income taxes increased
slightly to $176,000 in 1999 from $163,000 in 1998 due primarily to changes in
the amount of taxes paid on income in state and foreign jurisdictions.

EXTRAORDINARY LOSS. We incurred a loss of $130,000, net of taxes, on the
early extinguishment of $890,000 of stockholder debt upon its conversion into
series C-3 preferred stock in 1999.

COMPARISON OF FISCAL YEARS 1998 AND 1997

REVENUE. Our total revenue increased 10.6%, or $1.6 million, to
$16.4 million for 1998 from $14.8 million for 1997. The increase was principally
attributable to increased sales of our MPI software products, the introduction
in June 1997 of the MPA/Part Adviser product and the impact of our direct sales
subsidiary established in Italy in January 1998. This increase was offset in
part by lower sales in Asia resulting from declining economic conditions in the
region and the impact of currency fluctuations. Software licenses revenue
accounted for 51.9% of total revenue in 1998, compared to 45.5% during 1997.
Services revenue declined by 2.5% in 1998, or $205,000, to $7.9 million,
compared to $8.1 million in 1997. This was due to our decision to de-emphasize
our simulation and analysis consulting business while redirecting our
consultants into pre-sales support in order to increase software product sales
at a more rapid pace. In 1998 and 1997, a distributor in Japan, ISI-Dentsu,
Ltd., accounted for 12.7% and 14.9% of our total revenue for those periods.

COST OF REVENUE. Cost of software licenses revenue increased by 5.3%, or
$20,000, to $397,000 for 1998 from $377,000 for 1997 due primarily to the
increased volume of product sales. Cost of services revenue decreased by 11.5%,
or $219,000, to $1.7 million in 1998 from $1.9 million in 1997. The decrease was
attributable principally to a redirection of some of our technical and
consulting employees into pre-sales support activities, which costs are included
in selling and marketing.

RESEARCH AND DEVELOPMENT. Research and development expenses decreased by
13.2%, or $465,000, to $3.1 million for 1998 from $3.5 million for 1997. This
decrease was attributable primarily to the reduction in costs of our development
activities in Australia due to the weakening in the rate of exchange of the
Australian dollar to the U.S. dollar during 1998.

SELLING AND MARKETING. Selling and marketing expenses increased by 8.7%, or
$584,000, to $7.3 million for 1998 from $6.7 million for 1997. These expenses
increased due to compensation and other costs related to the addition of sales
associates and sales management in existing operations, including our Japanese
operation established in August 1997, and the establishment of direct sales and
support operations in Italy in January 1998.

GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased
by 11.2%, or $416,000, to $3.3 million for 1998 from $3.7 million for 1997. The
decrease was due primarily to a reduction in the cost of our Asian regional
finance and administrative activities located in Australia resulting from
changes in the rate of exchange versus the U.S. dollar and a reduction in the
level of professional fees incurred after our reorganization into a U.S.
corporation in August 1997.

24
<PAGE>
AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets
decreased $2.3 million, or 96.5%, to $84,000 in 1998 from $2.4 million in 1997
as our intangible assets, including developed software and goodwill acquired in
1994, became fully amortized in 1997.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net increased by
71.2%, or $99,000, to a net expense of $238,000 in 1998 from a net expense of
$139,000 in 1997 due to the increased level of bank and stockholder debt
outstanding in 1998.

OTHER INCOME (LOSS), NET. Other income (loss), net increased by $2,000, to
income of $19,000 in 1998 from income of $17,000 in 1997 due primarily to
unrealized foreign exchange gains resulting from the translation of intercompany
foreign currency denominated obligations.

PROVISION FOR INCOME TAXES. The provision for income taxes decreased by
56.1%, or $208,000, from $371,000 in 1997 to $163,000 in 1998 primarily as the
result of a reduction in the amount of foreign withholding taxes paid after the
establishment of our direct sales subsidiary in Japan.

25
<PAGE>
SELECTED QUARTERLY RESULTS OF OPERATIONS

The following table sets forth the unaudited quarterly consolidated
statement of operations data for each of the ten quarters in the period ended
January 1, 2000. In the opinion of management, the unaudited financial results
include all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of our results of operations for those
periods and have been prepared on the same basis as the audited consolidated
financial statements. The quarterly data should be read in conjunction with our
audited consolidated financial statements and the accompanying notes appearing
elsewhere in this prospectus. The results of operations for any quarter are not
necessarily indicative of the results of operations for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------
OCT 4, JAN. 3, APR. 4, JUN. 30, OCT. 3, JAN. 2, APR. 3, JUN. 30,
1997 1998 1998 1998 1998 1999 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Software licenses................... $1,568 $2,410 $2,313 $2,223 $2,350 $2,925 $3,555 $3,408
Services............................ 1,956 2,050 1,851 2,018 1,838 2,131 1,845 2,169
------ ------ ------ ------ ------ ------ ------ ------
Total revenue..................... 3,524 4,460 4,164 4,241 4,188 5,056 5,400 5,577
------ ------ ------ ------ ------ ------ ------ ------
Costs and expenses:
Cost of software licenses revenue... 165 125 79 28 77 91 116 94
Cost of services revenue............ 429 398 417 441 290 315 363 351
Research and development............ 809 748 785 720 895 859 1,031 681
Selling and marketing............... 1,569 1,920 1,900 1,898 2,086 2,529 2,526 2,532
General and administrative.......... 776 840 742 945 794 941 1,065 1,039
Litigation.......................... -- -- -- -- -- -- 150 470
Amortization of intangible assets... 84 -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total operating expenses.......... 3,832 4,031 3,923 4,032 4,142 4,735 5,251 5,167
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) from operations....... (308) 429 241 209 46 321 149 410
Interest income (expense), net........ (39) (42) (44) (113) (41) (44) 8 (100)
Other income (loss), net.............. 1 (60) 16 62 50 (72) (19) (51)
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes
and extraordinary loss............ (346) 327 213 158 55 205 138 259
Provision for income taxes............ -- 57 75 31 (3) 60 62 57
Extraordinary loss from early
extinguishment of debt, net of
taxes............................... -- -- -- -- 130 -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss)................... $ (346) $ 270 $ 138 $ 127 $ (72) $ 145 $ 76 $ 202
====== ====== ====== ====== ====== ====== ====== ======

<CAPTION>
QUARTER ENDED
-------------------
OCT. 2, JAN. 1,
1999 2000
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenue:
Software licenses................... $2,823 $3,828
Services............................ 2,358 2,495
------ ------
Total revenue..................... 5,181 6,323
------ ------
Costs and expenses:
Cost of software licenses revenue... 169 153
Cost of services revenue............ 236 255
Research and development............ 835 874
Selling and marketing............... 2,698 3,113
General and administrative.......... 1,076 1,201
Litigation.......................... 280 250
Amortization of intangible assets... -- --
------ ------
Total operating expenses.......... 5,294 5,846
------ ------
Income (loss) from operations....... (113) 477
Interest income (expense), net........ (1) (38)
Other income (loss), net.............. (34) (30)
------ ------
Income (loss) before income taxes
and extraordinary loss............ (148) 409
Provision for income taxes............ (217) 45
Extraordinary loss from early
extinguishment of debt, net of
taxes............................... -- --
------ ------
Net income (loss)................... $ 69 $ 364
====== ======
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
OCT. 4, JAN. 3, APR. 4, JUN. 30, OCT. 3, JAN. 2,
1997 1998 1998 1998 1998 1999
-------- -------- -------- -------- -------- --------
(AS A PERCENTAGE OF TOTAL REVENUE)
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Software licenses................... 44.5% 54.0% 55.5% 52.4% 56.1% 57.9%
Services............................ 55.5 46.0 44.5 47.6 43.9 42.1
----- ----- ----- ----- ----- -----
Total revenue..................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== ===== =====
Costs and expenses:
Cost of software licenses revenue... 4.7% 2.8% 1.9% 0.7% 1.8% 1.8%
Cost of services revenue............ 12.2 8.9 10.0 10.4 6.9 6.2
Research and development............ 23.0 16.8 18.9 17.0 21.4 17.0
Selling and marketing............... 44.5 43.0 45.6 44.8 49.8 50.0
General and administrative.......... 22.0 18.8 17.8 22.3 19.0 18.6
Litigation.......................... -- -- -- -- -- --
Amortization of intangible assets... 2.4 -- -- -- -- --
----- ----- ----- ----- ----- -----
Total operating expenses.......... 108.8 90.3 94.2 95.2 98.9 93.6
----- ----- ----- ----- ----- -----
Income (loss) from operations....... (8.8) 9.7 5.8 4.8 1.1 6.4
Interest income (expense), net........ (1.1) (0.9) (1.1) (2.7) (1.0) (0.9)
Other income (loss), net.............. 0.0 (1.3) 0.4 1.5 1.2 (1.4)
----- ----- ----- ----- ----- -----
Income (loss) before income taxes
and extraordinary loss............ (9.9) 7.5 5.1 3.6 1.3 4.1
Provision for income taxes............ -- 1.3 1.8 0.7 (0.1) 1.2
Extraordinary loss from early
extinguishment of debt, net of
taxes............................... -- -- -- -- 3.1 --
----- ----- ----- ----- ----- -----
Net income (loss)................... (9.9)% 6.2% 3.3% 2.9% (1.7)% 2.9%
===== ===== ===== ===== ===== =====

<CAPTION>
QUARTER ENDED
-----------------------------------------
APR. 3, JUN. 30, OCT. 2, JAN. 1,
1999 1999 1999 2000
-------- -------- -------- --------
(AS A PERCENTAGE OF TOTAL REVENUE)
<S> <C> <C> <C> <C>
Revenue:
Software licenses................... 65.8% 61.1% 54.5% 60.5%
Services............................ 34.2 38.9 45.5 39.5
----- ----- ----- -----
Total revenue..................... 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
Costs and expenses:
Cost of software licenses revenue... 2.1% 1.7% 3.3% 2.4%
Cost of services revenue............ 6.7 6.3 4.6 4.0
Research and development............ 19.1 12.2 16.1 13.8
Selling and marketing............... 46.8 45.4 52.1 49.2
General and administrative.......... 19.7 18.6 20.8 19.0
Litigation.......................... 2.8 8.4 5.4 4.0
Amortization of intangible assets... -- -- -- --
----- ----- ----- -----
Total operating expenses.......... 97.2 92.6 102.3 92.4
----- ----- ----- -----
Income (loss) from operations....... 2.8 7.4 (2.3) 7.6
Interest income (expense), net........ 0.1 (1.8) -- (0.6)
Other income (loss), net.............. (0.4) (1.0) (0.7) (0.5)
----- ----- ----- -----
Income (loss) before income taxes
and extraordinary loss............ 2.5 4.6 (3.0) 6.5
Provision for income taxes............ 1.1 1.0 (4.2) 0.7
Extraordinary loss from early
extinguishment of debt, net of
taxes............................... -- -- -- --
----- ----- ----- -----
Net income (loss)................... 1.4% 3.6% 1.2% 5.8%
===== ===== ===== =====
</TABLE>

26
<PAGE>
Our quarterly results have varied in the past and may vary significantly in
the future depending on many factors, many of which are outside of our control.
The primary factors that may affect us include the following:

- seasonal slowdowns, in particular, in our first fiscal quarter, in many of
the markets in which we sell our products,

- start-up expenses for new facilities and new personnel,

- our success in expanding our sales and marketing programs, including the
rollout of our Internet-enabled products currently under development,

- currency fluctuations,

- developments in the litigation that we are pursuing against our former
employee and our competitor, and in the nature and extent of proceedings
and findings related to their counterclaims pending against us, and

- the timing and integration of acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have financed our operations and met our capital
expenditure requirements primarily through private sales of our capital stock,
stockholder loans, funds generated from operations and borrowings from lending
institutions. As of January 1, 2000, our primary sources of liquidity consisted
of $1.3 million in total cash and cash equivalents and $1.4 million of available
borrowings under our $3,250,000 domestic and foreign revolving lines of credit,
which are secured by substantially all of our assets. As of January 1, 2000, the
balance outstanding on our lines of credit was $998,000. Borrowings under our
lines of credit are subject to a borrowing base of 80% of eligible domestic
accounts receivable, 30% of eligible foreign accounts receivable, and 90% of a
standby letter of credit issued by an Australian bank. The assets of our
Australian subsidiary secure the standby letter of credit. Interest on these
lines of credit is payable monthly at rates of prime plus 1.25% for the domestic
line and prime plus 1.5% for the foreign line. The standby letter of credit is
subject to a fee of 0.5% per year.

Net cash used in operating activities was $608,000 in 1997, and net cash
provided by operations was $771,000 in 1998, $1.2 million in 1999 and $210,000
in the six months ended January 1, 2000. The cash used in operating activities
in 1997 primarily reflects the net loss of $4.3 million offset, in part, by
non-cash charges of $3.1 million for depreciation of fixed assets and
amortization of intangible assets included in the net loss. The cash provided by
operations in 1998, 1999 and the six months ended January 1, 2000 reflects the
impact of increases in net income, deferred maintenance and support contract
revenue and accounts payable, offset by the impact of the increase in 1998 of
accounts receivable, and by non-cash depreciation and amortization charges
included in net income.

Net cash used in investing activities was $1.2 million, $729,000, and
$854,000 in 1997, 1998 and 1999, and $387,000 in the six months ended
January 1, 2000. Net cash used in investing activities reflects amounts used for
purchases of property and equipment, primarily for computers, networking and
materials laboratory test equipment to support our global product development
activities, and to enable data communications among our worldwide development,
sales, customer support and administrative organizations. In addition, in 1997,
net cash used in investing activities reflects $431,000 used to acquire the
shares of our third party distributor in France.

Net cash provided by financing activities was $1.4 million and $716,000 in
1997 and 1998. Net cash used in financing activities was $907,000 in 1999 and
net cash provided by financing activities was $134,000 in the six months ended
January 1, 2000. Net cash provided by financing activities in 1997 and 1998
reflects primarily borrowings from stockholders and lending institutions, net of
the repayment of debt obligations. In July 1998, we converted indebtedness of
$890,000 incurred in

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1997 and 1998 under stockholder loans into shares of preferred stock. For more
information on the loan conversion, see "Certain Relationships and Related
Transactions--Loans from Stockholders." Net cash used in financing activities in
1999 reflects principally the repayments of amounts outstanding on our working
capital lines of credit and capital lease obligations. Net cash provided by
financing activities in the six months ended January 1, 2000 reflects
principally borrowings on our working capital lines of credit.

We believe that the net proceeds of this offering, together with our current
cash, cash equivalents, and available lines of credit will be sufficient to
complete the planned acquisition of C-Mold and to meet our anticipated cash
needs for working capital and capital expenditures for at least the next
12 months following the date of this prospectus. On a long-term basis or to
complete other acquisitions, we may require additional external financing
through credit facilities, sales of additional equity or other financing
vehicles.

YEAR 2000 ISSUES

We are unaware of any problems that have arisen with respect to year 2000
issues in our current software products, our internal computer systems or in the
computer systems of our vendors. Prior to January 1, 2000, we conducted a
comprehensive review of the potential impact that the change in the date to the
year 2000 would have on our current products and computer systems. Based on this
review, we determined that all of our current products and major computer
systems are able to recognize and appropriately process dates commencing in the
year 2000. Our historical costs to assess our year 2000 readiness have not been
significant. The majority of the costs required to complete our year 2000
compliance process were incurred as part of our normal capital asset acquisition
program, and would have been incurred without consideration of year 2000 issues.
We are not currently able to estimate the final aggregate cost of addressing the
year 2000 issue, because funds may be required as a result of future findings.
However, given the lack of any problems related to the year 2000 since the year
change, we do not anticipate that we will experience any material problems
related to the year 2000 in the future. As a result, we do not expect costs
associated with these problems to have an adverse effect on our business and
financial results.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-9, "Modification of SOP No. 97-2, Software
Revenue Recognition, with Respect to Certain Transactions." SOP 98-9 amends SOP
97-2 to require recognition of revenue using the "residual method" in
circumstances outlined in SOP 98-9. Under the residual method, revenue is
recognized as follows: (1) the total fair value of undelivered elements, as
indicated by vendor specific objective evidence, is deferred and subsequently
recognized in accordance with the relevant sections of SOP 97-2 and (2) the
difference between the total arrangement fee and the amount deferred for the
undelivered elements is recognized as revenue related to the delivered elements.
SOP 98-9 is effective for transactions entered into in fiscal years beginning
after March 15, 1999. Also, the provision of SOP 97-2 that were deferred by SOP
98-4 will continue to be deferred until the date SOP 98-9 becomes effective. We
do not expect that the adoption of SOP 98-9 will have a significant impact on
our results of operations or financial position.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives), and for hedging
activities. SFAS 133, as amended by SFAS 137, is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000, with earlier
application encouraged. We do not currently use derivative instruments or engage
in hedging activities.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We develop our products in research centers in Australia, the United Kingdom
and the United States. We sell our products globally through our direct sales
force and indirect distributor channels. As a result, our financial results are
affected by factors such as changes in foreign currency exchange rates and weak
economic conditions in foreign markets. In the future, we expect to increase our
international operations in our existing markets and in geographic locations
where we do not have any operations now.

We collect a substantial portion of our revenue and pay a substantial
portion of our operating expenses in foreign currencies. As a result, changes in
currency exchange rates from time to time may affect our operating results.
Currently, we do not engage in hedging transactions to reduce our exposure to
changes in currency exchange rates, although we may do so in the future. We
cannot assure you, however, that any efforts we may make in the future to hedge
our exposure to currency exchange rate changes will be successful.

EUROPEAN UNION CURRENCY CONVERSION

On January 1, 1999, eleven member nations of the European Economic and
Monetary Union began using a common currency, the Euro. For a three-year
transition period ending June 30, 2002, both the Euro and each of the currencies
for such member countries will remain in circulation. After June 30, 2002, the
Euro will be the sole legal tender for those countries. The adoption of the Euro
will affect many financial systems and business applications as the commerce of
those countries may be transacted both in the Euro and the existing national
currency during the transition period. Significant portions of our revenue have
been historically generated in Europe. Of the eleven countries currently using
the Euro, we have subsidiary operations in France, Germany and Italy. We have
assessed the potential impact of the Euro conversion in a number of areas,
particularly on our pricing and other marketing strategies. Although we do not
currently expect that the conversion, either during or after the transition
period, will have an adverse effect on our operations or financial condition,
the conversion has only recently been implemented and there can be no assurance
that it will not have some unexpected adverse impact.

IMPACT OF INFLATION

We believe that our revenue and results of operations have not been
significantly impacted by inflation during the past three fiscal years.

FORWARD LOOKING STATEMENTS

This prospectus contains forward-looking statements. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words. You should
read statements that contain these words carefully because they discuss our
future expectations, contain projections of our future results of operations or
of our financial condition, or state other "forward-looking" information. We
believe that it is important to communicate our future expectations to our
investors. However, there may be events in the future that we are not able to
accurately predict or control and that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties, and actual results may differ materially from those discussed as
a result of various factors, including those factors described in the "Risk
Factors" section of this prospectus. Readers should not place undue reliance on
our forward-looking statements. Before you invest in our common stock, you
should be aware that the occurrence of the events described in the "Risk
Factors" section and elsewhere in this prospectus could harm our business,
prospects, operating results and financial condition.

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BUSINESS

OVERVIEW

We believe we are the world's leading developer of software solutions that
enhance the design, analysis, and manufacture of injection molded plastic parts.
Our products are used by participants in all aspects of the injection molded
plastic parts manufacturing process, including part designers, mold designers,
manufacturing engineers and machine operators. Our products enable our customers
to speed their products to market, decrease manufacturing costs and reduce
costly design and manufacturing errors by:

- assisting part designers in the selection of a plastic material,

- determining the strength, rigidity and ease of manufacturing of a given
part design,

- predicting the amount a plastic part will shrink or warp during
production,

- optimizing production conditions such as machine temperatures, injection
speeds, cooling, times and the locations in a mold to inject the plastic,

- identifying and providing optimized solutions for adverse variations
during production, and

- providing features which facilitate collaboration over shared media, such
as the Internet.

Prior to 1997, we offered a single product line, Moldflow Plastics Insight
(MPI), which was designed to be used by highly specialized engineers conducting
in-depth plastics simulation. Our two new product lines, Moldflow Plastics
Advisers (MPA) and Moldflow Plastics Xpert (MPX), can be used by participants in
all phases of the design and production process for injection molded plastic
parts, many of whom do not specialize in plastic part design. We believe a
large, untapped market for our new product lines exists.

We focus on developing software tools that improve the entire span of
product development for injection molded plastic parts to enable our customers
to enhance their competitiveness and reduce their costs. We believe we have the
widest and most advanced range of software solutions and proprietary technology
to address the problems that arise in each phase of the process of designing and
manufacturing injection molded plastic parts.

Our products are used by more than 2,200 customers at more than 2,500 sites
in over 50 countries around the world. We sell our products primarily through
our direct sales force in North America, Europe and Asia and, to a lesser
extent, through original equipment manufacturers and through distributors in
defined geographic regions. Representative customers include Baxter
International, DaimlerChrysler, DuPont, Fuji Xerox, Hewlett-Packard, Lego,
Lucent Technologies, Motorola, Nokia and Samsung. We have distribution
arrangements with Parametric Technology Corporation, Structural Dynamics
Research Corporation or SDRC, Unigraphics Solutions and CoCreate and resellers
of products of SolidWorks, a subsidiary of Dassault Systemes, and Autodesk.

INDUSTRY BACKGROUND

INJECTION MOLDED PLASTICS INDUSTRY

From high technology to traditional manufacturing, companies in many
industries today make extensive use of plastic materials to produce component
parts for their products. The widespread use of plastics as a manufacturing
material has occurred because plastic parts can be formed into an almost
limitless number of shapes, are relatively inexpensive to manufacture in volume
and are easy to assemble. Common consumer products that make extensive use of
plastic parts include cellular telephones, personal digital assistants, pagers,
automobiles, televisions, cameras, toys and personal computers. The commercial
success of each of these products often relies heavily upon reducing the time to
bring new products to market, reducing engineering and manufacturing costs, and
improving product quality and design.

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In high technology industries, the use of plastics has become increasingly
important as weight, cost and quality are standard points of competitive
differentiation. Most importantly, because plastics can be molded into extremely
complex shapes, they are uniquely suited for use in high technology products.
Products such as cell phones, personal digital assistants or PDAs, and notebook
computers have all employed increasingly complex designs characterized by
smaller parts, reduced weight, more sophisticated shapes and lower tolerances.
These complexities often lengthen the time to market for new products. As
product life cycles shrink and time to market becomes increasingly important,
successful manufacturers in these industries must design and build products
quickly and correctly the first time. In particular, production delays or high
product defect rates for manufacturers in rapidly changing industries can
represent significant economic and opportunity costs. For example, according to
Dataquest analog cellular handset and digital cellular/PCS handset production is
forecast to grow from 175 million units in 1998 to 551 million units in 2003.

The use of plastics also continues to increase in traditional industries
such as the automotive industry in large part due to improvements in the
injection molding process. Automobile manufacturers frequently find that plastic
parts provide the same or superior functionality at a lower cost than other
alternatives and permit a single part to replace multiple parts. Reducing the
number of parts decreases assembly costs and simplifies the overall product
development process. For instance, industry trade journals have reported that
DaimlerChrysler predicts that the 75-100 metal parts currently used on a typical
car's body structure could be replaced by 6-12 plastic parts on future cars. In
addition to cost savings and enhanced part performance, the use of plastics in
the automobile industry can yield improvements in other important design
criteria such as fuel economy due to the weight savings achieved by using
plastics instead of other heavier structural materials. For example, industry
trade journals have reported that DaimlerChrysler has recently produced a new
hardtop for its Jeep Wrangler model which uses plastics on external components
and weighs 23 pounds less than its current production hardtop.

INJECTION MOLDING PROCESS

The dominant method for producing plastic parts with complex shapes is
injection molding. We believe that in 1999 up to 750,000 injection molding
machines were in operation on a worldwide basis. Injection molding involves the
injection of molten plastic into a cavity called the mold, usually made of
metal, where it is packed under pressure, subsequently cooled, and then ejected,
yielding a final part.

The injection molding process is extremely complex. It requires the matching
of part geometry to mold geometry, as well as accommodating varying material,
machine, and environmental operating conditions. Not only must the mold cavity
be machined precisely to produce the desired shape of the final part, it also
must account for shrinkage and warpage of the plastic material as it cools and
is ejected. Problems can arise in this process if the molten plastic enters the
mold at the wrong temperature, if the locations of the points of entry of the
plastic into the mold are mismatched to the design of the part, or if the
properties of the chosen plastic are poorly matched to the product's function.
Each of these potential problems can cause an excessive number of defective or
substandard parts to be produced or require several attempts to remachine the
mold.

The process of designing and producing injection molded plastic parts
consists of four distinct steps, the design portion of which can take from
several weeks to several months depending on the complexity and other attributes
of the part being designed:

- PART DESIGN--A design engineer, who typically does not specialize in the
design of plastic parts, lays out the initial design of the end product,
including the plastic components. These

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design engineers face difficult plastic-related decisions which often fall
outside of their area of specialization, including:

- selecting a plastic material out of which the plastic portion of the
product will be made from among the thousands of plastic materials
currently available,

- estimating the strength and rigidity of the part,

- designing the part with shapes and thicknesses that can be readily
produced using injection molding, and

- completing each of the steps in a cost efficient manner.

- MOLD DESIGN--After the part has been designed, typically a second engineer
designs the mold into which injection molding machines can pack the
selected plastic material to create the part. Designing a mold requires
the engineer to estimate many important variables, including the amount
the plastic part will warp or shrink and the optimal locations for
injecting plastic into the mold. The cost of a mold can vary from as
little as a few thousand dollars to more than one million dollars.

- PRODUCTION SET-UP--After the mold has been designed and built, the mold is
fastened into an injection molding machine. A machine operator then
adjusts several machine settings, such as machine temperature, injection
speed and cooling time until the machine produces a single acceptable
part. In many instances, once acceptable parts are made with some
frequency, the operator makes little or no effort to improve the machine's
set-up to optimize speed or minimize failure rates.

- PRODUCTION MONITORING--Once commercial production begins, machine
operators monitor the injection molding machine's performance, which will
vary over time. This variation can be caused by operating conditions which
shift as a result of factors such as temperature fluctuations and
lot-to-lot variations in the plastic raw material.

Traditionally, these steps have been carried out through a trial-and-error
process which requires a significant amount of guesswork throughout. As a
result, the design and development process has been inherently inefficient. An
incorrect guess at any step of this process may produce suboptimal parts or
require that portions or all of the process be repeated, delaying production and
increasing costs.

The inefficiencies and resulting cost increases occurring in this process
are further exacerbated when companies outsource one or more of these steps.
Many companies have set up supply chains to match expertise and cost structures
to each step of this process and take advantage of available networks to
establish "design anywhere, build anywhere" collaborations with suppliers and
between divisions across their company. The part design, mold design and
production steps often occur in geographically separated facilities. As a
result, the iterative process of designing a plastic part is frequently hindered
by having to coordinate this process across multiple locations and time zones.

ABSENCE OF SOFTWARE SOLUTIONS FOR THE INJECTION MOLDED PLASTICS INDUSTRY

Although many industries have embraced software tools to improve their
product design and production processes, we believe that a substantial portion
of companies in the injection molded plastics industry continue to employ a
trial-and-error process at most steps of the design and development process. We
believe this condition exists today primarily because of the limited
availability of specific software tools capable of addressing many of the
complex and unique issues involved in designing injection molded plastic parts
and their molds. In addition, we believe that up to 750,000 injection molding
machines are currently in use worldwide and are being operated without
integrated software tools which can analyze and improve the efficiency of their
production.

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THE MOLDFLOW SOLUTION

Using our extensive knowledge of designing and manufacturing with plastics,
we have developed a suite of software applications which enhance our customers'
ability to optimize the design and production process for injection molded
plastic parts. Our approach, which we call Process Wide Plastics Solutions,
provides our customers with a software tool for each step in this process, from
part design through production monitoring, in an integrated environment.
Together, our suite of products permit plastics manufacturers for the first time
to significantly decrease the guesswork involved in each step of the injection
molding process by replacing the traditional trial-and-error process with an
automated and integrated process.

Our products can significantly reduce the time it takes to design plastic
parts for injection molding, improve the quality of the plastic part produced
and decrease the cost of the production process by:

- assisting part designers in the selection of a plastic material based on
their design criteria,

- determining the strength and rigidity of a given part design,

- evaluating the ease of manufacturing a given part design,

- predicting the amount a part will shrink or warp during production,

- determining the optimal locations in a mold to inject the plastic
material,

- selecting optimal machine temperatures, injection speeds and cooling times
for part production,

- identifying and providing solutions for adverse variations during
production, and

- providing features which facilitate collaboration over shared media, such
as the Internet.

With direct sales offices and distribution partners worldwide, we believe
that we are uniquely positioned to deliver our evolving suite of software tools
to customers in any part of the world.

OUR STRATEGY

We plan to extend our position as the leading provider of software solutions
that enhance the design, analysis and manufacture of injection molded plastic
parts. Key elements of our strategy are to:

CAPITALIZE ON MARKET OPPORTUNITY FOR EXPANDED PRODUCT OFFERINGS

We focus our research and development efforts on developing new products to
address unmet market needs. We developed Moldflow Plastics Advisers (MPA),
initially released in June 1997 and expanded in 1999, to provide plastic part
and mold design solutions to design engineers who are not highly specialized in
plastics simulation. Prior to the introduction of MPA, no software solution
existed specifically for use by these design engineers for the design of
injection molded plastic parts. Our MPA product has contributed significantly to
our revenue since its introduction. We developed Moldflow Plastics Xpert (MPX),
our newest product line initially introduced in September 1998, to optimize the
production set-up and monitoring of injection molding machines. No software
solution currently exists with functionality comparable to our MPX product to
address this market. We believe MPX represents a significant opportunity for
growth and we intend to vigorously pursue this largely untapped market. In
addition, we will continue to develop new product lines and expand our existing
product lines as opportunities arise.

EXPLOIT THE INTERNET TO PROVIDE SOLUTIONS TO OUR CUSTOMERS

We intend to use the Internet to allow users of our products, including part
and mold designers, machine operators, suppliers, business customers and
outsourcing plants, to share product data and coordinate product design and
development on a worldwide basis. Currently, our

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products permit users to produce and access product reports via the Internet
which can be viewed with any standard web browser. For example, we intend to use
the Internet to:

- release our MPA product using an application server provider or ASP
model, which would permit customers to use our products on demand over
the Internet,

- create an Internet portal to enable customers to use our MPX product to
monitor the injection molding process, including machine efficiency and
production data, from anywhere in the world.

FOCUS ON DIRECT SELLING MODEL

We believe that a key element of our success over the last two years has
been our focus on creating a highly effective direct sales organization. Most of
our products are sold through this organization, which encompassed 29 sales
associates employed at sales office located in nine countries as of January 1,
2000. Over the last two years, we have implemented a new sales model which
involves teaming each sales associate with an engineer. Each team works together
to conduct a thorough evaluation of potential customers' design and
manufacturing processes and provide them with a detailed analysis of the cost
savings our products could produce.

EXPAND OUR GLOBAL PRESENCE

We will continue to build on our existing global presence in sales, support
and research and development, which we believe provides us with a competitive
advantage. We maintain direct sales and support offices in the United States,
Australia, United Kingdom, France, Germany, Italy, Sweden, Korea and Japan. In
addition, we extend our geographic coverage by selling our products through over
100 distributors worldwide. Our research and development process involves
approximately 50 research and development personnel located at our United
States, Australia and United Kingdom facilities. Our personnel share software
code among these facilities, and are able to electronically update colleagues in
most cases every two hours and, at a minimum, at the end of each team's working
day. As a result, our research and development continues on an around-the-clock
basis. We believe that this geographically dispersed, team-oriented approach to
product development and delivery helps us to bring new products to market
faster.

SELECTIVELY ENGAGE IN ACQUISITIONS AND STRATEGIC RELATIONSHIPS

We intend to selectively engage in acquisitions and enter into strategic
relationships to accelerate the implementation of elements of our strategy. We
may pursue acquisitions, partnerships or licensing arrangements to obtain
technology to improve or broaden our product offerings if we determine that to
do so would be more cost effective or timely than developing our own.

OUR PRODUCTS

We offer software solutions for all phases of designing and manufacturing
injection molded plastic parts. We have categorized our product offerings into
three distinct families, the Moldflow Plastics Advisers (MPA) series for part
design and high-level mold design, the Moldflow Plastics Insight (MPI) series
for more in-depth mold design and the Moldflow Plastics Xpert (MPX) series for
production set-up and production monitoring. Our products employ complex and
proprietary mathematical concepts. For example, our MPA and MPI products employ
our patent-pending Dual Domain technology, which permits users to conduct
complex plastic flow simulations using the solid models created by their design
modeling software. As a result, users can eliminate the otherwise necessary,
time consuming and error prone step of creating a different type of model based
upon the part geometry contained in the solid model's database. Our products run
on the most widely used computing platforms and operating systems, including
various versions of Windows and UNIX.

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MOLDFLOW PLASTICS ADVISERS

Our MPA series provides part and mold designers with applications that
permit them to quickly check the ultimate manufacturability of their designs at
an early stage in the design process. We have designed MPA to input its results
directly into MPX to enhance the efficiency of machine set-up. The MPA series
consists of two products:

PART ADVISER is a user-friendly application which enables product
designers without expertise in designing plastic parts to address key
manufacturing concerns in the preliminary design stage. Part Adviser offers
practical advice for the broad range of problems it identifies without the
need to consult with engineers who specialize in plastic part design. For
the first time, part designers are able to receive rapid feedback on the
extent to which a number of factors, including modifications such as part
geometry, material selection or plastic fill locations affect the
manufacturability of a plastic part. In addition, Part Adviser permits the
designer to instantly share information with fellow team members across the
Internet.

MOLD ADVISER extends the capabilities of Part Adviser to permit the mold
designer to layout and analyze an optimal mold. This product eliminates the
need to design and build molds through trial-and-error, enabling a mold
designer to create molds quickly and efficiently.

The following is an example of how one of our customers has used MPA:

POLAROID CORPORATION, a producer of instant and digital imaging products,
recently used our MPA product in the design of its new digital microscope camera
product. Polaroid estimated that the use of our MPA product reduced their
overall product development time by 50% and enabled them to take the digital
microscope camera product from concept to market in only nine months. Among the
many challenges faced by Polaroid in designing their product was the
modification of an existing mold used to produce the camera's shutter. The
vendor which produced these parts for Polaroid did not believe that the mold
would work properly if modified to produce the new shutter and, therefore, was
reluctant to proceed and modify the mold. Using MPA, a Polaroid design engineer
was able to verify that the existing mold could be modified to reflect the
design of the new shutter and produce parts of acceptable quality. The results
MPA predicted were proven correct when the vendor was persuaded to modify the
mold after reviewing MPA's reports.

MOLDFLOW PLASTICS INSIGHT

The MPI series contains our broadest set of predictive capabilities for
injection molding for use by highly specialized design engineers. The MPI series
assists design engineers in determining the optimal combination of part
geometry, material choice, mold design and processing parameters to produce
quality finished products. MPI allows the optimization of the variables which
remain in the mold designer's control to adjust. For instance, a mold designer
often receives a part design and is not permitted to make changes to the design,
but rather must create a mold design and a set of operating conditions best
suited for the part as designed. MPI may also be used in connection with a
completed mold which was poorly designed and is producing defective parts at an
unacceptable rate. In these cases, MPI can be used to find the best possible
operating conditions for the mold-part combination to minimize the defects. The
results generated by our MPI products can be input directly into our MPX product
to reduce machine set-up time.

All applications in the MPI series use an integrated environment which
permits users to easily import all of the most commonly used types of
computer-generated models, select and compare material grades, prepare models
for analysis, sequence a series of analysis jobs, undertake advanced analysis
post-processing and use Internet-based capabilities to enhance collaboration
with team members. In these applications, we believe that we offer the broadest
integration with existing computer-aided design products in the plastics
software industry.

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MPI/FLOW predicts the flow and subsequent packing of plastics at the
start of the injection molding cycle to enable users to optimize locations
for plastic filling and processing conditions, assess possible part defects
and automatically determine the dimensions for a balanced feed system for
the plastic material.

MPI/COOL is used to design cooling circuits and a mold block around a
part to optimize mold design by adjusting the size and locations of the
cooling circuits. Because many warpage problems result from improper cooling
design, using MPI/COOL for mold designs enhances ultimate product quality.
MPI/COOL also enables all the benefits of mold cooling analysis to be
applied to gas injection molded parts.

MPI/WARP AND MPI/SHRINK predict and identify the cause and amount of
warpage and shrinkage in plastic parts. The mathematical tools incorporated
in these products permit the user to analyze warpage for the more than 4,500
plastics materials in our database.

MPI/FUSION allows users to work directly from three-dimensional solid
models to perform detailed calculations. Based upon the same patent pending
technology at the core of the MPA series of products, MPI/FUSION permits
more rapid investigation into the characteristics of the plastic parts and
molds being analyzed.

MPI/FLOW3D uses a fully three-dimensional meshing and solving technology
to analyze thick plastic parts. The majority of the MPI modules are focused
on the broadest class of plastic parts, those that are termed thin wall.
There are plastic parts, however, that are very thick or have widely varying
thicknesses throughout. Until the development of MPI/FLOW3D, creators of
these types of products had no commercially viable product alternative to
investigate the filling process to produce better parts and molds.

MPI/STRESS predicts the structural integrity of plastic components under
stress to quickly predict whether initial concept designs meet desired
structural requirements and whether the part will permanently deform if put
under load. The stress analysis calculates the amount of force which will
cause buckling and predicts the final buckled shape.

MPI/FIBER utilizes sophisticated visualization tools to provide insight
into the part's properties by allowing the user to see how fiber alignment
varies throughout the part's layers. The fiber analysis also predicts the
effects of fiber orientation. The effects of plastic flow on fiber
orientation have a significant impact on the mechanical and structural
properties of fiber filled plastic injection molded parts. Plastics are
often filled with various forms and quantities of fibers to tailor the
material's operating characteristics, such as strength or resistance to
bending.

MPI/OPTIM automatically determines the optimum processing conditions to
be set for a specific part on an injection molding machine to produce a part
of acceptable quality. These results may be used as input for MPX to ensure
molding machine setup is as quick and efficient as possible. The results may
also be used in isolation, as an input to assist the operator in finding the
best settings for a specific machine to produce the desired parts.

MPI/GAS provides predictive capabilities for the gas injection molding
process. The gas injection molding process is very similar to the injection
molding process described earlier but the machine produces an injection of
air, timed within the filling phase to follow the injection of plastic, to
produce wider, but hollow, channels within the part. These channels add
structural rigidity to the end product that is often desirable for large
parts such as television casings and lawn furniture.

MPI/TSETS provides tools to simulate the major thermoset molding
processes. Thermoset materials are a type of plastic which are used for
products which must withstand higher temperatures without alteration in
their material properties. Because other plastics may deform when exposed to
high temperatures, thermoset materials are used for a variety of plastic
parts

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such as chip holders in integrated circuits, distributor caps and other
automotive engine components and electrical outlets.

The following is an example of how one of our customers has used MPI:

HEWLETT-PACKARD COMPANY used our MPI product in the design of a recent model
in its HP DeskJet line of inkjet computer printers. Approximately 60% to 80% of
the mechanical parts used in these printers are injection molded plastic parts.
Hewlett-Packard typically introduces a new printer every six months and requires
ten molds to produce a sufficient quantity of each part. In order to maintain
this rapid product introduction cycle, Hewlett-Packard designs the plastic part
itself, but relies on vendors to design and build the part molds and produce the
parts. Hewlett-Packard uses our MPI products to ensure that its part designs can
be made using injection molding and to establish the optimal manufacturing
settings prior to retaining vendors to create molds and build the products.
Virtually all parts analyzed by Hewlett-Packard with our MPI product have been
produced on the first try by the ultimate producer of the part. In addition,
Hewlett-Packard has been able to reduce the amount of time it takes to produce
each part, yielding substantial cost savings. For example, using our MPI
product, Hewlett-Packard determined that the cavity through which plastic was
fed into the mold for one of its parts was wider than necessary and resulted in
the mold taking longer to fill with plastic. Hewlett-Packard was able to modify
the mold by narrowing the cavity, resulting in a reduction in the amount of time
required to produce each part by approximately 15 seconds, or 30%.
Hewlett-Packard estimated that this time savings would reduce their annual
production costs by $1.1 million.

MOLDFLOW PLASTICS XPERT

Our MPX product attaches to injection molding machines to monitor and
control the manufacturing process. MPX addresses common shop floor issues such
as machine set-up, process optimization and production part quality monitoring.
MPX interacts directly with the molding machine's built-in controller to provide
optimized process correction. With MPX, engineers and die-setters can
consistently and systematically set up molds, identify a robust molding window
and monitor production. MPX can be used with substantially all injection molding
machines and provides operators with a single, intuitive user interface,
minimizing the need for machine-specific operator training. In addition, MPX
gives real-time feedback, providing a mechanism for rapid manual or automatic
process adjustments. We designed MPX to reduce mold set-up times and to optimize
the efficiency of the part production cycle. Our MPX product consists of three
integrated modules:

SETUP XPERT enables systematic mold set-up from starting points
generated by MPA, MPI or operator inputs, independent of operator and
location. Setup Xpert optimizes the molding cycle and maximizes the usage of
machine capabilities without requiring the operator to have in-depth
knowledge of the individual machine or process. Setup Xpert quickly sets up
and optimizes each machine, while ensuring that each operator uses the same
set-up procedures.

MOLDSPACE XPERT establishes a defined range of operating conditions
within which acceptable quality parts will be produced. Moldspace Xpert can
reduce to a few minutes an optimization task that previously took several
hours or was not performed. The identification of a defined range of
operating conditions is one of the key steps in being able to determine what
operating conditions can be used by the machine to prevent scrap and machine
downtime.

PRODUCTION XPERT graphically monitors variables specific to the
injection molding process and automatically evaluates the quality of the
production process. In addition, Production Xpert spots problems and either
provides suggestions on how to correct the process or makes the necessary
changes.

37
<PAGE>
The following is an example of how one of our customers has used MPX:

MONTBLANC-SIMPLO GMBH designs and sells the Montblanc brand of premium pens.
Montblanc-Simplo employs injection molding to manufacture the outer casings of
many styles of Montblanc pens. These pen casings must have mirror-like surfaces
to satisfy Montblanc-Simplo's design requirements and high quality control
standards. However, producing mirror-like surfaces using injection molding
requires very precise machine operating conditions. Montblanc-Simplo's machine
operators experienced difficulty identifying these precise machine operating
conditions and reproducing them over time and from machine-to-machine. Prior to
using our MPX product, Montblanc produced pen casings with a high scrap rate.
However, since acquiring our MPX product, Montblanc-Simplo estimates that it has
been able to reduce the scrap rate of pen casings by 50% without significantly
altering the time required to manufacture each casing. In addition, Montblanc
estimates that it has been able to reduce its production set-up times and
reset-up times by approximately 60% with an equivalent reduction in wasted
material.

OUR CUSTOMERS

Our products are used at more than 2,500 user sites in more than 2,200
companies, which are located in over 50 countries spanning the globe.
Representative customers in various industries include:

<TABLE>
<S> <C>
AUTOMOTIVE ELECTRONICS
- ---------- ----------
DaimlerChrysler AG AMP Incorporated
DENSO Corporation The Framatome Group
Ford Motor Company Fuji Xerox Co., Ltd.
Hyundai Business Group Hewlett-Packard Company
Solvay SA Lucent Technologies, Inc.
Valeo SA Motorola, Inc.
Volkswagen AG Nokia Corporation
TOYS Siemens AG
- ---- MEDICAL
Hasbro, Inc. -------
The Lego Group Abbott Laboratories
Mattel, Inc. Baxter International, Inc.
MATERIAL SUPPLIERS Becton Dickinson and Company
- ----------------- OTHER/MULTIPLE INDUSTRIES
Bayer AG ------------------------
The Dow Chemical Company Fisher & Paykel Industries Limited
Eastman Chemical Company Honeywell International, Inc.
E. I. duPont de Nemours and Company LG Group
M. A. Hanna Company Minnesota Mining and Manufacturing (3M)
Montblanc-Simplo GmbH
Polaroid Corporation
Samsung Group
</TABLE>

SALES AND MARKETING

We distribute our products and services primarily through a direct sales
organization. As of January 1, 2000, our direct sales organization consisted of
29 sales associates, who operated out of offices located in Australia, France,
Germany, Italy, Japan, Korea, Sweden, the United Kingdom and the United States.
Our direct sales model involves pairing a sales associate and an engineer to
form a single sales team. These teams work together to conduct a thorough
evaluation of potential customers' design and manufacturing processes and
provide the potential customers with a detailed analysis of the cost savings our
products could produce in a selected aspect of their business. Based upon the
success of this sales model to date in increasing sales as well as the awareness
among our potential customers of our products, we intend to continue building
our direct sales organization worldwide.

38
<PAGE>
To supplement the efforts of our direct sales organization, we also sell our
products through marketing and distribution arrangements with several design
software vendors as an integrated application on their solid modeling design
systems. For example, Parametric Technology Corporation incorporates our MPA
product in a module of its Pro/ENGINEER product, which they call Pro/PLASTIC
ADVISOR, Structural Dynamics Research Corporation or SDRC sells our MPA product
as well as many modules contained within our MPI family of products, and
Unigraphics Solutions, Inc. sells our MPA product. Several distributors of
SolidWorks Corporation, a subsidiary of Dassault Systemes S.A., distribute our
MPA product and Autodesk, Inc. has designated us an MAI partner, which gives us
access to Autodesk's distribution channel to sell our MPA product. We have
retained over 100 distributors to provide worldwide sales coverage to complement
our direct sales organization.

CUSTOMER SUPPORT AND OTHER SERVICES

CUSTOMER SUPPORT AND TRAINING

We provide customer training on our products and 24-hour customer support.
Our customers may access customer support either through our telephone hotline
or our website. In addition, our product development staff is available to solve
more complex problems.

CONSULTING SERVICES

In addition to traditional customer support services, we also provide
consulting services to customers who lack employees with the expertise necessary
to take advantage of the full capability of our products. We employ design
engineers who use our products on behalf of our customers to optimize their part
design and production processes. We view providing consulting services as
complementary to our core business of selling sophisticated software solutions.
Accordingly, we provide consulting services typically in cases where we believe
that providing these services will help build relationships with future
customers for our software products.

MATERIAL TESTING SERVICES

Our material testing group provides testing services to our customers who
are seeking accurate, reliable material data on new or existing grades of
polymers, measured under a wide range of practical molding conditions. We have
established a database containing information on more than 4,500 plastics
materials. We conduct this testing at our facility located near Melbourne,
Australia, which we have equipped with state-of-the-art equipment and a number
of injection molding machines. The research and testing conducted at this
facility provides essential data for our full line of software applications.

PRODUCT DEVELOPMENT

Our product development strategy focuses on ongoing development and
innovation of new technologies to increase our customers' productivity and
provide solutions that our customers can integrate into their existing computing
platforms. We plan to extend our leadership position in plastics simulation
technology by continuing to make significant investments in research and
development and to maintain our market share by rapidly creating and delivering
new product releases to our customers. We intend to take advantage of current
and future technology trends, such as the Internet, to ensure our customers are
always able to gain incremental competitive advantage in their respective
industries.

Our product development activities take place in facilities located in the
United States, Australia and the United Kingdom. We linked the information
systems of each of these facilities to provide a continuous development
environment, enabling software development to be undertaken 24 hours per day.

39
<PAGE>
We also fund or participate in a wide assortment of external research and
development projects, often being conducted by the world's leading experts in
their fields. For instance, we currently have ongoing projects with CEMEF in
France and the University of Illinois, two highly regarded centers for plastic
material research. In many cases, under these projects we gain access to
fundamental research with comprehensive experimentation results. Often the
centers agree to restricted publishing rights in order to pursue topics of
mutual interest. A partial list of our collaborative partners includes ENSAM
(France) for shrinkage, Cranfield University (United Kingdom) for analysis of
fiber filled parts, Bradford/Leeds University (United Kingdom) for fiber
orientation measurement, Technical University of Eindhoven (Netherlands) for
numerical methods, McGill University (Canada) for material crystallization,
University of Sydney (Australia) for fluid mechanics and Nanyang Technological
University of Singapore for optimization. We believe that these relationships
provide a significant benefit to our product development efforts.

As of January 1, 2000, our product development staff had approximately 50
employees, most of whom hold advanced degrees and have industry experience in
engineering, mathematics, computer science or related disciplines. We seek to
recruit highly skilled employees, and our ability to attract and retain such
employees will be a principal factor in our success in maintaining our leading
technological position. We believe that such investments in research and
development are required in order for us to remain competitive and we believe
our cadre of software developers and our worldwide development capabilities
represent a significant competitive advantage.

COMPETITION

The markets into which our products are sold are highly competitive. We
compete with many companies engaged in selling software solutions to companies
engaged in product development and manufacturing. We also face competition from
materials vendors, injection molding machine manufacturers and small vendors,
such as independent engineering consultants. In addition, new competitors may
arise as we introduce new products into the marketplace.

The entrance of new competitors would be likely to intensify competition in
all or a portion of the markets in which we compete. Some of our current and
possible future competitors have greater financial, technical, marketing and
other resources than we do, and some have well established relationships with
our current and potential customers. Alliances among competitors may emerge and
rapidly acquire significant market share. Moreover, competition may increase as
a result of software industry consolidation.

We believe that the principal competitive factors affecting our market
include:

- speed of innovation,

- ease of use,

- flexibility,

- quality,

- ease of integration into or communication with computer-aided design
systems,

- compatibility across computer platforms,

- range of supported computer platforms,

- performance,

- price and cost of ownership,

- customer service and support,

- company reputation and financial viability, and

- effectiveness of sales and marketing efforts.

We believe that we compete effectively on these factors.

40
<PAGE>
TECHNOLOGY AND PROPRIETARY RIGHTS

Our proprietary technology applies general mathematical models describing
the behavior of plastics as fluids under conditions of heat and pressure to the
real world environment of plastic polymers and injection molding machines. We
believe that our broad range of proven numerical methods represents considerable
intellectual property and that these trade secrets are difficult to reproduce.
We own all of the core technology used in our products and license only assorted
peripheral software that facilitates the operation of our products' core
functions.

We engage in a regular review of our proprietary technology to determine the
optimal method of protecting such technology. We have been granted patents on
portions of our technology and have filed both U.S. and international
applications with respect to other technologies. We view these patents as one
important way of protecting our key intellectual property that may not be
protected by the use of other methods. We may not obtain any of the patents for
which we have applied and may not be able to enforce any patents we currently
hold or obtain in the future.

We rely on a combination of trade secret, copyright and trademark laws,
license agreements, nondisclosure and other contractual provisions and technical
measures to protect the unpatented proprietary technology contained in our
products. We distribute our software under software license agreements that
typically grant customers nonexclusive, nontransferable licenses to use our
products. These agreements usually restrict use of the licensed software to our
customer's internal operations on designated computers at specified sites unless
the customer obtains a site license for the customer's use of the software, and
are subject to terms and conditions prohibiting unauthorized reproduction or
transfer of the software.

For certain software such as the MPA series, we rely primarily on
"shrink-wrapped" or "click-wrapped" licenses that are not signed by licensees
and therefore may be unenforceable under the laws of certain jurisdictions.

We also seek to protect the source code of our software through trade secret
and copyright law. We have obtained or applied for United States federal
trademark mark protection for Moldflow, MPI, MPA, MPX and a number of other
trademarks and logos. We have also applied for or obtained trademark
registrations of these key marks in a number of foreign jurisdictions and are in
the process of seeking trademark registrations in other foreign countries.

We require our employees and consultants to sign a confidentiality and
non-competition agreement. Under these agreements, our employees agree not to
disclose trade secrets or confidential information and agree not to engage in or
be connected with any business that is competitive with our business while
employed by us, and in some cases for specified periods thereafter. Within these
agreements, employees also agree that any products or technology they create
during the term of their employment are our property.

Despite these precautions, misappropriation of our technology may occur.
Further, patent, trademark, copyright and trade secret protection may not be
available for our products in every country.

The software development industry is characterized by rapid technological
change. Therefore, we believe that factors such as the technological and
creative skills of our personnel, new product developments, frequent product
enhancements, name recognition and reliable product maintenance are more
important to establishing and maintaining a technology leadership position than
the various legal protections of our technology which may be available.

We seek to monitor the public records in order to become aware of any
potentially conflicting proprietary rights. To date, we have not received any
notification that any of our products infringe on the proprietary rights of
third parties. We can not assure you, however, that third parties will not

41
<PAGE>
claim such infringement by us or our licensors with respect to current or future
products. We expect that software product developers will increasingly be
subject to such claims as the number of products and competitors in our market
segment grows and the product functionality in different market segments
overlaps. In addition, patents on software and business methods are becoming
more common and we expect that more patents will issue in our technical field.
Any such claims, with or without merit, could be time-consuming, result in
costly litigation, cause product shipment delays or require us to enter into
royalty or licensing agreements. Moreover, such royalty or licensing agreements,
if required, may not be on terms acceptable to us.

We integrate third-party software into our products. This software may not
continue to be available on commercially reasonable terms. If we cannot maintain
licenses to this third-party software, distribution of our products could be
delayed until equivalent software could be developed or licensed and integrated
into our products. This could cause delays in our product sales and development
efforts.

EMPLOYEES

As of January 1, 2000, we had 161 employees, 54 of whom resided in
Australia, 44 of whom resided in the United States, 14 of whom resided in the
United Kingdom and 49 of whom resided in other countries. None of our employees
is subject to any collective bargaining agreement. We believe that our
relationship with our employees is good.

FACILITIES

We operate out of two primary facilities. We lease a 7,900 square foot
office in Lexington, Massachusetts pursuant to a 5-year lease that expires in
November 2001. The Lexington facility is our corporate headquarters. Personnel
located at the Lexington facility include most of our senior management team,
some of our North American sales force, some product marketing and development
personnel and some finance and administration personnel. We also own an 18,100
square foot office building set on approximately 15 acres in the Kilsyth suburb
of Melbourne, Australia. Personnel located at our Melbourne facility include
members of our software development and research team, our materials testing
personnel and a portion of our Asia Pacific sales force. We also maintain an
office containing a smaller group of our sales, administrative and software
development personnel in the United Kingdom as well as direct sales offices in
Korea, Japan, Sweden, Germany, Italy and France. We had aggregate lease payments
of $664,000 in our 1999 fiscal year.

LEGAL PROCEEDINGS

In February 1999, we filed suit in the United States District Court for the
Northern District of New York against a former employee, Leonid K. Antanovskii,
and his current employer, C-Mold. We are seeking immediate and permanent
injunctive relief and monetary damages arising from the alleged theft and
misappropriation of some of our trade secrets. Specifically, we allege
misappropriation of trade secrets, proprietary information and confidential
information, breach of contract, breach of implied covenant of good faith,
breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, unfair
competition, interference with contractual relations, fraud, civil conspiracy
and unjust enrichment. On February 28, 1999, the court issued a preliminary
injunction prohibiting Mr. Antanovskii and C-Mold from using or disclosing our
confidential and trade secret information. On January 11, 2000, the court denied
C-Mold's motion to vacate the preliminary injunction and ordered that it remain
in place. On the same date the court also held Mr. Antanovskii and C-Mold in
contempt of court and ordered sanctions, including the award of attorneys' fees
in connection with the motion, against Mr. Antanovskii and C-Mold.

42
<PAGE>

In March 1999, C-Mold filed counterclaims against us alleging that we had
violated federal antitrust laws, committed defamation and trade libel and
tortiously interfered with C-Mold's prospective business advantage.
Specifically, C-Mold alleges that we have engaged in predatory and
anticompetitive conduct in an attempt to monopolize the market for computer
software for use in simulating, modeling and analyzing the design and
manufacture of plastic injection molded articles or products and their
corresponding molds, particularly in full three-dimensional geometry. C-Mold
alleges antitrust violations based on bad faith assertion of a trade secret
claim and predatory pricing. In addition, C-Mold claims that we made certain
disparaging comments regarding C-Mold's products and its business. C-Mold has
requested that the court awards costs, attorneys' fees, injunctive relief and
monetary damages. We filed a motion to dismiss the amended counterclaims in
July 1999 and all discovery with respect to the counterclaims was stayed. On
January 26, 2000, the court granted our motion to dismiss these counterclaims in
part and denied it in part. All aspects of the litigation are currently being
held in abeyance upon agreement of the parties, in connection with our pending
acquisition of C-Mold. If the acquisition is completed, this litigation will be
dismissed with prejudice by the agreement of all parties. If for any reason our
acquisition of C-Mold is not completed, we expect that the litigation will
resume.

In the event that the litigation resumes, we intend to vigorously defend
against the remaining counterclaims. We believe that the counterclaims are
without merit.

We have incurred and may continue to incur significant expenses in the
course of pursuing our claims in this case and defending the counterclaims made
against us. For the year ended June 30, 1999 and the six months ended
January 1, 2000, our litigation expenses were $620,000 and $530,000.

From time to time we may be involved in other disputes and litigation
matters that arise in the ordinary course of business.

PENDING ACQUISITION

On February 11, 2000, we entered into a definitive agreement to acquire
C-Mold. C-Mold has developed software that is complementary to our current
product offerings in the areas of part design and in-depth plastics simulation.
In particular, we believe the acquisition of C-Mold will enhance our development
capabilities and enable us to broaden our product lines into adjacent markets
more quickly. C-Mold had $7.7 million in revenue for the fiscal year ended
September 30, 1999. The purchase price will be $11.0 million in cash. The
acquisition is subject to a number of closing conditions, including completion
of our business and financial review of C-Mold, delivery by C-Mold of disclosure
schedules in a form satisfactory to us, settlement of our outstanding litigation
with C-Mold, approval by C-Mold's stockholders and our obtaining financing for
the acquisition. We anticipate that the acquisition will close on or prior to
May 31, 2000. However, our acquisition of C-Mold may not be completed.

43
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors and their positions and ages as of
January 20, 2000 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
Marc J. L. Dulude...................... 39 President, Chief Executive Officer and Director
Suzanne E. Rogers...................... 42 Vice President of Finance and Administration, Chief
Financial Officer and Treasurer
A. Roland Thomas....................... 41 Vice President of Research and Development and
Director
Richard M. Underwood................... 45 Vice President of Sales
Kenneth R. Welch....................... 42 Vice President of Marketing
Charles D. Yie(1)(2)................... 41 Chairman of the Board of Directors
Julian H. Beale(1)..................... 65 Director
Roger Brooks(2)........................ 54 Director
Richard A. Charpie, Ph.D............... 47 Director
Robert P. Schechter(2)................. 51 Director
</TABLE>

- ------------------------

(1) Member of the compensation committee

(2) Member of the audit committee

MARC J. L. DULUDE has served as our President and Chief Executive Officer
and as a director of Moldflow since May 1996. Prior to joining Moldflow,
Mr. Dulude served in various positions with and most recently as the Senior Vice
President of Marketing of Parametric Technology Corporation, a computer-aided
design software company, from 1991 to May 1996, and in various positions with
the Bell-Northern Research division of Northern Telecom, a telecommunications
company, from 1987 to 1991. Mr. Dulude holds Bachelor and Master of Mechanical
Engineering degrees from Carleton University in Canada.

SUZANNE E. ROGERS has served as our Vice President of Finance and
Administration, Chief Financial Officer and Treasurer since September 1996.
Before joining Moldflow, Ms. Rogers served as the Vice President of Finance and
Chief Financial Officer from November 1994 to September 1996 and as the
Controller from May 1993 to November 1994 of Scitex America Corp., a subsidiary
of Scitex Corporation Ltd., a graphic arts systems manufacturer, in various
positions with Autographix, a graphic workstation manufacturer, from 1991 to
1993 and as the Director of Finance of MRS Technology, a micro-lithography
equipment manufacturer, from 1987 to 1991. Ms. Rogers is a certified public
accountant.

A. ROLAND THOMAS has served as a director of Moldflow since November 1989,
our Vice President of Research and Development since January 1997 and has served
in various other positions with Moldflow since 1982. Mr. Thomas holds a Bachelor
of Mechanical Engineering degree from the Royal Melbourne Institute of
Technology.

RICHARD M. UNDERWOOD has served as our Vice President of Sales since
October 1997. Prior to joining Moldflow, Mr. Underwood served in various
positions with and most recently as the Vice President of Sales Operations of
Parametric Technology Corporation from 1990 to October 1997.

KENNETH R. WELCH has served as our Vice President of Marketing since
November 1996. Prior to joining Moldflow, Mr. Welch served as the Director of
AutoCAD Product Marketing for Autodesk, Inc., a computer-aided design software
company, from September 1995 to November 1996, Vice President of Sales and
Marketing of Visual Kinematics, an original equipment manufacturer of software
tools, from June 1994 to September 1995, and the Director of Product Marketing
of Rasna Corporation, a computer-aided engineering software company, from 1989
to June 1994. Mr. Welch holds Bachelor and Master of Science degrees in Civil
Engineering from the University of California at Davis.

44
<PAGE>

CHARLES D. YIE has served as the Chairman of our board of directors since
August 1996 and as a director since December 1995. He joined Ampersand's
predecessor in 1985 and serves as a General Partner of all Ampersand's active
partnerships. Mr. Yie has served as a director of more than twelve public and
private companies and currently serves as a director of Intelligent
Controls, Inc., an electronic measurement systems manufacturer serving the
petroleum industry, and various privately-held companies. Mr. Yie holds a B.S.
in Electrical Engineering and an M.S. in Management from the Massachusetts
Institute of Technology.

JULIAN H. BEALE has served as a director of Moldflow since September 1996.
Mr. Beale is a private investor. Mr. Beale served as a member of Australia's
federal Parliament from 1984 to 1996.

ROGER BROOKS has served as a director of Moldflow since October 1998.
Mr. Brooks has served as the President and Chief Executive Officer and a
director of Intelligent Controls, Inc. since May 1998. Previously, Mr. Brooks
served as President and Chief Executive Officer and a director of Dynisco Inc.,
an instrumentation and equipment company, from 1984 through 1996.

RICHARD A. CHARPIE, PH.D. has served as a director of Moldflow since
December 1995. Dr. Charpie joined Ampersand Ventures' predecessor in 1980 and
led its activities beginning in 1983. The Managing General Partner of all of
Ampersand's active partnerships, he founded the firm in 1988 and structured its
spinoff from PaineWebber. Dr. Charpie has served as a director of more than
thirty-five public and private companies and currently serves as a director of
TriPath Imaging, Inc., a medical products company, V. I. Technologies, Inc., a
developer of blood products and systems, and various privately-held companies.
Dr. Charpie holds an M.S. degree in Physics and a Ph.D. in Applied Economics and
Finance from the Massachusetts Institute of Technology.

ROBERT P. SCHECHTER has served as a director of Moldflow since
January 2000. Mr. Schechter has served as President and Chief Executive Officer
of Natural MicroSystems, a telecommunications enabling technology company, since
April 1995 and its chairman since March 1996. Prior to joining Natural
MicroSystems, Mr. Schechter served in various positions with and most recently
as the Senior Vice President of the International Business Group of Lotus
Development Corporation, a software company, from 1987 to March 1994.
Mr. Schechter also serves as a director of Infinium Software, Inc., an
application software company.

BOARD COMPOSITION

Following the closing of this offering, our board of directors will be
divided into three classes, each of whose members will serve for a staggered
three-year term. Our board of directors will consist of Messrs. Schechter,
Thomas and Yie as Class I directors, whose term of office will continue until
the 2000 annual meeting of stockholders, Messrs. Beale and Dulude as Class II
directors, whose term of office will continue until the 2001 annual meeting of
stockholders, and Messrs. Brooks and Charpie as Class III directors, whose term
of office will continue until the 2002 annual meeting of stockholders. At each
annual meeting of stockholders, a class of directors will be elected for a
three-year term.

BOARD COMMITTEES

Effective upon the closing of this offering, our board of directors will
reconstitute the audit committee and compensation committee.

AUDIT COMMITTEE. The members of the audit committee will be responsible for
recommending to the board of directors the engagement of our outside auditors
and reviewing our accounting controls and the results and scope of audits and
other services provided by our auditors. All of the members of the audit
committee will be independent directors unless the board of directors determines
that exceptional and limited circumstances exist which warrant the inclusion of
one non-independent director on the audit committee and that the inclusion of
one non-independent director is in the best interests of Moldflow and its
stockholders. Although Mr. Yie is not an independent director, the board of
directors has determined that his service on the audit committee

45
<PAGE>
is in the best interest of Moldflow and its stockholders. The board of directors
based this determination, in part, on Mr. Yie's expertise in financial and
accounting matters and his extensive knowledge of Moldflow's operations.

COMPENSATION COMMITTEE. The members of the compensation committee, a
majority of whom will be independent directors, will be responsible for
reviewing and recommending to the board of directors the amount and type of
consideration to be paid to senior management, administering our stock option
plans and establishing and reviewing general policies relating to compensation
and benefits of employees.

DIRECTOR COMPENSATION

Directors who are employees receive no additional compensation for their
services as directors. Non-employee directors receive a $2,000 quarterly fee for
their service as directors and $250 for each meeting of a committee of the board
of directors they attend. Non-employee directors are also eligible to
participate in the 2000 Stock Option and Incentive Plan. The 2000 Stock Option
and Incentive Plan contains a formula under which each non-employee director
will receive an option to acquire 10,000 shares of common stock upon initial
election to the board. Non-employee directors will also receive an option to
acquire an additional 10,000 shares of common stock following the 2002 annual
meeting of stockholders and at every second annual meeting of stockholders
thereafter. Mr. Schechter received an option to acquire 10,000 shares upon his
election on January 20, 2000 and Messrs. Beale, Brooks, Charpie and Yie will
each receive options to acquire 10,000 shares of common stock concurrently with
the effectiveness of this offering.

EXECUTIVE COMPENSATION

The following table sets forth the total compensation paid or accrued in the
fiscal year ended June 30, 1999 to our Chief Executive Officer and the four
other most highly compensated executive officers, each of whose aggregate
compensation exceeded $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- --------------
NUMBER
OF SECURITIES
OTHER UNDERLYING ALL
ANNUAL OPTIONS OTHER
NAME SALARY BONUS COMPENSATION GRANTED COMPENSATION
- ---- --------- --------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Marc J. L. Dulude............. $215,000 $35,000 -- 131,250 $26,563(1)
President and Chief
Executive Officer
Suzanne E. Rogers............. 133,000 20,000 -- 35,417 10,400(2)
Vice President of Finance
and Administration, Chief
Financial Officer and
Treasurer
Richard M. Underwood.......... 120,000 -- $97,000(3) 22,917 17,321(2)
Vice President of Sales
A. Roland Thomas.............. 96,880 19,407 -- 25,000 22,150(4)
Vice President of Research
and Development
Kenneth R. Welch.............. 133,000 17,500 -- 33,333 10,400(2)
Vice President of Marketing
</TABLE>

- ------------------------------
(1) Includes $12,000 as a car allowance, $10,500 in contributions by Moldflow to
Mr. Dulude's 401(k) account, and $4,063 representing life insurance and
disability insurance purchased for Mr. Dulude's benefit.

(2) Constitute contributions by Moldflow to the executive officers' 401(k)
accounts.

(3) Constitutes sales commissions.

(4) Includes $9,057 in contributions to Mr. Thomas' retirement plan account and
$13,093 as a car allowance.

46
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information regarding stock options granted
during fiscal 1999 to the executive officers listed in the Summary Compensation
Table. The exercise price per share of each option was equal to the fair market
value of the common stock as of the grant date as determined by the board of
directors.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL EXERCISE STOCK PRICE
SECURITIES OPTIONS OR BASE APPRECIATION
UNDERLYING GRANTED TO PRICE FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN ($/ EXPIRATION ---------------------
NAME GRANTED(1) FISCAL YEAR(2) SHARE) DATE 5% 10%
- ---- ------------ ---------------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Marc J. L. Dulude................ 16,667 4.52% $0.72 8/14/2006 $ 5,729 $ 13,723
114,583 31.07 6.00 6/15/2007 328,251 786,217
Suzanne E. Rogers................ 10,417 2.82 0.72 8/14/2006 3,581 8,577
25,000 6.78 6.00 6/15/2007 71,618 171,538
Richard M. Underwood............. 2,083 0.56 0.72 8/14/2006 716 1,715
2,083 0.56 1.20 1/21/2007 1,194 2,859
2,083 0.56 4.80 4/22/2007 4,774 11,434
16,668 4.52 6.00 6/15/2007 47,749 114,368
A. Roland Thomas................. 25,000 6.78 6.00 6/15/2007 71,618 171,538
Kenneth R. Welch................. 8,333 2.26 0.72 8/14/2006 2,865 6,862
25,000 6.78 6.00 6/15/2007 71,618 171,538
</TABLE>

- --------------------------

(1) Subject to each executive officer's continued employment with Moldflow, 25%
of the options in each option grant vest on the first anniversary of the
date of the grant and the remaining options vest in equal quarterly
installments through the fourth anniversary of the date of the grant. In
addition, these options also vest in full upon any change of control of
Moldflow as defined in the options.

(2) Based on an aggregate of 368,813 options granted to employees in fiscal
1999.

(3) The amounts shown as potential realizable value illustrate what might be
realized upon exercise immediately prior to expiration of the option term
using the 5% and 10% appreciation rates compounded annually as established
in regulations of the Securities and Exchange Commission.

The following table sets forth the potential realizable value of the options
granted to the listed executive officers using our assumed initial public
offering price of $13.00 per share:

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
NUMBER OF APPRECIATION FOR OPTION
SECURITIES TERM
UNDERLYING ---------------------------
OPTIONS GRANTED 5% 10%
-------------------- ------------ ------------
<S> <C> <C> <C>
Marc J. L. Dulude....................... 16,667 $ 308,122 $ 452,453
114,583 1,513,289 2,505,547
Suzanne E. Rogers....................... 10,417 192,578 282,787
25,000 330,173 546,666
Richard M. Underwood.................... 2,083 38,508 56,547
2,083 37,508 55,547
2,083 30,010 48,048
16,668 220,133 364,473
A. Roland Thomas........................ 25,000 330,173 546,666
Kenneth R. Welch........................ 8,333 154,052 226,213
25,000 330,173 546,666
</TABLE>

The potential realizable value is not intended to predict future
appreciation of the price of our common stock. The values shown do not
consider non-transferability, vesting or termination of the options upon
termination of the employee's employment relationship with us.

47
<PAGE>
FISCAL YEAR-END OPTION VALUES

The following table sets forth information concerning the number and value
of unexercised options to purchase common stock held as of June 30, 1999 by the
executive officers listed in the Summary Compensation Table. There was no public
trading market for our common stock as of June 30, 1999. Accordingly, the values
of the unexercised in-the-money options have been calculated on the basis of the
estimated fair value of our common stock at June 30, 1999 of $6.00 per share,
less the applicable exercise price multiplied by the number of shares which may
be acquired on exercise. None of the executive officers listed in the Summary
Compensation Table exercised any stock options in fiscal 1999.

AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
------------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Marc J. L. Dulude....................... -- 131,250 $ -- $ 88,002
Suzanne E. Rogers....................... -- 35,417 -- 55,002
Richard M. Underwood.................... -- 22,917 -- 23,496
A. Roland Thomas........................ 17,392 69,494 98,091 152,855
Kenneth R. Welch........................ -- 33,333 -- 43,998
</TABLE>

2000 STOCK OPTION AND INCENTIVE PLAN

Our board of directors has adopted the 2000 Stock Option and Incentive Plan,
subject to stockholder approval. The 2000 Stock Option and Incentive Plan will
be submitted to our stockholders for approval in February 2000. The 2000 Stock
Option and Incentive Plan allows for the issuance of up to 2,000,000 shares of
common stock plus an additional amount equal to 20% of any net increase in the
total number of shares of common stock outstanding after this offering. Our
compensation committee will administer the 2000 Stock Option and Incentive Plan.

Under the 2000 Stock Option and Incentive Plan, our compensation committee
may:

- grant incentive stock options,

- grant non-qualified stock options,

- grant stock appreciation rights,

- issue or sell common stock with vesting or other restrictions, or without
restrictions,

- grant rights to receive common stock in the future with or without
vesting,

- grant common stock upon the attainment of specified performance goals, and

- grant dividend rights in respect of common stock.

These grants and issuances may be made to officers, employees, directors,
consultants, advisors and other key persons of Moldflow.

Our compensation committee has the right, in its discretion, to select the
individuals eligible to receive awards, determine the terms and conditions of
the awards granted, accelerate the vesting schedule of any award and generally
administer and interpret the plan.

The exercise price of options granted under the 2000 Stock Option and
Incentive Plan is determined by our compensation committee. Under present law,
incentive stock options and options intended to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986 may not
be granted at an exercise price less than the fair market value of the common
stock on the date of grant, or less than 110% of the fair market value in the
case of incentive stock options granted to optionees holding more than 10% of
the voting power.

Non-qualified stock options may be granted at prices which are less than the
fair market value of the underlying shares on the date granted. Options are
typically subject to vesting schedules,

48
<PAGE>
terminate eight years from the date of grant and may be exercised for specified
periods after the termination of the optionee's employment or other service
relationship with us. Upon the exercise of options, the option exercise price
must be paid in full either in cash or by certified or bank check or other
instrument acceptable to the committee or by delivery of shares of common stock
that have been owned by the optionee free of restrictions for at least six
months.

The 2000 Stock Option and Incentive Plan and all awards issued under the
plan will terminate upon a merger, reorganization or consolidation, the sale of
all or substantially all of our assets or all of our outstanding capital stock
or a liquidation or other similar transaction, unless Moldflow and the other
parties to such transactions have agreed otherwise. All participants under the
2000 Stock Option and Incentive Plan will be permitted to exercise for a period
of 30 days before any such termination all awards held by them which are then
exercisable or will become exercisable upon the closing of the transaction.

EMPLOYEE STOCK PURCHASE PLAN

The Employee Stock Purchase Plan was adopted by our board of directors in
January 2000, subject to stockholder approval. The Employee Stock Purchase Plan
will be submitted to stockholders in February 2000. Up to 500,000 shares of our
common stock may be issued under the Employee Stock Purchase Plan. The Employee
Stock Purchase Plan is administered by our compensation committee.

The first offering under the Employee Stock Purchase Plan will commence on
July 1, 2000 and end on December 31, 2000. Subsequent offerings will commence on
each January 1 and July 1 thereafter and will have a duration of six months.
Generally, all employees who are customarily employed for more than 20 hours per
week as of the first day of the applicable offering period are eligible to
participate in the Employee Stock Purchase Plan. Any employee who owns or is
deemed to own shares of stock representing in excess of 5% of the combined
voting power of all classes of our stock may not participate in the Employee
Stock Purchase Plan.

During each offering, an employee may purchase shares under the Employee
Stock Purchase Plan by authorizing payroll deductions of up to 10% of his cash
compensation during the offering period. Unless the employee has previously
withdrawn from the offering, his accumulated payroll deductions will be used to
purchase shares of our common stock on the last business day of the period at a
price equal to 85% of the fair market value of our common stock on the first or
last day of the offering period, whichever is lower. Under applicable tax rules,
an employee may purchase no more than $25,000 worth of our common stock in any
calendar year under the Employee Stock Purchase Plan. We have not issued any
shares to date under the Employee Stock Purchase Plan.

1997 EQUITY INCENTIVE PLAN

The 1997 Equity Incentive Plan was initially approved by our board of
directors in August 1997 and was approved by our stockholders in October 1997.
The 1997 Equity Incentive Plan provides for the issuance of 1,537,158 shares of
our common stock. As of January 20, 2000, options to purchase 605,071 shares of
our common stock were outstanding under the 1997 Equity Incentive Plan. Options
granted under the 1997 Equity Incentive Plan generally vest over four years and
terminate on the eighth anniversary of the date of grant. We will not make any
additional grants under the 1997 Equity Incentive Plan after the completion of
this offering.

EMPLOYMENT AGREEMENTS

We anticipate entering into employment agreements with each of
Messrs. Dulude, Underwood, Thomas and Welch and Ms. Rogers. Each proposed
agreement would be for a period of one year, and would be automatically extended
for one additional year on the anniversary date unless either party has given
notice that it does not wish to extend the agreement. Each agreement provides
for the payment of base salary and incentive compensation and for the provision
of certain fringe benefits to the executive. The agreements require our
executive officers to refrain from competing

49
<PAGE>
with Moldflow and from soliciting our employees for a period of twelve months
following termination for any reason. Each agreement also provides for certain
payments and benefits for an executive officer should his or her employment with
us be terminated because of death or disability, by the executive for good
reason or by us without cause, as further defined in the agreements. In general,
in the case of a termination by the executive officer for good reason, or by us
without cause, the executive officer will receive up to one year of salary, an
extension of benefits for one year and an acceleration of vesting for stock
options and restricted stock which otherwise would vest during the next twelve
months. Upon a change of control, as defined in the agreements, the executive
officer is eligible for payment of a minimum of six months and up to one year of
salary, an extension of benefits for one year and an acceleration of vesting for
all outstanding stock options and restricted stock. Mr. Dulude's agreement also
includes certain provisions requiring Moldflow to increase the payments to him
following a change in control in the event that amounts paid to him would
subject him to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986.

RESTRICTED STOCK AGREEMENTS

In July 1998, Messrs. Dulude, Underwood and Welch and Ms. Rogers purchased
from Moldflow a total of 551,287 shares of common stock at a price of $0.36 per
share. Each of these executive officers paid for the shares by delivering to
Moldflow a promissory note, which bears interest at a rate of 5.77% per year.
Principal and interest on the notes become payable in full on June 30, 2003, but
may be prepaid at any time. Each of these executive officers also entered into a
stock restriction agreement with Moldflow. Pursuant to these agreements,
Moldflow has the right, but not the obligation, to repurchase a portion of these
shares at the initial purchase price per share upon the termination for any
reason of the employment of the respective executive officer. The repurchase
rights with respect to these shares lapse on varying schedules through
October 2002 so long as the executive officer who purchased the shares remains
an employee of Moldflow. The repurchase right with respect to a portion of these
shares will also lapse if Moldflow terminates the employment of the executive
officer without cause as defined in his or her employment agreement or if
employment terminates due to his or her death or disability. The repurchase
right will lapse in its entirety in the event Moldflow experiences a change in
control as defined in the executive officers' employment agreements.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Beale and Yie are the members of our compensation committee. Neither
Mr. Beale nor Mr. Yie is an executive officer of Moldflow or has received any
compensation from Moldflow within the last three years other than in his
capacity as a director.

In January 1997, we entered into loan agreements with a group of our
stockholders consisting of JTC Investment Management Pty. Ltd., funds associated
with Ampersand Ventures, Thomas Investments Australia Pty. Ltd, Floatflow
Pty. Ltd. and Helmet Investments Australia Pty. Ltd. pursuant to which these
stockholders provided us with a credit line of approximately $1.1 million. In
July 1998, we converted the outstanding principal balance of $890,000 under this
credit line into 698,609 shares of our series C-3 convertible preferred stock
and paid these stockholders $107,000 of accrued interest. Mr. Yie is affiliated
with the funds associated with Ampersand Ventures, and Mr. Beale is affiliated
with JTC Investment Management Pty. Ltd.

50
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

1997 REORGANIZATION

In June 1997, our predecessor, Moldflow International Pty. Ltd., an
Australian corporation, entered into a reorganization agreement with Moldflow
and its stockholders. In the reorganization, the stockholders of Moldflow
International became stockholders of Moldflow, and Moldflow International became
a wholly-owned subsidiary of Moldflow. Stockholders of Moldflow International
were issued shares of either Moldflow's common stock, series A convertible
preferred stock or series B convertible preferred stock. In March 1998, these
shares of common stock, series A convertible preferred and series B convertible
preferred were redesignated as series C-1, C-2 and C-3 convertible preferred
stock. Upon completion of this offering, all shares of our outstanding preferred
stock will be converted into shares of common stock.

LOANS FROM STOCKHOLDERS

In January 1997, we entered into loan agreements with a group of our
stockholders consisting of JTC Investment Management Pty. Ltd., funds associated
with Ampersand Ventures, Thomas Investments Australia Pty. Ltd, Floatflow
Pty. Ltd. and Helmet Investments Australia Pty. Ltd. pursuant to which these
stockholders provided us with a credit line of approximately $1.1 million. In
July 1998, we converted the outstanding principal balance of $890,000 under this
credit line into 698,609 shares of our series C-3 convertible preferred stock
and paid these stockholders $107,000 of accrued interest. Dr. Charpie and
Mr. Yie, directors of Moldflow, are affiliated with the funds associated with
Ampersand Ventures, Mr. Beale, also a director of Moldflow, is affiliated with
JTC Investment Management Pty. Ltd., and Mr. Thomas, our Vice President of
Research and Development and a director of Moldflow, is the beneficial owner of
Thomas Investments Australia Pty. Ltd.

LOAN TO EXECUTIVE OFFICER AND DIRECTOR

In July 1999, Mr. Thomas borrowed approximately $129,000 from our
subsidiary, Moldflow International, pursuant to a promissory note. This
promissory note is not interest bearing and is due on July 1, 2000. The amounts
due under this promissory note will be completely offset by amounts due to
Mr. Thomas on July 1, 2000 pursuant to the terms of a deferred compensation
arrangement between Moldflow and Mr. Thomas.

In connection with the expatriate assignment of Mr. Thomas from Australia to
the United States, Moldflow loaned him $87,000 in September 1996. The loan was
repaid in January 1999.

OTHER ARRANGEMENTS WITH EXECUTIVE OFFICERS

In addition, other agreements with our executive officers are described
under "Management--Employment Agreements" and "Management--Restricted Stock
Agreements."

51
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of Moldflow common stock as of January 20, 2000 and on an as adjusted
basis to reflect the sale of the common stock offered hereby by:

- all persons known by us to own beneficially 5% or more of the common
stock,

- each of our directors,

- the executive officers listed in the summary compensation table,

- each stockholder selling shares in this offering, and

- all of our directors and executive officers as a group.

Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares of common stock beneficially owned
by the stockholder. The address of Ampersand Ventures is 55 William Street,
Suite 240, Wellesley, MA 02481, the address of JTC Investment Management
Pty. Ltd. is 333 Collins Street, Melbourne VIC 3000, Australia, the address of
Lombard Capital Fund LLC, is c/o Asiaciti Corp. Services Pte. Ltd., 3 Raffles
Place, #09-01 Bharat Building, Singapore 048617 and the address of Paul
Bordonaro is c/o Floatflow Pty. Ltd., 13 Townsend Street, Ivanhoe, VIC 3079,
Australia. The address of all other listed stockholders is c/o Moldflow
Corporation, 91 Hartwell Avenue, Lexington, MA 02421.

The number of shares beneficially owned by each stockholder is determined
under rules issued by the Securities and Exchange Commission and includes voting
or investment power with respect to securities. Under these rules, beneficial
ownership includes any shares as to which the individual or entity has sole or
shared voting power or investment power and includes any shares as to which the
individual or entity has the right to acquire beneficial ownership within
60 days after January 20, 2000 through the exercise of any warrant, stock option
or other right. The inclusion in this prospectus of such shares, however, does
not constitute an admission that the named stockholder is a direct or indirect
beneficial owner of such shares.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING
---------------------- SHARES TO ------------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT(1) BE SOLD SHARES PERCENT(1)
- ------------------------ --------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Ampersand Ventures(2)................... 4,039,060 66.7%
Richard A. Charpie(3)................... 4,039,060 66.7
Charles D. Yie(4)....................... 4,039,060 66.7
JTC Investment Management Pty.
Ltd.(5)............................... 752,627 12.4
Julian H. Beale(6)...................... 752,627 12.4
Marc J. L. Dulude(7).................... 403,151 6.7
Lombard Capital Fund LLC(8)............. 218,054 3.6
A. Roland Thomas(9)..................... 183,494 3.0
Paul Bordonaro(10)...................... 158,457 2.6
Richard M. Underwood(11)................ 57,104 *
Suzanne E. Rogers(12)................... 54,127 *
Kenneth R. Welch(13).................... 51,486 *
Roger Brooks............................ 1,562 *
Robert P. Schechter..................... -- *
All executive officers and directors, as
a group (10 persons)(14).............. 5,542,611 91.0
</TABLE>

- ------------------------

* Represents less than 1% of the outstanding shares of common stock.

52
<PAGE>

(1) All percentages assume the underwriters do not elect to exercise the
over-allotment option to purchase an additional 450,000 shares of common
stock. The number of shares of common stock includes shares to be issued
upon completion of this offering pursuant to the conversion of all of the
shares of our class C preferred stock into shares of common stock and the
exercise of the outstanding warrant into shares of common stock.

(2) Consists of 1,482,131 shares held by Ampersand Specialty Materials and
Chemicals II Limited Partnership, 2,516,019 shares held by Ampersand
Specialty Materials and Chemicals III Limited Partnership and 40,910 shares
held by Ampersand Specialty Materials and Chemicals III Companion Fund
Limited Partnership. Ampersand Specialty Materials and Chemicals II Limited
Partnership, Ampersand Specialty Materials and Chemicals III Limited
Partnership and Ampersand Specialty Materials and Chemicals III Companion
Fund Limited Partnership are part of an affiliated group of investment
partnerships referred to collectively herein as Ampersand Ventures. ASMC-II
MCLP LLP is the general partner of ASMC-II Management Company Limited
Partnership, which is the general partner of Ampersand Specialty Materials
and Chemicals II Limited Partnership, which exercises sole voting and
investment power with respect to all of the shares held of record by
Ampersand Specialty Materials and Chemicals II Limited Partnership. ASMC-III
MCLP LLP is the general partner of ASMC-III Management Company Limited
Partnership, which is the general partner of Ampersand Specialty Materials
and Chemicals III Limited Partnership and Ampersand Specialty Materials and
Chemicals III Companion Fund Limited Partnership, which exercises sole
voting and investment power with respect to all of the shares held of record
by Ampersand Specialty Materials and Chemicals III Limited Partnership and
Ampersand Specialty Materials and Chemicals III Companion Fund Limited
Partnership. Dr. Charpie, a director of Moldflow, is the Managing General
Partner of both ASMC-II MCLP LLP and ASMC-III MCLP LLP and Mr. Yie, a
director of Moldflow, is a General Partner of both ASMC-II MCLP LLP and
ASMC-III MCLP LLP. Dr. Charpie and Mr. Yie disclaim any beneficial ownership
of the shares held by Ampersand Ventures, except to the extent of their
respective pecuniary interests therein.

(3) Consists solely of the shares described in note (2) above, of which
Dr. Charpie may be considered the beneficial owner. Dr. Charpie disclaims
beneficial ownership of such shares, except to the extent of his pecuniary
interest therein.

(4) Consists solely of the shares described in note (2) above, of which Mr. Yie
may be considered the beneficial owner. Mr. Yie disclaims beneficial
ownership of such shares, except to the extent of his pecuniary interest
therein.

(5) Mr. Beale, a director of Moldflow, may be considered the beneficial owner of
these shares based on his voting and investment power with respect to the
parent company of JTC Investment Management Pty. Ltd.

(6) Consists solely of the shares described in note (5) above, of which
Mr. Beale may be considered the beneficial owner. Mr. Beale disclaims
beneficial ownership of 323,706 of such shares.

(7) Includes 6,250 shares that may be acquired within 60 days of January 20,
2000.

(8) The sole beneficial owner of these shares is Asiaciti Trust Samoa Limited.

(9) Includes 158,457 shares held by Thomas Investments Australia Pty. Ltd., of
which Mr. Thomas is the beneficial owner. Also includes 25,037 shares that
may be acquired within 60 days of January 20, 2000.

(10) Consists solely of shares held by Floatflow Pty. Ltd., of which
Mr. Bordonaro is the beneficial owner.

(11) Includes 1,302 shares that may be acquired within 60 days of January 20,
2000.

(12) Includes 3,906 shares that may be acquired within 60 days of January 20,
2000.

(13) Includes 3,125 shares that may be acquired within 60 days of January 20,
2000.

(14) Includes 39,620 shares that may be acquired within 60 days of January 20,
2000.

53
<PAGE>
DESCRIPTION OF CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

Following the offering, our authorized capital stock will consist of
60,000,000 shares of common stock, of which 9,069,610 will be issued and
outstanding, and 5,000,000 shares of undesignated preferred stock issuable in
one or more series designated by our board of directors, of which no shares will
be issued and outstanding. In addition, 605,071 shares of our common stock will
be issuable upon exercise of stock options outstanding and 2,500,000 shares of
our common stock will be available for future grant under our stock option plan
and our employee stock purchase plan.

COMMON STOCK

VOTING RIGHTS. The holders of our common stock have one vote per share.
Holders of our common stock are not entitled to vote cumulatively for the
election of directors. Generally, all matters to be voted on by stockholders
must be approved by a majority, or, in the case of the election of directors, by
a plurality, of the votes cast at a meeting at which a quorum is present, voting
together as a single class, subject to any voting rights granted to holders of
any then outstanding preferred stock.

DIVIDENDS. Holders of common stock will share ratably in any dividends
declared by our board of directors, subject to the preferential rights of any
preferred stock then outstanding. Dividends consisting of shares of common stock
may be paid to holders of shares of common stock.

OTHER RIGHTS. Upon liquidation, dissolution or winding up of Moldflow, all
holders of common stock are entitled to share ratably in any assets available
for distribution to holders of shares of common stock. No shares of common stock
are subject to redemption or have preemptive rights to purchase additional
shares of common stock.

PREFERRED STOCK

Our certificate of incorporation provides that shares of preferred stock may
be issued from time to time in one or more series. Our board of directors is
authorized to fix the voting rights, if any, designations, powers, preferences,
qualifications, limitations and restrictions thereof, applicable to the shares
of each series. Our board of directors may, without stockholder approval, issue
preferred stock with voting and other rights that could adversely affect the
voting power and other rights of the holders of the common stock and could have
anti-takeover effects, including preferred stock or rights to acquire preferred
stock in connection with implementing a shareholder rights plan. We have no
present plans to issue any shares of preferred stock. The ability of our board
of directors to issue preferred stock without stockholder approval could have
the effect of delaying, deferring or preventing a change of control of Moldflow
or the removal of existing management.

INDEMNIFICATION MATTERS

Prior to the offering, we will have entered into indemnification agreements
with each of our directors. The form of indemnification agreement provides that
we will indemnify our directors for expenses incurred because of their status as
a director to the fullest extent permitted by Delaware law, our certificate of
incorporation and our by-laws.

Our certificate of incorporation contains a provision permitted by Delaware
law that generally eliminates the personal liability of directors for monetary
damages for breaches of their fiduciary duty, including breaches involving
negligence or gross negligence in business combinations, unless the director has
breached his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or a knowing violation of law, paid a dividend or
approved a stock

54
<PAGE>
repurchase in violation of the Delaware General Corporation Law or obtained an
improper personal benefit. This provision does not alter a director's liability
under the federal securities laws and does not affect the availability of
equitable remedies, such as an injunction or rescission, for breach of fiduciary
duty. Our by-laws provide that directors and officers shall be, and in the
discretion of our board of directors, non-officer employees may be, indemnified
by Moldflow to the fullest extent authorized by Delaware law, as it now exists
or may in the future be amended, against all expenses and liabilities reasonably
incurred in connection with service for or on behalf of Moldflow. Our by-laws
also provide for the advancement of expenses to directors and, in the discretion
of our board of directors, to officers and non-officer employees. In addition,
our by-laws provide that the right of directors and officers to indemnification
shall be a contract right and shall not be exclusive of any other right now
possessed or hereafter acquired under any by-law, agreement, vote of
stockholders or otherwise. We also have directors' and officers' insurance
against certain liabilities. We believe that the indemnification agreements,
together with the limitation of liability and indemnification provisions of our
certificate of incorporation and by-laws and directors' and officers' insurance
will assist us in attracting and retaining qualified individuals to serve as
directors and officers of Moldflow.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be provided to directors, officers or persons controlling Moldflow
as described above, we have been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. At present,
there is no pending material litigation or proceeding involving any director,
officer, employee or agent of Moldflow in which indemnification will be required
or permitted.

PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BY-LAWS THAT MAY HAVE
ANTI-TAKEOVER EFFECTS

Certain provisions of our certificate of incorporation and by-laws described
below, as well as the ability of our board of directors to issue shares of
preferred stock and to set the voting rights, preferences and other terms
thereof, may be deemed to have an anti-takeover effect and may discourage
takeover attempts not first approved by our board of directors, including
takeovers which particular stockholders may deem to be in their best interests.
These provisions also could have the effect of discouraging open market
purchases of our common stock because they may be considered disadvantageous by
a stockholder who desires subsequent to such purchases to participate in a
business combination transaction with us or to elect a new director to our
board.

CLASSIFIED BOARD OF DIRECTORS

Our board of directors is divided into three classes serving staggered
three-year terms, with approximately one-third of the board being elected each
year. Our classified board, together with certain other provisions of our
certificate of incorporation authorizing the board of directors to fill vacant
directorships or increase the size of the board, may prevent a stockholder from
removing, or delay the removal of, incumbent directors and simultaneously
gaining control of the board of directors by filling vacancies created by such
removal with its own nominees.

DIRECTOR VACANCIES AND REMOVAL

Our certificate of incorporation and by-laws provide that vacancies in our
board of directors may be filled only by the affirmative vote of a majority of
the remaining directors. Our certificate of incorporation provides that
directors may be removed from office only with cause and only by the affirmative
vote of holders of at least 75% of the shares then entitled to vote at an
election of directors.

55
<PAGE>
NO STOCKHOLDER ACTION BY WRITTEN CONSENT

Our certificate of incorporation provides that any action required or
permitted to be taken by our stockholders at an annual or special meeting of
stockholders must be effected at a duly called meeting and may not be taken or
effected by a written consent of stockholders.

SPECIAL MEETINGS OF STOCKHOLDERS

Our certificate of incorporation and by-laws provide that a special meeting
of stockholders may be called only by our board of directors. Our by-laws
provide that only those matters included in the notice of the special meeting
may be considered or acted upon at that special meeting unless otherwise
provided by law.

ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND STOCKHOLDER PROPOSALS

Our by-laws include advance notice and informational requirements and time
limitations on any director nomination or any new proposal which a stockholder
wishes to make at an annual meeting of stockholders. For the first annual
meeting following the completion of this offering, a stockholder's notice of a
director nomination or proposal will be timely if delivered to the Secretary of
Moldflow at our principal executive offices not later than the close of business
on the later of the 75th day prior to the scheduled date of such annual meeting
or the 10th day following the day on which public announcement of the date of
such annual meeting is made by Moldflow.

AMENDMENT OF THE CERTIFICATE OF INCORPORATION

As required by Delaware law, any amendment to our certificate of
incorporation must first be approved by a majority of our board of directors
and, if required by law, thereafter approved by a majority of the outstanding
shares entitled to vote with respect to such amendment, except that any
amendment to the provisions relating to stockholder action by written consent,
directors, limitation of liability and the amendment of our certificate of
incorporation must be approved by not less than 75% of the outstanding shares
entitled to vote with respect to such amendment.

AMENDMENT OF BY-LAWS

Our certificate of incorporation and by-laws provide that our by-laws may be
amended or repealed by our board of directors or by the stockholders. Such
action by the board of directors requires the affirmative vote of a majority of
the directors then in office. Such action by the stockholders requires the
affirmative vote of at least 75% of the shares present in person or represented
by proxy at an annual meeting of stockholders or a special meeting called for
such purpose unless our board of directors recommends that the stockholders
approve such amendment or repeal at such meeting, in which case such amendment
or repeal only requires the affirmative vote of a majority of the shares present
in person or represented by proxy at the meeting.

STATUTORY BUSINESS COMBINATION PROVISION

Following the offering, we will be subject to Section 203 of the Delaware
General Corporation Law, which prohibits a publicly-held Delaware corporation
from consummating a "business combination," except under certain circumstances,
with an "interested stockholder" for a period of three years after the date such
person became an "interested stockholder" unless:

- before such person became an interested stockholder, the board of
directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the
business combination;

56
<PAGE>
- upon the closing of the transaction that resulted in the interested
stockholder becoming such, the interested stockholder owned at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding shares held by directors who are also
officers of the corporation and shares held by employee stock plans; or

- following the transaction in which such person became an interested
stockholder, the business combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders
by the affirmative vote of the holders of at least two-thirds of the
outstanding voting stock of the corporation not owned by the interested
stockholder.

The term "interested stockholder" generally is defined as a person who,
together with affiliates and associates, owns, or, within the prior three years,
owned, 15% or more of a corporation's outstanding voting stock. The term
"business combination" includes mergers, consolidations, asset sales involving
10% or more of a corporation's assets and other similar transactions resulting
in a financial benefit to an interested stockholder. Section 203 makes it more
difficult for an "interested stockholder" to effect various business
combinations with a corporation for a three-year period. A Delaware corporation
may "opt out"of Section 203 with an express provision in its original
certificate of incorporation or an express provision in its certificate of
incorporation or by-laws resulting from an amendment approved by holders of at
least a majority of the outstanding voting stock. Neither our certificate of
incorporation nor our by-laws contain any such exclusion.

TRADING ON THE NASDAQ NATIONAL MARKET SYSTEM

We have applied to have our common stock approved for quotation on the
Nasdaq National Market under the symbol MFLO.

NO PREEMPTIVE RIGHTS

No holder of any class of our stock has any preemptive right to purchase any
of our securities.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock will be .

57
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there was no public market for our common stock, and
we cannot predict the effect, if any, that sales of common stock or the
availability of common stock for sale will have on the market price of our
common stock prevailing from time to time. Nonetheless, substantial sales of
common stock in the public market following this offering, or the perception
that such sales could occur, could lower the market price of our common stock or
make it difficult for us to raise additional equity capital in the future.

Following this offering, there will be 9,069,610 shares of our common stock
outstanding, assuming no exercise of the underwriters' over-allotment option and
no exercise of outstanding options. All of the shares which are being sold in
this offering will be freely transferable without restriction or further
registration under the Securities Act unless the shares are purchased by
"affiliates" as that term is defined in Rule 144 under the Securities Act.

The remaining 6,069,610 shares of common stock held by existing stockholders
that will be outstanding after the offering will be "restricted securities" as
defined in Rule 144, and may be sold in the future without registration under
the Securities Act subject to compliance with the provisions of Rule 144,
Rule 701 or any other applicable exemption under the Securities Act.

In connection with this offering, our existing officers, directors and
stockholders, who hold substantially all of our currently outstanding shares of
common stock and will own an aggregate of 6,069,536 shares of common stock after
this offering and 522,649 shares of common stock issuable upon exercise of stock
options outstanding, have agreed with the underwriters that, subject to
exceptions, they will not sell or dispose of any of their shares for 180 days
after the date of this prospectus. Adams, Harkness & Hill, Inc. may, in its sole
discretion and at any time without notice, release all or any portion of the
shares subject to such restrictions. Subject to these lock-up agreements, the
shares of common stock outstanding upon the closing of the offering will be
available for sale in the public market as follows:

<TABLE>
<CAPTION>
APPROXIMATE
NUMBER OF
SHARES DESCRIPTION
- --------------------- -----------
<C> <S>
3,000,000 After the date of this prospectus, freely tradeable shares
sold in the offering.

5,994,162 After 180 days from the date of this prospectus, the lock-up
period will expire and these shares will be saleable under
Rule 144.

75,448 On various dates following the 180th day from the date of
this prospectus, these shares will vest and be saleable
under Rule 144.
</TABLE>

In general, under Rule 144, as currently in effect, a person who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period commencing 90 days after the date of this prospectus, a
number of shares that does not exceed the greater of:

- one percent of the then outstanding shares of common stock, which is
expected to be approximately 90,696 shares upon the completion of this
offering, or

- the average weekly trading volume of the common stock during the four
calendar weeks preceding the date on which notice of such sale is filed,
subject to manner of sale provisions and notice requirements and to the
availability of current public information about us.

Affiliates may sell shares not constituting restricted securities in accordance
with the foregoing volume limitations and other restrictions, but without regard
to the one-year holding period.

58
<PAGE>
In addition, a person who was not an affiliate of ours, as defined in
Rule 144, at any time during the 90 days preceding a sale and who has
beneficially owned the shares proposed to be sold for at least two years would
be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above. To the extent that shares were acquired from an
affiliate of ours, such person's holding period for the purpose of effecting a
sale under Rule 144 commences on the date of transfer from the affiliate.

In general, under Rule 701 of the Securities Act as currently in effect,
each of our employees, consultants or advisors who purchased shares from us in
connection with a compensatory stock plan or other written agreement is eligible
to resell those shares 90 days after the effective date of this offering in
reliance on Rule 144, but without compliance with some of the restrictions,
including the holding period, contained in Rule 144.

We cannot predict the effect, if any, that market sales of shares or the
availability of shares for sale will have on the market price of our common
stock prevailing from time to time. We are unable to estimate the number of our
shares that may be sold in the public market pursuant to Rule 144 or Rule 701
because this will depend on the market price of our common stock, the personal
circumstances of the sellers and other factors. Nevertheless, sales of
significant amounts of our common stock in the public market could adversely
affect the market price of our common stock.

We have agreed not to sell or otherwise dispose of any shares of common
stock during the 180-day period following the date of this prospectus, except we
may issue, and grant options to purchase, shares of common stock under the 2000
Stock Option and Incentive Plan and our Employee Stock Purchase Plan.

We intend to file registration statements on Form S-8 with respect to the
aggregate of shares of common stock issuable under our 2000 Stock Option
and Incentive Plan approximately 180 days following this offering. We intend to
file a registration statement with respect to our Employee Stock Purchase Plan
promptly following the consummation of this offering. Shares issued upon the
exercise of stock options after the effective date of the Form S-8 registration
statement will be eligible for resale in the public market without restriction,
except that affiliates must comply with Rule 144.

59
<PAGE>
UNDERWRITING

Under the underwriting agreement, which is filed as an exhibit to the
registration statement relating to this prospectus, each underwriter named
below, for whom Adams, Harkness & Hill, Inc. and A.G. Edwards & Sons, Inc. are
acting as representatives, has agreed to purchase from us the respective number
of shares of common stock shown opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON
UNDERWRITERS STOCK
- ------------ ----------------
<S> <C>
Adams, Harkness & Hill, Inc................................
A.G. Edwards & Sons, Inc...................................

---------
Total.................................................. 3,000,000
=========
</TABLE>

The underwriting agreement provides that the underwriters' obligation to
purchase shares of common stock depends on the satisfaction of the conditions
contained in the underwriting agreement and that, if any of the shares of common
stock are purchased by the underwriters under the underwriting agreement, all of
the shares of common stock that the underwriters have agreed to purchase under
the underwriting agreement must be purchased. The conditions contained in the
underwriting agreement include the requirement that the representations and
warranties made by us and the selling stockholders to the underwriters are true,
that there is no material change in the financial markets and that we deliver to
the underwriters customary closing documents.

The representatives of the underwriters have advised us that the
underwriters propose to offer the shares of common stock directly to the public
at the public offering price set forth on the cover page of this prospectus, and
to dealers, who may include the underwriters, at the public offering price less
a selling concession not in excess of $ per share. The underwriters may
also allow, and dealers may reallow, a concession not in excess of $ per
share to brokers and dealers. After the offering, the underwriters may change
the offering price and other selling terms.

Adams, Harkness & Hill, Inc. and A.G. Edwards & Sons, Inc. have informed us
that they do not intend to confirm sales of shares of common stock offered by
this prospectus to any accounts over which they exercise discretionary
authority. In addition, the other underwriters have informed us that they do not
intend to confirm sales to discretionary accounts that exceed 5% of the total
number of shares of common stock offered by them.

The following table shows the per share and total public offering price,
underwriting discount to be paid by us to the underwriters and the proceeds
before expenses to us and the selling stockholders. This information is
presented assuming both no exercise and full exercise by the underwriters of
their over-allotment option.

<TABLE>
<CAPTION>
TOTAL
----------------------------------
WITHOUT WITH
PER SHARE OPTION OPTION
--------- ----------- -----------
<S> <C> <C> <C>
Public offering price........................... $13.00 $39,000,000 $
Underwriting discount........................... 0.91 2,730,000
Proceeds before expenses to Moldflow............ 12.09 36,270,000
Proceeds before expenses to the selling
stockholders.................................. 12.09 --
</TABLE>

60
<PAGE>

The total proceeds before expenses to be received by us from this offering
will be approximately $36.3 million, assuming no exercise of the over-allotment
option.

The expenses of this offering, exclusive of the underwriting discount, are
estimated at $1.5 million and are payable by us.

We have granted to the underwriters an option to purchase from us and the
selling stockholders up to 450,000 additional shares of common stock,
exercisable solely to cover over-allotments, if any, at the public offering
price less the underwriting discount shown on the cover page of this prospectus.
The underwriters may exercise this option at any time until 30 days after the
date of the underwriting agreement. If this option is exercised, each
underwriter will be committed, so long as the conditions of the underwriting
agreement are satisfied, to purchase a number of additional shares of common
stock proportionate to the underwriters' initial commitment as indicated in the
preceding table and we and the selling stockholders will be obligated, under the
over-allotment option, to sell the shares of common stock to the underwriters.

We have agreed that, without the prior consent of Adams, Harkness &
Hill, Inc., we will not, directly or indirectly, offer, sell or otherwise
dispose of any shares of common stock or any securities which may be converted
into or exchanged for any such shares of common stock for a period of 180 days
from the date of this prospectus. Our executive officers and directors, the
selling stockholders and other stockholders who currently hold in the aggregate
more than 99% of our outstanding common stock have agreed under lock-up
agreements that, without the prior written consent of Adams, Harkness &
Hill, Inc., they will not, directly or indirectly, offer, sell or otherwise
dispose of any shares of common stock or any securities that may be converted
into or exchanged for any such shares for the period ending 180 days after the
date of this prospectus.

Prior to the offering, there has been no public market for the shares of
common stock. The initial public offering price and the underwriters'
compensation will be negotiated between the representatives and us. In
determining the initial public offering price of the common stock, we and the
representatives will consider, in addition to prevailing market conditions, our
historical performance and capital structure, estimates of our business
potential and earning prospects, an overall assessment of our management and the
consideration of the above factors in relation to the market valuation of
companies in related businesses.

We and the selling stockholders will indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act and
liabilities arising from breaches of representations and warranties contained in
the underwriting agreement, and contribute to payments that the underwriters may
be required to make for certain liabilities.

Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters and
selling group members to bid for and purchase shares of common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of the common stock. These transactions
may consist of bids or purchases for the purposes of pegging, fixing or
maintaining the price of the common stock.

The underwriters may create a short position in the common stock in
connection with the offering, which means that they may sell more shares than
are set forth on the cover page of this prospectus. If the underwriters create a
short position, then the representatives may reduce that short position by
purchasing common stock in the open market. The representatives also may elect
to reduce any short position by exercising all or part of the over-allotment
option.

The representatives also may impose a penalty bid on underwriters and
selling group members. This means that if the representatives purchase shares of
common stock in the open market to reduce the underwriters' short position or to
stabilize the price of the common stock, the representatives may reclaim the
amount of the selling concession from the underwriters and selling group members
who sold those shares as part of the offering. In addition, the representatives

61
<PAGE>
reserve the right to reclaim selling concessions from underwriters and selling
group members if the representatives receive a report that clients of the
underwriters and selling group members have sold the stock they purchased in
this offering, generally within 30 days following this offering. The
representatives reserve this right even if the representatives do not purchase
shares in the open market.

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it might discourage resales of the security by purchasers in an
offering.

The underwriters have reserved up to 225,000 shares of the common stock
offered by this prospectus for sale to our officers, directors, employees and
their family members and to our business associates at the initial public
offering price set forth on the cover page of this prospectus. These persons
must commit to purchase no later than the close of business on the day following
the date of this prospectus. The number of shares available for sale to the
general public will be reduced to the extent these persons purchase the reserved
shares.

VALIDITY OF COMMON STOCK

The validity of the shares of common stock offered hereby will be passed
upon for Moldflow by Goodwin, Procter & Hoar LLP, Boston, Massachusetts. Various
legal matters related to the sale of the common stock offered hereby will be
passed upon for the underwriters by Ropes & Gray, Boston, Massachusetts.

EXPERTS

The audited consolidated financial statements of Moldflow as of June 30,
1998 and 1999, and for each of the years ended June 30, 1997, 1998 and 1999, and
the audited consolidated financial statements of C-Mold as of September 30, 1998
and 1999, and for each of the years ended September 30, 1998 and 1999, included
in this prospectus have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission, or SEC, a
registration statement on Form S-1 (including the exhibits and schedules
thereto) under the Securities Act and the rules and regulations thereunder, for
the registration of the common stock offered hereby. This prospectus is part of
the registration statement. This prospectus does not contain all the information
included in the registration statement because we have omitted certain parts of
the registration statement as permitted by the SEC rules and regulations. For
further information about us and our common stock, you should refer to the
registration statement. Statements contained in this prospectus as to any
contract, agreement or other document referred to are not necessarily complete.
Where the contract or other document is an exhibit to the registration
statement, each statement is qualified by the provisions of that exhibit.

You can inspect and copy at the public reference facility maintained by the
SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
SEC's regional offices at Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You
may call the SEC at 1-800-732-0330 for further information about the operation
of the public reference rooms. Copies of all or any portion of the registration
statement can be obtained from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
the registration statement is publicly available through the SEC's site on the
Internet's World Wide Web, located at http://www.sec.gov.

We will also file annual, quarterly and current reports, proxy statements
and other information with the SEC. You can also request copies of these
documents, for a copying fee, by writing to the SEC. We intend to furnish to our
stockholders annual reports containing audited financial statements for each
fiscal year.

62
<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
MOLDFLOW CORPORATION

Report of Independent Accountants........................... F-2
Consolidated Balance Sheet at June 30, 1998 and 1999 and
January 1, 2000 (unaudited)............................... F-3
Consolidated Statement of Operations for the years ended
June 30, 1997, 1998 and 1999 and the six months ended
January 2, 1999 (unaudited) and January 1, 2000
(unaudited)............................................... F-4
Consolidated Statement of Stockholders' Equity for the years
ended June 30, 1997, 1998 and 1999 and the six months
ended January 1, 2000 (unaudited)......................... F-5
Consolidated Statement of Cash Flows for the years ended
June 30, 1997, 1998 and 1999 and the six months ended
January 2, 1999 (unaudited) and January 1, 2000
(unaudited)............................................... F-6
Notes to Consolidated Financial Statements.................. F-7

ADVANCED CAE TECHNOLOGY, INC.

Report of Independent Accountants........................... F-24
Consolidated Balance Sheet at September 30, 1998 and 1999
and December 31, 1999 (unaudited)......................... F-25
Consolidated Statement of Operations for the years ended
September 30, 1998 and 1999 and the three months ended
December 31, 1998 and 1999 (unaudited).................... F-26
Consolidated Statement of Stockholders' Equity for the years
ended September 30, 1998 and 1999 and the three months
ended December 31, 1999 (unaudited)....................... F-27
Consolidated Statement of Cash Flows for the years ended
September 30, 1998 and 1999 and the three months ended
December 31, 1998 and 1999 (unaudited).................... F-28
Notes to Consolidated Financial Statements.................. F-29

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR
MOLDFLOW CORPORATION

Basis of Presentation....................................... F-41
Unaudited Pro Forma Combined Balance Sheet at January 1,
2000...................................................... F-42
Unaudited Pro Forma Combined Statement of Operations for the
year ended June 30, 1999 and for the six months ended
January 1, 2000........................................... F-43
Notes to Unaudited Pro Forma Combined Financial
Information............................................... F-44
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of Moldflow Corporation

The 2.4-to-1 reverse stock split approved by the Board of Directors on
January 20, 2000 described in Note 16 to the consolidated financial statements
has not been consummated at February 11, 2000. When it has been consummated, we
will be in a position to furnish the following report:

"In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of stockholders' equity
and of cash flows present fairly, in all material respects, the financial
position of Moldflow Corporation and its subsidiaries at June 30, 1999
and 1998, and the results of their operations and their cash flows for
the years ended June 30, 1999, 1998 and 1997, in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally
accepted auditing standards which 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, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above."

PricewaterhouseCoopers LLP

Boston, Massachusetts
August 20, 1999, except as to Note 16 for
which the date is January 20, 2000

F-2
<PAGE>
MOLDFLOW CORPORATION

CONSOLIDATED BALANCE SHEET

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
JANUARY 1,
JUNE 30, JANUARY 1, 2000
------------------- 2000 (UNAUDITED)
1998 1999 (UNAUDITED) (NOTE 2)
-------- -------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,700 $ 1,240 $ 1,328 $ 1,478
Accounts receivable, net of allowance for doubtful
accounts of $539, $232 and $237 at June 30, 1998 and
1999 and January 1, 2000 (unaudited), respectively...... 4,277 4,444 4,534 4,534
Inventories............................................... -- 84 99 99
Prepaid expenses.......................................... 400 283 340 340
Other current assets...................................... 814 539 851 851
-------- -------- -------- --------
Total current assets.................................... 7,191 6,590 7,152 7,302
Fixed assets, net........................................... 2,978 3,110 3,026 3,026
Restricted cash............................................. 3,982 -- 22 22
Other assets................................................ 185 547 364 364
-------- -------- -------- --------
Total assets............................................ $ 14,336 $ 10,247 $ 10,564 $ 10,714
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank notes payable........................................ $ 1,525 $ 832 $ 1,029 $ 1,029
Current portion of capital lease obligations.............. 158 191 120 120
Accounts payable.......................................... 985 1,422 1,202 1,202
Accrued expenses.......................................... 3,539 2,835 3,102 3,102
Deferred revenue.......................................... 2,983 3,418 3,310 3,310
-------- -------- -------- --------
Total current liabilities............................... 9,190 8,698 8,763 8,763
Notes payable to stockholders............................... 890 -- -- --
Capital lease obligations, net of current portion........... 227 11 -- --
Unearned revenue from research and development contract..... 3,982 -- -- --
Other long-term liabilities................................. 13 268 38 38
-------- -------- -------- --------
Total liabilities....................................... 14,302 8,977 8,801 8,801
-------- -------- -------- --------
Commitments and contingencies (Note 13)
Stockholders' equity:
Convertible preferred stock, $0.01 par value; 8,254,386
shares authorized; 7,440,970, 8,139,579, 8,139,579 and 0
shares issued and outstanding at June 30, 1998 and 1999,
January 1, 2000 (unaudited) and pro forma January 1,
2000 (unaudited), respectively.......................... 11,476 12,496 12,496 --
Common stock, $0.01 par value; 8,333,333 shares
authorized; 0, 553,177, 560,327 and 6,069,610 shares
issued and outstanding at June 30, 1998 and 1999,
January 1, 2000 (unaudited) and pro forma January 1,
2000 (unaudited), respectively.......................... -- 6 6 61
Additional paid-in capital................................ -- 270 285 12,876
Deferred compensation..................................... -- (67) (57) (57)
Notes receivable from stockholders........................ -- (198) (198) (198)
Accumulated deficit....................................... (12,194) (11,843) (11,410) (11,410)
Accumulated other comprehensive income.................... 752 606 641 641
-------- -------- -------- --------
Total stockholders' equity.............................. 34 1,270 1,763 1,913
-------- -------- -------- --------
Total liabilities and stockholders' equity.............. $ 14,336 $ 10,247 $ 10,564 $ 10,714
======== ======== ======== ========
</TABLE>

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

F-3
<PAGE>
MOLDFLOW CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------
YEAR ENDED JUNE 30, JANUARY 2, JANUARY 1,
------------------------------ 1999 2000
1997 1998 1999 (UNAUDITED) (UNAUDITED)
-------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue:
Software licenses...................................... $ 6,743 $8,514 $12,238 $5,275 $6,651
Services............................................... 8,080 7,875 7,983 3,969 4,853
------- ------ ------- ------ ------
Total revenue........................................ 14,823 16,389 20,221 9,244 11,504
------- ------ ------- ------ ------
Costs and expenses:
Cost of software licenses revenue...................... 377 397 378 168 322
Cost of services revenue............................... 1,904 1,685 1,319 605 491
Research and development............................... 3,527 3,062 3,466 1,754 1,709
Selling and marketing.................................. 6,703 7,287 9,673 4,615 5,811
General and administrative............................. 3,719 3,303 3,839 1,735 2,277
Litigation............................................. -- -- 620 -- 530
Amortization of intangible assets...................... 2,370 84 -- -- --
------- ------ ------- ------ ------
Total operating expenses............................. 18,600 15,818 19,295 8,877 11,140
------- ------ ------- ------ ------
Income (loss) from operations.......................... (3,777) 571 926 367 364
Interest income.......................................... 14 -- 21 1 26
Interest expense......................................... (153) (238) (198) (86) (65)
Other income (loss), net................................. 17 19 (92) (22) (64)
------- ------ ------- ------ ------
Income (loss) before income taxes and extraordinary
loss................................................. (3,899) 352 657 260 261
Provision (benefit) for income taxes..................... 371 163 176 57 (172)
------- ------ ------- ------ ------
Income (loss) before extraordinary loss................ (4,270) 189 481 203 433
Extraordinary loss from early extinguishment of debt, net
of taxes............................................... -- -- 130 130 --
------- ------ ------- ------ ------
Net income (loss)...................................... (4,270) 189 351 73 433
Accretion on convertible preferred stock................. 741 80 -- -- --
------- ------ ------- ------ ------
Net income (loss) available to common stockholders... $(5,011) $ 109 $ 351 $ 73 $ 433
======= ====== ======= ====== ======
Net income (loss) per common share:
Basic................................................ $ -- $ -- $ 1.33 $ 0.34 $ 1.18
Diluted.............................................. $ -- $ 0.04 $ 0.06 $ 0.01 $ 0.07
Pro forma unaudited net income per common share:
Basic................................................ $ 0.06 $ 0.07
Diluted.............................................. $ 0.06 $ 0.07
Shares used in computing net income (loss) per common
share:
Basic................................................ -- -- 265 215 367
Diluted.............................................. -- 5,228 6,166 6,042 6,311
Pro forma unaudited basic............................ 5,717 5,855
Pro forma unaudited diluted.......................... 6,166 6,311
</TABLE>

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

F-4
<PAGE>
MOLDFLOW CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CONVERTIBLE NOTES
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE
-------------------- ---------------------- PAID-IN DEFERRED FROM
SHARES AMOUNT SHARES PAR VALUE CAPITAL COMPENSATION STOCKHOLDERS
--------- -------- ---------- --------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1996............. -- $ -- 2,016,923 $297 $740 $ -- $ --
Issuance of common stock............. 3,333 1 36
Accretion of redeemable preferred
stock to redemption value..........
Comprehensive income (loss):
Net loss...........................
Foreign currency translation
adjustment.......................
Comprehensive loss.................
--------- ------- ---------- ---- ---- ----- -----
Balance at June 30, 1997............. -- -- 2,020,256 298 776 -- --
Accretion of redeemable preferred
stock to redemption value..........
Issuance of common stock in exchange
for redemption rights of
outstanding preferred stock........ 29,167 4 73
Exchange of class A convertible
preferred stock for series A
convertible preferred stock, which
was redesignated as series C-2
convertible preferred stock........ 1,855,688 8,382
Exchange of convertible preferred
stock for series B convertible
preferred stock, which was
redesignated as series C-3
convertible preferred stock........ 666,666 1,943
Redesignation of common stock as
series C-1 convertible preferred
stock.............................. 4,918,616 1,151 (2,049,423) (302) (849)
Comprehensive income:
Net income.........................
Foreign currency translation
adjustment.......................
Comprehensive income...............
--------- ------- ---------- ---- ---- ----- -----
Balance at June 30, 1998............. 7,440,970 11,476 -- -- -- -- --
Conversion of promissory notes to
series C-3 convertible preferred
stock.............................. 698,609 1,020
Issuance of common stock............. 551,287 6 192 (198)
Exercise of stock options............ 1,890 -- 1
Deferred compensation associated with
stock options...................... 77 (77)
Amortization of deferred
compensation....................... 10
Comprehensive income:
Net income.........................
Foreign currency translation
adjustment.......................
Comprehensive income...............
--------- ------- ---------- ---- ---- ----- -----
Balance at June 30, 1999............. 8,139,579 12,496 553,177 6 270 (67) (198)
Exercise of stock options
(unaudited)........................ 7,150 -- 15
Amortization of deferred compensation
(unaudited)........................ 10
Comprehensive income (unaudited):
Net income.........................
Foreign currency translation
adjustment.......................
Comprehensive income...............
--------- ------- ---------- ---- ---- ----- -----
Balance at January 1, 2000
(unaudited)........................ 8,139,579 $12,496 560,327 $ 6 $285 $ (57) $(198)
========= ======= ========== ==== ==== ===== =====

<CAPTION>
ACCUMULATED TOTAL
COMPREHENSIVE OTHER STOCKHOLDERS'
INCOME ACCUMULATED COMPREHENSIVE EQUITY
(LOSS) DEFICIT INCOME (DEFICIT)
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Balance at June 30, 1996............. $ (7,292) $914 $(5,341)
Issuance of common stock............. 37
Accretion of redeemable preferred
stock to redemption value.......... (741) (741)
Comprehensive income (loss):
Net loss........................... $(4,270) (4,270) (4,270)
Foreign currency translation
adjustment....................... (269) (269) (269)
-------
Comprehensive loss................. (4,539)
======= -------- ---- -------
Balance at June 30, 1997............. (12,303) 645 (10,584)
Accretion of redeemable preferred
stock to redemption value.......... (80) (80)
Issuance of common stock in exchange
for redemption rights of
outstanding preferred stock........ 77
Exchange of class A convertible
preferred stock for series A
convertible preferred stock, which
was redesignated as series C-2
convertible preferred stock........ 8,382
Exchange of convertible preferred
stock for series B convertible
preferred stock, which was
redesignated as series C-3
convertible preferred stock........ 1,943
Redesignation of common stock as
series C-1 convertible preferred
stock.............................. --
Comprehensive income:
Net income......................... 189 189 189
Foreign currency translation
adjustment....................... 107 107 107
-------
Comprehensive income............... 296
======= -------- ---- -------
Balance at June 30, 1998............. (12,194) 752 34
Conversion of promissory notes to
series C-3 convertible preferred
stock.............................. 1,020
Issuance of common stock............. --
Exercise of stock options............ 1
Deferred compensation associated with
stock options...................... --
Amortization of deferred
compensation....................... 10
Comprehensive income:
Net income......................... 351 351 351
Foreign currency translation
adjustment....................... (146) (146) (146)
-------
Comprehensive income............... 205
======= -------- ---- -------
Balance at June 30, 1999............. (11,843) 606 1,270
Exercise of stock options
(unaudited)........................ 15
Amortization of deferred compensation
(unaudited)........................ 10
Comprehensive income (unaudited):
Net income......................... 433 433 433
Foreign currency translation
adjustment....................... 35 35 35
-------
Comprehensive income............... $ 468
======= -------- ---- -------
Balance at January 1, 2000
(unaudited)........................ $(11,410) $641 $ 1,763
======== ==== =======
</TABLE>

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

F-5
<PAGE>
MOLDFLOW CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------
YEAR ENDED JUNE 30, JANUARY 2, JANUARY 1,
------------------------------ 1999 2000
1997 1998 1999 (UNAUDITED) (UNAUDITED)
-------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $(4,270) $ 189 $ 351 $ 73 $ 433
Adjustments to reconcile to net cash provided by (used in)
operating activities:
Loss on disposal of fixed assets........................ -- -- 18 7 8
Depreciation and amortization........................... 3,138 810 881 426 417
Provision for doubtful accounts......................... (95) 256 29 9 7
Foreign exchange losses................................. 122 51 97 134 56
Common stock issued for services........................ 37 -- -- -- --
Changes in assets and liabilities:
Accounts receivable................................... (4) (1,901) (7) (88) (23)
Prepaid expenses, other current assets and
inventories......................................... 361 (47) 209 383 (382)
Accounts payable...................................... (463) 122 437 134 (208)
Accrued expenses...................................... (82) 889 (974) (918) 24
Deferred revenue...................................... 643 442 374 (284) (189)
Other assets.......................................... 5 (40) (209) (205) 67
------- ------- ------- ------ ------
Net cash provided by (used in) operating
activities........................................ (608) 771 1,206 (329) 210
------- ------- ------- ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets................................. (723) (729) (863) (683) (391)
Proceeds from fixed asset disposals....................... -- -- 9 -- 4
Acquisition of business, net of cash acquired............. (431) -- -- -- --
------- ------- ------- ------ ------
Net cash used in investing activities............... (1,154) (729) (854) (683) (387)
------- ------- ------- ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable to stockholder.... 542 460 -- -- --
Borrowings on bank notes payable.......................... 1,060 1,495 1,412 349 1,000
Payments on bank notes payable............................ (78) (1,124) (2,120) (56) (803)
Payments on capital lease obligations..................... (86) (115) (200) (99) (78)
Proceeds from issuance of common stock.................... -- -- 1 1 15
------- ------- ------- ------ ------
Net cash provided by (used in) financing
activities........................................ 1,438 716 (907) 195 134
------- ------- ------- ------ ------
Effect of exchange rate changes on cash and cash
equivalents............................................... (305) (67) 95 41 131
------- ------- ------- ------ ------
NET INCREASE (DECREASE) IN CASH............................. (629) 691 (460) (776) 88
Cash and cash equivalents, beginning of period.............. 1,638 1,009 1,700 1,700 1,240
------- ------- ------- ------ ------
Cash and cash equivalents, end of period.................... $ 1,009 $ 1,700 $ 1,240 $ 924 $1,328
======= ======= ======= ====== ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 145 $ 183 $ 225 $ 80 $ 69
Cash paid for income taxes................................ 416 112 157 52 109
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Acquisition of fixed assets under capital leases.......... $ 88 $ 18 $ -- $ -- $ 4
Conversion of notes payable to stockholder into series C-3
convertible preferred stock............................. -- -- 1,020 1,020 --
Issuance of common stock in exchange for notes
receivable.............................................. -- -- 198 198 --
</TABLE>

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

F-6
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND NATURE OF BUSINESS

Moldflow Corporation (the "Company") was incorporated in Delaware, USA in
January 1997. The Company was formed as the successor corporation to Moldflow
International Pty. Ltd. ("MIPL"), an Australian corporation that had been
incorporated in March 1994. On August 5, 1997, the stockholders of MIPL effected
a reorganization of that company's shares, resulting in MIPL becoming a wholly
owned subsidiary of the Company, and the stockholders of MIPL becoming
stockholders of the Company (Note 7). Given the carryover of the stockholders'
interests in MIPL to the Company, these consolidated financial statements
present together the financial position and results of operations of MIPL and
the Company before and after the reorganization.

The Company was formed to design, develop, manufacture and market computer
software applications for the design, engineering and manufacture of injection
molded plastic parts and, as such, revenues are derived from the plastic design
and manufacturing industry. The Company sells its products primarily to
customers in the United States, Europe, Asia and Australia.

The Company's fiscal year end is June 30. References to 1997, 1998 or 1999
mean the fiscal year ended June 30, unless otherwise indicated. During the
fiscal year, the Company follows a schedule in which each interim quarterly
period ends on the Saturday of the thirteenth full week of the reporting period.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and all of its wholly owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in the consolidated financial statements.

FOREIGN CURRENCY TRANSLATION

Assets and liabilities of international subsidiaries, whose functional
currency is the local currency, are translated at the rates in effect at the
balance sheet date and translation adjustments are recorded in stockholders'
equity. Statement of operations amounts are translated at the average rate for
the year. Foreign currency transaction gains and losses are included in other
income and expense.

CASH AND CASH EQUIVALENTS

All highly liquid investments purchased with a maturity of three months or
less are considered to be cash equivalents. The Company invests excess cash
primarily in over-night investments held at major financial institutions.
Accordingly, these investments are subject to minimal credit and market risk and
are reported at cost, which approximates fair value.

ACCOUNTS RECEIVABLE, CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

Financial instruments which potentially expose the Company to concentrations
of credit risk include only accounts receivable. The Company's customer base
consists of a large number of geographically dispersed customers. The Company
maintains reserves for potential credit losses on accounts receivable and such
losses, in the aggregate, have not exceeded management expectations.

Revenue of $2,206,000 (15% of total revenue), $2,074,000 (13% of total
revenue) and $1,888,000 (9% of total revenue) was attributable to one customer
in fiscal 1997, 1998 and 1999, respectively. At June 30, 1998 and 1999, accounts
receivable from that customer accounted for

F-7
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

$462,000 (10% of total accounts receivable) and $153,000 (3% of total accounts
receivable), respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash and cash equivalents,
short-term investments, accounts receivable, accounts payable, accrued expenses,
deferred revenue, and long-term debt. The carrying amounts of these instruments
at June 30, 1999 approximate their fair values.

INVENTORIES

Inventories are predominantly finished goods and are stated at the lower of
cost, using the first-in, first-out method, or market.

FIXED ASSETS

Fixed assets are recorded at cost and are depreciated using the
straight-line method over their estimated useful lives. Fixed assets held under
capital leases are stated at the lower of the fair market value of the related
asset or the present value of the minimum lease payments at the inception of the
lease and are amortized using the straight-line method over the shorter of the
life of the related asset or the term of the lease.

IMPAIRMENT OF LONG-LIVED ASSETS

In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed Of," the Company records impairment losses on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Through June 30, 1999, the Company had not
recognized an impairment loss on its long-lived assets.

REVENUE RECOGNITION

Revenue is derived from the licensing of computer software products and from
services consisting of maintenance and support, consulting, material testing and
training. Effective July 1, 1998, the Company adopted the guidelines of
Statement of Position (SoP) 97-2, "Software Revenue Recognition" ("SoP 97-2"),
which provides guidance on applying generally accepted accounting principles in
recognizing revenue on software transactions.

The Company recognizes revenue from sales of software licenses upon product
shipment and upon receipt of a signed purchase order or contract, provided that
the license fee is fixed and determinable, collection is probable and all other
revenue recognition criteria of SoP 97-2 are met. The Company's software
products do not require significant modification or customization. Installation
of the products is generally routine, requires insignificant effort and is not
essential to the functionality of the product. The Company recognizes revenue
from maintenance and support ratably over the contract period and from training
and other related services as the services are performed.

F-8
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SOFTWARE DEVELOPMENT COSTS

Costs associated with the research and development of the Company's products
are expensed as incurred. Costs associated with the development of computer
software are expensed prior to establishing technological feasibility, as
defined by SFAS No. 86, "Accounting for the Costs of Computer Software to be
Sold, Leased, or Otherwise Marketed," and capitalized thereafter until
commercial release of the software products. Software development costs eligible
for capitalization have not been significant to date.

ADVERTISING COSTS

The Company expenses as incurred costs of producing advertising and
sales-related collateral materials. Other production costs associated with
direct mail programs, placement costs associated with magazine or other printed
media and all direct costs associated with trade shows and other sales related
events are expensed when the related direct mail is sent, advertising space is
used or the event is held. Advertising expense for the years ended June 30,
1997, 1998 and 1999 was $252,000, $207,000 and $741,000, respectively.

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation to employees in accordance
with Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
Issued to Employees," and related interpretation. Accordingly, compensation
expense is recorded for options issued to employees in fixed amounts to the
extent that the fixed exercise prices are less than the fair market value of the
Company's common stock at the date of grant. The Company follows the disclosure
requirements of SFAS No. 123, "Accounting for Stock-Based Compensation"
(Note 9). All stock-based awards to non-employees are accounted for at their
fair value in accordance with SFAS No. 123.

NET INCOME (LOSS) PER COMMON SHARE--HISTORICAL

The Company computes net income (loss) per common share in accordance with
SFAS No. 128, "Earnings Per Share," ("SFAS 128") and SEC Staff Accounting
Bulletin No. 98 ("SAB 98"). Under the provisions of SFAS 128 and SAB 98, basic
earnings per common share is computed by dividing net income (loss) available to
common stockholders by the weighted-average number of common shares outstanding.
Diluted earnings per common share is computed by dividing net income (loss) by
the weighted-average number of common shares outstanding and, when dilutive, all
potential common equivalent shares outstanding including restricted stock,
options and warrants. The dilutive effect of options and warrants to purchase
common stock is determined under the treasury stock method using the average
fair value of common stock for the period (Note 10).

NET INCOME PER COMMON SHARE--PRO FORMA (UNAUDITED)

Pro forma net income per common share for the year ended June 30, 1999 and
the six months ended January 1, 2000 is calculated assuming that the automatic
conversion of all convertible preferred stock outstanding had occurred at
July 1, 1998 and July 1, 1999, respectively (Note 7). The calculation of pro
forma net income per common share for the year ended June 30, 1999 does not
include 411,000 potential shares of common stock equivalents, as their inclusion
would be antidilutive. The calculation of pro forma net income per common share
for the six months ended January 1, 2000 does not include 289,000 potential
shares of common stock equivalents, as their inclusion would be antidilutive.

F-9
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SEGMENT AND GEOGRAPHIC INFORMATION

As required, the Company adopted SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information," on July 1, 1998 (Note 15). SFAS No. 131
establishes standards for reporting information on operating segments in interim
and annual financial statements. SFAS No. 131 relates to disclosure only and had
no impact on the Company's consolidated financial position or results of
operations.

COMPREHENSIVE INCOME

As required, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income" on July 1, 1998. Under SFAS No. 130, the Company is required to display
comprehensive income and its components as part of the Company's full set of
financial statements. The measurement and presentation of net income did not
change. Comprehensive income is comprised of net income and other comprehensive
income. Other comprehensive income includes certain changes in equity that are
excluded from net income. At June 30, 1999, accumulated other comprehensive
income was comprised solely of cumulative foreign currency translation
adjustments. The individual components of comprehensive income are reflected in
the consolidated statement of stockholders' equity for the years ended June 30,
1997, 1998 and 1999.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The interim consolidated financial statements and related notes as of
January 1, 2000 and for the six month periods ended January 2, 1999 and
January 1, 2000 are unaudited. In the opinion of the Company's management, the
unaudited interim consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial position and results of operations for these
interim periods. The results of operations for the six months ended January 1,
2000 are not necessarily indicative of the results of operations for the year
ended June 30, 2000 or any other future period.

UNAUDITED PRO FORMA BALANCE SHEET

Under the terms of the Company's convertible preferred stock (Note 7), all
such preferred stock will be converted automatically into 5,488,450 shares of
common stock in connection with an initial public offering of common stock.
Also, the holder of an outstanding warrant to purchase common stock (Note 6) has
committed to exercise the warrant in connection with the initial public offering
of common stock; the warrant is exercisable for 20,833 shares of common stock at
$7.20 per share. The unaudited pro forma balance sheet reflects the conversion
of the preferred stock and the exercise of the warrant as if the conversion and
exercise had occurred on January 1, 2000.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

F-10
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS

In December 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
No. 98-9, "Modification of SOP No. 97-2, Software Revenue Recognition, with
Respect to Certain Transactions" ("SOP 98-9"). SOP 98-9 amends SOP 97-2 to
require recognition of revenue using the "residual method" in circumstances
outlined in SOP 98-9. Under the residual method, revenue is recognized as
follows: (1) the total fair value of undelivered elements, as indicated by
vendor specific objective evidence, is deferred and subsequently recognized in
accordance with the relevant sections of SOP 97-2 and (2) the difference between
the total arrangement fee and the amount deferred for the undelivered elements
is recognized as revenue related to the delivered elements. SOP 98-9 is
effective for transactions entered in fiscal years beginning after March 15,
1999 (fiscal 2000 for the Company). Also, the provisions of SOP 97-2 that were
deferred by SOP 98-4 will continue to be deferred until the date SOP 98-9
becomes effective. The Company does not expect that the adoption of SOP 98-9
will have a significant impact on the Company's results of operations or
financial position.

In June 1998, the Financial Accounting Standard Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as "derivatives"), and for hedging
activities. SFAS 133, as amended by SFAS 137, is effective for all fiscal
quarters of all years beginning after June 15, 2000, with earlier application
encouraged. The Company does not currently use derivative instruments or engage
in hedging activities.

3. FIXED ASSETS

Fixed assets consist of the following (dollars in thousands):

<TABLE>
<CAPTION>
ESTIMATED
USEFUL JUNE 30,
LIFE -------------------
(YEARS) 1998 1999
--------- -------- --------
<S> <C> <C> <C>
Land........................................... -- $ 522 $ 562
Buildings...................................... 30 1,275 1,392
Equipment...................................... 5-7 1,724 2,149
Computer equipment............................. 3-5 1,276 1,491
Furniture and fixtures......................... 7-10 240 493
Vehicles....................................... 3-7 20 --
Computers and equipment under capital leases... 3-7 657 708
Leasehold improvements......................... -- 20
------- -------
5,714 6,815
Less--accumulated depreciation and
amortization................................. (2,736) (3,705)
------- -------
$ 2,978 $ 3,110
======= =======
</TABLE>

Depreciation expense, including amortization of assets under capital leases,
was $768,000, $726,000 and $881,000 for the years ended June 30, 1997, 1998 and
1999, respectively. Accumulated amortization for assets held under capital
leases was $342,000, $425,000 and $596,000 at June 30, 1997, 1998 and 1999,
respectively.

F-11
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
JUNE 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Employee wages and commissions............................. $ 411 $ 565
Employee leave costs....................................... 685 604
Employee retirement costs.................................. 389 344
Professional fees.......................................... 189 591
Other...................................................... 1,865 731
------ ------
$3,539 $2,835
====== ======
</TABLE>

5. NOTES PAYABLE TO STOCKHOLDERS

In January 1997, certain subsidiaries of the Company entered into loan
agreements with stockholders of the Company which provided the Company with a
maximum borrowing amount of $1,073,000. At June 30, 1998, amounts outstanding
under the notes were $890,000 with accrued interest of $107,000. Interest
expense incurred by the Company under these agreements in the year ended
June 30, 1998 was $85,000.

On July 6, 1998, the Company converted the outstanding principal balance of
the notes of $890,000 into 698,609 shares of the Company's series C-3
convertible preferred stock. Accrued interest of $107,000 was paid in cash upon
conversion. As a result of this early extinguishment of debt the Company
recognized an extraordinary loss of $130,000, net of taxes ($0.02 per diluted
common share).

6. BANK NOTES PAYABLE

LINES OF CREDIT

In April 1998, the Company entered into an agreement with a bank for a
revolving credit facility totaling $3,750,000. In November 1998, the overall
facility was reduced to $3,250,000. Borrowings under the facility are secured by
certain assets of the Company and its Australian subsidiaries, and by a standby
letter of credit issued by an Australian bank. Available borrowings under the
line are computed based upon a percentage of domestic and foreign accounts
receivable and the value of the standby letter of credit in the amount of
$754,000. The line bears interest at the rate of prime plus 1.25% (9.0% at
June 30, 1999) and prime plus 1.50% (9.25% at June 30, 1999) on the domestic and
foreign lines, respectively, and was subject to a commitment fee of one half of
one percent. All outstanding principal plus accrued interest was due in
October 1999.

At June 30, 1998 and 1999, borrowings under the facility were $1,475,000 and
$767,000, respectively. The agreement contains covenants which, among other
matters, restrict or limit the ability of the Company to pay dividends, incur
indebtedness, merge, acquire or sell assets. The Company must also maintain
certain financial ratios regarding liquidity, profitability and net worth, among
other restrictions. At June 30, 1999, the Company was in compliance with these
covenants.

F-12
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. BANK NOTES PAYABLE (CONTINUED)

In connection with the facility, the Company issued warrants to purchase up
to 20,833 shares of the Company's common stock. These warrants are immediately
exercisable at $7.20 per share and have an expiration date of April 2005. The
value ascribed to these warrants was determined by management using the
Black-Scholes pricing model and was not significant.

UNAUDITED--On October 22, 1999, the term of the facility was extended to
December 31, 2000. All other significant provisions of the facility remained
unchanged. In addition, the holder of the warrant has committed to exercise the
warrant in connection with the initial public offering of common stock.

EQUIPMENT LOANS

At June 30, 1998 and 1999, the Company had $62,000 and $65,000,
respectively, outstanding under various equipment term loans. The loans bear
interest at variable rates and require monthly payments of principal and
interest through 2000. At June 30, 1998 and 1999, the long-term portion of the
loans amounted to $12,000 and $0, respectively, and are included in other
long-term liabilities.

SECURED LOAN

At June 30, 1997, the Company had $1,217,000 outstanding under a secured
line of credit which was collateralized by real estate and substantially all
other assets of the Company. In April 1998, in connection with the revolving
credit facility described above, the note was repaid in full.

7. CONVERTIBLE PREFERRED STOCK

On June 30, 1997, the Board of Directors of MIPL voted to enter into an
agreement with its stockholders and with the Company, whereby MIPL would
reacquire all of its outstanding and issued shares and issue an equal number of
common and convertible preferred shares to the Company. Simultaneously under the
arrangement, the former stockholders of MIPL would become stockholders of the
Company. Upon execution of the share exchange on August 5, 1997, the Company
effectively reorganized and MIPL became a wholly owned subsidiary of the
Company. The exchange resulted in the issuance by the Company of common stock,
series A convertible preferred stock, and series B convertible preferred stock.

Prior to the exchange, the MIPL preferred stockholders' redemption rights
were removed. As consideration for the removal of these redemption rights, these
stockholders received 29,167 common shares of MIPL which were valued at $77,000.

On March 9, 1998, the Company redesignated the previously issued common,
series A convertible preferred and series B convertible preferred into shares of
series C-1, C-2 and C-3 convertible preferred stock, respectively. In addition,
on that date, the Company increased the number of authorized common shares from
4,166,667 to 8,333,333 and increased the number of all classes of authorized
convertible preferred shares from 5,732,032 to 8,254,386.

On July 6, 1998, the Company converted the outstanding principal balance of
$890,000 in notes payable to stockholders of the Company into 698,609 shares of
newly designated series C-3 convertible preferred stock. As a result of this
early extinguishment of debt, the Company recognized an extraordinary loss of
$130,000, net of taxes.

F-13
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. CONVERTIBLE PREFERRED STOCK (CONTINUED)

Convertible preferred stock consists of the following (amounts in thousands,
except share data):

<TABLE>
<CAPTION>
JUNE 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Series C-1 convertible preferred stock, $0.01 par value;
4,918,616 shares authorized, issued and outstanding at
June 30, 1998 and 1999 (liquidation preference of
$7,181 at June 30, 1999)............................... $ 1,151 $ 1,151

Series C-2 convertible preferred stock, $0.01 par value;
1,855,688 shares authorized, issued and outstanding at
June 30, 1998 and 1999 (liquidation preference of
$10,058 at June 30, 1999).............................. 8,382 8,382

Series C-3 convertible preferred stock, $0.01 par value;
1,480,082 shares authorized; 666,666 and 1,365,275
shares issued and outstanding at June 30, 1998 and
1999, respectively (liquidation preference of $1,993 at
June 30, 1999)......................................... 1,943 2,963
------- -------
$11,476 $12,496
======= =======
</TABLE>

The series C-1, C-2 and C-3 convertible preferred stock have the following
characteristics:

VOTING

Each holder of the series C-1, C-2 and C-3 convertible preferred stock is
entitled to the number of votes equal to the number of whole shares of common
stock into which such holders' shares are convertible. The holders of the
series C-1, C-2 and C-3 convertible preferred stock shall vote together with the
holders of common stock as a single class.

DIVIDENDS

The holders of the series C-1, C-2 and C-3 convertible preferred stock are
entitled to dividends when and if declared by the Board of Directors subject to
any preferential dividend rights of any other then outstanding series of
preferred stock. In addition, the holders of series C-1, C-2 and C-3 convertible
preferred stock are entitled to receive a payment equal to any dividend declared
or paid by the Company in respect to common stock for each share of common stock
into which the convertible preferred stock is then convertible.

LIQUIDATION PREFERENCE

In the event of any liquidation, dissolution, or winding up of the affairs
of the Company, the holders of the series C-1, C-2 and C-3 convertible preferred
stock shall rank equally among themselves and be entitled to be paid out of the
assets of the Company available for distribution prior and in preference to the
holders of common stock.

The holders of the series C-1, C-2 and C-3 convertible preferred stock are
entitled to receive upon liquidation an amount equal to $1.46 per share, $5.42
per share and $1.46 per share, respectively, plus all accrued and unpaid
dividends. After the payment of all preferential amounts, the series C-1, C-2
and C-3 preferred stockholders and any other class ranking equal shall be

F-14
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. CONVERTIBLE PREFERRED STOCK (CONTINUED)

entitled to receive, on a pro-rata basis with the holders of the common stock,
the remaining funds and assets of the Company available for distribution to its
stockholders.

CONVERSION

Each share of the series C-1, C-2 and C-3 preferred stock is convertible, at
the option of the holder, into common stock of the Company based on a formula
which currently would result in a 1-for-0.41667 exchange for the series C-1 and
C-3 holders and a 1-for-1.54668 exchange for the series C-2 holders. All shares
of series C-1, C-2 and C-3 preferred stock will automatically convert into
common stock in connection with an initial public offering of common stock.

8. COMMON STOCK

Each share of common stock entitles the holder to one vote on all matters
submitted to a vote of the Company's stockholders. Common stockholders are
entitled to dividends when and if declared by the Board of Directors, subject to
the preferential rights of the series C-1, C-2 and C-3 preferred stockholders.

At June 30, 1999, the Company had 6,202,178 shares of its common stock
reserved for issuance upon the conversion of the series C-1, C-2 and C-3
preferred stock, warrants and instruments issued under the Company's Equity
Incentive Plan.

On July 1, 1998, the Company issued 551,287 shares of its common stock to
certain officers and senior managers of the Company for a cash purchase price of
$198,000. In connection with this issuance, the employees entered into Stock
Restriction Agreements that contain restrictions on the sale of the shares by
the employees and loan agreements evidenced by promissory notes bearing interest
at 5.77% and maturing on June 30, 2003. The shares purchased by the employees
under the Stock Restriction Agreements vest on varying schedules through fiscal
year 2003.

9. STOCK OPTION PLAN

In August 1997, the Company adopted the 1997 Equity Incentive Plan (the
"Plan") which provides for the grant of incentive stock options, non-qualified
stock options, stock awards and stock purchase rights for the purchase of up to
931,303 shares of the Company's common stock by officers, employees, consultants
and directors of the Company. In April 1999, the number of shares available
under the Plan was increased to 1,537,158 shares. The Board of Directors is
responsible for administration of the Plan. The Board determines the term of
each option, the option exercise price, the number of shares for which each
option is granted and the rate at which each option is exercisable. Incentive
stock options may be granted to any officer or employee at an exercise price per
share of not less than the fair value per common share on the date of the grant
(not less than 110% of fair value in the case of holders of more than 10% of the
Company's voting stock) and with a term not to exceed ten years from the date of
the grant (five years for incentive stock options granted to holders of more
than 10% of the Company's voting stock). Non-qualified stock options may be
granted to any officer, employee, consultant or director at an exercise price
per share of not less than the book value per share.

In January 1999 an amendment was made to certain employee stock options
which resulted in a determinable measurement date. Deferred compensation of
$77,000 was recorded, in accordance with APB No. 25, and will be amortized over
the related vesting period. Related compensation expense of $10,000 was recorded
during the year ended June 30, 1999.

F-15
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTION PLAN (CONTINUED)

Except for the options noted above, no compensation cost has been recognized
for employee stock-based compensation for the years ended June 30, 1997, 1998
and 1999. Had compensation cost been determined based on the fair value at the
grant dates for awards in 1997, 1998 and 1999 consistent with the provisions of
SFAS No. 123, the Company's net income (loss) available to common stockholders
would have been the pro forma amounts indicated below. Because options vest over
several years and additional option grants are expected to be made in future
years, the pro forma results are not representative of the pro forma results for
future years.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Net income (loss) available to common stockholders:
As reported....................................... $(5,011) $ 109 $ 351
Pro forma......................................... (5,011) (58) 332
Net income (loss) per common share:
Basic--as reported................................ $ -- $ -- $1.33
Pro forma basic................................... -- -- 1.25
Diluted--as reported.............................. -- 0.04 0.06
Pro forma diluted................................. -- -- 0.05
</TABLE>

The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions for
grants: no dividend yield; no volatility; risk-free interest rates of 5.8%, 5.8%
and 4.6% for 1997, 1998 and 1999, respectively; and expected option life of
8 years.

A summary of the status of the Company's stock options as of June 30, 1998
and 1999 and MIPL's stock options as of June 30, 1997, and changes during the
years then ended, is presented below:

<TABLE>
<CAPTION>
1997 1998 1999
------------------- --------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
-------- -------- ---------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year..... 62,500 $7.80 -- $ -- 795,624 $2.45
Granted.............................. -- -- 1,267,277 1.15 375,938 4.44
Exercised............................ -- -- -- -- (553,177) 0.36
Canceled............................. (62,500) 7.80 (471,653) 2.45 (52,280) 0.36
-------- ---------- ---------
Outstanding at end of year........... -- -- 795,624 2.45 566,105 3.07
======== ========== =========
Options exercisable at end of year... -- 254,392 68,382
Weighted average fair value of
options granted during the year.... $ -- $ 0.41 $ 1.37
Options available for future grant... -- 135,679 417,877
</TABLE>

In conjunction with the redesignation of the Company's common and preferred
stock in March 1998 (Note 7), 390,842 options with an exercise price of $2.64
were exchanged for 697,910 options with an exercise price of $0.36. The exercise
price at the time of the exchange was considered the fair market value of the
common stock of the Company subsequent to the redesignation. All other terms of
the new options remained consistent with the terms of the exchanged options.

F-16
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTION PLAN (CONTINUED)

The following table summarizes information about stock options outstanding
at June 30, 1999:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
REMAINING
CONTRACTUAL LIFE SHARES
EXERCISE PRICE SHARES (YEARS) EXERCISABLE
- -------------- -------- ---------------- -----------
<S> <C> <C> <C>
$0.36...................................... 196,751 6.2 68,382
$0.72-1.20................................. 101,958 7.1 --
$4.80-6.00................................. 267,396 7.8 --
------- ------
$0.36-6.00................................. 566,105 7.1 68,382
======= ======
</TABLE>

10. NET INCOME (LOSS) PER COMMON SHARE

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------
1997 1998 1999
-------- ---------- ----------
<S> <C> <C> <C>
Net income (loss)......................... $(4,270) $ 189 $ 351
Accretion on preferred stock.............. 741 80 --
------- ---------- ----------
Net income (loss) available to common
stockholders............................ $(5,011) $ 109 $ 351
======= ========== ==========
Weighted average shares used in computing
net income (loss) per common share--
basic................................... -- -- 264,731
------- ---------- ----------
Effect of dilutive securities:
Restricted stock...................... -- -- 286,741
Employee stock options................ -- 34,207 162,264
Convertible preferred stock........... -- 5,193,717 5,452,064
------- ---------- ----------
Dilutive potential common shares........ -- 5,227,924 5,901,069
------- ---------- ----------
Weighted average shares used in computing
net income (loss) per common share--
diluted................................. -- 5,227,924 6,165,800
======= ========== ==========
Net income (loss) per common
share--basic............................ $ -- $ -- $ 1.33
Net income (loss) per common share--
diluted................................. $ -- $ 0.04 $ 0.06
</TABLE>

Under the provisions of SFAS 128, the computation of basic and diluted net
income (loss) per common share has been adjusted retroactively for all periods
presented to reflect the redesignation of the Company's common and preferred
stock in March 1998 (Note 7). As a result of this treatment of the
redesignation, the Company had no common stock outstanding prior to June 30,
1998 for purposes of computing net income (loss) per common share. Accordingly,
basic net income (loss) per common share was zero for the years ended June 30,
1997 and 1998.

Options and warrants to purchase 680,000 and 432,000 shares of common stock
were outstanding for the years ended June 30, 1998 and 1999, respectively, but
were not included in the calculation of diluted net income per common share, as
their inclusion would be antidilutive.

F-17
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. INCOME TAXES

The income (loss) before income taxes consists of the following (in
thousands):

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Domestic income (loss)............................. $ 1,030 $(57) $(3,335)
Foreign income (loss).............................. (4,929) 409 3,992
------- ---- -------
Income (loss) before taxes and extraordinary
loss........................................... (3,899) 352 657
Extraordinary loss from early extinguishment of
debt............................................. -- -- 130
------- ---- -------
Income (loss) before taxes....................... $(3,899) $352 $ 527
======= ==== =======
</TABLE>

The provision for income taxes consists of the following (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal.......................................... $ 14 $ 10 $ 5
State............................................ 41 47 18
Foreign.......................................... 316 184 153
------- ---- -------
Total current.................................. 371 241 176
------- ---- -------

Deferred:
Federal.......................................... -- (78) --
State............................................ -- -- --
Foreign.......................................... -- -- --
------- ---- -------
Total deferred................................. -- (78) --
------- ---- -------
$ 371 $163 $ 176
======= ==== =======
</TABLE>

The reconciliation of the provision for income taxes computed at the U.S.
federal statutory tax rate to the actual provision is as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Statutory federal rate of 34%........................ $(1,326) $120 $179
Foreign withholding taxes............................ 323 36 79
State income taxes, net of federal benefit........... 29 (51) 12
Permanent differences................................ 516 11 (94)
Change in valuation allowance........................ 881 27 (10)
Foreign tax rate differential........................ 5 35 20
Other................................................ (57) (15) (10)
------- ---- ----
$ 371 $163 $176
======= ==== ====
</TABLE>

F-18
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. INCOME TAXES (CONTINUED)

The deferred tax assets and liabilities consist of the following (in
thousands):

<TABLE>
<CAPTION>
JUNE 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards....................... $ 4,071 $ 4,516
Foreign tax credits.................................... 311 326
Accrued expenses not deductible for tax purposes....... 239 133
Revenue deferred for financial purposes................ 1,628 1,614
Other.................................................. 327 274
------- -------
Gross deferred tax assets............................ 6,576 6,863
Deferred tax asset valuation allowance................. (6,293) (6,580)
------- -------
Total deferred tax assets............................ 283 283
Deferred tax liabilities................................. (205) (205)
------- -------
Net deferred tax assets.............................. $ 78 $ 78
======= =======
</TABLE>

At June 30, 1999, the Company had available federal, state and foreign net
operating loss carryforwards of approximately $4,505,000, $3,167,000 and
$7,844,000, respectively. These carryforwards expire at various times through
2014 if not utilized. Under the provisions of the U.S. Internal Revenue Code,
certain substantial changes in the Company's ownership may limit the amount of
federal net operating loss carryforwards and tax credit carryforwards which
could be utilized annually to offset federal future taxable income and taxes
payable.

Under generally accepted accounting principles, the benefit associated with
future deductible differences is recognized if it is more likely than not that
the benefit will be realized. Management believes that, based on the Company's
historical results of operations, it is more likely than not that a substantial
amount of the Company's deferred tax assets will not be realized. Accordingly,
the Company has recorded a valuation allowance of $6,293,000 and $6,580,000 at
June 30, 1998 and 1999, respectively. Management believes that the net deferred
tax asset represents management's best estimate, based upon the weight of
available evidence, of the deferred tax asset that will be realized. If such
evidence were to change, based upon near-term operating results and longer-term
projections, the amount of the valuation allowance recorded against the gross
deferred tax asset may be decreased or increased.

12. BENEFIT PLANS

401(K) SAVINGS PLAN

The Company has established a retirement savings plan under Section 401(k)
of the U.S. Internal Revenue Code (the "401(k) Plan"). The 401(k) Plan covers
substantially all U.S. based employees of the Company who meet minimum age and
service requirements, and allows Participants to defer a portion of their annual
compensation on a pre-tax basis. Matching contributions to the 401(k) Plan may
be made at the discretion of the Company. The Company contributed $87,000,
$132,000 and $175,000 to the 401(k) Plan in the years ended June 30, 1997, 1998
and 1999, respectively.

F-19
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. BENEFIT PLANS (CONTINUED)

SUPERANNUATION PLAN

Employees of the Company's Australian subsidiary are covered by a defined
contribution Super-annuation Plan. The Superannuation Plan covers substantially
all Australian employees and, under Australian law, the Company is required to
contribute 7% of taxable compensation to this plan. The Company contributed
$226,000, $157,000 and $201,000 to the Superannuation Plan in the years ended
June 30, 1997, 1998 and 1999, respectively.

13. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company leases certain of its office space and certain office equipment
under noncancelable operating leases which expire at various dates through 2009.
The Company also leases computers and other equipment under capital leases that
expire through 2001. Future minimum lease commitments at June 30, 1999 are as
follows:

<TABLE>
<CAPTION>
OPERATING CAPITAL
YEAR ENDING JUNE 30, LEASES LEASES
- -------------------- ---------- ---------
<S> <C> <C>
2000................................................. $ 958,000 $206,000
2001................................................. 817,000 11,000
2002................................................. 443,000 --
2003................................................. 190,000 --
2004................................................. 177,000 --
Thereafter........................................... 729,000 --
---------- --------
$3,314,000 217,000
==========
Less: portion representing interest 15,000
--------
$202,000
========
</TABLE>

Total rent expense under these operating leases was $297,000, $515,000 and
$664,000 for the years ended June 30, 1997, 1998 and 1999, respectively.

LITIGATION

On February 17, 1999, the Company filed suit against a former employee and
the individual's current employer, a competitor of the Company, seeking
immediate and permanent injunctive relief in connection with the theft and
misappropriation of the Company's proprietary trade secrets. Specifically, the
suit alleges, among other things, (i) misappropriation of trade secrets,
proprietary information, unfair competition and civil conspiracy, (ii) breach of
contract, implied covenant of good faith and fiduciary duty, and (iii) fraud
against the individual in his actions to breach his fiduciary duties. The
complaint seeks permanent injunction against the defendants, actual
consequential and punitive damages, and recovery of all legal costs.

Counterclaims, and amendments thereto, have been filed against the Company,
alleging that the Company (i) breached certain federal antitrust laws and
(ii) committed defamation and trade libel. The Company has moved to dismiss
these amended counterclaims. While the outcome of these

F-20
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. COMMITMENTS AND CONTINGENCIES (CONTINUED)

matters cannot be predicted with certainty, the Company believes that these
counterclaims are without merit.

During fiscal 1999, the Company incurred legal expenses of $620,000 during
the prosecution of the above referenced trade secret litigation. These expenses
have been included in litigation expenses in the consolidated statement of
operations. Management anticipates that further material expenditures will be
incurred at least through fiscal 2000 in pursuit of the Company's claims and in
defending against the counterclaims.

UNAUDITED--In connection with the trade secret litigation described above,
during the six months ended January 1, 2000, the Company incurred legal expenses
of $530,000 reflecting current period legal costs incurred to pursue its claims
regarding theft of trade secrets and to defend against the other parties'
counterclaims. All aspects of the litigation are currently being held in
abeyance upon agreement of the parties, in connection with the Company's pending
acquisition of the other party (Note 16). If the acquisition is completed, this
litigation will be dismissed with prejudice by the agreement of all parties. If
for any reason the acquisition of the other party is not completed, the Company
expects that the litigation will resume. In the event that the litigation
resumes, the Company intends to vigorously pursue its claims and defend against
the remaining counterclaims. In such event, the Company anticipates that it will
continue to incur legal costs to pursue its claims and to defend against the
counterclaims. The Company estimates that its possible costs to defend against
the counterclaims could range from $0 to $1,600,000.

14. RESEARCH AND DEVELOPMENT ARRANGEMENT

During 1994, the Company entered into a research and development arrangement
(the "Arrangement") with an unrelated third party. Under the terms of the
Arrangement, the Company received payments for (i) a license for certain of the
Company's technology and (ii) future research activities relating to the
licensed technology as agreed to by the parties. The Company accounted for the
Arrangement under SFAS No. 68, "Research and Development Arrangements," and,
accordingly, the amount of the Company's potential future obligation to provide
security and to subscribe for shares in the third party was recorded as unearned
revenue on the consolidated balance sheet. The part of the funds originally paid
to the Company that might have been required to satisfy the Company's potential
security and subscription obligation was held in a restricted cash account and
was classified as a long-term asset on the consolidated balance sheet. The
Company's potential security and subscription obligation was limited to the
amount of restricted cash on deposit. At June 30, 1998, the restricted cash and
potential security and subscription obligation amounted to $3,982,000. The
restricted cash was held in an interest bearing account in an Australian bank.
The interest earned on this account was used to satisfy the Company's
requirement to make minimum royalty payments to the third party, who had a right
of set-off against the accumulated interest. Interest income and license fees of
$270,000, $235,000 and $155,000 for the years ended June 30, 1997, 1998 and
1999, respectively, and have been offset against each other in the consolidated
statement of operations.

In April 1999, the Company and the third party concluded that the project
was technically infeasible. Subsequently, under the terms of the Arrangement,
the Company subscribed the funds held as restricted cash for shares in the third
party, which used those funds to repay its borrowing. Involvement of the third
party's original shareholders in the Arrangement was then terminated.

F-21
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15. SEGMENT AND GEOGRAPHIC INFORMATION

The Company is engaged in one industry segment: the development, marketing
and support of software products for the plastic design and manufacturing
industry.

The Company licenses its products to customers throughout the world. Sales
and marketing operations outside the United States are conducted principally
through the Company's foreign sales subsidiaries in Europe and Asia.

The Company's principal software development facility is located in
Australia and additional development facilities are located in the United States
and the United Kingdom.

Geographic information regarding the Company's operations was as follows (in
thousands):

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1997
---------------------------------------------------
ASIA/AUSTRALIA USA EUROPE CONSOLIDATED
-------------- -------- -------- ------------
<S> <C> <C> <C> <C>
Revenue from unaffiliated
customers:
Software licenses............... $2,767 $1,810 $2,166 $ 6,743
Services........................ 2,954 2,392 2,734 8,080
------ ------ ------ -------
Total......................... $5,721 $4,202 $4,900 $14,823
====== ====== ====== =======
Fixed assets, net................. $3,119 $ 234 $ 206 $ 3,559
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1998
---------------------------------------------------
ASIA/AUSTRALIA USA EUROPE CONSOLIDATED
-------------- -------- -------- ------------
<S> <C> <C> <C> <C>
Revenue from unaffiliated
customers:
Software licenses............... $2,945 $2,443 $3,126 $ 8,514
Services........................ 2,067 3,078 2,730 7,875
------ ------ ------ -------
Total......................... $5,012 $5,521 $5,856 $16,389
====== ====== ====== =======
Fixed assets, net................. $2,325 $ 396 $ 257 $ 2,978
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1999
---------------------------------------------------
ASIA/AUSTRALIA USA EUROPE CONSOLIDATED
-------------- -------- -------- ------------
<S> <C> <C> <C> <C>
Revenue from unaffiliated
customers:
Software licenses............... $3,156 $3,904 $5,178 $12,238
Services........................ 1,856 3,070 3,057 7,983
------ ------ ------ -------
Total......................... $5,012 $6,974 $8,235 $20,221
====== ====== ====== =======
Fixed assets, net................. $2,363 $ 408 $ 339 $ 3,110
</TABLE>

16. SUBSEQUENT EVENTS

On January 20, 2000, the Board of Directors approved a 2.4-to-1 reverse
stock split of the Company's common stock to be effective prior to the effective
date of the registration statement related to the Company's planned initial
public offering of common stock. All share and per share

F-22
<PAGE>
MOLDFLOW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

16. SUBSEQUENT EVENTS (CONTINUED)

information in the accompanying consolidated financial statements and notes has
been retroactively restated to reflect the effect of this reverse stock split.

In addition, the Board of Directors approved an amendment to the Company's
certificate of incorporation to take effect prior to the effective date of the
registration statement, increasing the authorized capital stock to 60,000,000
shares of common stock and 5,000,000 shares of preferred stock, each with a par
value of $0.01 per share.

Also on January 20, 2000, the Board of Directors approved the Moldflow
Corporation 2000 Stock Option and Incentive Plan with an authorization of up to
2,000,000 shares of common stock and the Moldflow Corporation Employee Stock
Purchase Plan with an authorization of up to 500,000 shares of common stock.

UNAUDITED--On February 11, 2000, the Company entered into a definitive
agreement to acquire Advanced CAE Technology, Inc., which does business as
"C-Mold." The purchase price will be $11.0 million in cash and the Company
estimates that it will incur $200,000 in related acquisition expenses.
Completion of the acquisition is subject to satisfaction of a number of
conditions, including the Company's ability to obtain satisfactory financing for
the transaction.

F-23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of Advanced CAE Technology, Inc.

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Advanced CAE
Technology, Inc. and its subsidiaries at September 30, 1999 and 1998, and the
results of their operations and their cash flows for the years ended September
30, 1999 and 1998, in conformity with generally accepted accounting principles.
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 of these statements in accordance with
generally accepted auditing standards, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP

Boston, Massachusetts
February 11, 2000

F-24
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------- DECEMBER 31,
1998 1999 1999
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $2,600 $2,648 $2,003
Marketable securities..................................... 393 521 686
Accounts receivable, net of allowance for doubtful
accounts of $189, $185 and $173 at September 30, 1998
and 1999 and December 31, 1999 (unaudited).............. 1,360 1,056 1,329
Refundable income taxes................................... 126 61 61
Prepaids and other current assets......................... 255 285 271
Deferred taxes............................................ 71 187 187
------ ------ ------

Total current assets.................................... 4,805 4,758 4,537

Fixed assets, net........................................... 2,469 2,394 2,373
Other assets................................................ 80 384 393
------ ------ ------

Total assets............................................ $7,354 $7,536 $7,303
====== ====== ======

LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt......................... $ 46 $ 48 $ 48
Accounts payable.......................................... 72 177 141
Accrued expenses.......................................... 705 773 682
Deferred revenue.......................................... 1,255 1,660 1,548
------ ------ ------

Total current liabilities............................... 2,078 2,658 2,419

Long term debt, net of current portion...................... 1,112 1,097 1,092
Other liabilities........................................... 11 11 1
------ ------ ------

Total liabilities....................................... 3,201 3,766 3,512
------ ------ ------

Minority interest........................................... 296 337 344
------ ------ ------

Commitments and contingencies (Note 11)

Stockholders' equity:
Common stock, $0.001 par value; 10,000,000 shares
authorized; 4,111,326, 4,113,476 and 4,113,476 shares
issued and 3,979,374, 3,946,303 and 3,941,373 shares
outstanding, at September 30, 1998 and 1999 and December
31, 1999 (unaudited), respectively...................... 4 4 4
Additional paid-in capital................................ 628 706 706
Retained earnings......................................... 3,411 2,747 2,583
Accumulated other comprehensive income.................... 11 230 416
Treasury stock............................................ (197) (254) (262)
------ ------ ------

Total stockholders' equity.............................. 3,857 3,433 3,447
------ ------ ------

Total liabilities, minority interest and stockholders'
equity................................................ $7,354 $7,536 $7,303
====== ====== ======
</TABLE>

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

F-25
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
------------------- -------------------
1998 1999 1998 1999
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue:
Software licenses....................................... $3,919 $3,772 $ 619 $ 774
Services................................................ 3,417 3,896 995 1,027
------ ------ ------ ------

Total revenue......................................... 7,336 7,668 1,614 1,801
------ ------ ------ ------

Costs and expenses:
Cost of software licenses revenue....................... 122 149 26 60
Cost of services revenue................................ 1,437 1,635 402 395
Research and development................................ 1,155 1,314 293 354
Selling and marketing................................... 2,924 3,389 781 862
General and administrative.............................. 1,127 1,416 453 234
Litigation.............................................. -- 490 -- 196
------ ------ ------ ------

Total operating expenses.............................. 6,765 8,393 1,955 2,101
------ ------ ------ ------

Income (loss) from operations............................. 571 (725) (341) (300)

Interest income........................................... 99 100 22 25
Interest expense.......................................... (164) (157) (13) (13)
Other income (loss), net.................................. (7) (18) (9) (10)
------ ------ ------ ------

Income (loss) before income taxes and minority
interest............................................ 499 (800) (341) (298)

Provision (benefit) for income taxes...................... 138 (209) (150) (146)
------ ------ ------ ------

Income (loss) before minority interest.................. 361 (591) (191) (152)

Minority interest in income of consolidated
subsidiaries............................................ 54 73 12 12
------ ------ ------ ------

Net income (loss)......................................... $ 307 $ (664) $ (203) $ (164)
====== ====== ====== ======
</TABLE>

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

F-26
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER COMPREHENSIVE
--------------------- PAID-IN RETAINED COMPREHENSIVE INCOME
SHARES PAR VALUE CAPITAL EARNINGS INCOME (LOSS)
--------- --------- ---------- --------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1997............... 3,960,524 $4 $458 $3,156 $ 176

Purchase of treasury stock.................. (63,028)
Stock donation.............................. 72
Issuance of common stock under employee
stock purchase plan....................... 81,878 -- 98
Cash distribution........................... (52)
Comprehensive income (loss):
Net income................................ 307 $ 307
Unrealized loss on marketable
securities.............................. (5) (5)
Foreign currency translation adjustment... (160) (160)
-----
Total comprehensive income................ 142
--------- -- ---- ------ ----- =====
Balance at September 30, 1998............... 3,979,374 4 628 3,411 11

Purchase of treasury stock.................. (35,221)
Stock donation.............................. 75
Issuance of common stock under employee
stock purchase plan....................... 2,150 -- 3
Comprehensive income (loss):
Net loss.................................. (664) (664)
Unrealized gain on marketable
securities.............................. 129 129
Foreign currency translation adjustment... 90 90
-----
Total comprehensive loss.................. (445)
--------- -- ---- ------ ----- =====
Balance at September 30, 1999............... 3,946,303 4 706 2,747 230

Purchase of treasury stock (unaudited)...... (4,930)
Comprehensive income (loss):
Net loss (unaudited)...................... (164) (164)
Unrealized gain on marketable securities
(unaudited)............................. 165 165
Foreign currency translation adjustment
(unaudited)............................. 21 21
-----
Total comprehensive income (unaudited).... $ 22
--------- -- ---- ------ ----- =====
Balance at December 31, 1999 (unaudited).... 3,941,373 $4 $706 $2,583 $ 416
========= == ==== ====== =====

TOTAL
TREASURY STOCKHOLDERS'
STOCK EQUITY
--------- -------------
<S> <C> <C>
Balance at September 30, 1997............... $(100) $3,694
Purchase of treasury stock.................. (97) (97)
Stock donation.............................. 72
Issuance of common stock under employee
stock purchase plan....................... 98
Cash distribution........................... (52)
Comprehensive income (loss):
Net income................................ 307
Unrealized loss on marketable
securities.............................. (5)
Foreign currency translation adjustment... (160)

Total comprehensive income................
----- ------
Balance at September 30, 1998............... (197) 3,857
Purchase of treasury stock.................. (57) (57)
Stock donation.............................. 75
Issuance of common stock under employee
stock purchase plan....................... 3
Comprehensive income (loss):
Net loss.................................. (664)
Unrealized gain on marketable
securities.............................. 129
Foreign currency translation adjustment... 90

Total comprehensive loss..................
----- ------
Balance at September 30, 1999............... (254) 3,433
Purchase of treasury stock (unaudited)...... (8) (8)
Comprehensive income (loss):
Net loss (unaudited)...................... (164)
Unrealized gain on marketable securities
(unaudited)............................. 165
Foreign currency translation adjustment
(unaudited)............................. 21

Total comprehensive income (unaudited)....
----- ------
Balance at December 31, 1999 (unaudited).... $(262) $3,447
===== ======
</TABLE>

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

F-27
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
------------------- -------------------
1998 1999 1998 1999
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 307 $ (664) $ (203) $ (164)
Adjustments to reconcile to net cash used:
Stock donation expense.................................. 72 75 -- --
Depreciation and amortization........................... 292 307 61 52
Deferred taxes.......................................... 57 (247) -- --
Minority interest income................................ 54 72 12 12
Provision for doubtful accounts......................... (10) (6) (3) (3)
Unrealized gain (loss) on marketable securities......... (5) 128 81 165
Changes in assets and liabilities:
Accounts receivable................................... (31) 306 44 (90)
Prepaid expenses and other current assets............. (33) 35 11 (145)
Accounts payable...................................... (113) 107 12 (53)
Accrued expenses...................................... 80 183 (391) (321)
Deferred revenue...................................... 87 295 96 (125)
Other assets.......................................... 22 (306) 16 28
------ ------ ------ ------
Net cash provided by (used in) operating
activities........................................ 779 285 (264) (644)
------ ------ ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets................................. (214) (198) (4) (20)
Sale of marketable securities............................. 307 -- -- --
------ ------ ------ ------
Net cash provided by (used in) investing
activities........................................ 93 (198) (4) (20)
------ ------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long term debt................................ (121) (13) (17) (9)
Partnership distributions................................. (23) (23) -- --
Repurchase of common stock................................ (97) (56) -- (8)
Proceeds from issuance of common stock.................... 98 3 -- --
------ ------ ------ ------
Net cash used in financing activities............... (143) (89) (17) (17)
------ ------ ------ ------
Effect of exchange rate changes on cash and cash
equivalents............................................... 8 50 29 36
------ ------ ------ ------
NET INCREASE (DECREASE) IN CASH............................. 737 48 (256) (645)

Cash and cash equivalents, beginning of period.............. 1,863 2,600 2,600 2,648
------ ------ ------ ------
Cash and cash equivalents, end of period.................... $2,600 $2,648 $2,344 $2,003
====== ====== ====== ======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 157 $ 164 $ 25 $ 23
Cash paid for income taxes................................ 106 10 9 9
</TABLE>

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

F-28
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND NATURE OF BUSINESS

Advanced CAE Technology, Inc., doing business as C-Mold (the "Company"), was
incorporated in New York, USA, in February 1986. The Company is engaged in the
development and sale of software for plastic injection molding simulation in the
polymer processing industry. The Company sells its products primarily to
customers in the United States, Europe and Asia.

The Company's fiscal year end is September 30. References to 1997, 1998 or
1999 mean the fiscal year ended September 30, unless otherwise indicated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries: AC Technology Europe B.V., Plastic Moulding
Consultants, Ltd., C-MOLD Singapore Pte. Ltd. and C-MOLD Scandinavia A.B.; its
99 percent-owned subsidiary, Advanced CAE Technology Pacific; its
84 percent-owned subsidiary, AC Technology Enterprise, Ltd.; and its
28 percent-owned subsidiary, ACT Partnership, which is consolidated because it
is controlled by the Company. All significant intercompany balances and
transactions have been eliminated in the consolidated financial statements.

FOREIGN CURRENCY TRANSLATION

CASH AND CASH EQUIVALENTS

All highly liquid investments purchased with a maturity of three months or
less are considered to be cash equivalents. Accordingly, these items are subject
to minimal credit and market risk and are reported at cost, which approximates
fair value.

MARKETABLE SECURITIES

All of the Company's marketable securities are classified as
available-for-sale securities and are valued at market value at September 30,
1998 and 1999. Unrealized gains and losses on these securities are included as
components of comprehensive income and are reflected in the consolidated
statement of stockholders' equity.

ACCOUNTS RECEIVABLE, CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

Financial instruments that potentially expose the Company to concentrations
of credit risk include accounts receivable. The Company's customer base consists
of a large number of geographically dispersed customers. The Company maintains
reserves for potential credit losses on accounts receivable and such losses, in
the aggregate, have not exceeded management expectations.

F-29
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue of $1,286,000 (18% of total revenue) and $773,000 (10% of total
revenue) was attributable to one customer in fiscal 1998 and 1999, respectively.
At September 30, 1998 and 1999, accounts receivable from that customer accounted
for $353,000 (23% of total accounts receivable) and $81,000 (7% of total
accounts receivable), respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash and cash equivalents,
marketable securities, accounts receivable, accounts payable, accrued expenses,
deferred revenue and debt. The carrying amounts of these instruments at
September 30, 1998 and 1999 approximate their fair values.

FIXED ASSETS

Fixed assets are recorded at cost and are depreciated using an accelerated
method over their estimated useful lives.

IMPAIRMENT OF LONG-LIVED ASSETS

In accordance with Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to be Disposed Of," the Company records impairment losses on long-lived assets
used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Through September 30, 1999, the Company had not
recognized an impairment loss on its long-lived assets.

REVENUE RECOGNITION

Revenue is derived from the licensing of computer software products and from
services consisting of maintenance and support, consulting, material testing and
training. The Company has adopted the guidelines of Statement of Position 97-2,
"Software Revenue Recognition" ("SoP 97-2"), which provides guidance on applying
generally accepted accounting principles in recognizing revenue on software
transactions.

SOFTWARE DEVELOPMENT COSTS

F-30
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Computer Software to be Sold, Leased, or Otherwise Marketed," and capitalized
thereafter until commercial release of the software products. Software
development costs eligible for capitalization have not been significant to date.

ADVERTISING COSTS

The Company expenses as incurred costs of producing advertising and
sales-related collateral materials. Other production costs associated with
direct mail programs, placement costs associated with magazine or other printed
media and all direct costs associated with trade shows and other sales related
events are expensed when the related direct mail is sent, advertising space is
used or the event is held. Advertising expense for the years ended
September 30, 1998 and 1999 was $60,000 and $67,000, respectively.

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation to employees in accordance
with Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
Issued to Employees," and related interpretation. Accordingly, compensation
expense is recorded for options issued to employees in fixed amounts to the
extent that the fixed exercise prices are less than the fair market value of the
Company's common stock at the date of grant. The Company follows the disclosure
requirements of SFAS No. 123, "Accounting for Stock-Based Compensation"
(Note 8). All stock-based awards to non-employees are accounted for at their
fair value in accordance with SFAS No. 123.

SEGMENT AND GEOGRAPHIC INFORMATION

The Company has adopted SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information" (Note 15). SFAS No. 131 establishes
standards for reporting information on operating segments in interim and annual
financial statements. SFAS No. 131 relates to disclosure only and had no impact
on the Company's consolidated financial position or results of operations.

COMPREHENSIVE INCOME

The Company has adopted SFAS No. 130, "Reporting Comprehensive Income."
Under SFAS No. 130, the Company is required to display comprehensive income and
its components as part of the Company's full set of financial statements. The
measurement and presentation of net income did not change. Comprehensive income
is comprised of net income and other comprehensive income. Other comprehensive
income includes certain changes in equity that are excluded from net income. At
September 30, 1999, accumulated other comprehensive income was comprised of
cumulative foreign currency translation adjustments and unrealized gains and
losses on marketable securities. The individual components of comprehensive
income are reflected in the consolidated statement of stockholders' equity for
the years ended September 30, 1997, 1998 and 1999.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The interim consolidated financial statements as of December 31, 1999 and
for the three month periods ended December 31, 1998 and 1999 are unaudited. In
the opinion of the Company's management, the unaudited interim consolidated
financial statements include all adjustments,

F-31
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial position and results of operations for these
interim periods. The results of operations for the three months ended
December 31, 1999 are not necessarily indicative of the results of operations
for the year ended September 30, 2000 or any other future period.

USE OF ESTIMATES

RECENT ACCOUNTING PRONOUNCEMENTS

F-32
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. MARKETABLE SECURITIES

The amortized cost and estimated market value of marketable securities were
as follows (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Amortized cost.............................................. $200 $200
Gross unrealized gains...................................... 193 321
---- ----
Market value................................................ $393 $521
==== ====
</TABLE>

4. FIXED ASSETS

Fixed assets consist of the following (dollars in thousands):

<TABLE>
<CAPTION>
ESTIMATED
USEFUL SEPTEMBER 30,
LIFE -------------------
(YEARS) 1998 1999
--------- -------- --------
<S> <C> <C> <C>
Land............................................ -- $ 531 $ 555
Buildings and improvements...................... 7 - 39 1,694 1,709
Laboratory equipment............................ 5 308 310
Computer equipment.............................. 5 1,269 1,252
Furniture and fixtures.......................... 7 562 574
Software........................................ 3 130 201
------ -------
4,494 4,601
Less--accumulated depreciation and
amortization.................................. (2,025) (2,207)
------ -------
$2,469 $ 2,394
====== =======
</TABLE>

Total depreciation and amortization expense was $292,000 and $307,000 for
the years ended September 30, 1998 and 1999, respectively.

5. ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Accrued commissions......................................... $ 33 $ 60
Accrued payroll and vacation................................ 180 212
Accrued income tax payable.................................. 118 50
Other accrued expenses...................................... 374 451
---- ----
$705 $773
==== ====
</TABLE>

F-33
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. LONG TERM DEBT

Long term debt consists of a mortgage loan on the Ithaca, New York facility,
a term loan on the Louisville, Kentucky facility and a mortgage loan on the
Taipei, Taiwan facility.

The mortgage loan for the Ithaca facility is a 30-year mortgage for $328,000
due in 2019. The unpaid balance on the mortgage loan was $233,000 at
September 30, 1999. The interest rate on the mortgage loan is adjustable
annually and is set 300 basis points over the one-year Treasury bill rate (8.0%
at September 30, 1999). Monthly interest and principal payments are $2,000. The
mortgage loan is guaranteed up to approximately $100,000 by certain officers of
the Company. The mortgage is secured by all real property in Ithaca. The
mortgage also contains certain subjective covenants including a material adverse
change clause. The Company was in compliance with these covenants at
September 30, 1999.

During 1994, the Company entered into a Revised and Replacement Letter loan
agreement (the Agreement) with a bank. The Agreement made available to the
Company a 10-year term loan due in 2005 for an amount not to exceed $650,000.
The unpaid balance was $621,000 at September 30, 1999. The purpose of the
Agreement was to finance the construction of the Company's facility in
Louisville. The Agreement has an adjustable interest rate defined at the prime
rate (8.25% at September 30, 1999). The Agreement is to be repaid in equal
monthly payments of $6,000. Each payment will be applied first to interest with
the remainder applied to principal. Based on the current monthly payments of
$6,000 and an interest rate of 8.25%, the Company will be required to make a
final payment of approximately $490,000 in the year 2005. The Agreement is
secured by the real property located in Louisville. The Company was in
compliance with the related debt covenants at September 30, 1999.

The mortgage loan for the Taiwan facility was refinanced during fiscal 1997
and is due in 2012. At September 30, 1999, the unpaid balance on the mortgage
was $291,000. The interest rate on the mortgage loan is adjusted annually (8.4%
at September 30, 1999). Monthly interest and principal payments are $4,000. The
mortgage loan is secured with the property of a subsidiary of the Company.

Future principal payments for long-term debt as of September 30, 1999 are as
follows (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR
- -----------
<S> <C>
2000........................................................ $ 48
2001........................................................ 52
2002........................................................ 57
2003........................................................ 62
2004........................................................ 67
Thereafter.................................................. 858
------
1,145
Less: current portion....................................... 48
------
$1,097
======
</TABLE>

F-34
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. COMMON STOCK

Each share of the Company's $0.001 par value common stock entitles the
holder to one vote on all matters submitted to a vote of the Company's
stockholders. Common stockholders are entitled to dividends when and if declared
by the board of directors.

In October 1995, a founding stockholder of the Company donated
238,000 shares of common stock back to the Company for distribution to its
employees. The shares are to be equally divided over five consecutive years and
distributed equally to eligible employees. These distributions were effected on
January 1, 1996, 1997, 1998 and 1999 and the final distribution will be made on
January 1, 2000. If an employee decides not to accept the donated shares, those
shares will carryover and be evenly distributed over the remaining years. Any
unclaimed shares in the year 2000 will be returned to the donor. As of
September 30 1999, 46,654 shares remain undistributed.

During 1998 and 1999, the Company repurchased 63,028 and 35,221 shares,
respectively, of common stock from existing stockholders for $97,000 and
$57,000, respectively. As of September 30, 1999, the Company had repurchased an
aggregate of 167,173 shares for treasury.

8. STOCK OPTION PLAN

In fiscal 1992, the Company adopted the Advanced CAE Technology, Inc. Stock
Option Plan (the "Plan") which provides for the grant of incentive stock
options, non-qualified stock options, stock awards and stock purchase rights for
the purchase of up to 2,000,000 shares of the Company's common stock by
officers, employees, consultants and directors of the Company. The Board of
Directors is responsible for administration of the Plan. The term of each option
shall be determined by a committee selected by the Board of Directors, but in no
event shall an option be exercisable after the expiration of 5 years from the
date on which it is granted. Each option may include, at the discretion of the
committee, a vesting period following the grant of any option during which all
or any part of such option remains forfeitable and cannot be exercised. All
options shall provide for full and immediate vesting in the event that the
Company disposes of all or substantially all of its assets as an entity and
dissolves, consolidates or merges into another corporation and not be the
resulting or surviving corporation. The Board of Directors of the Company may at
any time suspend or terminate the Plan or may amend it from time to time.

Under APB 25, no compensation cost has been recognized for employee
stock-based compensation for the years ended September 30, 1998 and 1999. Had
compensation cost been determined based on the fair value at the grant dates for
awards in 1998 and 1999 consistent with the provisions of SFAS No. 123, the
Company's net income (loss) would have been the pro forma amounts indicated
below. Because options vest over several years and additional option grants are
expected to be made in future years, the pro forma results are not
representative of the pro forma results for future years.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------
1998 1999
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Net income (loss):
As reported...................................... $307 $(664)
Pro forma........................................ 264 (690)
</TABLE>

F-35
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. STOCK OPTION PLAN (CONTINUED)

The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions for
grants: no dividend yield; no volatility; risk-free interest rates of 5.1% and
5.1% for 1998 and 1999, respectively; and expected option life of 5 years.

A summary of the status of the Company's stock options as of September 30,
1998 and 1999 and changes during the years then ended is presented below:

<TABLE>
<CAPTION>
1998 1999
--------------------- ---------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Outstanding at beginning of year................ 526,769 $1.35 350,719 $1.46
Granted......................................... 35,800 1.58 21,200 1.60
Exercised....................................... (173,800) 1.17 (3,913) 1.48
Canceled........................................ (38,050) 1.49 (9,788) 1.56
---------- ----------

Outstanding at end of year...................... 350,719 1.46 358,218 1.46
========== ==========

Options exercisable at end of year.............. 146,427 233,343
Weighted average fair value of options granted
during the year............................... $ 1.22 $ 1.23
Options available for future grant.............. 1,649,283 1,641,784
</TABLE>

The following table summarizes information about stock options outstanding
at September 30, 1999:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
LIFE SHARES
SHARES (YEARS) EXERCISABLE
EXERCISE PRICE -------- ----------- -----------
<S> <C> <C> <C>
$1.20 - 1.32................................................ 96,418 1.03 96,418
$1.50 - 1.53................................................ 219,400 2.38 129,025
$1.60....................................................... 42,400 4.13 7,900
------- -------
$1.20 - $1.60............................................... 358,218 2.22 233,343
======= =======
</TABLE>

F-36
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. INCOME TAXES

Income (loss) before income taxes and minority interest consists of the
following (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Domestic.................................................... $241 $(1,029)
Foreign..................................................... 258 229
---- -------
$499 $ (800)
</TABLE>

The income tax provision (benefit) consists of the following (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Current:
Federal................................................... $ 21 $ (70)
State..................................................... 23 49
Foreign................................................... 56 59
---- -----
Total current............................................. 100 38
---- -----
Deferred:
Federal................................................... 48 (210)
State..................................................... (10) (37)
---- -----
Total deferred taxes (benefit)............................ 38 (247)
---- -----
Total taxes (benefit)..................................... $138 $(209)
==== =====
</TABLE>

The reconciliation of the provision for income taxes computed at the U.S.
federal statutory tax rate to the actual provision is as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Statutory federal rate of 34%............................... $170 $(272)
State income taxes, net of federal effect................... 9 8
Foreign tax rate differential............................... (32) (19)
Permanent differences....................................... 1 12
Change in valuation allowance............................... 30 81
Other....................................................... (40) (19)
---- -----
$138 $(209)
==== =====
</TABLE>

F-37
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. INCOME TAXES (CONTINUED)

Net deferred tax assets consist of the following (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ -- $ 194
Tax credits............................................... 234 349
Accrued expenses not deductible for tax purposes.......... 79 109
Other..................................................... 5 8
-------- --------
Gross deferred tax assets............................... 318 660

Deferred tax asset valuation allowance...................... (230) (311)
-------- --------
Total deferred tax assets................................. 88 349
Deferred tax liabilities.................................... (4) (18)
-------- --------
Net deferred tax assets................................... 84 331
======== ========
</TABLE>

Under generally accepted accounting principles, the benefit associated with
future deductible differences is recognized if it is more likely than not that
the benefit will be realized. Management believes that, based on the Company's
historical results of operations, it is more likely than not that a portion of
the Company's deferred tax assets will not be realized. Accordingly, the Company
has recorded a valuation allowance of $230,000 and $311,000 at September 30,
1998 and 1999, respectively. Management believes that the net deferred tax asset
represents management's best estimate, based upon the weight of available
evidence, of the deferred tax asset that will be realized. If such evidence were
to change, based upon near-term operating results and longer-term projections,
the amount of the valuation allowance recorded against the gross deferred tax
asset may be decreased or increased.

As of September 30, 1999, the Company has approximately $293,000 in foreign
tax credits available to offset future income tax and $500,000 in federal net
operating loss carryforwards to offset future taxable income, which begin to
expire in 2019. Under the provisions of the U.S. Internal Revenue Code, certain
substantial changes in the Company's ownership may limit the amount of federal
net operating loss carryforwards and tax credit carryforwards which could be
utilized annually to offset future federal taxable income and taxes payable.

No provision was made in fiscal 1999 for U.S. income taxes on the
undistributed earnings of the foreign subsidiaries, as it is the Company's
intention to utilize those earnings in the foreign operations.

10. BENEFIT PLANS

401(K) SAVINGS PLAN

F-38
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. BENEFIT PLANS (CONTINUED)

contributions to the 401(k) Plan may be made at the discretion of the Board of
Directors. Employer contributions were $23,000 and $20,000 for the years ending
September 30, 1998 and 1999, respectively. Company contributions to the plan are
vested according to the following schedule: 20 percent after two years of
service and an additional 20 percent in each successive year. After six years of
service, employees are 100 percent vested.

PROFIT SHARING PLAN

The Company sponsors a profit sharing plan for all eligible employees. The
amount and distribution of profit sharing is at the sole discretion of the Board
of Directors. Profit sharing expense was $80,000 and $0 for the years ending
September 30, 1998 and 1999, respectively.

BONUS PLAN

The Company also sponsors a bonus plan for employees who, during the
preceding 12 months, have performed substantially above and beyond their
expected level of performance. The amount and distribution of these bonuses is
at the sole discretion of the Board of Directors. The Company paid $3,000 and $0
for the years ending September 30, 1998 and 1999, respectively.

11. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company leases certain equipment under non-cancelable operating leases
that expire at various dates through 2001. Lease expense for the years ended
September 30, 1998 and 1999 under these leases was $110,000 and $59,000,
respectively.

Future minimum annual lease payments as of September 30, 1999 are as follows
(in thousands):

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30,
- -------------------------
<S> <C>
2000.................................................. $34
2001.................................................. 1
---
$35
===
</TABLE>

LITIGATION

On February 17, 1999, suit was filed against the Company and one of its
employees by a competitor. The plaintiff is seeking immediate and permanent
injunctive relief in connection with the alleged theft and misappropriation of
the competitor's proprietary trade secrets. Specifically, the suit alleges,
among other things, (i) misappropriation of trade secrets, proprietary
information, unfair competition and civil conspiracy, (ii) breach of contract,
implied covenant of good faith and fiduciary duty, and (iii) fraud against the
individual in his actions to breach his fiduciary duties. The complaint seeks a
permanent injunction against the Company, actual, consequential and punitive
damages, and recovery of all legal costs.

Counterclaims, and amendments thereto, have been filed by the Company,
alleging that the competitor (i) breached certain federal antitrust laws and
(ii) committed defamation and trade libel. The competitor has moved to dismiss
these amended counterclaims.

Through February 11, 2000, based on the stage of developments with the
claims asserted against the Company and the Company's counterclaims, the Company
has not been able to reasonably estimate the amount of possible losses, if any,
related to this litigation. On February 11, 2000, the Company entered a
definitive agreement to be acquired by the counterparty in this litigation
(Note 13). Accordingly, this litigation is being held in abeyance in connection
with the pending acquisition. If the acquisition is completed, this litigation
will be dismissed with prejudice by the agreement of all parties. If for any
reason the acquisition is not completed, management expects that the litigation
will resume.

F-39
<PAGE>
ADVANCED CAE TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. SEGMENT AND GEOGRAPHIC INFORMATION

The Company conducts and manages its business in one industry segment: the
development, marketing and support of software products for plastic injection
molding simulation in the polymer processing industry.

Geographic information regarding the Company's operations was as follows (in
thousands):

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1998
---------------------------------------------
USA EUROPE ASIA CONSOLIDATED
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
Revenue from unaffiliated customers:
Software licenses......................................... $2,150 $1,181 $588 $3,919
Services.................................................. 2,712 520 185 3,417
------ ------ ---- ------
Total................................................... $4,862 $1,701 $773 $7,336
====== ====== ==== ======
Fixed assets, net........................................... $1,899 $ 67 $503 $2,469
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1999
---------------------------------------------
USA EUROPE ASIA CONSOLIDATED
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
Revenue from unaffiliated customers:
Software licenses......................................... $1,802 $1,343 $627 $3,772
Services.................................................. 2,890 797 209 3,896
------ ------ ---- ------
Total................................................... $4,692 $2,140 $836 $7,668
====== ====== ==== ======
Fixed assets, net........................................... $1,788 $ 80 $526 $2,394
</TABLE>

Revenues above for the USA include $1,344,000 and $806,000 of export sales
in the years ended September 30, 1998 and 1999, respectively.

13. SUBSEQUENT EVENT--PENDING ACQUISITION

On February 11, 2000, the Company entered into a definitive agreement to be
acquired by Moldflow Corporation ("Moldflow.") The purchase price will be
$11.0 million in cash. Completion of the acquisition is subject to satisfaction
of a number of conditions, including Moldflow's ability to obtain satisfactory
financing for the transaction.

F-40
<PAGE>
MOLDFLOW CORPORATION

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

BASIS OF PRESENTATION

The following unaudited pro forma combined balance sheet gives effect to the
pending acquisition by Moldflow Corporation (the "Company") of all of the stock
of Advanced CAE Technology, Inc., doing business as "C-Mold," as if it had
occurred on January 1, 2000. The unaudited pro forma combined statement of
operations gives effect to the pending acquisition as if it had occurred on
July 1, 1998. These statements are based on the actual historical financial
statements of the Company and C-Mold, and the estimates and assumptions set
forth below and in the notes to the unaudited pro forma combined financial
information.

The Company's fiscal year ends on June 30 while C-Mold's fiscal year ends on
September 30. The unaudited pro forma combined statement of operations for the
year ended June 30, 1999 combines the Company's actual results for its year
ended June 30, 1999 with C-Mold's actual results for its year ended
September 30, 1999. The unaudited pro forma combined statement of operations for
the six months ended January 1, 2000 combines the Company's and C-Mold's actual
results for the six months ended January 1, 2000.

The acquisition is subject to the terms of a definitive agreement between
the parties dated February 11, 2000. Completion of the transaction is subject to
the satisfaction of a number of conditions, including the Company's ability to
obtain satisfactory financing for the transaction.

The acquisition will be accounted for using the purchase method of
accounting and accordingly, the purchase price was allocated to the assets and
liabilities assumed based upon management's estimates of fair value, with any
excess purchase price being allocated to goodwill and other intangible assets.
The pro forma adjustments related to the purchase price allocation represent
management's best estimate of the effects of the pending acquisition and are
subject to adjustment upon completion of independent valuation analyses to be
obtained in connection with the closing of the transaction.

The pro forma adjustments are based upon estimates, currently available
information and certain assumptions that management deems appropriate. The
unaudited pro forma combined financial information presented herein is not
necessarily indicative of the results the Company would have obtained had such
events occurred on July 1, 1998, as assumed for purposes of the combined
statement of operations, or on January 1, 2000, as assumed for purposes of the
combined balance sheet, or of the future results of the Company. The unaudited
pro forma combined financial information should be read in conjunction with the
audited financial statements and notes thereto of each of the Company and C-Mold
included elsewhere in this prospectus.

F-41
<PAGE>

MOLDFLOW CORPORATION

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

(IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 1, 2000
------------------------------------------------------
MOLDFLOW PRO FORMA
CORPORATION C-MOLD ADJUSTMENTS(A) COMBINED
----------- -------- -------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................ $ 1,328 $ 2,003 $ 137 $ 3,468
Marketable securities............................ -- 686 -- 686
Accounts receivable, net......................... 4,534 1,329 -- 5,863
Prepaid expenses and other current assets........ 1,290 519 -- 1,809
-------- ------- ------- --------

Total current assets........................... 7,152 4,537 137 11,826

Fixed assets, net.................................. 3,026 2,373 75 5,474
Goodwill and other intangible assets............... -- -- 7,714 7,714
Other assets....................................... 386 393 -- 779
-------- ------- ------- --------

Total assets................................... $ 10,564 $ 7,303 $ 7,926 $ 25,793
======== ======= ======= ========

LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current debt obligations......................... $ 1,149 $ 48 $ -- $ 1,197
Accounts payable................................. 1,202 141 -- 1,343
Accrued expenses................................. 3,102 682 750 4,534
Deferred revenue................................. 3,310 1,548 -- 4,858
-------- ------- ------- --------

Total current liabilities...................... 8,763 2,419 750 11,932

Long term debt, net of current portion............. -- 1,092 (233) 859
Other long term liabilities........................ 38 1 -- 39
-------- ------- ------- --------

Total liabilities.............................. 8,801 3,512 517 12,830
-------- ------- ------- --------

Minority interest.................................. -- 344 (344) --
-------- ------- ------- --------

Stockholders' equity:
Common stock and additional paid-in capital...... 12,787 710 10,490 23,987
Retained earnings (accumulated deficit).......... (11,410) 2,583 (2,583) (11,410)
Other stockholders' equity....................... 386 154 (154) 386
-------- ------- ------- --------

Total stockholders' equity..................... 1,763 3,447 7,753 12,963
-------- ------- ------- --------

Total liabilities, minority interest and
stockholders' equity............................. $ 10,564 $ 7,303 $ 7,926 $ 25,793
======== ======= ======= ========
</TABLE>

The accompanying notes are an integral part of this unaudited pro forma
combined financial information.

F-42
<PAGE>

MOLDFLOW CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1999
----------------------------------------------------
MOLDFLOW PRO FORMA
CORPORATION C-MOLD ADJUSTMENTS COMBINED
------------ -------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue:
Software licenses................................. $12,238 $3,772 $ -- $16,010
Services.......................................... 7,983 3,896 -- 11,879
------- ------ ------- -------
Total revenue................................... 20,221 7,668 -- 27,889
------- ------ ------- -------
Costs and expenses:
Cost of software licenses revenue................. 378 149 -- 527
Cost of services revenue.......................... 1,319 1,635 -- 2,954
Research and development.......................... 3,466 1,314 -- 4,780
Selling and marketing............................. 9,673 3,389 -- 13,062
General and administrative........................ 3,839 1,416 -- 5,255
Litigation........................................ 620 490 (1,110)(a) --
Amortization of goodwill and other intangible
assets.......................................... -- -- 1,543 (b) 1,543
------- ------ ------- -------
Total operating expenses........................ 19,295 8,393 433 28,121
------- ------ ------- -------
Income (loss) from operations....................... 926 (725) (433) (232)
Interest and other income (expense), net............ (269) (75) -- (344)
------- ------ ------- -------
Income (loss) before income taxes, extraordinary
loss and minority interest.................... 657 (800) (433) (576)
Minority interest in income of consolidated
subsidiaries...................................... -- 73 (73)(c) --
Provision (benefit) for income taxes................ 176 (209) (174) (207)
------- ------ ------- -------
Income (loss) from continuing operations............ $ 481 $ (664) $ (186) $ (369)
======= ====== ======= =======
Income (loss) from continuing operations per common
share (d):
Basic............................................. $ 1.82 $ (0.33)
Diluted........................................... $ 0.08 $ (0.33)
Shares used in computing income (loss) from
continuing operations per common share (d):
Basic............................................. 265 1,127
Diluted........................................... 6,166 1,127

<CAPTION>
SIX MONTHS ENDED JANUARY 1, 2000
----------------------------------------------------
MOLDFLOW PRO FORMA
CORPORATION C-MOLD ADJUSTMENTS COMBINED
------------ -------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue:
Software licenses................................. $ 6,651 $1,832 $ -- $ 8,483
Services.......................................... 4,853 2,104 -- 6,957
------- ------ ----- -------
Total revenue................................... 11,504 3,936 -- 15,440
------- ------ ----- -------
Costs and expenses:
Cost of software licenses revenue................. 322 132 -- 454
Cost of services revenue.......................... 491 658 -- 1,149
Research and development.......................... 1,709 701 -- 2,410
Selling and marketing............................. 5,811 1,698 -- 7,509
General and administrative........................ 2,277 525 -- 2,802
Litigation........................................ 530 461 (991)(a) --
Amortization of goodwill and other intangible
assets.......................................... -- -- 772 (b) 772
------- ------ ----- -------
Total operating expenses........................ 11,140 4,175 (219) 15,096
------- ------ ----- -------
Income (loss) from operations....................... 364 (239) 219 344
Interest and other income (expense), net............ (103) (103) -- (206)
------- ------ ----- -------
Income (loss) before income taxes, extraordinary
loss and minority interest.................... 261 (342) 219 138
Minority interest in income of consolidated
subsidiaries...................................... -- 24 (24)(c) --
Provision (benefit) for income taxes................ (172) (36) 88 (120)
------- ------ ----- -------
Income (loss) from continuing operations............ $ 433 $ (330) $ 155 $ 258
======= ====== ===== =======
Income (loss) from continuing operations per common
share (d):
Basic............................................. $ 1.18 $ 0.21
Diluted........................................... $ 0.07 $ 0.04
Shares used in computing income (loss) from
continuing operations per common share (d):
Basic............................................. 367 1,229
Diluted........................................... 6,311 7,173
</TABLE>

The accompanying notes are an integral part of this unaudited pro forma combined
financial information.

F-43
<PAGE>
MOLDFLOW CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

1. UNAUDITED PRO FORMA COMBINED BALANCE SHEET

The accompanying unaudited pro forma combined balance sheet has been
prepared as if the acquisition had occurred on January 1, 2000 and reflects the
following pro forma adjustments:

(a) The following table presents the allocation of the purchase price (in
thousands):

<TABLE>
<S> <C>
Purchase price:
Purchase consideration--cash.............................. $11,000
Direct acquisition expenses............................... 200
-------
Total purchase price.................................... $11,200
=======
Tangible assets and liabilities:
Cash and cash equivalents................................. $ 2,140
Marketable securities..................................... 686
Accounts receivable, net.................................. 1,329
Prepaid expenses and other current assets................. 519
Fixed assets.............................................. 2,448
Other assets.............................................. 393
Current portion of long term debt......................... (48)
Accounts payable.......................................... (141)
Accrued expenses.......................................... (1,432)
Deferred revenue.......................................... (1,548)
Other long-term liabilities............................... (1)
Long-term debt, net of current portion.................... (859)
-------
Net tangible assets..................................... 3,486

Goodwill and other intangible assets...................... 7,714
-------
Total purchase price.................................... $11,200
=======
</TABLE>

The unaudited pro forma condensed balance sheet assumes that proceeds
raised from the Company's initial public offering of common stock will be
used to fund the purchase price of the acquisition.

2. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

The accompanying unaudited pro forma combined statement of operations has
been prepared as if the acquisition had occurred on July 1, 1998 and reflects
the following pro forma adjustments and the related tax effects:

(a) To eliminate the impact of litigation expenses incurred in connection
with the litigation pending between the Company and C-Mold, which
commenced in February 1999. Pursuant to the terms of the definitive
agreement, pending the successful completion of the acquisition, this
litigation will be dismissed with prejudice by the agreement of all
parties.

(b) Reflects amortization of the acquired goodwill and other intangible
assets, assuming a useful life of five years.

(d) The pro forma combined income (loss) from continuing operations per
common share reflects the issuance of 861,538 shares of common stock, at
an assumed initial public offering price of $13.00 per share, to fund
the acquisition as if such shares were issued on July 1, 1998.

F-44
<PAGE>

[Inside Back Cover]

The inside back cover page has the words "Polaroid Corporation" at the
top and the following paragraphs below next to a photo of a digital camera:

Polaroid Corporation, a producer of instant and digital imaging
products, recently used our MPA product in the design of its new
digital microscope camera product. Among the many challenges faced
by Polaroid in designing their product was the modification of an
existing mold used to produce the camera's shutter.

/X/ Polaroid estimated that the use of our MPA product reduced their
overall product development time by 50% and enabled them to take the
digital microscope camera product from concept to market in only nine
months.

/X/ Polaroid design engineers were able to verify that the existing mold
could be modified to reflect the design of the new shutter and
produce parts of acceptable quality.

The middle third of the page has the words "Hewlett-Packard Company" at
the top and the following paragraphs below next to a photo of a computer
printer:

Hewlett-Packard Company used our MPI product in the design of a recent
model in its HP Deskjet line of inkjet computer printers. Approximately
60% to 80% of the mechanical parts used in these printers are injection
molded plastic parts. After using our MPI product, Hewlett-Packard
determined that the cavity through which plastic was fed into the mold
for one of its parts was wider than necessary and resulted in the mold
taking longer to fill with plastic.

/X/ Hewlett-Packard was able to modify the mold by narrowing the cavity,
resulting in a reduction in the amount of time required to produce
each part by approximately 15 seconds, or 30%.

/X/ Hewlett-Packard estimated that this time savings would reduce their
annual production costs by $1.1 million.

The bottom third of the page has the words "Montblanc-Simplo GmbH at the
top and the following paragraphs below next to a photo of a pen:

Montblanc-Simplo GmbH designs and sells the Montblanc brand of premium
pens. Montblanc-Simplo employs injection molding to manufacture the outer
casings of many styles of pens. Their machine operators were experiencing
difficulty identifying the precise machine operating conditions.

/X/ Montblanc has been able to reduce the scrap rate of pen casings by
50% without significantly altering the time required to manufacture
each casing.

/X/ Montblanc estimated that it has been able to reduce its production
set-up times and reset-up times by approximately 60% with an
equivalent reduction in wasted material.

In the bottom right corner of the page is Moldflow's logo.
<PAGE>

3,000,000 Shares

[LOGO]

Common Stock

---------------------

PROSPECTUS

---------------------

Adams, Harkness & Hill, Inc.
A.G. Edwards & Sons, Inc.

-----------------

, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated expenses payable by us in
connection with the offering (excluding underwriting discounts and commissions):

<TABLE>
<CAPTION>
NATURE OF EXPENSE AMOUNT
- ----------------- ----------
<S> <C>
SEC Registration Fee........................................ $ 12,752
NASD Filing Fee............................................. 5,330
Nasdaq National Market Listing Fee.......................... 75,625
Accounting Fees and Expenses................................ *
Legal Fees and Expenses..................................... *
Printing Expenses........................................... *
Blue Sky Qualification Fees and Expenses.................... 15,000
Transfer Agent's Fee........................................ *
Miscellaneous............................................... *
----------
TOTAL..................................................... $1,500,000
==========
</TABLE>

The amounts set forth above, except for the Securities and Exchange
Commission, National Association of Securities Dealers, Inc. and Nasdaq National
Market fees, are in each case estimated.

- ------------------------

* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

In accordance with Section 145 of the Delaware General Corporation Law,
Article VII of our certificate of incorporation provides that no director of
Moldflow shall be personally liable to Moldflow or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability
(1) for any breach of the director's duty of loyalty to Moldflow or its
stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) in respect of unlawful
dividend payments or stock redemptions or repurchases, or (4) for any
transaction from which the director derived an improper personal benefit. In
addition, our first amended and restated certificate of incorporation provides
that if the Delaware General Corporation Law is amended to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.

Article V of our by-laws provides for indemnification by Moldflow of its
officers and certain non-officer employees under certain circumstances against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement, reasonably incurred in connection with the defense or settlement of
any threatened, pending or completed legal proceeding in which any such person
is involved by reason of the fact that such person is or was an officer or
employee of the registrant if such person acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of
Moldflow, and, with respect to criminal actions or proceedings, if such person
had no reasonable cause to believe his or her conduct was unlawful.

II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Set forth in chronological order below is information regarding the number
of shares of capital stock issued by Moldflow since our formation. Also included
is the consideration, if any, received by Moldflow for such shares. There was no
public offering in any such transaction and we believe that each transaction was
exempt from the registration requirements of the Securities Act of 1933, as
amended, by reason of Section 4(2) thereof, based on the private nature of the
transactions and the financial sophistication of the purchasers, all of whom had
access to complete information concerning Moldflow and acquired the securities
for investment and not with a view to the distribution thereof. In addition, we
believe that the transactions described below with respect to issuances and
option grants to our employees and consultants were exempt from the registration
requirements of said Act by reason of Section 4(2) of said Act or Rule 701
promulgated thereunder.

(a) Issuance of Capital Stock

(i) In August 1997, in connection with its reorganization Moldflow
issued 4,918,616 shares of its common stock, 1,855,688 shares of
its series A convertible preferred stock and 666,666 shares of its
series B convertible preferred stock to the shareholders of
Moldflow International Pty. Ltd., an Australian corporation, in
exchange for all of the outstanding capital stock of Moldflow
International.

(ii) In March 1998, Moldflow's shares of common stock, series A
convertible preferred stock and series B convertible preferred
stock were redesignated as series C-1 convertible preferred stock,
series C-2 convertible preferred stock and series C-3 convertible
preferred stock.

(iii) In April 1998, Moldflow granted warrants to purchase 20,833 shares
of its common stock to Silicon Valley Bank at an exercise price of
$7.20 per share.

(iv) In July 1998, Moldflow sold 551,285 shares of its common stock for
an aggregate purchase price of $198,463.35 which was paid by
promissory notes. These shares are subject to stock restriction
agreements.

(v) In July 1998, Moldflow issued 698,609 shares of its series C-3
convertible preferred stock in connection with the conversion into
equity of the outstanding principal balance of approximately
$890,000 under stockholder loan agreements.

(vi) In April 1999, Moldflow issued 327 shares of its common stock upon
the exercise of previously granted stock options at an aggregate
exercise price of $117.75.

(vii) In June 1999, Moldflow issued 1,562 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $562.50.

(viii) In July 1999, Moldflow issued 74 shares of its common stock upon
the exercise of previously granted stock options at an aggregate
exercise price of $26.85.

(ix) In August 1999, Moldflow issued 2,715 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $1,240.65.

(x) In September 1999, Moldflow issued 327 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $136.50.

(xi) In October 1999, Moldflow issued 2,900 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $1,607.10.

(xii) In November 1999, Moldflow issued 52 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $37.50.

(xiii) In December 1999, Moldflow issued 2,117 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $1,006.80.

II-2
<PAGE>

(xiv) In January 2000, Moldflow issued 4,080 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $1,798.20.

(xv) In February 2000, Moldflow issued 1,162 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $850.95.

(b) Grants of Stock Options

(i) As of January 20, 2000, options to purchase 605,071 shares of common
stock were outstanding under Moldflow's 1997 Equity Incentive Plan
of which options to purchase 120,350 shares are exercisable within
60 days of such date. All such options were granted between August
1997 and January 20, 2000 to officers, directors, employees and
consultants of Moldflow.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS. The following is a complete list of exhibits filed or
incorporated by reference as part of this Registration Statement.

*1.1 Form of Underwriting Agreement

2.1 Agreement and Plan of Merger, dated February 11, 2000, by
and among the Registrant, Moldflow Merger Corp. (a
subsidiary of the Registrant), Advanced CAE Technology, Inc.
d/b/a C-Mold ("C-Mold") and certain stockholders of C-Mold.
(Excluding schedules and exhibits which the Registrant
agrees to furnish supplementally to the Commission upon
request.)

*3.1 Second Amended and Restated Certificate of Incorporation of
the Registrant.

*3.2 Third Amended and Restated Certificate of Incorporation of
the Registrant.

*3.3 Amended and Restated By-laws of the Registrant.

*4.1 Specimen certificate for shares of Common Stock, $.01 par
value, of the Registrant.

*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of
the securities offered.

+10.1 Indenture of Lease, dated October 15, 1996, between Moldflow
Pty. Ltd and Mortimer B. Zuckerman and Edward H. Linde,
Trustees of 91 Hartwell Avenue Trust, which relates to space
in a certain building known as, and with an address at, 91
Hartwell Avenue, Lexington, Massachusetts.

+10.2 Acknowledgment of Assumption of Lease, dated June 28, 1999,
by and among Boston Properties Limited Partnership (as
successor-in-interest to the Trustees of 91 Hartwell Avenue
Trust), Moldflow Pty. Ltd and the Registrant.

+10.3 Stock Purchase Agreement, dated August 25, 1998, among
Ampersand Specialty Materials and Chemicals III Limited
Partnership ("Ampersand III"), Ampersand Specialty Materials
and Chemicals Companion Fund III Limited Partnership
("Ampersand III CF"), JTC Investment Management Pty. Ltd.
("JTC") and Westpac Custodian Nominees Limited (as nominee
for NJI No. 1(A) Investment Fund and NJI No. 1(B) Investment
Fund) ("Westpac").

+10.4 Shareholders Agreement, dated July 18, 1997 ("Shareholders
Agreement"), by and among the Registrant, Thomas Investments
Australia Pty. Ltd. ("Thomas"), Helmet Investments Australia
Pty. Ltd. ("Helmet"), Floatflow Pty. Ltd. ("Floatflow"),
JTC, Westpac, Ampersand Specialty Materials and Chemicals II
Limited Partnership ("Ampersand II"), Ampersand III,
Ampersand III CF and Mazza & Riley, Inc.

+10.5 First Amendment to Shareholders Agreement, dated October 24,
1997.
</TABLE>

II-3
<PAGE>

<TABLE>
<C> <S>
+10.6 Amended and Restated Credit Agreement, dated January 28,
1998 ("Amended and Restated Credit Agreement"), by and among
the Registrant, Thomas, Helmet, Floatflow, JTC, Westpac,
Ampersand II, Ampersand III and Ampersand III CF.

+10.7 First Amendment to Amended and Restated Credit Agreement,
dated August 25, 1998.

+10.8 Termination of Amended and Restated Credit Agreement.

+10.9 Loan Agreement, dated April 23, 1998, by and among Silicon
Valley Bank, the Registrant, Moldflow International Pty.
Ltd. and Moldflow Pty. Ltd.

+10.10 Loan Document Modification Agreement No. 2, dated
November 30, 1998, by and between Silicon Valley Bank and
the Registrant.

+10.11 Amendment to Loan Modification Agreement No. 2, dated
January 19, 1999, by and between Silicon Valley Bank and the
Registrant.

+10.12 Loan Document Modification Agreement No. 3, dated as of
June 1, 1999, by and between Silicon Valley Bank and the
Registrant.

+10.13 Loan Document Modification Agreement No. 4, dated as of
October 22, 1999, by and between Silicon Valley Bank and the
Registrant.

+10.14 Warrant to Purchase Common Stock, dated April 23, 1998,
issued by the Registrant to Silicon Valley Bank.

+10.15 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Marc J. L. Dulude.

+10.16 Amended and Restated Promissory Note, dated September 9,
1999, issued by Marc J. L. Dulude in favor of the
Registrant.

+10.17 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Suzanne E. Rogers.

+10.18 Amended and Restated Promissory Note, dated September 9,
1999, issued by Suzanne E. Rogers in favor of the
Registrant.

+10.19 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Kenneth R. Welch.

+10.20 Amended and Restated Promissory Note, dated September 9,
1999, issued by Kenneth R. Welch in favor of the Registrant.

+10.21 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Richard M. Underwood.

+10.22 Amended and Restated Promissory Note, dated September 9,
1999, issued by Richard M. Underwood in favor of the
Registrant.

+10.23 Service Agreement, dated July 1, 1994, between Moldflow Pty.
Ltd. and A. Roland Thomas.

+10.24 Letter Amendment, dated June 30, 1997, to Service Agreement
between Moldflow Pty. Ltd. and A. Roland Thomas.

+10.25 Letter Amendment, dated July 1, 1999, to Service Agreement
between Moldflow Pty. Ltd. and A. Roland Thomas.

+10.26 Loan Agreement, dated July 1, 1999 between Moldflow Pty.
Ltd, and A. Roland Thomas.

*10.27 Moldflow Corporation 2000 Stock Option and Incentive Plan.

*10.28 Form of Incentive Stock Option Agreement under the Moldflow
Corporation 2000 Stock Option and Incentive Plan.
</TABLE>

II-4

<PAGE>

<TABLE>
<C> <S>
*10.29 Form of Non-Qualified Stock Option Agreement under the
Moldflow Corporation 2000 Stock Option and Incentive Plan.

*10.30 Moldflow Corporation Employee Stock Purchase Plan.

+10.31 Moldflow Corporation 1997 Equity Incentive Plan.

+10.32 Form of Incentive Stock Option Agreement under the Moldflow
Corporation 1997 Equity Incentive Plan.

+10.33 Form of Non-Qualified Stock Option Agreement under the
Moldflow Corporation 1997 Equity Incentive Plan.

+10.34 Form of Non-Qualified Stock Option Agreement for Australian
employees under the Moldflow Corporation 1997 Equity
Incentive Plan.

*10.35 Employment Agreement, dated , between the
Registrant and Marc J. L. Dulude.

*10.36 Employment Agreement, dated , between the
Registrant and Suzanne E. Rogers.

*10.37 Employment Agreement, dated , between the
Registrant and Kenneth R. Welch.

*10.38 Employment Agreement, dated , between the
Registrant and Richard M. Underwood.

*10.39 Employment Agreement, dated , between the
Registrant and A. Roland Thomas.

*10.40 Form of Director Indemnification Agreement to be entered
into between the Registrant and each non-employee director.

*21.1 Subsidiaries of the Registrant.

*23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit
5.1 hereto).

23.2 Consent of PricewaterhouseCoopers LLP.

+24.1 Powers of Attorney.

27.1 Financial Data Schedule.
</TABLE>

- ------------------------

* To be filed by amendment to this registration statement.

+ Previously filed.

II-5
<PAGE>
(b) FINANCIAL STATEMENT SCHEDULES

All schedules have been omitted because they are not required or because the
required information is given in the consolidated financial statements or notes
to those statements.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.

II-6
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, on February 11,
2000.

<TABLE>
<S> <C> <C>
MOLDFLOW CORPORATION

BY: /S/ MARC J. L. DULUDE
-----------------------------------------
Marc J. L. Dulude
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
President, Chief Executive
/s/ MARC J. L. DULUDE Officer and Director
------------------------------------------- (Principal Executive February 11, 2000
Marc J. L. Dulude Officer)

Vice President and Chief
*** Financial Officer
------------------------------------------- (Principal Financial February 11, 2000
Suzanne E. Rogers Officer and Principal
Accounting Officer)

*** Director
------------------------------------------- February 11, 2000
A. Roland Thomas

*** Director
------------------------------------------- February 11, 2000
Charles D. Yie

*** Director
------------------------------------------- February 11, 2000
Julian H. Beale

*** Director
------------------------------------------- February 11, 2000
Richard A. Charpie
</TABLE>

II-7
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
*** Director
------------------------------------------- February 11, 2000
Roger Brooks

*** Director
------------------------------------------- February 11, 2000
Robert P. Schechter
</TABLE>

<TABLE>
<S> <C> <C> <C>
*** /s/ MARC J. L. DULUDE
--------------------------------------
Marc J. L. Dulude
ATTORNEY-IN-FACT
</TABLE>

II-8
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
*1.1 Form of Underwriting Agreement
2.1 Agreement and Plan of Merger, dated February 11, 2000, by
and among the Registrant, Moldflow Merger Corp. (a
subsidiary of the Registrant), Advanced CAE Technology, Inc.
d/b/a C-Mold ("C-Mold") and certain stockholders of C-Mold.
(Excluding schedules and exhibits which the Registrant
agrees to furnish supplementally to the Commission upon
request.)
*3.1 Second Amended and Restated Certificate of Incorporation of
the Registrant.
*3.2 Third Amended and Restated Certificate of Incorporation of
the Registrant.
*3.3 Amended and Restated By-laws of the Registrant.
*4.1 Specimen certificate for shares of Common Stock, $.01 par
value, of the Registrant.
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of
the securities offered.
+10.1 Indenture of Lease, dated October 15, 1996, between Moldflow
Pty. Ltd and Mortimer B. Zuckerman and Edward H. Linde,
Trustees of 91 Hartwell Avenue Trust, which relates to space
in a certain building known as, and with an address at, 91
Hartwell Avenue, Lexington, Massachusetts.
+10.2 Acknowledgment of Assumption of Lease, dated June 28, 1999,
by and among Boston Properties Limited Partnership (as
successor-in-interest to the Trustees of 91 Hartwell Avenue
Trust), Moldflow Pty. Ltd and the Registrant.
+10.3 Stock Purchase Agreement, dated August 25, 1998, among
Ampersand Specialty Materials and Chemicals III Limited
Partnership ("Ampersand III"), Ampersand Specialty Materials
and Chemicals Companion Fund III Limited Partnership
("Ampersand III CF"), JTC Investment Management Pty. Ltd.
("JTC") and Westpac Custodian Nominees Limited (as nominee
for NJI No. 1(A) Investment Fund and NJI No. 1(B) Investment
Fund) ("Westpac").
+10.4 Shareholders Agreement, dated July 18, 1997 ("Shareholders
Agreement"), by and among the Registrant, Thomas Investments
Australia Pty. Ltd. ("Thomas"), Helmet Investments Australia
Pty. Ltd. ("Helmet"), Floatflow Pty. Ltd. ("Floatflow"),
JTC, Westpac, Ampersand Specialty Materials and Chemicals II
Limited Partnership ("Ampersand II"), Ampersand III,
Ampersand III CF and Mazza & Riley, Inc.
+10.5 First Amendment to Shareholders Agreement, dated October 24,
1997.
+10.6 Amended and Restated Credit Agreement, dated January 28,
1998 ("Amended and Restated Credit Agreement"), by and among
the Registrant, Thomas, Helmet, Floatflow, JTC, Westpac,
Ampersand II, Ampersand III and Ampersand III CF.
+10.7 First Amendment to Amended and Restated Credit Agreement,
dated August 25, 1998.
+10.8 Termination of Amended and Restated Credit Agreement.
+10.9 Loan Agreement, dated April 23, 1998, by and among Silicon
Valley Bank, the Registrant, Moldflow International Pty.
Ltd. and Moldflow Pty. Ltd.
+10.10 Loan Document Modification Agreement No. 2, dated
November 30, 1998, by and between Silicon Valley Bank and
the Registrant.
+10.11 Amendment to Loan Modification Agreement No. 2, dated
January 19, 1999, by and between Silicon Valley Bank and the
Registrant.
+10.12 Loan Document Modification Agreement No. 3, dated as of
June 1, 1999, by and between Silicon Valley Bank and the
Registrant.
+10.13 Loan Document Modification Agreement No. 4, dated as of
October 22, 1999, by and between Silicon Valley Bank and the
Registrant.
+10.14 Warrant to Purchase Common Stock, dated April 23, 1998,
issued by the Registrant to Silicon Valley Bank.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
+10.15 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Marc J. L. Dulude.
+10.16 Amended and Restated Promissory Note, dated September 9,
1999, issued by Marc J. L. Dulude in favor of the
Registrant.
+10.17 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Suzanne E. Rogers.
+10.18 Amended and Restated Promissory Note, dated September 9,
1999, issued by Suzanne E. Rogers in favor of the
Registrant.
+10.19 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Kenneth R. Welch.
+10.20 Amended and Restated Promissory Note, dated September 9,
1999, issued by Kenneth R. Welch in favor of the Registrant.
+10.21 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Richard M. Underwood.
+10.22 Amended and Restated Promissory Note, dated September 9,
1999, issued by Richard M. Underwood in favor of the
Registrant.
+10.23 Service Agreement, dated July 1, 1994, between Moldflow Pty.
Ltd. and A. Roland Thomas.
+10.24 Letter Amendment, dated June 30, 1997, to Service Agreement
between Moldflow Pty. Ltd. and A. Roland Thomas.
+10.25 Letter Amendment, dated July 1, 1999, to Service Agreement
between Moldflow Pty. Ltd. and A. Roland Thomas.
+10.26 Loan Agreement, dated July 1, 1999 between Moldflow Pty.
Ltd, and A. Roland Thomas.
*10.27 Moldflow Corporation 2000 Stock Option and Incentive Plan.
*10.28 Form of Incentive Stock Option Agreement under the Moldflow
Corporation 2000 Stock Option and Incentive Plan.
*10.29 Form of Non-Qualified Stock Option Agreement under the
Moldflow Corporation 2000 Stock Option and Incentive Plan.
*10.30 Moldflow Corporation Employee Stock Purchase Plan.
+10.31 Moldflow Corporation 1997 Equity Incentive Plan.
+10.32 Form of Incentive Stock Option Agreement under the Moldflow
Corporation 1997 Equity Incentive Plan.
+10.33 Form of Non-Qualified Stock Option Agreement under the
Moldflow Corporation 1997 Equity Incentive Plan.
+10.34 Form of Non-Qualified Stock Option Agreement for Australian
employees under the Moldflow Corporation 1997 Equity
Incentive Plan.
*10.35 Employment Agreement, dated , between the
Registrant and Marc J. L. Dulude.
*10.36 Employment Agreement, dated , between the
Registrant and Suzanne E. Rogers.
*10.37 Employment Agreement, dated , between the
Registrant and Kenneth R. Welch.
*10.38 Employment Agreement, dated , between the
Registrant and Richard M. Underwood.
*10.39 Employment Agreement, dated , between the
Registrant and A. Roland Thomas.
*10.40 Form of Director Indemnification Agreement to be entered
into between the Registrant and each non-employee director.
*21.1 Subsidiaries of the Registrant.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
*23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit
5.1 hereto).
23.2 Consent of PricewaterhouseCoopers LLP.
+24.1 Powers of Attorney.
27.1 Financial Data Schedule.
</TABLE>

- ------------------------

* To be filed by amendment to this registration statement.

+ Previously filed.

<PAGE>

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

MOLDFLOW CORPORATION
(A DELAWARE CORPORATION),

MOLDFLOW MERGER CORP.
(A DELAWARE CORPORATION),

ADVANCED CAE TECHNOLOGY, INC.
D/B/A C-MOLD
(A NEW YORK CORPORATION),

AND

THE STOCKHOLDERS OF ADVANCED CAE TECHNOLOGY, INC.
NAMED HEREIN

DATED AS OF FEBRUARY 11, 2000

<PAGE>

TABLE OF CONTENTS

Page
----

<S> <C> <C>
SECTION 1. MERGER........................................................ 1
1.1 MERGER........................................................ 1
1.2 PROCEDURE FOR PAYMENT......................................... 4
1.3 INDEMNIFICATION ESCROW........................................ 5
1.4 EFFECTIVENESS; TIME AND PLACE OF CLOSING...................... 5
1.5 TRANSFER TAXES................................................ 6
1.6 FURTHER ASSURANCES............................................ 6
1.7 ITHACA REAL ESTATE............................................ 6
1.7 ITHACA REAL ESTATE............................................ 6
1.8 ALLOCATION OF PURCHASE PRICE.................................. 7
1.8 ALLOCATION OF PURCHASE PRICE.................................. 7
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 7
2.1 MAKING OF REPRESENTATIONS AND WARRANTIES...................... 7
2.2 ORGANIZATION AND QUALIFICATIONS OF THE COMPANY................ 7
2.3 CAPITAL STOCK OF THE COMPANY; BENEFICIAL OWNERSHIP............ 8
2.4 SUBSIDIARIES.................................................. 8
2.5 AUTHORITY OF THE COMPANY...................................... 8
2.6 REAL AND PERSONAL PROPERTY.................................... 9
2.7 FINANCIAL STATEMENTS.......................................... 11
2.8 TAXES......................................................... 12
2.9 COLLECTIBILITY OF ACCOUNTS RECEIVABLE......................... 13
2.10 ABSENCE OF CERTAIN CHANGES.................................... 13
2.11 ORDINARY COURSE............................................... 15
2.12 BANKING RELATIONS............................................. 15
2.13 INTELLECTUAL PROPERTY......................................... 16
2.14 CONTRACTS..................................................... 17
2.15 LITIGATION.................................................... 18
2.16 COMPLIANCE WITH LAWS.......................................... 18
2.17 INSURANCE..................................................... 19
2.18 WARRANTY OR OTHER CLAIMS...................................... 19
2.19 PERMITS; BURDENSOME AGREEMENTS................................ 19
2.20 CORPORATE RECORDS; COPIES OF DOCUMENTS........................ 19
2.21 TRANSACTIONS WITH INTERESTED PERSONS.......................... 19
2.22 EMPLOYEE BENEFIT PROGRAMS..................................... 20
2.23 ENVIRONMENTAL MATTERS......................................... 23
2.24 LIST OF DIRECTORS AND OFFICERS................................ 24
2.25 DISCLOSURE.................................................... 24
2.26 EMPLOYEES; LABOR MATTERS...................................... 24
2.27 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS......................... 25
2.28 YEAR 2000 COMPLIANCE.......................................... 25
SECTION 3. COVENANTS OF THE COMPANY AND THE PRINCIPAL STOCKHOLDERS....... 25

</TABLE>

<PAGE>

Page
----

3.1 MAKING OF COVENANTS AND AGREEMENTS............................ 25
3.2 CONDUCT OF BUSINESS........................................... 25
3.3 NOTICE OF DEFAULT............................................. 27
3.4 CONSUMMATION OF AGREEMENT..................................... 27
3.5 NO SOLICITATION OF OTHER OFFERS............................... 27
3.6 CONFIDENTIALITY............................................... 28
3.7 TAX RETURNS................................................... 28
3.8 BUSINESS REVIEW............................................... 28
3.9 PREPARATION OF SCHEDULES...................................... 29
3.10 FILING COOPERATION............................................ 29
3.11 STAY OF PROCEEDINGS........................................... 29
3.12 VOTING........................................................ 30
3.13 AUDITED FINANCIAL STATEMENTS.................................. 30
3.14 (a)SUBSIDIARIES............................................... 30
3.15 REAL PROPERTY................................................. 31
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.............. 31
4.1 MAKING OF REPRESENTATIONS AND WARRANTIES...................... 31
4.2 ORGANIZATION OF PURCHASERS.................................... 31
4.3 AUTHORITY OF PURCHASERS....................................... 31
SECTION 5. COVENANTS OF THE PURCHASERS................................... 32
5.1 MAKING OF COVENANTS AND AGREEMENT............................. 32
5.2 CONFIDENTIALITY............................................... 32
5.3 STAY OF PROCEEDINGS........................................... 33
5.4 FINANCING..................................................... 33
SECTION 6. CONDITIONS.................................................... 34
6.1 CONDITIONS TO THE OBLIGATIONS OF PURCHASERS................... 34
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE PRINCIPAL
STOCKHOLDERS.................................................. 36
6.3. POST-CLOSING OBLIGATION OF THE PARENT......................... 38
SECTION 7. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED................... 38
7.1 TERMINATION................................................... 38
7.2 EFFECT OF TERMINATION......................................... 38
7.3 RIGHT TO PROCEED.............................................. 39
SECTION 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.................. 39
8.1 SURVIVAL OF WARRANTIES........................................ 39

SECTION 9. INDEMNIFICATION............................................... 39
9.1 INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDERS................. 39
9.2 Limitation on INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDERS... 40
9.3 INDEMNIFICATION BY PARENT..................................... 41
9.4 LIMITATION ON INDEMNIFICATION BY PARENT....................... 41
9.5 NOTICE; DEFENSE OF CLAIMS..................................... 42
SECTION 10. MISCELLANEOUS................................................. 42
10.1 FEES AND EXPENSES............................................. 43
10.2 GOVERNING LAW................................................. 43

</TABLE>

<PAGE>

Page
----

10.3 NOTICES....................................................... 43
10.4 ENTIRE AGREEMENT.............................................. 44
10.5 ASSIGNABILITY; BINDING EFFECT................................. 44
10.6 CAPTIONS AND GENDER........................................... 44
10.7 EXECUTION IN COUNTERPARTS..................................... 44
10.8 AMENDMENTS.................................................... 44
10.9 PUBLICITY AND DISCLOSURES..................................... 45
10.10 DEFINITION OF KNOWLEDGE....................................... 45

</TABLE>

<PAGE>

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is entered into as
of February 11, 2000 by and among Moldflow Corporation, a Delaware corporation
("PARENT"), Moldflow Merger Corp., Inc., a Delaware corporation and wholly-owned
subsidiary of Parent ("MERGERSUB" and, together with Parent, the "PURCHASERS"),
Advanced CAE Technology, Inc. d/b/a C-Mold, a New York corporation (the
"COMPANY"), and Kuo-King Wang, a resident of New York, Ven-Woei Wang, a resident
of New York, Shan-Fu Shen, a resident of New York, Claude Cohen, a resident of
New York and Cornelius A. Hieber, a resident of New York (each, a "PRINCIPAL
STOCKHOLDER" and, collectively, the "PRINCIPAL STOCKHOLDERS").

W I T N E S S E T H

WHEREAS, the Purchasers and the Company desire to effect a combination
of their respective businesses through a merger of MergerSub, a subsidiary of
Parent, with and into the Company in accordance with applicable laws; and

WHEREAS, the Boards of Directors of the Purchasers and the Company each
have determined that it is in the best interests of their respective
stockholders for MergerSub to merge with and into the Company upon the terms in
and subject to the conditions of this Agreement.

NOW, THEREFORE, based upon the above premises and in consideration of
the mutual representations, warranties, covenants and agreements set forth
herein, the parties hereby agree as follows:

SECTION 1. MERGER.

1.1 MERGER.

(a) THE MERGER. On the terms and subject to the conditions set
forth in this Agreement, at the Effective Time (as defined in SECTION 1.1(c)
hereof), in accordance with this Agreement, the Delaware General Corporation Law
(the "DGCL") and the New York Business Corporation Law (the "NYBCL"), MergerSub
shall merge with and into the Company (the "MERGER"), the separate existence of
MergerSub shall cease and the Company shall continue, as the surviving
corporation. The Company, in its capacity as the corporation surviving the
Merger, is sometimes referred to herein as the "SURVIVING CORPORATION".

(b) EFFECT OF THE MERGER. At and after the Effective Time,
the Merger shall have the effects set forth in Sections 259 and 261 of the DGCL,
in Section 906 of the NYBCL and all other applicable laws.

<PAGE>

(c) CONSUMMATION OF THE MERGER. On the Closing Date (as
defined in Section 1.4 hereof), the parties hereto shall cause a Certificate of
Merger to be filed with the Secretary of State of New York, in such form as
required by, and executed in accordance with, Section 907 of the NYBCL. On the
Closing Date, the parties hereto shall also cause a Certificate of Merger to be
filed with the Secretary of State of Delaware, in such form as required by, and
executed in accordance with, Section 252 of the DGCL. The Merger shall be
effective as of the date of filing of the Articles of Merger (the "EFFECTIVE
TIME").

(d) ORGANIZATIONAL DOCUMENTS. From and after the Effective
Time, the Articles of Incorporation and By-Laws of MergerSub, as in effect
immediately prior to the Effective Time, shall be and become the Articles of
Incorporation and By-Laws, respectively, of the Surviving Corporation, and shall
thereafter continue in effect until amended as provided therein and in
accordance with the NYBCL.

(e) DIRECTORS AND OFFICERS. The directors and officers of
MergerSub holding office immediately prior to the Effective Time shall, from and
after the Effective Time, be the directors and officers of the Surviving
Corporation, until their respective successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Articles of Incorporation and
By-Laws.

(f) MERGER CONSIDERATION. The manner of converting or
canceling shares of Common Stock of the Company (the "COMPANY COMMON STOCK") and
any options, warrants, rights or other securities convertible into or
exercisable for shares of Common Stock of the Company ("CONVERTIBLE SECURITIES")
in the Merger shall be as follows:

(i) COMPANY COMMON STOCK. Subject to SECTIONS
1.1(f)(iii) and (vI), at the Effective Time, each share of Company
Common Stock that is issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger, and without the need for
any further action on the part of the holder thereof, be converted into
the right to receive the Per Share Consideration (as defined in SECTION
1.1(f)(vii) below) in cash from the Purchasers.

(ii) CONVERTIBLE SECURITIES. At the Effective
Time, each Convertible Security convertible into or exercisable for one
or more shares of Company Common Stock that is outstanding at the
Effective Time shall, with respect to each share of Company Common
Stock for which such Convertible Security is convertible or
exercisable, by virtue of the Merger and at the Effective Time, be
exchanged for the Per Share Consideration in cash, less the amount of
any applicable exercise price due upon the exercise or conversion of
such Convertible Security (the "EXERCISE PRICE") .

(iii) SHARES OF DISSENTING HOLDERS.

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(1) Notwithstanding anything to the contrary
contained in this Agreement, any shares of Company Common
Stock which are held by stockholders of the Company who have
filed with the Company, before the taking of the vote of the
stockholders of the Company to approve this Agreement, written
objections to such approval stating their intention to demand
payment for such shares, and who have not voted such shares of
Company Common Stock in favor of the adoption of this
Agreement ("COMPANY DISSENTING SHARES") shall not be entitled
to receive any Merger Consideration pursuant to this SECTION
1.1(f), but will thereafter constitute only the right to
receive payment of the fair value of such shares in accordance
with the applicable provisions of the NYBCL (the "APPRAISAL
RIGHTS PROVISIONS"); PROVIDED, HOWEVER, that all shares held
by stockholders of the Company who shall have failed to
perfect or who effectively shall have withdrawn or lost their
rights to appraisal of such shares under the Appraisal Rights
Provisions shall thereupon be deemed to have been canceled and
retired and to have been converted, as of the Effective Time,
into the right to receive the Per Share Consideration, without
interest, in the manner provided in this SECTION 1.1(f).

(2) Each dissenting stockholder who becomes
entitled under the NYBCL to payment for Company Dissenting
Shares shall receive payment therefor after the Effective Time
from the Surviving Corporation (but only after the amount
thereof shall have been agreed upon or finally determined
pursuant to the NYBCL) and such shares of Company Common Stock
shall be canceled.

(3) The Company shall give the Purchasers
prompt notice of any objections received by the Company for
the payment of fair value for shares of Company Common Stock.

(iv) ADJUSTMENTS FOR CAPITAL CHANGES.
Notwithstanding the provisions of SECTION 1.1(f), if at any time after
the date this Agreement is duly executed by all parties and prior to
the Effective Time, the Company, subject to the terms of this
Agreement, recapitalizes, either through a subdivision (or stock split)
of any of its outstanding shares of Company Common Stock into a greater
number of such shares, or a combination (or reverse stock split) of any
of its outstanding shares of Company Common Stock into a lesser number
of such shares, or reorganizes, reclassifies or otherwise changes its
outstanding shares of Company Common Stock into the same or a different
number of shares of other classes (other than through a subdivision or
combination of shares provided for in the preceding clause), or
declares a dividend on its outstanding shares payable in shares of
Company Common Stock or in shares or securities convertible into or
exercisable for shares of Company Common Stock, then the purchase price
per share as set forth in SECTION 1.1(f)(i) will be proportionally and
equitably adjusted.

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(v) CONVERSION OF MERGERSUB CAPITAL STOCK. Each
share of common stock of MergerSub issued and outstanding immediately
prior to the Effective Time shall be converted into and exchangeable
for one validly issued, fully paid and nonassessable share of the
common stock of the Surviving Corporation.

(vi) SHARES HELD BY THE COMPANY. At the Effective
Time, each share of Company Common Stock held by the Company as
treasury stock or held by any Subsidiary of the Company immediately
prior to the Effective Time shall, by virtue of the Merger and without
any action on the part of Parent, MergerSub, the Company or the holder
thereof, be canceled, retired and cease to exist, and no consideration
shall be delivered with respect thereto.

(vii) DEFINITIONS.

"MERGER CONSIDERATION" shall be equal to Eleven
Million Dollars ($11,000,000).

"PER SHARE CONSIDERATION" shall mean the quotient
produced by dividing the Merger Consideration by the sum of
the number of shares of Company Common Stock outstanding
immediately prior to the Effective Time, including as shares
of Company Common Stock deemed to be outstanding for purposes
of calculating the Per Share Consideration, without
duplication, shares issuable pursuant to any outstanding
Convertible Security; PROVIDED, HOWEVER, that with respect to
any outstanding Convertible Securities, the Per Share
Consideration shall be less the amount of any applicable
Exercise Price.

1.2 PROCEDURE FOR PAYMENT.

(a) In accordance with this Section 1, at the Effective Time,
Parent, subject to SECTION 1.3 and SECTION 1.7 hereof, shall pay by check to
each holder of shares of Company Common Stock (which shall include all of the
holders of Convertible Securities exercising such Convertible Securities at the
Effective Time) the Per Share Consideration to which such holder is entitled in
exchange for all of the certificates which immediately prior to the Effective
Time represented such holder's shares of Company Common Stock (the
"CERTIFICATES"). Subject to SECTION 1.1(f)(iii), until surrendered and exchanged
as contemplated by this SECTION 1.2, each Certificate (other than Certificates
representing shares of Company Common Stock held by the Company as treasury
stock or any Subsidiary of the Company) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender an
amount equal to (i) the Per Share Consideration, multiplied by (ii) the number
of shares of Company Common Stock represented by such Certificate, as
contemplated by this SECTION 1.2.

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(b) In the event that any Certificate shall have been lost,
stolen or destroyed, Parent shall pay, upon the making of an affidavit of that
fact by the holder thereof in form and substance reasonably acceptable to
Parent, the proper Per Share Consideration as may be required pursuant to this
SECTION 1.2; PROVIDED, HOWEVER, that Parent may, in its discretion, require the
delivery of a suitable bond and/or indemnity.

(c) The Per Share Consideration paid upon the surrender for
exchange of shares of Company Common Stock in accordance with the terms hereof
shall be deemed to have been paid in full satisfaction of all rights pertaining
to such shares of Company Common Stock. There shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this SECTION 1. The Merger Consideration represents full
consideration for all outstanding capital stock of the Company and any
Convertible Securities convertible into or exercisable for capital stock or
other equity interests in the Company.

(d) Neither Parent nor the Company shall be liable to any
holder of shares of Company Common Stock for any Per Share Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.

(e) Any Certificates that are not delivered to Parent at or
prior to the Effective Time, may be delivered to Parent at the following
location: Moldflow Corporation, 91 Hartwell Avenue, Lexington, Massachusetts
02421, Attn: Lori Henderson, Corporate Counsel. Any amounts remaining unclaimed
by holders of shares of Company Common Stock two years after the Effective Time
(or such earlier date immediately prior to such time as such amounts would
otherwise escheat to or become property of any governmental entity) shall, to
the extent permitted by applicable law, become the property of Parent free and
clear of any claim or interest of any Person previously entitled thereto.

1.3 INDEMNIFICATION ESCROW. On the Closing Date, the Purchasers shall
deposit an amount of cash equal to $2,200,000, which deposit shall be made from
such portion of the Merger Consideration payable to the Principal Stockholders
(the "CASH ESCROW AMOUNT") with Silicon Valley Bank or such other commercial
bank as may be selected by the Purchasers (the "Escrow Agent"), to be held,
invested and distributed by the Escrow Agent in accordance with the terms of an
escrow agreement in substantially the form attached hereto as EXHIBIT 1.3 (the
"ESCROW AGREEMENT").

1.4 EFFECTIVENESS; TIME AND PLACE OF CLOSING.

(a) This Agreement shall be effective as of the date that it
has been executed and delivered by all of the parties hereto; PROVIDED, HOWEVER,
that if within ten days after the Agreement is executed and delivered by any
party to the other parties hereto, the Agreement is

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<PAGE>

not counter executed and delivered by such other parties, this Agreement shall
become null and void and have no effect.

(b) The closing of the transaction provided for in this
Agreement (the "CLOSING") shall be held at the offices of Goodwin, Procter &
Hoar LLP, Exchange Place, Boston, Massachusetts 02109-2881 on the date or time
following the satisfaction of the conditions precedent set forth in SECTION 6.1
and SECTION 6.2 of this Agreement as may be fixed by mutual agreement of the
Purchasers and the Company (the "CLOSING DATE); PROVIDED, HOWEVER, that the
closing may not occur later than May 31, 2000 without the mutual consent of the
Purchasers and the Company. If any of the conditions set forth in SECTION 6.1 or
SECTION 6.2 have not been satisfied or waived by or as of the Closing Date, then
the party hereto for whose benefit such conditions have been imposed may, in its
sole and absolute discretion, postpone such Closing Date, by written notice to
the other parties hereto specifying the condition(s) not so satisfied, until
five business days after such condition or conditions shall have been satisfied
or waived, which date shall then become the Closing Date. Notwithstanding the
preceding sentence, in no event shall the Company and the Principal Stockholders
be permitted to extend the Closing Date for more than 15 days following such
event, without the mutual consent of the Purchasers, the Company and the
Principal Stockholders.

1.5 TRANSFER TAXES. All sales and transfer taxes, fees and duties under
applicable law incurred in connection with this Agreement or the transactions
contemplated hereby will be borne and paid by the Principal Stockholders, and
the Principal Stockholders shall promptly reimburse the Purchasers for the
payment of any such tax, fee or duty which it is required to make under
applicable law.

1.6 FURTHER ASSURANCES. The Principal Stockholders shall from time to
time, after the Effective Time, at the request of Parent or the Surviving
Corporation and without further consideration, execute and deliver, or cause to
be executed and delivered all such proper deeds, assignments and assurances in
law and do all acts necessary or proper to vest, perfect or confirm of record or
otherwise in the Surviving Corporation title to and possession of any property
or rights in the Company and otherwise to carry out the purposes of this
Agreement.

1.7 ITHACA REAL ESTATE. Immediately prior to the Effective Time, for
consideration of the Real Estate Purchase Price (as defined below), the Company
shall convey to ACT Partnership (the "REAL ESTATE PARTNERSHIP") all of its
right, title and interest in and to the Company's ownership interest in the Real
Estate Partnership. For purposes of this SECTION 1.7, the Real Estate Purchase
Price will be an amount equal to the product of 28% multiplied by the net asset
value of the Real Estate Partnership (the "REAL ESTATE PURCHASE PRICE");
PROVIDED, HOWEVER, that for purposes of calculating such net asset value, the
value of the Ithaca Property shall be $900,000. The Principal Stockholders
acknowledge that the Real Estate Partnership, which holds title to that certain
real property located in Ithaca, New York (the "ITHACA PROPERTY"), is owned
entirely by the Company and certain Stockholders. At the

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<PAGE>

Effective Time, Parent shall, in satisfaction of the Real Estate Purchase price,
reduce on a pro rata basis, in accordance with the percentage of such
Stockholders' ownership interest in the Real Estate Partnership, the Per Share
Consideration payable to each Stockholder that holds an ownership interest in
the Real Estate Partnership.

1.8 ALLOCATION OF PURCHASE PRICE. Parent has the right to allocate the
Merger Consideration based on the results of the Business Review (as herein
defined), as such allocation may mutually be agreed upon from time to time by
the Company and Parent.

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

2.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement
to the Purchasers to enter into this Agreement and consummate the transactions
contemplated hereby, the Company and the Principal Stockholders hereby jointly
and severally make to Parent and MergerSub the representations and warranties
contained in this SECTION 2. None of the Principal Stockholders shall have any
right of indemnity or contribution from the Company with respect to the breach
of any representation or warranty hereunder.

2.2 ORGANIZATION AND QUALIFICATIONS OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York with full corporate power and authority to own or lease
its properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. The copies of the Company's and each Subsidiary's (i)
Certificate of Organization as amended to date, certified by the Secretary of
State of the jurisdiction of organization, and (ii) by-laws, as amended to date,
certified by the Company's and each Subsidiary's Secretary, and delivered to the
Purchasers' counsel within ten (10) days of the date hereof, are complete and
correct, and no amendments thereto are pending. Neither the Company nor any
Subsidiary is in violation of any term of its Certificate of Organization or
By-laws. The Company and each Subsidiary is duly qualified to do business as a
foreign corporation in all jurisdictions where the ownership of its properties
or the conduct of its business requires such qualification, except where the
failure to be so qualified could not reasonably be expected to have a material
adverse effect on the business, assets, properties, results of operations, or
financial condition of the Company or any of its Subsidiaries. The Company has
made all required filings and done all things necessary in order to do business
under the name of "C-Mold."

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2.3 CAPITAL STOCK OF THE COMPANY; BENEFICIAL OWNERSHIP.

SCHEDULE 2.3(a) hereto lists, as of the date of this
Agreement, all shareholders of the Company, the number of shares of capital
stock of the Company held beneficially and of record by each, the authorized
capital stock of the Company and the aggregate number of shares outstanding. All
of such shares are duly and validly issued, outstanding, fully paid and
non-assessable. Except as set forth in SCHEDULE 2.3(a), there are no outstanding
options, warrants, rights, commitments, preemptive rights or agreements of any
kind for the issuance or sale of, or outstanding securities convertible into,
any additional shares of capital stock of any class of the Company. None of the
Company's capital stock has been issued in violation of any federal or state
law. Except as set forth in SCHEDULE 2.3(b) attached hereto, there are no voting
trusts, voting agreements, proxies or other agreements, instruments or
undertakings with respect to the voting of the capital stock of the Company to
which the Company or any of the Stockholders is a party. The persons referenced
in SCHEDULE 2.3(a) (the "STOCKHOLDERS") own beneficially and of record, free and
clear of any liens, encumbrances or restrictions, all of the outstanding shares
of capital stock of the Company, which consists solely of the shares of Company
Common Stock issued and potentially to be issued immediately prior to the
Effective Time, and when delivered by the Stockholders to the Purchasers
pursuant to this Agreement will be duly authorized, validly issued, fully paid,
non-assessable and free and clear of any and all liens, encumbrances, charges or
claims. The Principal Stockholders own of record, on a fully diluted basis, no
less than 66-2/3% of the issued and outstanding shares of Company Common Stock.

2.4 SUBSIDIARIES. The Company's subsidiaries and investments in any
other corporation or business organization are listed in SCHEDULE 2.4 hereto
(collectively, the "SUBSIDIARIES" or individually, a "SUBSIDIARY"). Except as
disclosed in SCHEDULE 2.4, all of the outstanding shares of capital stock of
each Subsidiary are owned beneficially and of record by the Company free of any
lien, restriction or encumbrance and said shares have been duly and validly
issued and are outstanding, fully paid and non-assessable. Except as disclosed
in SCHEDULE 2.4, there are no outstanding warrants, options or other rights to
purchase or acquire any of the shares of capital stock of any Subsidiary, or any
outstanding securities convertible into such shares or outstanding warrants,
options or other rights to acquire any such convertible securities.

2.5 AUTHORITY OF THE COMPANY. The Company and the Principal
Stockholders have full right, authority and power to enter into this Agreement
and each agreement, document and instrument to be executed and delivered by the
Company and the Principal Stockholders pursuant to this Agreement and, subject
to the approval of this Agreement by the Stockholders of the Company, to carry
out the transactions contemplated hereby and thereby. The execution, delivery
and performance by the Company and the Principal Stockholders of this Agreement
and each such other agreement, document and instrument have been duly authorized
by all necessary action of the Company and the Principal Stockholders and,
subject to the approval of this Agreement by the Stockholders of the Company, no
other action on the part of the Company or the Principal Stockholders is
required in connection therewith.

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This Agreement and each agreement, document and instrument executed and
delivered by the Company and the Principal Stockholders pursuant to this
Agreement constitutes, or when executed and delivered will constitute, valid and
binding obligations of the Company and the Principal Stockholders enforceable in
accordance with their terms. The execution, delivery and performance by the
Company and the Principal Stockholders of this Agreement and each such
agreement, document and instrument:

(i) does not and will not violate any provision
of the charter or by-laws of the Company;

(ii) does not and will not violate any laws of
the United States, or any state or other jurisdiction applicable to the
Company or the Principal Stockholders or require the Company or the
Principal Stockholders to obtain any approval, consent or waiver of, or
make any filing with, any person or entity (governmental or otherwise)
that has not been obtained or made; and

(iii) does not and will not result in a breach of,
constitute a default under, accelerate any obligation under, or give
rise to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award to which the Company or any
of the Principal Stockholders is a party or by which the property of
the Company or any of the Principal Stockholders is bound or affected,
or result in the creation or imposition of any mortgage, pledge, lien,
security interest or other charge or encumbrance on any of the
Company's, its Subsidiaries' or Principal Stockholders' assets or
capital stock of the Company or its Subsidiaries, except as
specifically identified on SCHEDULE 2.5.

2.6 REAL AND PERSONAL PROPERTY.

(a) REAL PROPERTY. All of the real property owned or leased by
the Company or any of its Subsidiaries is identified on SCHEDULE 2.6(a) hereto
(herein referred to as the "OWNED REAL PROPERTY" or the "LEASED REAL PROPERTY,"
as the case may be, or collectively as the "REAL PROPERTY.")

(i) TITLE. Each of the Company and its
Subsidiaries (including without limitation ACT Partnership) has good,
clear, record, marketable and sole title to (A) all Owned Real Property
and (B) enforceable leasehold interests in the Leased Real Property, in
each case, free and clear of all easements, covenants, restrictions,
leases, mortgages, liens, assessments, claims, rights, judgments,
encroachments or other matters affecting title (collectively,
"ENCUMBRANCES"), other than liens for Taxes (as defined in SECTION
2.8(a)) not yet due or delinquent or being contested in good faith by
appropriate means and statutory liens arising in the ordinary course of
business by

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<PAGE>

operation of law that are not yet due or developed ("PERMITTED
ENCUMBRANCES"), except as set forth on SCHEDULE 2.6(a).

To the knowledge of the Company and the Principal Stockholders, the
lessors of Leased Real Property have good, clear, record and marketable
title to the Leased Real Property, and the Company and its Subsidiaries
have good, clear, record and marketable title to enforceable leasehold
interests in the Leased Real Property, in each case free and clear of
all Encumbrances other than Permitted Encumbrances, subject only to the
right of reversion of the lessor, except as set forth in SCHEDULE
2.6(a).

(ii) STATUS OF LEASES. All leases of Leased Real
Property are identified on SCHEDULE 2.6(a), and true and complete
copies thereof will be delivered to the Purchasers within fifteen (15)
days of the date hereof. Each of said leases has been duly authorized
and executed by the parties and is in full force and effect. Neither
the Company nor any of its Subsidiaries is in default under any of said
leases, nor has any event occurred which, with notice or the passage of
time, or both, would give rise to such a default. To the Company's and
the Principal Stockholders' knowledge, the other party to each of said
leases is not in default under any of said leases and there is no event
which, with notice or the passage of time, or both, would give rise to
such a default.

(iii) CONSENTS. Except as set forth in SCHEDULE
2.6(a), no consent or approval is required with respect to the
transactions contemplated by this Agreement from the other parties to
any lease of Leased Real Property, from the holder of any Encumbrance
on any Owned Real Property, or from any regulatory authority, no filing
with any regulatory authority is required in connection therewith, and
to the extent that any such consents, approvals or filings are
required, the Company or the Principal Stockholders will obtain or
complete them before the Closing.

(iv) CONDITION OF REAL PROPERTY. Except as set
forth in SCHEDULE 2.6(a), there are no material defects in the physical
condition of any land, buildings or improvements constituting part of
the Real Property, including without limitation, structural elements,
mechanical systems, parking and loading areas, and all such buildings
and improvements are in good operating condition and repair, ordinary
wear and tear excepted, and have been well maintained. None of the Real
Property is located in an area designated by any governmental authority
as being within a flood plain or subject to special flood or other
hazards. Access to the Real Property is by a public way or public
street. All water, sewer, gas, electric, telephone, drainage and other
utilities required by law or necessary for the current or planned
operation of the Real Property have been connected under valid permits
and pursuant to valid easements where required, and are sufficient to
service the Real Property and are in good operating condition.

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(v) COMPLIANCE WITH THE LAW. Except as set forth
on SCHEDULE 2.5(a), neither the Company nor any Subsidiary has received
any notice from any governmental authority of any violation of any law,
ordinance, regulation, license, permit or authorization issued with
respect to any Real Property or improvements located on or constituting
part of the Real Property that has not been heretofore corrected and no
such violation existed or exists which could have an adverse affect on
the use, operation or value of any Real Property or improvements
located on or constituting part of the Real Property. No approval or
consent to the transactions contemplated by this Agreement is required
of any governmental authority with jurisdiction over any aspect of the
Real Property or its use or operations. Neither the Company nor any
Subsidiary has received any notice of any real estate tax deficiency or
assessment or is aware of any proposed deficiency, claim or assessment
with respect to any of the Real Property, or any pending or threatened
condemnation thereof.

(b) PERSONAL PROPERTY. A complete description of the machinery
and equipment of the Company and each of its Subsidiaries is contained in
SCHEDULE 2.6(b) hereto. Except as specifically disclosed in said Schedule or in
the Base Balance Sheet (as hereinafter defined), the Company and each of its
Subsidiaries has good and marketable title to all of its personal property. None
of such personal property or assets is subject to any mortgage, pledge, lien,
conditional sale agreement, security title, encumbrance or other charge except
as specifically disclosed in said Schedule or in the Base Balance Sheet. The
Base Balance Sheet reflects all personal property of the Company and each of its
Subsidiaries. Except as otherwise specified in SCHEDULE 2.6(b), all leasehold
improvements, furnishings, machinery and equipment of the Company and each of
its Subsidiaries are in good repair, ordinary wear and tear excepted, have been
well maintained, and substantially comply with all applicable laws, ordinances
and regulations, and such machinery and equipment is in good working order.

2.7 FINANCIAL STATEMENTS.

(a) The Company will deliver to the Purchasers the following
financial statements: Consolidated Balance Sheets of the Company and its
Subsidiaries for its fiscal years ending on September 30, 1997, September 30,
1998 and September 30, 1999, and for the quarter ending December 31, 1999 (the
Balance Sheet of the Company for the quarter ending December 31, 1999 is
hereinafter referred to as the "BASE BALANCE SHEET") and statements of income,
retained earnings and cash flows for the three years then ended, in each case
with appropriate footnotes and in the case of the September 30, 1997 and
December 31, 1999 statements, certified by V.W. Wang, the President and Chief
Executive Officer of the Company. Said financial statements have been prepared
in accordance with generally accepted accounting principles applied consistently
during the periods covered thereby, are complete and correct in all material
respects and present fairly in all material respects the financial condition of
the Company and each of its Subsidiaries at the dates of said statements and the
results of its operations for the periods covered thereby.

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(b) As of the date of the Base Balance Sheet, the date hereof
and as of the Closing neither the Company nor any Subsidiary had or will have
any liabilities of any nature, whether accrued, absolute, contingent or
otherwise, asserted or unasserted, known or unknown (including without
limitation, liabilities as guarantor or otherwise with respect to obligations of
others, liabilities for taxes due or then accrued or to become due, liabilities
in respect of legal, accounting, tax or other professional services rendered on
behalf of the Company or any of its Subsidiaries in connection with the
Litigations (as defined in SECTION 3.11 hereof) or otherwise, or contingent or
potential liabilities relating to activities of the Company or any Subsidiary or
the conduct of their business prior to the date of the Base Balance Sheet, the
date hereof or as of the Closing, as the case may be, regardless of whether
claims in respect thereof had been asserted as of such date), except liabilities
(i) stated or adequately reserved against on the Base Balance Sheet, or (ii)
since the date of the Base Balance Sheet, incurred in the ordinary course of
business of the Company or any Subsidiary consistent with the terms of this
Agreement.

(c) The Base Balance Sheet contains separate line items that
set forth the amount of any and all liabilities in respect of legal, accounting,
tax or other professional services rendered on behalf of the Company, which line
items shall specifically identify the amount of any such liabilities related to
the Litigations.

2.8 TAXES.

(a) The Company and each of its Subsidiaries has paid or
caused to be paid all federal, state, local, foreign, and other taxes, including
without limitation, income taxes, estimated taxes, alternative minimum taxes,
excise taxes, sales taxes, use taxes, value-added taxes, gross receipts taxes,
franchise taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, stamp taxes, transfer taxes, windfall profit taxes,
environmental taxes and property taxes, whether or not measured in whole or in
part by net income, and all deficiencies, or other additions to tax, interest,
fines and penalties owed by it (collectively, "TAXES"), required to be paid by
it through the date hereof whether disputed or not.

(b) The Company has filed in accordance with applicable law
all federal, state, local and foreign tax returns required to be filed by it
through the date hereof, and all such returns correctly and accurately set forth
the amount of any Taxes relating to the applicable period. A list of all
federal, state, local and foreign income tax returns filed with respect to the
Company and its Subsidiaries for taxable periods ended on or after December 31,
1993 is set forth in SCHEDULE 2.8 hereto, and said Schedule indicates those
returns that have been audited or currently are the subject of an audit. For
each taxable period of the Company and its Subsidiaries ended on or after
December 31, 1993, the Company will have, within 10 days of the date hereof,
delivered to Purchasers correct and complete copies of all federal, state, local
and foreign income tax returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company or any of its
Subsidiaries.

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(c) Neither the Internal Revenue Service nor any other
governmental authority is now asserting or, to the knowledge of the Company or
either Stockholder, threatening to assert against the Company or any Subsidiary
any deficiency or claim for additional Taxes. No claim has ever been made by an
authority in a jurisdiction where the Company or any Subsidiary does not file
reports and returns that the Company or such Subsidiary is or may be subject to
taxation by that jurisdiction. There are no security interests on any of the
assets of the Company or any Subsidiary that arose in connection with any
failure (or alleged failure) to pay any Taxes. Neither the Company nor any
Subsidiary has ever entered into a closing agreement pursuant to Section 7121 of
the Internal Revenue Code of 1986, as amended (the "CODE").

(d) Except as set forth in SCHEDULE 2.8, there has not been
any audit of any tax return filed by the Company, no such audit is in progress,
and neither the Company nor any Subsidiary has been notified by any tax
authority that any such audit is contemplated or pending. Except as set forth in
SCHEDULE 2.8, no extension of time with respect to any date on which a tax
return was or is to be filed by the Company or any Subsidiary is in force, and
no waiver or agreement by the Company or any Subsidiary is in force for the
extension of time for the assessment or payment of any Taxes.

(e) Neither the Company nor any Subsidiary has ever been or
has ever had any liability for unpaid Taxes because it once was a member of an
"affiliated group" (as defined in Section 1504(a) of the Code). Except as set
forth in SCHEDULE 2.8, neither the Company nor any Subsidiary has ever filed,
nor has ever been required to file, a consolidated, combined or unitary tax
return with any other entity. Except as set forth in SCHEDULE 2.8, neither the
Company nor any Subsidiary owns nor has ever owned a direct or indirect interest
in any trust, partnership, corporation or other entity. Except as set forth in
SCHEDULE 2.8, neither the Company nor any Subsidiary is a party to any tax
sharing agreement.

(f) For purposes of this Agreement, all references to Sections
of the Code shall include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign law.

2.9 COLLECTIBILITY OF ACCOUNTS RECEIVABLE. All of the accounts
receivable of the Company shown or reflected on the Base Balance Sheet or
existing at the date hereof (less the reserve for bad debts set forth on the
Base Balance Sheet) are or will be at the Closing valid and enforceable claims,
fully collectible and subject to no set off or counterclaim. Neither the Company
nor any Subsidiary has any accounts or loans receivable from any person, firm or
corporation which is affiliated with the Company or any Subsidiary or from any
director, officer or employee of the Company or any Subsidiary, except as
disclosed on SCHEDULE 2.9 hereto, and all accounts and loans receivable from any
such person, firm or corporation shall be paid in cash prior to the Closing.

2.10 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 2.10
hereto, since the date of the Base Balance Sheet there has not been:

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(a) Any change in the financial condition, properties, assets,
liabilities, prospects, or business or operations of the Company or any of its
Subsidiaries, which change by itself or in conjunction with all other such
changes, whether or not arising in the ordinary course of business, has been
materially adverse with respect to the Company or any of its Subsidiaries;

(b) Any contingent liability incurred by the Company or any of
its Subsidiaries as guarantor or otherwise with respect to the obligations of
others or any cancellation of any material debt or claim owing to, or waiver of
any material right of, the Company or any of its Subsidiaries;

(c) Any mortgage, encumbrance or lien placed on any of the
properties of the Company or any of its Subsidiaries which remains in existence
on the date hereof or will remain on the Closing Date;

(d) Any obligation or liability of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, known or
unknown, incurred by the Company or any of its Subsidiaries other than
obligations and liabilities incurred in the ordinary course of business
consistent with the terms of this Agreement (it being understood that product or
service liability claims shall not be deemed to be incurred in the ordinary
course of business);

(e) Any purchase, sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Company or any of its Subsidiaries other than in the
ordinary course of business;

(f) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
of the Company or any of its Subsidiaries;

(g) Except with respect to any agreement of the Company made
prior to the date hereof for the purchase or redemption of any option for shares
of Common Stock of the Company issued by the Company prior to the date hereof,
any declaration, setting aside or payment of any dividend by the Company or any
of its Subsidiaries, or the making of any other distribution in respect of the
capital stock of the Company, or any direct or indirect redemption, purchase or
other acquisition by the Company or any of its Subsidiaries of its own capital
stock;

(h) Any labor trouble or claim of unfair labor practices
involving the Company; any change in the compensation payable or to become
payable by the Company or any of its Subsidiaries to any of its officers,
employees, agents or independent contractors other than normal merit increases
in accordance with its usual practices; or any bonus payment or arrangement made
to or with any of such officers, employees, agents or independent contractors;

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(i) Any change with respect to the officers or management of
the Company or any of its Subsidiaries;

(j) Any payment or discharge of a material lien or liability
of the Company or any of its Subsidiaries which was not shown on the Base
Balance Sheet or incurred in the ordinary course of business thereafter;

(k) Any obligation or liability incurred by the Company or any
of its Subsidiaries to any of its officers, directors, stockholders or
employees, or any loans or advances made by the Company or any of its
Subsidiaries to any of its officers, directors, stockholders or employees,
except normal compensation and expense allowances payable to officers or
employees;

(l) Any change in accounting methods or practices, credit
practices or collection policies used by the Company or any of its Subsidiaries;

(m) Any other transaction entered into by the Company or any
of its Subsidiaries other than transactions in the ordinary course of business;
or

(n) Any agreement or understanding whether in writing or
otherwise, for the Company to take any of the actions specified in paragraphs
(a) through (m) above.

2.11 ORDINARY COURSE. Since the date of the Base Balance Sheet, the
Company and each of its Subsidiaries have conducted its business only in the
ordinary course and consistently with its prior practices.

2.12 BANKING RELATIONS. All of the arrangements which the Company or
any of its Subsidiaries has with any banking institution are completely and
accurately described in SCHEDULE 2.12 attached hereto, indicating with respect
to each of such arrangements the type of arrangement maintained (such as
checking account, borrowing arrangements, safe deposit box, etc.) and the person
or persons authorized in respect thereof.

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2.13 INTELLECTUAL PROPERTY.

(a) Except as described in SCHEDULE 2.13, the Company and each
of its Subsidiaries has exclusive ownership of, or exclusive license to use, all
patent, copyright, trade secret, trademark, or other proprietary rights
(including without limitation, rights in respect of the name "C-Mold")
(collectively, "INTELLECTUAL PROPERTY") used or to be used in the business of
the Company and each Subsidiary as presently conducted or contemplated. All of
the rights of the Company and its Subsidiaries in such Intellectual Property are
freely transferable. There are no claims or demands of any other person
pertaining to any of such Intellectual Property and no proceedings have been
instituted, or are pending or threatened, which challenge the rights of the
Company or any Subsidiary in respect thereof. The Company and each of its
Subsidiaries has the right to use, free and clear of claims or rights of other
persons, all customer lists, designs, manufacturing or other processes, computer
software, systems, data compilations, research results and other information
required for or incident to its products or its business as presently conducted
or contemplated. Neither the Company nor any of its Subsidiaries has knowledge
of any infringement by any party of any of its Intellectual Property rights.

(b) All patents, patent applications, trademarks, trademark
applications, service marks, trade names, franchises, permits, Internet domain
names, software and registrations and registered copyrights which are owned by
or licensed to the Company or any of its Subsidiaries or used or to be used by
the Company or any of its Subsidiaries in their businesses as presently
conducted or contemplated, and all other items of Intellectual Property which
are used in the business or operations of the Company or any of its
Subsidiaries, are listed in SCHEDULE 2.13. All of such patents, patent
applications, trademark registrations, trademark applications and registered
copyrights have been duly registered in, filed in or issued by the United States
Patent and Trademark Office, the United States Register of Copyrights, or the
corresponding offices of other jurisdictions as identified on said Schedule, and
have been properly maintained and renewed in accordance with all applicable
provisions of law and administrative regulations of the United States and each
such jurisdiction. The trademark "C-Mold" has been registered by the Company
with the United States Patent and Trademark Office and such registration is in
full force and effect.

(c) All licenses or other agreements under which the Company
is granted rights in Intellectual Property are listed in SCHEDULE 2.13. All said
licenses or other agreements are in full force and effect, there is no material
default by any party thereto, and, except as set forth on SCHEDULE 2.13, all of
the rights of the Company or any Subsidiary thereunder are freely assignable. To
the knowledge of the Company and the Principal Stockholders, the licensors under
said licenses and other agreements have and had all requisite power and
authority to grant the rights purported to be conferred thereby. True and
complete copies of all such licenses or other agreements, and any amendments
thereto, will be provided to the Purchasers within 15 days of the date hereof.

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(d) All licenses or other agreements under which the Company
or any of its Subsidiaries has granted rights to others in Intellectual Property
owned or licensed by the Company or such Subsidiary are listed in SCHEDULE 2.13.
All of said licenses or other agreements are in full force and effect, there is
no material default by any party thereto, and, except as set forth on SCHEDULE
2.13, all of the rights of Company or any Subsidiary thereunder are freely
assignable. True and complete copies of all such licenses or other agreements,
and any amendments thereto, will be provided to the Purchasers within 15 days of
the date hereof.

(e) Except as set forth on SCHEDULE 2.13, the present and, to
the knowledge of the Company and the Principal Stockholders after diligent
investigation, the contemplated business, activities and products of the Company
and its Subsidiaries do not infringe any Intellectual Property of any other
person. Except as set forth on SCHEDULE 2.13, no proceeding charging the Company
or any of its Subsidiaries with infringement of any adversely held Intellectual
Property has been filed or is threatened to be filed. To the Company's
knowledge, there exists no unexpired patent or patent application which includes
claims that would be infringed by or otherwise adversely affect the products,
activities or business of the Company. Neither the Company nor any of its
Subsidiaries is making unauthorized use of any confidential information or trade
secrets of any person, including without limitation, any former employer of any
past or present employee of Company or any of its Subsidiaries. Except as set
forth in SCHEDULE 2.13, neither the Company nor any Subsidiary nor, to the
knowledge of the Company and the Principal Stockholders, any of their employees
have any agreements or arrangements with any persons other than the Company or
its Subsidiaries related to confidential information or trade secrets of such
persons or restricting any such employee's ability to engage in business
activities of any nature. The activities of the Company's or any of its
Subsidiaries' employees on behalf of the Company or any Subsidiary do not
violate any such agreements or arrangements known to the Company.

2.14 CONTRACTS. Except for contracts, commitments, plans, agreements
and licenses described in SCHEDULE 2.14 (true and complete copies of which have
been delivered to the Purchasers), neither the Company nor any of its
Subsidiaries is a party to or subject to:

(a) any plan or contract providing for bonuses, pensions,
options, stock purchases, deferred compensation, retirement payments, profit
sharing, collective bargaining or the like, or any contract or agreement with
any labor union;

(b) any employment contract or contract for services which is
not terminable within 30 days by the Company or a Subsidiary without liability
for any penalty or severance payment;

(c) any contract or agreement for the purchase of any
commodity, material or equipment, except purchase orders in the ordinary course
for less than $10,000 each, such orders not exceeding $50,000 in the aggregate;

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(d) any other contracts or agreements creating any obligations
of the Company or any of its Subsidiaries of $50,000 or more with respect to any
such contract or agreement not specifically disclosed elsewhere under this
Agreement;

(e) any contract or agreement providing for the purchase of
all or substantially all of its requirements of a particular product from a
supplier;

(f) any contract or agreement which by its terms does not
terminate or is not terminable without penalty by the Company or a Subsidiary or
their successors within one year after the date hereof;

(g) any contract or agreement for the sale or license of its
products not made in the ordinary course of business;

(h) any contract with any sales agent or distributor of
products of the Company or any of its Subsidiaries;

(i) any contract containing covenants limiting the freedom of
the Company or any of its Subsidiaries to compete in any line of business or
with any person or entity;

(j) any contract or agreement for the purchase of any fixed
asset for a price in excess of $10,000 whether or not such purchase is in the
ordinary course of business;

(k) any license agreement (as licensor or licensee), other
than the standard license agreement used for the Company's software products, a
form copy of which will be provided to the Purchasers within 10 days after the
date hereof;

(l) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money; or

(m) any contract or agreement with any officer, director,
employee or stockholder of the Company or any of its Subsidiaries or with any
persons or organizations controlled by or affiliated with any of them.

Neither the Company nor any of its Subsidiaries is in default under any
such contracts, commitments, plans, agreements or licenses described in said
Schedule or has any knowledge of conditions or facts which with notice or
passage of time, or both, would constitute a default.

2.15 LITIGATION. SCHEDULE 2.15 hereto lists all currently pending
litigation and governmental or administrative proceedings or investigations to
which the Company or any of its Subsidiaries is a party.

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2.16 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 2.16 hereto,
the Company and each of its Subsidiaries is in compliance in all material
respects with all applicable statutes, ordinances, orders, judgements, decrees,
rules and regulations promulgated by any federal, state, municipal entity,
agency, court or other governmental authority which apply to the Company or any
Subsidiary or to the conduct of its business, and neither the Company nor any of
its Subsidiaries has received notice of a violation or alleged violation of any
such statute, ordinance, order, rule or regulation.

2.17 INSURANCE. The physical properties and assets of the Company and
its Subsidiaries are insured to the extent disclosed in SCHEDULE 2.17 attached
hereto and all such insurance policies and arrangements are disclosed in said
Schedule. Said insurance policies and arrangements are in full force and effect,
all premiums with respect thereto are currently paid, and the Company and each
of its Subsidiaries is in compliance in all material respects with the terms
thereof. Said insurance is adequate and customary for the business engaged in by
the Company and each Subsidiary and is sufficient for compliance by the Company
and each Subsidiary with all requirements of law and all agreements and leases
to which the Company or any Subsidiary is a party.

2.18 WARRANTY OR OTHER CLAIMS. There are no existing or, to the
knowledge of the Company and the Principal Stockholders, threatened product
liability, warranty or other similar claims, or any facts upon which a material
claim of such nature could be based, against the Company or any of its
Subsidiaries for products or services which are defective or fail to meet any
product or service warranties except as disclosed in SCHEDULE 2.18 hereto.

2.19 PERMITS; BURDENSOME AGREEMENTS. SCHEDULE 2.19 hereto lists all
permits, registrations, licenses, franchises, certifications and other approvals
(collectively, the "APPROVALS") required from federal, state or local
authorities in order for the Company and each of its Subsidiaries to conduct its
business. The Company and each of its Subsidiaries has obtained all such
Approvals, which are valid and in full force and effect, and is operating in
compliance therewith. Such Approvals include, but are not limited to, those
required under federal, state or local statutes, ordinances, orders,
requirements, rules, regulations, or laws pertaining to environmental
protection, public health and safety, worker health and safety, buildings,
highways or zoning. Except as disclosed in SCHEDULE 2.19 or in any other
Schedule hereto, neither the Company nor any of its Subsidiaries is subject to
or bound by any agreement, judgment, decree or order which may materially and
adversely affect its business or prospects, its condition, financial or
otherwise, or any of its assets or properties.

2.20 CORPORATE RECORDS; COPIES OF DOCUMENTS. The corporate record books
of the Company and its Subsidiaries accurately record all corporate action taken
by their respective stockholders and boards of directors and committees. The
copies of the corporate records of the Company and each of its Subsidiaries, as
made available to the Purchasers for review, are true and complete copies of the
originals of such documents.

2.21 TRANSACTIONS WITH INTERESTED PERSONS.

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(a) Except as set forth in SCHEDULE 2.21(a) hereto, none of
the Company, any of its Subsidiaries, any Stockholder, officer, supervisory
employee or director of the Company or, to the knowledge of Company and the
Principal Stockholders, any of their respective spouses or family members, owns
directly or indirectly on an individual or joint basis any material interest in,
or serves as an officer or director or in another similar capacity of, any
competitor or supplier of Company, or any organization which has a material
contract or arrangement with the Company or any of its Subsidiaries.

(b) Except as set forth in SCHEDULE 2.21(b) hereto, each
Stockholder who is employed by the Company is not a party to any
non-competition, trade secret or confidentiality agreement with any third party
other than the Company or a Subsidiary. There are no agreements or arrangements
not contained herein or disclosed in a Schedule hereto, to which any Stockholder
is a party relating to the business of the Company or any Subsidiary or to such
Stockholder's rights and obligations as a stockholder, director or officer of
the Company or any Subsidiary.

2.22 EMPLOYEE BENEFIT PROGRAMS.

(a) SCHEDULE 2.22 hereto lists every Employee Program (as
defined below) that has been maintained (as defined below) by the Company or any
of its Subsidiaries or Affiliates (as defined below) at any time during the
six-year period ending on the Closing date.

(b) Each Employee Program which has ever been maintained by
the Company or any of its Subsidiaries or Affiliates and which has at any time
been intended to qualify under Section 401(a) or 501(c)(9) of the Code has
received a favorable determination or approval letter from the Internal Revenue
Service ("IRS") regarding its qualification under such section and has, in fact,
been qualified under the applicable section of the Code from the effective date
of such Employee Program through and including the Closing (or, if earlier, the
date that all of such Employee Program's assets were distributed). No event or
omission has occurred which would cause any Employee Program to lose its
qualification or otherwise fail to satisfy the relevant requirements to provide
tax-favored benefits under the applicable Code Section (including without
limitation Code Sections 105, 125, 401(a) and 501(c)(9)). Each asset held under
any such Employee Program may be liquidated or terminated without the imposition
of any redemption fee, surrender charge or comparable liability. No partial
termination (within the meaning of Section 411(d)(3) of the Code) has occurred
with respect to any Employee Program.

(c) The Company does not know and has no reason to know, of
any failure of any party to comply with any laws applicable to the Employee
Programs that have been maintained by the Company or any of its Subsidiaries or
Affiliates. With respect to any Employee Program ever maintained by the Company
or any of its Subsidiaries or Affiliates, there has occurred no "prohibited
transaction", as defined in Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 4975 of the Code,

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or breach of any duty under ERISA or other applicable law (including, without
limitation, any health care continuation requirements or any other tax law
requirements, or conditions to favorable tax treatment, applicable to such
plan), which could result, directly or indirectly, in any taxes, penalties or
other liability to the Company, any Subsidiary, or the Purchasers. No
litigation, arbitration, or governmental administrative proceeding (or
investigation) or other proceeding (other than those relating to routine claims
for benefits) is pending or threatened with respect to any such Employee
Program. All payments and/or contributions required to have been made (under the
provisions of any agreements or other governing documents or applicable law)
with respect to all Employee Programs ever maintained by the Company or any
Affiliate, for all periods prior to the Closing Date, either have been made or
have been accrued (and all such unpaid but accrued amounts are described on
SCHEDULE 2.22).

(d) None of the Company, any Subsidiary or any Affiliate (as
defined below) (i) has ever maintained any Employee Program which has been
subject to title IV of ERISA (including, but not limited to, any Multiemployer
Plan (as defined below)) or (ii) has ever provided health care or any other
non-pension benefits to any employees after their employment is terminated
(other than as required by part 6 of subtitle B of title I of ERISA) or has ever
promised to provide such post-termination benefits.

(e) With respect to each Employee Program maintained by the
Company or any Subsidiary within the three years preceding the Closing, complete
and correct copies of the following documents (if applicable to such Employee
Program) will be delivered to the Purchasers within 10 days of the date hereof:
(i) all documents embodying or governing such Employee Program, and any funding
medium for the Employee Program (including, without limitation, trust
agreements) as they may have been amended; (ii) the most recent IRS
determination or approval letter with respect to such Employee Program under
Code Sections 401 or 501(c)(9), and any applications for determination or
approval subsequently filed with the IRS; (iii) the six most recently filed IRS
Forms 5500, with all applicable schedules and accountants' opinions attached
thereto; (iv) the summary plan description for such Employee Program (or other
descriptions of such Employee Program provided to employees) and all
modifications thereto; (v) any insurance policy (including any fiduciary
liability insurance policy) related to such Employee Program; (vi) any documents
evidencing any loan to an Employee Program that is a leveraged employee stock
ownership plan; and (vii) all other materials reasonably necessary for Parent
and the Company or any Affiliate to perform any of its responsibilities with
respect to any Employee Program subsequent to the Closing (including, without
limitation, health care continuation requirements).

(f) Each Employee Program required to be listed on SCHEDULE
2.22 may be amended, terminated, or otherwise modified by the company to the
greatest extent permitted by applicable law, including the elimination of any
and all future benefit accruals under any Employee Program and no employee
communications or provision of any Employee Program document has failed to
effectively reserve the right of the Company or the Subsidiary or Affiliate to
so amend, terminate or otherwise modify such Employee Program.

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<PAGE>

(g) Each Employee Program ever maintained by the Company or
any of its Subsidiaries or Affiliates (including each non-qualified deferred
compensation arrangement) has been maintained in compliance with all applicable
requirements of federal and state securities laws including (without limitation,
if applicable) the requirements that the offering of interests in such Employee
Program be registered under the Securities Act of 1933 and/or state "Blue Sky"
laws.

(h) Each Employee Program ever maintained by the Company or
any of its Subsidiaries or Affiliates has complied with the applicable
notification and other applicable requirements of the Consolidated Omnibus
Budget Reconciliation Act of 1985, Health Insurance Portability and
Accountability Act of 1996, the Newborns' and Mothers' Health Protection Act of
1996, the Mental Health Parity Act of 1996, and the Women's Health and Cancer
Rights Act of 1998.

(i) For purposes of this Section:

(i) "EMPLOYEE PROGRAM" means (A) all employee
benefit plans within the meaning of ERISA Section 3(3), including, but
not limited to, multiple employer welfare arrangements (within the
meaning of ERISA Section 3(40)), plans to which more than one
unaffiliated employer contributes and employee benefit plans (such as
foreign or excess benefit plans) which are not subject to ERISA; (B)
all stock option plans, bonus or incentive award plans, severance pay
policies or agreements, deferred compensation agreements, supplemental
income arrangements, vacation plans, and all other employee benefit
plans, agreements, and arrangements not described in (A) above,
including without limitation, any arrangement intended to comply with
Code Section 120, 125, 127, 129 or 137; and (C) all plans or
arrangements providing compensation to employee and non-employee
directors. In the case of an Employee Program funded through a trust
described in Code Section 401(a) or an organization described in Code
Section 501(c)(9), or any other funding vehicle, each reference to such
Employee Program shall include a reference to such trust, organization
or other vehicle.

(ii) An entity "MAINTAINS" an Employee Program if
such entity sponsors, contributes to, or provides (or has promised to
provide) benefits under such Employee Program, or has any obligation
(by agreement or under applicable law) to contribute to or provide
benefits under such Employee Program, or if such Employee Program
provides benefits to or otherwise covers employees of such entity, or
their spouses, dependents, or beneficiaries.

(iii) An entity is an "AFFILIATE" of the Company
or a Subsidiary if it would have ever been considered a single employer
with the Company or any of its Subsidiaries under ERISA Section 4001(b)
or part of the same "controlled group" as the Company or any of its
Subsidiaries for purposes of ERISA Section 302(d)(8)(C).

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(iv) "MULTIEMPLOYER PLAN" means a (pension or
non-pension) employee benefit plan to which more than one employer
contributes or which is maintained pursuant to one or more collective
bargaining agreements.

2.23 ENVIRONMENTAL MATTERS.

(a) Except as set forth in SCHEDULE 2.23 hereto, (i) neither
the Company nor any of its Subsidiaries has ever generated, transported, used,
stored, treated, disposed of, or managed any Hazardous Waste (as defined below);
(ii) no Hazardous Material (as defined below) has ever been or is threatened to
be spilled, released, or disposed of at any site presently or formerly owned,
operated, leased, or used by the Company or any of its Subsidiaries, or has ever
been located in the soil or groundwater at any such site; (iii) no Hazardous
Material has, to the knowledge of the Company or any of the Principal
Stockholders, ever been transported from any site presently or formerly owned,
operated, leased, or used by the Company or any of its Subsidiaries for
treatment, storage, or disposal at any other place; (iv) neither the Company nor
any of its Subsidiaries presently owns, operates, leases, or uses, nor has it
previously owned, operated, leased, or used any site on which underground
storage tanks are or were located; and (v) no lien has ever been imposed by any
governmental agency on any property, facility, machinery, or equipment owned,
operated, leased, or used by the Company or any of its Subsidiaries in
connection with the presence of any Hazardous Material.

(b) Except as set forth in SCHEDULE 2.23, (i) neither the
Company nor any of its Subsidiaries has any liability under, nor has it ever
violated, any Environmental Law (as defined below); (ii) the Company and each of
its Subsidiaries, any property owned, operated, leased, or used by any of them,
and any facilities and operations thereon, are presently in compliance with all
applicable Environmental Laws; (iii) neither the Company nor any of its
Subsidiaries has ever entered into or been subject to any judgment, consent
decree, compliance order, or administrative order with respect to any
environmental or health and safety matter or received any request for
information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law; and (iv) neither the
Company nor any of its Subsidiaries has any reason to believe that any of the
items enumerated in clause (iii) of this subsection will be forthcoming.

(c) Except as set forth in SCHEDULE 2.23, no site owned,
operated, leased (provided that with respect to sites leased by the Company or
its Subsidiaries outside the United States of America this representation shall
be made as to the Company's and the Principal Stockholders' knowledge), or used
by the Company or any of its Subsidiaries contains any asbestos or
asbestos-containing material, any polychlorinated biphenyls (PCBs) or equipment
containing PCBs, or any urea formaldehyde foam insulation.

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(d) For purposes of this SECTION 2.23, (i) "HAZARDOUS
MATERIAL" shall mean and include any hazardous waste, hazardous material,
hazardous substance, petroleum product, oil, toxic substance, pollutant,
contaminant, or other substance which may pose a threat to the environment or to
human health or safety, as defined or regulated under any Environmental Law;
(ii) "HAZARDOUS WASTE" shall mean and include any hazardous waste as defined or
regulated under any Environmental Law; (iii) "ENVIRONMENTAL LAW" shall mean any
environmental or health and safety-related law, regulation, rule, ordinance, or
by-law at the foreign, federal, state, or local level, whether existing as of
the date hereof, previously enforced, or subsequently enacted; and (iv)
"COMPANY" shall mean and include the Company, each of its Subsidiaries and all
other entities for whose conduct the Company or any of its Subsidiaries is or
may be held responsible under any Environmental Law.

2.24 LIST OF DIRECTORS AND OFFICERS. SCHEDULE 2.24 hereto contains a
true and complete list of all current directors and officers of the Company and
each of its Subsidiaries. In addition, SCHEDULE 2.24 contains a list of all
managers, employees and consultants of the Company. In each case such Schedule
includes the current job title and aggregate annual compensation of each such
individual.

2.25 DISCLOSURE. The representations, warranties and statements
contained in this Agreement and in the certificates, exhibits and schedules
delivered by the Company and the Principal Stockholders to the Purchasers
pursuant to this Agreement do not contain any untrue statement of a material
fact, and, when taken together, do not omit to state a material fact required to
be stated therein or necessary in order to make such representations, warranties
or statements not misleading in light of the circumstances under which they were
made. There are no facts which presently or may in the future have a material
adverse affect on the business, properties, prospects, operations or condition
of the Company or any of its Subsidiaries which have not been specifically
disclosed herein or in a Schedule furnished herewith, other than general
economic conditions affecting the industries in which the Company or any of its
Subsidiaries operates.

2.26 EMPLOYEES; LABOR MATTERS. The Company and its Subsidiaries
generally enjoys good employer-employee relationships. Neither the Company nor
any of its Subsidiaries is delinquent in payments to any of its employees for
any wages, salaries, commissions, bonuses or other direct compensation for any
services performed for it to the date hereof or amounts required to be
reimbursed to such employees. Except as set forth in SECTION 6.2(d) hereof, upon
termination of the employment of any of said employees, neither the Company, any
of its Subsidiaries nor the Purchasers will by reason of the transactions
contemplated under this Agreement or anything done prior to the Closing be
liable to any of said employees for so-called "severance pay" or any other
payments, except as set forth in SCHEDULE 2.26. Neither the Company nor any of
its Subsidiaries has any policy, practice, plan or program of paying severance
pay or any form of severance compensation in connection with the termination of
employment, except as set forth in said Schedule. The Company and each of its
Subsidiaries is in compliance with all applicable laws and regulations
respecting labor, employment, fair employment practices, work place safety and
health, terms and conditions of employment, and

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wages and hours. Neither the Company nor any of its Subsidiaries has received
any information indicating that any of its employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency. The Company and each of its Subsidiaries is, and at all times
since November 6, 1986 has been, in compliance with the requirements of the
Immigration Reform Control Act of 1986.

2.27 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. SCHEDULE 2.27(a) sets forth
any customer, sales representative or distributor (whether pursuant to a
commission, royalty or other arrangement) which accounts for more than 5% of the
sales of the Company and its Subsidiaries on a consolidated basis for the twelve
months ended December 31, 1999 (collectively, the "CUSTOMERS AND DISTRIBUTORS").
SCHEDULE 2.27(b) lists all of the suppliers of the Company and each of its
Subsidiaries to whom during the twelve months ended December 31, 1999 the
Company or its Subsidiary made payments aggregating $10,000 or more showing,
with respect to each, the name, address and dollar volume involved (the
"SUPPLIERS"). The relationships of the Company and each of its Subsidiaries with
its Customers, Distributors and Suppliers are good commercial working
relationships.

2.28 YEAR 2000 COMPLIANCE. All computer applications, programs and
products including those of its suppliers and vendors that are material to the
Company and its Subsidiaries are able to perform properly date-sensitive
functions for all dates before and after January 1, 2000.

SECTION 3. COVENANTS OF THE COMPANY AND THE PRINCIPAL STOCKHOLDERS.

3.1 MAKING OF COVENANTS AND AGREEMENTS. The Company and the Principal
Stockholders jointly and severally hereby make the covenants and agreements set
forth in this SECTION 3 and the Principal Stockholders agree to cause the
Company and its Subsidiaries to comply with such agreements and covenants. No
Principal Stockholder shall have any right of indemnity or contribution from the
Company or any Subsidiary with respect to the breach of any covenant or
agreement hereunder.

3.2 CONDUCT OF BUSINESS. Between the date of this Agreement and
the Closing Date, the Company and each of its Subsidiaries will:

(a) Conduct its business only in the ordinary course and
refrain from changing or introducing any method of management or operations
except in the ordinary course of business and consistent with prior practices;

(b) Refrain from making any purchase, sale or disposition of
any asset or property other than in the ordinary course of business, from
purchasing any capital asset costing more than $10,000 and from mortgaging,
pledging, subjecting to a lien or otherwise encumbering any of its properties or
assets other than in the ordinary course of business;

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<PAGE>

(c) Refrain from incurring any contingent liability as a
guarantor or otherwise with respect to the obligations of others, and from
incurring any other contingent or fixed obligations (including obligations for
borrowed money) or liabilities except in the ordinary course of business;

(d) Refrain from making any change or incurring any obligation
to make a change in its charter, bylaws or authorized or issued capital stock;

(e) Except with respect to any agreement of the Company made
prior to the date hereof for the purchase or redemption of any option for shares
of Common Stock of the Company issued by the Company prior to the date hereof,
refrain from declaring, setting aside or paying any dividend, making any other
distribution in respect of its capital stock or making any direct or indirect
redemption, purchase or other acquisition of its stock;

(f) Refrain from entering into any employment contracts, or
making any change in the compensation payable or to become payable to any of its
officers, employees, agents or independent contractors, other than with respect
to Richard Ran on terms negotiated in the ordinary course of business;

(g) Refrain from prepaying any loans (if any) from its
stockholders, officers or directors or making any change in its borrowing
arrangements;

(h) Except with respect to any agreement of the Company made
prior to the date hereof for the purchase or redemption of any option for shares
of Common Stock of the Company issued by the Company prior to the date hereof,
refrain from issuing any equity securities;

(i) Refrain from entering into any transaction of the type
described in SECTION 2.21 hereof;

(j) Use its best efforts to prevent any change with respect to
its management and supervisory personnel and banking arrangements;

(k) Use its best efforts to keep intact its business
organization, to keep available its present officers and employees and to
preserve the goodwill of all suppliers, customers, independent contractors and
others having business relations with it;

(l) Have in effect and maintain at all times all insurance of
the kind, in the amount and with the insurers set forth in the SCHEDULE 2.17
hereto or equivalent insurance with any substitute insurers approved in writing
by Parent; and

(m) Furnish the Purchasers with unaudited monthly balance
sheets and statements of income and retained earnings and cash flows of the
Company and each of its

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<PAGE>

Subsidiaries on a consolidated basis within 15 days after each month end for
each month ending more than 15 days before the Closing.

(n) Refrain from acquiring any rights, assets, intangible
property or liabilities currently owned or controlled by any Stockholder from
such Stockholder, including without limitation the Principal Stockholders, or,
other than in the ordinary cause of business, from any other third-party,
without the prior written consent of Parent.

(o) Refrain from, other than in the ordinary cause of
business, transferring from the Company or any of its Subsidiaries any rights,
assets, intangible property or liabilities to any Stockholder (including without
limitation the Principal Stockholders) or any other third party, without the
prior written consent of Parent.

3.3 NOTICE OF DEFAULT. Promptly upon the occurrence of, or promptly
upon the Company, any Subsidiary or a Principal Stockholder becoming aware of
the impending or threatened occurrence of, any event which would cause or
constitute a breach or default, or would have caused or constituted a breach or
default had such event occurred or been known to the Company, any Subsidiary or
such Stockholder prior to the date hereof, of any of the representations,
warranties or covenants of the Company or the Principal Stockholders contained
in or referred to in this Agreement or in any Schedule or Exhibit referred to in
this Agreement, the Company or the Principal Stockholders shall give detailed
written notice thereof to the Purchaser and the Company and the Principal
Stockholders shall use their best efforts to prevent or promptly remedy the
same.

3.4 CONSUMMATION OF AGREEMENT. The Company and each of the Principal
Stockholders shall use their best efforts to perform and fulfill all conditions
and obligations on their parts to be performed and fulfilled under this
Agreement, and shall cooperate with all reasonable requests of the Purchasers
and their counsel in connection therewith, to the end that the transactions
contemplated by this Agreement shall be fully carried out. To this end, the
Company will obtain prior to the Closing all necessary authorizations or
approvals of its Stockholders and Board of Directors.

3.5 NO SOLICITATION OF OTHER OFFERS. None of the Company, its
Subsidiaries, the Principal Stockholders, nor any of their representatives will,
directly or indirectly, solicit, encourage, assist, initiate discussions or
engage in negotiations with, provide any information to, or enter into any
agreement or transaction with, any person, other than the Purchasers, relating
to the possible acquisition of any capital stock of the Company or its
Subsidiaries, or any of their assets, except for the sale of assets in the
ordinary course of business of the Company or its Subsidiaries consistent with
the terms of this Agreement.

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<PAGE>

3.6 CONFIDENTIALITY. The Company and the Principal Stockholders agree
that, unless and until the Closing has been consummated, each of the Company,
its Subsidiaries, the Principal Stockholders and their officers, directors,
agents and representatives will hold, and will cause the other Stockholders of
the Company to hold, in strict confidence, and will not use, any confidential or
proprietary data or information obtained from the Purchasers with respect to
their business or financial condition except for the purpose of evaluating,
negotiating and completing the transaction contemplated hereby. If the
transactions contemplated by this Agreement are not consummated, the Company,
its Subsidiaries and the Principal Stockholders will return to the Purchasers
(or certify that they have destroyed) all copies of such data and information,
including but not limited to financial information, customer lists, business and
corporate records, worksheets, test reports, tax returns, lists, memoranda, and
other documents prepared by or made available to the Company, its Subsidiaries
or the Principal Stockholders in connection with the transaction.

3.7 TAX RETURNS. The Company and the Principal Stockholders shall
cooperate with the Purchasers to permit the Company and its Subsidiaries in
accordance with applicable law to promptly prepare and file on or before the due
date or any extension thereof all federal, state and local tax returns required
to be filed by the Company and its Subsidiaries with respect to taxable periods
ending on or before the Closing.

3.8 BUSINESS REVIEW. The Purchasers and each of their authorized
representatives, attorneys, accountants and consultants shall have the
opportunity to conduct a full and complete due diligence investigation of the
business, financial condition and operations of the Company and its
Subsidiaries, which investigation shall include a customary legal due diligence
review (the "BUSINESS REVIEW").

In connection with the Business Review, the Company, its Subsidiaries
and the Principal Stockholders shall permit the Purchasers and their authorized
representatives (including without limitation their counsel and independent
public accountants) access to all of the books and records of the Company and
its Subsidiaries, and the opportunity to inspect, review or copy the same. The
Company, its Subsidiaries and the Principal Stockholders shall also permit the
Purchasers and their authorized representatives, including any engineers,
environmental engineers or consultants retained by the Purchasers, upon
reasonable prior notice and subject to any reasonable rules or regulations
pertinent to the applicable facilities, access to the Owned Real Property or the
Leased Real Property for inspection. The Company, its Subsidiaries and the
Principal Stockholders shall, and shall cause their employees, agents and
representatives to, cooperate with the Purchasers in the conduct of the Business
Review.

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<PAGE>

3.9 PREPARATION OF SCHEDULES. The Company, its Subsidiaries and the
Principal Stockholders acknowledge that the Schedules contemplated by this
Agreement have not been attached hereto as of the date hereof, and the Company,
its Subsidiaries and the Principal Stockholders shall use best efforts to
prepare, negotiate and finalize the Schedules as soon as practicable following
execution and delivery of this Agreement, but in no event later than 30 days
following the date hereof. On the date on which the Schedules have been
finalized, the Company, its Subsidiaries and the Principal Stockholders shall
execute and deliver an amendment to this Agreement acknowledging and agreeing to
the incorporation of the Schedules into this Agreement effective as of the date
hereof, and true and complete copies of the Schedules shall be attached to such
amendment (the "SCHEDULE AMENDMENT").

3.10 FILING COOPERATION. In connection with any filings to be made by
Parent under the Securities Act of 1933, as amended (the "SECURITIES ACT") or
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the
Company and the Principal Stockholders shall (a) provide for inclusion therein
or filing therewith the financial, business and other information and documents
reasonably requested for inclusion therein by Parent, (b) consider promptly
Parent's reasonable requests for any additional information or documents and use
commercially reasonable efforts to make such available, and (c) generally
cooperate with Parent and its representatives and agents in connection
therewith. The Principal Stockholders shall not have an obligation to incur any
personal expense in order to comply with this SECTION 3.10, however, the
Principal Stockholders shall comply with this SECTION 3.10 so long as any such
expense is paid for by Parent.

3.11 STAY OF PROCEEDINGS. Commencing upon the date hereof and
continuing until the Closing or the earlier termination of this Agreement, the
Company and the Principal Stockholders agree to use commercially reasonable best
efforts to cause all parties who are (x) defendants in that certain litigation
pending in United States District Court for the Northern District of New York
(the "NEW YORK COURT"), case No. 99-CV-216 (the "NEW YORK LITIGATION") and (y)
plaintiffs in that certain litigation pending in Jefferson Circuit Court,
Division One in Jefferson County, Kentucky (the "KENTUCKY COURT"), case
No.98-CI-03901 (the "KENTUCKY LITIGATION" and together with the New York
Litigation, the "LITIGATIONS") to (i) stay all actions and proceedings related
to the Litigations, (ii) refrain from filing any motions, conducting any
depositions, serving any interrogatories, engaging in discovery proceedings, or
performing, conducting or engaging in any actions or proceedings related
thereto, and (iii) file with the New York Court and the Kentucky Court any and
all necessary documents, instruments and certificates as may be required by such
courts to effect such stay of the Litigations. Nothing herein shall be construed
to affect in any way the Preliminary Injunction entered by the United States
District Court for the Northern District of New York on February 28, 1999, and
reaffirmed by that Court on January 11, 2000, which shall remain in full force
and effect during the pendency of this Agreement.

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<PAGE>

3.12 VOTING. The Principal Stockholders hereby agree to vote all of the
shares of Company Common Stock held by them in favor of the transactions
contemplated by this Agreement.

3.13 AUDITED FINANCIAL STATEMENTS. The Company and the Principal
Stockholders shall, at the Purchasers' expense, cause to be delivered to the
Purchasers on the date hereof the following financial information, in each case
audited by PricewaterhouseCoopers LLP: Consolidated Balance Sheets of the
Company and its Subsidiaries for its fiscal years ending on September 30, 1998
and September 30, 1999 and statements of income, retained earnings and cash
flows for the two years then ended.

3.14 SUBSIDIARIES. (a) Subject to SECTION 3.14(b), the Company and the
Principal Stockholders hereby acknowledge that the transactions contemplated by
this Agreement include the acquisition by the Purchasers of all of the capital
stock of the Subsidiaries of the Company, including without limitation, AC
Technology Europe B.V. (BV), Plastic Moulding Consultants, Ltd., C-Mold
Scandinavia AB, Advanced CAE Technology Pacific (Pacific) ("ACTP"), and C-Mold
Singapore PTE LTD.

(b) The Company and the Principal Stockholders shall, on or prior to
the Closing Date, cause each owner (other than the Company) of capital stock of
ACTP to deliver to Parent certificates in respect of such capital stock
accompanied by stock powers duly executed in blank by such owner, pursuant to
which such owners shall assign, transfer and set over to Parent or its nominee
all of such owner's right, title and interest in such certificate and any
ownership of capital stock of ACTP evidenced thereby. If required by any
jurisdiction in which ACTP is organized or is conducting business, Parent shall
cause such certificates to be transferred into the name or names of its nominee
or nominees, such that Parent will be in compliance with any legal requirement
in effect in such jurisdiction(s) with respect to the ownership of capital stock
of ACTP. Upon such assignment and transfer by such owner to Parent of such
owner's interest in the capital stock of ACTP, Parent agrees to hold each such
owner harmless from any liability relating to such owner's interest in such
capital stock.

(c) The Company and the Principal Stockholders shall, prior to the
Closing Date, obtain all necessary consents, authorizations, or approvals from
any applicable third parties, execute and deliver all necessary documents,
instruments and certificates and perform all other acts necessary such that the
Company (and to the extent set forth in SECTION 3.14(b), any nominee or nominees
of Parent) will, on the Closing Date, own, beneficially and of record, all of
the outstanding shares of capital stock of the Subsidiaries free of any lien,
restriction or encumbrance.

(d) The Company and the Principal Stockholders shall, on or prior to
the Closing Date, cause the liquidation and dissolution of AC Technology
Enterprise Ltd. (LTD), evidence of which shall be provided to Purchasers.

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<PAGE>

(e) The Company and the Principal Stockholders jointly and severally
represent, and based solely on such representation the Purchasers hereby
acknowledge, that Ven-Woei Wang and Nan-San Liu each hold a 2.5% ownership
interest in the joint venture known as Beijing-Beihang Haier.

3.15 REAL PROPERTY. (a) The Company and the Principal Stockholders
hereby acknowledge that the transactions contemplated by this Agreement include
the acquisition by the Purchasers of sole right, title and interest in and to
all Owned Real Property (other than the Real Estate Partnership). The Company
and the Principal Stockholders shall, prior to the Closing Date obtain all
necessary consents, authorizations or approvals from any applicable third
parties, execute and deliver all necessary documents, instruments and
certificates and perform all other acts necessary such that the Company will, on
or prior to the Closing Date have good, clear, record, marketable and sole title
to all Owned Real Property in each case free and clear of all Encumbrances other
than Permitted Encumbrances.

(b) The Purchasers, the Company and the Principal Stockholders hereby
agree to negotiate in good faith a Lease Renewal and Purchase Option Agreement,
the key terms of which are attached hereto as EXHIBIT 3.15(b), to be executed
and delivered by the Company and the Real Estate Partnership prior to or at the
Closing.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

4.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement
to the Company and the Principal Stockholders to enter into this Agreement and
consummate the transactions contemplated hereby, the Purchasers hereby jointly
and severally make the representations and warranties to the Company and the
Principal Stockholders contained in this SECTION 4.

4.2 ORGANIZATION OF PURCHASERS. Each of Parent and MergerSub is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware with full corporate power to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted by it.

4.3 AUTHORITY OF PURCHASERS. Each of Parent and MergerSub has full
right, authority and power to enter into this Agreement, and each agreement,
document and instrument to be executed and delivered by it pursuant to this
Agreement and to carry out the transactions contemplated hereby. The execution,
delivery and performance by each of Parent and MergerSub of this Agreement, and
each such other agreement, document and instrument have been duly authorized by
all necessary corporate action of Parent and MergerSub and no other action on
the part of either Parent or MergerSub is required in connection therewith. This
Agreement and each other agreement, document and instrument executed and
delivered by each of Parent and MergerSub pursuant to this Agreement constitute,
or when executed and delivered will constitute, valid and binding obligations of
Parent and MergerSub enforceable in

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<PAGE>

accordance with their terms. The execution, delivery and performance by Parent
and MergerSub of this Agreement and each such agreement, document and
instrument:

(a) does not and will not violate any provision of the charter or
bylaws of either Parent or MergerSub;

(b) does not and will not violate any laws of the United States or of
any state or any other jurisdiction applicable to either Parent or MergerSub or
require either Parent or MergerSub to obtain any approval, consent or waiver of,
or make any filing with, any person or entity (governmental or otherwise) which
has not been obtained or made; and

(c) does not and will not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of any indenture, loan or credit agreement, or other agreement mortgage, lease,
permit, order, judgment or decree to which Parent or MergerSub is a party and
which is material to the business and financial condition of Parent and
MergerSub and its affiliated organizations on a consolidated basis.

SECTION 5. COVENANTS OF THE PURCHASERS.

5.1 MAKING OF COVENANTS AND AGREEMENT. The Purchasers hereby make the
covenants and agreements set forth in this SECTION 5.

5.2 CONFIDENTIALITY

(a) Each of Parent and MergerSub agrees that, unless and until the
Closing has been consummated, each of Parent and MergerSub and its officers,
directors, agents and representatives will hold in strict confidence, and will
not use any confidential or proprietary data or information obtained from the
Company, its Subsidiaries or the Principal Stockholders with respect to the
business or financial condition of the Company and its Subsidiaries except for
the purpose of evaluating, negotiating and completing the transaction
contemplated hereby. Information generally known in the industries of the
Company or its Subsidiaries or which has been disclosed to Parent and MergerSub
by third parties which have a right to do so shall not be deemed confidential or
proprietary information for purposes of this agreement. If the transaction
contemplated by this Agreement is not consummated, each of Parent and MergerSub
will return to the Company (or certify that it has destroyed) all copies of such
data and information, including but not limited to financial information,
customer lists, business and corporate records, worksheets, test reports, tax
returns, lists, memoranda, and other documents prepared by or made available to
Parent and MergerSub in connection with the transaction.

<PAGE>

(b) The Company and the Principal Stockholders hereby acknowledge that
(i) Parent has filed with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-1 (the "REGISTRATION STATEMENT") under the
Securities Act and (ii) pursuant to applicable law (including without limitation
the Securities Act and the rules promulgated thereunder), Parent is obligated to
disclose the existence and substance of this Agreement in the Registration
Statement. Accordingly, notwithstanding SECTION 5.2(a) hereof, Parent shall be
permitted to disclose such information about the Company, its Subsidiaries, its
stockholders and the transaction contemplated hereby (i) as may be legally
required, and otherwise reasonably necessary, in the preparation, filing and
distribution of such reports, filings and other documents required by the
Securities Act or the Exchange Act, or the rules promulgated thereunder or (ii)
as may be required by any underwriter of shares of the Company's Common Stock to
be registered under the Securities Act pursuant to the Registration Statement.
Purchasers will use commercially reasonable efforts to provide the Company with
any information relating to the Company to be contained in such filing in
advance of such filing with the SEC. Notwithstanding the preceding sentence, the
Company and the Principal Stockholders acknowledge that neither the Company nor
any of the Principal Stockholders shall have any right to object to such
proposed disclosure.

5.3 STAY OF PROCEEDINGS. Commencing upon the date hereof and continuing
until the Closing or the earlier termination of this Agreement, the Parent
agrees to use commercially reasonable best efforts to cause all parties who (x)
are plaintiffs in the New York Litigation, and (y) are defendants in the
Kentucky Litigation to (i) stay all actions and proceedings related to the
Litigations, (ii) refrain from filing any motions, conducting any depositions,
serving any interrogatories, engaging in discovery proceedings, or performing,
conducting or engaging in any actions or proceedings related thereto, and (iii)
file with the New York Court and the Kentucky Court any and all necessary
documents, instruments and certificates as may be required by such courts to
effect such stay of the Litigations. Nothing herein shall be construed to affect
in any way the Preliminary Injunction entered by the United States District
Court for the Northern District of New York on February 28, 1999, and reaffirmed
by that Court on January 11, 2000, which shall remain in full force and effect
during the pendency of this Agreement.

5.4 FINANCING. The Purchasers shall use commercially reasonable efforts
to obtain, on terms and conditions satisfactory to them in their sole and
absolute discretion, such financing as may be necessary to consummate the
transactions contemplated by this Agreement. Upon the reasonable request of the
Company and the Principal Stockholders, the Purchasers shall (i) apprise the
Company and the Principal Stockholders of the status of such financing, and (ii)
solely for the purpose of confirming such status, provide the Company and the
Principal Stockholders with reasonable access to any reasonably potential source
of such financing.

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SECTION 6. CONDITIONS.

6.1 CONDITIONS TO THE OBLIGATIONS OF PURCHASERS. The obligation of the
Purchasers to consummate this Agreement and the transactions contemplated hereby
are subject to the fulfillment, prior to or at the Closing, of the conditions
precedent listed in this SECTION 6.1 (all or any of which may be waived in whole
or in part by the Purchasers in their sole and absolute discretion):

(a) REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the representations
and warranties of the Company and the Principal Stockholders contained in
SECTION 2 shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms as to
materiality, which representations and warranties as so qualified shall be true
in all respects) as of the date of this Agreement and, except for the
representation set forth in SECTION 2.10(a), as of the Closing Date as though
made on and as of the Closing, after giving effect to the Schedules described in
SECTION 3.9; and the Company and each of the Principal Stockholders shall, on or
before the Closing, have performed all of their obligations, and fulfilled all
their covenants hereunder which by the terms hereof are to be performed on or
before the Closing.

(b) [**Intentionally Omitted.**]

(c) CERTIFICATE FROM OFFICERS. The Principal Stockholders shall have
delivered to the Purchasers a certificate of the Company's President and Chief
Financial Officer dated as of the Closing to the effect that the statements set
forth in paragraph (a) and (b) above in this SECTION 6.1 are true and correct.

(d) NO LITIGATION. There shall have been no determination by the
Purchasers, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state or other
governmental authority of litigation, proceedings or other action against the
Purchasers, the Company, its Subsidiaries or any stockholder of the Company.

(e) CONSENTS. The Company and the Principal Stockholders shall have
made all filings with and notifications of governmental authorities, regulatory
agencies and other entities required to be made by the Company or the Principal
Stockholders in connection with the execution and delivery of this Agreement,
the performance of the transactions contemplated hereby and the continued
operation of the business of the Company by Parent subsequent to the Closing.
The Company, the Principal Stockholders, Parent and MergerSub shall have
received all authorizations, waivers, consents and permits, in form and
substance reasonably satisfactory to Parent and MergerSub (the "REQUIRED
CONSENTS"), from all third parties required to permit the continuation of the
business of the Company and its Subsidiaries and the consummation of the
transactions contemplated by this Agreement, and to avoid a breach, default,
termination, acceleration or modification of any material indenture, loan or
credit agreement or any other material agreement, contract, instrument,
mortgage, lien, lease,

<PAGE>

permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award as a result of, or in connection with, the execution and
performance of this Agreement.

(f) FINANCING. The Purchasers shall have obtained proceeds from
financing sources in an aggregate amount adequate to finance the transactions
contemplated hereby on terms and conditions satisfactory to them in their sole
and absolute discretion.

(g) OPINION OF COUNSEL. The Company shall have delivered to the
Purchasers a legal opinion delivered by counsel for the Company and the
Principal Stockholders, substantially in the form attached hereto as EXHIBIT
6.1(g).

(h) NON-COMPETITION AGREEMENTS.

(i) Each of the Principal Stockholders, each other Stockholder of
the Company owning two percent (2%) or more of the Common Stock of the
Company on a fully diluted basis, and the officers and directors of the
Company, as shall be determined by the Purchasers in their reasonable
discretion, shall have executed and delivered to the Purchasers a
Non-Competition and Release Agreement in substantially the form annexed
hereto as EXHIBIT 6.1(h)(i)(a).

(ii) The Principal Stockholders shall have used their best
efforts to cause each of the employees of the Company and its Subsidiaries
whose employment with the Company or any of its Subsidiaries is being
terminated, as shall be determined by the Purchasers in their reasonable
discretion, to execute and deliver to the Purchasers a Non-Competition and
Release Agreement in substantially the form annexed hereto as EXHIBIT
6.1(h)(i)(a).

(iii) The Company shall have used its best efforts to cause each
of the employees of the Company and its Subsidiaries, as shall be
determined by the Purchasers in their reasonable discretion, to have
executed and delivered to the Purchasers a Non-Competition Agreement in
substantially the form annexed hereto as EXHIBIT 6.1(h)(I)

(i) RESIGNATIONS. The Company shall have delivered to the Purchasers
the resignations of (i) all of the directors and officers of the Company and
each Subsidiary, and (ii) such employees of the Company and its Subsidiaries as
shall be determined by the Purchasers in their reasonable discretion, each of
which such resignations are to be effective at the Closing.

(j) RELEASES. There shall have been delivered to Parent releases in the
form attached hereto as EXHIBIT 6.1(j) signed by (i) the Company with respect to
the New York Litigation, (ii) the plaintiff in the Kentucky Litigation, and
(iii) each officer and director of the Company and each Subsidiary.

<PAGE>

(k) STOCKHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been legally approved and adopted by the
requisite vote or consents of the Company's stockholders.

(l) DISSENTING SHARES. Of the total shares of Company Common Stock
outstanding immediately prior to the Effective Time of the Merger, no more than
five (5%) will be Dissenting Shares.

(m) SCHEDULE AMENDMENT. The Company and the Principal Stockholders
shall have executed and delivered to the Purchasers in form and substance
satisfactory to the Purchasers in their sole and absolute discretion, the
Schedule Amendment, to which shall be attached true and complete copies of the
Schedules contemplated by this Agreement, which Schedules, including all
information contained thereon shall be in form and substance satisfactory to
Purchasers in their sole and absolute discretion.

(n) ESCROW AGREEMENT. The Principal Stockholders and the Escrow Agent
shall have executed and delivered to Parent the Escrow Agreement.

(o) TITLE INSURANCE. The Purchasers shall have obtained title insurance
on the Owned Real Property with exceptions and on terms satisfactory to the
Purchasers in their sole and absolute discretion.

(p) SETTLEMENT AGREEMENT. Leonid Antanovskii shall have executed and
delivered to Parent a Settlement Agreement in the form annexed hereto as EXHIBIT
6.1(p).

(q) OTHER DELIVERIES. The Company and the Principal Stockholders shall
have executed and delivered such other documents, certificates, instruments or
opinions as may be required by the Purchasers.

6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE PRINCIPAL
STOCKHOLDERS. The obligation of the Company and the Principal Stockholders to
consummate this Agreement and the transactions contemplated hereby is subject to
the fulfillment, prior to or at the Closing, of the following conditions
precedent (all or any of which may be waived in whole or in part by the Company
and the Principal Stockholders in their sole and absolute discretion):

(a) REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the representations
and warranties of the Purchasers contained in SECTION 4 shall be true and
correct in all material respects as though made on and as of the Closing; each
of Parent and MergerSub shall, on or before the Closing, have performed all of
its obligations hereunder which by the terms hereof are to be performed on or
before the Closing; and Parent and MergerSub each shall have delivered to the
Company and the Principal Stockholders a certificate of the President or any
Vice President of Parent and MergerSub dated on the Closing to such effect.

<PAGE>

(b) ESCROW AGREEMENT. Parent and the Escrow Agent shall have executed
and delivered to the Principal Stockholders the Escrow Agreement.

(c) SEVERANCE ARRANGEMENTS. (i) Subject to SECTIONS 6.2(ii) AND (iii),
Parent will, in accordance with the severance arrangements set forth in EXHIBIT
6.2(c) hereto (the "SEVERANCE ARRANGEMENTS"), provide severance payments to
those officers or employees of the Company whose employment is terminated
without cause by (1) the Company as of the Closing in connection therewith or
(2) subsequently thereto by the Company or Parent pursuant to the Severance
Arrangements (the "SEVERANCE PAYMENTS").

(ii) Notwithstanding SECTION 6.2(c)(i), the payment of such
Severance Payments to each such officer or employee is contingent upon the
effectiveness of a Non-Competition and Release Agreement, in substantially
the form annexed hereto as EXHIBIT 6.1(h)(i)(a) or (b), as the case may be,
to be executed and delivered by such officer or employee.

(iii) If, upon the termination by the Company or Parent of the
employment of any officer or employee of the Company, the aggregate amount of
the Severance Payments that have been paid by or are required to be paid by
Parent and the Company in connection with such termination and any prior
terminations, exceeds $700,000 (the "AGGREGATE SEVERANCE PAYMENTS"), the
Principal Stockholders shall, contemporaneously with such termination, jointly
and severally pay to Parent an amount equal to the difference between the
Aggregate Severance Payments and $700,000 (the "INITIAL SEVERANCE
DIFFERENTIAL"). If, subsequent to the payment by the Principal Stockholders of
the Initial Severance Differential, there are additional terminations made by
Parent or the Company of any employees or officers of the Company, the result of
which would require Parent to make a Severance Payment (with respect to each
such termination, a "Subsequent Severance Payment"), the Principal Stockholders
shall, contemporaneously with each such subsequent termination, jointly and
severally pay to Parent an amount equal to the full amount of the Subsequent
Severance Payment.

(iv) The Principal Stockholders' obligation to pay the Initial
Severance Differential and any Subsequent Severance Payment shall be
satisfied first from the Cash Escrow Amount held in escrow pursuant to the
Escrow Agreement. However, to the extent that (1) an amount equal to $600,000
or more has been paid to Parent from the Cash Escrow Amount in satisfaction
of the Principals Stockholders' obligation to pay the Initial Severance
Differential or any Subsequent Severance Payment, or (2) the Cash Escrow
Amount is insufficient to satisfy the payment of all or any portion of the
Initial Severance Differential or any Subsequent Severance Payment, the
Principal Stockholders shall jointly and severally pay directly to Parent any
unpaid portion of the Initial Severance Differential or any Subsequent
Severance Payment.

(d) RELEASES. There shall have been delivered to the Company releases
in the form attached thereto as EXHIBIT 6.2(d) signed by Parent and Moldflow
Pty., Ltd. with respect to the Litigations.

<PAGE>

6.3. POST-CLOSING OBLIGATION OF THE PARENT: Parent agrees that from and
after the Closing Date and for a period of twelve (12) months following the
Closing Date, Parent shall use commercially reasonable efforts to maintain and
support the installed customer base of Company with respect to the products of
the Company offered on the Closing Date. Further, Parent agrees that it will
retain the name of the Company, including the d/b/a C-Mold designation, for such
twelve (12) month period.

SECTION 7. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED.

7.1 TERMINATION. At any time prior to the Closing, this Agreement may
be terminated as follows:

(i) on or prior to March 31, 2000, by Parent or MergerSub if
either is not satisfied, in its sole and absolute discretion, with the
results of the Business Review contemplated by SECTION 3.8;

(ii) by any of the Purchasers, the Company or the Principal
Stockholders if the Closing has not occurred by May 31, 2000;

(iii) by mutual written consent of all of the parties to this
Agreement;

(iii) by Parent or MergerSub, pursuant to written notice by
Parent or MergerSub to the Company and the Principal Stockholders, if any
of the conditions set forth in SECTION 6.1 of this Agreement have not been
satisfied at or prior to the Closing, or if it has become reasonably and
objectively certain that any of such conditions, other than a condition
within the control of Parent or MergerSub, will not be satisfied at or
prior to the Closing, such written notice to set forth such conditions
which have not been or will not be so satisfied; and

(iv) by the Company and the Principal Stockholders, pursuant to
written notice by the Company and the Principal Stockholders to Parent, if
any of the conditions set forth in SECTION 6.2 of this Agreement have not
been satisfied at or prior to the Closing, or if it has become reasonably
and objectively certain that any of such conditions, other than a condition
within the control of the Company or any of the Principal Stockholders,
will not be satisfied at or prior to the Closing, such written notice to
set forth such conditions which have not been or will not be so satisfied.

7.2 EFFECT OF TERMINATION. All obligations of the parties hereunder
shall cease upon any termination pursuant to SECTION 7.1, provided, however,
that (i) the provisions of this SECTION 7, SECTION 3.6, SECTION 5.2, SECTION
10.1 and SECTION 10.9 hereof shall survive any termination of this Agreement;
(ii) nothing herein shall relieve any party from any liability for a material
error or omission in any of its representations or warranties contained herein
or a

38
<PAGE>

material failure to comply with any of its covenants, conditions or agreements
contained herein, and (iii) any party may proceed as further set forth in
SECTION 7.3 below.

7.3 RIGHT TO PROCEED. Notwithstanding anything in this Agreement to the
contrary, if any of the conditions specified in SECTION 6.1 hereof have not been
satisfied, Parent and MergerSub shall, in their sole and absolute discretion,
have the right to proceed with the transactions contemplated hereby without
waiving any of their rights hereunder, and if any of the conditions specified in
SECTION 6.2 hereof have not been satisfied, the Company and the Principal
Stockholders shall, in their sole and absolute discretion, have the right to
proceed with the transactions contemplated hereby without waiving any of their
rights hereunder.

SECTION 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.

8.1 SURVIVAL OF WARRANTIES. Each of the representations, warranties,
agreements, covenants and obligations herein or in any schedule, exhibit,
certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material (except as
specifically provided herein), shall be deemed to have been relied upon by the
other party and shall survive the Closing regardless of any investigation and
shall not merge in the performance of any obligation by either party hereto.

SECTION 9. INDEMNIFICATION.

9.1 INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDERS.

(a) The Principal Stockholders jointly and severally agree subsequent
to the Closing to indemnify and hold the Company, Parent and their respective
subsidiaries and affiliates and persons serving as officers, directors, partners
or employees thereof (individually a "PURCHASER INDEMNIFIED PARTY" and
collectively the "PURCHASER INDEMNIFIED PARTIES") harmless from and against any
damages, liabilities, losses, taxes, fines, penalties, costs, and expenses
(including, without limitation, reasonable fees of counsel) of any kind or
nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing) which may be sustained or suffered by any of them arising out of or
based upon any of the following matters:

(i) fraud, intentional misrepresentation or a deliberate or
willful breach by the Company or any Principal Stockholder of any of their
representations, warranties or covenants under this Agreement or in any
certificate, schedule or exhibit delivered pursuant hereto;

(ii) any other breach of any representation or warranty of the
Company or any Principal Stockholder under this Agreement or in any
document, certificate, schedule or exhibit delivered pursuant hereto, or by
reason of any claim,

<PAGE>

action or proceeding asserted or instituted growing out of any matter or
thing constituting a breach of such representations or warranties; and

(iii) any breach of any covenant of the Company or any of the
Principal Stockholders under this Agreement or in any document,
certificate, schedule or exhibit delivered pursuant hereto, or by reason of
any claim, action or proceeding asserted or instituted growing out of any
matter or thing constituting a breach of such covenants.

(b) Claims under clauses (i), (ii) and (iii) of SECTION 9.1(a) are
collectively referred to herein as "PURCHASER INDEMNIFIABLE CLAIMS", and Losses
in respect of such claims are collectively referred to herein as "PURCHASER
INDEMNIFIABLE LOSSES".

9.2 LIMITATION ON INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDERS.

(a) All Purchaser Indemnifiable Claims and Purchaser Indemnifiable
Losses shall be satisfied first from the Cash Escrow Amount held in escrow
pursuant to the Escrow Agreement. To the extent that the Cash Escrow Amount is
insufficient to satisfy any Purchaser Indemnifiable Claims or Purchaser
Indemnifiable Losses, or such Purchaser Indemnifiable Claims or Purchaser
Indemnifiable Losses occur on or after the Termination Date (as such term is
defined in the Escrow Agreement), the Purchaser Indemnified Parties shall be
entitled to claim directly against the Principal Stockholders.

(b) No indemnification shall be payable pursuant to SECTION 9.1(a)(ii)
above to any Purchaser Indemnified Party, unless the total of all claims for
indemnification pursuant to SECTION 9.1(a)(ii) exceeds $50,000 in the aggregate,
whereupon the amount in excess of such claims shall be recoverable in accordance
with the terms hereof;

(c) No indemnification shall be payable to any Purchaser Indemnified
Party with respect to claims asserted pursuant to SECTION 9.1(a)(ii) (exclusive
of claims for indemnification for a breach of any representation or warranty
contained in SECTION 2.3 (Capital Stock of the Company); SECTION 2.4
(Subsidiaries); SECTION 2.6 (Real and Personal Property, but only to the extent
such representations and warranties relate to the Company's and its Subsidiaries
title to the Owned Real Property and Personal Property); SECTION 2.8 (Taxes);
SECTION 2.13 (Intellectual Property); and SECTION 2.23 (Environmental Matters))
after the second anniversary of the Closing Date (the "INDEMNIFICATION CUT-OFF
DATE"); provided, HOWEVER, if prior to the Indemnification Cut-Off Date, a
Purchaser Indemnified Party shall have given written notice of a Purchaser
Indemnifiable Claim under SECTION 9.5, such Purchaser Indemnifiable Claim shall
survive the Indemnification Cut-Off Date until final resolution of such
Purchaser Indemnifiable Claim; and

(d) The Principal Stockholders shall not be obligated to indemnify the
Purchaser Indemnified Parties with respect to Purchaser Indemnifiable Claims
asserted pursuant to SECTION 9.1(a)(II) for any amount payable thereunder in
excess of the greater of (a)

40
<PAGE>

the proceeds to be received by the Principal Stockholders pursuant to SECTION
1.2, and (b) $8,700,000.

9.3 INDEMNIFICATION BY PARENT. (a) Parent agrees to indemnify and hold
the Principal Stockholders (individually a "STOCKHOLDER INDEMNIFIED PARTY" and
collectively the "STOCKHOLDER INDEMNIFIED PARTIES") harmless from and against
any damages, liabilities, losses and expenses (including, without limitation,
reasonable fees of counsel) of any kind or nature whatsoever (whether or not
arising out of third-party claims and including all amounts paid in
investigation, defense or settlement of the foregoing) which may be sustained or
suffered by any of them arising out of or based upon any of the following
matters:

(i) fraud, intentional misrepresentation or a deliberate or
willful breach by Parent or MergerSub of any of their representations or
warranties or under this Agreement or in any certificate, schedule or
exhibit delivered pursuant hereto;

(ii) any other breach of any representation or warranty or of
Parent or MergerSub under this Agreement or in any document, certificate,
schedule or exhibit delivered pursuant hereto, or by reason of any claim,
action or proceeding asserted or instituted growing out of any matter or
thing constituting a breach of such representations, warranties or
covenants; and

(iii) any breach of any covenant of Parent of Merger Sub under
this Agreement or in any document, certificate, schedule or exhibit
delivered pursuant hereto, or by reason of any claim, action or proceeding
asserted or instituted growing out of any matter or thing constituting a
breach of such covenants.

(b) Claims under clauses (i), (ii) and (iii) of SECTION 9.3(a) are
collectively referred to herein as "STOCKHOLDER INDEMNIFIABLE CLAIMS", and
Losses in respect of such claims are collectively referred to herein as
"STOCKHOLDER INDEMNIFIABLE LOSSES".

9.4 LIMITATION ON INDEMNIFICATION BY PARENT.

(a) No indemnification shall be payable pursuant to SECTION 9.3(a)(ii)
above to any Stockholder Indemnified Party, unless the total of all claims for
indemnification pursuant to SECTION 9.3(a)(ii) exceeds $50,000 in the aggregate,
whereupon the amount in excess of such claims shall be recoverable in accordance
with the terms hereof;

(b) No indemnification shall be payable to any Stockholder Indemnified
Party with respect to claims asserted pursuant to SECTION 9.3(a)(ii) after the
second anniversary of the Closing Date (the "INDEMNIFICATION CUT-OFF DATE");
PROVIDED, HOWEVER, if prior to the Indemnification Cut-Off Date, a Stockholder
Indemnified Party shall have given written notice of a Stockholder Indemnifiable
Claim under SECTION 9.5, such Stockholder Indemnifiable Claim shall survive the
Indemnification Cut-Off Date until final resolution of such Stockholder
Indemnifiable Claim; and

41
<PAGE>

(c) Parent shall not be obligated to indemnify the Stockholder
Indemnified Parties with respect to Stockholder Indemnifiable Claims asserted
pursuant to SECTION 9.3(a)(ii) for any amount payable thereunder in excess of
the greater of (a) the proceeds to be received by the Principal Stockholders
pursuant to SECTION 1.2, and (b) $8,700,000.

9.5 NOTICE; DEFENSE OF CLAIMS. An indemnified party may make claims for
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims can be made hereunder.
In addition, if indemnification is sought for a claim or liability asserted by a
third party, or to the knowledge of the indemnified party a claim or liability
is threatened to be asserted by a third party, the indemnified party shall also
give written notice thereof to the indemnifying party promptly after it receives
notice of the claim or liability being or threatened to be asserted, but the
failure to do so shall not relieve the indemnifying party from any liability
except to the extent that it is prejudiced by the failure or delay in giving
such notice. Such notice shall summarize the bases for the claim for
indemnification and any claim or liability being asserted by a third party.
Within 20 days after receiving such notice the indemnifying party shall give
written notice to the indemnified party stating whether it disputes the claim
for indemnification and whether it will defend against any third party claim or
liability at its own cost and expense. If the indemnifying party fails to give
notice that it disputes an indemnification claim within 20 days after receipt of
notice thereof, it shall be deemed to have accepted and agreed to the claim,
which shall become immediately due and payable. The indemnifying party shall be
entitled to direct the defense against a third party claim or liability with
counsel selected by it (subject to the consent of the indemnified party, which
consent shall not be unreasonably withheld) as long as the indemnifying party is
conducting a good faith and diligent defense. The indemnified party shall at all
times have the right to fully participate in the defense of a third party claim
or liability at its own expense directly or through counsel; PROVIDED, HOWEVER,
that if the named parties to the action or proceeding include both the
indemnifying party and the indemnified party and the indemnified party is
advised that representation of both parties by the same counsel would be
inappropriate under applicable standards of professional conduct, the
indemnified party may engage separate counsel at the expense of the indemnifying
party. If no such notice of intent to dispute and defend a third party claim or
liability is given by the indemnifying party, or if such good faith and diligent
defense is not being or ceases to be conducted by the indemnifying party, the
indemnified party shall have the right, at the expense of the indemnifying
party, to undertake the defense of such claim or liability (with counsel
selected by the indemnified party), and to compromise or settle it, exercising
reasonable business judgment. If the third party claim or liability is one that
by its nature cannot be defended solely by the indemnifying party, then the
indemnified party shall make available such information and assistance as the
indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense, at the expense of the indemnifying party.

SECTION 10. MISCELLANEOUS.

42
<PAGE>

10.1 FEES AND EXPENSES. Except as otherwise provided in this Agreement,
each of the parties will bear its own expenses in connection with the
negotiation and the consummation of the transactions contemplated by this
Agreement. No expenses of the Company or the Principal Stockholders relating in
any way to the purchase and sale of the shares of Company Common Stock hereunder
and the transactions contemplated hereby, including without limitation legal,
accounting or other professional expenses of the Company or the Principal
Stockholders, shall be charged to or paid by the Company or the Purchasers;
PROVIDED, HOWEVER that up to $50,000 of such legal, accounting, or other
professional expenses of the Company or the Principal Stockholders may be
charged to or paid by the Company. In the event that any such amount is charged
to or paid by the Company, the Principal Stockholders will provide a complete
accounting of such expenses to Parent at the Closing.

10.2 GOVERNING LAW. This Agreement shall be construed under and
governed by the internal laws of the State of Delaware without regard to its
conflict of laws provisions.

10.3 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three days after deposit in United
States post office facilities properly addressed with postage prepaid. If any
such notice, request, demand or other communication is sent by facsimile
transmission, the sender shall confirm such facsimile transmission by
concurrently sending such notice, request, demand or other communication by
first class mail. All notices to a party will be sent to the addresses set forth
below or to such other address or person as such party may designate by notice
to each other party hereunder:

TO PURCHASER: Moldflow Corporation

91 Hartwell Avenue
Lexington, Massachusetts 02421
Attn: Marc Dulude, CEO
Facsimile: 781-674-0267

With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Stuart M. Cable, P.C.

TO COMPANY AND PRINCIPAL Advanced CAE Technology, Inc.
STOCKHOLDERS: d/b/a C-Mold

At its principal business address

With a copy to: True, Walsh & Miller, LLP
The Commons
202 East State Street

43
<PAGE>

Ithaca, New York 14850
Attn: Peter Walsh, Esq.

Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.

10.4 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such Schedules and Exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by either party hereto have been expressed herein or in such Schedules or
Exhibits or in such other writings.

10.5 ASSIGNABILITY; BINDING EFFECT. Except as otherwise provided
herein, this Agreement shall only be assignable, in whole or in part, by either
Purchaser to an entity controlling, controlled by or under common control with
such Purchasers upon written notice to the Company and the Principal
Stockholders. This Agreement may not be assigned by the Principal Stockholders
or the Company without the prior written consent of the Purchasers. This
Agreement shall be binding upon and enforceable by, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.

10.6 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.

10.7 EXECUTION IN COUNTERPARTS. For the convenience of the parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document. Signatures sent by facsimile will be
deemed valid to facilitate Closing.

10.8 AMENDMENTS. This Agreement may not be amended or modified
(including without limitation the Severance Arrangement set forth on EXHIBIT
6.2(c) hereto), nor may compliance with any condition or covenant set forth
herein be waived, except by a writing duly and validly executed by each party
hereto, or in the case of a waiver, the party waiving compliance.
Notwithstanding the preceding sentence, the Company and the Principal
Stockholders hereby consent to any amendments to this Agreement that may be
necessary to effectuate the assignment contemplated by the first sentence of
SECTION 10.5; PROVIDED, HOWEVER, that in no event shall any such assignment
relieve Parent of its obligations under this Agreement.

44
<PAGE>

10.9 PUBLICITY AND DISCLOSURES. Except as set forth in SECTION 5.2(b)
hereof, no press releases or public disclosure, either written or oral, of the
transactions contemplated by this Agreement, shall be made by a party to this
Agreement without the prior knowledge and written consent of the Purchasers and
the Company.

10.10 DEFINITION OF KNOWLEDGE. As used in this Agreement, the term
"knowledge" of a party shall mean the actual knowledge of that party or any of
its directors or executive officers, and shall include any information that
could have been, or reasonably should have been, discovered by such party in the
exercise of good business judgment.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

45
<PAGE>

IN WITNESS HEREOF, the parties have executed this Agreement and Plan of
Merger as of the date first written above.

MOLDFLOW CORPORATION

By: /s/ Marc Dulude
-----------------------------------------------
Name: Marc Dulude
Title: President

MOLDFLOW MERGER CORP.

By: /s/ Marc Dulude
-----------------------------------------------
Name: Marc Dulude
Title: President

ADVANCED CAE TECHNOLOGY, INC.
D/B/A C-MOLD

By: /s/ Kuo-King Wang
-----------------------------------------------
Name: Kuo-King Wang
Title: Chairman of the Board

PRINCIPAL STOCKHOLDERS:

/s/ Kuo-King Wang
-----------------------------------------------
Kuo-King Wang

/s/ Ven-Woei Wang
-----------------------------------------------
Ven-Woei Wang

46
<PAGE>

/s/ Shan-Fu Shen
-----------------------------------------------
Shan-Fu Shen

/c/ Claude Cohen
-----------------------------------------------
Claude Cohen

/s/ Cornelius A. Hieber
-----------------------------------------------
Cornelius A. Hieber

<PAGE>
Exhibit 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of our
report dated August 20, 1999, except as to Note 16 for which the date is
January 20, 2000, relating to the consolidated financial statements of Moldflow
Corporation, which appears in such Registration Statement. We also consent to
the use in this Registration Statement on Form S-1 of our report dated
February 11, 2000, relating to the consolidated financial statements of Advanced
CAE Technology, Inc., which appears in such Registration Statement. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Boston, Massachusetts
February 11, 2000

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MOLDFLOW
CORPORATION CONSOLIDATED BALANCE SHEET CONSOLIDATED STATEMENT OF OPERATIONS
</LEGEND>
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-1999
<PERIOD-START> JUL-01-1998 JUL-01-1999
<PERIOD-END> JUN-30-1999 JAN-01-2000
<CASH> 1,240 1,328
<SECURITIES> 0 0
<RECEIVABLES> 4,676 4,771
<ALLOWANCES> (232) (237)
<INVENTORY> 84 99
<CURRENT-ASSETS> 6,590 7,152
<PP&E> 6,815 7,051
<DEPRECIATION> (3,705) (4,025)
<TOTAL-ASSETS> 10,247 10,564
<CURRENT-LIABILITIES> 8,698 8,763
<BONDS> 0 0
12,496 12,496
0 0
<COMMON> 6 6
<OTHER-SE> (11,232) (10,739)
<TOTAL-LIABILITY-AND-EQUITY> 10,247 10,564
<SALES> 12,238 6,651
<TOTAL-REVENUES> 20,221 11,504
<CGS> 378 322
<TOTAL-COSTS> 1,697 813
<OTHER-EXPENSES> 17,598 10,327
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 198 65
<INCOME-PRETAX> 657 261
<INCOME-TAX> 176 (172)
<INCOME-CONTINUING> 481 433
<DISCONTINUED> 0 0
<EXTRAORDINARY> 130 0
<CHANGES> 0 0
<NET-INCOME> 351 433
<EPS-BASIC> 1.33 1.18
<EPS-DILUTED> 0.06 0.07

</TABLE>