<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON, D.C. 20549-1004

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996

                         COMMISSION FILE NUMBER 0-020992

                                 MATHSOFT, INC.
             (Exact name of registrant as specified in its charter)

          MASSACHUSETTS                                 04-2842217
 (State or other jurisdiction            (I.R.S. Employer Identification Number)
of incorporation or organization)

                                 101 MAIN STREET
                       CAMBRIDGE, MASSACHUSETTS 02142-1521
   (Address, including zip code, of registrant's principal executive offices)

                                 (617) 577-1017
               (Registrant's telephone number including area code)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR AT LEAST THE PAST 90 DAYS.

                             YES  X     NO
                                 ---       ---

AS OF FEBRUARY 5, 1997 THERE WERE 8,978,097 SHARES OF COMMON STOCK, $.01 PAR
VALUE PER SHARE, OUTSTANDING.





<PAGE>   2



                         MATHSOFT, INC. AND SUBSIDIARIES

                                    FORM 10-Q



                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996

                                TABLE OF CONTENTS


                                                                          PAGE
                                                                          ----

PART I.    FINANCIAL INFORMATION:

     Item 1. Consolidated Condensed Financial Statements

          -  Consolidated Condensed Balance Sheets as of
             December 31, 1996 and June 30, 1996                           3-4

          -  Consolidated Condensed Statements of Operations
             for the Three and Six Month Periods Ended
             December 31, 1996 and 1995                                     5

          -  Consolidated Condensed Statements of Cash Flows for the
             Six Month Periods Ended December 31, 1996 and 1995            6-7

          -  Notes to Consolidated Condensed Financial Statements          8-9

     Item 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations                          10-12

             Cautionary Statements                                        13-15


PART II.   OTHER INFORMATION:

     Item 2. Changes in Securities                                         16

     Item 4. Submission of Matters to a Vote of Security-Holders           16

     Item 6. Exhibits and Reports on Form 8-K                              17


SIGNATURES                                                                 18




                                        2


<PAGE>   3

<TABLE>
                         MATHSOFT, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                     ASSETS
                                   (UNAUDITED)


<CAPTION>
                                                                DECEMBER 31,    JUNE 30,
                                                                   1996          1996
                                                                -----------   -----------
<S>                                                            <C>           <C>
CURRENT ASSETS:
       Cash and cash equivalents                               $ 3,916,098   $ 4,954,416
       Accounts receivable and other receivables, less
          reserves of approximately $983,000 at December
          31, 1996 and $776,000 at June 30, 1996                 3,629,952     3,881,568
       Inventories                                                 537,260       547,892
       Prepaid expenses                                            445,761       381,638
                                                               -----------   -----------
              Total current assets                               8,529,071     9,765,514
                                                               -----------   -----------

PROPERTY AND EQUIPMENT, AT COST:
       Computer equipment and software                           4,505,170     4,052,662
       Furniture and fixtures                                      978,110       968,644
       Leasehold improvements                                      626,890       621,354
                                                               -----------   -----------
                                                                 6,110,170     5,642,660
       Less - Accumulated depreciation and amortization          4,481,036     4,044,072
                                                               -----------   -----------
                                                                 1,629,134     1,598,588

OTHER ASSETS:
       Purchased technology, net of accumulated amortization
            of approximately $2,613,000 at December 31, 1996
            and $2,505,000 at June 30, 1996                        395,630       504,006
       Other Assets                                                 74,481        31,044
                                                               -----------   -----------
                                                                   470,111       535,050
                                                               -----------   -----------
                                                               $10,628,316   $11,899,152
                                                               ===========   ===========




 The accompanying notes are an integral part of these consolidated condensed financial statements.
</TABLE>


                                        3


<PAGE>   4


<TABLE>
                         MATHSOFT, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                                   (UNAUDITED)


<CAPTION>
                                                            DECEMBER 31,      JUNE 30,
                                                               1996            1996
                                                           ------------    ------------
<S>                                                       <C>             <C>
CURRENT LIABILITIES:
       Note payable                                       $     16,000    $          0
       Current portion of capital lease obligations              8,938          16,753
       Accounts payable                                      2,407,918       1,699,414
       Accrued expenses                                      1,857,385       2,255,214
       Accrued restructuring, current portion                   15,928          13,316
       Deferred revenue                                      1,036,834       1,092,541
                                                          ------------    ------------
              Total current liabilities                      5,343,003       5,077,238
                                                          ------------    ------------

ACCRUED RESTRUCTURING, LESS CURRENT PORTION                     18,883          24,152
                                                          ------------    ------------

CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION                 -                2,694
                                                          ------------    ------------

ACCRUED RENT, LESS CURRENT PORTION                              27,854          36,372
                                                          ------------    ------------

STOCKHOLDERS' EQUITY:
       Preferred stock, $.01 par value -
          Authorized - 1,000,000 shares
          Issued and outstanding-none                           -               -
       Common stock, $.01 par value-
          Authorized - 20,000,000 shares
          Issued and outstanding - 8,925,939 shares
           at December 31, 1996 and 8,579,262 shares at
          June 30, 1996                                         89,259          85,793
       Additional paid-in capital                           29,011,410      28,158,558
       Accumulated deficit                                 (23,758,712)    (21,474,509)
       Cumulative translation adjustment                      (103,381)        (11,146)
                                                          ------------    ------------
              Total stockholders' equity                     5,238,576       6,758,696
                                                          ------------    ------------
                                                          $ 10,628,316    $ 11,899,152
                                                          ============    ============





 The accompanying notes are an integral part of these consolidated condensed financial statements.
</TABLE>



                                        4

<PAGE>   5

<TABLE>

                         MATHSOFT, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<CAPTION>
                                                                THREE  MONTHS ENDED            SIX MONTHS ENDED
                                                                    DECEMBER 31,                  DECEMBER 31,
                                                               1996            1995          1996            1995
<S>                                                         <C>             <C>           <C>             <C>
                                                            ----------      ----------    -----------     -----------
REVENUES:
       Software licenses                                    $4,341,275      $4,853,750    $ 8,265,680     $ 9,269,323
       Services and other                                      610,642         634,365      1,212,513       1,306,878
                                                            ----------      ----------    -----------     -----------     

          Total revenues                                     4,951,917       5,488,115      9,478,193      10,576,201
                                                            ----------      ----------    -----------     -----------

COST OF REVENUES:
       Software licenses                                       795,790         740,260      1,578,825       1,445,487
       Services and other                                      212,719         223,101        403,991         464,381
                                                            ----------      ----------    -----------     -----------
          Total cost of revenues                             1,008,509         963,361      1,982,816       1,909,868
                                                            ----------      ----------    -----------     -----------
          Gross profit                                       3,943,408       4,524,754      7,495,377       8,666,333
                                                            ----------      ----------    -----------     -----------

OPERATING EXPENSES:
       Sales and marketing                                   2,582,164       2,455,533      5,007,644       4,870,105
       Research and development                              1,286,926         951,709      2,377,768       1,703,602
       General and administrative                              715,075         588,782      1,240,686       1,174,674
                                                            ----------      ----------    -----------     -----------
          Total operating expenses                           4,584,165       3,996,024      8,626,098       7,748,381
                                                            ----------      ----------    -----------     -----------

          INCOME (LOSS) FROM OPERATIONS                       (640,757)        528,730     (1,130,721)        917,952

INTEREST INCOME, NET                                            40,014          41,667         79,723          79,976
                                                            ----------      ----------    -----------     -----------
          INCOME (LOSS) BEFORE PROVISION FOR
               INCOME TAXES                                   (600,743)        570,397     (1,050,998)        997,928

PROVISION FOR INCOME TAXES                                         746          10,274         15,582          21,470
                                                            ----------      ----------    -----------     -----------
          NET INCOME (LOSS)                                 $ (601,489)     $  560,123    $(1,066,580)    $   976,458
                                                            ==========      ==========    ===========     ===========

NET INCOME (LOSS) PER COMMON AND
       COMMON EQUIVALENT SHARE                              $    (0.07)     $     0.06    $     (0.12)    $      0.10
                                                            ==========      ==========    ===========     ===========
WEIGHTED AVERAGE NUMBER OF COMMON
     AND COMMON EQUIVALENT SHARES
     OUTSTANDING                                             8,769,065       9,497,571      8,693,148       9,308,032
                                                            ==========      ==========    ===========     ===========



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

</TABLE>

                                        5


<PAGE>   6


<TABLE>
                         MATHSOFT, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<CAPTION>
                                                                    SIX MONTHS ENDED
                                                                      DECEMBER 31,
                                                                   1996           1995
                                                                -----------    -----------
<S>                                                            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

  Net income (loss)                                            ($1,066,580)   $   976,458
  Adjustments to reconcile net income (loss) to  net
    cash used in operating activities -
      Depreciation and amortization                                545,620        501,979
      Changes in assets & liabilities-
       Accounts receivable and other receivables                   251,616     (1,551,351)
       Inventories                                                  17,472       (152,620)
       Prepaid expenses                                            (64,123)       (18,619)
       Accounts payable                                            694,961        488,192
       Accrued expenses                                         (1,018,900)      (561,610)
       Deferred revenue                                            (55,707)       (60,568)
                                                               -----------    -----------
          Net cash used in operating activities                   (695,641)      (378,139)

CASH FLOWS FROM INVESTING ACTIVITIES

  Decrease in short-term investments                                 -            248,678
  Purchases of property and equipment                             (449,107)      (458,106)
  (Increase) Decrease in deposits and other assets                 (35,834)        13,337
  Cash acquired from the TriMetrix, Inc. acquisition                 -             27,849
  Cash acquired from the AcroScience Corporation acquisition         9,691          -
                                                               -----------    -----------  
          Net cash used in investing activities                   (475,250)      (168,242)
                                                               -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES

  Payments on long-term debt                                         -             (3,211)
  Payments on capital lease obligations                            (10,510)       (52,774)
  Proceeds from exercise of stock options & warrants               235,318        151,804
  Net proceeds from sale of common stock                             -          2,940,463
                                                               -----------    -----------
           Net cash provided by financing activities               224,808      3,036,282

Effect of exchange rate changes on cash                            (92,235)       (55,610)
                                                               -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS            (1,038,318)     2,434,291

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                   4,954,416      3,486,329
                                                               -----------    -----------
                                                                                          
CASH AND CASH EQUIVALENTS, END OF PERIOD                       $ 3,916,098    $ 5,920,620
                                                               ===========    ===========




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

</TABLE>


                                        6



<PAGE>   7

<TABLE>
                         MATHSOFT, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)
                                   (UNAUDITED)

<CAPTION>

                                                                   SIX MONTHS ENDED
                                                                      DECEMBER 31,
                                                                   1996           1995
                                                                -----------    -----------
<S>                                                                <C>            <C> 
                                                                                      
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
       INFORMATION:
          Cash paid during the period for-
              Interest                                             $ 2,642        $ 5,341
                                                                   =======        =======
              Income taxes                                         $23,111        $21,470
                                                                   =======        =======




















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

</TABLE>


                                        7
<PAGE>   8


                         MATHSOFT, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.  BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have been
prepared by MathSoft, Inc. ("MathSoft" or the "Company") pursuant to the rules
and regulations of the Securities and Exchange Commission regarding interim
financial reporting. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements and should be read in conjunction with the consolidated
financial statements and notes thereto for the fiscal year ended June 30, 1996.
The accompanying consolidated condensed financial statements reflect all
adjustments (consisting solely of normal, recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of results for the
interim periods presented. The results of operations for the three and six month
periods ended December 31, 1996 are not necessarily indicative of the results to
be expected for the full fiscal year.

2.  INVENTORIES

<TABLE>
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist of the following:

<CAPTION>
                                           DECEMBER 31,       JUNE 30,
                                               1996            1996
                                           -----------       --------
<S>                                         <C>              <C>
Materials and supplies                      $135,736         $162,627
Finished goods                               401,524          385,265
                                            --------         --------
                                            $537,260         $547,892
                                            ========         ========
</TABLE>

3.  SALE OF STOCK

On July 27, 1995, the Company completed a private placement of 750,000 shares of
common stock. The company received net proceeds of approximately $2.94 million.

4.  ACQUISITION OF ACROSCIENCE CORPORATION

On November 26, 1996, the Company acquired all of the outstanding capital stock
of AcroScience Corporation, a Boulder, Colorado developer of visual modeling and
programming tools, in a business combination accounted for as a pooling of
interests. As a result of the transaction, AcroScience Corporation became a
wholly-owned subsidiary of the Company. As part of the business combination,
former stockholders of AcroScience Corporation received a total of 250,000
shares of the Company's common stock in exchange for all outstanding shares of
AcroScience Corporation.




                                       8
<PAGE>   9


                         MATHSOFT, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)



ACQUISITION OF ACROSCIENCE CORPORATION (CONTINUED)

For financial reporting purposes, the periods preceding the acquisition have not
been restated, as the acquisition of AcroScience Corporation was not material to
the consolidated financial statements.






























                                       9

<PAGE>   10



                         MATHSOFT, INC. AND SUBSIDIARIES

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

Total revenues decreased 9.8% from $5,488,000 in the second quarter of fiscal
1996 to $4,952,000 in the second quarter of fiscal 1997. The decrease in total
revenues was primarily attributable to a worldwide decrease in both new licenses
and upgrade revenue generated by the Company's core product, Mathcad for
Windows, offset by the release of Mathcad 6.0 for Macintosh in November 1996 and
growth in the Company's Axum product line acquired in the second quarter of
fiscal 1996 as part of the TriMetrix, Inc. acquisition. The Company's last
significant upgrade, Mathcad 6.0 for Windows, was released approximately
eighteen months earlier in July 1995 and supported upgrade revenue of $1,149,000
in the second quarter of fiscal 1996 compared to upgrade revenue of $269,000 in
the second quarter of fiscal 1997, a decrease as a percentage of total revenues
from 20.9% to 5.4%, respectively, as the Mathcad 6.0 for Windows upgrade cycle
draws to a close. Worldwide Mathcad for Windows non-upgrade product line sales
decreased 26.5% from $2,743,000 in the second quarter of fiscal 1996 to
$2,017,000 in the second quarter of fiscal 1997 and decreased as a percentage of
total revenues from 50.0% in the second quarter of fiscal 1996 to 40.7% in the
second quarter of fiscal 1997. The release of Mathcad 6.0 for Macintosh in
November 1996 accounted for $772,000, or 15.6% of total revenues, in the second
quarter of fiscal 1997. Revenues attributable to the Axum product line accounted
for $92,000, or 1.7% of total revenues, in the second quarter of fiscal 1996
compared to $406,000, or 8.2% of total revenues, in the second quarter of fiscal
1997.

Worldwide S-PLUS product line and services revenue decreased 2.7% from
$1,414,000 in the second quarter of fiscal 1996 to $1,376,000 in the second
quarter of fiscal 1997, and increased as a percentage of total revenues from
25.8% in the second quarter of fiscal 1996 to 27.8% in the second quarter of
fiscal 1997. Total international revenues increased 10.0% from $1,709,000 in the
second quarter of fiscal 1996 to $1,880,000 in the second quarter of fiscal
1997, and increased as a percentage of total revenues from 31.1% in the second
quarter of fiscal 1996 to 38.0% in the second quarter of fiscal 1997.

Total cost of revenues increased 4.8% from $963,000 in the second quarter of
fiscal 1996 to $1,009,000 in the second quarter of fiscal 1997, and increased as
a percentage of total revenues from 17.5% to 20.4%, respectively. The increase
in total cost of revenues as a percentage of total revenues was primarily
attributable to a reduction of inventory reserves in the second quarter of
fiscal 1996 based on an evaluation of actual inventory exposure. A similar
reduction was not required in the second quarter of fiscal 1997. In addition,
fixed costs such as amortization of purchased technology and royalties were
allocated over a lower revenue base in the second quarter of fiscal 1997.




                                       10







<PAGE>   11

                         MATHSOFT, INC. AND SUBSIDIARIES

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS (CONTINUED)

Sales and marketing expenses increased 5.1% from $2,456,000 in the second
quarter of fiscal 1996 to $2,582,000 in the second quarter of fiscal 1997, and
increased as a percentage of total revenues from 44.8% to 52.1%, respectively.
The increase in overall sales and marketing expenses was primarily attributable
to expenses incurred related to the launch of Mathcad 6.0 for Macintosh and new
retail packaging for the Company's StudyWorks product line in addition to
increased spending on both domestic and International channel marketing
programs. International sales and marketing expenses increased from $586,000 in
the second quarter of fiscal 1996 to $669,000 in the second quarter of fiscal
1997.

Research and development expenses increased 35.2% from $952,000 in the second
quarter of fiscal 1996 to $1,287,000 in the second quarter of fiscal 1997, and
increased as a percentage of total revenues from 17.3% to 26.0%, respectively.
The increase in research and development expenses was due primarily to increased
personnel and consulting costs associated with the continued development of the
S-PLUS product line.

General and administrative expenses increased 21.4% from $589,000 in the second
quarter of fiscal 1996 to $715,000 in the second quarter of fiscal 1997, and
increased as a percentage of total revenues from 10.7% to 14.4%, respectively.
The increase in overall general and administrative expenses was primarily
attributable to fluctuations in international exchange rate transactions and, to
a lesser extent, increased legal fees and the addition of personnel from the
AcroScience Corporation acquisition in the second quarter of fiscal 1997. The
Company recorded exchange rate gains of $30,000 in the second quarter of fiscal
1996 compared to exchange rate losses of $54,000 in the second quarter of fiscal
1997.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents, totaling $3,916,000 at December 31, 1996, decreased
$1,038,000 during the six month period ended December 31, 1996 from $4,954,000
at June 30, 1996. The negative cash flow resulted primarily from cash used in
operating activities of approximately $696,000 and purchases of property and
equipment of approximately $449,000, offset by proceeds received from the
exercise of stock options of approximately $235,000.





                                       11
<PAGE>   12



                         MATHSOFT, INC. AND SUBSIDIARIES

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

The Company's financial reserves are represented by cash and cash equivalents as
of December 31, 1996. The Company has a line of credit agreement with a
commercial bank. Borrowings under the line are limited to the lesser of 80% of
eligible domestic accounts receivable or $1,000,000. Borrowings are secured by a
first security interest on substantially all of the Company's assets and bear
interest at the bank's prime rate plus 1/2%. The line of credit contains certain
restrictive covenants, including minimum amounts of profitability, equity,
leverage and liquidity, all as defined in the agreement, and expires on December
1,1997.  There were no amounts outstanding under the line as of 
December 31, 1996.

The Company believes its financial reserves and cash flows from future
operations will be sufficient to meet its liquidity requirements for at least
the next twelve months. The foregoing statement is forward-looking and involves
risks and uncertainties, many of which are outside the Company's control. The
Company's actual experience may differ materially from that discussed above.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Cautionary Statements" as well as future events that have
the effect of reducing the Company's available cash balances, such as
unanticipated operating losses or capital expenditures or cash expenditures
related to possible future acquisitions. The Company may be presented from time
to time with acquisition opportunities which require additional external
financing, and the Company may from time to time seek to obtain additional funds
from public or private issuances of equity or debt securities. There can be no
assurance that any such financing will be available at all or on terms
acceptable to the Company.






                                       12

<PAGE>   13



                         MATHSOFT, INC. AND SUBSIDIARIES

                              CAUTIONARY STATEMENTS


In addition to the other information in this report, the following cautionary
statements should be considered carefully in evaluating the Company and its
business. Information provided by the Company from time to time may contain
certain "forward-looking" information, as that term is defined by (i) the
Private Securities Litigation Reform Act of 1995 (the "Act") and (ii) in
releases made by the Securities and Exchange Commission (the "SEC"). These
cautionary statements are being made pursuant to the provisions of the Act and
with the intention of obtaining the benefits of the "safe harbor" provisions of
the Act.

VARIABILITY OF QUARTERLY OPERATING RESULTS. The Company's quarterly operating
results may vary significantly from quarter to quarter, depending upon factors
such as the introduction and market acceptance of new products and new versions
of existing products, the ability to reduce expenses, and the activities of
competitors. Because a high percentage of the Company's expenses are relatively
fixed in the near term, minor variations in the timing of orders and shipments
can cause significant variations in quarterly operating results. The Company
operates with little or no backlog and has no long-term contracts, and
substantially all of its product revenues in each quarter result from software
licenses issued in that quarter, and the Company's ability to accurately
forecast future revenues and income for any period is necessarily limited. Any
forward-looking information provided from time to time by the Company represents
only management's then-best current estimate of future results or trends, and
actual results may differ materially from those contained in the Company's
estimates.

POTENTIAL VOLATILITY OF STOCK PRICE. There has been significant volatility in
the market price of securities of technology companies. The Company believes
factors such as announcements of new products by the Company or its competitors,
quarterly fluctuations in the Company's financial results or other software
companies' financial results, shortfalls in the Company's actual financial
results compared to results previously forecasted by stock market analysts, and
general conditions in the software industry and conditions in the financial
markets could cause the market price of the Common Stock to fluctuate
substantially. These market fluctuations may adversely affect the price of the
Company's Common Stock.

RISKS ASSOCIATED WITH DISTRIBUTION CHANNELS. The Company markets and distributes
its S-PLUS products in the U.S. through the Company's telesales force and
internationally through third party resellers and distributors. Mathcad products
are currently marketed and distributed in the U.S. through third party resellers
and distributors, telesales and direct mail (for upgrades to the Company's
installed base). Internationally, the Company's Mathcad products are marketed
and distributed through third party resellers and distributors. There can be no
assurance that the Company will be able to retain its current resellers




                                       13
<PAGE>   14



                         MATHSOFT, INC. AND SUBSIDIARIES

                              CAUTIONARY STATEMENTS


and distributors, or expand its distribution channels by entering into
arrangements with new resellers and distributors in the Company's current
markets or in new markets.

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. Sales outside North America
accounted for approximately 36.1% of the Company's total revenues in fiscal
1995, approximately 32.5% of the Company's total revenues in fiscal 1996 and
approximately 33.5% for the six months ended December 31, 1996, and may continue
to represent a significant portion of the Company's product revenues. Any
decrease in sales outside North America may have a materially adverse effect on
the Company's operating results. The Company's international business and
financial performance may be affected by fluctuations in exchange rates and by
trade regulations.

RELIANCE ON THIRD PARTY LICENSORS. Maple V, a software product licensed as a
part of the most recent version of Mathcad, contains certain copyrighted texts
licensed from third party publishers incorporated in the Company's Electronic
Books, and the S programming language, the language on which all of StatSci's
products are based, are currently licensed from a single source or limited
source suppliers. If such licenses are discontinued, there can be no assurance
that the Company will be able to independently develop substitutes or to obtain
alternative sources or, if able to be developed or obtained as needed in the
future, that such efforts would not result in delays or reductions in product
shipments or cost increases that could have a material adverse effect on the
Company's consolidated business operations.

RAPID TECHNOLOGICAL CHANGE; COMPETITION. The technical calculation software
market is subject to rapid and substantial technological change, similar to that
affecting the software industry generally. The Company, to remain successful,
must be responsive to new developments in hardware and chip technology,
operating systems, programming technology and multimedia capabilities. In
addition, the Company competes against numerous other companies, some of which
have significant name recognition, as well as substantially greater capital
resources, marketing experience, research and development staffs and production
facilities than the Company. The Company's financial results may be negatively
impacted by the failure of new or existing products to be favorably received by
retailers and consumers due to price, availability, features, other product
choices or the necessity of promotions to increase sales of the Company's
products.




                                       14

<PAGE>   15



                         MATHSOFT, INC. AND SUBSIDIARIES

                              CAUTIONARY STATEMENTS


UNCERTAINTIES REGARDING PROTECTION OF PROPRIETARY TECHNOLOGY; UNCERTAINTIES
REGARDING PATENTS. The Company believes that while the mathematical calculations
performed by the Company's software are not proprietary, the speed and quality
of displaying the computation and the ease of use are unique to MathSoft's
products. The Company's success will depend, in part, on its ability to
aggressively protect the proprietary aspects of its products. The Company seeks
to protect these proprietary aspects of its products principally through a
combination of patents, contract provisions and copyright, trademark and trade
secret laws. There can be no assurance that the steps taken by the Company to
protect its proprietary rights will be adequate to prevent misappropriation of
its technology. Although the Company believes that its products and technology
do not infringe any existing proprietary rights of others, the use of patents to
protect software has increased and there may be pending or issued patents of
which the Company is not aware that the Company may need to license or challenge
at significant expense. There can be no assurance that any such license would be
available on acceptable terms, if at all, or that the Company would prevail in
any such challenge.

RISKS ASSOCIATED WITH ACQUISITIONS. The Company has made a number of
acquisitions and will continue to review future acquisition opportunities. No
assurances can be given that acquisition candidates will continue to be
available on terms and conditions acceptable to the Company. Acquisitions
involve numerous risks, including, among other things, possible dilution to
existing shareholders, difficulties and expenses incurred in connection with the
acquisitions and the subsequent assimilation of the operations and services or
products of the acquired companies, the difficulty of operating new (albeit
related) businesses, the diversion of management's attention from other business
concerns and the potential loss of key employees of the acquired company. In the
event that the operations of an acquired business do not live up to
expectations, the Company may be required to restructure the acquired business
or write-off the value of some or all of the assets of the acquired business.
There can be no assurance that any acquisition will be successfully integrated
into the Company's operations.

RELIANCE ON ATTRACTING AND RETAINING KEY EMPLOYEES. The Company's continued
success will depend in large part on its ability to attract and retain
highly-qualified technical, managerial, sales and marketing and other personnel.
Competition for such personnel is intense. None of the senior management of the
Company is subject to an employment contract, although the Company does have
non-competition agreements with its key management and technical personnel.
There can be no assurance that the Company will be able to continue to attract
or retain such personnel.






                                       15


<PAGE>   16


                         MATHSOFT, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION


 ITEM 2. CHANGES IN SECURITIES

         (a) Not applicable.

         (b) Not applicable.

         (c) On November 26, 1996 the Company acquired all of the outstanding
             capital stock of AcroScience Corporation, a Washington corporation
             ("AcroScience"). As a part of the transaction, the former
             stockholders of AcroScience received a total of 250,000 shares of
             the Company's common stock (the "Shares") in exchange for all of
             the outstanding shares of AcroScience. The Shares were issued in
             reliance upon an exemption from the registration provisions of the
             Securities Act of 1933, as amended (the "Act"), set forth in
             Section 4(2) thereof. In connection with this issuance, the
             AcroScience stockholders made certain representations to the
             Company as to their investment intent, level of sophistication and
             access to information. The Shares issued were subject to
             restrictions on transfer absent registration under the Act or an
             exemption therefrom.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

         (a) An Annual Meeting of the Stockholders of the Company was held on
             November 8, 1996.

         (b) Not applicable.

         (c) At the meeting, the Stockholders of the Company voted:

               (i)  to elect Charles H. Federman as a Class I director, to serve
                    for a three-year term (until the Annual Meeting of
                    Stockholders in 1999) (7,259,281 shares in favor; 22,235
                    shares withheld; 0 shares abstaining; and 0 shares unvoted);

              (ii)  to amend the Company's Amended and Restated 1992 Stock
                    Plan to increase the number of shares of Common Stock
                    available for issuance under the plan from 2,150,000 shares
                    to 2,550,000 shares, and to permit grants thereunder to
                    comply with Section 162(m) of the Internal Revenue Code.   
                    (5,658,812 shares in favor; 903,028 shares against; 15,900 
                    shares abstaining; and 703,776 shares unvoted); 

             (iii)  to ratify the selection of Arthur Andersen LLP as auditors 
                    for the fiscal year ending June 30, 1997 (7,256,302 shares 
                    in favor; 20,069 shares against; 5,145 shares abstaining; 
                    and 0 shares unvoted).

         (d) Not applicable.





                                       16
<PAGE>   17


                         MATHSOFT, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits:

               10.1 Software License Agreement dated February 18, 1996 between
                    the Company and Lucent Technologies Inc. *

               27.1 Financial Data Schedule.

         (b) Reports on Form 8-K:

                    The Company filed a current Report on Form 8-K dated January
                    14, 1997 reporting second quarter results.





* Confidential treatment requested as to certain portions.













                                       17
<PAGE>   18




                         MATHSOFT, INC. AND SUBSIDIARIES

                                   SIGNATURES


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


                                 MATHSOFT, INC.




Dated:  February 14, 1997        By  /s/ Charles J. Digate
                                 -------------------------
                                 Charles J. Digate
                                 Chairman, President and Chief Executive Officer
                                 (Principal Executive Officer)




Dated:  February 14, 1997        By  /s/ Robert P. Orlando
                                 -------------------------
                                 Robert P. Orlando
                                 Vice President Finance and Administration,
                                 Chief Financial Officer, Treasurer, and Clerk
                                 (Principal Financial and Accounting Officer)
















                                       18
<PAGE>   19



                                  EXHIBIT INDEX


EXHIBIT NO.                         DESCRIPTION
-----------                         -----------

10.1                Software License Agreement dated February 18, 1996 between 
                    the Company and Lucent Technologies Inc. *

27.1                Financial Data Schedule.





* Confidential treatment requested as to certain portions.

















                                       19