<PAGE>


                    U. S. SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   FORM 10-QSB

[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934.

                For the Quarterly Period Ended September 30, 2002

                                       or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934.

                    For the Transition Period From    To

                         Commission File Number: 0-30781

                                 MANGOSOFT, INC.
        (Exact name of small business issuer as specified in its charter)


            Nevada                                       87-0543565
  (State or other jurisdiction               (IRS Employer Identification No.)
of incorporation or organization)

      12 Pine Street Extension
             Nashua, NH                                     03060
(Address of principal executive offices)                  (Zip code)

                    Issuer's telephone number: (508) 871-7300

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:

    Common Stock                                   27,352,033 Shares
   $0.001 Par Value                        (Outstanding on November 10, 2002)

<PAGE>

                         MANGOSOFT, INC. AND SUBSIDIARY

                              INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>

                                                                                                   Page
<S>                                                                                                <C>
PART I.  FINANCIAL INFORMATION

ITEM 1 - Condensed Consolidated Financial Statements (unaudited):

Balance Sheets as of September 30, 2002 and December 31, 2001 ....................................   3
Statements of Operations for the Three Months Ended September 30, 2002 and 2001 ..................   4
Statements of Operations for the Nine Months Ended September 30, 2002 and 2001 ...................   5
Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001 ...................   6
Notes to the Condensed Consolidated Financial Statements .........................................   7

ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations ...  11

ITEM 3 - Controls and Procedures .................................................................  19

PART II  OTHER INFORMATION

ITEM 6 - Exhibits and Reports on Form 8-K. .......................................................  20

Signature ........................................................................................  22

</TABLE>



                                       2

<PAGE>

                         MANGOSOFT, INC. AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                         September 30,      December 31,
                                                             2002               2001
                                                             ----               ----
                                                         (Unaudited)
<S>                                                      <C>                 <C>
                               ASSETS

Current Assets:
     Cash and cash equivalents .......................    $  1,406,034       $  6,911,906
     Short-term investments ..........................         458,329                 --
     Accounts receivable .............................          27,401             41,925
     Prepaid expenses and other current assets .......         151,311            199,653
                                                          ------------       ------------
          Total current assets .......................       2,043,075          7,153,484
Property and equipment - net .........................         331,772            875,533
Intangibles - net ....................................         255,888                 --
Other assets .........................................          37,845              2,400
                                                          ------------       ------------
               Total .................................    $  2,668,580       $  8,031,417
                                                          ============       ============

              LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts payable ................................    $    793,400       $    772,919
     Accrued compensation ............................          11,521            309,426
     Other accrued expenses and current liabilities ..         255,023            154,683
                                                          ------------       ------------
          Total current liabilities ..................       1,059,944          1,237,028
                                                          ------------       ------------

Commitments and contingencies

Stockholders' Equity:
     Common stock ....................................          27,352             27,002
     Additional paid-in capital ......................      89,157,000         89,560,431
     Deferred compensation ...........................       (544,182)        (1,678,303)
     Accumulated deficit .............................    (87,031,534)       (81,114,741)
                                                          -----------        -----------
          Total stockholders' equity .................       1,608,636          6,794,389
                                                          ------------       ------------
               Total .................................    $  2,668,580       $  8,031,417
                                                          ============       ============
</TABLE>

    See notes to the unaudited condensed consolidated financial statements.


                                       3

<PAGE>

                         MANGOSOFT, INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                Three Months Ended September 30,
                                                                                --------------------------------
                                                                                2002                        2001
                                                                                ----                        ----
                                                                                       (Unaudited)
<S>                                                                        <C>                        <C>
Software license revenues ...........................................      $      21,250              $      67,785
Service revenues ....................................................            124,352                     20,004
                                                                           -------------              -------------
     Total revenues                                                              145,602                     87,789
Costs and expenses:
  Cost of software license revenues .................................                 --                     11,167
  Cost of services (1) ..............................................            136,147                    190,486
  Engineering and development (1) ...................................            277,803                    604,154
  Selling and marketing (1) .........................................            128,314                    292,111
  General and administrative (1) ....................................            641,943                    933,258
  Equipment write-down ..............................................            219,605                         --
  Stock-based compensation expense ..................................            123,592                    190,778
                                                                           -------------              -------------
     Loss from operations ...........................................        (1,381,802)                (2,134,165)
Interest income .....................................................             10,657                     94,681
                                                                           -------------              -------------
Net loss ............................................................      $ (1,371,145)              $ (2,039,484)
                                                                           =============              =============

Net loss per share  - basic and diluted .............................      $      (0.05)              $      (0.08)
Weighted average shares outstanding - basic and diluted .............         27,352,033                 26,969,901

(1) Excludes stock-based compensation expense as follows:
      Cost of services ..............................................      $       4,875              $      15,475
      Engineering and development ...................................             36,850                     54,958
      Selling and marketing .........................................                449                     13,875
      General and administrative ....................................             81,418                    106,470

</TABLE>



    See notes to the unaudited condensed consolidated financial statements.


                                       4

<PAGE>

                         MANGOSOFT, INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended September 30,
                                                                                 -------------------------------
                                                                                 2002                       2001
                                                                                 ----                       ----
                                                                                       (Unaudited)

<S>                                                                        <C>                        <C>
Software license revenues ............................................     $      28,303              $     250,135
Service revenues .....................................................           326,026                     36,254
                                                                           -------------              -------------
     Total revenues ..................................................           354,329                    286,389
Costs and expenses:
  Cost of software license revenues ..................................                --                     37,011
  Cost of services (1) ...............................................           561,923                    862,628
  Engineering and development (1) ....................................         1,775,138                  2,654,831
  Selling and marketing (1) ..........................................           698,477                  1,585,192
  General and administrative (1) .....................................         2,594,833                  3,624,815
  Equipment write-down ...............................................           219,605                         --
  Stock-based compensation expense ...................................           479,040                    956,665
                                                                           -------------              -------------
     Loss from operations ............................................       (5,974,687)                (9,434,753)
Interest income ......................................................            57,894                    459,734
                                                                           -------------              -------------
Net loss .............................................................     $ (5,916,793)              $ (8,975,019)
                                                                           =============              =============

Net loss per share  - basic and diluted ..............................     $      (0.22)              $      (0.33)
Weighted average shares outstanding - basic and diluted ..............        27,298,987                 26,961,424

(1) Excludes stock-based compensation expense as follows:
      Cost of services ...............................................      $     37,125              $      55,367
      Engineering and development ....................................           179,886                    262,674
      Selling and marketing ..........................................            16,417                    193,626
      General and administrative .....................................           245,612                    444,998

</TABLE>



     See notes to the unaudited condensed consolidated financial statements.


                                       5

<PAGE>

                         MANGOSOFT, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended September 30,
                                                                                 -------------------------------
                                                                                 2002                       2001
                                                                                 ----                       ----
                                                                                           (Unaudited)
<S>                                                                           <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................................................    $(5,916,793)            $ (8,975,019)
Adjustments to reconcile net loss to net cash used by
  operating activities:
    Depreciation, amortization and equipment write-down ..................        708,775                 404,155
    Stock-based compensation .............................................        479,040                 956,665
    Increase (decrease) in cash from the change in:
      Accounts receivable ................................................         14,524                 (78,148)
      Prepaid expenses and other current assets ..........................         48,342                 (52,085)
      Accounts payable ...................................................         20,481                (442,331)
      Accrued compensation ...............................................       (297,905)                 80,951
      Other accrued expenses and current liabilities .....................        100,340                (113,169)
                                                                              -----------             -----------
          Net cash used by operating activities ..........................     (4,843,196)             (8,218,981)
                                                                              -----------             -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment ....................................        (29,347)               (200,681)
Cash paid for fileTRUST assets ...........................................       (175,000)                     --
Short-term investments ...................................................       (458,329)                     --
                                                                              -----------              ----------
          Net cash used by investing activities ..........................       (662,676)               (200,681)
                                                                              -----------              ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the issuance of common stock ...........................             --                   8,471
                                                                              -----------              ----------
          Net cash provided by financing activities ......................             --                   8,471
                                                                              -----------              ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS ................................     (5,505,872)             (8,411,191)
CASH AND CASH EQUIVALENTS, BEGINNING OF
  PERIOD .................................................................      6,911,906              17,354,025
                                                                              -----------              ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD .................................    $ 1,406,034              $8,942,834
                                                                              ===========              ==========


NON CASH ACTIVITIES:
  Fair value of common stock and warrants issued in
    connection with the purchase of the fileTRUST assets .................    $  252,000               $       --
                                                                              ===========              ==========
</TABLE>

    See notes to the unaudited condensed consolidated financial statements.


                                       6

<PAGE>

                         MANGOSOFT, INC. AND SUBSIDIARY

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

     MangoSoft, Inc. and subsidiary (the "Company") develop Internet business
software and services that improve the utility and effectiveness of
Internet-based business applications. The Company develops, markets and supports
software solutions to address the networking needs of small businesses,
workgroups and large enterprises. The Company is engaged in a single operating
segment of the computer software industry.

     From its inception through the year ended December 31, 2001, the Company
was considered to be a development stage company because it had not generated
significant revenues from products and had not commercially launched its
principal product line. In January 2001, the Company launched its principal
product and began to recognize revenues from the sale of this product. As such,
effective January 1, 2001, the Company was deemed to have exited the development
stage.

     The accompanying unaudited condensed consolidated financial statements have
been prepared on the same basis as the annual financial statements. In the
opinion of management, all significant adjustments, which are normal, recurring
in nature and necessary for a fair presentation of the financial position, cash
flows and results of the operations of the Company, have been consistently
recorded. The operating results for the interim periods presented are not
necessarily indicative of expected performance for the entire year.

     The unaudited information should be read in conjunction with the audited
financial statements of the Company and the notes thereto for the year ended
December 31, 2001 included in the Company's Annual Report on Form 10-KSB filed
with the Securities and Exchange Commission.

     As shown in the unaudited condensed consolidated financial statements,
during the nine months ended September 30, 2002 and 2001, the Company incurred
net losses of $5,916,793 and $8,975,019, respectively. Cash used in operations
during the nine months ended September 30, 2002 and 2001 was $4,843,196 and
$8,218,981, respectively. These factors, among others, raise significant doubt
about the Company's ability to continue as a going concern. The unaudited
condensed consolidated financial statements do not include any adjustments
relating to the recoverability and classification of assets or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern is dependent upon its ability to generate sufficient cash flow and meet
its obligations on a timely basis and ultimately attain profitability.

2. RECENT DEVELOPMENTS

     The Company has reduced its work force on four separate occasions since
April 23, 2001. Effective April 23, 2001, the Company implemented an
approximately 40% reduction in its work force. In connection with this work
force reduction, the Company eliminated the positions held by two members of
senior management in addition to twenty-three (23) other employees. Effective
June 28, 2002, the Company implemented an approximate 50% reduction in its
existing work force. The remaining twenty (20) employees took a ten percent
reduction in salary. Effective July 29, 2002, the Company reduced its work force
by approximately 35% to thirteen (13) persons. In connection with this work
force reduction, the Company eliminated the positions held by two members of
senior management. Effective September 30, 2002, the Company reduced its work
force to three (3) persons. In connection with this work force reduction, the
Company eliminated the positions held by two members of senior management.


                                       7

<PAGE>

     In conjunction with its September 30, 2002 work force reduction, the
Company executed an Information Management Services Agreement with Built Right
Networks LLC ("Right Networks") whereby Right Networks will support the
Company's information technology infrastructure, its billable services
infrastructure, software code base and reseller network. In addition, Right
Networks executed a standard commissioned reseller agreement with the Company to
continue to resell the Company's products and services. The principals of Right
Networks are all former Company employees, including its former Vice President
of Sales.

3. BUSINESS COMBINATION

     On February 11, 2002, the Company acquired the fileTRUST online data
storage service and related assets from FleetBoston Financial Corporation
("FleetBoston"). Under the terms of the purchase, the Company paid $175,000 in
cash, issued 350,000 shares of the Company's common stock and warrants to
purchase 150,000 shares of the Company's common stock at an exercise price of
$0.53 per share. The aggregate fair value of the common stock was $182,000,
which was based on the closing price of the Company's common stock on February
11, 2002. The aggregate fair value of the warrants was $70,000, which was
determined using the Black-Scholes valuation model using the following
assumptions: expected life of the warrants, 5 years; volatility, 127%; and the
risk free interest rate, 4.25%.

     As part of the transaction, FleetBoston and the Company entered into a
two-year enterprise license agreement for the internal use of fileTRUST by
FleetBoston. In addition, the two companies will continue to market fileTRUST
under a cooperative marketing agreement. Under the terms of this cooperative
marketing agreement, the Company is required to issue warrants to purchase its
common stock to FleetBoston based on certain revenue targets, not to exceed
850,000 warrants over this two-year period. The 850,000 warrants have been
accounted for as contingent consideration and will be recognized as additional
purchase price as the revenue targets are achieved.

     The total aggregate consideration rendered for this transaction totaled
approximately $427,000. The Company has not completed its final allocation of
the purchase price to the net assets acquired. The following presents the
preliminary allocation of the purchase price:

Cash paid .......................................    $ 175,000
Fair value of common stock issued ...............      182,000
Fair value of warrants issued ...................       70,000
                                                     ---------

Purchase price ..................................    $ 427,000
                                                     =========

Software and acquired technology ................    $ 329,000
Computer equipment ..............................       54,000
Other identifiable intangible assets ............       44,000
                                                     ---------
                                                     $ 427,000
                                                     =========

     The software and acquired technology represents the fileTRUST operating
software that has reached technological feasibility and has future economic
value. The other identifiable intangible assets are comprised of customer
relationships and the fileTRUST service mark. The computer equipment will be
depreciated over its estimated useful lives, generally not to exceed three
years. The software and acquired technology will be amortized over three years.
The other identifiable intangible assets have indefinite lives and will not be
amortized but will be subject to an impairment analysis in accordance with
Statement of Financial Accounting Standard No. 142, "Goodwill and Other
Intangible Assets."

     The operations of the fileTRUST assets prior to the acquisition were not
material to the Company's financial statements.


                                       8

<PAGE>

4. STOCK-BASED COMPENSATION

     The Company accounts for stock options granted to employees in accordance
with Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
Issued to Employees." Under APB No. 25, stock options that include stock
appreciation rights ("SARs") are accounted for as variable awards and
compensation expense is measured at each reporting date based on the difference
between the exercise price and the market price of the common stock. For
unvested awards, compensation expense is recognized over the vesting period; for
vested awards, compensation expense is adjusted up or down at each reporting
date based on changes in the market price of the common stock. At September 30,
2002 and 2001, there were 1,667,272 and 2,683,611 outstanding options,
respectively, to purchase the Company's common stock that included SARs.

     On April 3, 2001, the Company's Board of Directors resolved to reprice
options to purchase 2,584,167 shares of the Company's common stock. The options
were originally issued between October 1999 and December 2000 and had exercise
prices ranging from $1.88 to $5.00 per share. The exercise price for these
options was reduced to $1.03, the closing market value of the Company's common
stock as of the repricing date. The repriced options continue to vest according
to the original grant date. These options are now accounted for as variable
awards, similar to the SARs. At September 30, 2002 and 2001, there were
1,330,981 and 2,080,851 outstanding options, respectively, to purchase the
Company's common stock that were repriced and subject to variable plan
accounting.

     During the nine months ended September 30, 2002, the Company recorded
stock-based compensation expense of $479,040. This expense represents the
amortization of deferred stock-based compensation recognized as the result of
the Company's issuance of stock options to employees at exercise prices less
than the quoted market price on the grant date. During the nine months ended
September 30, 2001, the stock-based compensation expense totaled $956,665. This
expense was due primarily to the amortization of $794,638 in fixed awards. In
addition, stock-based compensation of $158,449 was recognized in connection with
the Company's issuance of 163,730 options to non-employees in lieu of cash
compensation. The remainder of the stock-based compensation expenses was
recorded as a result of the effects of the decrease in the quoted market price
of the Company's common stock and its effect on outstanding stock options
accounted for as variable awards.

     The Company did not record any stock-based compensation on stock options
accounted for as variable awards for the nine months ended September 30, 2002
because the closing market price of the Company's common stock was less than the
exercise price of these options.

5. EQUIPMENT WRITE-DOWN

     As a result in the Company's shift in outsourced data centers, the Company
changed its billable service's infrastructure configuration and therefore the
computer equipment requirements used to operate these services. The Company
recorded a $219,605 charge during the three-month period ended September 30,
2002 primarily as a result of a write-down of certain computer hardware and
related equipment no longer used in these operations. The Company believes that
the net book value of these assets may not be recovered through expected future
cash flows from their use and eventual disposition, therefore the Company wrote
down these assets.

6. NET LOSS PER COMMON SHARE

     Basic net loss per common share is computed by dividing net loss applicable
to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted net loss per common share reflects, in
addition to the weighted average number of common shares, the potential dilution
if stock


                                       9

<PAGE>

options and warrants outstanding were exercised and/or converted into common
stock, unless the effect of such equivalent shares was antidilutive.

     For the nine months ended September 30, 2002 and 2001, the effect of stock
options and other potentially dilutive shares were excluded from the calculation
of diluted net loss per common share as their inclusion would have been
antidilutive.


                                       10

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     This Quarterly Report on Form 10-QSB contains forward-looking statements
within the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Any statements in this Quarterly Report that are not statements of
historical facts are forward-looking statements, which involve risks and
uncertainties. Without limiting the foregoing, the words "believes,"
"anticipates," "plans," "expects," and similar expressions are intended to
identify forward-looking statements. Our actual results may differ materially
from those indicated in the forward-looking statements as a result of the
factors set forth elsewhere in this Quarterly Report on Form 10-QSB, including
under "Risk Factors." You should read the following discussion and analysis
together with our condensed consolidated financial statements for the periods
specified and the related notes included herein. Further reference should be
made to our Annual Report on Form 10-KSB for the period ended December 31, 2001
filed with the Securities and Exchange Commission.

Overview

     We develop Internet business software and services that improve the utility
and effectiveness of Internet-based business applications. We develop, market
and support software solutions to address the networking needs of small
businesses, workgroups and large enterprises. Our products and services enhance
the performance of PC networks and deliver improved service utilizing existing
equipment.

     Mangomind(TM) is multi-user, business-oriented, peer-to-peer file sharing
service, allowing individual users to collaborate over the Internet across
organizational boundaries in a safe and secure manner. The architecture is a
blend of the manageability of client/server with the autonomy, clustering, and
caching optimizations of peer-to-peer. The user experience is one of easy file
sharing with colleagues through what looks like an ordinary LAN shared drive.

     In May 2002, we launched our Mangomind(R) Enterprise Server Software. The
Mangomind Enterprise Server Software extends the Mangomind service to medium to
large sized organizations that require data to be stored behind their corporate
firewall. The Mangomind Enterprise Server Software integrates easily into
existing networks and data centers and is scalable for organizations of any
size.

     Cachelink(TM) is a peer-to-peer clustered web cache. Cachelink utilizes our
peer-to-peer clustering technology to efficiently link together the individual
browser caches of multiple systems on a LAN into an aggregated "super cache,"
resulting in much faster Internet access without the expense of a dedicated
hardware caching appliance or server. Cachelink is a pure peer-to-peer
architecture, including a completely decentralized directory. The product is
self-configuring and self-healing from any number of system failures.

     In February 2002, we acquired the fileTRUST(TM) online storage service and
related assets from FleetBoston Financial Corporation ("FleetBoston"). fileTRUST
is a secure Internet service for storing electronic data and allowing file
access via any Internet connected computer and a web browser. fileTRUST allows
users to invite guests to upload and download files from the fileTRUST storage
box and send and receive email messages and file attachments. Files are
protected with SSL encryption during transfer over the Internet. Concurrent with
this purchase, we executed a two-year enterprise license agreement for the
internal use of fileTRUST by FleetBoston. In addition, we entered into a
two-year cooperative marketing agreement with FleetBoston whereby FleetBoston
will continue to market fileTRUST as well as other MangoSoft products and
services.

     From our inception in June 1995 through our fiscal year ended December 31,
2000, we were considered to be a development stage company because we had not
generated significant revenues from our products and had not commercially
launched our principal product line. In January 2001, we launched the Mangomind


                                       11

<PAGE>

service, our principal product, and began to recognize revenues from its sale.
As such, effective January 1, 2001, we were deemed to have exited from the
development stage.

     The adverse economic environment and our need to conserve capital have
forced us to reduce our work force and restructure our operations on several
occasions over the past two years. Effective September 30, 2002, we have three
(3) employees and have outsourced our information technology infrastructure,
billable services infrastructure, software code base and reseller network to a
third party whose principals are all former employees. We believe that this
outsourced relationship will not impair our ability to deliver our products and
services.

Critical Accounting Policies

     Our accounting policies are described in our Annual Report on Form 10-KSB
for the period ended December 31, 2001 filed with the Securities and Exchange
Commission. The following describes the application of accounting principles
that have a significant impact on our consolidated financial statements:

     Revenue Recognition - We recognize revenue generated from the sale of our
Mangomind and fileTRUST services as the services are provided to our end
customers. We recognize revenues generated from the sale of our Cachelink and
Mangomind Enterprise Server Software product when pervasive evidence of an
arrangement exists, the price is fixed and determinable, delivery has occurred
and collection is probable.

     Going Concern Assumption - The consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary
should we be unable to continue as a going concern. If the consolidated
financial statements were prepared on liquidation basis, the carrying value of
our assets and liabilities would be adjusted to net realizable amounts. In
addition, the classification of the assets and liabilities would be adjusted to
reflect the liquidation basis of accounting.

     Stock-based Compensation - As part of our compensation programs offered to
our employees, we grant stock options. In addition, we have engaged third-party
consultants and advisors and have compensated them in the form of stock options.
Compensation for stock options issued to employees is generally measured as the
difference between the exercise price of the options granted and the fair value
of our common stock on the date of grant. Compensation for stock options issued
to third-parties is measured at the fair value on the date of grant, determined
using the Black-Scholes valuation model. Because of the cashless exercise
feature of the stock options granted in 1999 and the repricing of options
granted in 2000, we are required to remeasure the compensation related to these
awards at each reporting date. As the quoted market price of our common stock
fluctuates, our reported operating results will continue to fluctuate. These
fluctuations can be significant.

     Deferred Taxation - Because of the significant operating losses incurred
and the projected future operating losses, we have provided a full valuation
allowance against the deferred tax assets created by our net operating loss
carryforwards.

Costs and Expenses

     Cost of software license revenues and cost of services - Cost of software
license revenues primarily consist of disk replication costs and other costs we
incur in connection with sales of Cachelink. Cost of services consist solely of
the expenses we incur to administer the Mangomind and fileTRUST services. These
expenses consist primarily of salaries and related personnel costs, the cost of
our outsourced data center and the license royalties we pay to our e-security
software provider for the 128-bit encryption used in the Mangomind service and
the Mangomind Enterprise Server Software.


                                       12

<PAGE>

     Engineering and Development - Engineering and development expenses consist
primarily of salaries and related personnel costs and other costs related to the
design, development, testing, deployment and enhancement of our products and
services.

     Other Operating Expenses - Selling and marketing expenses consist primarily
of salaries and related personnel costs and additional costs incurred to market
our products and services such as the costs of attending and presenting at trade
shows. General and administrative expenses consist primarily of salaries and
related personnel costs and other general corporate costs such as facility
costs, commercial and general liability insurance, accounting and legal expenses
and other costs typical of a publicly held corporation.

     Reductions in Force - We have reduced our work force on four separate
occasions since April 23, 2001 due to adverse economic conditions and our need
to conserve capital. Effective April 23, 2001, we reduced our work force by
twenty-five (25) employees, or approximately 40% of our then existing work
force. Effective June 28, 2002, we reduced our work force by twenty (20)
employees, or approximately 50% of our existing work force. Our remaining twenty
(20) employees took a ten percent reduction in salary. Effective July 29, 2002,
we reduced our work force to thirteen (13) employees. Effective September 30,
2002, we reduced our work force to three (3) employees.

Results of Operations - Three Months Ended September 30, 2002 and 2001

     Revenues for the three months ended September 30, 2002 increased $57,813 or
66% to $145,602 from $87,789 for the comparable period in 2001. The increase in
our revenues was attributable to a $104,348 increased in service revenue offset
by a decrease in software license revenue of $46,535 over the two periods.
Customers representing more than 10% of our revenues for the three-month period
ended September 30, 2002 were FleetBoston, New York Life Insurance Company ("New
York Life") and Veritas Software Corporation ("Veritas"), approximately 32%, 24%
and 14%, respectively. In 2001, sales under our July 13, 2000 Value Added
Reseller Agreement with 3Com Corporation ("3Com") represented approximately 77%
of our revenues for the three months ended September 30, 2001. No other customer
accounted for more than 10% of our revenues for either period.

     We recognized $21,250 in software license revenues for the three months
ended September 30, 2002 as compared to $67,785 during the same period in 2001,
a decrease of $46,535. This decrease was primarily due to the decline in
software license sales of our Cachelink product. In 2001, sales of Cachelink to
3Com represented all software license revenue for that period. We concluded our
reselling agreement with 3Com in 2001. We are currently seeking alternative
channels to distribute the Cachelink product.

     In May 2002, we launched our Mangomind Enterprise Server Software product.
In June 2002, we completed a $113,700 sale of this product to New York Life,
which we will recognize over the period of the maintenance contract, twelve (12)
months. We recognized $21,250 in software license revenue and $7,175 in service
revenue for the three-month period ended September 30, 2002. We deferred
approximately $79,500 of this sale at September 30, 2002.

     We recognized $82,088 from the sale of our Mangomind service and $42,264
from the sale of our fileTRUST service during the three months ended September
30, 2002. During the same period in 2001, we recognized $20,004 from the sale of
our Mangomind service.

     We incur cost of software license revenues when we ship electronic media
and other Cachelink product materials under our agreement with 3Com. For the
three months ended September 30, 2001, we incurred $11,167 in disk replication
costs in connection with our sales of $67,785 to 3Com. There were no such costs
incurred in the three-month period ended September 30, 2002.


                                       13

<PAGE>

     Cost of services for the three months ended September 30, 2002 decreased
$54,339 or 29% to $136,147 compared to $190,486 for the comparable period in
2001. The decrease in the cost of delivering our services was primarily a result
of our continued overhead reductions, our switch to a lower cost data center and
decreased personnel costs as a result of our work force reductions.

     Engineering and development expense for the three-month period ended
September 30, 2002 decreased $326,351 or 54% to $277,803 from $604,154 for the
comparable period in 2001. The decrease in engineering and development expense
was primarily a result of our work force reductions.

     For the three-month period ended September 30, 2002, other operating
expenses including selling and marketing and general and administrative expenses
decreased $455,112 or 37% to $770,257 compared with $1,225,369 for the
comparable period in 2001. The decrease in other operating expenses was due
primarily to our reduced spending in the areas of marketing and sales
consultants, public relations, legal and other corporate consultants and
facility rent in addition to reductions in our marketing, selling and general
and administrative personnel associated with our work force reductions.

     We recorded a $219,605 charge during the three months ended September 30,
2002 primarily related to out write-down of certain computer hardware and
related equipment that was no longer used in our operations. As a result of our
shift in outsourced data centers, we significantly changed the configuration and
therefore the computer equipment requirements used to operate our billable
services infrastructure. As the net book value of these assets may not be
recovered through the expected future cash flows from their use and eventual
disposition, we wrote down these assets.

     Stock-based compensation expense of $123,592 was recorded for the
three-month period ended September 30, 2002 compared to $190,778 for the
comparable period in 2001. The decrease in this expense was primarily
attributable to the decrease in the number of outstanding employee stock options
subject to compensation expense as well as the decline in the market price of
our common stock and its effect on employee stock options accounted for as
variable awards (see note 4 to the condensed consolidated financial statements).

     Our loss from operations decreased $752,363 to $1,381,802 for the
three-month period ended September 30, 2002 compared with a loss from operations
of $2,134,165 for the comparable period in 2001 as a result of the above
factors.

       Interest income decreased $84,024 to $10,657 for the three months ended
September 30, 2002 compared to $94,681 for the three months ended September 30,
2001. The decrease was attributable to the reduced balances of our
interest-bearing cash and cash equivalent accounts as a result of our use of
cash in operations.

Results of Operations - Nine Months Ended September 30, 2002 and 2001

     Revenues for the nine months ended September 30, 2002 increased $67,940 to
$354,329 compared with $286,389 for the comparable period in 2001. The increase
in our revenues was attributable to a $289,772 increase in service revenue
offset by a $221,832 decrease in software license revenue. Customers
representing more than 10% of our revenues for the nine-month period ended
September 30, 2002 were FleetBoston, New York Life, and Veritas, approximately
27%, 20% and 14%, respectively. In 2001, sales to 3Com represented approximately
74% of our revenues. No other customer accounted for more than 10% of our
revenues for either period.

     Prior to our fiscal year ending December 31, 2001, the majority of our
revenues were generated from the sale of the Cachelink product. Sales generated
under our Value Added Reseller Agreement with 3Com of $211,785 represented
approximately 74% of our total revenues for the nine-month period ended
September 30, 2001. We concluded our agreement with 3Com in 2001. In May 2002,
we launched our Mangomind


                                       14

<PAGE>

Enterprise Server Software product. In June 2002, we completed a $113,700 sale
of this product to New York Life, which we will recognize over the period of the
maintenance contract, twelve (12) months. We deferred approximately $79,500 of
this sale at September 30, 2002.

     We recognized $220,873 from the sale of our Mangomind service and $105,153
from the sale of our fileTRUST service during the nine months ended September
30, 2002. During the same period in 2001, we recognized $36,254 from the sale of
our Mangomind service.

     Cost of software license revenues for the nine months ended September 30,
2001 consisted primarily of disk replication costs incurred in connection with
our sales of Cachelink to 3Com. There were no such costs incurred in the
nine-month period ended September 30, 2002.

     Cost of services for the nine months ended September 30, 2002 decreased
$300,705 or 35% to $561,923 compared to $862,628 for the comparable period in
2001. The decrease in the cost of delivering our services was primarily a result
of our continued overhead reductions, our switch to a lower cost data center and
decreased personnel costs as a result of our work force reductions.

     Engineering and development expenses for the nine months ended September
30, 2002 decreased $879,693 or 33% to $1,775,138 from $2,654,831 for the
comparable period in 2001. The decrease in engineering and development expense
was primarily a result of our work force reductions.

     Other operating expenses including selling and marketing and general and
administrative expenses for the nine months ended September 30, 2002 decreased
$1,916,697 or 37% to $3,293,310 compared with $5,210,007 for the comparable
period in 2001. The decrease in other operating expenses was due primarily to
our reduced spending in the areas of marketing and sales consultants, public
relations, legal and other corporate consultants in addition to reductions in
our marketing, selling and general and administrative personnel associated with
our work force reductions.

     Stock-based compensation expense of $479,040 was recorded for the
nine-month period ended September 30, 2002 compared to $956,665 for the
comparable period in 2001. The decrease in this expense was primarily
attributable to the decrease in the number of outstanding employee stock options
subject to compensation expense as well as the decline in the market price of
our common stock and its effect on employee stock options accounted for as
variable awards (see note 4 to the condensed consolidated financial statements).

     We recorded a $219,605 charge during the nine months ended September 30,
2002 primarily related to out write-down of certain computer hardware and
related equipment that was no longer used in our operations. As a result of our
shift in outsourced data centers, we significantly changed the configuration and
therefore the computer equipment requirements used to operate our billable
services infrastructure. As the net book value of these assets may not be
recovered through the expected future cash flows from their use and eventual
disposition, we wrote down these assets.

     Our loss from operations decreased $3,460,066 to $5,974,687 for the
nine-month period ended September 30, 2002 compared with a loss from operations
of $9,434,753 for the comparable period in 2001 as a result of the above
factors.

       Interest income decreased $401,840 to $57,894 for the nine months ended
September 30, 2002 compared to $459,734 for the nine months ended September 30,
2001. The decrease was attributable to the reduced balances of our
interest-bearing cash and cash equivalent accounts as a result of our use of
cash in operations.


                                       15

<PAGE>

Financial Condition, Liquidity and Capital Resources

     We were formed in June 1995 and, since our formation, have raised
approximately $74.2 million in gross proceeds as of September 30, 2002 through
the private placement of debt and equity securities.

     In addition, we have, at times, depended upon loans from stockholders and
directors and credit from suppliers to meet interim financing needs. Borrowings
from stockholders and directors have generally been refinanced with new debt
instruments or converted into additional equity.

     At September 30, 2002, we had a cash balance of approximately $1.4 million
and working capital of approximately $1.0 million. In September 2002, we
invested approximately $0.5 million in short-term, interest-bearing investments
as a means to increase returns on our capital. Excluding our facility lease and
other minor equipment leases with aggregate annual commitments totaling
approximately $453,000 in 2002 and $192,000 in 2003, we do not have any
long-term obligations.

     In June 2002, we retained Adams, Harkness & Hill, Inc., an investment bank,
to provide investment banking and financial advisory services.

     In February 2002, we acquired the fileTRUST online data storage service and
related assets from FleetBoston for $175,000 in cash, 350,000 shares of our
common stock and warrants to purchase 150,000 shares of our common stock at
$0.53 per share. The total aggregate consideration for this transaction was
approximately $427,000. We acquired approximately $329,000 of software and
acquired technology, $54,000 of computer equipment and related hardware and
$44,000 in other identifiable intangible assets. Concurrent with this purchase,
we executed a two-year enterprise license agreement for the internal use of
fileTRUST by FleetBoston. We expect to recognize approximately $350,000 in
revenues under this agreement over the next two years.

     During the year ended December 31, 2001, we emerged from the development
stage when we began recording commercial sales on both our Cachelink product and
Mangomind service.

     As shown in the unaudited condensed consolidated financial statements,
during the nine months ended September 30, 2002 and 2001, we incurred net losses
of $5,916,793 and $8,975,019, respectively. Cash used in operations during the
nine months ended September 30, 2002 and 2001 was $4,843,196 and $8,218,981,
respectively. The factors, among others, raise significant doubt about our
ability to continue as a going concern. Our continuation as a going concern is
dependent upon our ability to generate sufficient cash flow and meet our
obligations on a timely basis and ultimately attain profitability.


                                       16

<PAGE>

Risk Factors

We Have A Limited Operating History And A History Of Substantial Operating
Losses.

     We have a history of substantial operating losses and an accumulated
deficit of approximately $87.0 million as of September 30, 2002. For the nine
months ended September 30, 2002 and the year ended December 31, 2001, our net
losses were $5.9 million and $11.2 million, respectively. We have historically
experienced cash flow difficulties primarily because our expenses have exceeded
our revenues. We expect to incur additional operating losses. These factors,
among others, raise significant doubt about our ability to continue as a going
concern. If we are unable to generate sufficient revenue from our operations to
pay expenses or we are unable to obtain additional financing on commercially
reasonable terms, our business, financial condition and results of operations
will be materially and adversely affected.

We May Need Additional Financing.

     We may require additional capital to finance our future operations. We can
provide no assurance that we will obtain additional financing sufficient to meet
our future needs on commercially reasonable terms or otherwise. If we are unable
to obtain the necessary financing, our business, operating results and financial
condition will be materially and adversely affected.

Our Performance Depends On Market Acceptance Of Our Products.

     We expect to derive a substantial portion of our future revenues from the
sales of the Mangomind and fileTRUST services as well as the Mangomind
Enterprise Server Software. If markets for our products and services fail to
develop, develop more slowly than expected or are subject to substantial
competition, our business, financial condition and results of operations will be
materially and adversely affected.

We Depend in Part on Strategic Marketing Relationships.

     We expect our future marketing efforts will focus in part on developing
business relationships with technology companies that seek to augment their
businesses by offering our products and services to their customers. Our
inability to enter into and retain strategic relationships or the inability of
such technology companies to effectively market our products and services could
materially and adversely affect our business, operating results and financial
condition.

There May Be Limited Liquidity in Our Common Stock and Its Price May Be Subject
To Fluctuation.

     Our common stock is currently traded on the OTC Bulletin Board and there is
only a limited market for our common stock. We can provide no assurance that we
will be able to have our common stock listed on an exchange or quoted on Nasdaq
or that it will continue to be quoted on the OTC Bulletin Board. If there is no
trading market, the market price of our common stock will be materially and
adversely affected.

SEC Rules Concerning Sales of Low-Priced Securities May Hinder Re-Sales of Our
Common Stock.

     Because our common stock has a market price less than five dollars per
share, our common stock is not listed on an exchange or quoted on Nasdaq and is
traded on the OTC Bulletin Board. Brokers and dealers who handle trades in our
common stock are subject to certain SEC disclosure rules when effecting trades
in our common stock, including disclosure of the following: the bid and offer
prices of our common stock, the compensation for the brokerage firms and the
salesperson handling a trade and legal remedies available to the buyer. These
requirements may hinder re-sales of our common stock and may adversely affect
the market price of our common stock.


                                       17

<PAGE>

Rapidly Changing Technology And Substantial Competition May Adversely Affect Our
Business.

     Our business is subject to rapid changes in technology. We can provide no
assurances that research and development by competitors will not render our
technology obsolete or uncompetitive. We compete with a number of computer
hardware and software design companies that have technologies and products
similar to those offered by us and have greater resources, including more
extensive research and development, marketing and capital than us. We can
provide no assurance that we will be successful in marketing our existing
products and developing and marketing new products in such a manner as to be
effective against such competition. If our technology is rendered obsolete or we
are unable to compete effectively, our business, operating results and financial
condition will be materially and adversely affected.

Litigation Concerning Intellectual Property Could Adversely Affect Our Business.

     We rely on a combination of trade secrets, copyright and trademark law,
contractual provisions, confidentiality agreements and certain technology and
security measures to protect our proprietary intellectual property, technology
and know-how. However, we can provide no assurance that our rights in our
intellectual property will not be infringed upon by competitors or that
competitors will not similarly make claims against us for infringement. If we
are required to be involved in litigation involving intellectual property
rights, our business, operating results and financial condition will be
materially and adversely affected.

Our Success Depends on Key Personnel.

     Our success is dependent upon the efforts of our senior management
personnel. The loss of members of our senior management group could have a
material adverse effect on our business. In addition, competition for qualified
personnel in the computer software industry is intense, and we can provide no
assurance that we will be able to retain existing personnel or attract and
retain additional qualified personnel necessary for the development of our
business. Our inability to attract and retain such personnel would have a
material adverse effect on our business, financial condition and results of
operations.

Defects In Our Software May Adversely Affect Our Business.

     Complex software products and services such as the software developed by
MangoSoft may contain defects when introduced and also when updates, upgrades
and new versions are released. Our introduction of software with defects or
quality problems could result in adverse publicity, product returns, reduced
orders, uncollectible or delayed accounts receivable, product redevelopment
costs, loss of or delay in market acceptance of our products and services or
claims by customers or others against us. Such problems or claims could have a
material adverse effect on our business, financial condition and results of
operations.


                                       18

<PAGE>

ITEM 3.   CONTROLS AND PROCEDURES

     We continue to review our internal controls and procedures and the
effectiveness of those controls. Within the ninety (90) day period prior to the
date of this report, we conducted an evaluation, under the supervision of and
with the participation of our Chief Executive Officer (principal financial and
accounting officer), of the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Rule 13a-14 of the Securities and
Exchange Act of 1934. Based upon that evaluation, our Chief Executive Officer
(principal financial and accounting officer) concluded that our disclosure
controls and procedures are effective in timely alerting him to material
information required to be included in our periodic SEC filings.

     There were no significant changes in our internal controls or in other
factors that could significantly affect our disclosure procedures subsequent to
the date of their evaluation, nor were there any significant deficiencies or
material weaknesses in the Company's internal controls. As a result, no
corrective actions were required or taken.

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<PAGE>

                           PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

Exhibit
Number                              Description of Exhibit

 2.1   Agreement and Plan of Merger by and among First American Clock Co.,
       MangoSoft Corporation and MangoMerger Corp., dated as of
       August 27, 1999. (1)
 3.1   Articles of Incorporation, as amended. (2)
 3.2   By-laws. (2)
  10   Lease of Westborough Office Park, Building Five, dated
       November 10, 1995. (3)
  16   Letter on Change in Certifying Accountant. (4)
  21   Subsidiary of the Registrant. (2)
99.1   1999 Incentive Compensation Plan, as amended and restated on
       May 1, 2000. (2)
99.2   Form of Subscription Agreement for purchase of common stock, dated as of
       March 20, 2000. (2)
99.3   Form of Warrant Agreement. (2)
99.4   Value Added Reseller Agreement, dated July 14, 2000, between MangoSoft,
       Inc. and 3Com Corporation. (5)
99.5   Asset Purchase Agreement, dated February 11, 2002, between MangoSoft,
       Inc. and Fleet National Bank. (6)
99.6   Warrant Agreement, dated February 11, 2002, between MangoSoft, Inc. and
       Fleet National Bank. (6)
99.7   Officer Certification.

(1)  Filed as an exhibit to our Current Report on Form 8-K for an event dated
     September 7, 1999 and hereby incorporated by reference thereto.
(2)  Filed as an exhibit to our Registration Statement on Form 10-SB, filed June
     9, 2000, and hereby incorporated by reference thereto.
(3)  Filed as an exhibit to our Quarterly Report filed November 9, 1999 for the
     quarter ended September 30, 1999 and hereby incorporated by reference
     thereto.
(4)  Filed as an exhibit to our Current Report on Form 8-K/A for an event dated
     January 11, 2000 and hereby incorporated by reference thereto.
(5)  Filed as an exhibit to our Registration Statement on Form 10-SB/A, filed
     August 30, 2000, and hereby incorporated by reference thereto.
(6)  Filed as an exhibit to our Quarterly Report filed August 14, 2002 for the
     quarter ended September 30, 2002 and hereby incorporated by reference
     thereto.

(b)  Reports on Form 8-K:

     On September 27, 2002, we filed on Form 8-K that we entered into an Account
Purchase Agreement with Plaintiff Funding Corporation as a means to increase
returns on our working capital.

     On September 27, 2002, we filed on Form 8-K that we engaged Stowe & Degon
as our new independent accountants.


                                       20

<PAGE>

     On September 18, 2002, we filed on Form 8-K that Deloitte & Touche LLP
("Deloitte") resigned as our independent accountants on September 16, 2002.
Deloitte's reports on our consolidated financial statements for the years ended
December 31, 2001 and 2000 did not contain an adverse opinion or disclaimer of
opinion. Furthermore, such reports were not qualified or modified as to audit
scope or accounting principles. The report for the year ended December 31, 2001
contained an explanatory paragraph indicating that conditions existed that
raised significant doubt with respect to our ability to continue as a
going-concern. There were no disagreements between us and Deloitte during any
period preceding Deloitte's resignation on any matter of accounting principles
or practices, financial statement disclosure, auditing scope or procedure.

     On September 12, 2002, we filed on Form 8-K that Tony Coehlo, Ira
Goldstein, Paul O'Brien (Co-Chairman), Nick Treddinick and Selig Zises resigned
their positions on our Board of Directors effective September 3, 2002. Dale
Vincent, our President and Chief Executive Office, is the one remaining
director.

     On August 7, 2002, we filed on Form 8-K a notification that we reduced our
work force to thirteen (13) persons, which represented an approximate 35%
reduction in our personnel effective July 29, 2002. In connection with this work
force reduction, we eliminated the positions held by Dr. Donald A. Gaubatz,
Senior Vice President and Chief Operating Officer, and Dan Dietterich, Vice
President of Engineering and Research.

     On July 2, 2002, we filed on Form 8-K a notification that we reduced our
work force to twenty (20) persons, which represented an approximate 50%
reduction in our personnel effective June 28, 2002. Our remaining employees took
a ten percent reduction in salary. In an unrelated matter, we announced that we
retained Adams, Harkness & Hill, Inc., an investment bank, to provide us banking
and financial advisory services.


                                       21

<PAGE>

                                   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.

November 12, 2002                       MANGOSOFT, INC.

                                        /S/  DALE VINCENT
                                            ----------------------------------
                                             Dale Vincent
                                             Chief Executive Officer
                                             (Principal Financial and Accounting
                                              Officer)


CERTIFICATION:

I, Dale Vincent, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of MangoSoft, Inc.
     (the "Registrant");

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the Registrant as of, and for, the periods presented in this quarterly
     report;

4.   I am responsible for establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
     Registrant and have:

     (a) designed such disclosure controls and procedures to ensure that
     material information relating to the Registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;

     (b) evaluated the effectiveness of the Registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

     (c) presented in this quarterly report my conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

5.   I have disclosed, based on my most recent evaluation, to the Registrant's
     auditors and the audit committee of the Registrant's board of directors (or
     persons performing the equivalent functions):

     (a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the Registrant's ability to record,
     process, summarize and report financial data and have identified for the
     Registrant's auditors any material weakness in internal controls; and


                                       22

<PAGE>

     (b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the Registrant's internal
     controls; and

6.   I have indicated in this quarterly report whether there were significant
     changes in internal controls or in other factors that could significantly
     affect internal controls subsequent to the date of our most recent
     evaluation, including any corrective actions with regard to significant
     deficiencies and material weaknesses.

Date: November 12, 2002

/s/ Dale Vincent
-----------------------
Chief Executive Officer


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