**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**




**Washington,
      DC 20549**





**FORM
      10-Q**





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




**For
      the Quarterly Period Ended September 30, 2008**





**Commission
      File Number: 000-30781**





**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)**29 Riverside St., Ste A Box 8****Nashua, NH**
            **03062**(Address of principal executive offices)
            (Zip code)





**Issuer’s
      telephone number: (603) 324-0400**







Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months, and (2) has been subject to such filing requirements for
      the past 90 days. Yes x No o





Indicate
      by check mark whether the Registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated filero
            Accelerated filero





Non-accelerated filer (Do not check if a smaller reporting company)o
            Smaller reporting companyx




Indicate
      by check mark whether the Registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o


No x





As
      of
      August 14, 2008, 5,443,157 shares of the Registrant’s common stock, par value
      $0.001 per share, were outstanding.







**MANGOSOFT,
      INC. AND SUBSIDIARIES**





**INDEX**





PagePART I.   FINANCIAL INFORMATIONITEM 1 – Condensed Consolidated Financial Statements (Unaudited):Balance Sheets as of September 30, 2008 and December 31, 2007
            
            3Statements of Operations for the Three Months Ended September 30, 2008 and 2007
            
            4Statements of Operations for the Nine Months Ended September 30, 2008 and 2007
            
            5Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007
            
            6Notes to Unaudited Condensed Consolidated Financial Statements
            
            7ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
            
            10ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk
            
            14ITEM 4 – Controls and Procedures
            
            14PART II.   OTHER INFORMATIONITEM 1 – Legal Proceedings
            
            15ITEM 1a. – Risk Factors
            
            16ITEM 6 – Exhibits and Reports on Form 8-K
            
            19Signature
            
            21Officer Certification




2




**MANGOSOFT,
      INC. AND SUBSIDIARIES**





**CONDENSED
      CONSOLIDATED BALANCE SHEETS**





**September 30,**
            
            **December**
              **31,****2008**
            
            **2007****(Unaudited)****ASSETS**Current
                Assets:Cash
                and cash equivalents
            
            $
            553,175
            
            $
            318,065Accounts
                receivable
            
            
            21,116
            
            
            20,607Total
                assets
            
            $
            574,291
            
            $
            338,672**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                Liabilities:Accounts
                payable
            
            $
            22,412
            
            $
            114,566Accrued
                compensation
            
            
            7,788
            
            
            7,788Other
                accrued expenses and current liabilities
            
            
            25,776
            
            
            41,609Total
                current liabilities
            
            
            55,976
            
            
            163,963Stockholders’
                Equity:Preferred
                stock - $.001 par value; authorized, 5,000,000 shares; issued and
                outstanding, 20,000
            
            
            20
            
            
            20Common
                stock - $.001 par value, authorized 15,000,000 shares in September
                2008
                and December 2007; issued and outstanding, 5,443,157 in September
                2008 and
                3,413,038 in December 2007
            
            
            5,443
            
            
            3,413Additional
                paid-in capital
            
            
            90,926,275
            
            
            89,904,757Accumulated
                deficit
            
            
            (90,413,423
            )
            
            (89,733,481
            )Total
                stockholders' equity
            
            
            518,315
            
            
            174,709Total
                liabilities and stockholders' equity
            
            $
            574,291
            
            $
            338,672




See
      notes
      to the unaudited condensed consolidated financial statements.


3





**MANGOSOFT,
      INC. AND SUBSIDIARIES**





**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**





**Three Months Ended**
              **September 30,****2008**
            
            **2007****(Unaudited)**Service
                revenues
            
            $
            67,349
            
            $
            61,059Costs
                and expenses:Cost
                of services
            
            
            65,274
            
            
            65,117General
                and administrative
            
            
            115,454
            
            
            105,228Loss
                from operations
            
            
            (113,379
            )
            
            (109,286
            )Interest
                income
            
            
            4,113
            
            
            5,826Net
                loss
            
            $
            (109,266
            )
            $
            (103,460
            )Net
                loss per share – basic and diluted
            
            $
            (0.02
            )
            $
            (0.03
            )Weighted
                average shares outstanding – basic and diluted
            
            
            5,443,157
            
            
            3,413,038




See
      notes
      to the unaudited condensed consolidated financial statements.




4





**MANGOSOFT,
      INC. AND SUBSIDIARIES**





**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**





**Nine Months Ended**
              **September 30,****2008**
            
            **2007****(Unaudited)**Service
                revenues
            
            $
            201,204
            
            $
            183,234Costs
                and expenses:Cost
                of services
            
            
            196,327
            
            
            195,115General
                and administrative
            
            
            699,269
            
            
            539,339Loss
                from operations
            
            
            (694,392
            )
            
            (551,220
            )Interest
                income
            
            
            14,450
            
            
            22,389Net
                loss
            
            $
            (679,942
            )
            $
            (528,831
            )Net
                loss per share – basic and diluted
            
            $
            (0.14
            )
            $
            (0.16
            )Weighted
                average shares outstanding – basic and diluted
            
            
            5,013,424
            
            
            3,325,126




See
      notes
      to the unaudited condensed consolidated financial statements.


5




**MANGOSOFT,
      INC. AND SUBSIDIARIES**





**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**





**Nine Months Ended September**
              **30,****2008**
            
            **2007****(Unaudited)**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (679,942
            )
            $
            (528,831
            )Adjustments
                to reconcile net loss to net cash used by operating
                activities:Increase
                (decrease) in cash from the change in:Accounts
                receivable
            
            
            (509
            )
            
            1,456Accounts
                payable
            
            
            (92,154
            )
            
            (51,738
            )Accrued
                compensation
            
            
            -
            
            
            (3,894
            )Other
                accrued expenses
            
            
            (15,833
            )
            
            (6,675
            )Net
                cash used in operating activities
            
            
            (788,438
            )
            
            (589,682
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Net
                Proceeds from Private Placement of Common Stock
            
            
            1,023,548
            
            
            925,000Net
                cash provided by financing activities
            
            
            1,023,548
            
            
            925,000NET
                INCREASE IN CASH AND CASH EQUIVALENTS
            
            
            235,110
            
            
            335,318CASH
                AND CASH EQUIVALENTS, BEGINNING OF PERIOD
            
            
            318,065
            
            
            125,348CASH
                AND CASH EQUIVALENTS, END OF PERIOD
            
            $
            553,175
            
            $
            460,666




See
      notes
      to the unaudited condensed consolidated financial statements.


6


**MANGOSOFT,
      INC. AND SUBSIDIARIES**




**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**1.
      NATURE OF BUSINESS AND BASIS OF PRESENTATION**





MangoSoft,
      Inc. and subsidiaries (the "Company") markets, sells and supports Internet
      business software and services that improve the utility and effectiveness of
      Internet-based business applications. The Company’s software solutions 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.




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. Certain amounts from
      the
      prior year have been reclassified to conform to the current year
      presentation.





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,
      2007 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, 2008 and 2007, the Company incurred net losses of
      $679,942 and $528,831 respectively. Cash used in operations during the nine
      months ended September 30, 2008 and 2007 was $788,436 and $589,682,
      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.





On
      September 11, 2006, Mangosoft Corp. assigned the ownership and legal titles
      of
      twelve of its patents and applications with no recorded value to Mangosoft
      Intellectual Property, Inc., (a wholly owned subsidiary), Pursuant to the
      agreement, Mangosoft Corp. assigned the entire right, title, and interest in
      and
      to the following applications to Mangosoft Intellectual Property,
      Inc.:





**Title**
            
            **Application No./Patent No.**
            
            **Filing Date/Issue**
              **Date**System
                For Tracking Data
            
            08/848,970
            
            05/02/97Method
                For Scheduling Thread Execution On A Limited Number Operating
                System
            
            09/069,352
            
            04/29/98Internet-Based
                Shared File Service With Native PC Client Access And Semantics And
                Distributed Access Control
            
            09/704,050
            
            11/01/00Internet-Based
                Shared File Service With Native PC Client Access And
                Semantics
            
            09/704,262
            
            11/01/00Dynamic
                Directory Service
            
            10/704,327
            
            11/07/03Internet-Based
                Shared File Service With Native PC Client Access And Semantics And
                Distributed Version Control
            
            11/285,423
            
            11/21/05System
                and Method For Providing Highly Available Data Storage Using Globally
                Addressable Memory
            
            5,909,540
            
            06/01/99Remote
                Access And Geographically Distributed Computers In A Globally Addressable
                Storage Environment
            
            5,987,506
            
            11/16/99Shared
                Client-Side Web Caching Using Globally Addressable Memory
            
            6,026,474
            
            02/15/00Dynamic
                Directory Service
            
            6,647,393
            
            11/11/03Distributed
                Virtual Web Cache Implemented Entirely in Software
            
            6,760,756
            
            07/06/04Internet-Based
                Shared File Service With Native PC Client Access And
                Semantics
            
            7,058,696
            
            06/06/06




7




On
      January 10, 2007, the Company announced the sale of an aggregate of 2,400,000
      shares of common stock, par value $.001 per share to a group of investors led
      by
      current stockholders. Through the private placement of its common stock, the
      Company raised aggregate gross proceeds of $1,200,000. One of the investors
      in
      the offering provided bridge financing to the Company on September 20, 2006
      in
      the principal amount of $250,000. This principal amount and accrued interest
      of
      $6,463, was automatically converted into a subscription for Common Stock
      pursuant to the offering. The Company intends to utilize the net proceeds of
      the
      private placement to pay past due expenses and to fund its various patent
      litigations.




On
      April
      25, 2007, the Company announced that its Mangomind Business Internet File
      Service now supports Microsoft’s Windows Vista. With the addition of Windows
      Vista, Mangomind runs on all of the most commonly used Windows PC business
      platforms, including Windows 97, 98, ME, NT, 2000, XP and Windows Server
      2003.





The
      Company received gross proceeds of $1,023,548 through the issuance of common
      stock pursuant to a rights offering and as a consequence issued, commencing
      on
      or about February 27, 2008, approximately 2,047,344 shares of its common stock
      to stockholders who properly exercised their rights in the rights offering.
      Pursuant to the rights offering, which concluded as of the close of business
      on
      February 19, 2008, stockholders of record at the close of business on December
      21, 2007, received, at no charge, a 0.7032 non-transferable right for each
      share
      of common stock owned by such stockholder on the record date. Each full right
      entitled the holder to purchase one share of the Company's common stock at
      a
      purchase price of $0.50 per share.




The
      Company expects to use approximately $750,000 of the net proceeds from the
      rights offering in connection with pursuing various intellectual property
      litigations to enforce the Company’s patent portfolio. The Company anticipates
      using the balance of the net proceeds from the rights offering for working
      capital purposes, including obtaining directors’ and officers’
insurance.





**2.
      NET LOSS PER SHARE**





Basic
      net
      loss per share is computed by dividing net loss by the weighted average number
      of common shares outstanding for the period. Diluted net loss per share
      reflects, in addition to the weighted average number of common shares, the
      potential dilution if stock 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, 2008 and 2007, 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.


8




**3.
      REVENUE RECOGNITION**





We
      recognize revenue generated from product sales when persuasive evidence of
      an
      arrangement exists, the price is fixed and determinable, delivery has occurred
      and collection is probable. We recognize revenue generated from the sale of
      the
      Mangomind SM and
      fileTRUST SM services
      as the service is provided. We recognize revenue generated from the sale of
      the
      Mangomind SM product
      over the period of the first year’s maintenance agreement when persuasive
      evidence of the arrangement exists, the price is fixed and determinable,
      delivery and any required installation has been completed and collection is
      probable.





**4.
      STOCK-BASED COMPENSATION**





The
      Company currently has one stock-based compensation plan, which is described
      more
      fully in Note 7 in the Company’s Annual Report on Form 10-KSB for the period
      ended December 31, 2007, as filed on March 28, 2008. As amended, this plan
      provides for the issuance of up to 296,297 shares of common stock to employees,
      officers, directors and consultants in the form of nonqualified and incentive
      stock options, restricted stock grants or other stock-based awards, including
      stock appreciation rights. The stock options are exercisable as specified at
      the
      date of grant and expire no later than ten years from the date of grant. As
      of
      September 30, 2008, there were 179,652 remaining options available under this
      plan.




Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of
      Statement of Financial Accounting Standards (“SFAS”) No. 123(R), *Share-Based
      Payment* (“SFAS
      123R”), using the modified-prospective-transition method. Under this transition
      method, compensation cost to be recognized for the first three months of 2006
      would include: (a) compensation cost for all stock-based payments granted,
      but
      not yet vested as of January 1, 2006, based on the grant-date fair value
      estimated in accordance with the original provisions of SFAS No. 123, *Accounting
      for Stock Based Compensation* , and
      (b) compensation cost for all stock-based payments granted subsequent to January
      1, 2006, based on the grant-date fair value estimated in accordance with the
      provisions of SFAS 123R. Results for prior periods have not been restated.
      There
      were no unvested stock based payments at January 1, 2006 and there were no
      stock
      based payments granted during the nine months ended September 30, 2008 and
      2007.


9




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





This
      Quarterly Report on Form 10-Q 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-Q, including under “Risk Factors.” You should
      read the following discussion and analysis together with our unaudited 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, 2007 filed with the Securities
      and
      Exchange Commission.





**Overview**





We
      market, sell and support Internet business software and services that improve
      the utility and effectiveness of Internet-based business applications. Our
      software solutions 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. We no longer
      develop new software products or services.




Mangomind SM is a
      multi-user, business-oriented, peer-to-peer file sharing system, 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. Mangomind SM provides
      the secure file sharing benefits of a VPN without additional hardware and
      configuration complexities. Mangomind SM is sold
      as both a service and a standalone software product.





fileTRUST SM is an
      online data storage service we purchased from Bank of America (formerly
      FleetBoston) in February 2002 for approximately $427,000, of which $175,000
      was
      paid in cash and the balance in our common stock and warrants to purchase our
      common stock at $14.31 per share. fileTRUST SM users
      can access their stored files from any Internet-connected system. The fileTRUST SM service
      compliments our Mangomind SM service
      by providing customers with a lower cost online storage system. In conjunction
      with our purchase of fileTRUST SM , we
      executed a two-year enterprise license agreement with Bank of America (formerly
      FleetBoston) for the internal use of fileTRUST SM by Bank
      of America (formerly FleetBoston), which expired in February 2004. The terms
      and
      conditions of this agreement provided for automatic renewals on a month-to-month
      basis.





**Critical
      Accounting Policies**





Our
      accounting policies are fully described in Note 2 in the Company’s Annual Report
      on Form 10-KSB for the period ended December 31, 2007, as filed on March 28,
      2008. The following describes the application of accounting principles that
      have
      significant impact on our unaudited consolidated financial
      statements:





*Going
      Concern Assumption* –
The
      unaudited 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 unaudited 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.


10




*Revenue
      Recognition* –
We
      recognize revenue generated from product sales when persuasive evidence of
      an
      arrangement exists, the price is fixed and determinable, delivery has occurred
      and collection is probable. We recognize revenue generated from the sale of
      the
      Mangomind SM and
      fileTRUST SM services
      as the service is provided. We recognize revenue generated from the sale of
      the
      Mangomind SM product
      over the period of the first year’s maintenance agreement when persuasive
      evidence of the arrangement exists, the price is fixed and determinable,
      delivery and any required installation has been completed and collection is
      probable.





*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 and to third-party consultants and advisors 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 and 2003, 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 expenses will continue to fluctuate. These fluctuations can be
      significant.





*Deferred
      Taxation* –
Because
      of the significant operating losses incurred and 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 services* - Cost
      of services consist solely of the expenses we incur to administer and service
      the Mangomind SM and
      fileTRUST SM services. These expenses consist primarily of salaries and related personnel
      costs, the cost of our outsourced data center, the license royalties we pay
      to
      our e-security software provider for the encryption used in the Mangomind SM service
      and the fees we pay to Built Right Networks to manage our billable services
      infrastructure.





*Engineering
      and Development Expenses* -
      Engineering and development expenses consist primarily of costs related to
      the
      design, development, testing, deployment and enhancement of our products and
      services. We have expensed our engineering and development costs as incurred.
      At
      September 30, 2008, there were no full time employees performing engineering
      or
      development on our products and services. We have outsourced the maintenance
      of
      our billable services infrastructure as well as product and customer support
      to
      Built Right Networks.





*Other
      Operating Expenses –* Selling
      and marketing expenses consist primarily of 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. At September 30, 2008,
      there were no full time employees performing selling and marketing activities.
      Our remaining employee is performing general and administrative
      activities.





*Reduction
      in Force* –
We
      have
      reduced our work force on four occasions since April 23, 2001 due to adverse
      economic conditions and our need to conserve capital. At September 30, 2008,
      we
      had one employee, working in a general and administrative capacity.




11




**Results
      of Operations** – **Three
      Months Ended September 30, 2008 and 2007**





Revenues
      for the three months ended September 30, 2008 increased $6,290 or 10.3% to
      $67,349 from $61,059 for the comparable period in 2007. No customer accounted
      for more than 10% of our revenues for either period.





We
      recognized $64,438 from the sale of our Mangomind SM service
      and $2,911 from the sale of our fileTRUST SM service
      during the three months ended September 30, 2008. During the comparable period
      in 2007, we recognized $58,513 from the sale of the Mangomind SM service
      and $2,546 from the sale of our fileTRUST SM service.




Cost
      of
      services for the three months ended September 30, 2008 increased $157 or .2%
      to
      $65,274 compared to $65,117 for the comparable period in 2007. The cost of
      delivering our service has been consistent from year to year due to the
      stabilization of our contracts with our data center.





For
      the
      three months ended September 30, 2008, other operating expenses including
      selling and marketing and general and administrative expenses increased $10,226
      or 9.7% to $115,454 compared with $105,228 for the comparable period in 2007.
      During the three months ended September 30, 2008 and 2007, our one (1) full-time
      employee was working in a general and administrative capacity.





Our
      loss
      from operations increased $4,093 to $113,379 for the three months ended
      September 30, 2008 compared with a loss from operations of $109,286 for the
      comparable period in 2007 as a result of the above factors.





Interest
      income decreased $1,713 to $4,113 for the three months ended September 30,
      2008
      compared to $5,826 for the comparable period in 2007 due to the availability
      of
      working capital.





**Results
      of Operations** – **Nine
      Months Ended September 30, 2008 and 2007**





Revenues
      for the nine months ended September 30, 2008 increased $17,970 or 9.8% to
      $201,204 from $183,234 for the comparable period in 2007. No customer accounted
      for more than 10% of our revenues for either period.





We
      recognized $191,913 from the sale of our Mangomind SM service
      and $9,291 from the sale of our fileTRUST SM service
      during the nine months ended September 30, 2008. During the comparable period
      in
      2007, we recognized $175,302 from the sale of the Mangomind SM service
      and $7,932 from the sale of our fileTRUST SM service.




Cost
      of
      services for the nine months ended September 30, 2008 increased $1,212 or .6%
      to
      $196,327 compared to $195,115 for the comparable period in 2007. The cost of
      delivering our service has been consistent from year to year due to the
      stabilization of our contracts with our data center.





For
      the
      nine months ended September 30, 2008, other operating expenses including selling
      and marketing and general and administrative expenses increased $159,930 or
      29.7% to $699,269 compared with $539,339 for the comparable period in 2007.
      The
      increase in other operating expenses was due primarily to legal costs incurred
      in pursuit of patents and in defense of our patents combined with a reduction
      of
      public relations, legal and other corporate consultants and facility rent.
      During the three months ended September 30, 2008 and 2007, our one (1) full-time
      employee was working in a general and administrative capacity.





Our
      loss
      from operations increased $143,172 to $694,392 for the nine months ended
      September 30, 2008 compared with a loss from operations of $551,220 for the
      comparable period in 2007 as a result of the above factors.





Interest
      income decreased $7,939 to $14,450 for the nine months ended September 30,
      2008
      compared to $22,389 for the comparable period in 2007 due to the availability
      of
      working capital.




**Financial
      Condition, Liquidity and Capital Resources**





We
      were
      formed in September 1995 and, since our formation, have raised approximately
      $76,449,000 in financing from private placements of debt and equity securities.
      In addition to the financing we received through the sale of our securities,
      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, 2008, approximately $56,000 in
      additional financing was provided through accounts payable, accrued expenses
      and
      other trade credit.




12




On
      January 10, 2007, the Company completed the sale of an aggregate of 2,400,000
      shares of common stock, par value $.001 per share to a group of investors led
      by
      current stockholders. Through the private placement of its common stock, the
      Company raised aggregate gross proceeds of $1,200,000. One of the investors
      in
      the offering provided bridge financing to the Company on September 20, 2007
      in
      the principal amount of $250,000. This principal amount and accrued interest
      of
      $6,463 was automatically converted into a subscription for Common Stock pursuant
      to the offering. The Company intends to utilize the net proceeds of the private
      placement to pay past due expenses and to fund its various patent
      litigations





The
      Company received gross proceeds of $1,023,546 through the issuance of common
      stock pursuant to a rights offering and as a consequence issued, completed
      on or
      about February 19, 2008, approximately 2,047,344 shares of its common stock
      to
      stockholders who properly exercised their rights in the rights offering.
      Pursuant to the rights offering, which concluded as of the close of business
      on
      February 19, 2008, stockholders of record at the close of business on December
      21, 2007, received, at no charge, a 0.7032 non-transferable right for each
      share
      of common stock owned by such stockholder on the record date. Each full right
      entitled the holder to purchase one share of the Company’s common stock at a
      purchase price of $0.50 per share.





At
      September 30, 2008, we had a cash balance of $553,175 and working capital of
      $518,315. We do not have any commercial commitments or off balance sheet
      financing. Our commitments are described in Note 9 in the Company’s Annual
      Report on Form 10-KSB for the period ended December 31, 2007, as filed on March
      28, 2008.





We
      did
      not make any capital expenditures during the three months ended September 30,
      2008.





We
      have
      significantly modified our operations and reduced our work force on four
      separate occasions since April 2001. We currently have one (1) employee, working
      in a general and administrative capacity. We outsource the management of our
      billable services infrastructure, software code base, customer support and
      reseller channel management to Built Right Networks for approximately $21,000
      per month, under an agreement, which can be cancelled with a ninety (90) day
      notice.





Unless
      we
      can generate significant on-going revenue, we will need additional sources
      of
      equity or debt financing. Although we have been successful in raising past
      financing, there can be no assurances that additional financing will be
      available to us on commercially reasonable terms, or at all.





As
      shown
      in the unaudited consolidated financial statements, during the nine months
      ended
      September 30, 2008 and 2007, we incurred a net loss of $679,942 and $528,831,
      respectively. Cash used in operations during the nine months ended September
      30,
      2008 and 2007 was $788,436 and $589,682, 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.





**OFF-BALANCE
      SHEET ARRANGEMENTS**





We
      do not
      have any commercial commitments or off-balance sheet financing. Our commitments
      are described in Note 9 to our consolidated financial statements filed on Form
      10-KSB for the period ended December 31, 2007, as reported to the Securities
      and
      Exchange Commission.




13




**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





The
      accompanying unaudited consolidated financial statements include estimated
      fair
      value information as of September 30, 2008 as required by SFAS No. 107,
“Disclosure About Fair Value of Financial Instruments”. Disclosure of the
      estimated fair values of financial instruments often requires the use of
      estimates. The Company uses the following methods and assumptions to estimate
      the fair value of financial instruments.





**CASH**





The
      carrying amounts approximate fair market value at September 30,
      2008.




**ITEM
      4. CONTROLS AND PROCEDURES**





At
      September 30, 2007 and 2008, we had one (1) employee, Mr. Dale Vincent, our
      President, Chief Executive Officer and sole director. A complete set of internal
      controls including segregation of duties is not possible in an organization
      of
      this size. However, we have implemented control procedures surrounding the
      maintenance of our accounting and financial systems and the safeguarding of
      our
      assets. Further, all transactions entered into outside the normal course of
      our
      day-to-day operations must be approved by Mr. Vincent.





Our
      Chief
      Executive Officer, President and sole director, after evaluating the
      effectiveness of our "disclosure controls and procedures" (as defined in the
      Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end
      of
      the period covered by this Quarterly Report on Form 10-Q (the "Evaluation
      Date"), has concluded that as of the Evaluation Date, our disclosure controls
      and procedures were not effective to provide reasonable assurance that
      information we are required to disclose in reports that we file or submit under
      the Exchange Act is recorded, processed, summarized and reported within the
      time
      periods specified in the Securities and Exchange Commission rules and forms,
      and
      that such information is accumulated and communicated to our management,
      including our Chief Executive Officer, as appropriate, to allow timely decisions
      regarding required disclosure.





We
      have
      identified deficiencies in the design or operation of the Company’s internal
      controls that we consider to be material weaknesses in the effectiveness of
      the
      Company’s internal controls pursuant to standards established by the Public
      Company Accounting Oversight Board. A “material weakness” is a deficiency, or
      combination of significant deficiencies, that results in more than a remote
      likelihood that a material misstatement of the annual or interim financial
      statements will not be prevented or detected. Specifically, we found that the
      Company has an overall lack of segregation of duties as well as a lack of
      necessary corporate accounting resources related to the financial reporting
      process and accounting functions as the Company does not have any full time
      accounting personnel. The Company’s President serves as both Chief Executive
      Officer and Chief Financial Officer of the Company. Accordingly, certain
      functional and monitoring controls do not exist.





There
      was
      no change in our internal control over financial reporting (as defined in Rules
      13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter
      ended September 30, 2008 that has materially affected, or is reasonably likely
      to materially affect, our internal control over financial
      reporting.




14




**PART
      II** – **OTHER
      INFORMATION**


**ITEM
      1. LEGAL PROCEEDINGS**





On
      November 22, 2002, the Company filed a complaint in the United States District
      Court of New Hampshire, against Oracle Corporation for infringement of U.S.
      Patent No. 6,148,377 and U.S. Patent No. 5,918,229. The complaint seeks
      unspecified monetary damages and injunctive relief and awards for interest,
      costs and attorneys’ fees.





On
      May
      15, 2003, Oracle Corporation filed a complaint in the United States District
      Court, Northern District of California, against the Company and Built Right
      Networks for infringement of a patent held by Oracle Corporation. The complaint
      seeks unspecified monetary damages and injunctive relief and awards for
      interest, costs and attorneys’ fees.





On
      July
      2, 2003, the Company filed a complaint in the United States District Court,
      Northern District of California, against Oracle Corporation, Sun Microsystems,
      Inc., Dell Computer Corporation and Electronic Arts, Inc. for infringement
      of
      U.S. Patent No. 6,148,377 and U.S. Patent No. 5,918,229. The complaint seeks
      unspecified monetary damages and injunctive relief and awards for interest,
      costs and attorneys’ fees.




On
      March
      14, 2006, the U,S., District Court in New Hampshire ruled in favor of Oracle’s
      motion for summary judgment that did it did not infringe U.S. Patent No.
      6,148,377 held by Mangosoft, Inc. Mangosoft had sued Oracle in 2002, claiming
      infringement of its patent on shared memory technology as described
      above.





On
      September 22, 2006, the Company through its subsidiary Mangosoft Intellectual
      Property, Inc., filed a civil action in the United States District Court for
      the
      Eastern District of Texas alleging patent infringement against eBay, Inc. of
      San
      Jose and its subsidiaries Skype Technologies SA and Skype Software Sarl of
      Luxembourg. The Complaint alleges that each of the defendants have infringed,
      and continue to infringe, U.S. Patent No. 6,647,393 entitled "Dynamic Directory
      Service" in violation of one or more provisions of 35 U.S.C. section 271. The
      complaint seeks damages for willful infringement as well as injunctive
      relief.





On
      October 26, 2006 Mangosoft Inc. was successful in its motion for summary
      judgment of non-infringement of United States Patent No. 6,371,790 in an action
      brought by Oracle International Corp. Oracle's motion for summary adjudication
      of patent validity, along with Mangosoft's motion to amend its final contentions
      of patent invalidity, and Oracle's motion to preclude Mangosoft from asserting
      a
      defense of inequitable conduct were denied by the United States District Chief
      Judge.





On
      March
      29, 2007 the Company filed a Notice of Appeal in the United States District
      Court for the District of New Hampshire in the case of Mangosoft,
      Inc., et al. v. Oracle Corporation , C.A.
      No. 02-545-M. By filing the Notice of Appeal, Mangosoft has commenced an appeal
      in the United States Court of Appeals for the Federal Circuit challenging,
      among
      other things, the District Court’s claim construction Order of September 21,
      2004, the District Court’s order granting defendant Oracle Corporation’s motion
      for summary judgment of non-infringement entered on March 14, 2006, and the
      District Court’s entry of final judgment entered on March 29, 2007.





On
      May 14
      2008, Form 8-K was filed indicating that the United States Court of Appeals
      for
      the Federal Circuit issued an opinion in the case Mangosoft, Inc. et al. v.
      Oracle Corporation. The opinion affirmed the District Court’s claim construction
      order of September 21, 2004 and the District Court’s decision granting
      defendant’s motion for summary judgement on non-infringement entered by the
      District Court on March 28, 2007.





Other
      than the matters listed above, there are no material pending legal proceedings,
      other than the routine litigation occurring in the normal course of operations,
      to which we are party or of which any of our properties are
      subject.




15




**ITEM
      1a.**  –  **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
      $90,413,423 as of September 30, 2008. For the nine months ended September 30,
      2008, our loss from operations was $694,392. For the year ended December 31,
      2007 our loss from operations was $816,105. 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
      Will 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.





*Our
      Success Depends On Our Outsourced Services Agreement.*





Effective
      September 30, 2002, we outsourced the management of our internal information
      systems, billable services infrastructure, software code base, customer support
      and reseller channel management to Built Right Networks under our September
      30,
      2002 Information Management Services Agreement (the “Outsourced Services
      Agreement”). The principals of Built Right Networks are all former MangoSoft
      employees. Our contract represents a large majority of Built Right Networks’
revenue. We can provide no assurance that Built Right Networks will remain
      solvent or can retain their key personnel. Built Right Network’s inability to
      retain key personnel or to remain solvent would have a material and adverse
      effect on our business, financial condition and results of
      operations.





*Our
      Performance Depends On Market Acceptance Of Our Products.*





We
      expect
      to derive a substantial portion of our future revenues from the sales of
      Mangomind SM and
      fileTRUST SM . Due to
      our small size and need to conserve capital, our selling and marketing
      activities for these products and services is limited. If markets for our
      products fail to develop, develop more slowly than expected, are subject to
      substantial competition or react negatively to Bank of America’s (formerly
      FleetBoston) termination of its February 2002 enterprise license agreement
      with
      us, our business, financial condition and results of operations will be
      materially and adversely affected.





*We
      Depend 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 to their customers. Our inability to enter into and retain
      strategic relationships, or the inability of such technology companies to
      effectively market our products, could materially and adversely affect our
      business, operating results and financial condition.




16





*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 assurances 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 for our common stock, 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 that is 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 of the brokerage firm 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.





*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 assurances 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 our
      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 trademarks, patents, proprietary 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.





*Defects
      In Our Software Products May Adversely Affect Our Business.*




Complex
      software such as the software developed by MangoSoft may contain defects when
      introduced and also when updates and new versions are released. Our introduction
      of software with defects or quality problems may 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 or claims by customers or others against us. Such problems or claims
      may have a material and adverse effect on our business, financial condition
      and
      results of operations.




17





*We
      Have Limitations On The Effectiveness Of Our Internal
      Controls.*





We
      have
      one full-time employee. This employee is engaged in general and administrative
      capacities. A complete set of internal controls is not possible in an
      organization of this size. Management does not expect that its disclosure
      controls or its internal controls will prevent all errors and intentional
      misrepresentations. A control system, no matter how well conceived and operated,
      can provide only reasonable, not absolute, assurance that the objectives of
      the
      control system are met. Further, the design of a control system must reflect
      the
      fact that there are resource constraints and the benefits of controls must
      be
      considered relative to their costs. Because of the inherent limitations in
      all
      control systems, no evaluation of controls can provide absolute assurance that
      all control issues, if any, within the organization have been
      detected.




18




**ITEM
      6.**  **EXHIBITS
      AND REPORTS ON FORM 8-K**





**(a)**
            **Exhibits:**


**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)4.1
            
            Rights
                Plan. (6)10
            
            Lease
                of Westborough Office Park, Building Five, dated November 10, 1995.
                (3)14
            
            Code
                of Ethics. (7)21
            
            Subsidiary
                of the Registrant. (2)31.1
            
            Certification
                of Principal Executive Officer required by Rule 13a 14(a) or Rule
                15-d14
                (a) of the Securities Exchange Act of 1934, as adopted pursuant to
                Section
                302 of the Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.99.1
            
            1999
                Incentive Compensation Plan, as amended and restated on May 1, 2000.
                (1)99.2
            
            Form
                of Subscription Agreement for purchase of common stock, dated as
                of March
                20, 2000. (1)99.3
            
            Form
                of Warrant Agreement. (1)99.4
            
            Asset
                Purchase Agreement, dated February 11, 2002, between MangoSoft, Inc.
                and
                Fleet National Bank. (4)99.5
            
            Warrant
                Agreement, dated February 11, 2002, between MangoSoft, Inc. and Fleet
                National Bank. (4)99.6
            
            Information
                Management Services Agreement, dated September
              30,
                2002, between MangoSoft, Inc. and Built Right Networks LLC.
                (5)99.7
            
            Rights
                Agreement, dated March 14, 2003, between MangoSoft, Inc. and Interwest
                Transfer Co., Inc. (6)




(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
                September
                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 Quarterly Report filed August 14, 2002 for the
                quarter ended September 30, 2002 and hereby incorporated by reference
                thereto.(5)
            Filed
                as an exhibit to our Current Report on Form 8-K for an event dated
                September 30, 2002 and hereby incorporated by reference
                thereto.(6)
            Filed
                as an exhibit to our Current Report on Form 8-K for an event dated
                March
                21, 2003, as amended on July 25, 2003, and hereby incorporated by
                reference thereto.(7)
            Filed
                as an exhibit to our Annual Report filed on March 26, 2004 for the
                year
                ended December 31, 2003 and hereby incorporated by reference
                thereto.




19





**(b)
      Reports on Form 8-K:**





(1)
            On
                January 22, 2008, Form 8-K was filed indicating that its Board of
                Directors has extended the expiration date of its previously announced
                rights offering from January 29, 2008 to February 18,
                2008.





(2)
            On
                January 29, 2008, Form 8-K was filed indicating that its Board of
                Directors has extended the expiration date of its previously announced
                rights offering from February 18, 2008 to February 19,
                2008.





(3)
            On
                February 27, 2008, Form 8-K was filed indicating the closing and
                the
                results of its rights offering which ended as of the close of business
                on
                February 19, 2008. The Company received gross proceeds of approximately
                $1,023,672 and will issue approximately 2,047,344 shares of its common
                stock to its stockholders who properly exercised their rights in
                the
                rights offering. The Company expects to commence issuing the shares
                of
                common stock on or about February 27,
                2008.





(4)
            On
                May 14 2008, Form 8-K was filed indicating that the United States
                Court of
                Appeals for the Federal Circuit issued an opinion in the case Mangosoft,
                Inc. et al. v. Oracle Corporation. The opinion affirmed the District
                Court’s claim construction order of September 21, 2004 and the District
                Court’s decision granting defendant’s motion for summary judgement on
                non-infringement entered by the District Court on March 28,
                2007.




20




**SIGNATURE**





In
      accordance with 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 14, 2008
            MANGOSOFT, INC./S/*Dale Vincent*Dale Vincent
              Chief Executive Officer
              (Principal Financial and Accounting Officer)




21