U. S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

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

                                 FORM 10-QSB/A


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

                For the Quarterly Period Ended September 30, 1999

                                       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 of                (IRS Employer ID. No.)
    incorporation or organization)

                         1500 West Park Drive, Suite 190
                              WESTBOROUGH, MA 01581
                              ---------------------
                    (Address of principal executive offices)


Registrant's telephone number, including area code:   (508) 871-7397

      FIRST AMERICAN CLOCK CO., 953 EAST SOUTH, SALT LAKE CITY, UTAH 84106
      --------------------------------------------------------------------
         (Former name and former address, if changed since last report)

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for 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                         19,883,998 SHARES
          ------------                         -----------------
         $.001 Par Value                (Outstanding on November 14, 1999)

<PAGE>

                         MANGOSOFT, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                             INDEX TO FORM 10-QSB/A



PART I.   FINANCIAL INFORMATION

ITEM 1--Financial Statements:

Condensed Consolidated Statements of Operations for the Three
  Months Ended September 30, 1999 and 1998, as restated ......................3

Condensed Consolidated Statements of Operations for the Nine
  Months Ended September 30, 1999 and 1998 and Cumulative for
  the Period From June 15, 1995 (Inception) to September 30, 1999,
  as restated.................................................................4

Condensed Consolidated Balance Sheets as of September 30, 1999
  and December 31, 1998, as restated..........................................5

Condensed Consolidated Statements of Cash Flows for the Nine
  Months Ended September 30, 1999 and 1998 and Cumulative for
  the Period From June 15, 1995 (Inception) to September 30, 1999,
  as restated.................................................................6

Notes to Condensed Consolidated Financial Statements .........................7

ITEM 2-- Management's Discussion and Analysis of Financial Condition and
         Results of Operations ..............................................17

PART II.  OTHER INFORMATION

ITEM 1--Legal Proceedings ...................................................26

ITEM 2--Changes in Securities ...............................................26

ITEM 3--Defaults Upon Senior Securities .....................................26

ITEM 4--Submission of Matters to a Vote of Security Holders ................ 26

ITEM 5--Other Information .................................................. 27

ITEM 6--Exhibits and Reports on Form 8-K ................................... 27

Signatures ................................................................. 28


                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION

                         MANGOSOFT, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                 THREE MONTHS ENDED SEPTEMBER 30,
                                                                                 --------------------------------
                                                                                   1999(1)              1998(1)
                                                                                 -----------          -----------

<S>                                                                             <C>               <C>
Revenues .....................................................................  $     27,775      $      1,138
Cost of revenues .............................................................            --             4,486
                                                                                ------------      ------------
          Gross margin .......................................................        27,775            (3,348)

Costs and expenses:

  Research and development (excluding stock-based
    compensation expense of $4,060,631 in 1999) ..............................     1,274,944         1,618,116

  Selling and marketing (excluding stock-based compensation
    expense of $478,802 in 1999) .............................................       152,076           243,134

  General and administrative (excluding stock-based compensation expense of
   $4,031,182 in 1999) .......................................................       292,079           905,586

  Stock-based compensation expense ...........................................     8,570,615                --

  Consulting fees to related parties .........................................        31,595                --
                                                                                ------------      ------------
          Total operating costs and expenses .................................    10,321,309         2,766,836
                                                                                ------------      ------------
Loss from operations..........................................................   (10,293,534)       (2,770,184)

Interest income ..............................................................         3,760            16,311

Interest  expense  to  related  parties  (including $3,027,375
related to a beneficial conversion feature in 1999) ..........................    (3,099,759)               --

Other interest expense (including $1,832,625 related
  to a beneficial conversion feature in 1999) ................................    (1,881,292)          (22,238)
                                                                                 -----------       -----------
          Total interest expense .............................................    (4,981,051)          (22,238)

Other income (expense), net ..................................................        (5,485)               --
                                                                                 -----------       -----------

Net loss .....................................................................   (15,276,310)       (2,776,111)
Accretion of preferred stock .................................................      (471,231)         (658,422)
                                                                                 -----------       -----------

Net loss applicable to common stockholders ...................................  $(15,747,541)     $ (3,434,533)
                                                                                ============      ============

Net loss per common share - basic and diluted ................................  $      (2.98)     $     (25.08)
                                                                                ============      ============

Shares used in computing basic and diluted net loss per
   common share ..............................................................     5,288,353           136,949
                                                                                ============      ============
</TABLE>

(1) As restated.  See note 12.

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

                                       3
<PAGE>

                         MANGOSOFT, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                        CUMULATIVE FROM
                                                                      NINE MONTHS ENDED SEPTEMBER 30,    JUNE 15, 1995
                                                                      ------------------------------    (INCEPTION) TO
                                                                        1999(1)             1998(1)   SEPTEMBER 30, 1999(1)
                                                                      -----------         ----------  ---------------------

<S>                                                                  <C>               <C>               <C>
Revenues .......................................................     $     35,766      $    245,406      $    281,172
Cost of revenues ...............................................              363            91,529            91,892
                                                                     ------------      ------------      ------------
  Gross margin .................................................           35,403           153,877           189,280

Costs and expenses:
  Research and development (excluding stock-based
    compensation expense of $4,060,631 in 1999 and cumulative
    from June 15, 1995 (Inception) to September 30, 1999) ......        3,372,695         5,241,567        21,937,263

  Selling and marketing (excluding stock-based compensation
    expense of $478,802 in 1999 and cumulative from June 15,
    1995 (Inception) to September 30, 1999) ....................          211,701         2,586,971         9,298,371

  General and administrative (excluding stock-based
    compensation expense of $4,031,182 in 1999 and cumulative
    from June 15, 1995 (Inception) to September 30, 1999) ......        1,611,558         2,370,679         9,985,212

  Stock-based compensation expense .............................        8,570,615                --         8,570,615

  Consulting fees to related parties ...........................           51,198           350,000           698,993
                                                                     ------------      ------------      ------------
          Total operating costs and expenses ...................       13,817,767        10,549,217        50,490,454
                                                                     ------------      ------------      ------------
Loss from operations ...........................................      (13,782,364)      (10,395,340)      (50,301,174)

Interest income ................................................            7,031           163,478           572,107

Interest  expense  to  related  parties  (including $3,027,375
    related to a  beneficial  conversion  feature in 1999 and
    cumulative from June 15, 1995 (Inception) to September
    30, 1999) ..................................................       (3,265,868)               --         3,285,594)

Other interest expense (including $1,832,625 related to a
    beneficial conversion feature in 1999 and cumulative from
    June 15, 1995 (Inception) to September 30, 1999) ...........       (1,958,125)          (30,175)       (2,007,632)
                                                                     ------------      ------------      ------------
          Total interest expense ...............................       (5,223,993)          (30,175)       (5,293,226)
Other income (expense), net ....................................           (6,200)               --           (73,400)
                                                                     ------------      ------------      ------------
Net loss .......................................................      (19,005,526)      (10,262,037)      (55,095,693)
Accretion of preferred stock ...................................       (1,884,923)       (1,976,063)       (6,604,024)
                                                                     ------------      ------------      ------------
Net loss applicable to common stockholders .....................     $(20,890,449)     $(12,238,100)     $(61,699,717)
                                                                     ============      ============      ============
Net loss per common share - basic and diluted ..................     $     (11.15)           (89.95)
                                                                     ============      ============
Shares used in computing basic and diluted net loss per
    common share................................................        1,872,953           136,049
                                                                     ============      ============
</TABLE>


(1) As restated.  See note 12.

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

                                       4
<PAGE>

                         MANGOSOFT, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                        SEPTEMBER 30, 1999(1)   DECEMBER 31, 1998
                                                        ---------------------   -----------------
ASSETS
<S>                                                          <C>               <C>

CURRENT ASSETS:
   Cash and cash equivalents ...........................     $  2,294,607      $    232,637
   Accounts receivable .................................               --             9,458
   Inventory ...........................................               --               275
   Prepaid insurance ...................................          173,475                --
   Other prepaid expenses and current assets ...........           12,350             3,591
                                                             ------------      ------------
     Total current assets ..............................        2,480,432           245,961

Property and equipment, at cost ........................        2,078,631         2,037,008
Accumulated depreciation ...............................       (1,897,652)       (1,830,744)
                                                             ------------      ------------
     Property and equipment, net .......................          180,979           206,264

DEPOSITS AND OTHER ASSETS ..............................            5,943             5,943
                                                             ------------      ------------
     TOTAL .............................................     $  2,667,354      $    458,168
                                                             ============      ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
   Demand notes payable to related parties .............     $     32,500      $  2,000,000
   Other short-term debt ...............................          136,088           750,000
   Accrued expenses to related parties .................          798,993           647,795
   Accounts payable, including past due amounts ........        1,876,622         1,768,456
   Accrued payroll .....................................          287,584           142,834
   Accrued merger costs ................................          216,171                --
   Other accrued expenses ..............................          437,304           424,172
   Deferred revenue ....................................               --            19,160
                                                             ------------      ------------
     Total current liabilities .........................        3,785,262         5,752,417

COMMITMENTS AND CONTINGENCIES

REDEEMABLE PREFERRED STOCK
   Redeemable convertible preferred stock, Series C                    --        10,536,748
   Redeemable convertible preferred stock, Series D                    --         7,193,384
   Redeemable convertible preferred stock, Series E                    --        14,233,546
                                                             ------------      ------------
                 Total redeemable preferred stock ......               --        31,963,678
                                                             ------------      ------------

STOCKHOLDERS' DEFICIENCY:
   Convertible preferred stock, Series A ...............               --            22,500
   Convertible preferred stock, Series B ...............               --             7,500
   Common stock ........................................           19,884               761
   Additional paid-in capital ..........................       58,842,503                --
   Deferred compensation ...............................       (1,801,158)               --
   Deficit accumulated during the development stage ....      (58,179,137)      (37,288,688)
                                                             ------------      ------------
     Total stockholders' deficiency ....................       (1,117,908)      (37,257,927)
                                                             ------------      ------------
TOTAL...................................................     $  2,667,354      $    458,168
                                                             ============      ============
</TABLE>
(1) As restated.  See note 12.

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

                                       5
<PAGE>

                         MANGOSOFT, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                            CUMULATIVE FROM
                                                                        NINE MONTHS ENDED SEPTEMBER 30,      JUNE 15, 1995
                                                                        -------------------------------      (INCEPTION) TO
                                                                            1999(1)            1998       SEPTEMBER 30, 1999(1)
                                                                        ---------------   -------------   ---------------------
<S>                                                                     <C>             <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .............................................................  $(19,005,526)   $  (10,262,037)    $ (55,096,693)
Adjustments to reconcile net loss to net cash used in operating
activities:
   Depreciation and amortization .....................................        82,662           499,010         2,018,476
     Stock-based compensation ........................................     8,570,615                --         8,570,615
     Beneficial conversion feature of 12% convertible notes ..........     4,860,000                --         4,860,000
     Accrued interest converted into paid-in capital in connection
        with  the conversion of the 12% convertible notes ............       377,409                --           377,409
   Loss on disposal of equipment .....................................            --                --            71,942
   (Decrease) increase in cash from:
     Accounts receivable .............................................         9,458           140,063                --
     Inventory .......................................................           275            62,358                --
     Prepaid insurance and other current assets ......................       (46,146)           68,280           (49,737)
     Deposits and other assets .......................................            --           172,172            (5,943)
     Accrued expenses to related parties .............................        51,198           350,000           698,993
     Accounts payable ................................................       108,183          (802,379)        1,876,639
     Accrued payroll .................................................       144,749            76,952           287,583
     Other accrued expenses ..........................................        13,132            43,023           437,304
     Deferred revenue ................................................       (19,160)         (130,361)               --
                                                                        ------------      ------------      ------------
               Net cash used in operating activities .................    (4,853,151)       (9,782,919)      (35,952,412)
                                                                        ------------      ------------      ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Expenditures for property and equipment ...........................       (57,377)         (158,216)       (2,284,146)
   Payment of merger costs ...........................................       (60,002)               --           (60,002)
   Proceeds from sale of fixed assets ................................            --                --            12,749
                                                                        ------------      ------------      ------------
          Net cash used in investing activities ......................      (117,379)         (158,216)       (2,331,399)
                                                                        ------------      ------------      ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from issuance of common and preferred stock .........     3,750,000           203,837        34,545,918
    Proceeds from issuance of notes to related parties ...............     2,032,500                --         4,332,500
    Proceeds from other debt financings ..............................     2,000,000           750,000         2,750,000
    Repayments of other debt financings ..............................      (750,000)               --          (750,000)
                                                                        ------------      ------------      ------------
               Net cash provided by financing activities .............     7,032,500           953,837        40,578,418
                                                                        ------------      ------------      ------------
NET INCREASE (DECREASE)  IN CASH AND EQUIVALENTS .....................     2,061,970        (8,987,298)        2,294,607

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .......................       232,637         9,366,392                --
                                                                        ------------      ------------      ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD .............................  $  2,294,607    $      379,094     $   2,294,607
                                                                        ============      ============      ============
</TABLE>

(1)  As restated. See note 12.

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

                                       6
<PAGE>

                        MANGOSOFT, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       NATURE OF BUSINESS

         MangoSoft, Inc. and subsidiaries (a development stage company) ("the
Company") develop and market advanced software technology to simplify, expand
and integrate networking and pooled use of computer resources. It is engaged in
a single operating segment of the computer software industry.

         The Company is considered to be a development stage company since it
has not generated significant revenues from products that have been developed to
date. The Company is subject to a number of risks similar to those of other
companies in an early stage of development. Principal among these risks are
dependencies on key individuals, competition from other substitute products and
larger companies, the successful development and marketing of its products and
the need to obtain adequate additional financing necessary to fund future
operations.

         The Company, without audit, has prepared the accompanying condensed
consolidated financial statements. In the opinion of management, these unaudited
interim condensed consolidated financial statements furnished herein reflect all
adjustments, which in the opinion of management are of a normal recurring
nature, necessary to fairly state MangoSoft, Inc. and subsidiaries' financial
position, cash flows and the results of operations for the periods presented and
have been prepared on a basis substantially consistent with the audited
financial statements as at December 31, 1998. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with the accounting principles generally accepted in the United States of
America have been condensed or omitted. Accordingly, these unaudited interim
condensed consolidated financial statements should be read in conjunction with
the Company's Form 8-K.

         The results of operations for the interim periods are not necessarily
indicative of the results of operations to be expected for the fiscal year.

2.       MERGER TRANSACTION AND BASIS OF PRESENTATION

         On September 7, 1999, MangoMerger Corp., a wholly-owned subsidiary of
First American Clock Co. ("First American"), merged with and into MangoSoft
Corporation, pursuant to an Agreement and Plan of Merger ("the Merger") dated
August 27, 1999. Following the merger the business to be conducted by First
American was the business conducted by MangoSoft Corporation prior to the
merger. In conjunction with the merger, First American, which is the legal
acquirer and surviving legal entity, changed its name to MangoSoft, Inc.
("MangoSoft, Inc.").

         Immediately after the Merger, the former common and preferred
stockholders of MangoSoft Corporation held 6,008,998 shares of the Company's
common stock, while the former common stockholders of First American held
1,575,000 shares of the Company's common stock. In addition, the 12% Senior
Secured Convertible Notes (the "12% convertible notes") in the aggregate of
$6,000,000 held by creditors of MangoSoft Corporation were converted into an
aggregate of 9,000,000 shares of the Company's common stock. As part of the
Merger, the Company completed a Private Placement (the "Private Placement") of
3,000,000 shares of common stock for net proceeds of $3,098,827. The Company
also issued 300,000 shares of common stock to the placement agent in respect for
such Private Placement.

         At the time of the merger, the common shares issued to the former
stockholders of MangoSoft Corporation represented a majority of the Company's
common sttock, enabling them to retain voting and operating control of the
Company. Because First American was a non-operating entity and the closing of
the Private Placement was contingent upon the closing of the Merger, the Merger
was accounted for as a capital transaction and was treated as a reverse
acquisition as the shareholders of MangoSoft Corporation received the larger
portion of the voting interests in the combined enterprise. Estimated costs of
the Merger of $276,173 and the value ($375,000) of the 300,000 shares of common

                                       7
<PAGE>

stock issued to the placement agent have been recorded as issuance costs of the
Private Placement.

         Since the accounting applied differs from the legal form of the merger,
the Company's financial information for periods prior to the merger represent
the financial results of MangoSoft Corporation.

         Pro Forma Disclosure (Unaudited)- The following table represents the
unaudited pro forma results of operations for the nine months ended September
30, 1999 and 1998 assuming the Merger had occurred on January 1, 1998, the
beginning of the earliest period presented in the accompanying condensed
consolidated financial statements. These pro forma results have been prepared
for comparative purposes only and are not necessarily indicative of what would
have occurred had the Merger occurred at that date or of results which may occur
in the future.

<TABLE>
<CAPTION>
                                                               NINE MONTHS ENDED
                                                                  SEPTEMBER 30,
                                                              ----------------------
                                                              1999              1998
                                                              ----              ----
<S>                                                       <C>             <C>
          Revenue ....................................    $     35,678    $    245,406
          Loss from operations .......................     (13,782,902)    (10,359,688)
          Net loss ...................................     (18,646,937)    (10,286,378)
          Net loss applicable to common shares .......     (18,646,937)    (10,286,378)

          Net loss per common share ..................    $      (0.97)   $      (1.35)
          Shares used in computing net loss per common
                 share ...............................      19,217,331       7,610,219
</TABLE>

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Principles of Consolidation - As described in Note 2, MangoSoft, Inc.
completed a merger transaction on September 7, 1999 that has been accounted for
as a reverse acquisition. Accordingly, the Company's consolidated financial
statements for periods prior to September 7, 1999 represent those of its
subsidiary, MangoSoft Corporation, which is considered to be the acquirer for
accounting purposes. The consolidated financial statements for periods
subsequent to September 7, 1999 include the accounts of MangoSoft, Inc. and its
wholly owned subsidiary after the elimination of all significant intercompany
balances.

         Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the balance
sheet dates. Estimates include such items as reserves for estimated product
returns and allowances, the valuation allowance of deferred tax assets, useful
lives of other assets, property and equipment, and accrued liabilities. Actual
results could differ from those estimates.

         Revenue Recognition - Revenue is recognized when earned. The Company
sells its products primarily through distributors. Revenue from off-the-shelf
product sales is recognized upon resale by the distributors. Revenue from
products licensed to original equipment manufacturers ("OEMs") is recognized
when OEMs ship licensed products. Provisions are recorded for estimated product
returns and allowances.

         Cash and Equivalents - Cash and equivalents include cash on hand, cash
deposited with banks and highly liquid debt securities with remaining maturities
of ninety days or less when purchased.

         Inventory - Inventory is stated at a lower of cost or market using the
first-in, first-out method. Inventory consists of costs associated and packaging
of software.

         Property and Equipment - Property and equipment are recorded at cost.
Depreciation and amortization are provided using the straight-line method over
the estimated useful lives (one to five years) of the related assets. The
Company periodically evaluates the recoverability of its long-lived assets based
on the expected, undiscounted cash flows and recognizes impairment, if any,
based on discounted cash flows.

                                       8
<PAGE>

         Software Development Costs - Costs incurred prior to technological
feasibility of the Company's software products are expensed as research and
development costs. Certain costs incurred after technological feasibility has
been established are capitalized. In 1999 and 1998, no such costs were
capitalized.

         Income Taxes - The Company accounts for income taxes under Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes."
This Statement requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
Company's consolidated financial statements or tax returns. Deferred tax
liabilities and assets are determined based on the difference between the
financial statement carrying amounts and tax bases of existing assets and
liabilities, using enacted tax rates in effect in the year(s) in which the
differences are expected to reverse.

         Stock-Based Compensation - As permitted by SFAS No. 123, "Accounting
for Stock-Based Compensation," the Company accounts for stock-based compensation
using the intrinsic value method in accordance with Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees."

         Equity instruments issued to non-employees are accounted for in
accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force
("EITF") Issue No. 96-18, "Accounting for Equity Instruments That Are Issued To
Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services". All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the
fair value of the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable. The measurement date
of the fair value of the equity instrument issued is the earlier of the date on
which the counterparty's performance is complete or the date on which it is
probable that performance will occur.

         Net Loss Per Common Share - The Company calculates basic and diluted
earnings (loss) per share in accordance with SFAS No. 128, "Earnings Per Share".
Basic earnings per common share is computed by dividing net earnings available
to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per common share includes the
weighted average number of common shares outstanding and gives effect to
potentially dilutive common shares such as options, warrants and convertible
debt and preferred stock outstanding.

         Net loss per common share for the three and nine months ended September
30, 1999 and 1998 is based only on the weighted average number of shares of
common stock outstanding. Basic and diluted loss per common share are the same
for all periods presented as potentially dilutive securities, including options,
warrants, convertible notes and preferred stock have not been included in the
calculation of the net loss per common share as their effect is antidilutive.

         Comprehensive Income - Comprehensive income (loss) is equal to net
income (loss) for the three and nine months ended September 30, 1999 and 1998.

         Future Adoption of Accounting Pronouncements - In June 1998, the
Financial Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
The provisions of SFAS No. 133 are effective for periods beginning after June
15, 2000. The Company is currently evaluating the effect SFAS No. 133 will have
on the Company's financial position and results of operations. The Company will
adopt this accounting standard on January 1, 2001, as required.

         On December 3, 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 provides guidance on the recognition, presentation and
disclosure of revenues in financial statements filed with the Securities and
Exchange Commission. Management is currently evaluating the effect, if any, SAB
No. 101 will have on the Company's financial position and results of operations.
The Company will adopt this accounting standard during the fourth quarter of
2000, as required.

                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                                   NINE MONTHS ENDED
                                                                      SEPTEMBER 30,             CUMULATIVE
                                                                   -------------------             SINCE
                                                                   1999           1998           INCEPTION
                                                                   ----           ----           ---------
<S>                                                            <C>             <C>             <C>
SUPPLEMENTAL CASH FLOW INFORMATION
  Cash paid during the period for interest .................   $    11,102     $    25,487     $    80,335

 NON CASH ACTIVITIES
   Merger-related transactions:
      Conversion of redeemable convertible preferred
        stock to common stock ..............................   $33,818,617     $        --     $33,818,617
      Conversion of convertible preferred stock to common
        stock ..............................................        30,000              --          30,000
      Conversion of 12% convertible notes to common stock        6,000,000              --       6,000,000
      Beneficial conversion feature on conversion of 12%
        convertible notes ..................................     4,860,000              --       4,860,000
      Conversion of accrued interest payable into common
        stock ..............................................       377,409              --         377,409
      Repurchase of Company stock ..........................       100,000              --         100,000
      Accrued merger costs .................................       300,000                         300,000
      Common stock issued in lieu of investment banking
        fees ...............................................           300              --             300
      Issuance of note to finance prepaid insurance ........       136,088              --         136,088
      Accretion of redeemable convertible preferred
        stock ..............................................     1,884,923       1,976,063       6,604,024
      Conversion of accounts payable to common stock .......            --          90,000          90,000
</TABLE>


4.       FUNDING OF OPERATIONS

         The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the financial
statements during the nine months ended September 30, 1999 and 1998, and
cumulative since inception, the Company incurred net losses of $19,005,526,
$10,262,037 and $55,095,693, respectively, and at September 30, 1999, a
substantial portion of its accounts payable were past due. These factors, among
others, raise substantial doubt about the Company's ability to continue as a
going concern. Based upon the Company's present financial position, management
believes that the Company has sufficient capital to fund operations through
January 2000.

         The financial statements do not include any adjustments relating to the
recoverability 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 to meet its obligations on a timely basis, to comply with the terms of its
financing agreements, to obtain additional financing, and ultimately to attain
profitability. During 1999, management expects to continue to reduce operating
expenses, consolidate operations, and seek additional equity and debt financing.
Management expects to further develop markets for the Company's product by
establishing license and contractual agreements with OEMs (Original Equipment
Manufacturers).

                                       10
<PAGE>

5.       SHORT-TERM DEBT

         Short-term debt consisted of the following at:

<TABLE>
<CAPTION>
                                      SEPTEMBER 30,   DECEMBER 31,
                                         1999             1998
                                      -------------   ------------
<S>                                    <C>            <C>
Notes payable to related parties ...   $   32,500     $2,000,000
Notes payable to insurance company..      136,088             --
Equipment term loan due to bank ....           --        750,000
                                       ----------     ----------
     Total .........................   $  168,588     $2,750,000
                                       ----------     ----------
</TABLE>


         On May 28, 1998, the Company entered into a $1,250,000 financing
agreement with a bank. The financing consisted of a $750,000 equipment term loan
and a $500,000 revolving loan. Advances against the revolving loan were based on
a percentage of eligible accounts receivable. Interest was charged at the bank's
prime rate plus 1/2%. Borrowings outstanding were collateralized by
substantially all of the Company's assets. The financing agreement contained
financial and non-financial covenants including a prohibition for further
indebtedness, and the Company was not in compliance with its financial covenants
as of December 31, 1998. Using proceeds received from the issuance of the Notes
in February 1999, the Company repaid the $750,000 of outstanding borrowings,
plus the related accrued interest, and the bank agreement was terminated.

         In October 1998, the Company entered into financing agreements with two
stockholders to provide $2,000,000 of financing through the issuance of demand
notes. Unpaid amounts under the notes bear interest at 8%. The amounts
outstanding under these financing agreements were converted into the Notes in
February 1999.

         In February 1999, the Company issued $4,000,000 in 12% convertible
notes, which included $2,000,000 from conversion of the demand notes issued to
the two stockholders in 1998. Subsequent to the February 1999 issuance, the two
stockholders purchased an additional $2,000,000 in 12% convertible notes to
enable the Company to meet its financing needs. The 12% convertible notes were
secured by substantially all of the Company's assets, and were convertible into
common stock at the option of the holder at $3.50 per common share, or at 75% of
the lowest cash price paid in any equity offering during the period the 12%
convertible notes were outstanding. In addition, the conversion price would
continue to decrease by 5% per month for each month following the initial
six-month period the 12% convertible notes remained unpaid, provided that the
final conversion price would never be lower than 50% of the lowest price paid by
investors in any equity financing. The total $6,000,000 in 12% convertible notes
plus the related accrued interest of $377,409 was converted into 9,000,000
shares of MangoSoft, Inc. common stock at a value of $.71 per share in
connection with the merger.

         The 12% convertible notes contained a beneficial conversion feature
which allowed their conversion into common stock at less than the fair market
value of the common stock. As part of the Merger, the Company completed the
Private Placement of 3,000,000 shares of its common stock at $1.25 per share for
net proceeds of $3,098,827. This per share value was the lowest cash price paid
in any equity offering during the period the 12% convertible notes were
outstanding. At the time of the Merger, the terms of the 12% convertible notes
allowed for its conversion at 65% of the $1.25 per share equity offering price,
or $0.81 per share. To facilitate the completion of the Company's Merger, a Note
Conversion Agreement was entered into between the Company and the holders of the
12% convertible notes which allowed for their conversion at $0.71 per share
(including accrued interest), or $0.54 per share below fair market value of the
Company's common stock. In accordance with EITF Issue No. 98-5 "Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios", the difference of $4,860,000 was recognized as a
beneficial conversion feature through a charge to interest expense and a credit
to additional paid-in capital.

         Upon conversion of the 12% convertible notes, the accrued interest
expense was no longer payable and was credited to additional paid-in capital.

         In August 1999, the Company entered into a financing arrangement with
two additional stockholders to provide $400,000 of interim financing in advance


                                       11
<PAGE>

of the merger. The notes were unsecured, carried interest at an annual rate of
9%, and automatically converted into common stock at $1.25 per share in
conjunction with the merger on September 7, 1999.

         In September 1999, the Company executed a note payable to an insurance
company to finance the payment of its Directors and Officers Liability Insurance
premium. The note carries interest at 8.5% per annum and is due in nine monthly
installments, with a final maturity on June 3, 2000.

6.       REDEEMABLE CONVERTIBLE PREFERRED STOCK

         At December 31, 1998, the Company had 1,500,000 authorized, issued and
outstanding shares of Series C Redeemable Convertible Preferred Stock, $.01 par
value (the "Series C Preferred Stock") with a liquidation preference of $9
million; 1,000,000 authorized, 799,751 issued and outstanding shares of Series D
Convertible Preferred Stock, $.01 par value (the "Series D Preferred Stock")
with a liquidation preference of $6.4 million; and 1,450,000 authorized, issued
and outstanding shares of Series E Convertible Preferred Stock, $.01 par value
(the "Series E Preferred Stock") with a liquidation preference of $13.1 million
(collectively, the "Redeemable Preferred Stock").

         The Redeemable Preferred Stock had no stated dividend rate. The holders
were entitled to receive dividends had dividends been declared on either the
Company's common stock or the Series A and B Convertible Preferred Stock. The
Company has not declared dividends since its inception. Information with respect
to the issuance of the Redeemable Preferred Stock is as follows:

<TABLE>
<CAPTION>

                                                          ISSUANCE DATE      NET PROCEEDS
                                                          -------------      ------------
<S>                                                        <C>               <C>
Series C Redeemable Preferred Stock, 1,500,000 shares
 at $6.00 per share, net of offering costs of $783,355       June 1996       $ 8,216,645
Series D Redeemable Preferred Stock, 499,751 shares
 at $8.00 per share, net of offering costs of $351,020      April 1997         6,046,988
Series E Redeemable Preferred Stock, 1,450,000 shares
 at $9.00 per share, net of offering costs of $272,893     December 1997      12,777,107
                                                                             -----------
                                                                             $27,040,740
                                                                             ===========
</TABLE>

         Holders of the Redeemable Preferred Stock had the right and option to
convert the preferred shares, at any time, into shares of common stock. Each
share of Redeemable Preferred Stock would initially convert into one share of
common stock. The conversion rate was adjusted for stock splits, combinations,
stock dividends and distributions. The Redeemable Preferred Stock had voting
rights equal to the number of shares of common stock into which it was
convertible. Under certain events, including a public offering of the common
stock or approval by a certain percentage of each class of the holders, the
Redeemable Preferred Stock would automatically convert into common stock at the
applicable conversion rate.

         In addition, the holders of the Redeemable Preferred Stock were
entitled to receive preference to the holders of the common stock in the event
of liquidation. On June 15, 2001, the Company may have been required, at the
option of the holders of a majority of the then outstanding Series C, Series D
and Series E Preferred Stock, to redeem 33 1/3% of the outstanding shares of the
Series C, Series D and Series E Preferred Stock, and 50% and 100% of all
outstanding shares on the first and second anniversaries from June 15, 2001,
respectively. In the event of such a mandatory redemption, the holders of the
Redeemable Preferred Stock would have received a price equal to the original
issue price plus an annual compounded dividend of 8%. Accordingly, to reflect
the mandatory redemption feature, the Company recorded accretion on the
Redeemable Preferred Stock of $1,884,923, $1,976,063 and $6,604,024 for the nine
months ended September 20, 1999 and 1998 and cumulative for the period from June
15 (inception) to September 30, 1999, respectively.

                                       12
<PAGE>

7.       STOCKHOLDERS' EQUITY (DEFICIENCY)

MangoSoft, Inc.

         Common stock - At September 30, 1999, the Company had authorized
100,000,000 shares of $.001 common stock, of which 19,883,998 shares were issued
and outstanding, and 3,500,000 shares are reserved for issuance pursuant to the
Company's 1999 Incentive Compensation Plan.

         Preferred stock - At September 30, 1999, the Company had authorized
5,000,000 shares of preferred stock, $.001 par value per share, of which no
shares were issued and outstanding.

MangoSoft Corporation

         Convertible Preferred Stock - At December 31, 1998, the MangoSoft had
2,250,000 authorized, issued and outstanding shares of Series A Convertible
Preferred Stock, $.01 par value (the "Series A Preferred Stock") and 750,002
authorized, issued and outstanding shares of Series B Convertible Preferred
Stock, $.01 par value (the "Series B Preferred Stock") (collectively, the
"Convertible Preferred Stock").

         Holders of the Convertible Preferred Stock had the right and option to
convert the preferred shares, at any time, into shares of common stock. Each
share of Convertible Preferred Stock would initially convert into one share of
common stock. The conversion rate was adjusted for stock splits, combinations,
stock dividends and distributions. The Convertible Preferred Stock had voting
rights equal to the number of shares of common stock into which it is
convertible, and a preference over the holders of the common stock in the event
of liquidation. In the event of a public offering of the common stock or upon
written notice of at least 51% of all the then outstanding shares, the Series A
Preferred Stock and Series B Preferred Stock would automatically convert into
common stock at the applicable conversion rate.

         Common Stock - At December 31, 1998, MangoSoft had authorized
25,000,000 shares of $.001 par value common stock (the "common stock"), of which
761,250 shares were issued and outstanding; 2,250,000 shares are reserved for
issuance upon conversion of the Series A Preferred Stock; 750,002 shares are
reserved for issuance upon conversion of the Series B Preferred Stock; 1,500,000
shares are reserved for issuance upon conversion of the Series C Preferred
Stock; 799,751 shares are reserved for issuance upon conversion of the Series D
Preferred Stock; 1,450,000 shares are reserved for issuance upon conversion of
the Series E Preferred Stock; 180,000 shares are reserved for issuance upon
exercise of outstanding common stock warrants; and 2,000,000 shares are reserved
for issuance pursuant to the Company's 1995 Stock Plan.

         In connection with the merger in September 1999, as described in Note
2, all shares of MangoSoft common stock and Convertible Preferred Stock were
converted into common stock of MangoSoft, Inc. In addition, substantially all
outstanding options and warrants to purchase MangoSoft common stock were
terminated and new options to purchase MangoSoft, Inc. common stock were issued
in their place.

8.     STOCK OPTION PLAN

         In connection with the Merger, the Company adopted the 1999 Incentive
Compensation Plan (the "Plan"). The Plan, as amended, provides for the issuance
of up to 3,500,000 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. The exercise price of the option
is not less than the fair market value at the date of grant.

         As discussed in Note 3, the Company accounts for stock options granted
to employees in accordance with APB No. 25. In connection with the merger,
outstanding employee options of MangoSoft Corporation were cancelled and
replaced with options to purchase shares of MangoSoft, Inc. The new options were
granted at fair market value at the date of grant ($1.25) and contained the same
vesting provisions as the options replaced. In addition, the new options include

                                       13
<PAGE>

stock appreciation rights ("SARs") that permit the employee to receive the
appreciation in shares of common stock in lieu of exercising the option.

         Under APB No.25, SARs are accounted for as a variable plan 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 options, compensation expense is recognized over the vesting period;
for vested options, 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, 1999, compensation related to the SARs totaled
$10,209,456 based on the market price of $4.875 at that date compared to the
fair market value at the dates of grant. Because a substantial portion of the
options are vested, the charge to expense in the three months ended September
30, 1999 was $8,408,298. The balance of $1,801,158 relates to unvested options
and will be charged to expense over the vesting period. Based on the number of
vested options at September 30, 1999, $1 increase in the market price of the
Company's common stock results in the immediate recognition of compensation
expense of approximately $3,000,000.

         In connection with the merger, the Company granted 405,590 options to
non-employees. The options were fully vested at the date of grant and the
Company recorded an expense of $162,317 related to these grants. The fair value
of the stock options awarded to non-employees on the grant date was $.40 per
share, calculated using the Black-Scholes option pricing model, with a
risk-free interest rate of 6.0%, an expected option life of two years, no
dividends and a volatility of 50%.

         The following table sets forth information regarding the options
outstanding at September 30, 1999:

<TABLE>
<CAPTION>
                                   AVERAGE     NUMBER        PRICE OF
EXERCISE   NUMBER OF   EXERCISE   REMAINING   CURRENTLY     CURRENTLY
 PRICE      SHARES      PRICE        LIFE    EXERCISABLE   EXERCISABLE
--------   ---------   --------   ---------  -----------   -----------

<S>       <C>           <C>        <C>        <C>             <C>
$1.25     2,982,832     $1.25      10 Years   2,492,695       $1.25
</TABLE>

         At September 30, 1999, all of the outstanding options to employees and
non-employees contained SARs.

         Pro Forma Disclosure - As discussed in Note 3, the Company uses the
intrinsic value method to measure compensation expense associated with grants of
stock options. Had the Company used the fair value method of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," to measure compensation, the reported net loss for the nine
months ended September 30, 1999 would have been $19,359,992. For purposes of
calculating the pro forma effects on net loss, the fair value of options on
their grant date was measured using the Black-Scholes Model with a risk-free
interest rate of 6.0%, an expected option life of two years, no dividends and a
volatility of 5%. Options granted during the nine months ended September 30,
1999 had a weighted average grant date fair value of $0.14.

9.    COMMITMENTS AND CONTINGENCIES

         The Company has a cancelable operating lease for office space, which
expires in 2001. The Company also leases various office equipment under
operating leases. Total rent expense was approximately $ 413,488 and $509,820
for the nine months ended September 30, 1999 and 1998, respectively. Future
minimum rental payments under the cancelable operating lease are $252,000 for
the year ending December 31, 1999.

         On August 30, 1999, one of the Company's shareholders filed suit in
Orange County (CA) Superior Court alleging damages for fraud in the sale of
securities under both Federal and California State law, and seeking a rescission
of the purchase agreement. The shareholder seeks damages in the amount of
$50,000, plus interest. On October 22, 1999, the matter was removed to Federal
Court following a petition by the Company. The Company has answered the
complaint, denied all material allegations and asserted various affirmative
defenses. Discovery has not commenced. In the judgement of management, this
litigation will not have a material adverse effect on the Company's business and
results of operations, although there can be no assurance as to the ultimate
outcome of this matter.

                                       14
<PAGE>

10.    TRANSACTIONS WITH STOCKHOLDERS

         Notes Payable - As discussed in Note 5, the Company received $2,000,000
of financing in 1998 from two stockholders. The demand notes, including accrued
interest thereon, were converted into 12% Senior Secured Convertible Notes (the
"Notes") in February 1999. During the period from February 1999 through
September 1999, these two stockholders advanced an additional $2,032,500 in
interim financing, of which $2 million represented the purchase of additional
Notes. In connection with the Merger, the Notes, including accrued interest,
were converted into MangoSoft, Inc. common stock.

       Other Stockholder Loans - As discussed in Note 5, the Company received
$400,000 in interim financing from two additional stockholders in advance of the
merger. The loans automatically converted into common stock in conjunction with
the merger.

         Administrative Services - During 1999 and 1998, a stockholder provided
administrative assistance to the Company. Amounts expensed and accrued for such
services approximated $698,993 and are included as an accrued expense in the
accompanying balance sheets.

         Repurchase of Common Stock - In connection with the Merger, MangoSoft
agreed to repurchase 200,000 shares of common stock from one of its stockholders
for $100,000. The shares of common stock have been reacquired and the amount
owed of $100,000 has been reflected as an accrued liability.

11.    GEOGRAPHIC SALES INFORMATION AND MAJOR CUSTOMERS

         The Company's sales by geographic area were approximately 88% in Japan
and 12% in North America in both the nine months ended September 30, 1999 and
1998. One customer accounted for 88% of the 1999 sales and another customer
accounted for approximately 88% of the sales in 1998.

12.    RESTATEMENT

         Subsequent to the filing of the Company's Quarterly Report on Form
10-QSB, the Company's management determined that the unaudited condensed
consolidated financial statements contained errors. Management determined that
(1) options granted in conjunction with the Merger (see Note 2) should have been
accounted for as variable plan awards and (2) a beneficial conversion feature
should have been recognized on the conversion of the Notes (see Note 5) at the
time of the Merger and (3) the Company's weighted average shares outstanding for
the periods prior to the merger were incorrect. In addition, certain other
adjustments and reclassifications have been reflected in the 1999 and 1998
financial statements for fair presentation.

         The accompanying restatements reflect the aforementioned corrections to
the unaudited condensed consolidated financial statements for the three and
nine-month periods ended September 30, 1999 and the cumulative results of
operations from June 15, 1995 (inception) to September 30, 1999. The significant
effects of the restatements are as follows:

<TABLE>
<CAPTION>
                                         AS OF SEPTEMBER 30, 1999
                                    --------------------------------
                                    AS PREVIOUSLY
                                      REPORTED           AS RESTATED
                                      --------           -----------
<S>                                <C>                 <C>
Deposits and other assets ....     $     59,320        $      5,943
Additional paid-in-capital ...       43,586,903          58,842,503
Deferred compensation ........               --          (1,801,158)
Deficit accumulated during the
   development stage .........      (44,595,713)        (58,179,137)
</TABLE>

                                       15
<PAGE>

<TABLE>
<CAPTION>

                                THREE MONTHS ENDED SEPTEMBER 30, 1999  NINE MONTHS ENDED SEPTEMBER 30, 1999
                                -------------------------------------  ------------------------------------
                                    AS PREVIOUSLY                         AS PREVIOUSLY
                                      REPORTED           AS RESTATED        REPORTED       AS RESTATED
                                      --------           -----------        --------       -----------

<S>                                <C>              <C>                <C>               <C>
General and administrative ...    $     438,293     $     292,079      $  1,513,025      $  1,611,558
Stock-based compensation .....               --         8,570,615                --         8,570,615
Loss from operations .........       (1,846,381)      (10,293,534)       (5,062,005)      (13,782,364)
Total interest expense .......         (121,051)       (4,981,051)         (363,933)       (5,223,993)
Net loss applicable to common
   shareholders ..............       (2,438,038)      (15,747,541)       (7,307,025)      (20,890,449)
Net loss per common share -
   basic and diluted .........            (0.32)            (2.98)            (2.02)           (11.15)
Shares used in computing basic
   and diluted net loss per
   common share ..............        7,678,000         5,288,353         3,609,333         1,872,953
</TABLE>

                                    CUMULATIVE FROM JUNE 15, 1995
                                  (INCEPTION) TO SEPTEMBER 30, 1999
                                  ---------------------------------
                                  AS PREVIOUSLY
                                    REPORTED        AS RESTATED
                                    --------        -----------

General and administrative ..     $ 10,016,733      $  9,985,212
Stock-based compensation ....               --         8,570,615
Loss from operations ........      (41,648.015)      (50,301,174)
Total interest expense ......         (433,226)       (5,293,226)
Net loss applicable to common
   shareholders .............      (48,116,293)      (61,699,717)


                                 NINE MONTHS ENDED SEPTEMBER 30, 1998
                                 ------------------------------------
                                    AS PREVIOUSLY
                                     REPORTED         AS RESTATED
                                     --------         -----------
Revenues .....................     $    308,260      $    245,406
General and administrative ...        2,433,533         2,370,679
Net loss applicable to common
   shareholders ..............      (12,238,100)      (12,238,100)
Net loss per common share -
   basic and diluted .........            (7.77)           (89.95)
Shares used in computing basic
   and diluted net loss per
   common share ..............        1,575,000           136,049


                                     *******

                                       16
<PAGE>

                          PART I. FINANCIAL INFORMATION

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

OVERVIEW

         The discussion below assumes that the Company can continue to do
business on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. As shown
in the financial statements, during the nine months ended September 30, 1999 and
1998, and cumulative since inception, the Company incurred net losses of
$19,005,526, $10,262,037 and $55,095,693, respectively, and at September 30,
1999, a substantial portion of it's accounts payable were past due. These
factors, among others, raise substantial doubt about the Company's ability to
continue as a going concern.

         In addition, the financial statements do not include any adjustments
relating to the recoverability of assets and the amount 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 to meet its obligations on a timely
basis, to comply with the terms of its financing agreements, to obtain
additional financing, and ultimately to attain profitability. During the
remainder of 1999, management expects to continue to reduce operating expenses,
consolidate operations, and seek additional equity and debt financing.
Management also seeks to further develop markets for the Company's product by
establishing license and contractual agreements with OEMs (Original Equipment
Manufacturers).

         On September 7, 1999, MangoMerger, a wholly-owned subsidiary of First
American, merged (the "Merger") with and into MangoSoft, pursuant to an
Agreement and Plan of Merger (the "Merger Agreement"), dated August 27, 1999.
Following the Merger the business to be conducted by First American was the
business conducted by MangoSoft prior to the Merger. In conjunction with the
Merger, First American changed its name to MangoSoft, Inc. ("MangoSoft, Inc."),
which is the legal acquirer and surviving legal entity. As a result of the
Merger, the Company's Common Stock is included for trading on the
Over-the-Counter Electronic Bulletin Board (the "OTCBB"). The Company does not
intend to maintain its listing on the OTCBB, which would require it to register
its Common Stock under Federal Securities laws by mid-December 1999. See "--
Risk Factors-Expected Delisting."

         The accounting applied in the Merger differs from the legal form.
Accordingly, the Company's consolidated financial statements for periods prior
to September 7, 1999, represent only the operating results and financial
position of its operating subsidiary, MangoSoft. The consolidated financial
statements for periods subsequent to September 7, 1999, reflect the combined
operating results and financial position of MangoSoft, Inc. and MangoSoft. See
Note 2 to the Unaudited Condensed Consolidated Financial Statements.

         The Company develops and markets advanced software technology to
simplify, expand and integrate networking and pooled use of computer resources.
The Company is considered to be a development stage company since it has not
generated significant revenues from the products that have been
developed-to-date. The Company is subject to a number of risks similar to those
of other companies in an early stage of development. Principal among these risks
are dependencies on key individuals, competition from other substitute products
and larger companies, the successful development and marketing of its products
and the need to obtain adequate additional financing necessary to fund future
operations. See "Risk Factors."

         Management's Discussion and Analysis of Financial Condition and Results
of Operations contains trend analysis and other forward-looking statements.
Actual results could differ materially from those set forth in the
forward-looking statements as a result of factors set forth elsewhere herein,
including under "--Risk Factors." This discussion should be read in conjunction
with the accompanying condensed consolidated financial statements for the
periods specified and the associated notes. Further reference should be made to
the Company's Report on Form 8-K filed with the Securities and Exchange
Commission in September 1999.

                                       17
<PAGE>

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

         Revenue increased to $27,775 in 1999 from $1,138 in 1998 due to
increased sales and marketing efforts. Revenue in the same period last year
suffered due to a product recall in the summer of 1998, and management's
decision to defer sales and marketing efforts until the product was improved.

         Cost of revenues decreased to $0 from $4,486 as the Company's software
products in 1999 were delivered via e-mail over the Internet. Accordingly, the
Company incurred no disk replication costs.

         Operating expenses (excluding stock-based compensation expenses)
decreased 37% to $1,750,694 from $2,766,836 due to the corporate reorganization
discussed in Liquidity and Capital Resources. The reorganization included
changing the sales distribution channel from a retail approach to value added
resellers, consolidating corporate functions and reducing total personnel.

         A summary of the expense reductions is as follows:
<TABLE>
<CAPTION>

                                            THREE MONTHS ENDED SEPTEMBER 30,  INCREASE (DECREASE)
                                            -------------------------------   -------------------
                                                1999          1998              $AMOUNT         %
                                                ----          ----              -------        ---
<S>                                         <C>             <C>              <C>              <C>
Research and development ..............     $ 1,274,944     $ 1,618,116      $  (343,172)     (21)
Selling and marketing .................         152,076         243,134          (91,058)     (37)
General and administrative ............         292,079         905,586         (613,507)     (68)
Consulting fees paid to related parties          31,595              --           31,595      N/A
                                            -----------     -----------      -----------
                                              1,750,694       2,766,836       (1,016,142)     (37)
Stock-based compensation expense ......       8,570,615              --        8,570,615      ---
                                            -----------     -----------      -----------
         Total operating expenses .....     $10,321,309     $ 2,766,836      $ 7,554,473      273%
                                            ===========     ===========      ===========      ===
</TABLE>

         Stock-based compensation expense of $8,570,615 in 1999 relates
primarily to stock appreciation rights ("SARs") granted in tandem with certain
employee stock options. An expense was recorded due to the increase in the
quoted market price of the common stock from the grant date to September 30,
1999.

         The loss from operations increased from $2,770,184 in 1998 to
$10,293,534 in 1999 due to the stock-based compensation expenses which offset
other operating cost savings from the reorganization.

         Interest income declined from $16,311 in 1998 to $3,760 in 1999 due to
generally lower average cash balances in 1999, as only $4.3 million was raised
prior to the Merger through financings, versus the $13.1 million raised at the
end of 1997 through the sale of the Redeemable Convertible Preferred Stock,
Series E.

         Interest expense increased from $22,238 in 1998 to $4,981,051 in 1999
primarily due to the issuance and subsequent conversion into common stock of the
$6.0 million in the 12% Senior Secured Convertible Notes in February 1999 (the
"12% notes"). Approximately $4.9 million of the interest cost in 1999 represents
the value of a beneficial conversion feature. Pursuant to the Merger, the 12%
notes converted at a price of $0.71 per share, which was lower than the fair
value of the common stock. The difference between the $0.71 and the fair value,
which constitutes a beneficial conversion feature, has been recorded as interest
expense. Since the accrued interest on the 12% notes also converted to Company
common stock in conjunction with the Merger, virtually none of the interest
expense required an outlay of cash in 1999.

         The net loss increased from $2,776,111 in 1998 to $15,276,310 in 1999
due to the stock-based compensation costs and to the beneficial conversion
feature related to the conversion of the 12% notes, which offset other operating
cost savings from the reorganization.

                                       18
<PAGE>

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

         Revenue decreased from $245,406 in the nine months ended September 30,
1998 to $35,766 in the nine months ended September 30, 1999, due to the
Company's decision to defer sales and marketing efforts in the latter half of
1998 and early 1999, and focus on improving the product. A single customer,
Hitachi, Ltd., represented 88% of the 1999 revenue, while another customer,
Nippon Telephone & Telegraph, represented approximately 88% of the 1998 revenue.

         Cost of revenues decreased to $363 from $91,529 due to the lower level
of revenue. In addition, the 1999 products sold were delivered via e-mail over
the Internet and the Company incurred no disk replication costs.

         Operating expenses (excluding stock-based compensation expenses)
decreased 50% from $10,549,217 in 1998 to $5,247,152 in 1999 due to the
corporate reorganization discussed in "Liquidity and Capital Resources." The
reorganization included changing the sales distribution channel from a retail
approach to value added resellers, consolidating corporate functions and
reducing total personnel.

         A summary of the expense reductions is as follows:
<TABLE>
<CAPTION>

                                             NINE MONTHS ENDED SEPTEMBER 30,           INCREASE (DECREASE)
                                            -------------------------------            -------------------
                                                1999              1998             $AMOUNT         %
                                                ----              ----             -------        ---
<S>                                         <C>              <C>               <C>               <C>
Research and development ..............     $  3,372,695     $  5,241,567      $ (1,868,872)     (36)
Selling and marketing .................          211,701        2,586,971        (2,375,270)     (92)
General and administrative ............        1,611,558        2,370,679          (759,121)     (32)
Consulting fees paid to related parties           51,198          350,000          (298,802)     (85)
                                            -----------      ------------      ------------
                                               5,247,152       10,549,217        (5,364,919)     (51)
Stock-based compensation expense ......        8,570,615           --             8,570,615     N/A
                                            ------------     ------------      -------------
         Total operating expenses .....     $ 13,817,767     $ 10,549,217      $  3,205,696       30%
                                            ============     ============      ============     ====
</TABLE>

         The loss from operations increased from $10,395,340 in 1998 to
$13,782,364 in 1999 due to the stock-based compensation expenses which offset
other operating cost savings from the reorganization.

         Interest income declined from $163,478 in 1998 to $7,031 in 1999 due to
generally lower average cash balances in 1999, as only $4.3 million was raised
prior to the Merger through financings, versus the $13.1 million raised at the
end of 1997 through the sale of the Redeemable Convertible Preferred Stock,
Series E.

         Interest expense increased from $30,175 in 1998 to $5,223,993 in 1999
primarily due to the issuance and subsequent conversion into common stock of the
$6.0 million in the 12% Senior Secured Convertible Notes in February 1999 (the
"12% notes"). Approximately $4.9 million of the interest cost in 1999 represents
the value of a beneficial conversion feature. Pursuant to the Merger, the 12%
notes converted at a price of $0.71 per share, which was lower than the fair
value of the common stock. The difference between the $0.71 and the fair value,
which constitutes a beneficial conversion feature, has been recorded as interest
expense. Since the accrued interest on the 12% notes also converted to Company
common stock in conjunction with the Merger, virtually none of the interest
expense required an outlay of cash in 1999.

         The net loss increased from $10,262,037 in 1998 to $19,005,526 in 1999
due to the stock-based compensation costs and to the beneficial conversion
feature related to the conversion of the 12% notes, which offset other operating
cost savings from the reorganization.

                                       19
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         MangoSoft was formed in June 1995. Through August 1999, MangoSoft has
raised approximately $38 million in financing from the placement of private debt
and equity securities, as follows:

<TABLE>
<CAPTION>
 DATE             DESCRIPTION                                     $ MILLIONS
 ------           ------------                                    ----------
<S>               <C>                                                 <C>
August 1995       Convertible preferred stock, Series A               $ 1.5
December 1995     Convertible preferred stock, Series B                 2.0
June 1996         Redeemable convertible preferred stock, Series        9.0
April 1997        Redeemable convertible preferred stock, Series D      6.4
February 1998     Redeemable convertible preferred stock, Series E     13.1
February 1999     12% Senior Secured Convertible Notes                  6.0
                                                                      -----
                                   Total                              $38.0
                                                                      =====
</TABLE>

         In addition to the above, MangoSoft has, at times, depended upon bank
debt and loans from stockholders and Directors to meet interim financing needs.
Bank debt of $750,000, incurred to purchase capital equipment, was repaid using
proceeds received from issuance of the 12% Secondary Secured Convertible Notes
(the "12% Notes"). Borrowing from stockholders and directors has generally been
refinanced with new debt instruments or converted to additional equity. At
September 30, 1999, an additional $3.8 million in financing was provided through
accounts payable, accrued expenses and other trade credit, a significant portion
of which was past due.

         The proceeds raised from these financings have been used in the
development of the Company's current products with approximately $22 million
invested in research and development. An additional $9 million was spent on
sales and marketing, principally due to an earlier attempt to distribute
products through traditional retail software channels. This strategy
subsequently was discontinued due to the resellers' inability to deliver
complete peer to peer network installation to end customers. The remaining $11
million in proceeds have been used for working capital and general corporate
purposes.

         To date, product sales have provided a minor source of revenues. From
inception through September 30, 1999, MangoSoft generated $.3 million in sales
and incurred cumulative net losses of $55.1 million, including losses of $19.0
million and $10.3 million for the nine months ended September 30, 1999 and 1998,
respectively. In the fourth quarter of 1998, MangoSoft significantly modified
its operations in an effort to reduce its operating costs and net losses. The
modifications included changing the sales distribution channel from a retail
approach to value added resellers, consolidating corporate functions and
reducing total personnel.

         At September 30, 1999, the Company had a cash balance of $2.3 million
due to a $3.75 million sale of MangoSoft, Inc. common stock just prior to the
merger. The Company had working capital deficits of $1.3 million at September
30, 1999 and $5.5 million at December 31, 1998. The working capital deficit at
December 31, 1998 included $2 million in stockholder and director loans and $.7
million in other financing from related parties. The $2 million in loans were
converted into a like amount of the 12% Notes in February 1999. The 12% Notes,
including accrued interest of $377,409, were subsequently converted into
MangoSoft, Inc. common stock in connection with the merger.

         The Company will require additional financing to continue operations
beyond mid-January 2000. Although the Company has been successful in raising
past financing, there can be no assurance that any additional financing will be
available to the Company on commercially reasonable terms, or at all. Any
inability to obtain additional financing when needed will have a material
adverse effect on the Company, requiring the Company to significantly curtail or
possibly cease its operations. In addition, any additional equity financing may
involve substantial dilution to the interests of the Company's then existing
shareholders.

                                       20
<PAGE>

PLAN OF OPERATION - NEXT 12 MONTHS

         During the period immediately preceding the Merger, the Company reached
agreements with creditors representing approximately $2.0 million in older trade
payables and accrued expenses, and with the related parties owed $.7 million.
Terms of these agreements range from six (6) to eighteen (18) months and some
include a reduction of the obligation. These renegotiations will allow the
Company to continue operations through December 1999 with its existing cash of
$2.3 million. The Company will require additional financing to continue
operations beyond mid-January 2000 and has undertaken to raise an additional
$10.0 million in equity. Management believes that, if such funds are raised,
they will satisfy cash requirements through the year 2000. There can be no
assurance that the Company will secure this additional financing.

         The Company plans to continue development of new products based upon
its core, patented technology during the next 12 months. This is expected to
include enhancements to the Company's existing products as well as development
of an Internet-based product. The number of employees could increase over the
next twelve months by as much as 30%. The most significant area of increase
would be in sales and marketing with lesser increases in engineering and
administration. Asset purchases are expected primarily to equip newer employees
as well as update the engineering development equipment. It is not anticipated
that the purchase of new assets will be a significant financial expenditure.

RISK FACTORS

LIMITED OPERATING HISTORY AND HISTORY OF SUBSTANTIAL OPERATING LOSSES

         The Company's current operations substantially commenced in May 1997.
Accordingly, the Company's prospects must be evaluated in light of the problems,
expenses, delays and complications normally encountered with any early stage
business. The Company has a history of substantial operating losses since
inception (June 1995) and has an accumulated deficit of approximately $37.3
million as of December 31, 1998 and $58.2 million as of September 30, 1999. For
its fiscal years ended December 31, 1998, 1997 and 1996, the Company's losses
from operations were $13.1 million, $15.8 million and $6.1 million,
respectively. Such losses have resulted primarily from costs incurred in
research and development activities, the establishment of an initial sales and
marketing force, and general and administrative expenses. The Company expects to
incur additional operating losses over the foreseeable future and expects
cumulative losses to increase substantially as the Company's marketing, sales,
and research and development efforts expand. The Company is currently
experiencing cash flow difficulties primarily because its current expenses
exceed its current revenues.

NEED FOR EXPANDED MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS; CONCENTRATION OF
REVENUE

         The Company's 1998 product revenues, approximately $245,406, had been
derived primarily from sales of the prior versions of its Medley product through
the Company's relationship with SVA. The Company expects to derive a substantial
majority of its revenues in the foreseeable future from the sale of CacheLink,
its updated Medley product, and MIND, neither of which has previously been
marketed by the Company. Accordingly, the Company's future financial performance
will depend on the growth in demand for and acceptance of new software products.
As is typical in new and evolving markets, demand for and market acceptance of
products are subject to a high level of uncertainty. The Company has limited
experience in commercially providing software products and services and the
Company's MIND product is still only a prototype and will not be available for
commercial sale until at least the second quarter of 2000. In addition, the
small business market is relatively young and there are few proven products.
There can be no assurance that the Company will generate business from these
products or that its market acceptance will increase. If these markets fail to
develop, develop more slowly than expected or attract new competitors, or if the
Company's products do not achieve market acceptance, the Company's business,
financial condition and results of operations will be materially and adversely
affected. In addition, the loss of SVA as a reseller could have a material
affect on the Company's business financial condition and results of operations.

                                       21
<PAGE>

EXPECTED DELISTING

         The Company does not intend to maintain its listing on the OTCBB, which
would require it to register its Common Stock under Federal Securities laws by
mid-December 1999. For the Common Stock to thereafter be included for trading on
the National Quotation Bureau "Pink Sheets," a market-maker must make certain
filings with the National Quotation Bureau. There can be no assurance that any
such filings will be made or that if made, the Common Stock will be accepted for
inclusion into the "Pink Sheets." Even if included, a trading market may not
develop or be sustained. Regardless, since there may not be a trading market for
the Common Stock, investors may not be able to liquidate their investment.

UNCERTAIN ADOPTION OF INTERNET AS A MEDIUM OF COMMERCE AND COMMUNICATIONS AND
DEPENDENCE ON THE INTERNET

         Demand and market acceptance for recently introduced services and
products like those offered by the Company are subject to a high level of
uncertainty. The use of the Internet in marketing and advertising and otherwise,
particularly by those individuals and enterprises that have historically relied
upon traditional means of marketing and advertising, generally requires the
acceptance of a new way of conducting business and exchanging information.
Enterprises that have already invested substantial resources in other means of
conducting business and exchanging information may be particularly reluctant or
slow to adopt a new strategy that may make their existing resources and
infrastructure less useful. There can be no assurance that the market for the
Company's products will develop and if it fails to develop, develops more slowly
than expected or becomes saturated with competitors, or if the Company's
products do not achieve market acceptance, the Company's business, operating
results and financial conditions will be materially adversely affected.

         The Company's ability to derive revenues will also depend upon a robust
industry and the infrastructure for providing Internet access and carrying
Internet traffic. The Internet may not prove to be a viable commercial
marketplace because of inadequate development of the necessary infrastructure or
timely development of complementary products, such as high speed modems.
Moreover, other critical issues concerning the commercial use of the Internet
(including security, reliability, cost, ease-of-use, access, and quality of
service) remain unresolved and may impact the growth of Internet use. Because
global commerce and online exchange of information on the Internet and other
similar open WANs are new and evolving, it is difficult to predict with any
assurance whether the Internet will prove to be and remain a viable commercial
marketplace. If the infrastructure necessary to support the Internet's
commercial viability is not developed, or if the Internet does not become a
viable marketplace, the Company's business, operating results and financial
condition would be materially and adversely affected.

INTELLECTUAL PROPERTY; CHANGING TECHNOLOGY; POTENTIAL INFRINGEMENT

         The Company owns trademarks on "CacheLink," "Medley," "Mango,"
"MangoSoft," "Pool" and "Pooling." In addition, the Company has been granted two
patents and one Notification of Allowance and has applied for six other patents.
There can be no assurance, however, that the patents will be issued, and if
issued, there can be no certainty that claims allowed in any such patents would
provide competitive advantages or protection for the Company's products, or that
such claims will not be successfully challenged by competitors. The Company
considers certain elements of its software and its Pooling technology to be
proprietary. The Company relies on a combination of trade secrets, copyright and
trademark law, contractual provisions, confidentiality agreements and certain
technology and security measures to protect its proprietary intellectual
property, technology and know-how.

         The Company's business is subject to rapid changes in technology
including potential introduction of competing products and services which could
have a material adverse impact on the Company's business. There are existing
hardware-based file server and web caching products that could be used as the
basis for the development of technology that would be directly competitive with
the technology employed by the Company. In addition, there can be no assurance
that research and development by others will not render the Company's technology
obsolete or uncompetitive. Furthermore, in a technology-based industry, there
can be no assurance that a claim of patent or other infringement will not be
made against the Company. While the Company is not aware of any such claims, no
infringement studies have been conducted on behalf of the Company.

                                       22
<PAGE>

         Despite the Company's efforts to protect its proprietary rights,
existing copyright, trademark, patent and trade secret laws afford only limited
protection. Moreover, effective protection of copyrights, trade secrets,
trademarks and other proprietary rights may be unavailable or limited in certain
foreign countries and territories. There can be no assurance that these domestic
and foreign laws, in combination with the steps taken by the Company to guard
its proprietary rights, will be adequate to prevent misappropriation of its
technology or other proprietary rights.

Regulatory Acceptance of the Company's Technology; Government Regulation, Legal
Uncertainties and Regulatory Policy Risks

         The Company is not currently subject to direct regulation by any
government agency, other than regulations applicable to businesses generally.
However, due to the increasing media attention focused on the Internet, it is
possible that a number of laws and regulations may be adopted with respect to
the Internet, covering issues such as user privacy, and pricing and
characteristics and quality of products and services. The adoption of any such
laws or regulations may decrease the growth of the Internet, which could in turn
decrease the demand for the Company's products and increase the Company's cost
of doing business or cause the Company to modify its operations, or otherwise
have an adverse effect on the Company's business, operating results and
financial condition. Moreover, the applicability to the Internet of existing
laws governing issues such as property ownership, libel and personal privacy is
uncertain. The Company cannot predict the impact, if any, that future regulation
or regulatory changes may have on its business.

COMPETITION; NO SUBSTANTIAL BARRIERS TO ENTRY INTO THE COMPANY'S BUSINESS; PRICE
EROSION

         The markets for the Company's products are characterized by rapid
technological change, evolving industry standards, customer demands and intense
competition. The Company competes with a number of large public and private
companies, including many large computer and software designers which have
created technologies and products that perform similar and/or competing
functions to those of the Company's products. The Company also competes with
hardware providers that have bundled in a certain level of networking
functionality on top of the hardware, all-in-one Internet access solutions and
virtual office workspace offerings.

         Many of the Company's competitors have greater resources, including
more extensive facilities, larger research and development teams, more
experienced marketing teams, greater capital resources and equipment, and the
ability to offer a broader range of services than the Company. As a result, the
Company's ability to remain competitive will depend in significant part upon it
being able to successfully and continually develop and introduce, in a timely
and cost-effective manner, enhancements to existing products in response to both
evolving demands of the marketplace and competitive product offerings. In
addition, over a long-term period, the Company's ability to remain competitive
will depend in significant part upon its ability to develop and introduce, in a
timely and cost-effective manner, new products to expand and diversify the
Company's product offerings. There can be no assurance that the Company will be
successful in developing and introducing, in a timely and cost-effective way,
any enhancements or extension for existing products or any new products. In
addition, there can be assurance that the competitors of the Company will not
achieve technological advances that provide a competitive advantage over the
Company's products or that make such products obsolete.

MANAGEMENT OF GROWTH; DEPENDENCE ON KEY PERSONNEL AND ABILITY TO ATTRACT NEW
PERSONNEL

         Even if the Company successfully generates significant revenue growth,
there can be no assurance that the Company will effectively develop and
implement systems, procedures or controls adequate to support the Company's
operations or that management will be able to achieve the rapid execution
necessary to fully exploit the opportunity for the Company's products. To manage
its business and any growth, the Company must continue to implement and improve
its operational and financial systems and continue to expand, train and manage
its employees. In particular, management believes that the Company will need to
hire additional employees. If the Company is unable to manage growth
effectively, the Company's business, operating results and financial condition
will be materially affected. The success of the Company is dependent upon the
efforts of Scott H. Davis, the Company's Vice President and Chief Technology
Officer; Robert E. Parsons, the Company's Chief Financial Officer; and James M.
Stark, the Company's Vice President of Sales and Marketing. The loss of Mr.

                                       23
<PAGE>

Davis, Mr. Parsons or Mr. Stark, or of any of the Company's senior management,
could delay or prevent the Company from achieving its objectives. The Company is
also highly dependent upon its ability to continue to attract and retain
additional management and technical personnel because of the specialized nature
of the Company's business. Competition for such qualified personnel is intense,
and there can be no assurance that the Company will be able to retain existing
personnel or attract, assimilate or retain additional qualified personnel
necessary for the development of its business. The inability of the Company to
attract and retain qualified personnel would have a material adverse effect on
the Company's business, financial condition and results of operations.

RISK OF ERRORS OR FAILURE IN SOFTWARE PRODUCTS

         Complex products such as CacheLink and Medley, or any new product which
may be developed by the Company in the future, may contain errors, failures,
bugs or defects, particularly when first introduced, and as updates, upgrades
and new versions are released. The introduction by the Company of products with
errors, failures, bugs, defects or otherwise with reliability, quality or
compatibility problems could result in adverse publicity, product returns,
reduced orders, uncollectible accounts receivable, delays in collecting accounts
receivable, product redevelopment costs, loss of or delay in market acceptance
of the Company's products, or claims by the customer or others against the
Company. Alleviating such problems could require significant expenditures of
capital and resources by the Company's customers. Errors, failures, bugs or
defects in the Company's products could have a material adverse effect on the
Company's business, financial condition and results of operations.


NO DIVIDENDS

         The Company intends to retain any future earnings to finance its
operations and does not intend to pay dividends.

CONCENTRATION OF SHARE OWNERSHIP

         The Company's directors and officers, together with entities affiliated
with them, beneficially own approximately 22% of the Company's capital stock,
including all outstanding options, warrants or other convertible securities to
purchase shares of the Company's Common Stock. These stockholders, acting as a
group, may continue to have significant influence over the outcome of all
matters submitted to the stockholders for approval, including the election of a
majority of the Company's Board of Directors and the determination of all
corporate actions after this Offering. The voting power of these stockholders
could also have the effect of delaying or preventing a change in control of the
Company. Such influence by management could have the effect of discouraging
others from attempting to take-over the Company thereby increasing the
likelihood that the market price of the Common Stock will not reflect a premium
for control.

YEAR 2000 COMPLIANCE

         Many existing computer programs use only two digits, rather than four,
to represent a year. The Year 2000 ("Y2K") problem arises because date-sensitive
software or hardware written or developed in this fashion may not be able to
distinguish between 1900 and 2000, and programs written in this manner that
perform arithmetic operations, comparisons or sorting of date fields may yield
incorrect results when processing a Y2K date. The Y2K problem could potentially
cause system failures or miscalculations that could disrupt operations.

         The Company recently completed a review, which included testing, of the
Company's computer systems. This review of internal financial and information
technology systems was completed in the fourth quarter of 1998. The Company has
evaluated and prioritized the problems, which are not considered significant.

         The Company intends to continuously identify and prioritize critical
vendors and suppliers and communicate with them about their plans and progress
in addressing their Y2K problems. The Company has implemented a policy to
exclude the use of any vendors which are not Y2K compliant.

                                       24
<PAGE>

         Based on the efforts described above, the Company currently believes
that its systems are Y2K compliant. However, there can be no assurance that all
Y2K problems have been successfully identified, or that the necessary corrective
actions were taken. Failure to successfully identify and remediate such Y2K
problems in a timely manner could have material adverse effect on the Company's
results of operations, financial position or cash flow.

         As of September 30, 1999, the Company had not incurred significant
costs related to the Y2K problem, and does not expect to do so in the future.
Overall, the Company anticipates that incremental costs to the Company related
to the Y2K problem will not exceed $50,000, but there can be no assurance that
such costs will not be greater than anticipated.

Registration Rights of Other Securityholders-Potential Costs to the Company;
Adverse Effects on Future Financing and Stock Price

         Pursuant to the merger agreement by and among the Company and First
American, the Company is obligated to use reasonable efforts to file a
registration statement relating to the resale of up to 33% of the shares of the
Company's Common Stock sold in a Rule 506 Offering completed in August of 1999
and 300,000 shares of the Company's Common Stock held by the Placement Agent
from that offering. The Company is obligated to use its best efforts to have
such registration statement declared effective as soon as practicable after
filing with the Securities Exchange Commission and shall keep such registration
statement effective for a period of at least one year. These registration rights
could result in substantial future expense to the Company and could adversely
affect any future equity or debt financing. Furthermore, the sale of Common
Stock held by or issuable to the holders of registration rights, or even the
potential of such sales, could have an adverse effect on the market price of the
Common Stock.

                                       25
<PAGE>

PART II.   OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

                  On August 30, 1999, one of the Company's shareholders filed
         suit in Orange County (CA) Superior Court alleging damages for fraud in
         the sale of securities under both Federal and California State law
         seeking a recession of the purchase agreement governing the sale of
         such securities. The shareholder seeks damages in the amount of
         $50,000, plus interest. On October 22, 1999, the matter was removed to
         Federal Court, following a petition by the Company.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

                  In conjunction with the merger (the "Merger") of MangoMerger,
         a wholly-owned subsidiary of First American, with and into MangoSoft,
         pursuant to an Agreement and Plan of Merger, dated August 27, 1999, on
         September 7, 1999, the Company issued 9,000,000 shares of Common Stock
         to former noteholders of MangoSoft in exchange for the termination of
         promissory notes in the aggregate amount of $6,000,000, plus accrued
         interest. In connection with the issuance of such stock, the Company
         relied on the statutory exemption provided by Section 4(2) of the
         Securities Act of 1933, as amended (the "Act"), because the issuances
         did not involve public offering.

                  In conjunction with the Merger, on September 7, 1999 the
         Company issued options to purchase an aggregate of 120,000 shares of
         Common Stock at an exercise price of $1.25 per share to former
         warrantholders of MangoSoft in exchange for the termination of existing
         warrants. In addition, on September 7, 1999, the Company issued options
         to purchase an aggregate of 1,397,268 shares of Common Stock at an
         exercise price of $1.25 per share to former optionees of MangoSoft in
         exchange for the termination of existing options. In connection with
         the issuances of such options, the Company relied on the statutory
         exemption provided by Section 4(2) of the Act because the issuances did
         not involve public offerings.

                   In conjunction with the Merger, on September 7, 1999 the
         Company issued an aggregate of 6,008,998 shares of Common Stock to
         former holders of capital stock of MangoSoft in exchange for capital
         stock of the MangoSoft. In connection with the issuance of such stock,
         the Company relied on the statutory exemption provided by Section 4(2)
         of the Act because the issuance did not involve public offerings.

                  In conjunction with the Merger, on September 7, 1999 the
         Company issued an aggregate of 4,875,000 shares of Common Stock to
         accredited investors pursuant to Rule 506 of Regulation D, promulgated
         under the Act, because the issuances did not involve public offerings.

ITEM 3.  DEFAULTS UPON SECURITIES

                  Not applicable.

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


                  On August 2, 1999, MangoSoft provided to its stockholders an
         information statement and merger consent solicitation in order to
         obtain the consent of at least a majority of its stockholders to enter
         into the Merger. On August 26, 1999, MangoSoft provided to its
         stockholders a supplemental information statement and merger consent
         solicitation in order to obtain the consent of at least a majority of
         its stockholders to enter into the Merger. On August 30, 1999,
         MangoSoft obtained the consent of a majority of its stockholders to
         enter into the Merger.

                                       26
<PAGE>

                  On September 1, 1999, MangoSoft provided a supplemental
         information statement and merger consent solicitation to holders of
         debt of MangoSoft in connection with the exchange of notes of MangoSoft
         for shares of Common Stock of the Company. The Company obtained the
         unanimous consent of all debt holders of MangoSoft on September 7,
         1999.

                  On August 13, 1999, First American obtained the unanimous
         written consent of its shareholders, authorizing a forward stock split,
         the Merger, the name change of the Company, the adoption of the
         Company's 1999 Incentive Compensation Plan, and the election of Dale
         Vincent, Craig D. Goldman, Dr. Ira Goldstein, Paul C. O'Brien, Selig
         Zises and Ravi Singh to serve as directors of the Company following the
         Merger.

ITEM 5.  OTHER INFORMATION

                  Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:

         2.1*         Agreement and Plan of Merger by and among First American,
                      MangoSoft and MangoMerger, dated as of August 27, 1999
                      (filed without exhibits or schedules) (filed as Exhibit
                      2.1 to Form 8-K filed September 21, 1999)

         3.1*         Certificate of Amendment to the Articles of Incorporation
                      of First American, as filed with the Secretary of State of
                      the State of Nevada on September 7, 1999 (filed as Exhibit
                      4.2 to Form 8-K filed September 21, 1999)

         3.2          By-laws of the Company (formerly by-laws of
                      MangoMerger).**

         10           Lease of Westborough Office Park Building Five, dated
                      November 10, 1995.**

         11           Statement regarding computation of net loss per common
                      share.**

         20.1         Merger Consent Solicitation and Information Statement,
                      dated August 2 1999.**

         20.2         Supplement to Merger Consent Solicitation and Information
                      Statement, dated August 26, 1999.**

         20.3         Supplement to Merger Consent Solicitation and Information
                      Statement, dated September 1, 1999.**

         27           Financial Data Schedule

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

         *        Exhibits designated with an asterisk (*) have previously been
                  filed with the Commission and are incorporated by reference to
                  the document referenced in parentheticals following the
                  description of such exhibits.

         **       Filed herewith.

(b)      Reports on Form 8-K

                  The Registrant filed a report on Form 8-K on September 21,
         1999, which reported that MangoMerger, merged with and into MangoSoft,
         as provided for in that certain Agreement and Plan of Merger, dated
         August 27, 1999 between First American, MangoMerger and MangoSoft,
         effective as of September 7, 1999, pursuant to a Certificate of Merger
         filed with the Secretary of State of Delaware on that date. In
         conjunction with the Merger, First American changed its name to
         "MangoSoft, Inc."

                                       27
<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 13, 2000            MANGOSOFT, INC.


                             /s/ Robert E. Parsons
                                 --------------------------
                                 Robert E. Parsons
                                 Chief Financial Officer
                                 (Principal Financial and Accounting Officer)


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