U.S. SECURITIES AND EXCHANGE COMMISSION

Washington,DC 20549

FORM 10-QSB

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

For the Quarterly Period Ended March 31, 2002

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

For the Transition Period From To

Commission File Number: 0-30781

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

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

1500 West Park Drive, Suite 190
Westborough, MA 01581
(Address of principal executive offices) (Zip Code)

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

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

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

Common Stock 27,352,033
$0.001 Par Value Outstanding on May 10, 2002

MANGOSOFT, INC. AND SUBSIDIARY

INDEX TO FORM 10-QSB

PART I. FINANCIAL INFORMATION Page

ITEM 1 - Financial Statements (unaudited):

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

ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations ....................................................................................... 9

PART II. OTHER INFORMATION

ITEM 6 - Exhibits and Reports on Form 8-K ........................................................... 15

Signatures .......................................................................................... 16

MANGOSOFT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, December 31,
2002 2001
---- ----
(Unaudited)
ASSETS

Current Assets:
Cash and cash equivalents .............................. $ 4,766,886 $ 6,911,906
Accounts receivable .................................... 44,059 41,925
Prepaid expenses and other current assets .............. 228,789 199,653
------------- -------------
Total current assets 5,039,734 7,153,484
Property and equipment - net ................................ 815,508 875,533
Intangibles - net ........................................... 310,722 --
Other assets ................................................ 44,567 2,400
------------- -------------
Total ........................................ $ 6,210,531 $ 8,031,417
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable ....................................... $ 786,982 $ 772,919
Accrued compensation ................................... 337,279 309,426
Other accrued expenses and current liabilities ......... 141,216 154,683
------------- -------------
Total current liabilities ......................... 1,265,477 1,237,028
------------- -------------

Commitments and contingencies

Stockholders' Equity:
Common stock ........................................... 27,352 27,002
Additional paid-in capital ............................. 89,714,206 89,560,431
Deferred compensation .................................. (1,399,329) (1,678,303)
Accumulated deficit .................................... (83,397,175) (81,114,741)
------------ -------------
Total stockholders' equity ........................ 4,945,054 6,794,389
------------- -------------
Total ........................................ $ 6,210,531 $ 8,031,417
============= =============

See notes to the condensed consolidated financial statements.

MANGOSOFT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,
----------------------------
2002 2001
---- ----
(Unaudited)

Software license revenues ................................. $ 1,500 $ 127,270
Service revenues .......................................... 89,968 11,360
------------- ------------
Total revenues ....................................... 91,468 138,630
Costs and expenses:
Cost of software license revenues ....................... -- 16,000
Cost of services (1) .................................... 198,161 377,815
Engineering and development (1) ......................... 694,733 1,130,019
Selling and marketing (1) ............................... 298,430 767,922
General and administrative (1) .......................... 1,029,911 1,363,943
Stock-based compensation expense ........................ 181,099 501,273
------------- ------------
Loss from operations ................................. (2,310,866) (4,018,342)
Interest income ........................................... 28,432 224,005
------------- ------------
Net loss .................................................. $ (2,282,434) $ (3,794,337)
============= =============

Net loss per share - basic and diluted ................... $ (0.08) $ (0.14)
Weighted average shares outstanding - basic and diluted ... 27,188,700 26,957,089

(1) Excludes stock-based compensation expense as follows:
Cost of services .................................... $ 16,125 $ 23,117
Engineering and development ......................... 71,518 154,411
Selling and marketing ............................... 11,359 162,634
General and administrative .......................... 82,097 161,111

See notes to the condensed consolidated financial statements.

MANGOSOFT, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,
2002 2001
---- ----
(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ...................................................... $ (2,282,434) $ (3,794,337)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization ............................. 162,350 131,915
Stock-based compensation .................................. 181,099 501,273
Increase (decrease) in cash from the change in:
Accounts receivable ..................................... (2,134) (44,515)
Prepaid expenses and other current assets ............... (29,136) (3,669)
Accounts payable ........................................ 14,063 (189,621)
Accrued compensation .................................... 27,853 168,444
Other accrued expenses and current liabilities .......... (13,467) (33,087)
-------------- -------------
Net cash used by operating activities ............... (1,941,806) (3,263,597)
-------------- -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment ......................... (28,214) (51,241)
Cash paid for fileTRUST assets ................................ (175,000) --
-------------- -------------
Net cash used by investing activities ............... (203,214) (51,241)
-------------- -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the issuance of common stock ................ -- 375
-------------- -------------
Net cash provided by financing activities ........... -- 375
-------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,145,020) (3,314,463)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD ...................................................... 6,911,906 17,354,025
-------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ...................... $ 4,766,886 $ 14,039,562
============== ============

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

See notes to the condensed consolidated financial statements.

MANGOSOFT, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

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

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

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

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

As shown in the unaudited condensed consolidated financial statements,
during the three months ended March 31, 2002 and 2001, the Company incurred net
losses of $2,282,434 and $3,794,337, respectively. Cash used in operations
during the three months ended March 31, 2002 and 2001 was $1,941,806 and
$3,263,597, respectively. These factors, among others, raise significant doubt
about the Company's ability to continue as a going concern. The unaudited
condensed consolidated financial statements do not include any adjustments
relating to the recoverability and classification of assets or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern is dependent upon its ability to generate sufficient cash flow and meet
its obligations on a timely basis and ultimately attain profitability.

2. BUSINESS COMBINATION

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

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

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

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

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

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

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

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

3. STOCK-BASED COMPENSATION

The Company accounts for stock options granted to employees in accordance
with Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
Issued to Employees." Under APB No. 25, stock options that include stock
appreciation rights ("SARs") are accounted for as variable awards and
compensation expense is measured at each reporting date based on the difference
between the exercise price and the market price of the common stock. For
unvested awards, compensation expense is recognized over the vesting period; for
vested awards, compensation expense is adjusted up or down at each reporting
date based on changes in the market price of the common stock. At March 31, 2002
and 2001, there were 2,453,611 and 2,571,955 options, respectively, to purchase
the Company's common stock that included SARs.

On April 3, 2001, the Company's Board of Directors resolved to reprice
options to purchase 2,584,167 shares of the Company's common stock. The options
were originally issued between October 1999 and December 2000 and had exercise
prices ranging from $1.88 to $5.00 per share. The exercise price for these
options was reduced to $1.03, the closing market value of the Company's common
stock as of the repricing date. The repriced options continue to vest according
to the original grant date.

These options are now accounted for as variable awards, similar to the SARs. At
March 31, 2002, there were 2,036,788 outstanding options to purchase the
Company's common stock that were repriced and subject to variable plan
accounting.

During the three months ended March 31, 2002, the Company recorded
stock-based compensation expense of $181,099. This expense represents the
amortization of deferred stock-based compensation recognized as the result of
the Company's issuance of stock options to employees at exercise prices less
than the quoted market price on the grant date. During the three months ended
March 31, 2001, the stock-based compensation expense totaled $501,273 and
represented amortization of fixed awards as well as the remeasurement of awards
that were subject to variable plan accounting.

The Company did not record any stock-based compensation on stock options
accounted for as variable awards for the three months ended March 31, 2002 based
on the closing market price of its common stock.

4. NET LOSS PER COMMON SHARE

Basic net loss per common share is computed by dividing net loss applicable
to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted net loss per common share reflects, in
addition to the weighted average number of common shares, the potential dilution
if stock options and warrants outstanding were exercised and/or converted into
common stock, unless the effect of such equivalent shares was antidilutive.

For the three months ended March 31, 2002 and 2001, the effect of stock
options and other potentially dilutive shares totaling 5,633,744 and 6,116,458,
respectively, were excluded from the calculation of diluted net loss per common
share as their inclusion would have been antidilutive.

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

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

Overview

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

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

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

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

From our inception in June 1995 through our fiscal year ended December 31,
2001, we were considered to be a development stage company because we had not
generated significant revenues from our products and had not commercially
launched our principal product line. In January 2001, we launched the Mangomind
service, our principal product, and began to recognize revenues from its sale.
As such, effective January 1, 2001, we were deemed to have exited from the
development stage.

Critical Accounting Policies

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

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

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

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

Costs and Expenses

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

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

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

Results of Operations - Three Months Ended March 31, 2002 and 2001

Revenues for the three months ended March 31, 2002 decreased $47,162 or 34%
to $91,468 from $138,630 for the comparable period in 2001. The decrease in our
revenues was primarily attributable to the significant decline in our Cachelink
sales offset by service revenues we recognized from the sales of our Mangomind
and fileTRUST services.

Prior to our fiscal year ending December 31, 2002, the majority of our
revenues were generated from the sale of the Cachelink product. Sales generated
under our July 13, 2000 Value Added Reseller Agreement with 3Com Corporation
("3Com") represented approximately 64% of our total revenue for the fiscal year
ended December 31, 2001. We concluded this agreement in 2001. We are currently
seeking alternative channels to distribute the Cachelink product.

We recognized $68,093 from the sale of our Mangomind service, $21,875 from
the sale of our fileTRUST service and $1,500 from the sale of our Cachelink
product for the three months ended March 31, 2002. Sales of our Cachelink
product were $127,270, or 92% of our total revenue, for the three months ended
March 31, 2001. Sales of Mangomind to New York Life Insurance Company and
Veritas Software Corporation of $22,425 and $15,000, respectively, and sales of
fileTRUST to FleetBoston of $21,875 represented approximately 65% of out total
revenues for the three months ended March 31, 2002. Sales of Cachelink to 3Com
and Kacom, Inc., a Korean systems integrator, of $90,000 and $25,500,
respectively, represented approximately 83% of our revenues for the comparable
period in 2001. No other customer accounted for more than 10% of our sales in
either period.

We incur cost of software license revenues when we ship electronic media
and other Cachelink product materials under our agreement with 3Com. For the
three months ended March 31, 2001, we incurred $16,000 in disk replication costs
in connection with our sales of $90,000 to 3Com. There were no such costs
incurred in the three-month period ended March 31, 2002.

Cost of services for the three months ended March 31, 2002 decreased
$179,654 or 48% to $198,161 compared to $377,815 for the comparable period in
2001. The decrease in the cost of delivering our services was primarily a result
of our continued overhead reductions, our switch to a lower cost data center and
decreased personnel costs as a result of our April 2001 work force reduction.

Engineering and development expense for the three-month period ended March
31, 2002 decreased $435,286 or 39% to $694,733 from $1,130,019 for the
comparable period in 2001. The decrease in engineering and development expense
was a result of our April 2001 work force reduction.

For the three-month period ended March 31, 2002, other operating expenses
including selling and marketing and general and administrative expenses
decreased $803,524 or 38% to $1,328,341 compared with $2,131,865 for the
comparable period in 2001. The decrease in other operating expenses was due
primarily to our reduced spending in the areas of marketing and sales
consultants, public relations, legal and other corporate consultants in addition
to reductions in our marketing, selling and general and administrative personnel
associated with our April 2001 work force reduction.

Stock-based compensation expense of $181,099 was recorded for the
three-month period ended March 31, 2002 compared to $501,273 for the comparable
period in 2001. The decrease in this expense was primarily attributable to the
decrease in the number of outstanding employee stock options subject to
compensation expense as well as the decline in the market price of our common
stock and its effect on employee stock options accounted for as variable awards
(see footnote 3 to the condensed consolidated financial statements).

Our loss from operations decreased $1,707,476 to $2,310,866 for the
three-month period ended March 31, 2002 compared with a loss from operations of
$4,018,342 for the comparable period in 2001 as a result of the above factors.

Interest income increased $195,573 to $28,432 for the three months ended
March 31, 2002 compared to $224,005 for the three months ended March 31, 2001.
The decrease was attributable to the reduced balances of our interest-bearing
cash accounts as a result of our use of cash in operations as well as a decrease
in the rate of return on our investments in 2002 as compared to 2001.

Financial Condition, Liquidity and Capital Resources

We were formed in June 1995 and, since our formation, have raised
approximately $74.2 million in gross proceeds as of March 31, 2002 through the
private placement of debt and equity securities.

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

At March 31, 2002, we had a cash balance of approximately $4.8 million and
working capital of approximately $3.8 million. Excluding our facility lease and
other minor equipment leases with aggregate annual commitments totaling
approximately $453,000 in 2002 and $192,000 in 2003, we do not have any
long-term obligations.

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

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

As shown in the unaudited condensed consolidated financial statements,
during the three months ended Mach 31, 2002 and 2001, we incurred net losses of
$2,282,434 and $3,794,337, respectively. Cash used in operations during the
three months ended March 31, 2002 and 2001 was $1,941,806 and $3,263,597,
respectively. The factors, among others, raise significant doubt about our
ability to continue as a going concern. We are considering a private placement
of debt or equity securities during 2002. Based upon our current forecasted
operating results and cash flows, we believe our current resources and the
additional financing that we intend to obtain will be adequate to fund
continuing operations. However, we can provide no assurances that we will be
able to obtain this additional financing to meet our future needs.

Risk Factors

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

We have a history of substantial operating losses and an accumulated
deficit of approximately $83.4 million as of March 31, 2002. For the three
months ended March 31, 2002 and the year ended December 31, 2001, our net losses
were $2.3 million and $11.2 million, respectively. We have historically
experienced cash flow difficulties primarily because our expenses have exceeded
our revenues. We expect to incur additional operating losses and expect
cumulative losses to increase substantially as our marketing, sales, and
research and development efforts expand. These factors, among others, raise
significant doubt about our ability to continue as a going concern. If we are
unable to generate sufficient revenue from our operations to pay expenses or we
are unable to obtain additional financing on commercially reasonable terms, our
business, financial condition and results of operations will be materially and
adversely affected.

We Will Need Additional Financing.

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

Our Performance Depends On Market Acceptance Of Our Products.

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

We Depend in Part on Strategic Marketing Relationships.

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

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

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

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

Because our common stock has a market price less than five dollars per
share, our common stock is not listed on an exchange or quoted on Nasdaq and is
traded on the OTC Bulletin Board. Brokers and dealers who handle trades in our
common stock are subject to certain SEC disclosure rules when

effecting trades in our common stock, including disclosure of the following: the
bid and offer prices of our common stock, the compensation for the brokerage
firms and the salesperson handling a trade and legal remedies available to the
buyer. These requirements may hinder re-sales of our common stock and may
adversely affect the market price of our common stock.

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

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

Litigation Concerning Intellectual Property Could Adversely Affect Our Business.

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

Our Success Depends on Key Personnel.

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

Defects In Our Software May Adversely Affect Our Business.

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

PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

Exhibit
Number Description of Exhibit

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

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

(b) Report on Form 8-K:

On February 19, 2002, we filed on Form 8-K a notification that we acquired
the fileTRUST online data storage service and related assets from FleetBoston
Financial Corporation.

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.

May 13, 2002 MANGOSOFT, INC.

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