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

FORM 10-QSB

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

[ ] 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: 000-30781

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

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

12 PINE STREET EXTENSION
NASHUA, NH 03060
(Address of principal executive offices) (Zip code)

ISSUER'S TELEPHONE NUMBER: (603) 324-0400

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 1,013,038 SHARES
$0.001 par value (Outstanding on November 12, 2004)

Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]

MANGOSOFT, INC. AND SUBSIDIARY

INDEX TO FORM 10-QSB

Page
PART I. FINANCIAL INFORMATION ----

ITEM 1 - Condensed Consolidated Financial Statements (unaudited):

Balance Sheets as of September 30, 2004 and December 31, 2003..................3
Statements of Operations for the Three Months Ended September 30, 2004
and 2003.....................................................................4
Statements of Operations for the Nine Months Ended September 30, 2004 and
2003.........................................................................5
Statements of Cash Flows for the Nine Months Ended September 30, 2004
and 2003.....................................................................6
Notes to the Condensed Consolidated Financial Statements.......................7

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

ITEM 3 - Controls and Procedures..............................................18

PART II. OTHER INFORMATION

ITEM 1 - Legal Proceedings....................................................19
ITEM 5 - Other Information ...................................................19
ITEM 6 - Exhibits ............................................................20

Signature.....................................................................21

MANGOSOFT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, DECEMBER 31,
2004 2003
------------ ------------
(UNAUDITED)

ASSETS
Current Assets:
Cash and cash equivalents ............................ $ 415,480 $ 317,444
Short-term investments ............................... 468,225 607,439
Accounts receivable .................................. 13,301 27,281
Prepaid expenses and other current assets ............ 589 1,625
------------ ------------
Total current assets ............................ 897,595 953,789
Property and equipment - net .............................. -- 58,765
Long-term investments ..................................... -- 180,547
Intangibles - net ......................................... 57,333 140,195
Other assets .............................................. 5,066 5,916
------------ ------------
Total ...................................... $ 959,994 $ 1,339,212
============ ============

LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
Accounts payable ..................................... $ 752,787 $ 671,383
Accrued compensation ................................. 7,739 12,392
Other accrued expenses and current liabilities ....... 244,427 335,981
Deferred revenue ..................................... 25,584 19,976
------------ ------------
Total current liabilities ....................... 1,030,537 1,039,732
------------ ------------

Commitments and contingencies

Stockholders' Equity (Deficit):
Preferred Stock-$.001 par value; authorized, 5,000,000
shares issued and outstanding, 20,000 ................ 20 20
Common stock ......................................... 1,013 1,013
Additional paid-in capital ........................... 88,725,694 88,725,694
Deferred compensation ................................ (686) (1,460)
Accumulated deficit .................................. (88,796,584) (88,425,787)
------------ ------------
Total stockholders' equity (deficit) ............ (70,543) 299,480
------------ ------------
Total ...................................... $ 959,994 $ 1,339,212
============ ============

See notes to the unaudited condensed consolidated financial statements.

MANGOSOFT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
2004 2003
----------- -----------
(UNAUDITED)

Service revenues ........................................ $ 131,225 $ 115,700
----------- -----------
Costs and expenses:
Cost of services ...................................... 109,027 126,666
Selling and marketing ................................. -- 16,316
General and administrative (1) ........................ 138,086 247,052
Loss on disposal of equipment ......................... 21,910 --
Stock-based compensation expense ...................... 258 29,511
----------- -----------
Loss from operations ............................... (138,056) (303,845)
Interest income ......................................... 10,757 37,298
----------- -----------
Net loss ................................................ $ (127,299) $ (266,547)
=========== ===========

Net loss per share - basic and diluted ................. $ (0.13) $ (0.26)
Weighted average shares outstanding - basic and diluted . 1,013,038 1,013,038

(1) Excludes stock-based compensation expense as follows:
General and administrative ........................ $ 258 $ 29,511

See notes to the unaudited condensed consolidated financial statements.

MANGOSOFT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2004 2003
----------- -----------
(UNAUDITED)

Software license revenues ............................... $ -- $ 37,033
Service revenues ........................................ 388,790 350,956
----------- -----------
Total revenues ..................................... 388,790 387,989
Costs and expenses:
Cost of services ...................................... 321,997 385,628
Engineering and development (1) ....................... -- 4,205
Selling and marketing ................................. -- 20,159
General and administrative (1) ........................ 463,992 827,902
Loss on disposal of equipment ......................... 21,910 --
Stock-based compensation expense ...................... 774 31,849
----------- -----------
Loss from operations ............................... (419,883) (881,754)
Interest income ......................................... 49,086 94,320
----------- -----------
Net loss ................................................ $ (370,797) $ (787,434)
=========== ===========

Net loss per share - basic and diluted ................. $ (0.37) $ (0.78)
Weighted average shares outstanding - basic and diluted . 1,013,038 1,013,038

(1) Excludes stock-based compensation expense as follows:
Engineering and development ....................... $ -- $ 1,798
General and administrative ........................ 774 30,051

See notes to the unaudited condensed consolidated financial statements.

MANGOSOFT, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30,
------------------------------
2004 2003
--------- ---------
(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................ $(370,797) $(787,434)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation andamortization .................... 119,715 246,541
Loss on disposal of equipment ................... 21,910 --
Stock-based compensation ........................ 774 31,849
Unrealized investment loss ...................... (3,485) (65,315)
Increase (decrease) in cash from the change in:
Accounts receivable ........................... 13,980 (2,801)
Prepaid expenses and other current assets ..... 1,036 94,974
Accounts payable .............................. 81,404 13,556
Accrued compensation .......................... (4,653) 16,748
Other accrued expenses and current liabilities (91,554) (7,265)
Deferred revenue .............................. 5,608
--------- ---------
Net cash used by operating activities ..... (226,062) (459,147)
--------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for short and long-term investments ....... -- (257,437)
Investment maturities ............................... 323,248 396,136
Return of security deposit .......................... 850 --
--------- ---------
Net cash provided by investing activities . 324,098 138,699
--------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of preferred stock ....... -- 50,000
--------- ---------
Net cash provided by financing activities . -- 50,000
--------- ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
98,036 (270,448)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD ............................................ 317,444 425,369
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ............ $ 415,480 $ 154,921
========= =========

See notes to the unaudited condensed consolidated financial statements.

MANGOSOFT, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

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

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

The unaudited information should be read in conjunction with the audited
financial statements of the Company and the notes thereto for the year ended
December 31, 2003 included in the Company's Annual Report on Form 10-KSB filed
with the Securities and Exchange Commission.

As shown in the unaudited condensed consolidated financial statements,
during the nine months ended September 30, 2004 and 2003, the Company incurred
net losses of $(370,797) and $(787,434), respectively. Cash used in operations
during the nine months ended September 30, 2004 and 2003 was $226,062 and
$459,147, 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. NET LOSS PER SHARE

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

For the nine months ended September 30, 2004 and 2003, the effect of stock
options and other potentially dilutive shares were excluded from the calculation
of diluted net loss per common share, as their inclusion would have been
antidilutive.

3. REVENUE RECOGNITION

The Company records revenue upon delivery if pervasive evidence of an
arrangement exists, the price is fixed and determinable, delivery has occurred
and collection is probable. Revenue for sales to distributors is recognized upon
sales to end-users. Service revenue is recognized as services are performed.

In December 2003, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 104, "Revenue Recognition," which superceded SAB
101, "Revenue Recognition in Financial Statements" and Emerging Issues Task

Force Extract No. 00-21, "Revenue Arrangements with Multiple Deliverables." The
adoption of SAB No. 104 did not have a material impact on the Company's results
of operations or financial position.

4. STOCK-BASED COMPENSATION

The Company currently has one stock-based compensation plan, which is
described more fully in Note 8 in the Company's Annual Report on Form 10-KSB for
the period ended December 31, 2003, as filed on March 26, 2004. As amended, this
plan provides for the issuance of up to 296,297 shares of common stock to
employees, officers, directors and consultants in the form of nonqualified and
incentive stock options, restricted stock grants or other stock-based awards,
including stock appreciation rights. The stock options are exercisable as
specified at the date of grant and expire no later than ten years from the date
of grant. As of September 30, 2004, there were 172,503 remaining options
available under this plan.

The following table illustrates the effect on net loss and net loss per
share if the Company applied the fair value recognition provision of SFAS No.
123 to stock-based employee compensation:

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------

Net loss as reported ...................... $ (127,299) $ (266,547) $ (370,797) $ (787,434)
Add back stock-based compensation
included in the determination of net loss
as reported ............................. 258 29,511 774 31,849
Less stock-based compensation had all
options been recorded at fair value ..... (180,386) (117,203) (238,952) (190,103)
----------- ----------- ----------- -----------

Adjusted net loss ......................... $ (307,427) $ (354,239) $ (608,975) $ (945,688)
=========== =========== =========== ===========

Weighted average shares outstanding,
basic and diluted ....................... 1,013,038 1,013,038 1,013,038 1,013,038

Net loss per share, basic and diluted,
as reported ............................. $ (0.13) $ (0.26) $ (0.37) $ (0.78)
=========== =========== =========== ===========

Adjusted net loss per share, basic and
diluted ................................. $ (0.30) $ (0.35) $ (0.60) $ (0.93)
=========== =========== =========== ===========

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, 2003
filed with the Securities and Exchange Commission.

OVERVIEW

We market, sell and support Internet business software and services that
improve the utility and effectiveness of Internet-based business applications.
Our software solutions address the networking needs of small businesses,
workgroups and large enterprises. Our products and services enhance the
performance of PC networks and deliver improved service utilizing existing
equipment. We no longer develop new software products or services.

Mangomind(SM) is a multi-user, business-oriented, peer-to-peer file sharing
system, allowing individual users to collaborate over the Internet across
organizational boundaries in a safe and secure manner. The architecture is a
blend of the manageability of client/server with the autonomy, clustering, and
caching optimizations of peer-to-peer. The user experience is one of easy file
sharing with colleagues through what looks like an ordinary LAN shared drive.
Mangomind(SM) provides the secure file sharing benefits of a VPN without
additional hardware and configuration complexities. Mangomind(SM) is sold as
both a service and a standalone software product.

fileTRUST(SM) is an online data storage service we purchased from Bank of
America (formerly FleetBoston) in February 2002 for approximately $427,000, of
which $175,000 was paid in cash and the balance in our common stock and warrants
to purchase our common stock at $14.31 per share. fileTRUST(SM) users can access
their stored files from any Internet-connected system. The fileTRUST(SM) service
compliments our Mangomind(SM) service by providing customers with a lower cost
online storage system. In conjunction with our purchase of fileTRUST(SM), we
executed a two-year enterprise license agreement with Bank of America (formerly
FleetBoston) for the internal use of fileTRUST(SM) by Bank of America (formerly
FleetBoston), which expired in February 2004. The terms and conditions of this
agreement provide for automatic renewals on a month-to-month basis. We recorded
approximately $508,000 in net revenues from the inception of this agreement
through September 30, 2004. Bank of America (formerly FleetBoston) terminated
its license agreement with us in September 2004.

Net revenues from Bank of America (formerly FleetBoston) during the three
and nine month periods ended September 30, 2004 were approximately $53,000 and
$163,000, respectively. We are actively seeking new business opportunities to
replace this lost revenue. If we are unable to replace this revenue, our
operations may be adversely affected. During September 2004, we have instituted
cost reductions to lessen the adverse effects of this loss of revenue, including
restructuring our business relationships with key vendors such as Built Right
Networks.

CRITICAL ACCOUNTING POLICIES

Our accounting policies are described in our Annual Report on Form 10-KSB
for the period ended December 31, 2003 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:

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

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

Investments - At September 30, 2004, we have approximately $468,000
invested in several high-yield, secured corporate notes with related parties to
better maximize our rate of return on our cash. These investments represent a
significant portion of our total assets at September 30, 2004. These investments
are classified as held-to-maturity and are carried at their amortized cost.
Investments and maturities of less than one year are classified as short-term
investments.

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-party consultants and advisors is measured at the fair value on the
date of grant, determined using the Black-Scholes valuation model. Because of
the cashless exercise feature of the stock options granted in 1999 and the
repricing of options granted in 2000 and 2003, we are required to remeasure the
compensation related to these awards at each reporting date. As the quoted
market price of our common stock fluctuates, our reported operating expenses
will continue to fluctuate. These fluctuations can be significant.

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

COSTS AND EXPENSES

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

Engineering and Development Expenses - Engineering and development expenses
consist primarily of costs related to the design, development, testing,
deployment and enhancement of our products and services. We have expensed our
engineering and development costs as incurred. At September 30, 2004, there were
no full time employees performing engineering or development on our products and
services. Effective September 30, 2002, we have outsourced the maintenance of
our billable services infrastructure as well as product and customer support to
Built Right Networks.

Other Operating Expenses - Selling and marketing expenses consist primarily
of costs incurred to market our products and services such as the costs of
attending and presenting at trade shows. General and administrative expenses
consist primarily of salaries and related personnel costs and other general
corporate costs such as facility costs, commercial and general liability
insurance, accounting and legal expenses and other costs typical of a publicly
held corporation. At September 30, 2004, there were no full time employees
performing selling and marketing activities. Our remaining two employees are
performing general and administrative activities.

Reduction in Force - We have reduced our work force on four occasions since
April 23, 2001 due to adverse economic conditions and our need to conserve
capital. At September 30, 2004, we had two employees, each working in a general
and administrative capacity.

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

Revenues for the three months ended September 30, 2004 increased $15,525 or
13% to $131,225 from $115,700 for the comparable period in 2003. One customer,
Bank of America (formerly FleetBoston) represented approximately 40% of our
revenues for the three-month period ended September 30, 2004. In 2003, Bank of
America (formerly FleetBoston) and New York Life Insurance Company ("New York
Life") accounted for approximately 43% and 22% of our revenues, respectively. In
September 2004, we were notified by Bank of America (formerly FleetBoston) that
it had terminated its February 2002 enterprise license agreement with us. We are
investigating options to replace the loss of this revenue. No other customer
accounted for more than 10% of our revenues for either period

We recognized $67,474 from the sale of our Mangomind(SM) service and
$63,751 from the sale of our fileTRUST(SM) service during the three months ended
September 30, 2004. During the same period in 2003, we recognized $63,307 from
the sale of our Mangomind(SM) service and $52,393 from the sale of our
fileTRUST(SM) service.

Cost of services for the three months ended September 30, 2004 decreased
$17,639 or 14% to $109,027 compared to $126,666 for the comparable period in
2003. The decrease in the cost of delivering our services was primarily a result
of our continued reductions and our switch to a lower cost data center. In
response to our loss of Bank of America (formerly FleetBoston) as a customer, we
have instituted cost reductions to lessen the adverse effects of the loss of the
Bank of America (formerly FleetBoston) revenues, including restructuring our
business relationships with key vendors such as Built Right Networks.

There was no engineering and development expense for the three-month period
ended September 30, 2004 and 2003. During the three-month periods ended
September 30, 2004 and 2003, we had no full-time employees performing
engineering or development activities

For the three-month period ended September 30, 2004, other operating
expenses including selling and marketing and general and administrative expenses
decreased $103,372 or 39% to $159,996 compared with $263,368 for the comparable
period in 2003. The decrease in other operating expenses was due primarily to
our reduced spending in the areas of marketing and sales consultants, public
relations, legal and other corporate consultants and facility rent in addition
to reductions in our marketing, selling and general and administrative personnel

associated with our work force reductions. During the three-month period ended
September 30, 2004, each of our two (2) full-time employees were working in a
general and administrative capacity.

Stock-based compensation expense of $258 was recorded for the three-month
period ended September 30, 2004 compared to $29,511 for the comparable period in
2003. Of that 2003 total, $29,253 represented stock based-compensation recorded
in connection with our repricing of 37,037 options to purchase our common stock
in July 2003. The decrease in this expense was primarily attributable to the
decrease in the number of outstanding employee stock options subject to
compensation expense. The expense represents the ratable recognition of
stock-based compensation for stock option awards granted in 2000 at exercise
prices that were less than the fair value at the time of grant. See note 4 to
the condensed consolidated financial statements.

Our loss from operations decreased $165,789 to $138,056 for the three-month
period ended September 30, 2004 compared with a loss from operations of $303,845
for the comparable period in 2003 as a result of the above factors.

Interest income decreased $26,541 to $10,757 for the three months ended
September 30, 2004 compared to $37,298 for the three months ended September 30,
2003. Our cash balances available for investment have decreased period over
period, however we have invested approximately $468,000 in several high-yield,
secured corporate notes that deliver greater returns than our previous
interest-bearing cash accounts.

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

Revenues for the nine months ended September 30, 2004 increased $801 or
0.2% to $388,790 from $387,989 for the comparable period in 2003. The increase
in our revenues was attributable to a $37,834 increase in service revenue offset
by a $37,033 decrease in software license revenue over the two periods. One
customer, Bank of America (formerly FleetBoston) represented approximately 42%
of our revenues for the nine-month period ended September 30, 2004. In September
2004, we were notified by Bank of America (formerly FleetBoston) that it had
terminated its February 2002 enterprise license agreement with us. We are
investigating options to replace the loss of this revenue. In 2003, Bank of
America (formerly FleetBoston) and New York Life Insurance Company ("New York
Life") accounted for approximately 37% and 16% of our revenues, respectively. No
other customer accounted for more than 10% of our revenues for either period

We recognized $199,386 from the sale of our Mangomind(SM) service and
$189,404 from the sale of our fileTRUST(SM) service during the nine months ended
September 30, 2004. During the same period in 2003, we recognized $194,189 from
the sale of our Mangomind(SM) service and $156,767 from the sale of our
fileTRUST(SM) service.

Cost of services for the nine months ended September 30, 2004 decreased
$63,631 or 17% to $321,997 from $385,628 for the comparable period in 2003. The
decrease in the cost of delivering our services was primarily a result of
continued overhead reductions and our switch to a lower cost data center. In
response to our loss of Bank of America (formerly FleetBoston) as a customer, we
have instituted cost reductions to lessen the adverse effects of the loss of the
Bank of America (formerly FleetBoston) revenues, including restructuring our
business relationships with key vendors such as Built Right Networks.

There were no engineering and development expense for the nine-month period
ended September 30, 2004. In the comparable period in 2003, engineering and
development expense was $4,205. During the nine-month period ended September 30,
2004 and 2003, we had no full-time employees performing engineering or
development activities.

For the nine-month period ended September 30, 2004, other operating
expenses including selling and marketing and general and administrative expenses
decreased $362,159 or 43% to $485,902 compared with $848,061 for the comparable
period in 2003. The decrease in other operating expenses was due primarily to
our reduced spending in the areas of marketing and sales consultants, public
relations, legal and other corporate consultants and facility rent in addition
to reductions in our marketing, selling and general and administrative personnel
associated with our work force reductions. During the nine-month period ended
September 30, 2004, each of our two (2) full-time employees were working in a
general and administrative capacity.

We recorded $744 in stock-based compensation expense over the nine-month
period ended September 30, 2004 compared to $31,849 for the comparable period in
2003. The decrease in this expense was primarily attributable to the decrease in
the number of outstanding employee stock options subject to compensation
expense. The expense represents the ratable recognition of stock-based
compensation for stock option awards granted in 2000 at exercise prices that
were less than the fair value at the time of grant. See note 4 to the condensed
consolidated financial statements.

Our loss from operations decreased $461,871 to $419,883 for the nine-month
period ended September 30, 2004 compared with a loss from operations of $881,754
for the comparable period in 2003 as a result of the above factors.

Interest income decreased $45,234 to $49,086 for the nine-months ended
September 30, 2004 compared to $94,320 for the nine-months ended September 30,
2003. Our cash balances available for investment have decreased period over
period, however we have invested approximately $468,000 in several high-yield,
secured corporate notes that deliver greater returns than our previous
interest-bearing cash accounts.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We were formed in June 1995 and, since our formation, have raised
approximately $74,250,000 in financing from private placements of debt and
equity securities. In addition to the financing we received through the sale of
our securities, we have, at times, depended upon loans from stockholders and
directors and credit from suppliers to meet interim financing needs. Borrowings
from stockholders and directors have generally been refinanced with new debt
instruments or converted into additional equity. At September 30, 2004,
approximately $1,005,000 in additional financing was provided through accounts
payables, accrued expenses and other trade credit, a significant portion of
which is past due.

At September 30, 2004, we had a cash balance of approximately $415,000 and
a working capital deficiency of approximately $133,000. Excluding our Nashua, NH
facility lease which expires in November 2004, we do not have any commercial
commitments or off balance sheet financing. Our commitments under our operating
leases are described in Note 10 to our consolidated financial statements filed
on Form 10-KSB for the period ended December 31, 2003, as reported to the SEC.

At September 30, 2004, we had approximately $468,000 invested in several
high-yield short-term investments with related parties. Approximately $108,000
of the corporate notes receivable outstanding at September 30, 2004 were issued
to Plaintiff Funding Corporation, a privately held corporation in which Selig
Zises is a stockholder. In addition, LawCash II LLC, a privately held company in
which Selig Zises is a member, paid all of the remaining balance of it corporate
note at September 30, 2004. At September 30, 2004, two corporate notes
receivable totaling approximately $360,000 were due from Unicrown Partners LLC,
a privately held company in which Selig Zises and Jay Zises are members. Selig
Zises and Jay Zises are stockholders of MangoSoft, Inc. Selig Zises was the
former co-chairman of our Board of Directors. Investments in high-yield
securities pose higher risks than investments in lower-yield securities,
including the risk of total loss.

We did not make any capital expenditures during the nine months ended
September 30, 2004.

We have significantly modified our operations and reduced our work force on
four separate occasions since April 2001. We currently have two (2) employees,
each working in a general and administrative capacity. We outsource the
management of our billable services infrastructure, software code base, customer
support and reseller channel management to Built Right Networks for the modified
amount of approximately $21,000 per month, under a September 30, 2002 agreement,
which can be cancelled with a ninety (90) day notice.

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

As shown in the unaudited condensed consolidated financial statements,
during the nine-months ended September 30, 2004 and 2003, we incurred net losses
of $370,797 and $787,434, respectively. Cash used in operations during the
nine-months ended September 30, 2004 and 2003 was $226,062 and $459,147,
respectively. The factors, among others, raise significant doubt about our
ability to continue as a going concern. Our continuation as a going concern is
dependent upon our ability to generate sufficient cash flow and meet our
obligations on a timely basis and ultimately attain profitability.

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 $88,796,584 as of September 30, 2004. For the nine-months ended
September 30, 2004 and the year ended December 31, 2003, our net losses were
$370,797 and $926,644, respectively. We have historically experienced cash flow
difficulties primarily because our expenses have exceeded our revenues. We
expect to incur additional operating losses. These factors, among others, raise
significant doubt about our ability to continue as a going concern. If we are
unable to generate sufficient revenue from our operations to pay expenses or we
are unable to obtain additional financing on commercially reasonable terms, our
business, financial condition and results of operations will be materially and
adversely affected.

We May Need Additional Financing.

We may require additional capital to finance our future operations. We can
provide no assurance that we will obtain additional financing sufficient to meet
our future needs on commercially reasonable terms or otherwise. Also, Bank of
America (formerly FleetBoston) terminated its license agreement with us in
September 2004. While we are seeking new business opportunities to replace the
resulting loss of revenue, we cannot be certain we will find a replacement for
such revenue. If we are unable to obtain the necessary financing, our business,
operating results and financial condition will be materially and adversely
affected.

Our Success Depends On Our Outsourced Services Agreement.

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

Our High-Yield Investments Could Become Impaired.

We have approximately $468,000 invested in high-yield, secured corporate
notes with related parties. These investments represent a significant portion of
our total assets at September 30, 2004. Investments in high-yield corporate
notes entail a higher risk of delinquency or even complete loss. No assurance
can be given that we will not experience any losses or that our debtors will
timely remit on the maturity of these notes. If we experience any loss or
impairment on these investments, our business, financial condition and results
of operations will be materially and adversely affected.

We Have Limitations On The Effectiveness Of Our Internal Controls.

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

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

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

There May Be Limited Liquidity In Our Common Stock And Its Price May Be Subject
to Fluctuation.

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

Our Performance Depends On Market Acceptance Of Our Products.

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

We Depend On Strategic Marketing Relationships.

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

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

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

Litigation Concerning Intellectual Property Could Adversely Affect Our Business.

We rely on a combination of trade secrets, copyright and trademark law,
contractual provisions, confidentiality agreements and certain technology and
security measures to protect our trademarks, patents, proprietary technology and
know-how. However, we can provide no assurance that our rights in our

intellectual property will not be infringed upon by competitors or that
competitors will not similarly make claims against us for infringement. If we
are required to be involved in litigation involving intellectual property
rights, our business, operating results and financial condition will be
materially and adversely affected.

Defects In Our Software Products May Adversely Affect Our Business.

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

ITEM 3. CONTROLS AND PROCEDURES

We have significantly reduced our work force on several occasions during
2001 and 2002. At September 30, 2004 and 2003, we had two (2) employees,
including Mr. Dale Vincent, our President, Chief Executive Officer and sole
director. A complete set of internal controls including segregation of duties is
not possible in an organization of this size. However, we have implemented
control procedures surrounding the maintenance of our accounting and financial
systems, financial reporting and safeguarding of our assets. Further, all
transactions entered into outside the normal course of our day-to-day operations
must be approved by Mr. Vincent.

Our principal executive and financial officer has evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), as of the end of the period covered by this Quarterly
Report on Form 10-QSB. Based on such evaluation, our principal executive and
financial officer has concluded that as of such date, our disclosure controls
and procedures were designed to ensure that information required to be disclosed
by us in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
applicable SEC rules and forms and were effective.

There was no change in our internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred
during the quarter ended September 30, 2004 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

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

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

ITEM 5. OTHER INFORMATION.

In September 2004, Bank of America (formerly FleetBoston) terminated its
license agreement with us. Net revenues from this license during the three and
nine month periods ended September 30, 2004 were approximately $53,000 and
$163,000, respectively. During the nine-month period ended September 30, 2004,
these revenues represented approximately 42% of our revenues. We are actively
seeking new business opportunities to replace this list revenue; however, if we
are unable to replace this revenue, our operations may be adversely affected.

ITEM 6. EXHIBITS

(a) EXHIBITS:

NUMBER DESCRIPTION OF EXHIBIT

2.1 Agreement and Plan of Merger by and among First American
Clock Co., MangoSoft Corporation and MangoMerger Corp.,
dated as of August 27,1999. (1)

3.1 Articles of Incorporation, as amended. (2)

3.2 By-laws. (2)

4.1 Rights Plan. (6)

10 Lease of Westborough Office Park, Building Five, dated
November 10, 1995. (3) 14 Code of Ethics. (7)

21 Subsidiary of the Registrant. (2)

31.1 Certification of Principal Executive Officer required by
Rule 13a 14(a) or Rule 15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

32.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.

99.1 1999 Incentive Compensation Plan, as amended and restated on
May 1, 2000. (1)

99.2 Form of Subscription Agreement for purchase of common stock,
dated as of March 20, 2000. (1)

99.3 Form of Warrant Agreement. (1)

99.4 Asset Purchase Agreement, dated February 11, 2002, between
MangoSoft, Inc. and Fleet National Bank. (4)

99.5 Warrant Agreement, dated February 11, 2002, between
MangoSoft, Inc. and Fleet National Bank. (4)

99.6 Information Management Services Agreement, dated September
30, 2002, between MangoSoft, Inc. and Built Right Networks
LLC. (5)

99.7 Rights Agreement, dated March 14, 2003 and amended on July
25, 2003, between MangoSoft, Inc. and Interwest Transfer
Co., Inc. (6)

(1) Filed as an exhibit to our Current Report on Form 8-K for an event dated
September 7, 1999 and hereby incorporated by reference thereto.

(2) Filed as an exhibit to our Registration Statement on Form 10-SB, filed
June 9, 2000, and hereby incorporated by reference thereto.

(3) Filed as an exhibit to our Quarterly Report filed November 9, 1999 for the
quarter ended September 30, 1999 and hereby incorporated by reference
thereto.

(4) Filed as an exhibit to our Quarterly Report filed August 14, 2002 for the
quarter ended June 30, 2002 and hereby incorporated by reference thereto.

(5) Filed as an exhibit to our Current Report on Form 8-K for an event dated
September 30, 2002 and hereby incorporated by reference thereto.

(6) Filed as an exhibit to our Current Report on Form 8-K for an event dated
March 21, 2003, as amended on July 25, 2003, and hereby incorporated by
reference thereto.

(7) Filed as an exhibit to our Annual Report filed on March 26, 2004 for the
years ended December 31, 2003 and hereby incorporated by reference
thereto.

SIGNATURE

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

November 12, 2004 MANGOSOFT, INC.

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