UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐	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: 001-42546

FATPIPE, INC.

(Exact name of registrant as specified in its charter)

Fatpipe Inc/UT

Utah		27-1113325
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

392 East Winchester Street, Fifth Floor
Salt Lake City, Utah		84107
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (844) 203-6092

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, No Par Value Per Share

FATN

The NASDAQ Stock Market LLC

(The NASDAQ Capital Market)

Securities registered pursuant to Section 12(g) of the Act:

None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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 ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $0.

As of November 3, 2025, there were 13,924,468 shares of the Company’s common stock issued and outstanding.

TABLE OF CONTENTS

			Page
Part I. Financial Information			1
	Item 1.	Financial Statements	1
		Consolidated Balance Sheets as of September 30, 2025 (unaudited) and March 31, 2025	2
		Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2025 and 2024 (unaudited)	3
		Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended September 30, 2025 and 2024 (unaudited)	4
		Consolidated Statements of Cash Flows for the Three and Six Months Ended September 30, 2025 and 2024 (unaudited)	5
		Notes to Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
	Item 4.	Controls and Procedures	27

Part II. Other Information			29
	Item 1	Legal Proceedings	29
	Item 1A	Risk Factors	29
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 5	Other Information	29
	Item 6	Exhibits	30
Signatures			31

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Consolidated Financial Statements

Table of Contents

Consolidated Balance Sheets	2
Consolidated Statements of Operations and Comprehensive Loss	3
Consolidated Statements of Stockholders’ Equity	4
Consolidated Statements of Cash Flows	5
Notes to the Consolidated Financial Statements	6

FatPipe Inc and Subsidiaries

Consolidated Balance Sheets

	September 30,		March 31,
	2025		2025
	(Unaudited)
ASSETS
Current assets:
Cash	$	6,229,021	$	2,920,550
Accounts receivable, net		4,334,621		3,764,945
Inventory		328,736		419,677
Other current assets		230,169		666,376
Contracts receivable - current, net		5,481,559		5,191,136
Total current assets		16,604,106		12,962,684
Property and equipment, net		85,098		57,844
Intangible assets, net		860,748		1,048,620
Operating lease right of use assets, net		1,254,254		1,455,373
Contracts receivable - non current, net		12,959,109		12,307,266
Other assets		402,805		379,077
Deferred tax asset		76,905		76,905
Total assets	$	32,243,025	$	28,287,769

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	294,762	$	437,253
Accrued expenses and other current liabilities		3,696,357		3,863,096
Deferred revenue		1,100,715		1,358,632
Operating lease liabilities, current		384,687		366,677
Notes payable, current		577,706		463,422
Total current liabilities		6,054,227		6,489,080
Notes payable, non-current		4,183,321		4,642,317
Operating lease liabilities, non-current		905,401		1,114,067
Other non-current liabilities		112,757		116,988
Total liabilities		11,255,706		12,362,452

Commitments and contingencies (Note 9)		-

Stockholders’ equity:
Common stock, $0.01 par value; 50,000,000 shares authorized, 13,924,468 and 13,026,464 shares of common stock issued and outstanding as of September 30, 2025 and March 31, 2025, respectively		131,245		130,265
Additional paid-in capital		6,079,817		1,588,105
Retained earnings		11,803,871		11,106,063
Accumulated other comprehensive income		2,972,386		3,100,884
Total stockholders’ equity		20,987,319		15,925,317
Total liabilities and stockholders’ equity	$	32,243,025	$	28,287,769

FatPipe Inc and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

	2025			2024			2025			2024
	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2025			2024			2025			2024
	(Unaudited)						(Unaudited)
Revenues	$	3,959,231		$	5,595,576		$	7,895,154		$	9,345,895
Cost of revenues		312,904			229,315			539,838			512,995
Gross profit		3,646,327			5,366,261			7,355,316			8,832,900

Operating expenses:
Sales and marketing		1,202,636			919,392			2,254,301			1,934,327
General and administrative (includes $625,220 of stock based comp in 3 and 6 months ended September 2025)		1,392,675			1,183,797			1,979,674			1,764,919
Product development		489,157			435,402			963,614			858,902
Employee cost		562,652			564,298			1,155,843			1,151,537
Total operating expenses		3,647,120			3,102,889			6,353,432			5,709,685

Income (loss) from operations		(793	)		2,263,372			1,001,884			3,123,215

Other income (expense), net:
Interest income		42,949			(15,576	)		48,748			10,514
Foreign exchange gain/(loss)		27,895			17,380			45,687			(10,046	)
Interest expense		(126,033	)		(86,411	)		(195,921	)		(172,443	)
Total other income (expense), net		(55,189	)		(84,607	)		(101,486	)		(171,975	)

Income (loss) before benefit/(provision) for taxes		(55,982	)		2,178,765			900,398			2,951,240
Income tax benefit/(provision)		12,595			(551,117	)		(202,590	)		(714,515	)
Net income (loss)		(43,387	)		1,627,648			697,808			2,236,725
Less: Net loss attributable to non-controlling interests		-			16,416			-			-
Net income (loss) attributable to stockholders	$	(43,387	)	$	1,611,232		$	697,808		$	2,236,725

Net income (loss) per common share - basic and diluted	$	0.00		$	0.13		$	0.05		$	0.17
Weighted average common shares outstanding - basic and diluted		13,892,903			12,737,886			13,820,522			13,026,464

Net income (loss)	$	(43,387	)	$	1,627,648		$	697,808		$	2,236,725
Other comprehensive income:
Foreign currency translation adjustment		(72,739	)		99,957			(128,498	)		12,702
Total other comprehensive income, net of tax		(72,739	)		99,957			(128,498	)		12,702
Comprehensive income (loss)		(116,126	)		1,727,605			569,310			2,249,427
Less: Comprehensive loss attributable to non-controlling interests		-			3,865			-			-
Comprehensive income (loss) attributable to stockholders	$	(116,126	)	$	1,723,740		$	569,310		$	2,249,427

FatPipe Inc and its Subsidiaries

Consolidated Statements of Stockholders’ Equity

	Shares		Amount		in capital			Earnings			Income			Equity			Interests			Equity
											Accumulated
											Other			Total Fatpipe			Non-
	Common stock				Additional paid			Retained			Comprehensive			Stockholders’			controlling			Total
	Shares		Amount		in capital			Earnings			Income			Equity			Interests			Equity
Balance as of March 31, 2024		12,449,308	$	124,493	$	1,517,753		$	9,040,515		$	3,254,706		$	13,937,467		$	112,654		$	14,050,121
Net income (loss)		-		-		-			625,493			-			625,493			(16,416	)		609,077
Other comprehensive income		-		-		-			-			(83,390	)		(83,390	)		(3,865	)		(87,255	)
Balance as of June 30, 2024 (unaudited)		12,449,308		124,493		1,517,753			9,666,008			3,171,316			14,479,570			92,373			14,571,943
Issue of shares		577,156		5,772		70,352			36,530			-			112,654			(112,654	)		-
Net income (loss)		-		-		-			1,611,232			-			1,611,232			16,416			1,627,648
Other comprehensive income		-		-		-			-			96,092			96,092			3,865			99,957
Balance as of September 30, 2024 (unaudited)		13,026,464	$	130,265	$	1,588,105		$	11,313,770		$	3,267,408		$	16,299,548		$	-		$	16,299,548

Balance as of March 31, 2025		13,026,464	$	130,265		1,588,105		$	11,106,063		$	3,100,884		$	15,925,317		$	-		$	15,925,317
Issuance of shares pursuant to initial public offering		800,004		-		3,935,522			-			-			3,935,522			-			3,935,522
Offering costs		-		-		(151,050	)		-			-			(151,050	)		-			(151,050	)
Net income		-		-		-			741,195			-			741,195			-			741,195
Other comprehensive loss		-		-		-			-			(55,759	)		(55,759	)		-			(55,759	)
Balance as of June 30, 2025 (unaudited)		13,826,468	$	130,265	$	5,372,577		$	11,847,258		$	3,045,125		$	20,395,225		$	-		$	20,395,225
Balance		13,826,468	$	130,265	$	5,372,577		$	11,847,258		$	3,045,125		$	20,395,225		$	-		$	20,395,225
Shares issued for cash and services		98,000		980		707,240			-			-			708,220			-			708,220
Net loss		-		-		-			(43,387	)		-			(43,387	)		-			(43,387	)
Net income (loss)		-		-		-			(43,387	)		-			(43,387	)		-			(43,387	)
Other comprehensive income		-		-		-			-			(72,739	)		(72,739	)		-			(72,739	)
Other comprehensive income (loss)		-		-		-			-			(72,739	)		(72,739	)		-			(72,739	)
Balance as of September 30, 2025 (unaudited)		13,924,468	$	131,245	$	6,079,817		$	11,803,871		$	2,972,386		$	20,987,319		$	-		$	20,987,319
Balance		13,924,468	$	131,245	$	6,079,817		$	11,803,871		$	2,972,386		$	20,987,319		$	-		$	20,987,319

FatPipe Inc and its Subsidiaries

Consolidated Statements of Cash Flows

	2025			2024
	Six Months Ended
	September 30,
	2025			2024
	(Unaudited)
Cash Flows From Operating Activities
Net income	$	697,808		$	2,236,725
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		196,065			266,692
Income tax provision		202,590			714,515
Allowance for contract receivables		66,502			133,847
Stock based compensation		625,220			-
Allowance for accounts receivables		-			492,772
Bad debts written off during the year		-			52,942
Foreign exchange		-			10,046
Changes in operating assets and liabilities:
Accounts receivable		(569,676	)		(689,442	)
Contracts receivable		(1,008,768	)		(2,664,195	)
Inventories		90,941			(48,949	)
Other current assets		436,207			(387,774	)
Other assets		(23,728	)		(2,228	)
Accounts payable		(142,491	)		(70,749	)
Accrued expenses and other current liabilities		(369,329	)		205,505
Deferred revenue		(257,917	)		(356,837	)
Other non current liabilities		(62,656	)		400
Operating lease liability, net		10,463			(97,445	)
Net cash used in operating activities		(108,769	)		(204,175	)

Cash Flows From Investing Activities
Purchase of equipment		(35,447	)		12,228
Net cash used in investing activities		(35,447	)		12,228

Cash Flows From Financing Activities
Net repayment of debt		(286,287	)		-
Issuance of shares pursuant to initial public offering		3,867,472			-
Repayment of financing obligation of lease		-			(87,424	)
Net cash provided by (used in) financing activities		3,581,185			(87,424	)

Effect of exchange rate changes on cash and cash equivalents		(128,498	)		12,702
Net change in cash and cash equivalents		3,308,471			(266,669	)
Cash and cash equivalents:
Beginning of the period		2,920,550			1,112,519
End of the period	$	6,229,021		$	845,850

Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$	195,921		$	172,443

Supplemental Disclosure of Non-Cash Investing Activities and Financing Activities:
Right of use assets obtained in exchange of lease liabilities	$	-		$	1,319,422

FatPipe and its Subsidiaries

Notes to Consolidated Financial Statements

NOTE 1 : SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Company Overview and Significant Accounting Policies

(A) Company Overview

FatPipe Inc. (“FatPipe” or the “Company” or “us” or “we” or “our”) is a leading developer of enterprise-class, application-aware, secure software-defined wide area network (“SD-WAN”) solutions and single stack cybersecurity solutions for organizations, including enterprises, communication service providers, security service providers, government organizations, and other middle-market companies.

FatPipe holds thirteen software and technology patents, which it leverages through an integrated suite of software solutions to offer our customers a reliable, accelerated and secure platform to support mission-critical applications running on cloud, hybrid cloud and on-premises networks. Its core offerings include SD-WAN, secure access service edge (“SASE”), single stack cybersecurity (“Cybersecurity”), and network monitoring service (“NMS”) software solutions, each of which is typically offered to customers as a subscription service. These solutions address a broad set of network management needs and include an integrated set of capabilities designed to manage multi-line network traffic and routing.

FatPipe sells in geographies around the world, with its largest customer populations located in the United States and South Asia. It plans to continue expanding its presence throughout North America and parts of Southeast Asia.

Initial Public Offering

On April 7, 2025, we entered into an underwriting agreement (the “Underwriting Agreement”) with D. Boral Capital LLC, as representative (the “Representative”) of the underwriters named therein (the “Underwriters”), pursuant to which the Company agreed to sell to the Underwriters, in a firm commitment initial public offering (the “Offering”), an aggregate of 695,656 shares of the Company’s common stock, no par value per share (the “Common Stock”), at an initial public offering price of $5.75 per share. The Common Stock was offered pursuant to a registration statement on Form S-1, as amended (File No. 333-280925), originally filed with the U.S. Securities and Exchange Commission (the “Commission”) on July 19, 2024, as amended, and which was declared effective by the Commission on February 12, 2025. A post effective amendment to the registration statement related to the Offering was filed with the Commission on March 11, 2025, and which was declared effective by the Commission on March 17, 2025.

On April 9, 2025, the Company closed the Offering and the Company issued and sold an aggregate of 791,024 shares of common stock. The total gross proceeds to the Company from the Offering, which does not include a potential exercise of the underwriter’s over-allotment option, and before deducting discounts and expenses, were approximately $4,500,000. The Company received net proceeds of approximately $3,700,000 pursuant to the Offering.

A final prospectus relating to this Offering was filed with the Commission on April 7, 2025. The Common Stock was previously approved for listing on The Nasdaq Capital Market and commenced trading under the ticker symbol “FATN” on April 8, 2025.

(B) Significant Accounting Policies

Basis of Preparation of Financial Statements

This summary of significant accounting policies of FatPipe is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (GAAP) and have been consistently applied in the preparation of the financial statements.

Use of Estimates

The preparation of Company’s consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, reported amounts of revenues and expenses during the reporting period.

These estimates are based upon information available through the date of the issuance of the financial statements and actual results could differ from those estimates. Areas requiring significant estimates and assumptions by the Company include, but are not limited to:

	●	Fair value of long-term debt and notes receivable.
	●	Recognition of revenue
	●	Credit loss on trade receivables and contract receivables.
	●	Valuation of inventory
	●	Recoverability of long-lived assets including intangible assets and their related estimated lives; and
	●	Accruals for estimated liabilities such as property tax accruals and litigation settlement accruals.
	●	Accruals for income tax and deferred tax.
	●	Determination of standalone selling price of performance obligations for revenue contracts with multiple performance obligations.

Actual results could differ from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, which forms the basis for making judgments about the carrying values of assets and liabilities.

Principles of Consolidation

These financial statements include the accounts of FatPipe, Inc. and its wholly and majority owned subsidiaries, FatPipe Technologies, Inc. and FatPipe Networks Private Limited. All significant intercompany transactions and balances have been eliminated.

As of March 31, 2024, the Company owned 95.6% of the outstanding shares of capital stock of FatPipe Networks Private Limited (“Limited”) and remaining 4.4% of the outstanding shares of capital stock of Limited were owned by certain individual stockholders (collectively, the “Limited non-controlling interests”). In July 2024, pursuant to the terms of a stock purchase and sale agreement, the Company issued an aggregate of 577,156 shares of common stock in exchange for the Limited non-controlling interests. As of September 30, 2025 and am, Limited was a wholly-owned subsidiary of the Company (see Note 3).

Reclassifications

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

Comprehensive Income

Comprehensive income includes net income as well as other changes in Stockholders’ equity that result from transactions and economic events other than those with stockholders.

Segment Reporting

In accordance with ASC 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. The Company’s chief operating decision-maker is its Chief Executive Officer, who makes resource allocation decisions and assesses performance based on financial information presented on an aggregate basis. There are no segment managers who are held accountable by the chief operating decision-maker, or anyone else, for any planning, strategy and key decision-making regarding operations. We have determined that each of our products and services share similar economic and other qualitative characteristics, and therefore the results of our operating businesses are aggregated into one reportable segment. All of the operating businesses have met the aggregation criteria and have been aggregated and are presented as one reportable segment, as permitted by ASC 280. We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments.

Revenue Recognition

Effective January 1, 2020, the Company adopted Financial Accounting Standards Board (FASB), Accounting Standard Updates (ASU) No. 2014-09, Revenue from Contracts with Customers and the related amendments, which are codified into Accounting Standard Codification (ASC) 606 Revenue from Contracts with Customers., which establishes a broad principle that requires entities to assess the products or services promised in contracts with customers at contract inception to determine the appropriate unit at which to record revenues, which is referred to as a performance obligation. Revenue is recognized when control of the promised products or services is transferred to customers, at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those products or services. The new standard supersedes GAAP guidance on revenue recognition and requires the use of more estimates and judgments than the previous standards. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

ASC 606 may be applied either retrospectively or through the use of a modified-retrospective method. The full retrospective method requires companies to recast each prior reporting period presented as if the new guidance had always existed. Under the modified retrospective method, companies recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings at the date of initial application. The Company adopted ASC 606, Revenue from Contracts with Customers, on January 1, 2020, using the modified retrospective method, the impact of which was not material to the Company.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606 Revenue from Contracts with Customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract was determined to be within the scope of ASC 606, Revenue from Contracts with Customers, the Company assessed the goods or services promised within each contract and determined those that were performance obligations, and assessed whether each promised good or service was distinct.

The company recognizes three types of revenues as explained below:

Product Revenue is for a network server running FatPipe software with contract term of 36 to 60 months. Each contract has a description of the goods and services to be delivered, the term of the contract, and payment terms. We assess relevant contractual terms in our customer contracts to determine the standalone selling price of each of the performance obligation. We apply judgment in identifying contractual terms and determining the transaction price. The Company’s performance obligations are to transfer control of the software delivered on a network server with customer-specific configurations. In addition, the Company provides technical support which includes implementation, configuration and training services over the term of the contract. Additionally, as per the options for determining standalone selling price in ASC 606-10-32-32 to 32-35, in respect to the contract with multiple performance obligations of delivery of software license and technical support; including implementation into customer networks, configuration of the software, and training services to train the customer on how to use the software, we have selected the cost of technical support personnel, plus a 20% margin for support services, and the balance contract value as the standalone selling price for delivery of product and software license, so that it can be consistently applied for each financial year.

The contract’s initial term is non-cancellable and does not have a refund or cancellation provision. The customer enjoys the use of the product and associated service for the Term in exchange for monthly payments or upfront payment made for the term of the contract. The revenue is recognized upon transfer of control of the software and network server to the customer or to staging when the customer requests staging and custom configuration of the software and network server. The software license revenue in our product arrangements is recognized at a point-in-time when the software solution has been delivered or ownership has been transferred.

The service and support revenue is recognized over the term of the contract. An imputed interest charge is recognized in income using the interest method in respect of the inherent interest arising from the payment terms. The balance sheet account “Contract receivable” represents unbilled receivables in connection with the revenue recognized upfront upon transfer of control of the software and the network server to the customer. The same shall be transferred to Accounts Receivable on a monthly basis over the contract term. Cash is received based on our payment terms which is typically 30-90 days.

We provide service/support options for our customers. The first support option is 36 to 60 months paid monthly, or secondly, 12 months paid upfront. For the 36-to-60-month service contracts paid monthly, the service revenue is recognized over the term of the contract. as discussed above and is part of our product offering. The 12-month service option revenue is deferred and recognized ratably over the 12-months, and is referred to in the balance sheet as “Deferred Revenue”.

Our service offerings complement our products. We provide a broad range of service and support options to our customers. Consulting agreements are usually of 12 months term with options to extend. We also provide comprehensive advisory services that are focused on responsive, preventive, and consultative support of our technologies for specific networking needs. Total contract terms may be up to 5 years. Customers are billed monthly based on the hours expended on customers’ behalf. Revenue is recognized on a monthly basis. Payment terms vary from 30 to 45 days from invoice date based on the customer/partner. In the below table, short term RPO will be recognized over the next 12 months, while long-term RPO will be recognized over the 36-60 month term of the contracts.

Remaining Performance Obligations

	2025		2024
	Six Months Ended
	September 30,
	2025		2024
Product	$	830,312	$	2,610,723
Service		1,713,964		2,441,321
Total		2,544,276		5,052,044

Short Term – RPO – within 12 months		1,100,715		2,553,338
Long Term – RPO – from 13 to 36 months		319,231		1,515,040
Long Term RPO (37 month to 60 months)		1,124,330		983,666
Total	$	2,544,276	$	5,052,044

Amount to be recognized as revenue over next 12 months

SCHEDULE OF DEFERRED RECOGNIZED REVENUE

	September 30,		March 31,
	2025		2025
Deferred Revenue	$	1,100,715	$	1,358,632
Total	$	1,100,715	$	1,358,632

Deferred Revenue

	September 30,		March 31,
	2025		2025
Product	$	-	$	-
Service		1,100,715		1,358,632
Total	$	1,100,715	$	1,358,632

	September 30,		March 31,
	2025		2025
Current	$	1,100,715	$	1,358,632
Non-Current		-		-
Total	$	1,100,715	$	1,358,632

Contract balances

SCHEDULE OF CONTRACT BALANCES

	September 30,
	2025
Allowance for bad debts at the beginning of the period	$	(1,018,756	)
(Provisions) / reversal		(7,981	)
Recoveries		-
Allowance for bad debts at the end of the period	$	(1,026,737	)

Disaggregated revenue

We disaggregate our revenue into products, services and consulting revenue that depict the nature, amount, and timing of revenue and cash flows for our various offerings.

SCHEDULE OF DISAGGREGATED REVENUE

	2025		2024		2025		2024
	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Product revenue	$	2,420,579	$	4,487,946	$	4,812,882	$	6,593,293
Service revenue		905,795		611,100		1,859,082		1,479,331
Consulting revenue		632,857		496,529		1,223,190		1,273,271
Total	$	3,959,231	$	5,595,576	$	7,895,154	$	9,345,895

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The financial and nonfinancial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The hierarchy is presented down into three levels based on the reliability of the inputs.

Level 1	Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2	Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for the full term of the assets or liabilities.

Level 3	Unobservable pricing inputs that are less observable from objective sources or based upon our own assumptions used to measure assets and liabilities at fair value, such as discounted cash flow models or valuations. The inputs require significant management judgment or estimation.

The carrying amounts of cash, accounts receivable, accounts payable, notes payable and accrued liabilities are approximately fair value because of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities.

Cash and Cash Equivalents

Cash equivalents are generally comprised of certain highly liquid investments with maturities of three months or less at the date of purchase.

For the purposes of the statement of cash flows, the Company considers all highly liquid financial instruments with a maturity of less than three months to be cash equivalents.

Trade Accounts Receivable

Accounts Receivable are recorded at the invoiced amount and do not bear interest. Accounts receivables are due from various customers and are shown net of applicable reserves for doubtful accounts as shown on the face of the balance sheet. There were no accounts that had been placed on non-accrual status. The allowance for doubtful accounts has been estimated by management based on historical experience, current market trends and, for larger customer accounts, their assessment of the ability of the customers to pay outstanding balances. Past due balances and other higher risk amounts are reviewed individually for collectability. Changes in circumstances relating to the collectability of accounts receivable may result in the need to increase or decrease the allowance for doubtful accounts in the future. The company provides for any and all of the accounts receivable which are due over the period of one year if it meets the criteria for allowance estimated by the management.

Inventories

Inventories are recorded at lower of cost and net realizable value on the weighted average cost method of accounting.

Property and Equipment

Property and equipment are recorded at cost. Expenditures that increase value or extend useful lives are capitalized and routine maintenance and repairs are charged to expense in the year incurred. Gains and losses from disposition of fixed assets are reflected in other income. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:

SCHEDULE OF ESTIMATED USEFUL LIVES

Furniture and fixtures		5 to 10 years
Office equipment and computers		3 to 5 years
Vehicles		5 years

Major renewals and improvements are capitalized. Replacements, maintenance and repairs, which do not significantly improve or extend the useful life of the assets, are expensed when incurred.

Upon the sale or retirement of assets, costs and the related accumulated depreciation and amortization are removed from the accounts and any gain or loss is included in the results of operations.

Intangible Assets

Intangible assets primarily consist of patent legal costs and are recorded at cost. Amortization is computed using the straight-line method over the estimated useful lives of the assets which is assumed as 15 years. The Company capitalizes product development costs in accordance with ASC 350-40 and ASC 985-20. Amortization is computed using the straight-line method over the estimated useful lives of the assets which is assumed as 15 years.

Long-Lived Assets

The Company evaluates its long-lived assets or asset groups for indicators of possible impairment by determining whether there were any triggering events that could impact the Company’s assets. If events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable the Company performs a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by such asset or asset group. Should an impairment exist, the impairment loss is measured based on the excess carrying value of the asset over the asset’s fair value generally determined by estimates of future discounted cash flows.

The Company has not identified any such impairment losses for the period ended September 30, 2025 and March 31, 2025.

Defined Benefit Plan

The subsidiary company “FatPipe Networks Private Limited” provides a defined benefit gratuity plan to eligible employees in accordance with applicable labor laws of India. The gratuity benefit is based on the employee’s last drawn salary and years of continuous service, and is payable upon resignation, retirement, or termination of employment.

The gratuity plan is accounted for in accordance with ASC 715, Compensation—Retirement Benefits. The liability for the defined benefit obligation is determined using the projected unit credit method and is based on actuarial valuations performed annually by independent actuaries. Actuarial gains and losses are recognized immediately in the statement of operations in the period in which they occur and this method is applied consistently.

The benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as of the reporting date. The discount rate used to determine the present value of the obligation reflects the yields available on high-quality corporate bonds of similar duration. The Company does not fund the plan, and benefits are paid as they become due.

Key assumptions used in the actuarial valuation include discount rate, salary growth rate, and employee turnover rates.

Income Taxes

The Company is subject to federal and state income taxes. Its taxable income and deductions are included on a consolidated income tax return. The consolidated entities have a net loss carryover which may be fully utilized. Deferred tax assets are recognized in these financial statements after considering valuation allowances. A subsidiary of the Company is subject to foreign income taxes in India. The Indian subsidiary is subjected to income tax audits annually and tax assessments in accordance with the applicable Income Tax laws.

Warranties

The Company offers a 1 one-year to 3 three-year warranty on the hardware products it sells. The cost of fulfilling the warranty obligation has historically been insignificant. No provision for future warranty costs has been made in these financial statements.

Leases

The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred.

In calculating the right of use asset and lease liability, the Company has elected to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.

Related Parties

Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. The Company discloses related party transactions that are outside of normal compensatory agreements, such as salaries. The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

Concentrations

The Company has no significant geographic concentrations in either trade accounts receivable or revenue.

Revenue by Geography	2025		2024		2025		2024
	Three Months Ended				Six Months Ended
	September 30,				September 30,
Revenue by Geography	2025		2024		2025		2024
US	$	3,574,328	$	5,115,032	$	7,353,954	$	8,636,955
Rest of the World		384,903		480,544		541,201		708,940
Revenue by geography	$	3,959,231	$	5,595,576	$	7,895,154	$	9,345,895

At September 30, 2025, the carrying amount of cash was $6,229,021 only a portion of which is covered by federal depository insurance. At March 31, 2025, the carrying amount of cash was $2,920,550, only a portion of which is covered by federal depository insurance.

Concentrations of Risk

The Company’s financial instruments that may be exposed to concentrations of credit risk consist primarily of temporary cash investments and trade accounts receivable. The Company maintains its cash balances at financial institutions it believes to be financially sound. At times such balances may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk in cash.

We perform ongoing credit evaluations of our customers and, with the exception of certain financing transactions, do not require collateral from our customers.

The Company has three major partners that account for approximately 56.33% of the company’s consolidated revenues for the six months ended September 30, 2025 and two major partners that accounted for 49.54% for the six months ended September 30, 2024. As reflected in the table below, partner A contributed $3,870,963 or 49.03% in revenue for the six months ended September 30, 2025, and $4,269,980 or 45.69% for the six months ended September 30, 2024. Separately, Partner B contributed $326,338 or 4.13% for the six months ended September 30, 2025, and $359,977 or 3.85% for the six months ended September 30, 2024. Partner C contributed $250,422 or 3.17% in for the six months ended September 30, 2025.

SCHEDULE OF CONCENTRATION RISK

Partner	2025			2024
	Six Months Ended
	September 30,
Partner	2025			2024
Partner A (%)		49.03	%		45.69	%
Partner B (%)		4.13	%		3.85	%
Partner C (%)		3.17	%		0.00	%
Total		56.33	%		49.54	%

Partner	2025		2024
	Six Months Ended
	September 30,
Partner	2025		2024
Partner A (Revenue)	$	3,870,963	$	4,269,980
Partner B (Revenue)		326,338		359,977
Partner C (Revenue)		250,422		-
Total	$	4,447,723	$	4,629,956

Recent Accounting Pronouncements

The Company has implemented all new relevant accounting pronouncements that are in effect through the date of these financial statements. The pronouncements did not have any material impact on the financial statements unless otherwise disclosed., and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 2: PROPERTY AND EQUIPMENT, NET

The Company’s property and equipment consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT, NET

	September 30,			March 31,
	2025			2025
Furniture and fixtures	$	282,174		$	256,415
Office equipment and computers		503,561			493,873
Property and equipment, gross		785,735			750,288
Less: Accumulated depreciation		(700,637	)		(692,444	)
Property and equipment, net	$	85,098		$	57,844

Depreciation expense for the three months ended September 30, 2025 and 2024 amounted to $691 and $8,096, respectively. Depreciation expense for the six months ended September 30, 2025 and 2024 amounted to $8,193 and $16,588, respectively.

NOTE 3: INTANGIBLE ASSETS, NET

The Company’s intangible assets consist of the following:

SCHEDULE OF INTANGIBLE ASSETS, NET

	September 30,			March 31,
	2025			2025
Product development	$	218,383		$	218,383
Patent costs		7,790,890			7,790,890
Intangible assets, gross		8,009,273			8,009,273
Less: Accumulated amortization		(7,148,525	)		(6,960,653	)
Intangible assets, net	$	860,748		$	1,048,620

Amortization expense for the three months ended September 30, 2025 and 2024 amounted to $103,416 and $125,052, respectively. Amortization expense for the six months ended September 30, 2025 and 2024 amounted to $187,871 and $250,105, respectively.

The estimated future amortization expense for the next five years and thereafter is as follows:

Year ending March 31,
2026	$	118,220
2027		230,007
2028		156,350
2029		102,283
Thereafter		253,888
Total	$	860,748

NOTE 4: NOTE PAYABLE

On January 25, 2023, the Company entered into a three-year term loan with a local bank that is secured by substantially all assets of the Company with a corporate guarantee given by subsidiary - FatPipe Networks Private Limited. The loan is repayable in full during the Fiscal year 2025-26. The Company has received $2.5 million of the $5 million loan sanctioned by the bank. Interest rate is at current value of index and additional 4.25% above the bank’s reference rate (interest rate per annum determined by bank as its three-year cost of funds, at time of signing) which works out to 12% as on the reporting date.

In November 2024, the Company received an additional $500,000 in proceeds from the bank pursuant to an additional draw.

In March 2025, the Company obtained a $5 million term loan from Fortis Bank, of which $3 million was used to repay an outstanding loan from the bank loan noted above. The Fortis Bank loan is repayable in 120 equal monthly installments commencing from March 1, 2025 and the interest is charged at the Prime Rate plus 1%. The “Prime Rate” is the Prime Rate in effect on the first business day of the month (as published in the Wall Street Journal newspaper) in which SBA received the application, or the first day of the month in which any interest rate change occurs. The interest rate will be adjusted every calendar quarter (the “change period”) beginning April 1, 2025 (date of first rate adjustment). The interest rate works out to 8.75% as on the reporting date. The loan is secured by substantially all assets of the Company, certain personal properties of Directors of the Company, along with a personal guarantee given by them and a Trust, where the directors are trustees. During the six months ended September 30, 2025, the Company made principal payments totaling $152,635.

Future maturities of long-term debt are as follows:

Year Ended March 31,
2026		577,706
2027		359,811
2028		392,588
2029		428,352
2030		467,373
Thereafter		2,535,197
Total principal repayments		4,761,027
Less: Current portion		577,706
Long-term portion of notes payable	$	4,183,321

Interest expense for the three months ended September 30, 2025 and 2024 amounted to $126,033 and $86,411, respectively. Interest expense for the six months ended September 30, 2025 and 2024 amounted to $195,921 and $172,443, respectively.

Short Term Debt

On June 15, 2023, the Company received an interest free loan for $120,000 from Stay in Business Inc., repayable on demand. During the year ended March 31, 2025, the Company received an additional $13,652 under the same arrangement. During the six months ended September 30, 2025, the Company repaid the entire outstanding balance of the loan.

NOTE 5: STOCKHOLDERS’ EQUITY

Authorized Capital Stock

On June 19, 2024, our Board and Shareholders approved an increase in our authorized capital stock from 15,000,000 shares of common stock, no par value, to 50,000,000 shares of common stock, no par value.

Common Stock

We are authorized to issue up to a total of 50,000,000 shares of common stock, no par value per share. Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of our stockholders, including the election of directors. Holders of our common stock have no cumulative voting rights. Further, holders of our common stock have no preemptive or conversion rights or other subscription rights.

Additionally, if a quorum is present, an action by stockholders entitled to vote on a matter is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action (other than the election of directors). The vote of a majority of the shares of our common stock held by stockholders present in person or represented by proxy and entitled to vote at the Meeting will be sufficient to elect directors or to approve a proposal.

During the six months ended September 30, 2025, the Company issued an aggregate of 800,004 shares of common stock for total proceeds of $3,935,522 pursuant to the April 2025 Offering, including partial exercise of the underwriter’s over-allotment option.

During the six months ended September 30, 2025, the Company issued 98,000 shares of its common stock to consultants and employees as consideration for cash and services rendered. The fair value of the shares, determined based on the market price of the Company’s common stock on the date of issuance, totaled $708,220, of which $83,000 was received in cash and $625,220 was recognized as stock-based compensation expense within general and administrative expenses.

As of September 30, 2025, the total number of outstanding shares is 13,924,468.

Preferred Stock

The Company is not currently authorized to issue preferred stock under its Articles of Incorporation, but may choose to do so in the future.

NOTE 6: LEASES

The Company leases certain office space under operating leases. Lease commencement occurs on the date the Company takes possession or control of the property. The original terms for facility related leases are generally between three to five years. Some of the Company’s leases also include rental escalation clauses and/or termination provisions. Renewal options and termination options are included in determining the lease payments when management determines the options are reasonably certain of exercise.

If readily determinable, the rate implicit in the lease is used to discount lease payments to present value: however, substantially all of the Company’s leases do not provide a readily determinable implicit rate. When the implicit rate is not determinable, the Company’s estimated incremental borrowing rate is utilized, determined on a collateralized basis, to discount lease payments based on information available at lease commencement.

The Company’s leases typically require payment of common area maintenance and real estate taxes which represent the majority of variable lease costs. Certain lease agreements also provide for variable rental payments based on sales performance in excess of specified minimums, usage measures, or changes in the consumer price index. Variable rent payments based on future performance, usage, or changes in indices were not significant for any of the periods presented. Variable lease costs are excluded from the present value of lease obligations. The Company’s lease agreements do not contain any material restrictions, covenants, or any material residual value guarantees.

	September 30,		March 31,
	2025		2025
Operating leases:
Operating lease right of use assets, net	$	1,254,254	$	1,455,373

Operating lease liabilities - current	$	384,687	$	366,677
Operating lease liabilities - Non-current		905,401		1,114,067
Total operating lease liabilities	$	1,290,088	$	1,480,744

SCHEDULE OF OPERATING LEASE EXPENSE

	2025		2024
	Six Months Ended
	September 30,
	2025		2024
Operating lease expense:
Operating Lease Cost	$	234,147	$	99,291
Short term Lease Cost		33,916		22,408
Total operating lease expense	$	268,063	$	121,699

	2025		2024
	Six Months Ended
	September 30,
	2025		2024
Operating Cash Flows for Operating Leases	$	223,423	$	467,769

Year Ended March 31,	Operating leases
2026	$	223,423
2027		468,390
2028		485,245
2029		189,413
2030		75,068
Total minimum lease payments		1,441,539
Less: imputed interest		(151,451	)
Total lease obligations		1,290,088
Less: Current portion		384,687
Long-term portion of lease obligations	$	905,401

NOTE 7: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

The following is a summary of accrued expenses and other current liabilities:

	September 30,		March 31,
	2025		2025
Provision for tax	$	3,169,894	$	2,967,305
Accrued employer expenses		363,620		18,969
Credit card payables		53,924		352,792
Employee payables		-		429,366
Other current liabilities		105,341		91,669
Provisions		3,578		2,995
	$	3,696,357	$	3,863,096

NOTE 8: RELATED PARTY TRANSACTIONS

The subsidiary company “FatPipe Networks Private Limited” has taken a lease from a company “Back Office Extensions India Pvt Ltd” in which the Company’s directors are management. The total lease payments amounted to $33,916 and $22,408 for the six months ended September 30, 2025 and 2024 respectively.

The Company has received a short-term interest free loan from a related entity which is controlled by the Company’s Chief Executive Officer, Stay in Business Inc, for $120,000. The loan is repayable on demand during the year 2023-24. An additional loan of $13,652 was received under the same arrangement during the year ended March 31, 2025. During the six months ended September 30, 2025, the Company repaid the entire outstanding balance of the loan.

NOTE 9. COMMITMENTS AND CONTINGENCIES

From time to time, the Company is involved in legal proceedings arising in the ordinary course of business. The Company, in conjunction with its legal counsel, assesses the need to record liability for litigation or loss contingencies. A liability is recorded when and if it is determined that such a liability for litigation or loss contingencies is both probable and estimable.

Although the results of legal proceedings and claims cannot be predicted with certainty, management is of the opinion, after consulting legal counsel, that the Company is not currently a party to any legal proceedings, which would, individually or in the aggregate, have a material adverse effect on its results of operations, cash flows, or financial position.

At this time, there are no legal proceedings that require the Company to assess the need to record a liability.

NOTE 10. SUBSEQUENT EVENTS:

The Company evaluated the subsequent events through November 3, 2025, the date at which the financial statements were issued.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. This discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. See “Cautionary Note Regarding Forward-Looking Statements” below. We have no obligation to update any of these forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements due to many factors, including, but not limited to, those set forth under the heading “Risk Factors” in this Quarterly Report. Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this Quarterly Report.

Cautionary Statement Regarding Forward-Looking Information

This Quarterly Report contains statements that constitute forward-looking statements that are subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Some of the statements in this Quarterly Report constitute forward-looking statements because they relate to future events or the future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our industry, our beliefs and our assumptions. These forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” or the negative of these terms or other similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include, but are not limited to:

	●	changes in the market acceptance of our software solutions and offerings;

	●	our ability to successfully execute on our growth strategy and enter into new markets;

	●	our ability to expand in existing markets;

	●	increased levels of competition;

	●	our relationships with our key customers;

	●	changes in customer preferences and the level of acceptance of our software services;

	●	our ability to retain and attract senior management and other key employees;

	●	our ability to quickly and effectively respond to new technological developments;

	●	our ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on the proprietary rights of the Company; and

	●	other risks, including those described in the “Risk Factors” section of this prospectus.

We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this prospectus are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise.

We have based the forward-looking statements included in this Quarterly Report on information available to us on the date of this Quarterly Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Quarterly Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Overview

FatPipe is a pioneer in enterprise-class, application-aware, secure SD-WAN and cybersecurity solutions for organizations, including enterprises, communication service providers, security service providers, government organizations, and other middle-market companies.

We strive to be the global leader in delivering leading-edge enterprise-class networking and cybersecurity software technology. We are dedicated to continually improving the way organizations connect, ensuring their networks are secure, reliable, and supporting their continued success. Our commitment lies in empowering our customers with a seamless and dependable connectivity infrastructure that safeguards their critical data and fosters business continuity. We further aim to ensure our customers have unparalleled insights into their network operations and to ensure our customers have greater control of security in their network operations through our full cybersecurity offering suite.

To deliver on this vision, we hold over a dozen software and technology patents, which we leverage through an integrated suite of software solutions to offer our customers a reliable and secure platform to support mission-critical applications running on cloud, hybrid cloud and on-premise networks. Our core offerings include SD-WAN, SASE, NMS, and single-stack Cybersecurity software solutions, each of which is typically offered to our customers as a subscription service. These network solutions address a broad set of network management needs and include an integrated set of capabilities designed to manage multi-line network traffic and routing. When customers have multiple data lines, and one of the lines fails, FatPipe automatically and dynamically transfers network traffic from one data line to another (failover) without disconnecting the application session. When all lines are functional, FatPipe is able to improve data traffic speed and optimize bandwidth. Our cybersecurity solutions address a broad set of cybersecurity management needs and include integrated software functions such as firewalling, intrusion detection and prevention, content filtering, and secure VPN connectivity. These tools are designed to protect network traffic traversing across multiple WAN links and cloud environments, providing consistent security enforcement at the edge and core of the network. By combining these capabilities within the same software stack as its network management offerings, FatPipe enables enterprises to monitor, control, and secure data flows across hybrid infrastructures, supporting continuous protection of applications and users while maintaining network performance and reliability.

We service customers in geographies around the world, with our largest customer populations located in the United States and India. We plan to continue expanding our presence throughout North America and parts of Southeast Asia. Further, FatPipe is in discussions with potential partners to offer geography specific software license bundles to address these market needs. Customers in different geographies require different licenses and network servers specific to their needs and prices. We plan to expand our presence in Mexico and Asian markets with products and services bundles to address geography specific markets.

Industry

SD-WAN is a network architecture that allows enterprises to utilize software and virtualization technologies to enhance the performance, security, and manageability of their WANs that connect offices, data centers, cloud applications, and cloud storage. This innovative architecture has emerged as a force in the world of networking and connectivity, revolutionizing the way organizations manage and optimize their WANs. SD-WAN technology enables organizations to leverage multiple types of connections, such as broadband, multiprotocol label switching, and LTE, to create a unified and intelligent network that can be centrally managed and orchestrated. This flexibility not only improves network efficiency but also reduces costs associated with expensive dedicated circuits, and the technology represents a seismic shift from traditional static network architectures to dynamic, agile, and cloud-centric solutions. SD-WAN applications have gained tremendous momentum in recent years due to their ability to address many evolving needs of modern businesses.

SASE technology enhances network security by enabling centralized policy enforcement and encryption. It allows for granular control over traffic, ensuring that sensitive data is transmitted securely across the network. This is particularly significant in today’s cyber-threat landscape, where data breaches and network vulnerabilities are constant concerns for businesses of all sizes, and trends such as remote work and distributed organizations have only served to exacerbate potential susceptibility.

NMS allows for the systematic monitoring and management of computer networks. Generally consisting of an integrated set of tools, NMS solutions provide network administrators with the ability to remotely detect and address network issues or anomalies before they affect network performance, integrity, or end-user experience. Many NMS solutions combine multiple data collection methods to offer comprehensive insights into a range of network performance metrics, allowing administrators to continuously and remotely optimize network configurations, troubleshoot problems, manage capacity, identify suspicious network activity and generate analytics for further assessment.

Cybersecurity software encompasses applications and integrated platforms designed to protect enterprise networks, connected devices, and cloud resources from intrusion, disruption, or data compromise. These solutions typically include functions such as next-generation firewalls, intrusion detection and prevention systems, secure web gateways, endpoint protection, and network access controls. As organizations expand the use of cloud and hybrid infrastructure, cybersecurity software increasingly emphasizes unified visibility, centralized policy enforcement, and real-time analytics across distributed environments. Recent trends show a convergence of security and networking, in which threat prevention, encryption, and traffic management capabilities operate within the same software stack. This approach enables continuous monitoring and coordinated defense across multiple network layers and access points, reflecting a broader industry shift toward software-defined, full-stack security architectures that can adapt to evolving enterprise connectivity models.

Total Addressable Market

SD-WAN. The market for SD-WAN products was estimated to be approximately $4.5 billion in 2023 (according to the research published via the Maia Research Report) with expected market size to grow to over $17.6 billion by 2030. The North America and Asia-Pacific (“APAC”) segments of the market, which represent FatPipe’s primary markets, are expected to achieve continued growth in the near term. According to Gartner, Inc., the North America market for SD-WAN solutions will grow at an estimated 18% compound annual growth rate (“CAGR”) through 2025, while growth in APAC is projected to exceed 60% CAGR. This significant growth trajectory has been attributed to several factors, including the rise in remote work, need for enhanced network security, migration of applications to the cloud, and overall digital transformation efforts of enterprises.

SASE. According to the Maia Research Report, total revenues for SASE software and platform solutions is expected to grow from $6.4 billion in 2022 to $27.2 billion by 2030, resulting in a CAGR of almost 20.0% during the forecast period. This is driven by the rise of work-from-home mandating secure zero-trust remote connectivity, cloud-adoption broadening the definition of a corporate network, and the convergence of cloud and on-premise networks creating the need for a unified solution.

NMS. The total NMS market, including both cloud-based and on-premise solutions, is projected by the Maia Research Report to grow at a more modest CAGR of 10.0% for the period from 2022 to 2030. Total market revenues for NMS solutions are estimated at $2.0 billion in 2022, approximately three-quarters of which is categorized at cloud-based, and is projected to grow to approximately $4.4 billion, when cloud-based solutions will account for almost 85% of the total market.

Cybersecurity. According to a report by Grand View Research, the global cybersecurity market was valued at approximately US $245.6 billion in 2024 and is projected to reach about US $500.7 billion by 2030, corresponding to an estimated compound annual growth rate (CAGR) of roughly 12.9% from 2025 to 2030. This growth is being driven by expanding cloud migration, the proliferation of Internet of Things (IoT) and edge-computing devices, increasingly complex cyber-threat landscapes and regulatory requirements, and an ongoing shift in enterprise spending toward software-defined and integrated security platforms.

FatPipe Software Solutions

Our objective is to offer a suite of solutions to ensure our customers can securely support their networks in this cloud-first world. We are committed to driving a trusted customer experience through innovation and a diverse set of capabilities. Our core offerings are based on a complete, integrated suite of software solutions, including SD-WAN, SASE, NMS, and Cybersecurity capabilities, each of which can be individually licensed to create an experience tailored to a customer’s needs and network configuration. Additionally, all of our technologies are available for commercial sale. Further, our product pipeline consists of new SD-WAN security features and enhancements to the NMS as well as single-stack cybersecurity features to serve all a customer’s cybersecurity requirements from a single vendor.

Components of Results of Operations

Revenue

FatPipe derives its revenues from the sale of its software solutions and services, which include an integrated suite of SD-WAN, security and network management capabilities. These solutions are delivered to customers on commodity network servers, or virtually for deployment in public, private or hybrid cloud environments. Revenues are reported net of marketing development funds provided to our distribution partners for sales and marketing support. FatPipe Technologies, FatPipe’s subsidiary and consulting group, generally provides consulting, staffing, and engineering services on a project basis.

The Company launched software licenses that resulted in increased market acceptance and accelerated revenue growth. Our customer contracts generally range from 36 – 60 months and are typically billed on a monthly basis; however, the accounting treatment varies based on the nature of the service. The majority of our revenue is recognized at a point-in-time once the software solution has been delivered or ownership has been transferred, and our performance obligations have been satisfied. For clarity, the Company delivers software licenses that are valid for the duration of the contract term (i.e., 36-60 months) along with the product. Therefore, the Company recognizes the software license revenue at the time of delivery or transfer of control. At that point, the performance obligation for the software license has been satisfied. The contract value is recorded as contracts receivable and is transferred to accounts receivables upon invoicing the customer. The Company’s contracts receivable is classified as accounts receivable when the Company’s right to consideration becomes unconditional. The remaining obligation of the contract value is recorded as contract liability. Our deferred revenue consists of the amounts from the service portion of the contract and is amortized pro-rata over the term of the service agreement. For further details on our revenue recognition policies, please refer to the notes to the consolidated financial statements incorporated in this document.

Cost of Revenue

The cost of revenue includes all costs associated with the network server components, as well as the costs of cloud hosting services used for the delivery of our software solutions and services.

Gross Profit

Gross profit represents the difference between revenue and cost of revenue. Cost of revenue primarily includes the cost of the network server hardware that is used in certain instances to deliver our software solutions. Gross profit is impacted by our software solutions’ average selling price and the revenue mix between solutions and services. We do not use custom hardware and historically have not been constrained by access to adequate supplies of hardware required to support our sales. The costs of revenue include all costs associated with network server components as well as costs associated with providing services to our customers, including costs associated with hosting our services through Amazon Web Services.

Operating Expenses

Our operating expenses consist of marketing and sales (M&S) expense, general and administrative (“G&A”) expense and product development and expense. Historically, we have not capitalized any material portion of our product development expense.

Marketing and Sales Expense

Marketing and sales expenses include the costs associated with our sales and product marketing professionals and marketing expenses in support of our distribution partners and direct sales efforts. We incur expenses for such activities as co-marketing, trade show support, travel, promotional materials, and product training.

General and Administrative Expense

Our G&A expenses primarily include the direct costs associated with corporate functions such as accounting, human resources, administrative support, legal and professional fees, and rent and provisions for bad debt. Additionally, intangible charges, such as depreciation and amortization expenses, are included in G&A. Depreciation and amortization expenses are primarily related to the amortization of our intellectual property and capitalized leases. We expect that G&A expenses will increase in absolute dollars as we hire additional personnel, improve our information technology infrastructure, and incur other costs for the compliance requirements of operating as a public company.

Product Development Expense

FatPipe invests in ongoing research and development as a core component of its product innovation. These expenses consist primarily of the direct costs of engineers and technicians who design and test our highly complex software solutions. We record all research and development R&D expenses as incurred. Our research and development teams are primarily located at our main offices in Salt Lake City, Utah and Chennai, India.

Operating Results

Operating results reflect the income from operations derived from the sale of our software solutions and services with adjustments for non-operating income and expenses such as interest expense, interest income, and foreign exchange losses/gains resulting from our India operations.

Results of Operations

For the Three Months Ended September 30, 2025 and 2024

	Three Months Ended
	September 30,
	2025			2024
	(Unaudited)
Revenues	$	3,959,231		$	5,595,576	*
Cost of revenues		312,904			229,315
Gross profit		3,646,327			5,366,261

Operating expenses:
Sales and marketing		1,202,636			919,392
General and administrative (includes $625,220 of stock based comp in 6 months ended September 2025)		1,392,675			1,183,796
Product development		489,157			435,402
Employee cost		562,652			564,298
Total operating expenses		3,647,120			3,102,888

Income (loss) from operations		(793	)		2,263,373

Other income (expense), net:
Interest income		42,949			(15,576	)
Foreign exchange gain/(loss)		27,895			17,380
Interest expense		(126,033	)		(86,411	)
Total other income (expense), net		(55,189	)		(84,607	)

Income (loss) before benefit/(provision) for taxes		(55,982	)		2,178,766
Income tax benefit/(provision)		12,595			(551,117	)
Net income (loss)		(43,387	)		1,627,649
Less: Net loss attributable to non-controlling interests		-			16,416
Net income (loss) attributable to stockholders	$	(43,387	)	$	1,611,233

*reflects a one time $1.4 MM contract

Revenue

In Q2 2025, two large contracts totaling $1.4 MM was won resulting in an exceptional quarter. in Q2, 2026, the current year, ended September 30, 2025, Net revenue was $3,959,231, a decrease of $1,636,345, or 29%, from the prior period ended September 30, 2024 primarily due to the two large contracts in Q2 2025. The decrease in revenue was primarily due to a comparison against an exceptionally strong Q2 2025. FatPipe continued to execute successfully on its GTM strategy. Consulting and services revenue increased due to the timing of consulting engagements.

Cost of Revenue

In the three months ended September 30, 2025, our cost of revenue was $312,904, an increase of $83,589, or 36%, from the prior period ended September 30, 2024. Cost of revenue increased as costs of inputs increased due to macroeconomic factors. The cost of revenue includes costs associated with providing services to our customers, such as costs associated with hosting our cloud services.

Gross Profit and Gross Margin

In the three months ended September 30, 2025, our gross profit was $3,646,327 a decrease of $1,719,934, or 32%, reflecting the effect of the two large contracts during the prior period.

Our gross margin decreased to 92% in the three months ended September 30, 2025 from 96% in the prior period reflecting increased tariffs and transportation costs.

Sales and Marketing Expense

In the three months ended September 30, 2025, our sales and marketing expense was $1,202,636, an increase of $283,244, or 31%, compared to the prior period. This was primarily due to an increase in salary expenses as FatPipe invested in scaling sales headcount across its sales divisions to invest in long-term growth. This use of funds was disclosed in the previously filed S-1.

General and Administrative Expense

In the three months ended September 30, 2025, our general and administrative expense was $1,392,675, an increase of $208,879 compared to the prior period primarily due to $625,220 in non-cash stock-based compensation expense recorded in the second quarter, offset by overall cost cutting via automation efforts in 2025. Excluding non-cash stock-based compensation, G&A decreased by 35%.

Product Development Expense

Product development expense in the three months ended September 30, 2025 was $489,157, an increase of $53,755 compared to the prior period, as the Company continued its development plans for its cybersecurity and satellite products. The Company has ramped up its product development in early 2025 following its April 2025 IPO.

Employee Cost Expense

Employee cost expenses in the three months ended September 30, 2025 were $562,652, a decrease of $1,646, compared to the prior period.

Depreciation and Amortization Expense

Depreciation and amortization expense in the three months ended September 30, 2025 was $691, a decrease of $7,405, compared to the prior period. These expenses are categorized under general and administrative expenses.

Other Income (Expense)

Interest income during the three months ended September 30, 2025 was $42,949 as compared to $0 in the prior fiscal year, reflecting the deposit of funds raised from the IPO.

Interest expense during the three months ended September 30, 2025 was $126,033, as compared to $86,411 in the prior fiscal year. The increase was due to higher loan amount in 2025.

The foreign exchange gain/(loss) results from currency conversion from U.S. dollars to Indian rupees.

For the Six Months Ended September 30, 2025 and 2024

	Six Months Ended
	September 30,
	2025			2024
	(Unaudited)
Revenues	$	7,895,154		$	9,345,895
Cost of revenues		539,838			512,995
Gross profit		7,355,316			8,832,900

Operating expenses:
Sales and marketing		2,254,301			1,934,327
General and administrative		1,979,674			1,764,918
Product development		963,614			858,902
Employee cost		1,155,843			1,151,537
Total operating expenses		6,353,432			5,709,685

Income (loss) from operations		1,001.884			3,123,215

Other income (expense), net:
Interest income		48,748			10,514
Foreign exchange gain/(loss)		45,687			(10,046	)
Interest expense		(195,921	)		(172,443	)
Total other income (expense), net		(101,486	)		(171,975	)

Income (loss) before benefit/(provision) for taxes		900,398			2,951,240
Income tax benefit/(provision)		(202,590	)		(714,515	)
Net income (loss)		697,808			2,236,725
Less: Net loss attributable to non-controlling interests		-			-
Net income (loss) attributable to stockholders	$	697,808		$	2,236,725

Revenue

In the six months ended September 30, 2024, two large contracts were won totaling $1.4M in total revenue, resulting in an exceptional six months. Overall, net revenue was $7,895,154, a decrease of $1,450,741, or 16%, from the prior period ended September 30, 2024. FatPipe continued to execute successfully on its GTM strategy with sales steady YoY when excluding the large contract wins.

Cost of Revenue

In the six months ended September 30, 2025, our cost of revenue was $539,838, an increase of $26,843, or 5%, from the prior period ended September 30, 2024. Cost of revenue increased as higher costs of inputs increased due to macroeconomic factors. The cost of revenue includes costs associated with providing services to our customers, such as costs associated with hosting our cloud services.

Gross Profit and Gross Margin

In the six months ended September 30, 2025, our gross profit was $7,355,316, a decrease of $1,477,584, or 17%, from prior period. The decrease in gross profit reflects the effect of the two large contracts during the prior period.

Our gross margin decreased to 93% in the six months ended September 30, 2025 from 95% in the prior period reflecting increased tariffs and transportation costs.

Sales and Marketing Expense

In the six months ended September 30, 2025, our sales and marketing expense was $2,254,301, an increase of $319,974, or 17%, compared to the prior period, primarily due to an increase in salary expenses as FatPipe invested in scaling sales headcount across its sales divisions to invest in long-term growth. This is in line with the Use of Funds guidelines disclosed in the previously filed S-1.

General and Administrative Expense

In the six months ended September 30, 2025, our general and administrative expense was $1,979,674, an increase of $214,756 compared to the prior period. General and administrative expenses increased primarily due to $625,220 in non-cash stock-based compensation expense recorded in the second quarter, offset by overall cost cutting via automation efforts in 2025. Excluding non-cash stock-based compensation, G&A decreased by 23%.

Product Development Expense

SEC Form 10-Q filed by FatPipe Inc.