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 December 31, 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 February 02, 2026, 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 December 31, 2025 (unaudited) and March 31, 2025	2
		Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2025 and 2024 (unaudited)	3
		Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended December 31, 2025 and 2024 (unaudited)	4
		Consolidated Statements of Cash Flows for the Three and Nine Months Ended December 31, 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	29
	Item 4.	Controls and Procedures	29

Part II. Other Information			31
	Item 1	Legal Proceedings	31
	Item 1A	Risk Factors	31
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	31
	Item 5	Other Information	31
	Item 6	Exhibits	32
Signatures			33

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

	December 31,		March 31,
	2025		2025
	(Unaudited)
ASSETS
Current assets:
Cash	$	6,163,214	$	2,920,550
Accounts receivable, net		4,414,594		3,764,945
Inventory		167,348		419,677
Other current assets		153,550		666,376
Contracts receivable - current, net		5,670,124		5,191,136
Total current assets		16,568,830		12,962,684
Property and equipment, net		86,731		57,844
Intangible assets, net		764,800		1,048,620
Operating lease right of use assets, net		1,154,472		1,455,373
Contracts receivable - non current, net		13,345,249		12,307,266
Other assets		381,415		379,077
Deferred tax asset		76,905		76,905
Total assets	$	32,378,402	$	28,287,769

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	352,184	$	437,253
Accrued expenses and other current liabilities		3,861,321		3,863,096
Deferred revenue		1,098,571		1,358,632
Operating lease liabilities, current		394,128		366,677
Notes payable, current		417,323		463,422
Total current liabilities		6,123,527		6,489,080
Notes payable, non-current		4,183,321		4,642,317
Operating lease liabilities, non-current		800,033		1,114,067
Other non-current liabilities		111,343		116,988
Total liabilities		11,218,224		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 December 31, 2025 and March 31, 2025, respectively		131,245		130,265
Additional paid-in capital		5,954,817		1,588,105
Retained earnings		12,114,533		11,106,063
Accumulated other comprehensive income		2,959,583		3,100,884
Total stockholders’ equity		21,160,178		15,925,317
Total liabilities and stockholders’ equity	$	32,378,402	$	28,287,769

FatPipe Inc and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

	2025			2024			2025			2024
	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2025			2024			2025			2024
	(Unaudited)						(Unaudited)
Revenues	$	4,087,786		$	3,148,677		$	11,982,940		$	12,494,572
Cost of revenues		503,816			379,870			1,043,654			892,865
Gross profit		3,583,970			2,768,807			10,939,286			11,601,707

Operating expenses:
Sales and marketing		1,282,706			888,546			3,537,007			2,822,873
General and administrative		828,350			573,906			2,808,024			2,338,824
Product development		453,539			448,568			1,417,153			1,307,470
Employee cost		616,955			672,959			1,772,798			1,824,496
Total operating expenses		3,181,550			2,583,979			9,534,982			8,293,663

Income from operations		402,420			184,828			1,404,304			3,308,044

Other income (expense), net:
Interest income		41,145			15,342			89,893			25,856
Other Income		-			1,831			-			1,831
Foreign exchange gain/(loss)		61,361			60,506			107,048			50,460
Interest expense		(104,072	)		(118,081	)		(299,993	)		(290,524	)
Total other income (expense), net		(1,566	)		(40,402	)		(103,052	)		(212,377	)

Income before benefit/(provision) for taxes		400,854			144,426			1,301,252			3,095,667
Income tax benefit/(provision)		(90,192	)		(60,054	)		(292,782	)		(774,569	)
Net income		310,662			84,372			1,008,470			2,321,098
Less: Net income attributable to non-controlling interests		-			16,416			-			-
Net income attributable to stockholders	$	310,662		$	67,956		$	1,008,470		$	2,321,098

Net income (loss) per common share - basic and diluted	$	0.02		$	0.01		$	0.07		$	0.18
Weighted average common shares outstanding - basic and diluted		13,924,468			13,026,464			13,855,297			12,803,997

Net income	$	310,662		$	84,372		$	1,008,470		$	2,321,098
Other comprehensive income (loss):
Foreign currency translation adjustment		(12,803	)		304,188			(141,301	)		316,890
Total other comprehensive income (loss), net of tax		(12,803	)		304,188			(141,301	)		316,890
Comprehensive income		297,859			388,560			867,169			2,637,988
Less: Comprehensive loss attributable to non-controlling interests		-			-			-			-
Comprehensive income attributable to stockholders	$	297,859		$	388,560		$	867,169		$	2,637,988

FatPipe Inc and its Subsidiaries

Consolidated Statements of Stockholders’ Equity

	Shares		Amount		in capital			Earnings			Income			Equity			Interests			Equity
	Common stock				Additional paid			Retained			Accumulated Other Comprehensive			Total Fatpipe Stockholders’			Non-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			-			-			76,124			(112,654	)		(36,530	)
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			11,277,240			3,267,408			16,263,018			-			16,263,018
Issue of shares		-		-		-			-			-			-			-			-
Net income (loss)		-		-		-			84,372			-			84,372			-			84,372
Other comprehensive income		-		-		-			-			304,188			304,188			-			304,188
Balance as of December 31, 2024 (unaudited)		13,026,464	$	130,265	$	1,588,105		$	11,361,612		$	3,571,596		$	16,651,578		$	-		$	16,651,578

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
Shares issued for cash and services		98,000		980		707,240			-			-			708,220			-			708,220
Net loss		-		-					(43,387	)		-			(43,387	)		-			(43,387	)
Other comprehensive income		-		-		-			-			(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
Offering costs		-		-		(125,000	)		-			-			(125,000	)		-			(125,000	)
Net loss		-		-		-			310,662			-			310,662			-			310,662
Net income (loss)		-		-		-			310,662			-			310,662			-			310,662
Other comprehensive income		-		-		-			-			(12,803	)		(12,803	)		-			(12,803	)
Balance as of December 31, 2025 (unaudited)		13,924,468	$	131,245	$	5,954,817		$	12,114,533		$	2,959,583		$	21,160,178		$	-		$	21,160,178
Balance		13,924,468	$	131,245	$	5,954,817		$	12,114,533		$	2,959,583		$	21,160,178		$	-		$	21,160,178

FatPipe Inc and its Subsidiaries

Consolidated Statements of Cash Flows

	2025			2024
	Nine Months Ended
	December 31,
	2025			2024
	(Unaudited)
Cash Flows From Operating Activities
Net income	$	1,008,470		$	2,321,098
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		298,902			399,354
Allowance for contract receivables		89,555			101,950
Stock based compensation		625,220			-
Allowance for accounts receivables		-			505,053
Foreign exchange		-			(36,530	)
Bad debts written off during the year		-			52,942
Changes in operating assets and liabilities:
Accounts receivable		(649,649	)		(568,736	)
Contracts receivable		(1,606,526	)		(2,548,766	)
Inventories		252,329			(329,310	)
Right of use assets		-			(965,514	)
Other current assets		512,826			(99,913	)
Other assets		(2,338	)		(340,813	)
Accounts payable		(85,069	)		(85,855	)
Accrued expenses and other current liabilities		(1,775	)		800,663
Deferred revenue		(260,061	)		(366,813	)
Other non current liabilities		(64,070	)		(3,084	)
Operating lease liability, net		14,318			850,124
Net cash provided by (used in) operating activities		132,132			(314,150	)

Cash Flows From Investing Activities
Purchase of equipment		(43,969	)		(12,748	)
Net cash used in investing activities		(43,969	)		(12,748	)

Cash Flows From Financing Activities
Net repayment of debt		(446,670	)		-
Proceeds from debt		-			513,652
Issuance of shares pursuant to initial public offering		3,742,472			-
Net cash provided by financing activities		3,295,802			513,652

Effect of exchange rate changes on cash and cash equivalents		(141,301	)		316,890
Net change in cash and cash equivalents		3,242,664			503,644
Cash and cash equivalents:
Beginning of the period		2,920,550			1,112,519
End of the period	$	6,163,214		$	1,616,163

Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$	299,993		$	290,524

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 December 31, 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


	Nine Months Ended
	December 31,
	2025		2024
Product	$	1,194,553	$	392,549
Service		918,497		2,632,602
Total		2,113,050		3,025,151

Short Term – RPO – within 12 months		1,098,571		1,152,599
Long Term – RPO – from 13 to 36 months		176,296		909,416
Long Term RPO (37 month to 60 months)		838,183		963,136
Total	$	2,113,050	$	3,025,151

Amount to be recognized as revenue over next 12 months

SCHEDULE OF DEFERRED RECOGNIZED REVENUE

	December 31,		March 31,
	2025		2025
Deferred Revenue	$	1,098,571	$	1,358,632
Total	$	1,098,571	$	1,358,632

Deferred Revenue

	December 31,		March 31,
	2025		2024
Product	$	-	$	-
Service		1,098,571		1,358,632
Total	$	1,098,571	$	1,358,632

	December 31,		March 31,
	2025		2024
Current	$	1,098,571	$	1,358,632
Non-Current		-		-
Total	$	1,098,571	$	1,358,632

Contract balances

SCHEDULE OF CONTRACT BALANCES

	December 31,
	2025
Allowance for bad debts at the beginning of the period	$	(1,018,756	)
(Provisions) / reversal		139
Recoveries		-
Allowance for bad debts at the end of the period	$	(1,018,617	)

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


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2025		2024		2025		2024
Product revenue	$	2,572,879	$	1,953,706	$	7,385,761	$	8,546,999
Service revenue		898,127		438,956		2,757,209		1,918,287
Consulting revenue		616,780		756,015		1,839,970		2,029,286
Total	$	4,087,786	$	3,148,677	$	11,982,940	$	12,494,572

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 December 31, 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. The Company plans to review its provision for deferred taxes, which is included in accrued expenses and other current liabilities on the consolidated balance sheet, at the end of the fiscal year. The Company expects to adjust the current balance after calculation and utilization of its net operating loss carryforwards.

The Company’s subsidiary 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.


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
Revenue by Geography		2025		2024		2025		2024
US	$	3,009,237	$	3,104,411	$	11,363,192	$	11,741,366
Rest of the World		78,549		44,266		619,748		753,206
Revenue by geography	$	4,087,786	$	3,148,677	$	11,982,940	$	12,494,572

At December 31, 2025, the carrying amount of cash was $6,163,214 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 47.18% of the company’s consolidated revenues for the nine months ended December 31, 2025 and two major partners that accounted for 51.68% for the nine months ended December 31, 2024. As reflected in the table below, partner A contributed $5,138,047 or 42.88% in revenue for the nine months ended December 31, 2025, and $5,878,792 or 47.05% for the nine months ended December 31, 2024. Separately, Partner B contributed $356,401 or 2.97% for the nine months ended December 31, 2025, and $578,114 or 4.63% for the nine months ended December 31, 2024. Partner C contributed $158,939 or 1.33% in for the nine months ended December 31, 2025.

SCHEDULE OF CONCENTRATION RISK


	Nine Months Ended
	December 31,
Partner	2025			2024
Partner A (%)		42.88	%		47.05	%
Partner B (%)		2.97	%		4.63	%
Partner C (%)		1.33	%		0.00	%
Total		47.18	%		51.68	%


	Nine Months Ended
	December 31,
Partner	2025		2024
Partner A (Revenue)	$	5,138,047	$	5,878,792
Partner B (Revenue)		356,401		578,114
Partner C (Revenue)		158,939		-
Total	$	5,653,386	$	6,456,906

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

	December 31,			March 31,
	2025			2025
Furniture and fixtures	$	280,455		$	256,415
Office equipment and computers		511,135			493,873
Property and equipment, gross		791,590			750,288
Less: Accumulated depreciation		(704,859	)		(692,444	)
Property and equipment, net	$	86,731		$	57,844

Depreciation expense for the three months ended December 31, 2025 and 2024 amounted to $4,222 and $7,609, respectively. Depreciation expense for the nine months ended December 31, 2025 and 2024 amounted to $12,415 and $24,197, respectively.

NOTE 3: INTANGIBLE ASSETS, NET

The Company’s intangible assets consist of the following:

SCHEDULE OF INTANGIBLE ASSETS, NET

	December 31,			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		(7,244,473	)		(6,960,653	)
Intangible assets, net	$	764,800		$	1,048,620

Amortization expense for the three months ended December 31, 2025 and 2024 amounted to $95,949 and $125,052, respectively. Amortization expense for the nine months ended December 31, 2025 and 2024 amounted to $283,820 and $375,157, respectively.

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

Year ending March 31,
2026	$	22,272
2027		230,007
2028		156,350
2029		102,283
Thereafter		253,888
Total	$	764,800

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 nine months ended December 31, 2025, the Company made principal payments totaling $254,594.

Future maturities of long-term debt are as follows:

Year Ended March 31,
2026		417,323
2027		359,811
2028		392,588
2029		428,352
2030		467,373
Thereafter		2,535,197
Total principal repayments		4,600,644
Less: Current portion		417,323
Long-term portion of notes payable	$	4,183,321

Interest expense for the three months ended December 31, 2025 and 2024 amounted to $104,072 and $118,081, respectively. Interest expense for the nine months ended December 31, 2025 and 2024 amounted to $299,993 and $290,524, 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 nine months ended December 31, 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 nine months ended December 31, 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 nine months ended December 31, 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 December 31, 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.

	December 31,		March 31,
	2025		2025
Operating leases:
Operating lease right of use assets, net	$	1,154,472	$	1,455,373

Operating lease liabilities - current	$	394,128	$	366,677
Operating lease liabilities - Non-current		800,033		1,114,067
Total operating lease liabilities	$	1,194,161	$	1,480,744

SCHEDULE OF OPERATING LEASE EXPENSE


	Nine Months Ended
	December 31,
	2025		2024
Operating lease expense:
Operating Lease Cost	$	350,292	$	909,818
Short term Lease Cost		49,102		363,927
Total operating lease expense	$	399,394	$	1,273,745

Year Ended March 31,	Operating leases
2026	$	114,160
2027		467,203
2028		483,988
2029		188,299
2030		74,178
Total minimum lease payments		1,327,828
Less: imputed interest		(133,667	)
Total lease obligations		1,194,161
Less: Current portion		394,128
Long-term portion of lease obligations	$	800,033

NOTE 7: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

	December 31,		March 31,
	2025		2025
Provision for tax	$	3,260,086	$	2,967,305
Accrued employer expenses		364,778		18,969
Credit card payables		66,311		352,792
Employee payables		-		429,366
Other current liabilities		169,534		91,669
Provisions		612		2,995
	$	3,861,321	$	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 $67,997 and $51,833 for the nine months ended December 31, 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 nine months ended December 31, 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, and hence there was no need to record a liability.

NOTE 10. SUBSEQUENT EVENTS:

The Company evaluated the subsequent events through February 2, 2026, 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;

SEC Form 10-Q filed by FatPipe Inc.