Fatpipe Inc 10-Q for FY2027 Q2
Fatpipe Inc (FATN)
About this 10-Q
Fatpipe Inc filed this 10-Q on November 4, 2026, covering the quarter ended September 30, 2026 (FY2027 Q2).
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $4.83M
- up 22.1% from $3.96M a year earlier
- Net income
- $1.2M
- compared with a net loss of $43.39K a year earlier
- Diluted EPS
- $0.09
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from: _____________to______________
Commission
File Number:
FATPIPE, INC.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
(The NASDAQ Capital Market) |
Securities registered pursuant to Section 12(g) of the Act:
None.
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.
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).
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 ☐ |
| 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 4, 2026, there were shares of the Company’s common stock issued and outstanding.
TABLE OF CONTENTS
| i |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Financial Statements
Table of Contents
| 1 |
FatPipe Inc and Subsidiaries
Consolidated Balance Sheets
| September 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| Contracts receivable - current, net | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right of use assets, net | ||||||||
| Contracts receivable - non current, net | ||||||||
| Other assets | ||||||||
| Deferred tax asset | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ||||||||
| Operating lease liabilities, current | ||||||||
| Notes payable, current | ||||||||
| Total current liabilities | ||||||||
| Notes payable, non-current | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Other non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
| 2 |
FatPipe Inc and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Product development | ||||||||||||||||
| Employee cost | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Income (loss) from operations | ( | ) | ||||||||||||||
| Other income (expense), net: | ||||||||||||||||
| Interest income | ||||||||||||||||
| Foreign exchange gain/(loss) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income (loss) before benefit/(provision) for taxes | ( | ) | ||||||||||||||
| Income tax benefit/(provision) | ( | ) | ||||||||||||||
| Net income | $ | $ | ( | ) | $ | $ | ||||||||||
| Net income per common share - basic | $ | $ | ( | ) | $ | $ | ||||||||||
| Net income per common share - diluted | $ | $ | ( | ) | $ | $ | ||||||||||
| Weighted average common shares outstanding - basic | ||||||||||||||||
| Weighted average common shares outstanding - diluted | ||||||||||||||||
| Net income | $ | $ | ( | ) | $ | $ | ||||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other comprehensive income, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ||||||||||
| 3 |
FatPipe Inc and its Subsidiaries
Consolidated Statements of Stockholders’ Equity
| Shares | Amount | capital | Earnings | Income | Equity | |||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Common stock | Additional paid in | Retained | Other Comprehensive | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | capital | Earnings | Income | Equity | |||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Issuance of shares pursuant to initial public offering | ||||||||||||||||||||||||
| Offering costs | - | ( | ) | ( | ||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ||||||||||||||||||||
| Balance as of June 30, 2025 (unaudited) | ||||||||||||||||||||||||
| Shares issued for cash and services | ||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ||||||||||||||||||||
| Balance as of September 30, 2025 (unaudited) | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Reclassification between par value and additional paid-in capital | - | ( | ) | |||||||||||||||||||||
| Shares issued for employee and consultant services | ||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ||||||||||||||||||||
| Balance as of June 30, 2026 (unaudited) | ||||||||||||||||||||||||
| Balance | ||||||||||||||||||||||||
| Shares issued for employees and board members | ||||||||||||||||||||||||
| Shares issued for employees, consultant services and board members | ||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Net income (loss) | - | |||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ||||||||||||||||||||
| Balance as of September 30, 2026 (unaudited) | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | |||||||||||||||||||
| 4 |
FatPipe Inc and its Subsidiaries
Consolidated Statements of Cash Flows
| 2026 | 2025 | |||||||
| Six Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock based compensation | ||||||||
| Provisions for credit losses, net | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Contracts receivable | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Other non current liabilities | ( | ) | ( | ) | ||||
| Operating lease liability, net | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Net repayment of debt | ( | ) | ( | ) | ||||
| Proceeds from issuance of common stock for cash | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents: | ||||||||
| Beginning of the period | ||||||||
| End of the period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| 5 |
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 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”), 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 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” or “IPO”), an aggregate of shares of the Company’s common stock, no par value per share (the “Common Stock”), at an initial public offering price of $ 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 “SEC”) 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 shares of common stock, including
an exercise of the over-allotment option by the underwriters. The total gross proceeds to the Company from the Offering, and before deducting
discounts and expenses, were approximately $
The Common Stock commenced trading on The Nasdaq Capital Market 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.
| 6 |
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 (“Limited”). All significant intercompany transactions and balances have been eliminated.
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
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies a five-step model: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) the entity satisfies the performance obligations.
| 7 |
The Company derives its revenue from three primary sources, each of which is delivered through subscription-based or service contracts:
Software product and license revenue. Software product and license revenue is generated through the sale of term licenses for our proprietary SD-WAN, SASE, NMS, and cybersecurity software, including delivery of the related network server hardware components, where applicable. The Company has determined that delivery of the software license, including any related network server hardware, represents a single performance obligation that is satisfied at a point in time when control of the product transfers to the customer. Accordingly, the Company recognizes software product and license revenue at the point of delivery or transfer of control.
Service and support revenue. Service and support revenue is generated through the provision of technical support, software updates, monitoring services, and other ongoing services associated with the customer’s subscription. The Company has determined that these services represent a single performance obligation satisfied over time. Service and support revenue is recognized ratably over the contractual term of the customer’s subscription, which generally ranges from 36 to 60 months.
Consulting and other revenue. Consulting and other revenue is generated primarily through FatPipe Technologies, which provides networking, cybersecurity, programming, and professional services on a project basis. Revenue from these arrangements is recognized over time, as services are rendered, in accordance with the terms of the underlying customer contract.
Customer contracts may contain multiple performance obligations, including the delivery of software licenses, technical support, implementation, configuration, and training services. The Company allocates the transaction price to each performance obligation based on the relative standalone selling price of each obligation. The Company has selected the cost of technical support personnel plus a variable margin as the standalone selling price for service and support, with the residual contract value allocated to software product and license delivery. The Company has consistently applied this methodology across all periods presented.
Customer contracts are typically billed monthly. Amounts billed in advance of revenue recognition are recorded as deferred revenue. Amounts representing the future contractual rights to consideration in exchange for delivered software products and licenses are recorded as contracts receivable.
Remaining Performance Obligations
SCHEDULE OF REMAINING PERFORMANCE OBLIGATION
Remaining performance obligations represent contracted revenue that has not yet been recognized as the related performance obligations have not been satisfied. The Company’s remaining performance obligations as of September 30, 2026 and March 31, 2026 consisted of the following:
| September 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Product | $ | $ | ||||||
| Service | ||||||||
| Total | ||||||||
| Short Term – RPO – within 12 months | ||||||||
| Long Term – RPO – from 13 to 36 months | ||||||||
| Long Term RPO (37 month to 60 months) | ||||||||
| Total | $ | $ | ||||||
| Remaining Performance Obligations | $ | $ | ||||||
Amount to be recognized as revenue over next 12 months
SCHEDULE OF DEFERRED RECOGNIZED REVENUE
| September 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Deferred Revenue | $ | $ | ||||||
| Deferred Revenue | $ | $ | ||||||
| 8 |
Deferred Revenue
| September 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Product | $ | $ | ||||||
| Service | ||||||||
| Total | $ | $ | ||||||
| September 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Current | $ | $ | ||||||
| Non-Current | ||||||||
| Total | $ | $ | ||||||
Contract Balances
SCHEDULE OF CONTRACT BALANCES
| 2026 | 2025 | |||||||
| Six Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Allowance at beginning of period | $ | ( | ) | $ | ( | ) | ||
| (Provisions) / reversal | ( | ) | ( | ) | ||||
| Write-offs | ||||||||
| Allowance at end of period | $ | ( | ) | $ | ( | ) | ||
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.
Disaggregation of Revenue – By Type
SCHEDULE OF DISAGGREGATED REVENUE
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Product revenue | $ | $ | $ | $ | ||||||||||||
| Service revenue | ||||||||||||||||
| Consulting revenue | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
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. |
| 9 |
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 | ||
| Office equipment and computers | ||
| Vehicles |
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
| 10 |
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, 2026 and March 31, 2026.
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
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation — Stock Compensation. Compensation expense for share-based awards is measured at fair value at the grant date and recognized as expense, net of estimated forfeitures, on a straight-line basis over the requisite service period. Awards are made under the FatPipe, Inc. 2024 Equity Incentive Plan adopted in connection with the Company’s initial public offering. The Company recognized stock-based compensation expense of $ during the six months ended September 30, 2026, compared to $ during the six months ended September 30, 2025, which is included within general and administrative expenses in the consolidated statements of operations.
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.
| 11 |
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 is primarily concentrated in the United States for trade accounts receivable and revenue.
Disaggregation of Revenue – By Geography
SCHEDULE OF REVENUE FROM GEOGRAPHIC CONCENTRATIONS
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| US | $ | $ | $ | $ | ||||||||||||
| Rest of the World | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
At
September 30, 2026, the carrying amount of cash was $
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
SCHEDULE OF CONCENTRATION RISK
| Partner | 2026 | 2025 | ||||||
| Six Months Ended | ||||||||
| September 30, | ||||||||
| Partner | 2026 | 2025 | ||||||
| Partner A (%) | % | % | ||||||
| Partner B (%) | % | % | ||||||
| Partner C (%) | % | % | ||||||
| Total | % | % | ||||||
| Concentration risk percentage | % | % | ||||||
| Partner | 2026 | 2025 | ||||||
| Six Months Ended | ||||||||
| September 30, | ||||||||
| Partner | 2026 | 2025 | ||||||
| Partner A (Revenue) | $ | $ | ||||||
| Partner B (Revenue) | ||||||||
| Partner C (Revenue) | ||||||||
| Revenue | $ | $ | ||||||
| 12 |
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements. In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The Company adopted ASU 2023-07 effective for the fiscal year beginning April 1, 2025 on a retrospective basis. The adoption did not have a material impact on the Company’s condensed consolidated financial statements but resulted in additional disclosures about its single reportable segment.
In December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require disaggregated information about reconciling items in the rate reconciliation and additional disaggregation of income taxes paid by jurisdiction. The Company adopted ASU 2023-09 effective for the fiscal year beginning April 1, 2025 on a prospective basis. The adoption did not have a material impact on the Company’s consolidated financial statements but resulted in additional income tax disclosures.
Accounting Pronouncements Issued But Not Yet Adopted. In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40). The amendments require public business entities to disclose, in a tabular format, additional information about specified categories of expenses. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statement disclosures.
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, | |||||||
| 2026 | 2026 | |||||||
| Furniture and fixtures | $ | $ | ||||||
| Office equipment and computers | ||||||||
| Property and equipment, gross | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expense for the three months ended September 30, 2026 and 2025 amounted to $
NOTE 3: INTANGIBLE ASSETS, NET
The Company’s intangible assets consist of the following:
SCHEDULE OF INTANGIBLE ASSETS, NET
| 2026 | 2026 | |||||||
| September 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Product development | $ | $ | ||||||
| Patent costs | ||||||||
| Intangible assets, gross | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Amortization
expense for the three months ended September 30, 2026 and 2025 amounted to $
| 13 |
The estimated future amortization expense for the next five years and thereafter is as follows:
SCHEDULE OF ESTIMATED FUTURE AMORTIZATION EXPENSE
| Year ending March 31, | ||||
| 2027 (remaining six months) | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
NOTE 4: NOTE PAYABLE
In January 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 was repayable in full during the Fiscal year 2025-26.
In
March 2025, the Company obtained a $
On October 1, 2026, the Company repaid the Fortis Bank loan in full with proceeds from a new term loan with KeyBank National Association, and the Fortis Bank loan was terminated. See Note 11.
Future maturities of long-term debt as of September 30, 2026, which reflect the Fortis Bank loan prior to its refinancing, are as follows:
SCHEDULE OF FUTURE MATURITIES OF LONG-TERM DEBT
| Year Ended March 31, | Amount | |||
| 2027 (remaining six months) | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Thereafter | ||||
| Total principal repayments | ||||
| Less: Current portion | ||||
| Long-term portion of notes payable | $ | |||
Interest
expense was $
Short Term Debt
On
June 15, 2023, the Company received an interest-free loan of $
NOTE 5: STOCKHOLDERS’ EQUITY
ATM Offering
On
July 2, 2026, the Company filed a shelf registration statement on Form S-3 registering up to $
| 14 |
Net proceeds from any future issuances are expected to be used for working capital, general corporate purposes, and potential acquisitions. As of the issuance date of these financial statements, no securities had been issued or sold under the shelf registration statement or the ATM program. Any future issuances under these arrangements may increase the number of shares outstanding and result in shareholder dilution.
Authorized Capital Stock
On
June 19, 2024, our Board and Shareholders approved an increase in our authorized capital stock from shares of common stock,
Common Stock
We
are authorized to issue up to a total of shares of common stock,
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, 2026, the Company issued an aggregate of shares of common stock for employee services.
As of September 30, 2026, the total number of outstanding shares is .
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.
| 15 |
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.
SCHEDULE OF LEASE ASSETS AND LIABILITIES
| 2026 | 2026 | |||||||
| September 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Operating lease right of use assets, net | $ | $ | ||||||
| Operating lease liabilities — current | ||||||||
| Operating lease liabilities — non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
SCHEDULE OF OPERATING LEASE EXPENSE
| 2026 | 2025 | |||||||
| Six Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Operating lease expense: | ||||||||
| Operating lease cost | $ | $ | ||||||
| Short-term lease cost | ||||||||
| Total operating lease expense | $ | $ | ||||||
SCHEDULE OF CASH PAID MEASUREMENT OF LEASE LIABILITIES
| 2026 | 2025 | |||||||
| Six Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Operating cash flows for operating leases | $ | $ | ||||||
| Right-of-use assets obtained in exchange for new lease liabilities | $ | $ | ||||||
SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES
| Year Ended March 31, | Operating leases | |||
| 2027 (remaining six months) | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total lease obligations | ||||
| Less: Current portion | ||||
| Long-term portion of lease obligations | $ | |||
NOTE 7: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
The following is a summary of accrued expenses and other current liabilities:
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| September 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Provision for tax | $ | $ | ||||||
| Accrued employer expenses | ||||||||
| Credit card payables | ||||||||
| Other current liabilities | ||||||||
| Provisions | ||||||||
| $ | $ | |||||||
| 16 |
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 $
The
Company had 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 $
NOTE 9: INCOME TAXES
The Company records its interim income tax provision (benefit) based on the estimated annual effective tax rate expected to apply for the full fiscal year, adjusted for discrete items recognized in the period, in accordance with ASC 740-270, Income Taxes — Interim Reporting.
For
the three months ended September 30, 2026, the Company recognized an income tax benefit of $
The income tax benefit for the three and six months ended September 30, 2026 reflects a change in estimate, recognized as a discrete item in each quarter of the current fiscal year, relating to the phased reduction of a previously accrued income tax payable balance following the Company’s application of available net operating loss carryforwards. Consistent with ASC 740-270, this discrete item was recognized in the period in which it arose and was excluded from the estimated annual effective tax rate applied to ordinary income.
NOTE 10. 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 11. SUBSEQUENT EVENTS:
The Company evaluated the subsequent events through November 4, 2026, the date at which the financial statements were issued.
Refinancing of Note Payable
On
October 1, 2026, the Company entered into a $
Acquisition of ViewVertical Technologies LLC
On
October 1, 2026, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) to acquire
| 17 |
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 contains 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 report. |
| 18 |
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 report 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 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 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.
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, and NMS software solutions, each of which is typically offered to our 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. 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.
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.
| 19 |
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.
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”), 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.
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, and NMS 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.
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.
| 20 |
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.
| 21 |
Results of Operations
For the Three Months Ended September 30, 2026 and 2025
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| Revenues | $ | 4,834,061 | $ | 3,959,231 | ||||
| Cost of revenues | 484,933 | 312,904 | ||||||
| Gross profit | 4,349,128 | 3,646,327 | ||||||
| Operating expenses: | ||||||||
| Sales and marketing | 1,340,959 | 1,202,636 | ||||||
| General and administrative | 1,062,395 | 1,392,675 | ||||||
| Product development | 524,781 | 489,157 | ||||||
| Employee cost | 576,338 | 562,652 | ||||||
| Total operating expenses | 3,504,473 | 3,647,120 | ||||||
| Income (loss) from operations | 844,655 | (793 | ) | |||||
| Other income (expense), net: | ||||||||
| Interest income | 34,368 | 42,949 | ||||||
| Foreign exchange gain/(loss) | 53,638 | 27,895 | ||||||
| Interest expense | (101,846 | ) | (126,033 | ) | ||||
| Total other income (expense), net | (13,840 | ) | (55,189 | ) | ||||
| Income (loss) before benefit/(provision) for taxes | 830,815 | (55,982 | ) | |||||
| Income tax benefit/(provision) | 370,815 | 12,595 | ||||||
| Net income | $ | 1,201,630 | $ | (43,387 | ) | |||
Revenue
In Q2 2027, the current quarter ended September 30, 2026, net revenue was $4,834,061, an increase of $874,830, or 22%, from the prior period ended September 30, 2025. Product revenue was $3,322,745 compared to $2,420,579 in the prior period, an increase of $902,166, or 37%, reflecting increased sales of our product solutions as FatPipe continued to execute on its GTM strategy. Service revenue increased by $12,030, while consulting revenue decreased by $39,366 due to the timing of consulting engagements.
Cost of Revenue
In the three months ended September 30, 2026, our cost of revenue was $484,933, an increase of $172,029, or 55%, from the prior period ended September 30, 2025. Cost of revenue increased in line with higher product sales volumes. 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, 2026, our gross profit was $4,349,128, an increase of $702,801, or 19%, reflecting the increase in net revenue.
Our gross margin decreased to 90% in the three months ended September 30, 2026 from 92% in the prior period, reflecting a higher proportion of product sales.
| 22 |
Sales and Marketing Expense
In the three months ended September 30, 2026, our sales and marketing expense was $1,340,959, an increase of $138,323, or 12%, compared to the prior period. This was primarily due to increased sales headcount and advertising and promotional efforts to support revenue growth.
General and Administrative Expense
In the three months ended September 30, 2026, our general and administrative expense was $1,062,395, a decrease of $330,280, or 24%, compared to the prior period, primarily due to $625,220 in non-cash stock-based compensation expense recorded in the second quarter of the prior year, with $14,750 expense in the current quarter.
Product Development Expense
Product development expense in the three months ended September 30, 2026 was $524,781, an increase of $35,624, or 7%, compared to the prior period, as the Company continued its development plans for its cybersecurity and monitoring products.
Employee Cost Expense
Employee cost expenses in the three months ended September 30, 2026 were $576,338, an increase of $13,686, or 2%, compared to the prior period, attributable to inflation adjusted salaries.
Depreciation and Amortization Expense
Depreciation and amortization expense in the three months ended September 30, 2026 was $42,426, a decrease of $61,682, compared to $104,108 in the prior period. These expenses are categorized under general and administrative expenses.
Other Income (Expense)
Interest income during the three months ended September 30, 2026 was $34,368 as compared to $42,949 in the prior fiscal year period.
Interest expense during the three months ended September 30, 2026 was $101,846, as compared to $126,033 in the prior fiscal year period. The decrease was due to the lower outstanding loan balance.
The foreign exchange gain/(loss) results from currency conversion from U.S. dollars to Indian rupees.
For the Six Months Ended September 30, 2026 and 2025
| Six Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| Revenues | $ | 9,865,599 | $ | 7,895,154 | ||||
| Cost of revenues | 874,995 | 539,838 | ||||||
| Gross profit | 8,990,604 | 7,355,316 | ||||||
| Operating expenses: | ||||||||
| Sales and marketing | 2,696,209 | 2,254,301 | ||||||
| General and administrative | 2,226,101 | 1,979,674 | ||||||
| Product development | 1,051,826 | 963,614 | ||||||
| Employee cost | 1,270,348 | 1,155,843 | ||||||
| Total operating expenses | 7,244,484 | 6,353,432 | ||||||
| Income (loss) from operations | 1,746,120 | 1,001,884 | ||||||
| Other income (expense), net: | ||||||||
| Interest income | 76,050 | 48,748 | ||||||
| Foreign exchange gain/(loss) | 61,006 | 45,687 | ||||||
| Interest expense | (196,958 | ) | (195,921 | ) | ||||
| Total other income (expense), net | (59,902 | ) | (101,486 | ) | ||||
| Income (loss) before benefit/(provision) for taxes | 1,686,218 | 900,398 | ||||||
| Income tax benefit/(provision) | 741,740 | (202,590 | ) | |||||
| Net income | $ | 2,427,958 | $ | 697,808 | ||||
Revenue
In the six months ended September 30, 2026, net revenue was $9,865,599, an increase of $1,970,445, or 25%, from the prior period ended September 30, 2025. Product revenue was $6,861,479 compared to $4,812,882 in the prior period, an increase of $2,048,597, or 43%, as FatPipe continued to execute successfully on its GTM strategy. Service revenue increased by $3,130, while consulting revenue decreased by $81,282 due to the timing of consulting engagements.
Cost of Revenue
In the six months ended September 30, 2026, our cost of revenue was $874,995, an increase of $335,157, or 62%, from the prior period ended September 30, 2025. Cost of revenue increased in line with higher product sales volumes. 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, 2026, our gross profit was $8,990,604, an increase of $1,635,288, or 22%, from the prior period. The increase in gross profit reflects the increase in net revenue.
Our gross margin decreased to 91% in the six months ended September 30, 2026 from 93% in the prior period, reflecting a higher proportion of product sales.
Sales and Marketing Expense
In the six months ended September 30, 2026, our sales and marketing expense was $2,696,209, an increase of $441,908, or 20%, compared to the prior period, primarily due to increased sales headcount and advertising and promotional efforts to support revenue growth.
General and Administrative Expense
In the six months ended September 30, 2026, our general and administrative expense was $2,226,101, an increase of $246,427, or 12%, compared to the prior period. Non-cash stock-based compensation expense was $219,040 in the six months ended September 30, 2026, compared to $625,220 in the prior period. Excluding non-cash stock-based compensation, G&A increased primarily due to provisioning contract impairment expenses during the year as opposed to at the year end.
| 23 |
Product Development Expense
Product development expense in the six months ended September 30, 2026 was $1,051,826, an increase of $88,212, or 9%, compared to the prior period, as the Company continued its development plans for its cybersecurity and monitoring products.
Employee Cost Expense
Employee cost expenses in the six months ended September 30, 2026 were $1,270,348, an increase of $114,505, or 10%, compared to the prior period, attributable to headcount added to support revenue growth.
Depreciation and Amortization Expense
Depreciation and amortization expense in the six months ended September 30, 2026 was $85,540, a decrease of $110,525, compared to $196,065 in the prior period. These expenses are categorized under general and administrative expenses.
Other Income (Expense)
Interest income during the six months ended September 30, 2026 was $76,050 as compared to $48,748 in the prior fiscal year period.
Interest expense during the six months ended September 30, 2026 was $196,958, as compared to $195,921 in the prior fiscal year period.
The foreign exchange gain/(loss) results from currency conversion from U.S. dollars to Indian rupees.
Income Tax Benefit (Provision)
In the three months ended September 30, 2026, the Company recognized an income tax benefit of $370,815, compared to an income tax benefit of $12,595 in the prior period. In the six months ended September 30, 2026, the Company recognized an income tax benefit of $741,740, compared to an income tax provision of $202,590 in the prior period. The current-period benefit reflects a change in estimate, recognized as a discrete item in each quarter of the current fiscal year, relating to the phased reduction of a previously accrued income tax payable balance following the Company’s application of available U.S. federal net operating loss carryforwards against taxable income. The Company’s effective tax rate applicable to ordinary income for the period was minimal as a result of the utilization of net operating loss carryforwards. Consistent with interim reporting guidance, the change in estimate was recognized discretely and excluded from the estimated annual effective tax rate applied to ordinary income.
Liquidity and Capital Resources
We believe we have sufficient sources of funding to meet our business requirements and plans for the next 12 months and in the longer term. Our primary sources of liquidity for funding our strategic business requirements are our cash and cash equivalents, cash generated by operations, and borrowings available under our revolving line of credit. We may also raise additional capital through our at-the-market offering program.
To fund our cash requirements in the ordinary course of business, we anticipate that we will continue to primarily rely on operating cash flows, supplemented by our total cash and cash equivalents and borrowings available under the Revolving Facility described below. Our capital requirements, including but not limited to, servicing our debt and lease obligations and fixed asset purchases, will depend on many factors, including our growth rate and the timing and extent of operating expenses.
On October 1, 2026, we entered into a secured revolving line of credit of up to $1.5 million with KeyBank National Association (the “Revolving Facility”), which is available for working capital and matures on September 30, 2027. Borrowings under the Revolving Facility bear interest at the Adjusted Daily SOFR Index plus 3.00%, and availability is subject to our compliance with the financial and other covenants described under “Debt” below. As of November 4, 2026, no amounts were outstanding under the Revolving Facility.
On July 2, 2026, we filed a shelf registration statement on Form S-3 registering up to $20.0 million of common stock and/or debt securities and entered into an At-the-Market Offering Agreement with H.C. Wainwright & Co., LLC, under which we may offer and sell up to $10.0 million of our common stock from time to time (the “ATM program”). The ATM program forms part of, and is not in addition to, the $20.0 million registered under the shelf registration statement. As of the date of this report, we had not sold any shares under the ATM program. Our ability to raise capital under the ATM program will depend on market conditions and the trading price of our common stock, and any sales would dilute our existing shareholders.
| 24 |
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements involving commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our financial condition, results of operations, liquidity, cash requirements or capital resources.
As the Company expands in the India and South Asian market, the Company can expect a lower gross margin from sales in that cost sensitive region. Further, the impact on margins will be offset by lower costs of sales, as the wages in that region are also lower than in the U.S. Also, general economic conditions, the demand for the Company’s offerings and changes in customer preferences in the future may have an impact on the revenue and income. In the future as the Company exhausts its net operating losses from the past, it will be expected to pay income taxes.
Debt
In March 2025, the Company obtained a $5 million term loan from Fortis Bank, of which $3 million was used to repay an existing term loan from a local bank. 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, 2026, the Company made principal payments totaling $183,586.
On October 1, 2026, subsequent to the end of the quarter, the Company refinanced the Fortis Bank loan with KeyBank National Association. The Company entered into a $4.5 million secured term loan (the “Term Loan”) and a secured revolving line of credit of up to $1.5 million available for working capital (the “Revolving Facility”), and used approximately $4.47 million of the Term Loan proceeds to repay the Fortis Bank loan in full. Borrowings under both facilities bear interest at the Adjusted Daily SOFR Index plus 3.00%, compared with the Prime Rate plus 1.00% under the Fortis Bank loan. Based on benchmark rates at the time of the refinancing, the Company expects an approximately 110 basis point reduction in its annual borrowing rate; actual savings will depend on changes in benchmark rates and outstanding balances. The Term Loan requires 35 monthly principal payments of $75,000 beginning November 1, 2026, plus accrued interest, with the remaining balance of approximately $1.9 million due at maturity on October 1, 2029. The Revolving Facility matures on September 30, 2027. The facilities are guaranteed by the Company’s subsidiary, FatPipe Technologies, Inc., are secured by substantially all personal property assets of the Company and FatPipe Technologies, Inc., and require the Company to maintain a ratio of Total Funded Debt to EBITDA of no greater than 2.50 to 1.00 and a Fixed Charge Coverage Ratio of at least 1.20 to 1.00, each tested quarterly. As of November 4, 2026, no amounts were outstanding under the Revolving Facility. See Note 11 to the consolidated financial statements.
Future maturities of long-term debt as of September 30, 2026, which reflect the Fortis Bank loan prior to its refinancing, are as follows:
| Year Ended March 31, | Amount | |||
| 2027 (remaining six months) | 207,811 | |||
| 2028 | 422,007 | |||
| 2029 | 456,724 | |||
| 2030 | 493,404 | |||
| 2031 | 533,031 | |||
| Thereafter | 2,327,720 | |||
| Total principal repayments | 4,440,697 | |||
| Less: Current portion | 418,815 | |||
| Long-term portion of notes payable | $ | 4,021,882 | ||
Interest expense was $101,846 and $126,033 for the three months ended September 30, 2026 and 2025, respectively, and $196,958 and $195,921 for the six months ended September 30, 2026 and 2025, respectively.
Short Term Debt
On June 15, 2023, the Company received an interest-free loan of $120,000 from Stay in Business Inc., a related party, repayable on demand. An additional loan of $13,652 was received under the same arrangement during the year ended March 31, 2026. The Company repaid the outstanding balance in full during the fiscal year ended March 31, 2026, and there was no outstanding balance as of September 30, 2026 or March 31, 2026.
| 25 |
Cash Flows
The following table sets forth certain combined statements of cash flow data:
| Six Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (1,786,279 | ) | $ | (108,769 | ) | ||
| Net cash used in investing activities | (3,522 | ) | (35,447 | ) | ||||
| Net cash provided by financing activities | (183,586 | ) | 3,581,185 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (138,444 | ) | (128,498 | ) | ||||
| Net change in cash and cash equivalents | $ | (2,111,831 | ) | $ | 3,308,471 | |||
Operating Activities
Net cash used in operating activities in the six months ended September 30, 2026 was $1,786,279 compared to $108,769 in the prior period. The increase in cash used was primarily due to growth in contracts receivable of $3,135,375 and a decrease in accrued expenses and other current liabilities of $740,295, partially offset by higher net income.
Investing Activities
Net cash used in investing activities in the six months ended September 30, 2026 was $3,522 as compared to $35,447 in the prior period. Cash used in investing activities was primarily due to the purchase of equipment.
Financing Activities
Net cash used in financing activities in the six months ended September 30, 2026 was $183,586, consisting of repayments of the term loan. In the six months ended September 30, 2025, net cash provided by financing activities was $3,581,185, which included $3,867,472 in proceeds from the Company’s April 2025 IPO, partially offset by $286,287 in repayment of debt.
Non-GAAP Financial Measures
In addition to our financial results determined in accordance with the generally accepted accounting principles in the United States (“GAAP”), our management uses adjusted earnings before interest, taxes, depreciation, and amortization expenses to net income (“Adjusted EBITDA”), a non-GAAP measure, as a key measure in operating our business. We use Adjusted EBITDA to make strategic decisions, establish business plans and forecasts, identify trends affecting our business, and evaluate performance. For example, we use Adjusted EBITDA as a measure of our operating performance. Adjusted EBITDA is presented for supplemental informational purposes only, should not be considered a substitute for, or a more meaningful measure than, financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation is provided below for Adjusted EBITDA to the most directly comparable financial measure presented in accordance with GAAP. Investors are encouraged to review the related GAAP financial measure and the reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measure. Impairment of legacy contract assets represents the portion of contract provision made for legacy contracts.
In the six months ended September 30, 2026, our Adjusted EBITDA was $2,450,700, an increase of $627,531 compared to $1,823,169 in the prior fiscal year period, primarily due to higher revenues and operating income.
| 26 |
| Six Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net income | $ | 2,427,958 | $ | 697,808 | ||||
| Impairment of legacy contract assets | 400,000 | - | ||||||
| Stock-based compensation | 219,040 | 625,220 | ||||||
| Non-GAAP net income | 3,046,998 | 1,323,028 | ||||||
| Depreciation and amortization | 85,540 | 196,065 | ||||||
| Income tax (benefit)/provision | (741,740 | ) | 202,590 | |||||
| Interest expense | 196,958 | 195,921 | ||||||
| Foreign exchange gain/(loss) | (61,006 | ) | (45,687 | ) | ||||
| Interest income | (76,050 | ) | (48,748 | ) | ||||
| Adjusted EBITDA | $ | 2,450,700 | $ | 1,823,169 | ||||
Recurring Billings
FatPipe GAAP revenue is aligned to new bookings of contracts. Billings follow customer deployments. As booked revenue converts to billings, FatPipe has seen strong billings growth, with total billings billed on a monthly basis up 55% YoY. As this faster-growing revenue segment scales, it represents a larger portion of FatPipe’s total income.
Off-Balance Sheet Arrangements
During the period presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.
Critical Accounting Policies and Estimates
The application of our accounting policies may require us to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expense, and the accompanying disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time the estimate was made.
On an ongoing basis, management evaluates its estimates, including those related to intangible assets, and deferred taxes. We base our estimates, assumptions and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from the results implied by these estimates and judgments under different assumptions or conditions.
Intangible Assets
Our financial statements include IP-related intangible assets consisting primarily of legal and related costs associated with our patents and capitalized lease obligations adjusted by accumulated amortization. The identification and recognition of those intangible assets involve significant judgements, relating to, among other things, the projected cash flows attributable to these intangible assets and the estimated useful lives of these intangible assets. We amortize intangible assets that are subject to amortization over their estimated useful lives. The useful lives are determined by management at the time of creation of the intangible assets and based on historical experience and the economic life of the underlying technology and are regularly reviewed for appropriateness. We perform a quarterly review of significant finitely lived identified intangible assets to make a judgement on whether facts and circumstances indicate that the carrying amount may not be recoverable and an impairment may be required.
These reviews can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy.
| 27 |
Deferred Taxes
Deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the combined financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. Use of the term “more likely than not” indicates the likelihood of occurrence is greater than 50%.
Accordingly, the need to establish valuation allowances for deferred tax assets is continually assessed based on a more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of profitability and taxable income, the duration of statutory carryforward periods, our experience with the utilization of operating loss and tax credit carryforwards before expiration and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified.
Implications of being an Emerging Growth Company
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies” including, but not limited to:
| ● | being permitted to present only two years of audited financial statements and only two years of related disclosure in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report; |
| ● | being permitted to provide less extensive narrative disclosure than other public companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; |
| ● | being permitted to utilize exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved; |
| ● | being permitted to defer complying with certain changes in accounting standards; and |
| ● | being permitted to use test-the-waters communications with qualified institutional buyers and institutional accredited investors. |
We intend to take advantage of these and other exemptions available to “emerging growth companies.” We could remain an “emerging growth company” until the earliest of (i) the last day of our fiscal year following the fifth anniversary of the closing of the IPO, (ii) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (iii) the last day of our fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (which would occur if the market value of our equity securities that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter), or (iv) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.
The JOBS Act permits an “emerging growth company” like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to delay such adoption of new or revised accounting standards.
Smaller Reporting Company
We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700 million as of the last trading day of our second quarter and our annual revenue is less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million as of the last trading day of our second quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million as of the last trading day of our second quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. For example, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
| 28 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms and is accumulated and communicated to our management, as appropriate, in order to allow timely decisions in connection with required disclosure.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. As required by Rule 13a-15(b) or Rule 15d-15(b) promulgated by the SEC under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report at the reasonable assurance level.
Changes in Internal Control
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.
| 29 |
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
There were no material changes in the risk factors we previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, filed with the SEC on May 18, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
None.
Repurchases
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
| # | Management contract or compensatory plan, contract, or arrangement. |
| * | Previously Filed |
| ** | To be filed by amendment. |
| 30 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FATPIPE, INC. | ||
| By: | /s/ Ragula Bhaskar, Ph.D. | |
Ragula Bhaskar, Ph.D Chief Executive Officer and Chairman | ||
| Date: November 4, 2026 | ||
| 31 |
Exhibit 31.1
Certification of Chief Executive Officer
I, Ragula Bhaskar, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Fatpipe, Inc. (the “registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 4, 2026 | |
| /s/ Ragula Bhaskar | |
| Ragula Bhaskar | |
| Chief Executive Officer |
Exhibit 31.2
Certification of Chief Financial Officer
I, Kanishka Ragula, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Fatpipe, Inc. (the “registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 4, 2026 | |
| /s/ Kanishka Ragula | |
| Kanishka Ragula | |
| Chief Financial Officer |
Exhibit 32.1
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
I, Ragula Bhaskar, Chief Executive Officer of Fatpipe, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
| (i) | The Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2026 (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, and | |
| (ii) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated. |
| Date: November 4, 2026 | |
| /s/ Ragula Bhaskar | |
| Ragula Bhaskar | |
| Chief Executive Officer |
Exhibit 32.2
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
I, Kanishka Ragula, Chief Financial Officer of Fatpipe, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
| (i) | The Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2026 (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, and | |
| (ii) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated. |
| Date: November 4, 2026 | |
| /s/ Kanishka Ragula | |
| Kanishka Ragula | |
| Chief Financial Officer |