# Fatpipe Inc: Form 10-Q for the period ended Sep 30, 2025

- Company: [Fatpipe Inc](/companies/fatn.md) (CIK 1993400)
- Form: 10-Q
- Filed: 2025-11-03
- Accepted by EDGAR: Nov 3, 2025, 16:31 ET
- Period: 2025-09-30
- Accession: 0001493152-25-020604
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1993400/000149315225020604/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1993400/000149315225020604/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-07-01 to 2025-09-30 | $4.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-04-01 to 2025-09-30 | $7.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-07-01 to 2025-09-30 | $312.9k | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2025-04-01 to 2025-09-30 | $539.8k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-07-01 to 2025-09-30 | $3.6m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-04-01 to 2025-09-30 | $7.4m | us-gaap:GrossProfit |
| Operating income | 3 months, 2025-07-01 to 2025-09-30 | −$793 | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-04-01 to 2025-09-30 | $1.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-07-01 to 2025-09-30 | $126.0k | us-gaap:InterestExpense |
| Interest expense | 6 months, 2025-04-01 to 2025-09-30 | $195.9k | us-gaap:InterestExpense |
| Income tax | 3 months, 2025-07-01 to 2025-09-30 | −$12.6k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-04-01 to 2025-09-30 | $202.6k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-07-01 to 2025-09-30 | −$43.4k | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-04-01 to 2025-09-30 | $697.8k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-07-01 to 2025-09-30 | $0.00 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-04-01 to 2025-09-30 | $0.05 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-07-01 to 2025-09-30 | $0.00 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-04-01 to 2025-09-30 | $0.05 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-07-01 to 2025-09-30 | 13,892,903 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-04-01 to 2025-09-30 | 13,820,522 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-04-01 to 2025-09-30 | −$108.8k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2025-09-30 | $6.2m | us-gaap:Cash |
| Current assets | at 2025-09-30 | $16.6m | us-gaap:AssetsCurrent |
| Total assets | at 2025-09-30 | $32.2m | us-gaap:Assets |
| Current liabilities | at 2025-09-30 | $6.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-09-30 | $11.3m | us-gaap:Liabilities |
| Long-term debt | at 2025-09-30 | $4.8m | us-gaap:LongTermDebt |
| Current portion of debt | at 2025-09-30 | $577.7k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-09-30 | $21.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 47,697 characters.

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

### Cautionary Statement Regarding Forward-Looking Information

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

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

- changes in the market acceptance of our software solutions and offerings;
- our ability to successfully execute on our growth strategy and enter into new markets;
- our ability to expand in existing markets;
- increased levels of competition;
- our relationships with our key customers;
- changes in customer preferences and the level of acceptance of our software services;
- our ability to retain and attract senior management and other key employees;
- our ability to quickly and effectively respond to new technological developments;
- our ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on the proprietary rights of the Company; and
- other risks, including those described in the “Risk Factors” section of this prospectus.

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

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

### Overview

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

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

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

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

### Industry

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

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

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

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

### Total Addressable Market

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

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

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

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

### FatPipe Software Solutions

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

### Components of Results of Operations

### Revenue

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

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

### Cost of Revenue

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

### Gross Profit

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

### Operating Expenses

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

### Marketing and Sales Expense

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

### General and Administrative Expense

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

### Product Development Expense

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

### Operating Results

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

### Results of Operations

### For the Three Months Ended September 30, 2025 and 2024

*(Unaudited)*

|  | Three Months Ended September 30, 2025 | 2024 |
| --- | ---: | ---: |
| Revenues | $3,959,231 | $5,595,576 \* |
| Cost of revenues | 312,904 | 229,315 |
| Gross profit | 3,646,327 | 5,366,261 |
| Operating expenses: |  |  |
| Sales and marketing | 1,202,636 | 919,392 |
| General and administrative (includes $625,220 of stock based comp in 6 months ended September 2025) | 1,392,675 | 1,183,796 |
| Product development | 489,157 | 435,402 |
| Employee cost | 562,652 | 564,298 |
| Total operating expenses | 3,647,120 | 3,102,888 |
| Income (loss) from operations | (793) | 2,263,373 |
| Other income (expense), net: |  |  |
| Interest income | 42,949 | (15,576) |
| Foreign exchange gain/(loss) | 27,895 | 17,380 |
| Interest expense | (126,033) | (86,411) |
| Total other income (expense), net | (55,189) | (84,607) |
| Income (loss) before benefit/(provision) for taxes | (55,982) | 2,178,766 |
| Income tax benefit/(provision) | 12,595 | (551,117) |
| Net income (loss) | (43,387) | 1,627,649 |
| Less: Net loss attributable to non-controlling interests | - | 16,416 |
| Net income (loss) attributable to stockholders | $(43,387) | $1,611,233 |

\*reflects a one time $1.4 MM contract

#### Revenue

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

#### Cost of Revenue

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

#### Gross Profit and Gross Margin

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

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

#### Sales and Marketing Expense

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

#### General and Administrative Expense

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

#### Product Development Expense

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

#### Employee Cost Expense

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

#### Depreciation and Amortization Expense

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

#### Other Income (Expense)

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

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

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

### For the Six Months Ended September 30, 2025 and 2024

*(Unaudited)*

|  | Six Months Ended September 30, 2025 | 2024 |
| --- | ---: | ---: |
| Revenues | $7,895,154 | $9,345,895 |
| Cost of revenues | 539,838 | 512,995 |
| Gross profit | 7,355,316 | 8,832,900 |
| Operating expenses: |  |  |
| Sales and marketing | 2,254,301 | 1,934,327 |
| General and administrative | 1,979,674 | 1,764,918 |
| Product development | 963,614 | 858,902 |
| Employee cost | 1,155,843 | 1,151,537 |
| Total operating expenses | 6,353,432 | 5,709,685 |
| Income (loss) from operations | 1,001.884 | 3,123,215 |
| Other income (expense), net: |  |  |
| Interest income | 48,748 | 10,514 |
| Foreign exchange gain/(loss) | 45,687 | (10,046) |
| Interest expense | (195,921) | (172,443) |
| Total other income (expense), net | (101,486) | (171,975) |
| Income (loss) before benefit/(provision) for taxes | 900,398 | 2,951,240 |
| Income tax benefit/(provision) | (202,590) | (714,515) |
| Net income (loss) | 697,808 | 2,236,725 |
| Less: Net loss attributable to non-controlling interests | - | - |
| Net income (loss) attributable to stockholders | $697,808 | $2,236,725 |

#### Revenue

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

#### Cost of Revenue

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

#### Gross Profit and Gross Margin

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

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

#### Sales and Marketing Expense

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

#### General and Administrative Expense

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

#### Product Development Expense

Product development expense in the six months ended September 30, 2025 was $963,614, an increase of $104,712 compared to the prior period, as the Company continued its development plans for its cybersecurity and satellite products. The Company has ramped up its product development in early 2025 following its April 2025 IPO.

#### Employee Cost Expense

Employee cost expenses in the six months ended September 30, 2025 were $1,155,843, an increase of $4,306, compared to the prior period. The increase in employee cost expense is attributable to the increase in professional services revenues.

#### Depreciation and Amortization Expense

Depreciation and amortization expense in the six months ended September 30, 2025 was $196,064, a decrease of $70,629, compared to the prior period. These expenses are categorized under general and administrative expenses.

#### Other Income (Expense)

Interest income during the six months ended September 30, 2025 was $48,748 as compared to $10,514 in the prior fiscal year. The increase was due to interest on larger cash reserves.

Interest expense during the six months ended September 30, 2025 was $195,921, as compared to $172,443 in the prior fiscal year. The increase was due to higher loan amount in 2025.

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

### 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. Cash generated by operations and cash raised from the public offering of our common stock are our primary source of liquidity for funding our strategic business requirements.

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, together with the cash raised from the public offering of our common stock conducted in April 2025. Our capital requirements, including but not limited to, servicing our lease obligations and fixed asset purchases, will depend on many factors, including our growth rate and the timing and extent of operating expenses.

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

Future maturities of long-term debt are as follows:

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

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

### Short Term Debt

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

### Cash Flows

The following table sets forth certain combined statements of cash flow data:

*(Unaudited)*

| Cash Flows From Operating Activities | Six Months Ended September 30, 2025 | 2024 |
| --- | ---: | ---: |
| Net income | $697,808 | $2,236,725 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| Depreciation and amortization | 196,065 | 266,692 |
| Income tax provision | 202,590 | 714,515 |
| Allowance for contract receivables | 66,502 | 133,847 |
| Stock based compensation | 625,220 | - |
| Allowance for accounts receivables | - | 492,772 |
| Bad debts written off during the year | - | 52,942 |
| Foreign exchange | - | 10,046 |
| Changes in operating assets and liabilities: |  |  |
| Accounts receivable | (569,676) | (689,442) |
| Contracts receivable | (1,008,768) | (2,664,195) |
| Inventories | 90,941 | (48,949) |
| Other current assets | 436,207 | (387,776) |
| Other assets | (23,728) | (2,228) |
| Accounts payable | (142,491) | (70,749) |
| Accrued expenses and other current liabilities | (369,329) | 205,505 |
| Deferred revenue | (257,917) | (356,837) |
| Other non current liabilities | (62,656) | 400 |
| Operating lease liability, net | 10,463 | (97,445) |
| Net cash used in operating activities | (108,769) | (204,175) |
| **Cash Flows From Investing Activities** |  |  |
| Purchase of equipment | (35,447) | (12,228) |
| Net cash used in investing activities | (35,447) | (12,228) |
| **Cash Flows From Financing Activities** |  |  |
| Net repayment of debt | (286,287) | - |
| Issuance of shares pursuant to initial public offering | 3,867,472 | - |
| Repayment of financing obligation of lease | - | (87,424) |
| Net cash provided by (used in) financing activities | 3,581,185 | (87,424) |
| Effect of exchange rate changes on cash and cash equivalents | (128,498) | 12,702 |
| Net change in cash and cash equivalents | 3,308,471 | (266,669) |
| Cash and cash equivalents: |  |  |
| Beginning of the period | 2,920,550 | 1,112,519 |
| End of the period | $6,229,021 | $845,850 |

#### Operating Activities

Net cash used in operating activities in the six months ended September 30, 2025 was $108,769 compared to $204,175 in the prior period. The increase in cash used in operating activities was primarily due to a lower net income in 2025.

#### Investing Activities

Net cash used in investing activities in the six months ended September 30, 2025 was $35,447 as compared to $12,228 in the prior period. Cash used in investing activities was primarily due to the purchase of furniture for office improvement.

#### Financing Activities

Net cash provided by financing activities in the six months ended September 30, 2025 was $3,581,185. Cash provided by financing activities included $3,867,472 in proceeds from the Company’s April 2025 IPO and proceeds from issue of share to consultant, partially offset by $286,287 in net repayments of debt. Net cash used in financing activities in the six months ended September 30, 2024 was $87,424. Cash used in financing activities included $87,424 in repayment of financing obligation of lease.

### 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 earnings before interest, taxes, depreciation, and amortization expenses to net income (“EBITDA”), a non-GAAP measure, as a key measure in operating our business. We use 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.

In the six months ended September 30, 2025, our adjusted EBITDA decreased by $345,933 compared to the prior fiscal year, primarily due to a decrease in operating income as a result of lower revenues. Adjusted EBITDA margin for the six months ended September 30, 2025 was 24%, vs 24% for the 6 months ended September 30, 2024.

Net Income for the Six Months Ended September 30, 2025 of $697,810 was lower than Net Income for the Six Months Ended September 30, 2024 of $2,236,725, primarily due to Stock-Based Compensation Expense of $625,220 recognized in the three months ended on September 30, 2025.

*(Unaudited)*

|  | Six Months Ended September 30, 2025 | 2024 |
| --- | ---: | ---: |
| Net income\* | $697,810 | $2,236,725 |
| Depreciation and amortization | 196,065 | 163,301 |
| Income tax benefit/(provision) | 202,590 | - |
| Interest expense | 195,921 | (86,032) |
| Foreign exchange gain/(loss) | 45,687 | (27,426) |
| Interest income | (48,748) | (26,090) |
| Stock based compensation (non-cash) | 625,220 | - |
| Adjusted EBITDA | $1,914,545 | $2,260,478 |

\*lower number reflects the two large contracts in 2024

### Net New Revenue Bookings and Recurring Billings

25

FatPipe GAAP revenue is aligned to new bookings of contracts. Billings follow customer deployments. Net new bookings has remained consistent quarter over quarter as the business scales. As booked revenue converts to billings, FatPipe has seen strong growth on billings, with monthly recurring billings up 49% YoY. As this faster-growing revenue segment scales, it represents a larger portion of FatPipe’s total revenues.

New bookings in Q2’25 were booked by 8 salespeople. As part of FatPipe’s strategy post-IPO, we’ve expanded the sales team to 25 salespeople.

### Off-Balance Sheet Arrangements

During the years 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.

### 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 prospectus;
- 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.

26

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 this offering, (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.

## Market risk

As filed, 207 characters.

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).

## Controls and procedures

As filed, 5,426 characters.

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 Annual 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 Annual 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 six months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, under the supervision of our Audit Committee. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting as of March 31, 2025, based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment and those criteria, management believes that we maintained effective internal control over financial reporting as of September 30, 2025.

### Limitations on the Effectiveness of Controls

Management of the Company, including its Chief Executive Officer and its Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Furthermore, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons or by the collusion of two or more persons. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

## Risk factors

As filed, 271 characters.

Except with respect to the Company’s on-going liquidity needs, 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, 2025, filed with the SEC on June 30, 2025.

Filed Nov 3, 2025.
Source: SEC EDGAR, the filing index for accession 0001493152-25-020604. Last ingested by Listed: Nov 6, 2026, 14:08 ET. No prices; not investment advice.