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SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended
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Jun. 30, 2026
Accounting Policies [Abstract] |
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 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 695,656 shares of the Company’s common stock, no par value per share (the “Common Stock”), at an initial public offering price of $5.75 per share. The Common Stock was offered pursuant to a registration statement on Form S-1, as amended (File No. 333-280925), originally filed with the U.S. Securities and Exchange Commission (the “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 791,024 shares of common stock. The total gross proceeds to the Company from the Offering, and before deducting discounts and expenses, were approximately $4,500,000. The Company received net proceeds of approximately $3,700,000 pursuant to the Offering. 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. 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. As of March 31, 2025, the Company owned 95.6% of the outstanding shares of capital stock of Limited and remaining 4.4% of the outstanding shares of capital stock of Limited were owned by certain individual stockholders (collectively, the “Limited non-controlling interests”). In July 2024, pursuant to the terms of a stock purchase and sale agreement, the Company issued an aggregate of 577,156 shares of common stock in exchange for the Limited non-controlling interests. As of June 30, 2026, Limited was a wholly-owned subsidiary of the Company (see Note 3). Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. Comprehensive Income Comprehensive income includes net income as well as other changes in Stockholders’ equity that result from transactions and economic events other than those with stockholders. Segment Reporting In accordance with ASC 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. The Company’s chief operating decision-maker is its Chief Executive Officer, who makes resource allocation decisions and assesses performance based on financial information presented on an aggregate basis. There are no segment managers who are held accountable by the chief operating decision-maker, or anyone else, for any planning, strategy and key decision-making regarding operations. We have determined that each of our products and services share similar economic and other qualitative characteristics, and therefore the results of our operating businesses are aggregated into one reportable segment. All of the operating businesses have met the aggregation criteria and have been aggregated and are presented as one reportable segment, as permitted by ASC 280. We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments. Revenue Recognition 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. 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 perpetual 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 FT, which provides networking, 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 20% 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 June 30, 2026 and March 31, 2026 consisted of the following:
|  | June 30, 2026 |  |  | March 31, 2026 |
Product |  | $ | 2,206,510 |  |  | $ | 3,120,564 |
Service |  |  | 1,272,994 |  |  |  | 1,520,941 |
Total |  | $ | 3,479,504 |  |  | $ | 4,641,505 |
Short-term — within 12 months |  |  | 1,792,174 |  |  |  | 2,902,049 |
Long-term — 13 to 36 months |  |  | 735,065 |  |  |  | 761,128 |
Long-term — 37 to 60 months |  |  | 952,265 |  |  |  | 978,328 |
Total |  | $ | 3,479,504 |  |  | $ | 4,641,505 |
Amount to be recognized as revenue over next 12 months SCHEDULE OF DEFERRED RECOGNIZED REVENUE
|  | June 30, 2026 |  |  | March 31, 2026 |
Deferred revenue |  | $ | 919,245 |  |  | $ | 1,093,440 |
Deferred Revenue
|  | June 30, 2026 |  |  | March 31, 2026 |
Product |  | $ | - |  |  | $ | - |
Service |  |  | 919,245 |  |  |  | 1,093,440 |
Total |  | $ | 919,245 |  |  | $ | 1,093,440 |
|  | June 30, 2026 |  |  | March 31, 2026 |
Current |  | $ | 919,245 |  |  | $ | 1,093,440 |
Non-current |  |  | - |  |  |  | - |
Total |  | $ | 919,245 |  |  | $ | 1,093,440 |
Contract Balances SCHEDULE OF CONTRACT BALANCES
|  | 2026 |  |  | 2025 |
|  | Three Months Ended June 30, |
|  | 2026 |  |  | 2025 |
Allowance at beginning of period |  | $ | (1,976,180 | ) |  | $ | (875,518 | )
(Provisions) / reversal |  |  | (138,557 | ) |  |  | (33,811 | )
Write-offs |  |  | 18,434 |  |  |  | - |
Recoveries |  |  | - |  |  |  | - |
Allowance at end of period |  | $ | (2,096,303 | ) |  | $ | (909,329 | )
Disaggregated revenue We disaggregate our revenue into products, services and consulting revenue that depict the nature, amount, and timing of revenue and cash flows for our various offerings. SCHEDULE OF DISAGGREGATED REVENUE
|  | 2026 |  |  | 2025 |
|  | Three Months Ended June 30, |
|  | 2026 |  |  | 2025 |
Product revenue |  | $ | 3,538,734 |  |  | $ | 2,392,303 |
Service revenue |  |  | 944,387 |  |  |  | 953,287 |
Consulting revenue |  |  | 548,417 |  |  |  | 590,333 |
Total |  | $ | 5,031,538 |  |  | $ | 3,935,923 |
Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The financial and nonfinancial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The hierarchy is presented down into three levels based on the reliability of the inputs.
Level 1 | Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 | Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for the full term of the assets or liabilities.
Level 3 | Unobservable pricing inputs that are less observable from objective sources or based upon our own assumptions used to measure assets and liabilities at fair value, such as discounted cash flow models or valuations. The inputs require significant management judgment or estimation.
The carrying amounts of cash, accounts receivable, accounts payable, notes payable and accrued liabilities are approximately fair value because of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities. Cash and Cash Equivalents Cash equivalents are generally comprised of certain highly liquid investments with maturities of three months or less at the date of purchase. For the purposes of the statement of cash flows, the Company considers all highly liquid financial instruments with a maturity of less than three months to be cash equivalents. Trade Accounts Receivable Accounts Receivable are recorded at the invoiced amount and do not bear interest. Accounts receivables are due from various customers and are shown net of applicable reserves for doubtful accounts as shown on the face of the balance sheet. There were no accounts that had been placed on non-accrual status. The allowance for doubtful accounts has been estimated by management based on historical experience, current market trends and, for larger customer accounts, their assessment of the ability of the customers to pay outstanding balances. Past due balances and other higher risk amounts are reviewed individually for collectability. Changes in circumstances relating to the collectability of accounts receivable may result in the need to increase or decrease the allowance for doubtful accounts in the future. The Company provides for any and all of the accounts receivable which are due over the period of one year if it meets the criteria for allowance estimated by the management. Inventories Inventories are recorded at lower of cost and net realizable value on the weighted average cost method of accounting. Property and Equipment Property and equipment are recorded at cost. Expenditures that increase value or extend useful lives are capitalized and routine maintenance and repairs are charged to expense in the year incurred. Gains and losses from disposition of fixed assets are reflected in other income. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: SCHEDULE OF ESTIMATED USEFUL LIVES
Furniture and fixtures |  | 5 to 10 years
Office equipment and computers |  | 3 to 5 years
Vehicles |  | 5 years
Major renewals and improvements are capitalized. Replacements, maintenance and repairs, which do not significantly improve or extend the useful life of the assets, are expensed when incurred. Upon the sale or retirement of assets, costs and the related accumulated depreciation and amortization are removed from the accounts and any gain or loss is included in the results of operations. Intangible Assets Intangible assets primarily consist of patent legal costs and are recorded at cost. Amortization is computed using the straight-line method over the estimated useful lives of the assets which is assumed as 15 years. The Company capitalizes product development costs in accordance with ASC 350-40 and ASC 985-20. Amortization is computed using the straight-line method over the estimated useful lives of the assets which is assumed as 15 years. Long-Lived Assets The Company evaluates its long-lived assets or asset groups for indicators of possible impairment by determining whether there were any triggering events that could impact the Company’s assets. If events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable the Company performs a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by such asset or asset group. Should an impairment exist, the impairment loss is measured based on the excess carrying value of the asset over the asset’s fair value generally determined by estimates of future discounted cash flows. The Company has not identified any such impairment losses for the period ended June 30, 2026 and March 31, 2026. Defined Benefit Plan The subsidiary company “Limited” provides a defined benefit gratuity plan to eligible employees in accordance with applicable labor laws of India. The gratuity benefit is based on the employee’s last drawn salary and years of continuous service, and is payable upon resignation, retirement, or termination of employment. The gratuity plan is accounted for in accordance with ASC 715, Compensation—Retirement Benefits. The liability for the defined benefit obligation is determined using the projected unit credit method and is based on actuarial valuations performed annually by independent actuaries. Actuarial gains and losses are recognized immediately in the statement of operations in the period in which they occur and this method is applied consistently. The benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as of the reporting date. The discount rate used to determine the present value of the obligation reflects the yields available on high-quality corporate bonds of similar duration. The Company does not fund the plan, and benefits are paid as they become due. Key assumptions used in the actuarial valuation include discount rate, salary growth rate, and employee turnover rates. Income Taxes The Company is subject to federal and state income taxes. Its taxable income and deductions are included on a consolidated income tax return. The consolidated entities have a net loss carryover which may be fully utilized. Deferred tax assets are recognized in these financial statements after considering valuation allowances. A subsidiary of the Company is subject to foreign income taxes in India. The Indian subsidiary is subjected to income tax audits annually and tax assessments in accordance with the applicable Income Tax laws. Warranties The Company offers a 1 one-year to 3 three-year warranty on the hardware products it sells. The cost of fulfilling the warranty obligation has historically been insignificant. No provision for future warranty costs has been made in these financial statements. 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 $204,290 during the three months ended June 30, 2026 (none in the comparative period), which is included within general and administrative expenses in the condensed 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. In calculating the right of use asset and lease liability, the Company has elected to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term. Related Parties Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. The Company discloses related party transactions that are outside of normal compensatory agreements, such as salaries. The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Concentrations The Company has no significant geographic concentrations in either trade accounts receivable or revenue. SCHEDULE OF REVENUE FROM GEOGRAPHIC CONCENTRATIONS
|  | 2026 |  |  | 2025 |
|  | Three Months Ended June 30, |
|  | 2026 |  |  | 2025 |
United States |  | $ | 4,784,016 |  |  | $ | 3,779,625 |
Rest of the World |  |  | 247,522 |  |  |  | 156,298 |
Total |  | $ | 5,031,538 |  |  | $ | 3,935,923 |
At June 30, 2026, the carrying amount of cash was $5,906,988, only a portion of which is covered by federal depository insurance. At March 31, 2026, the carrying amount of cash was $2,920,550, only a portion of which is covered by federal depository insurance. Concentrations of Risk The Company’s financial instruments that may be exposed to concentrations of credit risk consist primarily of temporary cash investments and trade accounts receivable. The Company maintains its cash balances at financial institutions it believes to be financially sound. At times such balances may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk in cash. We perform ongoing credit evaluations of our customers and, with the exception of certain financing transactions, do not require collateral from our customers. The Company has three major partners that account for approximately 38.44% of the Company’s consolidated revenues for the three months ended June 30, 2026 and three major partners that accounted for 43.52% for the three months ended June 30, 2025. As reflected in the table below, partner A contributed $1,706,815 or 33.92% in revenue for the three months ended June 30, 2026, and $1,495,461 or 38.00% for the three months ended June 30, 2025. Separately, Partner B contributed $146,687 or 2.92% for the three months ended June 30, 2026, and $149,854 or 3.81% for the three months ended June 30, 2025. Partner C contributed $80,550 or 1.60% for the three months ended June 30, 2026, and $67,200 or 1.71% for the three months ended June 30, 2025. SCHEDULE OF CONCENTRATION RISK
|  | 2026 |  |  | 2025 |
|  | Three Months Ended June 30, |
|  | 2026 |  |  | 2025 |
Partner A |  |  | 33.92 | % |  |  | 38.00 | %
Partner B |  |  | 2.92 | % |  |  | 3.81 | %
Partner C |  |  | 1.60 | % |  |  | 1.71 | %
Concentration risk percentage |  |  | 1.60 | % |  |  | 1.71 | %
|  | 2026 |  |  | 2025 |
|  | Three Months Ended June 30, |
|  | 2026 |  |  | 2025 |
Partner A |  | $ | 1,706,815 |  |  | $ | 1,495,461 |
Partner B |  |  | 146,687 |  |  |  | 149,854 |
Partner C |  |  | 80,550 |  |  |  | 67,200 |
Revenue |  |  | 80,550 |  |  |  | 67,200 |
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 condensed 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.

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- Definition The entire disclosure for the basis of presentation and significant accounting policies concepts. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). Accounting policies describe all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483426/235-10-50-1 + Details
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