Financial Analysis

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.

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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 is repayable in full during the Fiscal year 2025-26. 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 three months ended June 30, 2026, the Company made principal payments totaling $ 92,728 . Future maturities of long-term debt are as follows: SCHEDULE OF FUTURE MATURITIES OF LONG-TERM DEBT Amount Yea …

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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

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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 June 30, 2026, the Company recognized an income tax benefit of $ 370,925 , compared to an income tax provision of $ 215,185 for the three months ended June 30, 2025. The Companys effective tax rate applicable to ordinary income for the current period was minimal, reflecting the utilization of available U.S. federal net operating loss carryforwards against taxable income. The income tax benefit for the three months ended June 30, 2026 reflects a change in estimate, recognized as a discrete item during the quarter, relating to the phased reduction of a previously accrued income tax payable balance following the Companys 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. …

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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 Companys 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 Companys leases do not provide a readily determinable implicit rate. When the implicit rate is not determinable, the Companys estimated incremental borrowing rate is utilized, determined on a collateralized basis, to discount lease payments based on information available at lease commencement. The Companys 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 obli …

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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 Companys 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 Companys 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 expens …

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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 Companys directors are management. The total lease payments amounted to $ 23,450 and $ 22,183 for the three months ended June 30, 2026 and 2025, respectively. The Company had received a short-term interest free loan from a related entity which is controlled by the Companys Chief Executive Officer, Stay in Business Inc., for $ 120,000 . The loan was repayable on demand during the year 2023-24. An additional loan of $ 13,652 was received under the same arrangement during the year ended March 31, 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 June 30, 2026 or March 31, 2026. …

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NOTE 5: STOCKHOLDERS EQUITY Authorized Capital Stock On June 19, 2024, our Board and Shareholders approved an increase in our authorized capital stock from 15,000,000 shares of common stock, no par value, to 50,000,000 shares of common stock, no par value. Common Stock We are authorized to issue up to a total of 50,000,000 shares of common stock, no par value per share. Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of our stockholders, including the election of directors. Holders of our common stock have no cumulative voting rights . Further, holders of our common stock have no preemptive or conversion rights or other subscription rights. Additionally, if a quorum is present, an action by stockholders entitled to vote on a matter is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action (other than the election of directors). The vote of a majority of the shares of our common stock held by stockholders present in person or represented by proxy and entitled to vote at the Meeting will be sufficient to elect directors or to approve a proposal. During the three months ended June 30, 2026, the Company issued an aggregate of 101,000 shares of common stock for employee services with a total proceeds of $ 3,935,522 pursuant to the April 2025 Offering, including partial exercise of the underwriters over-allotment option. As of June 30, 2026, the total number …

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NOTE 11. SUBSEQUENT EVENTS : The Company evaluated the subsequent events through July 30, 2026, the date at which the financial statements were issued. Shelf Registration Statement and At-the-Market Offering Program On July 2, 2026, the Company filed a shelf registration statement on Form S-3 registering up to $ 20.0 million of common stock and/or debt securities. Concurrently, the Company entered into an At-the-Market Offering Agreement with H.C. Wainwright & Co., LLC, pursuant to which the Company may, from time to time, offer and sell up to $ 10.0 million of its common stock. The ATM program forms part of, and is not in addition to, the $ 20.0 million registered under the shelf registration statement. 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. Since these arrangements were entered into subsequent to June 30, 2026, they represent non-recognized subsequent events and had no impact on the Companys financial position, weighted average shares outstanding, or basic and diluted earnings (loss) per share for the quarter ended June 30, 2026. Any future issuances under these arrangements may increase the number of shares outstanding and result in shareholder dilution. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing