Fatpipe (FATN) risk factors, FY2026 10-K

Risks Related to Our Business and Financial Position

1. 01Our operating results are likely to vary significantly and be unpredictable
2. 02We rely heavily on our reselling partners and our ability to work with suitable partners may impact our growth plans
3. 03If we are unable to develop and introduce new software solutions and improve existing software solutions in a cost-effective and timely manner, then our competitive position may be negatively impacted and our business, results of operations, and financial condition may be adversely affected
4. 04We invest significantly in research and development, and to the extent our research and development efforts are unsuccessful, our competitive position may be negatively impacted and our business, results of operations, and financial condition may be adversely affected
5. 05We operate in a highly competitive market
6. 06Increases in costs of the materials and other components that we use in our solutions would adversely affect our business, results of operations, and financial condition
7. 07Adverse economic conditions, such as a possible recession and possible impacts of inflation or stagflation, increasing or decreasing interest rates, reduced information technology spending or any economic downturn or recession, may adversely impact our business
8. 08Our billings, revenue and free cash flow growth may slow or may not continue, and our operating margins may decline
9. 09We are dependent on the continued services and performance of our senior management, the loss of any of whom could adversely affect our business, operating results and financial condition
10. 10If we are unable to attract, retain, and motivate key employees, then our business, results of operations, and financial condition would be adversely affected
11. 11We may need to raise additional capital in the future, which may not be available on terms acceptable to us, or at all

Risks Related to Our Sales and End-Customers

1. 12If we do not increase the effectiveness of our sales organization, we may have difficulty adding new end-customers or increasing sales to our existing end-customers and our business may be adversely affected
2. 13Unless we continue to develop better market awareness of our company and our software solutions, and to improve lead generation and sales enablement, our revenue may not continue to grow

Risks Related to Our Industry, Customers, Software and Services

1. 14The market for network security software solutions is competitive and dynamic and we expect to face competitors across different cybersecurity markets
2. 15If our new software solutions and enhancements do not achieve sufficient market acceptance, our results of operations and competitive position will suffer
3. 16Demand for our software solutions may be limited by market perception that individual software solutions from one vendor that provide multiple layers of security protection in one offering are inferior to point solution network security solutions from multiple vendors
4. 17If functionality similar to that offered by our software solutions is incorporated into our competitors’ existing network infrastructure products, our customers may decide against adding our appliances to their network, which would have an adverse effect on our business
5. 18The sales prices of our hardware and software solutions may decrease, which may reduce our gross profits and operating margin and may adversely impact our financial results and the trading price of our common stock
6. 19Our ability to sell our software solutions is dependent on our quality control processes and the quality of our technical support services, and our failure to offer high-quality technical support services could have a material adverse effect on our sales and results of operations
7. 20Our business is subject to the risks of warranty claims, product returns, product liability and software defects
8. 21Our historical financial information may not be representative of our results as a public company

Risks Related to Our Systems and Technology

1. 22Our business and operations have experienced growth in recent periods, and if we do not effectively manage any future growth or are unable to improve our systems, processes, and controls, our operating results could be adversely affected

Risks Related to Our Intellectual Property

1. 23Our proprietary rights may be difficult to enforce and we may be subject to claims by others that we infringe their propriety technology
2. 24Claims by others that we infringe their proprietary technology or other litigation matters could harm our business
3. 25Failure to comply with laws and regulations applicable to our business could subject us to fines and penalties and could also cause us to lose end-customers in the public sector or negatively impact our ability to contract with the public sector
4. 26We are subject to governmental export and import controls that could subject us to liability or restrictions on sales, and that could impair our ability to compete in international markets
5. 27Investors’ expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks
6. 28As of March 31, 2026, we incurred an aggregate of $4.6 million of indebtedness outstanding under the Fortis Bank replacement loan

Risks Related to Finance, Accounting and Tax Matters

1. 29If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could fall below expectations of securities analysts and investors, resulting in a decline in our stock price
2. 30We are affected by fluctuations in currency exchange rates, including those in connection with recent inflationary trends in the United States
3. 31We could be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation, exposure to additional tax liabilities or impacts from the timing of tax payments
4. 32Forecasting our estimated annual effective tax rate is complex and subject to uncertainty, and there may be material differences between our forecasted and actual tax rates

Risks Related to Ownership of Our Common Stock

1. 33As a public company, we are subject to compliance initiatives that will require substantial time from our management and result in significantly increased costs that may adversely affect our operating results and financial condition
2. 34If securities or industry analysts stop publishing research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline

General Risks

1. 35Global economic uncertainty, an economic downturn, the possibility of a recession, inflation, rising interest rates, weakening product demand caused by political instability, changes in trade agreements and conflicts such as the war in Ukraine, could adversely affect our business and financial performance
2. 36Changes in financial accounting standards may cause adverse unexpected fluctuations and affect our reported results of operations