Company: FSTWF
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-044386
Chunk: 206

Company: FST Corp.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 16
Chunk 206
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 ordinary shares to secure the Further Extension,
the Old Sponsor shall be entitled to receive Earnout Shares based on the number of Class B ordinary shares transferred, in accordance
with the formula described above.

F-39

The Company analyzed the SPA entered into
during September 2023 under SAB Topic 5, Miscellaneous Accounting, section T, Accounting for Expenses or Liabilities Paid by Principal
Stockholder(s) and concluded that the SPA provides the Company with a benefit in the form of the right to receive additional extension
contributions from the New Sponsor. The right to receive the additional extension contributions required the New Sponsor, who is a principal
shareholder, to provide or cause to provide consideration in the form of a transfer of Class B ordinary shares of the Company. The estimated
fair value of the earnout provision at the closing of the Sponsor Sale on October 6, 2023 is nominal to zero. As a result, the Company
determined that an expense in the full amount of the fair value of the Class B ordinary shares transferred should be recorded. During
October 2023, the Company recorded an expense under SAB Topic 5T of $2,851,750 with a corresponding increase to additional paid-in capital,
based on a Monte Carlo Model simulation valuation of the Class B ordinary shares.

On October 2, 2023, the Old Sponsor entered into
the EBC Letter Agreement, under which, the Old Sponsor agreed to (i) transfer, at no consideration, to EBC 25,000 Class B ordinary shares
of the Company held by the Old Sponsor at the closing of the Business Combination. If the Old Sponsor is required to forfeit Class B ordinary
shares to the Company that it’s retaining pursuant to the SPA so that the total number of Class B ordinary shares becomes less than
500,000, EBC will forfeit a pro rata number of Class B ordinary shares with the Old Sponsor’s reduction below 500,000 such that
the Class B ordinary shares held by EBC will then represent 5% of the total Class B ordinary shares held by the Old Sponsor and EBC; (ii)
transfer to EBC an aggregate of 26.7% of any consideration it receives as a result of certain “tail” arrangement it has with
a third party as a result of a proposed transaction; and (iii) pay to EBC an aggregate of $5,000 to reimburse EBC for expenses incurred
by it for the services rendered to the Company