Company: FSTWF
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-044386
Chunk: 218

Company: FST Corp.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 16
Chunk 218
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 investment within the hierarchy is based on the pricing transparency of the investment and
does not necessarily correspond to the perceived risk of that investment.

See Note 9 for additional information on assets
and liabilities measured at fair value.

Derivative Financial Instruments and Warrant
and Over-allotment Liability

The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives,
pursuant to ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities
or as equity and measurement of fair value is re-assessed at the end of each reporting period. In accordance with ASC 825-10 “ Financial
Instruments”, offering costs attributable to the issuance of the derivative warrant liabilities and overallotment option have been
allocated based on their relative fair value of total proceeds and are recognized in the statements of operations as incurred. Derivative
warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current
assets or the creation of current liabilities.

The Company accounts for warrants and over-allotment
as either equity-classified or liability-classified instruments based on an assessment of the warrant and over-allotment option’s
specific terms and applicable authoritative guidance in Financial Accounting Standards Board Accounting Standards Codification 480, Distinguishing
Liabilities from Equity and ASC 815, Derivatives and Hedging. The assessment considers whether the warrants and over-allotment option
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
and over-allotment option meet all of the requirements for equity classification under ASC 815, including whether the warrants and over-allotment
option are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment is conducted
at the time of warrant and over-allotment option issuance and as of each subsequent quarterly period end date while the warrants and over-allotment
option are outstanding.

For warrants and over-allotment option that meet
all of the criteria for equity classification, they are recorded as a component of additional paid-in capital at the time of issuance.
For warrants and over-allotment that do not meet all the criteria for equity classification, they are required to be recorded as a