Company: FSTWF
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-044386
Chunk: 217

Company: FST Corp.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 16
Chunk 217
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 non-current assets.

Warrant Liabilities

The Company assessed its warrants under ASC 480-25,
“ Distinguishing liabilities from equity” and ASC 815-40 “ Derivatives and Hedging - Contracts in Entity’s Own
Equity”. The Company accounts for the Public Warrants and Private Placement Warrants (collectively, the “ Warrants”)
as derivative liabilities. A provision in the Warrant Agreement related to certain tender or exchange offers precludes the Warrants from
being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815 “ Derivatives
and Hedging” (“ ASC 815”), the Company accounts for Warrants for the Company’s ordinary shares that are not indexed
to its own stock as derivative liabilities at fair value on the balance sheets and measured at fair value at inception (on the date of
the IPO) and at each reporting date in accordance with ASC 820, with changes in fair value recognized in the statements of operations
in the period of change.

F-44

Fair Value of Financial Instruments

The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under FASB ASC 820, “ Fair Value Measurement” (“ ASC 820”),
approximates the carrying amounts represented in the balance sheets, primarily due to its short-term nature.

Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). The Company’s financial instruments are classified as either Level
1, Level 2 or Level 3. These tiers include:

  Level                                                                                                            

  Level                                                                                                                                    

  Level                                                                                                                                        

In some cases, the inputs used to measure fair
value might fall within different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which
the investment is categorized in its entirety is determined based on the lowest level input that is significant to the investment. Assessing
the significance of a particular input to the valuation of an investment in its entirety requires judgement and considers factors specific
to the investment. The categorization of an