Company: FSTWF
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-044386
Chunk: 136

Company: FST Corp.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 10
Chunk 136
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 sum of
the U. S. Holder’s initial investment in the warrants exercised and the exercise price of such warrants. It is unclear whether
a U. S. Holder’s holding period for the ordinary shares would commence on the date of exercise of the warrants or the day
following the date of exercise of the warrants.

Due to the absence of authority
on the U. S. federal income tax treatment of a cashless exercise, there can be no assurance which of the alternative tax consequences
and holding periods described above would be adopted by the IRS or a court of law. Accordingly, a U. S. Holder should consult its
tax advisor regarding the tax consequences of a cashless exercise.

While not free from doubt,
a redemption of warrants for ordinary shares should be treated as a “recapitalization” for U. S. federal income tax purposes.
Accordingly, subject to the PFIC rules discussed, a U. S. Holder should not recognize any gain or loss on the redemption of warrants
for ordinary shares. In such event, a U. S. Holder’s aggregate tax basis in the ordinary shares received in the redemption generally
should equal the U. S. Holder’s aggregate tax basis in the warrants redeemed and the holding period for the ordinary shares
should include the U. S. Holder’s holding period for the surrendered warrants. However, there is some uncertainty regarding
this tax treatment, and it is possible such a redemption could be treated in part as a taxable exchange, in which gain or loss would be
recognized in a manner similar to that discussed above for a cashless exercise of warrants. Accordingly, a U. S. Holder is urged to
consult its tax advisor regarding the tax consequences of a redemption of warrants for ordinary shares.

Possible constructive distributions

The terms of each warrant provide
for an adjustment to the number of ordinary shares for which the warrant may be exercised or to the exercise price of the warrant in certain
events. An adjustment which has the effect of preventing dilution generally is not taxable. The U. S. Holders of the warrants would,
however, be treated as receiving a constructive distribution from the Company if, for example, the adjustment increases the U. S. Holder’s
proportionate interest in the Company’s assets or earnings and profits (e. g., through an increase in the number of ordinary shares
that would be obtained upon exercise) as a result of a distribution of cash or other property to the holders of ordinary shares which
is taxable to the U.