Company: FSTWF
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-044386
Chunk: 230

Company: FST Corp.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 16
Chunk 230
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480- Distinguishing Liabilities from EquityandASC 815 - Derivatives and Hedgingand concluded
that, (i) due to the uncertainty of the Business Combination Closing as of December, 31, 2024, the Relevant Shares are not required to
be accounted for as a liability pursuant to ASC 480-10. Upon the closing of the Business Combination on January 15, 2025, and prior to
the Prepayment in full, the Forward Purchase of Relevant Shares is representative of an obligation to repurchase shares by transferring
assets under ASC 480-10-25-8 through 25-11. Following Prepayment in full, the Company will no longer have an obligation to transfer assets
and the Forward Purchase of Relevant Shares will no longer be subject to the accounting requirements of ASC 480, (ii) the embedded put
option feature in connection with the Terminated Shares is not indexed to the Company’s own equity because the settlement terms
are not fixed, which preclude the embed put option from equity classification. Accordingly, the embedded put option in connection with
the Terminated Shares is required to be bifurcated and accounted for separately as an embedded derivative under ASC 815. The Company recognizes
the embed put option as an OET derivative liability at fair value on the consolidated balance sheets. Changes in the fair value of OET
derivative liability are recorded in the consolidated statements of operations as a component of other income (expense).

For the year ended December 31, 2024, the company
recorded $917,764 fair value changes of the OET derivative liability. The fair value of the OET derivative liability was measure at Black-Scholes
model, with the key inputs as following:

                                                    December 31, 2024                     December 27,                   
                                                                                          2024                           
                                                                                          (Initial Valu)                 
 ─────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────
  Stock price                                       $                           9.63      $                       11.49  
  Exercise price                                    $                          11.79      $                       11.79  
  Risk-free rate                                                                4.16                               4.16  
  Volatility                                                                   30.17                              30.17  
  Expected terms (years)                                                        1.08                               1.10  
  Estimated weighted average Terminated Shares                             1,582,101                          1,582,101  

NOTE 7