Company: FSTWF
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-044386
Chunk: 85

Company: FST Corp.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 4A
Chunk 85
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T) technology to collect production data and energy consumption metrics. By integrating the
collection and analysis of equipment and production information, the Group has successfully enhanced production capacity and energy efficiency,
thereby improving overall operational performance.

The Group plans to continue
to invest in research and development to be in a leading position for the next stage of golf club shaft competition. However, if the Group’s
investment does not yield in meaningful results, such as new golf shaft material composition, improvement in manufacturing efficiency,
the results of operation, business and financial condition of the Group may be materially and adversely affected.

Research and development expenses
decreased to $1,296,969 for the year ended December 31, 2024 from $1,529,690 for the year ended December 31, 2023, representing
a 15.2% decrease. This decrease was primarily attributable to the reclassification of software purchase fee for the year ended December
31, 2024. The Group provided software service to Factory Automation Technology Co., Ltd., a related party, and purchased related software
from Parametric Technology Corporation, a third party. The Group recorded the software service income as other income and recorded software
purchase fee as research and development expenses for the year ended December 31, 2023. In fiscal year 2024, the Group became an authorized
agent of Parametric Technology Corporation to resell software usage rights to customers and the Group recorded the software service income
as revenue according to ASC 606 and recorded the software purchase fee as cost of sales accordingly. This reclassification resulted in
the decrease in FST’s R& D expenses and reflects the FST’s evolving role from a software user to a distributor.

Quantitative and Qualitative Disclosures About
Market Risk

The Group is exposed to various
risks in relation to financial instruments. The main types of risks are foreign currency risk and interest rate risk. Furthermore, the
Group does not have foreign-exchange hedging contracts in place with respect to all currencies in which it does business.

Foreign Currency Risk

The Group’s results of
operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. FST Taiwan and the Group’s
subsidiary in Japan may be exposed to significant currency risks from exchange rate fluctuations and the degree of foreign exchange rates
between the U. S. Dollar and the TWD, and between the U. S. Dollar and the JPY. As of December 31, 2024 and