Company: FSHPU
Filing Date: 2025-03-04
Form Type: 10-K
Source: 0001829126-25-001450
Chunk: 905

Company: Flag Ship Acquisition Corp
Filing Date: 2025-03-04
Form: 10-K
Item: Item 7A
Chunk 905
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 of the Trust Account with respect to such rights, and the rights
         will expire worthless. Further, there are no contractual penalties for failure to
         deliver securities to the holders of the rights upon consummation of a Business Combination.
         Additionally, in no event will the Company be required to net cash settle the rights.
         Accordingly, the rights may expire worthless.
       
      The Company accounts for rights as either equity-classified or liability-classified
         instruments based on an assessment of the right’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The
         assessment considers whether the rights are freestanding financial instruments pursuant
         to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the
         rights meet all of the requirements for equity classification under ASC 815, including
         whether the rights are indexed to the Company’s own ordinary shares and whether the right holders could potentially require “net
         cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which
         requires the use of professional judgment, is conducted at the time of right issuance
         and as of each subsequent quarterly period end date while the rights are outstanding.

    F-12

FLAG SHIP ACQUISITION CORPORATION

NOTES TO FINANCIAL STATEMENTS

      For issued or modified rights that meet all of the criteria for equity classification,
         the rights are required to be recorded as a component of equity at the time of issuance.
         For issued or modified rights that do not meet all the criteria for equity classification,
         the rights are required to be recorded as liabilities at their initial fair value
         on the date of issuance, and each balance sheet date thereafter. Changes in the estimated
         fair value of the rights are recognized as a non-cash gain or loss on the statements
         of operations.
       
      As the rights issued upon the IPO and private placements meet the criteria for equity
         classification under ASC 480, therefore, the rights are classified as equity.

            ●
            Income taxes

      Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized
         for the future tax consequences attributable to differences between the financial
         statement carrying amounts of existing assets and liabilities and their respective
         tax basis. Deferred tax assets and liabilities are measured using enacted income tax