Company: FSTWF
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-044386
Chunk: 81

Company: FST Corp.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 4A
Chunk 81
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 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.

Other Income

Other income increased by $664,415,
or 340.5%, from $201,227 for the year ended December 31, 2023 to $886,410 for the year ended December 31, 2024. The increase
was mainly due to (i) the increase of investment gain recognized in the fiscal year of 2024; (ii) the increase of other miscellaneous
incomes; and offset by: (i) the decrease of software service income, since we contracted with PTC to act as its software distributor in
2024, such income has been recorded as revenue, whereas it was recorded as other income in 2023; (ii) the increase of interest expense
due to the increase of borrowings.

Income Tax Expense (benefit)

Income tax expense was $456,246
for the year ended December 31, 2024 and income tax benefit was $786,562 for the year ended December 31, 2023. This was mainly
due to the change in deferred tax asset valuation allowance in the fiscal year of 2024.

Liquidity and Capital Resources

Historically, we have financed
our operations mainly through equity contributions from the Group’s shareholders and cash flow from operating activities in ordinary
course of business. As of December 31, 2024 and December 31, 2023, we had cash and cash equivalents of $5,098,420 and $8,904,618,
which consisted of cash, bank deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash.
We maintain good credit relationships with multiple banks and has sufficient unused credit facilities to meet its operating capital needs.
The Group began to generate positive operating cashflow in 2024,