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Item 3. Legal Proceedings

2026-04-07 compared with 2025-03-31 · 102 added, 124 removed, 34 unchanged (87% of the section changed)

2 unchanged sentences

There are no material proceedings

to which any director or officer, or any associate of any such director or officer, is a party that is adverse to our company or any

of our subsidiaries or has a material interest adverse to our company or any of our subsidiaries.

No director or executive officer has

been a director or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filed against

it during the past ten years.

No current director or executive officer has been convicted of a criminal offense or is the subject of

a pending criminal proceeding during the past ten years.

No current director or executive officer has been the subject of any order,

judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any

type of business, securities or banking activities during the past ten years.

No current director or officer has been found by a court

to have violated a federal or state securities or commodities law during the past ten years.

to which any director or officer, or any associate of any such director or officer, is a party that is adverse to our company or any of

our subsidiaries or has a material interest adverse to our company or any of our subsidiaries.

No director or executive officer has been

a director or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filed against it during

the past ten years.

No current director or executive officer has been convicted of a criminal offense or is the subject of a pending criminal

proceeding during the past ten years.

No current director or executive officer has been the subject of any order, judgment or decree of

any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities

or banking activities during the past ten years.

No current director or officer has been found by a court to have violated a federal or

state securities or commodities law during the past ten years.

From time to time, we are

subject to various legal proceedings that arise from the normal course of business activities.

In addition, from time to time, third

parties may assert claims of intellectual property infringement, misappropriation or other violation against us in the form of letters

and other forms of communication.

If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on

our results of operations, prospects, cash flows, financial position and brand.

In addition, from time to time, third parties

may assert claims of intellectual property infringement, misappropriation or other violation against us in the form of letters and other

forms of communication.

If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on our results

of operations, prospects, cash flows, financial position and brand.

We are not currently a party

6 unchanged sentences

litigated in Taiwan Taipei District Court Criminal Division (Taiwan Taipei District Court, Year 2022, Jin-Chong-Su-Zhi, No.

the “Criminal Prosecution”).

“Criminal Prosecution”).

Four court sessions for the Criminal Prosecution have been held.

The last court session was

on November 16, 2023.

The last court session was on November 16,

In response to the defendant’s request, the court has scheduled a series of hearings starting from March 2024.

The Prosecutor currently has 11 indictments against Mr.

The Prosecutor

currently has 11 indictments against Mr.

Sham in the Criminal Prosecution, which include the following alleged charges:

the offense of “causing

financial statements to become untrue by other improper means” under the Business Entity

Accounting Act of Taiwan as a result of failure to disclose a related party transaction

in connection with Electric Power Technology Limited’s (“EPTECH”) purchase

of Fund D securities from Sino-JP Fund Co., Ltd because Mr.

Sham is associated

with EPTECH and Sino-JP Fund Co., Ltd.

violation of Securities

and Exchange Act of Taiwan by misrepresentations of EPTECH’s financial

statements, non-arm’s length transaction, and/or breach of Mr.

Sham’s fiduciary

duty to EPTECH because the Prosecutor alleged those transactions are not in the normal course

of business of EPTECH or non-beneficial to EPTECH.

Sham’s acquisition of shares in Thunder

Power Hong Kong Limited (“TPHK”), a company wholly owned by EPTECH, paid for by his GPS patents which the Prosecutor

alleged were priced at “an unreasonably high price.”

EPTECH acquired a non-exclusive license for a

battery pack patent from TPHK by offsetting the debt owed by TPHK to EPTECH, which the Prosecutor alleged was “orchestrated”

the offense of “causing financial statements to become

untrue by other improper means” under the Business Entity Accounting Act of Taiwan as a result of failure to disclose

a related party transaction in connection with Electric Power Technology Limited’s (“EPTECH”) purchase of Fund D securities

from Sino-JP Fund Co., Ltd because Mr.

Sham is associated with EPTECH and Sino-JP Fund Co., Ltd.

violation of Securities and Exchange Act of Taiwan

by misrepresentations of EPTECH’s financial statements, non-arm’s length transaction, and/or breach of Mr.

fiduciary duty to EPTECH because the Prosecutor alleged those transactions are not in the normal course of business of EPTECH or non-beneficial to

acquisition of shares in Thunder Power Hong Kong Limited (“TPHK”), a company wholly owned by EPTECH, paid for by his

GPS patents which the Prosecutor alleged were priced at “an unreasonably high price.”

acquired a non-exclusive license for a battery pack patent from TPHK by offsetting the debt owed by TPHK to EPTECH, which the Prosecutor

alleged was “orchestrated” by Mr.

Sham and was “non-beneficial to EPTECH.”

EPTECH engaged an exclusive

authorized agent for the electric coupe and agreed to pay USD $4,950,000 immediately, which the Prosecutor alleged was “orchestrated”

Sham and was “deemed outside the normal course of EPTECH’s business” and caused significant losses

EPTECH paid USD $4,480,000

for parts for an electric four-door sedan from TPHK, which the Prosecutor alleged was “arranged” by Mr.

not in the normal course of business of EPTECH and non-beneficial to EPTECH, and constituted a non-arm’s length transaction

and a breach of fiduciary duty under the Securities and Exchange Act of Taiwan.

According to the Prosecutor,

EPTECH failed to fully disclose the transaction terms to the shareholders when negotiating the land purchase transaction between

EPTECH and Xiang Fang International Co., Ltd.

(“XFI”) or agreed to alter terms that may have been advantageous to EPTECH,

resulting in substantial losses to EPTECH.

Electric Power Technology

International Limited (“EPTI”), a subsidiary of EPTECH, granted bonuses to Mr.

in the amount of USD $150,000, USD $50,000, and USD $100,000, and EPTECH granted

a bonus of NTD 6,000,000 to Mr.

The Prosecutor alleged that those bonuses

were granted in violation of fiduciary duty under the Securities and Exchange Act of Taiwan

and caused losses for EPTECH.

Thunder Power granted

bonuses in the form of an option to purchase approximately 28 million shares of Thunder

Power at a price of HKD 1.00 per share to Mr.

Sham and his spouse*, which the Prosecutor

alleged to have resulted in losses for EPTECH and constituting a breach of fiduciary duty

under the Securities and Exchange Act of Taiwan.

EPTECH paid for expenses

associated with a seminar hosted by Thunder Power Electric Vehicle Limited (“TPEV”),

which the Prosecutor alleged was under the direction of Mr.

Sham, constituting a breach

of trust under the Criminal Code of Taiwan.

EPTECH paid the salaries

of certain employees of TPEV and TPHK, which the Prosecutor alleged was a breach of a fiduciary

duty under the Securities and Exchange Act of Taiwan.

According to the Prosecutor,

engaged an exclusive authorized agent for the electric coupe and agreed to pay USD $4,950,000 immediately, which the Prosecutor alleged

was “orchestrated” by Mr.

Sham and was “deemed outside the normal course of EPTECH’s business” and

caused significant losses for EPTECH.

paid USD $4,480,000 for parts for an electric four-door sedan from TPHK, which the Prosecutor alleged was “arranged”

Sham, not in the normal course of business of EPTECH and non-beneficial to EPTECH and constituted a non-arm’s

length transaction and a breach of fiduciary duty under the Securities and Exchange Act of Taiwan.

to the Prosecutor, EPTECH failed to fully disclose the transaction terms to the shareholders when negotiating the land purchase transaction

between EPTECH and Xiang Fang International Co., Ltd.

(“XFI”) or agreed to alter terms that may have been advantageous to

EPTECH, resulting in substantial losses to EPTECH.

Electric Power Technology International Limited (“EPTI”),

a subsidiary of EPTECH, granted bonuses to Mr.

Sham in the amount of USD $150,000, USD $50,000, and USD $100,000,

and EPTECH granted a bonus of NTD 6,000,000 to Mr.

The Prosecutor alleged that those bonuses were granted in violation

of fiduciary duty under the Securities and Exchange Act of Taiwan and caused losses for EPTECH.

Thunder Power granted bonuses in the form of an option to

purchase approximately 28 million shares of Thunder Power at a price of HKD 1.00 per share to Mr.

Sham and his spouse*, which

the Prosecutor alleged to have resulted in losses for EPTECH and constituting a breach of fiduciary duty under the Securities and Exchange Act of Taiwan.

Sham’s spouse is a former director of Thunder

Power, who resigned from all roles with Thunder Power in October 2021.

EPTECH paid for expenses associated with a seminar hosted

by Thunder Power Electric Vehicle Limited (“TPEV”), which the Prosecutor alleged was under the direction of Mr.

constituting a breach of trust under the Criminal Code of Taiwan.

EPTECH paid the salaries of certain employees of TPEV and

TPHK, which the Prosecutor alleged was a breach of fiduciary duty under the Securities and Exchange Act of Taiwan.

According to the Prosecutor, Mr.

Sham instructed Mr.

Albert Chen to compose a false press release with the aim

of disseminating rumors or misleading information as EPTECH’s spokesperson, which the

Prosecutor alleged was intended to impact EPTECH’s stock prices and influence investors’

judgments in the stock market, constituting the crime of manipulating the trading prices

of securities under the Securities and Exchange Act of Taiwan.

Chen to compose a false press release with the aim of disseminating rumors or misleading information as EPTECH’s spokesperson,

which the Prosecutor alleged was intended to impact EPTECH’s stock prices and influence investors’ judgments in the stock

market, constituting the crime of manipulating the trading prices of securities under the Securities and Exchange Act of Taiwan.

In response to the Prosecutor’s

accusations, Mr.

Sham sought relief by asserting his innocence, appointing a defense attorney, applying for an investigation of

favorable evidence, and actively exercising his right to defend himself.

Sham sought relief by asserting his innocence, appointing a defense attorney, applying for an investigation of favorable

evidence, and actively exercising his right to defend himself.

Civil actions against Wellen Sham

In conjunction with the

Criminal Prosecution, Taiwan’s Securities Investor and Futures Trader Protection Center (“SFIPC”) initiated the following

civil actions against Mr.

On October 18,

2022, SFIPC initiated an ancillary civil action to the Criminal Prosecution, requesting that

In conjunction with the Criminal

Prosecution, Taiwan’s Securities Investor and Futures Trader Protection Center (“SFIPC”) initiated the following civil

actions against Mr.

On October 18, 2022, SFIPC initiated an ancillary civil

action to the Criminal Prosecution, requesting that Mr.

Sham shall bear liability for damages incurred by EPTECH.

This civil action

is currently consolidated with the Criminal Prosecution and is under the jurisdiction of

Taiwan Taipei District Court Criminal Division, but has not been litigated in court.

Based on the content

of the Prosecutor’s indictment, SFIPC initiated a civil suit on August 11, 2022,

asserting Mr.

action is currently consolidated with the Criminal Prosecution and is under the jurisdiction of Taiwan Taipei District Court Criminal

Division but has not been litigated in court.

Based on the content of the Prosecutor’s indictment,

SFIPC initiated a civil suit on August 11, 2022, asserting Mr.

Sham should be dismissed from the position of Chairman of EPTECH.

suit is currently being litigated by the Intellectual Property and Commercial Court (Intellectual

Property and Commercial Court, Year 2022, Shang-Su-Zi, No.

Currently, an agreement to

suspend litigation has been reached with the opposing party (SFIPC).

It is anticipated that

the litigation will resume after the witnesses are summoned in the Criminal Prosecution.

Based on the content

of the Prosecutor’s indictment, SFIPC initiated a civil suit on November 7, 2022,

asserting that the valuation of Mr.

Sham’s GPS patent, acquired through technical

investment, is overestimated, and asserts that EPTECH’s financial reports are misleading.

SFIPC further asserts that Mr.

Sham shall bear liability for damages incurred by investors

This suit is currently being litigated by the Intellectual Property and Commercial

Court (Intellectual Property and Commercial Court, Year 2023, Shang-Su-Zi, No.

has required the SFIPC to bear the burden of proof.

Pursuant to the civil

suit of claim for damages of financial misrepresentation (paragraph #3, immediately preceding

this paragraph), SFIPC has applied for a provisional seizure procedure.

Intellectual Property

and Commercial Court has ruled to grant the provisional seizure on November 25, 2022.

Sham’s appeal, the Supreme Court reverse the original provisional seizure

ruling, and on December 29, 2023, the Intellectual Property and Commercial Court changed

the ruling (Intellectual Property and Commercial Court, Year 2023, Shang-Quan-Geng-Zi, No.

2) to reducing the amount of the provisional seizure and required the SFIPC to first provide

a security deposit before seizing Mr.

suit is currently being litigated by the Intellectual Property and Commercial Court (Intellectual Property and Commercial Court, Year

2022, Shang-Su-Zi, No.

Currently, an agreement to suspend litigation has been reached with the opposing party (SFIPC).

It is anticipated

that the litigation will resume after the witnesses are summoned in the Criminal Prosecution.

Based on the content of the Prosecutor’s indictment,

SFIPC initiated a civil suit on November 7, 2022, asserting that the valuation of Mr.

Sham’s GPS patent, acquired through

technical investment, is overestimated, and asserts that EPTECH’s financial reports are misleading.

SFIPC further asserts that

Sham shall bear liability for damages incurred by investors of EPTECH.

This suit is currently being litigated by the Intellectual

Property and Commercial Court (Intellectual Property and Commercial Court, Year 2023, Shang-Su-Zi, No.

The court has required the

SFIPC to bear the burden of proof.

Pursuant to the civil suit of claim for damages of financial

misrepresentation (paragraph #3, immediately preceding this paragraph), SFIPC has applied for a provisional seizure procedure.

Property and Commercial Court has ruled to grant the provisional seizure on November 25, 2022.

Sham’s appeal,

the Supreme Court reverse the original provisional seizure ruling, and on December 29, 2023, the Intellectual Property and Commercial

Court changed the ruling (Intellectual Property and Commercial Court, Year 2023, Shang-Quan-Geng-Zi, No.

2) to reducing the amount of

the provisional seizure and required the SFIPC to first provide a security deposit before seizing Mr.

Sham’s property.

This requirement to SFIPC

to pay a security deposit is an uncommon practice.

Sham has currently appealed the

Intellectual Property and Commercial Court’s remanded ruling on the provisional seizure

and is awaiting a decision from the Supreme Court.

requirement to SFIPC to pay a security deposit is an uncommon practice.

Sham has currently appealed to the Intellectual Property

and Commercial Court’s remanded ruling on the provisional seizure and is awaiting a decision from the Supreme Court.

While we are unable to predict

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Mine Safety Disclosures

Sham’s spouse is a former director of Thunder

Power, who has resigned from all roles with Thunder Power in October 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings