FKWL Franklin Wireless Corporation

Item 1.01 Entry into a Material Definitive Agreement.

Definitive Settlement Agreements Executed in Settlement of Class Action Litigation

Background

As previously disclosed, on April 16, 2021, an action was filed in the United States District Court for the Southern District of California against the Company and two of its officers relating to the timing of the disclosure of a recall of certain Jetpack products supplied by the Company to Verizon. On September 15, 2021, the court appointed a lead plaintiff. On November 15, 2021, the plaintiff filed a Class Action Amended Complaint asserting that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and U.S. Securities and Exchange Commission (“SEC”) Rule 10b-5 promulgated thereunder, by allegedly making materially false and misleading statements implying that the Jetpack products were functioning properly and were not suffering from any noteworthy defects. The defendants. On January 14, 2022, the defendants filed their answer to the Amended Complaint, in which they denied the material provisions of the Amended Complaint. Discovery commenced, and the parties exchanged document requests and interrogatories and began producing documents on a rolling basis.

On January 3, 2023, the Court granted the plaintiff’s motion for class certification.

Mediation

On May 1, 2023, the parties participated in a mediation session with Jed D. Melnick, Esq., an experienced mediator at JAMS. Prior to the mediation, the parties submitted comprehensive mediation statements setting forth the strengths and weaknesses of their case. Ultimately, the parties reached an agreement in principle to settle the action. The agreement was memorialized in a memorandum of understanding (the “Memorandum of Understanding”) which was fully executed on May 3, 2023. The Memorandum of Understanding sets forth, among other things, the parties’ agreement to fully and finally settle and release all claims that were asserted or could have been asserted in the action, in return for a payment of $2,400,000 for the benefit of the class. The Memorandum of Understanding was formalized in a Stipulation and Agreement of Settlement (the “Settlement Agreement”) that was executed on May 23, 2023 and filed with the Court on May 24, 2023.

Final Settlement Agreement

Under the terms of the Settlement Agreement, the Defendants will pay $2.4 million (the

“Settlement Amount”) into an escrow account maintained by Huntington National Bank. The Settlement Administrator will cause a Notice of Proposed Class Action (the “Notice”) to be sent to the class members. The Notice informs class members of the Settlement terms and affords an opportunity to request exclusion from the class or to object to the Settlement, the plan of allocation of the Settlement Amount, and a request for attorneys’ fees and expenses. A copy of the Notice, Claim Form, Settlement Agreement and related documents will also be posted on a website maintained by the Settlement Administrator.

Subject to the approval of the Court and the terms and conditions expressly provided within the Settlement Agreement, such Settlement fully, finally and forever settles, releases, resolves and dismisses with prejudice all claims asserted against the defendants. The Settlement Agreement provides that neither the Settlement nor any of the terms thereof constitute an admission or finding of any fault, liability, wrongdoing, or damages whatsoever or any infirmity in the defenses that the defendants have, or could have, asserted. The Company determined that it is desirable that the action be settled in the manner and upon the terms and conditions set forth in the Settlement Agreement. The Company’s decision to settle the action was based on the conclusion that further litigation would be protracted and expensive, with the uncertainty and risks inherent in any litigation and the determination that it is desirable and beneficial to settle the action in the manner and upon the terms and conditions set forth in the Settlement Agreement and to put the released claims to rest finally and forever, without in any way acknowledging any wrongdoing, fault, liability or damages to lead plaintiff or the settlement class.