Item 1.01 Entry into a Material Definitive Agreement.
On March 21, 2022, Franklin Wireless Corp. (the "Company") entered into a Loan
Agreement with Franklin Technology Incorporation, a Republic of Korea
corporation ("FTI"), under which the Company agreed to loan US$10,000,000 to
FTI. The Company owns a majority of the outstanding equity of FTI. FTI's primary
business is providing design and development services to the Company for our
wireless products. As part of the loan transaction, FTI delivered a $10 million
Promissory Note to the Company (the "Note").
The purpose of the loan is to allow FTI to purchase a facility in South Korea to
house its operations, and to provide it with additional working capital. The
purchase of such a facility with the loan proceeds is subject to the Company's
reasonable approval. Upon acquisition of the facility, FTI is required to grant
the Company a mortgage on it to secure payment of the Note.
The Note is for a term of five years, provides for annual payments of interest
only at 2% per annum, and is due and payable upon maturity. The Note and Loan
Agreement include customary provisions for default and acceleration upon
default, and a default interest rate of 7% per annum.
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