Franklin Wireless Corp. filed SEC Form 8-K: Entry into a Material Definitive Agreement
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Section 1 - Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
Definitive Settlement Agreements Executed in Settlement of Derivative Litigation
Background
As previously disclosed, a legal action was filed in the U.S. District Court, Southern District of California (San Diego) against Franklin, as a nominal defendant, Nosirrah Management LLC v. Franklin Wireless et al. (Case # 3:21-cv-01316-CAB-JLB), on or about July 22, 2021, claiming that our Chief Executive Officer, OC Kim, violated Section 16(b) of the Securities Exchange Act of 1934 for receiving “short-swing” profits from a sale and purchase of Franklin shares, in violation of that Act.
On February 16, 2024, a jury found for the plaintiff and awarded Nosirrah $2,000,000 in damages, plus costs and attorney’s fees. Mr. Kim and the Company believe the allegations and the verdict are not supported by the facts. Notwithstanding the foregoing, the Company, Mr. Kim, and Nossirrah determined to compromise and settle the matter in lieu of further proceedings and entered into a Settlement and Release Agreement, dated June 12, 2024.
The Settlement and Release Agreement
Under the terms of the Settlement and Release Agreement, Mr. Kim will pay the Company $1,000,000 and the Company will pay the plaintiff’s attorneys $550,000. The Settlement and Release Agreement also provides that Mr. Kim will dismiss his appeal of the judgment, and provides for mutual releases among the parties.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FRANKLIN WIRELESS CORP. | |
| Date: June 14, 2024 | By: /s/ OC Kim |
| OC Kim, President |
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