FRANKLIN WIRELESS CORP

Effective January 1, 2024, we leased approximately 11,400 square feet of office space in San Diego, California. The lease has an initial term of 65 months, expiring on May 31, 2029. The monthly rent for the first year was $27,789, subject to a fixed three percent annual increase every January 1, and the lease includes one month of rent abatement each year. In addition to the base monthly rent, the lease also requires payment for certain common area costs. We maintain appropriate insurance coverage and believe the facility is suitable and adequate for our present needs. Rent expense related to this property was $345,150 and $337,322 for the years ended June 30, 2026 and 2025, respectively.

Our Korea-based subsidiary, FTI, leases approximately 10,000 square feet of office space, at a monthly rent of approximately $6,400, and additional office space consisting of approximately 2,682 square feet at a monthly rent of approximately $2,100, both located in Seoul, South Korea. These leases expired on August 31, 2026, and were extended for an additional 24 months to August 31, 2028. In addition to monthly rent, the leases provide for periodic cost of living increases in the base rent and payment for certain common area costs. These facilities are covered by an appropriate level of insurance, and we believe them to be suitable for our use and adequate for our present needs. Rent expense related to these leases was $102,510 and $105,889 for the years ended June 30, 2026 and 2025, respectively.

We leased one corporate vehicle on December 1, 2024, in San Diego, California, for our employees, under a non-cancelable lease that expires on November 30, 2027. Rent expense related to this lease was $5,947 and $3,469 for the years ended June 30, 2026 and 2025, respectively.

We leased another corporate vehicle on April 28, 2026, in San Diego, California, for our employee, under a non-cancelable lease that expires on July 28, 2029. Rent expense related to this lease was $1,885 and $0 for the years ended June 30, 2026 and 2025, respectively.

We used discount rates of 7.0% and 6.0% in determining our operating lease liabilities for the office spaces in San Diego, California, and South Korea, respectively, and used a discount rate of 7.0% and 3.9% in determining our lease liabilities for the vehicles in the order of lease inception date, respectively. These rates represented our incremental borrowing rates at that time. Short-term leases with initial terms of twelve months or less are not capitalized. The office leases of our Korea-based subsidiary were extensions of previous leases and do not contain any further extension provisions.