bkti_ex101
Exhibit 1.01
Conflict Minerals Report of BK Technologies
Corporation
In Accordance With Rule 13p-1 under the Securities Exchange Act of
1934
This is
the Conflict Minerals Report of BK Technologies Corporation for
calendar year 2019 in accordance with Rule 13p-1 under the
Securities Exchange Act of 1934 (“1934 Act”). Please
refer to Rule 13p-1, Form SD and the 1934 Act Release No.
34-677161 for definitions to the terms used in this
report, unless otherwise defined herein. The date of filing of this
Conflict Minerals Report is May 27, 2020.
References in this report to “we,” “our,”
or “us” mean BK Technologies Corporation, together with
its subsidiaries, except where the context otherwise
requires.
Applicability of the Conflict Minerals Rule to Our
Company
As a
company engaged in the manufacture of land mobile radio
communications equipment, our products utilize certain electronic
components that potentially contain Conflict Minerals. A review of
the products was completed for 2019. It was determined that
potential Conflict Minerals could feasibly be found within, or as
part of, the production process of our products.
We are
many levels removed from mines, smelters and refiners and have
limited influence over the mines, smelters, refiners and many of
the other vendors in our supply chain. However, through the efforts
described in Form SD and this Conflict Minerals Report included as
an exhibit to Form SD, we seek to ensure that our sourcing
practices are consistent with our Conflict Minerals Policy and to
encourage conflict free sourcing in our supply chain.
While
BK Technologies Corporation takes its conflict minerals compliance
very seriously, as a company engaged in the manufacture of land
mobile radio communications equipment, related components and
subsystems, BK Technologies Corporation is several levels removed
from the actual mining of any potential conflict minerals that may
be contained in its final products. Furthermore, BK Technologies
Corporation does not purchase raw ore or unrefined conflict
minerals, or make purchases from the Covered Countries. Thus, BK
Technologies Corporation cannot determine the origin of any
potential conflict minerals that may be in its final products with
any certainty once the raw ores are smelted, refined and converted
to ingots, bullion or other conflict mineral-containing
derivatives. The smelters and refiners in BK Technologies
Corporation's supply chain -- who BK Technologies Corporation
typically does not know due to being so far removed from them in
the supply chain -- are in the best position to know the origin of
the ores.
Our Conflict Minerals Policy
BK
Technologies Corporation fully supports the goals and objectives of
Section 1502 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the "Act"), which aims to prevent the use of
certain "conflict minerals" that directly or indirectly finance or
benefit armed groups in the Democratic Republic of the Congo
("DRC") or adjoining countries (including Angola, Burundi, The
Central African Republic, The Republic of Congo, Uganda, Rwanda,
South Sudan, Tanzania, and Zambia) (the "Covered Countries").
Conflict minerals include: columbite-tantalite ("tantalum"),
cassiterite ("tin"), wolframite ("tungsten"), and
gold.
We
fully support Rule 13p-1 under the Securities Exchange Act of 1934,
as amended, and Form SD (collectively, the "Conflict Minerals
Rule") and are committed to responsible sourcing of Conflict
Minerals (as defined below) as well as compliance with the
requirements of the Conflict Minerals Rule. BK Technologies
Corporation has implemented procedures designed to identify the
potential conflict minerals which are necessary to the
functionality or production of a product manufactured by BK
Technologies Corporation or for BK Technologies Corporation by a
contract manufacturer and determining the country of origin of any
potential conflict material. Furthermore, we embrace the Electronic
Industry Citizenship Coalition’s (“EICC”) due
diligence and reporting processes that seek to ensure supply chain
transparency.
In
furtherance of the foregoing, we have adopted and communicated to
our suppliers and the public a company policy (the "Conflict
Minerals Policy") for the supply chain of Conflict Minerals. As
used herein and in the Conflict Minerals Policy, "Conflict
Minerals" are columbite-tantalite (coltan), cassiterite, gold,
wolframite and the derivatives tantalum, tin and tungsten, without
regard to the location of origin.
The
Conflict Minerals Policy includes our expectations that our
suppliers:
1.
Assist us in
complying with the conflict minerals Rule, by declaring any
components, parts and products that contain Conflict Minerals and
further providing associated country of and other origin
information;
2.
Implement controls
on their supply chains consistent with our responsible sourcing
commitment, so that they are able to provide us with the foregoing
information and so that all of the conflict minerals in the
components, parts and products that we purchase from them are
conflict free;
3.
Source conflict
minerals from ethically and socially responsible sources that do
not directly or indirectly contribute to conflict, including
sources that do not directly or indirectly benefit or finance armed
groups in the DRC or its adjoining countries; and
4.
Otherwise
implement, and require their direct and indirect suppliers to
implement, policies, protocols, standards, systems, frameworks and
procedures that are consistent with the Conflict Minerals Rule and
the Organization for Economic Co-operation and Development's Due
Diligence Guidance for Responsible Supply Chains of Minerals from
Conflict-Affected and High-Risk Areas.
Our Conflict
Minerals Policy indicates that suppliers will be reviewed and
evaluated accordingly for future business and sourcing decisions.
In addition, our suppliers are expected to comply with our code of
business conduct and ethics.
Reasonable
Country of Origin Information
In
connection with the reasonable country of origin inquiry (RCOI)
required by the Conflict Minerals Rule, BK Technologies Corporation
utilized the same process and procedures established for our due
diligence. We designed our due diligence measures relating to
Conflict Minerals to conform with, in all material respects,
guidance established by the Electronic Industry Citizenship
Coalition (EICC) for responsible sourcing of minerals, and on the
Organisation for Economic Co-operation and Development's (OECD) Due
Diligence Guidance for Responsible Supply Chains of Minerals from
Conflict-Affected and High-Risk Areas.
As a
result of BK Technologies Corporation's RCOI and ongoing due
diligence (as described below), BK Technologies Corporation does
not have sufficient information to determine the country of origin
of the conflict minerals used in our products or identify the
facilities used to process those conflict minerals. Therefore, we
cannot exclude the possibility that some of these conflict minerals
may have originated in the Democratic Republic of the Congo or an
adjoining country and/or are not from recycled or scrap
sources.
As
such, BK Technologies Corporation's products produced in calendar
year 2019 are "DRC Conflict Undeterminable." As a result we have
filed a Conflict Minerals Report.
Due Diligence
In
accordance with Rule 13p-1, BK Technologies Corporation undertook
due diligence reasonably designed to (i) identify whether there are
any conflict minerals necessary to the functionality or production
of products manufactured by BK Technologies Corporation or
contracted by BK Technologies Corporation to be manufactured, and
if so (ii) determine whether any of the minerals originated in the
DRC or an adjoining country, or are from recycled or scrap sources.
BK Technologies Corporation designed its due diligence based on
guidance issued by the Conflict Free Sourcing Initiative ("CFSI")
established by the Electronic Industry Citizenship Coalition (EICC)
and the Global e-Sustainability Initiative ("GeSI") ("EICC-GeSI
Guidance"), and on the Organization for Economic Co-operation and
Development's ("OECD") Due Diligence Guidance for Responsible
Supply Chains of Minerals from Conflict-affected and High-risk
Areas ("OECD Guidance").
BK
Technologies Corporation has taken the following measures to
exercise due diligence on the source and chain of custody of the
potential conflict minerals in its products. With respect to the
period covered, the design of the due diligence measures described
herein for tin, tungsten, tantalum, and gold was based on EICC-GeSI
Guidance and OECD Guidance, and involved the
following:
1.
BK Technologies
Corporation has established a management system for conflict
minerals.
a.
BK Technologies
Corporation has structured internal management to support supply
chain due diligence.
i.
BK Technologies
Corporation has adopted and implemented a conflict minerals
compliance policy and procedures that are consistent with that of
the EICC-GeSI Guidance, for its supply chain.
ii.
A cross-functional
team has been formed to administer the conflict minerals management
program. The team is comprised of senior Company employees,
including management, and reports to the Company’s Executive
Vice President and Chief Financial Officer.
b.
BK Technologies
Corporation conducts surveys of its direct suppliers to determine
whether the products they provide to BK Technologies Corporation
contain potential conflict minerals, using the Conflict Minerals
Reporting Template issued by the EICC and GeSI (the "EICC-GeSI
Template"). We follow-up with suppliers that submit an incomplete
response or a response that we determine contains inaccuracies,
inconsistencies or red flags, or that otherwise provide a EICC-GeSI
Template determined not to be suitable by us, in each case
requesting the supplier to submit a revised EICC-GeSI Template or
provide us with additional information. We follow up with other
suppliers where determined to be appropriate by us.
c.
BK Technologies
Corporation incorporates its conflict minerals compliance efforts
into its contractual procurement terms and conditions. For example,
BK Technologies Corporation’s purchase orders contain terms
and conditions that require the supplier to certify that its
product is "conflict free."
2.
BK Technologies
Corporation has designed and implemented a strategy to respond to
identified risks. BK Technologies Corporation's strategy includes
the following:
a.
Findings of supply
chain risk assessment are reported by the Conflict Minerals Team to
the team lead (EVP & CFO) and the Company’s
President.
b.
BK Technologies
Corporation works with suppliers to identify and use alternate
suppliers for any component deemed to include conflict minerals
from a Covered Country.
c.
BK Technologies
Corporation employees can report violations of its conflict
minerals policies. BK Technologies Corporation has also provided
training to relevant employees on its conflict minerals
policies.
d.
BK Technologies
Corporation has incorporated terms and conditions in its
procurement documents (e.g., purchase order contracts), which
require suppliers to certify their product to be conflict
free.
3.
BK Technologies
Corporation complies with Step 4 of the OECD Guidance through
encouraging its direct suppliers to purchase from EICC's Conflict
Free Smelter ("CFS") Compliant Smelters.
4.
BK Technologies
Corporation complies with Step 5 of the OECD Guidance through
making its conflict mineral reports ("CMR") available on its
website.
The due
diligence outlined above mitigates the risk that components
necessary to the function or production of BK Technologies
Corporation's products are made from conflict minerals. BK
Technologies Corporation is expanding its due diligence to improve
upon the information gathered and further mitigate any risk that BK
Technologies Corporation's products contain any necessary conflict
minerals from Covered Countries. We intend to take the following
additional steps to mitigate the risk that the necessary conflict
minerals contained in our products benefit armed
groups:
1.
Continue to
encourage suppliers to source only from smelters and refiners that
are compliant or active.
2.
Engage with
suppliers that provided incomplete responses for 2019 to help
ensure that they provide adequate information for
2020.
3.
Encourage the
continuing development and progress of traceability measures at
suppliers that indicated for 2019 that the source of conflict
minerals was unknown or undeterminable.
4.
Communicate to new
suppliers our sourcing expectations, including through the
dissemination of the Conflict Minerals Policy to them and required
adherence to contractual sourcing requirements. In addition, as new
suppliers are added, work with these suppliers to ensure that they
understand the requirements of the Conflict Minerals Rule and the
OECD Guidance.
As a
result of BK Technologies Corporation's due diligence efforts for
the year covered by this Report, BK Technologies Corporation
determined that its two-way land mobile radios, repeaters and base
stations potentially contain conflict minerals. Two-way land mobile
radios can be units that are hand-held or installed in vehicles.
Repeaters expand the range of two-way land mobile radios, enabling
them to operate over a wider area. Base station components and
subsystems are installed at radio transmitter sites to improve
performance by enhancing the signal and reducing or eliminating
signal interference. BK Technologies Corporation has concluded in
good faith that, with respect to two-way land mobile radios,
repeaters and base stations, the potential conflict minerals that
these final products contain are "DRC Conflict
Undeterminable."
Product Description
Based
on BK Technologies Corporation's due diligence, BK Technologies
Corporation determined for the period covered by this Report that
the BK Technologies Corporation products listed below have
production processes which utilize potential conflict minerals, and
that the final products are "DRC Conflict
Undeterminable."
1.
Products – BK
Technologies Corporation designs, manufactures, and markets
wireless communications equipment consisting of two-way land mobile
radios, repeaters, base stations, and related components and
subsystems. Two-way land mobile radios can be units that are
hand-held (portable) or installed in vehicles (mobile). Repeaters
expand the range of two-way land mobile radios, enabling them to
operate over a wider area. Base station components and subsystems
are installed at radio transmitter sites to improve performance by
enhancing the signal, reducing or eliminating signal interference
and enabling the use of one antenna for both transmission and
reception. We employ both analog and digital technologies in our
products. Our digital products are compliant with P-25
specifications. Our P-25 digital products and our analog products
function in the VHF (136MHz – 174MHz), UHF (380MHz –
470MHz, 450MHz – 520MHz), and 700-800 MHz.
2.
BK Technologies
Corporation, as a purchaser of finished components, and its
suppliers of which it is aware, are several layers removed from the
mining of any potential conflict minerals that may be contained in
the products. Accordingly, BK Technologies Corporation is unable to
determine the origin of these minerals with certainty.