Exhibit 1.01

 

Akoustis Technologies, Inc.

Conflict Minerals Report

For The Calendar Year Ended December 31, 2019

 

This Conflict Minerals Report (this “Report”) of Akoustis Technologies, Inc. for the calendar year ended December 31, 2019 (the “Reporting Period”) is filed in accordance with Rule 13p-1 under the Securities Exchange Act of 1934, as amended (the “Rule”), and pursuant to the Company’s Specialized Disclosure Report on Form SD (“Form SD”) for the Reporting Period filed with the Securities and Exchange Commission (the “SEC”). The Rule imposes certain reporting and disclosure obligations on SEC registrants for which cassiterite, columbite-tantalite, gold, wolframite, or their derivatives, which are limited to tin, tantalum and tungsten (“conflict minerals”) are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, by the registrant.

 

References in this Report to “Akoustis,” “the Company,” “we,” “our,” or “us” refer to Akoustis Technologies, Inc. and its subsidiary, on a consolidated basis, unless otherwise indicated or the context otherwise requires.

 

Company and Product Overview

 

Akoustis is focused on developing, designing, and manufacturing innovative radio frequency (“RF”) filter products for the wireless industry, including for products such as smartphones and tablets, cellular infrastructure equipment, WiFi Customer Premise Equipment (“CPE”), and military and defense communication applications. Located between the device’s antenna and its digital backend, the RF front-end (“RFFE”) is the circuitry that performs the analog signal processing and contains components such as amplifiers, filters and switches. To construct the resonator devices that are the building blocks for its RF filters, the Company has developed a family of novel, high purity acoustic piezoelectric materials as well as a unique microelectromechanical system (“MEMS”) wafer process, collectively referred to as XBAW™ technology. The Company leverages its integrated device manufacturing (“IDM”) business model to develop and sell high performance RF filters using its XBAWTM technology. Filters are critical in selecting and rejecting signals, and their performance enables differentiation in the modules defining the RFFE.

 

Design of Conflict Minerals Program

 

Akoustis’ due diligence framework with regards to conflict minerals, which is summarized below, is designed to conform with the Organization for Economic Co-operation and Development (“OECD”) Guidance for Responsible Supply Chains for Minerals from Conflict-Affected and High Risk Areas, and the Supplements on Tin, Tantalum and Tungsten and on Gold.

 

Step 1- Establish strong company management systems

 

Adopt a Conflict Mineral Policy and make it publicly available on our website. (https://akoustis.com/wp-content/uploads/2018/05/AKOUSTIS-TECHNOLOGIES-Conflict-Minerals-Statement.v2.pdf)
Establish an internal conflict minerals process, led by our Vice President of Quality, to implement our Conflict Minerals Policy, which reports program activities to executive management on a regular basis.
Establish a confidential hotline to enable employees, suppliers and stakeholders to report any concerns and violations, and for general inquiries.
Maintain records relating to our conflict minerals program.

 

Step 2- Identify and assess risks in the supply chain

 

Utilize the Conflict Minerals Reporting Template (“CMRT”), a standardized reporting template developed by the Responsible Minerals Initiative (“RMI”) to identify smelters and refiners (“SORs”) that process the necessary conflict minerals contained in our products.

 

 

 

 

Survey our supply chain using the CMRT, requesting identified direct suppliers to identify SORs and country of origin of the conflict minerals.
Contact suppliers who returned CMRT information with trigger items on which to follow up based on internally defined criteria.
Compare our final SORs list against the list of facilities maintained by the Responsible Minerals Assurance Process (“RMAP”) to identify which SORs are conformant to RMAP’s standards.

 

Step 3- Design and implement a strategy to respond to identified risks

 

Devise a risk management plan to respond to identified risks in the event that Akoustis’ due diligence process identifies smelters in the supply chain sourcing or processing conflict minerals from the Democratic Republic of Congo or adjoining countries (together, the “DRC”), and are not RMAP conformant.
Perform risk mitigation efforts by encouraging suppliers to purchase materials from SORs validated as supporting responsible mineral procurement by an independent auditor in conformance with the RMAP assessment protocols.
Provide status reports including information on the source and chain of custody of conflict minerals in our supply chain to our senior management regularly, and at least annually.

 

Step 4- Independent third-party audit of SORs’ due diligence practices

 

As Akoustis does not source directly from conflict minerals processing facilities, we rely on the risk management and due diligence processes of RMI’s RMAP, including the program’s independent third-party audit process.

 

Step 5- Report annually on supply chain due diligence

 

In accordance with the Rule, Akoustis will file a Form SD and, as applicable, a conflict minerals report with SEC on an annual basis. In accordance with the OECD guidelines and the Rule, this Report is available on our website at www.akoustis.com.

 

Description of Due Diligence Measures Performed

 

Compared our final SORs list (compiled based on information received from suppliers) against the list of facilities maintained by RMAP to identify which SORs are RMAP conformant or active.
Provided status reports including information on the source and chain of custody of conflict minerals in our supply chain to our senior management.

 

Results of Our Due Diligence Measures

 

Akoustis uses tin, tantalum, tungsten and gold (“3TG”) in the design and manufacture of certain of its products and is therefore a “downstream” company in the conflict minerals supply chain. Due to the nature of our supply chain, we do not typically have a direct relationship with 3TG SORs. Our manufacturing operations employ a wide variety of semiconductors, electromechanical components and raw materials that are also supplied by other downstream companies in the supply chain. Our due diligence process involves seeking data from our relevant suppliers, and these suppliers seeking similar information from their supply chain in order to identify the sources for the necessary conflict minerals. We rely on the good faith efforts of our supply chain to provide us with reasonable data. We also depend largely on information collected and provided by RMI obtained through its independent third-party audit programs, such as RMAP. We achieved a response rate of 100% for our supply chain survey.

 

Many of our suppliers sourced 3TG from a variety of upstream sources and provided information to us on an aggregated, company-wide level. Due to the fungible nature of these materials, we understand that these suppliers were unable to trace the 3TG that they source into the products provided to any particular customer (including Akoustis). As a result, our list of SORs may contain more facilities than are actually used in our supply chain.

 

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We compare SORs declared by our suppliers against the list of facilities that are conformant with the RMAP’s standards for responsible mineral procurement and obtain countries of origin information (when available) from RMI. We have identified 51 SORs determined to be legitimate processing facilities by the RMI, of which all 51 have been validated as RMAP conformant.

 

As reported to us by our relevant suppliers, we have included a list of SORs determined to be legitimate processing facilities by the RMI and the locations of these facilities in Table 1 below.

 

As previously noted, because of the nature of our supply chain, we do not typically have any direct relationship with 3TG SORs. Therefore, as noted above, we contributed to the improvement of SOR diligence practices by working through our supply chain and RMI.

 

Ongoing Improvement Efforts

 

For the next reporting period, we intend to continue taking steps to further mitigate the risk that conflict minerals that are necessary to the functionality or production of our products finance or benefit armed groups in the DRC.

 

These steps include:

 

a.work with relevant suppliers to update their conflict minerals reporting template using the latest CMRT, and verify the identified smelters with the latest RMI’s updated RMI list;
b.continue to refine our conflict minerals program to improve our reasonable due diligence measures in our effort to determine the source and chain of custody of conflict minerals;
c.work with suppliers and others on industry-wide solutions to enable products that are DRC conflict free; and
d.extend RCOI and due diligence measures to any entities and businesses acquired in the future.

 

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Table of Conflict Minerals Processing Smelters or Refiners

 

Set forth in the table below is a list of the 51 SORs identified by our suppliers as possibly being used to process 3TG. RMAP statuses set forth in the lists below are based on information provided by RMI as of May 1, 2020. Our efforts to determine the mine or location of origin of our necessary conflict minerals are set forth above in “Description of Due Diligence Measures Performed” and “Results of Our Due Diligence Measures”.

 

Table 1: Smelters and Refiners

 

Metal   Smelter Name   Smelter Country   RMI Smelter Identification
Gold   Matsuda Sangyo Co., Ltd.   JAPAN   CID001119
Gold   Mitsubishi Materials Corporation   JAPAN   CID001188
Gold   Mitsui Mining and Smelting Co., Ltd.   JAPAN   CID001193
Gold   Nihon Material Co., Ltd.   JAPAN   CID001259
Gold   Sumitomo Metal Mining Co., Ltd.   JAPAN   CID001798
Gold   Tanaka Kikinzoku Kogyo K.K.   JAPAN   CID001875
Gold   Tokuriki Honten Co., Ltd.   JAPAN   CID001938
Tungsten   Chongyi Zhangyuan Tungsten Co., Ltd.   CHINA   CID000258
Tungsten   Japan New Metals Co., Ltd.   JAPAN   CID000825
Tungsten   Ganzhou Huaxing Tungsten Products Co., Ltd.   CHINA   CID000875
Tungsten   Xiamen Tungsten Co., Ltd.   CHINA   CID002082
Tungsten   Xiamen Tungsten (H.C.) Co., Ltd.   CHINA   CID002320
Gold   Argor-Heraeus S.A.   SWITZERLAND   CID000077
Gold   Umicore S.A. Business Unit Precious Metals Refining   BELGIUM   CID001980
Gold   Heimerle + Meule GmbH   GERMANY   CID000694
Gold   JX Nippon Mining & Metals Co., Ltd.   JAPAN   CID000937
Tin   Malaysia Smelting Corporation (MSC)   MALAYSIA   CID001105
Gold   Metalor Technologies S.A.   SWITZERLAND   CID001153
Gold    Heraeus Metals Hong Kong Ltd.   CHINA   CID000707
Gold   Asahi Refining USA Inc.   UNITED STATES OF AMERICA   CID000920
Gold   Metalor USA Refining Corporation   UNITED STATES OF AMERICA   CID001157
Gold   Gold Refinery of Zijin Mining Group Co., Ltd.   CHINA   CID002243
Gold   CCR Refinery - Glencore Canada Corporation   CANADA   CID000185
Gold   Materion   UNITED STATES OF AMERICA   CID001113
Gold   Royal Canadian Mint   CANADA   CID001534
Tantalum   Changsha South Tantalum Niobium Co., Ltd.   CHINA   CID000211
Tantalum   Exotech Inc.   UNITED STATES OF AMERICA   CID000456
Tantalum   F&X Electro-Materials Ltd.   CHINA   CID000460
Tantalum   JiuJiang JinXin Nonferrous Metals Co., Ltd.   CHINA   CID000914
Tantalum   Ningxia Orient Tantalum Industry Co., Ltd.   CHINA   CID001277

 

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Metal   Smelter Name   Smelter Country   RMI Smelter Identification
Tantalum   Ulba Metallurgical Plant JSC   KAZAKHSTAN   CID001969
Tantalum   Hengyang King Xing Lifeng New Materials Co., Ltd.   CHINA   CID002492
Tantalum   H.C. Starck Tantalum and Niobium GmbH   GERMANY   CID002545
Tungsten   Kennametal Huntsville   UNITED STATES OF AMERICA   CID000105
Tungsten   Fujian Jinxin Tungsten Co., Ltd.   CHINA   CID000499
Tungsten   Global Tungsten & Powders Corp.   UNITED STATES OF AMERICA   CID000568
Tungsten   Hunan Chenzhou Mining Co., Ltd.   CHINA   CID000766
Tungsten   Hunan Chunchang Nonferrous Metals Co., Ltd.   CHINA   CID000769
Tungsten   Jiangxi Yaosheng Tungsten Co., Ltd.   CHINA   CID002316
Tungsten   H.C. Starck Tungsten GmbH   GERMANY   CID002541
Tungsten   Jiangwu H.C. Starck Tungsten Products Co., Ltd.   CHINA   CID002551
Gold   Tanaka Kikinzoku Kogyo K.K.   JAPAN   CID001875
Tin   Gejiu Non-Ferrous Metal Processing Co., Ltd.   CHINA   CID000538
Tin   Mineracao Taboca S.A.   BRAZIL   CID001173
Tin   Minsur   PERU   CID001182
Tin   Mitsubishi Materials Corporation   JAPAN   CID001191
Tin   Operaciones Metalurgicas S.A.   BOLIVIA (PLURINATIONAL STATE OF)   CID001337
Tin   PT Timah Tbk Kundur   INDONESIA   CID001477
Tin   PT Timah Tbk Mentok   INDONESIA   CID001482
Tin   Thaisarco   THAILAND   CID001898
Tin   Metallo Belgium N.V.   BELGIUM   CID002773

 

 

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