Conflict Minerals

Statement

The Zhengna is concerned that the trade in conflict minerals mined in regions of the Democratic Republic of the Congo (“DCR”) and its adjoining countries (Angola, Burundi, Central African Republic, The Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda and Zambia), (Collectively, the “Covered Countries”) and the metals refined from such minerals- tantalum, tin tungsten and gold (referred to as “3TG”) may be contributing to human rights abuses.  As a result, we support the actions of governments and our customers to increase supply chain transparency and enable companies to source DCR conflict-free minerals.

In August of 2012, the US Securities and Exchange Commission (“SEC”) released the final rules (the “Conflict Minerals Rule”), as mandated by Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires publicly traded companies to disclose for each calendar year the presence of 3TGs originating from the Covered Countries in the products they manufacture or contract to manufacture if the 3TG is necessary for the functionality or production of the products.

Although Zhengna is not a publicly traded company, we are committed to helping our publicly traded customers comply with the Conflict Minerals Rule disclosure requirements.  To meet our customers’ disclosure requirements, The Zhengna Company has developed a process to determine which products contain any 3TGs that are necessary for their functionality or production and is working with our supply chain for those products to ensure, to the extent possible, the source of any such 3TG is from a conflict-free mine.

Policy

The Zhengna Company does not engage in the mining or smelting of any 3TG, or have direct supply relationships with mines or smelters, and, as a result, and 3TGs necessary to the functionality or production of any Zhengna Company product are included in materials sourced from others in our supply chain.  The Zhengna Company therefore expects all of its suppliers to comply with our disclosure requirements by identifying the presence of any 3TGs in any raw materials or components supplied to The Zhengna Company. Zhengna expects them to provide the origin of such minerals and implement controls and procedures in their supply chain consistent with this Policy.  Our suppliers are expected to directly and indirectly source 3TG contained in the raw materials and components we purchase only from sources that do not directly or indirectly benefit or finance armed groups in the Covered Countries.  Furthermore, we expect our suppliers to, where possible, source 3TG contained in such raw materials and components from smelters and refiners that are validated as being conflict-free and otherwise implement and require their supply chain to implement policies, procedures and practices that are consistent with this Policy.  Suppliers who do not comply with these expectations will be reviewed and evaluated accordingly for future business and sourcing decisions.

The Zhengna will communicate this Policy to its suppliers and will seek to obtain representations or certifications from its suppliers on the origin for any 3TGs that are necessary to the functionality or production of The Zhengna Company’s products through the CFSI Conflict Minerals Reporting Template.

Key Terms

1. “3TG”- means tungsten, tantalum, tin and gold- the four minerals currently covered under the Conflict Minerals Rule.
2. “Conflict-free”- means the product does not contain any 3TGs necessary to the functionality or production of that product that directly or indirectly finance or benefit armed groups in the Covered Countries or any such 3TG is from recycled or scrap sources.
3. “Covered Countries”- means the Democratic Republic of the Congo (“DCR”) and its adjoining countries: Angola, Burundi, Central African Republic, and the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda and Zambia.
4. “Necessary to the functionality”- according to SEC guidance, a 3TG is necessary to the functionality of a product if:
   1. The 3TG is intentionally added to the product or any component of the product and is not a naturally occurring by-product; and
   2. The 3TG is necessary to the product’s generally expected function, use or purpose.

If the 3TG is only included for ornamentation or decoration, it is only considered necessary to the functionality of the product if the product’s primary purpose is ornamentation or decoration.

1. “Necessary to the production”- according to SEC guidance, a 3TG is necessary to the production of a product if:
   1. The 3TG is intentionally included in the product’s production process, with the expectation of any tools machines or equipment used to produce the product;
   2. The 3TG is included in the final product; and
   3. The 3TG is necessary to produce the product

If the 3TG is used as a catalyst that is necessary to produce the product but is not contained in the final product, the 3TG is not considered to be “necessary to the production” of the product according to SEC guidance.