Blueprint
Exhibit 1.01
INSIGNIA SYSTEMS, INC.
CONFLICT MINERALS REPORT
For the reporting period from January 1, 2016 to December 31,
2016
This
Conflict Minerals Report (the “Report”) of Insignia
Systems, Inc. (the “Company”) has been prepared
pursuant to Rule 13p-1 and Form SD (the “Rule”)
promulgated under the Securities Exchange Act of 1934, as amended,
for the reporting period January 1, 2016 to December 31,
2016.
The
Rule requires disclosure of certain information when a company
manufactures or contracts to manufacture products for which the
minerals specified in the Rule are necessary to the functionality
or production of those products. The specified minerals, which we
collectively refer to in the Report as the “Conflict
Minerals,” are gold, columbite-tantalite (coltan),
cassiterite and wolframite, including their derivatives, which are
limited to tantalum, tin and tungsten. The “Covered
Countries” for the purposes of the Rule are the Democratic
Republic of the Congo, the Republic of the Congo, the Central
African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania,
Zambia and Angola. As described in this Report, certain of the
Company’s operations manufacture, or contract to manufacture,
products, and the Conflict Minerals are necessary to the
functionality or production of those products.
Description of the Company’s Products Covered by this
Report
This
Report relates to products: (i) for which Conflict Minerals are
necessary to the functionality or production of the product; (ii)
that were manufactured, or contracted to be manufactured, by the
Company; and (iii) for which the manufacture was completed during
calendar year 2016.
These
products, which are referred to in this Report collectively as the
“Covered Products,” are a certain type of printed
signage. These products are manufactured using printer toner that
contains trace amounts of tin, a “Conflict Mineral” as
defined above.
Reasonable Country of Origin Inquiry
The
Company conducted a good faith reasonable country of origin inquiry
regarding the Conflict Minerals contained in the Covered Products.
This good faith reasonable country of origin inquiry was reasonably
designed to determine whether any Conflict Minerals contained in
the Covered Product originated in the Covered Countries and whether
any Conflict Minerals contained in the Covered Products may be from
recycled or scrap sources.
The
Company’s supply chain with respect to the Covered Products
is complex, and there are many third parties in the supply chain
between the ultimate manufacture of the Covered Products and the
original sources of Conflict Minerals. In this regard, the Company
does not purchase Conflict Minerals directly from mines, smelters
or refiners. The Company must therefore rely on its suppliers to
provide information regarding the origin of Conflict Minerals that
are included in the Covered Products. Moreover, the Company
believes that the smelters and refiners of the Conflict Minerals
are best situated to identify the sources of Conflict Minerals, and
therefore has taken steps to identify the applicable smelters and
refiners of Conflict Minerals in the Company’s supply
chain.
The
sole supplier of materials used to manufacture the Company’s
Covered Products was identified and contacted directly to inquire
if Conflict Minerals were present and critical to the functionality
of those materials provided to the Company. The supplier returned
to the Company a Conflict Minerals Reporting Template (the
“CMRT”) developed by the Electronic Industry
Citizenship Coalition and the Global Sustainability Initiative.
Based on the information disclosed on the CMRT, the Company
compiled a list of smelters identified by our sole supplier of
materials used to manufacture the Covered Products.
Due Diligence
Due Diligence Design and Framework
Because
the Company could not determine that the tin in the Covered Product
did not originate in a Covered Country or originated from recycled
or scrap sources based on the response to the CMRT, the Company
exercised due diligence on the source and chain of custody of the
Conflict Minerals. The Company’s due diligence measures have
been designed to conform to the five-step framework in the
Organization for Economic Co-operation and Development Due
Diligence Guidance for Responsible Supply Chain of Minerals from
Conflict-Affected and High Risk Areas: Third Edition, including the
related supplements on gold, tin, tantalum and tungsten (the
“OECD Guidance”).
The
Company adopted a policy relating to Conflict Minerals (the
“Company Policy”), incorporating the standards set
forth in OECD Guidance. The Company’s policy is to avoid the
use of Conflict Minerals that directly or indirectly finance or
benefit armed groups in Covered Countries. To achieve this
objective, the Company has and will continue to survey its
suppliers to understand the origin of Conflict Minerals in its
Covered Products and expects its suppliers to adopt similar
policies and procedures and to supply materials to the Company that
are not financing or benefiting armed groups in the Covered
Countries.
Due Diligence Measures Performed
The
objective of the due diligence performed was to determine the
source and chain of custody of the Conflict Minerals contained in
the Covered Products and to determine whether any of those Conflict
Minerals are associated with armed groups in the Covered Countries.
For the Covered Products manufactured during the twelve months
ended December 31, 2016, the Company’s Accounting Department,
Operations Department, and Legal Counsel were involved in the due
diligence process, which was overseen by the Director of Finance
and Controller.
The
Company compared the smelter information received from its sole
supplier of the toner containing the Conflict Minerals against the
smelter lists developed and maintained by the Conflict-Free
Sourcing Initiative (the “CFSI”) to determine the
compliance status of each of the smelters that our supplier
reported to us.
Due Diligence Results
The
eight smelters reported by our sole supplier on its CMRT are listed
in Appendix I below. The Company was able to identify that each of
these smelters was listed on the CFSI list as of May 11, 2017 and
each of them had been deemed compliant with the Conflict-Free
Smelter Program (“CFSP”) assessment protocols by an
independent third party auditor, although the CFSI list reports
that one of these smelters currently has a reaudit in progress.
Neither the Company nor our supplier has been able to identify the
countries of origin of the tin sourced by those smelters identified
by our supplier and therefore, the information received from our
due diligence efforts is not sufficient to determine the countries
of origin of the tin in our Covered Products. We are continuing to
work with our supplier cooperatively to monitor risks in our supply
chain to ensure compliance with the Company Policy.
Future Steps to Mitigate Risk
The
Company expects to take the following steps, among others, to
continue to improve its due diligence measures and to further
mitigate the risk that any Conflict Minerals necessary to the
functionality of any of the Company’s products finance or
benefit armed groups in the Covered Countries: continuing to engage
with suppliers to obtain current, accurate and complete information
about the supply chain; encouraging suppliers to implement
responsible sourcing and to have them encourage smelters and
refiners to obtain a “conflict-free” designation from
an independent, third-party auditor; and engaging in industry
initiatives encouraging “conflict-free” supply
chains.
APPENDIX I
|
Mineral
|
Smelter Name(1)
|
Country Location of Smelter
|
|
Tin
|
EM
Vinto (2)
|
Bolivia
|
|
Tin
|
Malaysia
Smelting Corporation (MSC) (3)
|
Malaysia
|
|
Tin
|
Mineração
Taboca S.A. (2)
|
Brazil
|
|
Tin
|
Minsur
(2)
|
Peru
|
|
Tin
|
Operaciones
Metalurgical S.A. (2)
|
Bolivia
|
|
Tin
|
Thaisacro
(2)
|
Thailand
|
|
Tin
|
White
Solder Metalurgia e Mineração Ltda. (2)
|
Brazil
|
|
Tin
|
Yunnan
Tin Company Limited (2)
|
China
|
(1)
Smelter names as
reported by the CFSI as of 5/11/17
(2)
Smelter is
currently certified as compliant with the CFSP assessment
protocols
(3)
Smelter was
certified as compliant with the CFSP assessment protocols through
5/27/16; smelter is currently undergoing a reaudit