Blueprint
Exhibit 1.01
INSIGNIA SYSTEMS, INC.
CONFLICT MINERALS REPORT
For the reporting period from January 1, 2017 to December 31,
2017
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, 2017 to December 31,
2017.
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 2017.
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. As part of the reasonable country of
origin inquiry, the Company reached out to six of suppliers to
confirm whether there were any Conflict Minerals contained in any
of the products that the Company manufactured or contracted to be
manufactured during the reporting period. The Company received
reasonable representations from all but one supplier that the
products supplied to the Company from those vendors during the
reporting period did not contain any Conflict Minerals and the
Company has no basis to believe that the representations that it
received from those vendors were untrue.
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 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 Responsible Minerals
Initiative (“RMI”) (formerly known as 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, 2017, the Company’s Accounting Department,
Operations Department, and Legal Counsel were involved in the due
diligence process, which was overseen by the Chief Financial
Officer.
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 RMI to determine the
compliance status of each of the smelters that our supplier
reported to us.
Due Diligence Results
The
thirty 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 RMI list as of May 10,
2018 and each of them had been deemed compliant with the
Responsible Minerals Assurance Process (“RMAP”)
(formerly known as the Conflict-Free Smelter Program) assessment
protocols by an independent third party auditor, although the RMI
list reports that five 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
|
CV Ayi Jaya(2)
|
INDONESIA
|
|
Tin
|
CV Dua Sekawan(2)
|
INDONESIA
|
|
Tin
|
CV Tiga Sekawan(3)
|
INDONESIA
|
|
Tin
|
CV United Smelting(2)
|
INDONESIA
|
|
Tin
|
CV Venus Inti Perkasa(2)
|
INDONESIA
|
|
Tin
|
EM Vinto(2)
|
BOLIVIA
|
|
Tin
|
Guangdong Hanhe Non-Ferrous Metal Co., Ltd.(2)
|
CHINA
|
|
Tin
|
Malaysia Smelting Corporation (MSC)(4)
|
MALAYSIA
|
|
Tin
|
Metallo-Chimique N.V.(5)
|
BELGIUM
|
|
Tin
|
Mineracao Taboca S.A.(6)
|
BRAZIL
|
|
Tin
|
Minsur(7)
|
PERU
|
|
Tin
|
Operaciones Metalurgical S.A.(2)
|
BOLIVIA
|
|
Tin
|
PT Aries Kencana Sejahtera(2)
|
INDONESIA
|
|
Tin
|
PT ATD Makmur Mandiri Jaya(2)
|
INDONESIA
|
|
Tin
|
PT Bangka Prima Tin(2)
|
INDONESIA
|
|
Tin
|
PT DS Jaya Abadi(2)
|
INDONESIA
|
|
Tin
|
PT Inti Stania Prima(2)
|
INDONESIA
|
|
Tin
|
PT Menara Cipta Mulia(2)
|
INDONESIA
|
|
Tin
|
PT Mitra Stania Prima(2)
|
INDONESIA
|
|
Tin
|
PT Prima Timah Utama(2)
|
INDONESIA
|
|
Tin
|
PT Refined Bangka Tin(2)
|
INDONESIA
|
|
Tin
|
PT Sariwiguna Binasentosa(2)
|
INDONESIA
|
|
Tin
|
PT Stanindo Inti Perkasa(2)
|
INDONESIA
|
|
Tin
|
PT Sukses Inti Makmur(2)
|
INDONESIA
|
|
Tin
|
PT Timah (Persero) Tbk Mentok(2)
|
INDONESIA
|
|
Tin
|
PT Tinindo Inter Nusa(2)
|
INDONESIA
|
|
Tin
|
PT Tommy Utama(2)
|
INDONESIA
|
|
Tin
|
Thaisarco(2)
|
THAILAND
|
|
Tin
|
White Solder Metalurgia e Mineracao Ltda.(8)
|
BRAZIL
|
|
Tin
|
Yunnan Chengfeng(2)
|
CHINA
|
(1)
Smelter names as
reported by the RMI as of May 10, 2018
(2)
Smelter is
currently certified as compliant with the RMAP assessment
protocols
(3)
The smelter with
CID002593 is also identified as “PT Rajehan Ariq” by
RMI. Smelter is currently certified as compliant with the RMAP
assessment protocols
(4)
Smelter was
certified as compliant with the RMAP assessment protocols through
June 16, 2017; smelter is currently undergoing a
reaudit
(5)
The smelter with
CID002773 is also identified as “Metallo Belgium N.V.”
by RMI. Smelter was certified as compliant with the RMAP assessment
protocols through April 7, 2017; smelter is currently undergoing a
reaudit
(6)
Smelter was
certified as compliant with the RMAP assessment protocols through
March 3, 2015; smelter is currently undergoing a
reaudit
(7)
Smelter was
certified as compliant with the RMAP assessment protocols through
January 31, 2015; smelter is currently undergoing a
reaudit
(8)
Smelter was
certified as compliant with the RMAP assessment protocols through
March 17, 2015; smelter is currently undergoing a
reaudit