isig_formsd2019ex101
EXHIBIT 1.01
INSIGNIA SYSTEMS, INC.
CONFLICT MINERALS REPORT
For the reporting period from January 1, 2019 to December 31,
2019
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, 2019 to December 31,
2019.
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, the Company’s
operations manufactured, or contracted 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 2019.
These
products, which are referred to in this Report collectively as the
“Covered Products,” are a certain type of printed
signage or corrugate display. 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 Products 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 nine
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 responses from all suppliers. One of those
suppliers was the Company’s primary source of toner for the
reporting period, and the results of its comprehensive response are
discussed below. The remaining suppliers indicated in their
responses that the products they had supplied to the Company during
the reporting period were not known to contain any Conflict
Minerals and the Company has no basis to believe that the responses
from those suppliers 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
primary supplier of toner was contacted directly to inquire if
Conflict Minerals were present and critical to the functionality of
the toner provided to the Company. The supplier returned to the
Company a Conflict Minerals Reporting Template (the
“CMRT”) developed by the Responsible Minerals
Initiative (“RMI”). Based on the information disclosed
on the CMRT, the Company compiled a list of smelters identified by
the supplier of toner.
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, 2019, 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
twenty smelters reported by our sole supplier on its CMRT are
listed in Appendix I below. The Company was able to identify that
eighteen out of the twenty smelters reported by our sole supplier
were listed on the RMI list as of May 20, 2020 and each of eighteen
smelters listed had been deemed compliant with the Responsible
Minerals Assurance Process (“RMAP”) assessment
protocols by an independent third party auditor, although the RMI
list reports that (a) five of these smelters are due for a
reassessment and (b) five of these smelters were only compliant
through the dates identified on Appendix I. 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
|
China Tin Group Co., Ltd(2)
|
CHINA
|
|
Tin
|
CV Ayi Jaya(3)
|
INDONESIA
|
|
Tin
|
CV Venus Inti Perkasa(4)
|
INDONESIA
|
|
Tin
|
Gejiu Jinye Mineral Company(5)
|
CHINA
|
|
Tin
|
Guangdong Hanhe Non-Ferrous Metal Co., Ltd.(2)
|
CHINA
|
|
Tin
|
Mineracao Taboca S.A.(6)
|
BRAZIL
|
|
Tin
|
Minsur(6)
|
PERU
|
|
Tin
|
Operaciones Metalurgical S.A.(6)
|
BOLIVIA
|
|
Tin
|
PT Aries Kencana Sejahtera(7)
|
INDONESIA
|
|
Tin
|
PT Bangka Serumpun(6)
|
INDONESIA
|
|
Tin
|
PT Eunindo Usaha Mandin(8)
|
INDONESIA
|
|
Tin
|
PT Menara Cipta Mulia(6)
|
INDONESIA
|
|
Tin
|
PT Sariwiguna Binasentosa(6)
|
INDONESIA
|
|
Tin
|
PT Sukses Inti Makmur(9)
|
INDONESIA
|
|
Tin
|
PT Tinindo Inter Nusa(6)
|
INDONESIA
|
|
Tin
|
PT Tommy Utama(10)
|
INDONESIA
|
|
Tin
|
Rui Da Hung(2)
|
TAIWAN
|
|
Tin
|
Thaisarco(2)
|
THAILAND
|
|
Tin
|
White Solder Metalurgia e Mineracao Ltda.(6)
|
BRAZIL
|
|
Tin
|
Yunnan Chengfeng Non-ferrous Metals Co., Ltd(2)
|
CHINA
|
|
_________________________________
|
|
(1)
Smelter names as reported by the RMI
as of May 20, 2020
|
|
(2)
Smelter has a reassessment in process
|
|
(3)
The smelter with CID002570 was
certified as compliant with RMAP assessment protocols through July
28, 2019
|
|
(4)
The smelter with CID002455 was
certified as compliant with RMAP assessment protocols through
October 12, 2019
|
|
(5)
The smelter with CID002859 is not
listed on RMI's list as of May 20, 2020
|
|
(6)
Smelter is currently certified as
compliant with the RMAP assessment protocols
|
|
(7)
The smelter with CID00309 was
certified as compliant with RMAP assessment protocols through July
27, 2019
|
|
(8)
The smelter with CID001438 is not
listed on RMI's list as of May 20, 2020
|
|
(9)
The smelter with CID002816 was
certified as compliant with RMAP assessment protocols through
September 1, 2019
|
|
(10) The smelter with CID001493 was certified as
compliant with RMAP assessment protocols through December 7,
2019
|