California Compliance Disclosure

This California Compliance Disclosure (“Compliance Disclosure”) is provided pursuant to the requirements of CAL. HEALTH & SAFETY CODE §§ 119400 – 119402, which requires that certain pharmaceutical and medical device companies adopt and make public Comprehensive Compliance Programs (“Compliance Programs”) that govern such companies’ marketing and promotional activities.

Sonex Health, Inc. (“Sonex”) is a medical device manufacturer and marketer headquartered in Eagan, Minnesota. Sonex’s Compliance Program is global in scope and incorporates the highest standards of ethical and legal conduct as expressed in laws, rules, and regulations applicable to the many territories in which Sonex does business. The Compliance Program is primarily structured to follow Office of the Inspector General of the US Department of Health and Human Services (“OIG”) Compliance Program Guidance documents, as well as the Federal Sentencing Guidelines’ Seven Elements of an Effective Compliance Program (endorsed by the OIG and set forth in the sections below). The policies and procedures issued under the Compliance Program are appropriate to Sonex and are modeled on (and often stricter than) guidance set forth in the AdvaMed Code of Ethics on Interactions with Healthcare Professionals, MedTech Europe Code of Ethical Business Practice, and various other self-regulatory codes applicable to where Sonex does business.

The Compliance Program is designed to assist Sonex in maintaining its reputation of good corporate citizenship and the high levels of trust Sonex has established in the global marketplace. Sonex’s Compliance Program aids Sonex by giving Sonex personnel specific direction in preventing, detecting, and resolving compliance challenges. Sonex is committed to ensuring that its personnel are trained comprehensively and understand their duties under the Compliance Program.

Sonex investigates and resolves all reported compliance concerns in a timely manner; reporting compliance concerns is each Sonex personnel’s obligation, and non-compliance with this or any other Compliance Program obligation may result in disciplinary action up to and including termination of employment or contract.

As of the date of this Compliance Disclosure, Sonex believes that its operations comply with its Compliance Program and the provisions of CAL. HEALTH & SAFETY CODE §§ 119400 – 119402.

This Compliance Disclosure is made solely for the purpose of complying with the California law cited above and should not be read in isolation from Sonex’s other discussions of its compliance related activities and information currently disclosed or disclosed in the future in its public statements, press releases, securities filings, and elsewhere. To see a copy of Sonex’s Code of Business Conduct and Ethics, please click here. Questions regarding Sonex’s Code of Business Conduct and Ethics and/or this Compliance Disclosure may be addressed to John Savage, Chief Financial Officer, at

Element 1: Written Policies and Procedures

Sonex’s written policies and procedures – including the Code of Business Conduct and Ethics and policies and procedures Sonex has put in place and published to its personnel – emphasize individual and corporate responsibility for compliance with all applicable laws and regulations and adherence to the highest ethical standards. All Sonex personnel worldwide must understand and comply with these obligations, and Sonex trains its personnel to ensure that they do so comply.

The Sonex Code of Business Conduct and Ethics (the “Code of Conduct”) describes Sonex’s commitment to operate in accordance with accepted standards of business integrity, Sonex policies, and applicable laws and regulations. Sonex’s CFO ensures that the Code of Conduct is regularly reviewed and offers revisions to the Sonex Compliance Committee.

The Code of Conduct and Sonex’s compliance policies provide explicit guidance aimed at ensuring the integrity of Sonex personnel’s relationships with customers and other Healthcare Professionals (“HCPs”) across the globe. Sonex’s compliance policies and procedures closely model the AdvaMed Code of Ethics for Interactions with Healthcare Providers and incorporate appropriate laws and standards of conduct from each jurisdiction in which Sonex operates or does business (e.g., Eucomed/Europe, US state laws governing medical device companies, and the UK Bribery Act 2010). Sonex ensures that legal and compliance-related developments relevant to Sonex’s business are captured in the policies and procedures and that those foundational documents are revised, published, and trained on as necessary to maintain compliance with applicable laws.

Consistent with CAL. HEALTH & SAFETY CODE § 119402, Sonex has established a written $2,500-per-calendar-year limit for certain promotional materials, items and/or promotional activities provided to California licensed healthcare professionals.

The spending limit, consistent with California statute, excludes the value of the following:

• Travel expenses for attendance at company medical education and product training meetings
• Product samples
• Educational materials that directly benefit patients or are intended for patient use
• Short-term loan of a device to permit evaluation
• In-kind items used for the provision of charity care; and
• Payment for legitimate professional healthcare services provided by a healthcare professional

Element 3: Training and Education

As part of their general compliance training, Sonex personnel must annually acknowledge and document that they have reviewed the Code of Conduct and the compliance policies and procedures and acknowledge their obligation to carry out their responsibilities in accordance with applicable law and Sonex policies and procedures.

The CFO ensures that all Sonex personnel receive generalized compliance training wherever they are in the world, as well as specialized training relevant to their day-to-day activities. Such training occurs at least annually, with additional training events as necessary for new personnel or to address significant changes in law or industry practices. The CFO also sends compliance updates to Sonex personnel as appropriate.

Element 4: Effective Lines of Communication

Sonex encourages candid and open communication between management and Sonex personnel regarding compliance concerns. Sonex has established (and communicated to personnel) multiple reporting channels, all of which are confidential and offer personnel the means to report compliance concerns without fear of retaliation. Sonex not only encourages its personnel to report possible violations of the Code of Conduct, its policies and procedures, U.S. law, or another country’s anti-corruption laws, it requires such reporting: Failure to report suspected non-compliance may result in disciplinary action up to and including termination of employment or contract with Sonex.

Element 5: Auditing and Monitoring

Compliance concerns may be directed to numerous managers, supervisors, and executives throughout the organization, and are ultimately reported to Sonex’s CFO. Sonex also offers an Ethics Helpline, which is hosted by an independent third party and is available 24/7. Callers may choose to remain anonymous, and information provided will be treated as confidential as far as possible. We will ensure that no action is taken against anyone who reports, in good faith, actual or suspected misconduct.

The Sonex CFO continuously monitors Sonex personnel’s compliance with the Compliance Program and Sonex policies and procedures. The CFO also conducts audits – both formal and informal – to address areas of risk.

Element 6: Enforcement and Discipline

Sonex Compliance Program documents establish the standards to which personnel are expected to adhere, as well as publish the procedures Sonex follows in response to any reported or otherwise-suspected improper behavior. Sonex timely investigates such suspected and/or reported non-compliance and responds promptly with corrective action as appropriate and required, and consistent with Sonex’s Compliance Program policies and procedures.

Element 7: Response and Prevention

As noted above, Sonex timely investigates suspected and/or reported non-compliance and responds promptly with corrective and preventive actions tailored to address improper actions or prevent potential violations.

Actions in response to detected violations of the Compliance Program or applicable laws, rules or regulations can include, but are not limited to, corrective actions, prevention plans, disciplinary action (up to and including dismissal), revision of Compliance Program documents, and retraining. The CFO works with Sonex management to ensure that Sonex personnel who remain with the company successfully complete any corrective action or prevention plans and takes the lead on re-drafting documents and conducting follow-up training, as necessary.

The CFO reports such investigation outcomes, corrective actions and prevention plans to the CEO and Compliance Committee. Certain matters are also reported to the Sonex Board of Directors’ Audit Committee, as appropriate.