.2

Board of Directors

Spirox, Inc.

Menlo Park, California

INDEPENDENT AUDITORS’ REPORT

We have audited the accompanying financial statements of Spirox, Inc., which comprise the balance sheets as of December 31, 2016 and 2015, and the related statements of operations, comprehensive loss, stockholders’ equity and cash flows for the years then ended and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Spirox, Inc. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.

/s/ Frank, Rimerman + Co. LLP

San Jose, California

March 21, 2017

Spirox, Inc.

Balance Sheets

See Notes to Financial Statements

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Spirox, Inc.

Statements of Operations and Other Comprehensive Loss

See Notes to Financial Statements

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Spirox, Inc.

Statements of Cash Flows

See Notes to Financial Statements

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Spirox, Inc.

Statement of Stockholders’ Equity

Years Ended December 31, 2016 and 2015

See Notes to Financial Statements

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Spirox, Inc.

Notes to Financial Statements

Spirox, Inc. (the Company) was incorporated in Delaware on November 3, 2011. The Company was founded to develop and commercialize a proprietary minimally invasive technology that improves the quality of life for patients with nasal obstruction. In 2016, the Company received 510(k) clearance from the United States Food and Drug Administration for the absorbable implant and accessory delivery tool that make up the Latera platform technology and is currently selling its product in the United States.

Cash and Cash Equivalents:

Cash and cash equivalents include all cash balances and highly liquid investments purchased with an original remaining maturity of three months or less. Cash equivalents consist of a money market account.

Short-Term Investments:

Short-term investments consist of United States treasury bonds with maturities of greater than three months and less than one year. The Company classifies these investments as available for sale. These investments are carried at fair value. Unrealized gains and losses are included as accumulated other comprehensive loss in stockholders’ equity in the accompanying financial statements.

Concentration of Credit Risk:

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents, short-term investments and accounts receivable. The Company’s cash and cash equivalents are deposited with a major financial institution in the United States of America and are in excess of the insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

The Company does not require collateral or other security for accounts receivable. The Company performs credit evaluations to reduce credit risk, as needed. To date, no credit losses have been incurred.

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Spirox, Inc.

Notes to Financial Statements

Inventory:

Inventory is valued at the lower of cost or market. Cost is determined using the standard cost method, which approximates the first-in, first-out method. The determination of market value involves numerous judgments, including estimated average selling prices based upon recent sales volumes, industry trends, existing customer orders, current contract price, future demand, pricing for the Company’s products and technological obsolescence of the Company’s product. Provisions are considered, when required, to reduce excess inventory to net realizable value. As of December 31, 2016, inventory consists primarily of finished goods.

Property and Equipment:

Property and equipment are stated at cost, net of accumulated depreciation and amortization. The Company depreciates property and equipment using the straight-line method over their estimated useful lives, generally three years for computer hardware and software, and five years for furniture, fixtures and machinery and equipment. Leasehold improvements are amortized over the lesser of the assets’ useful lives or the remaining lease term.

Accounting for Impairment of Long-Lived Assets:

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company has not record an expense related to impairment of long-lived assets since inception.

Product Warranty:

The Company provides for future warranty obligations at the time of sale. The warranty is generally for 90 days from delivery. The Company’s liability under these warranties is to provide a replacement product to the customer when a valid claim is received and approved. As of December 31, 2016, the Company has estimated the potential liability for future warranty obligations to be negligible and, therefore, has not recorded a liability on the accompanying balance sheet relating to the warranty.

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Spirox, Inc.

Notes to Financial Statements

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses in the financial statements and accompanying notes. Key estimates in the financial statements include the allowance for doubtful accounts, useful lives of property and equipment, impairment of long-lived assets, certain accrued expenses, valuation allowance for deferred income tax assets and the fair value of the convertible preferred stock warrant and of options granted under the Company’s stock-based compensation plan. Actual results could differ from those estimates.

Revenue Recognition:

The Company recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is probable. Generally, the Company recognizes revenue when products are shipped.

Cost of Revenue:

The Company includes the following in cost of revenue: product costs, direct labor, and manufacturing overhead, which includes allocations from quality assurance, material procurement, inventory control, facilities, depreciation of manufacturing equipment, operations supervision and management. Cost of revenue also includes certain direct costs such as shipping costs.

Research and Development Costs:

Research and development costs are expensed as incurred and consist primarily of salary and related expenses, consulting and materials.

Comprehensive Loss:

The Company accounts for comprehensive income and loss by major components and as a total separate component in stockholders’ equity. Comprehensive loss is defined as the change in stockholders’ equity arising from non-owner sources. In the Company’s case, other comprehensive loss results unrealized losses on investments available for sale.

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Spirox, Inc.

Notes to Financial Statements

Stock-Based Compensation:

The Company generally grants stock options to its employees for a fixed number of shares with an exercise price equal to the fair value of the shares at the date of grant. The Company accounts for employee options using the fair value method and all stock-based compensation is recognized over the grantee’s service period.

Stock-based compensation for options or warrants granted to non-employees is measured on the date of performance at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measured. Stock-based compensation for options granted to non-employees is periodically re-measured as the underlying options vest.

Convertible Preferred Stock Warrant:

The Company has accounted for its outstanding warrant stock to purchase shares of the Company’s convertible preferred stock as a liability at fair value upon issuance. The warrant is subject to measurement at each balance sheet date and any change in fair value is recognized in the statement of operations as other income or expense.

Fair Value Measurements:

Investments in marketable securities are presented at fair value at prices quoted on established securities exchanges.

The Company uses a three-level hierarchy, which prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. Fair value focuses on an exit price and is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those investments.

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Spirox, Inc.

Notes to Financial Statements

Fair Value Measurements: (continued)

The three-level hierarchy for fair value measurements is defined as follows:

An asset or liability’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company’s short-term investments were classified within Level 1 of the fair value hierarchy as of and for the year ended December 31, 2016.

The Company’s preferred stock warrant liability is classified within Level 3 of the fair value hierarchy at December 31, 2016 and 2015.

There have been no transfers made into or out of the Level 3 category to date.

The changes in value of the preferred stock warrant liability are summarized below:

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Spirox, Inc.

Notes to Financial Statements

Income Taxes:

The Company accounts for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are recorded based on the estimated future tax effects of differences between the financial statement and income tax basis of existing assets and liabilities. Deferred income taxes are classified as current or non-current, based on the classifications of the related assets and liabilities giving rise to the temporary differences. A valuation allowance is provided against the Company’s deferred income tax assets when their realization is not reasonably assured.

Recent Accounting Pronouncements Not Yet Effective:

Revenue:

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers. This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that reflects the consideration to which the entity expects to be entitled to in exchange for those goods and services.

The standard will replace most existing revenue recognition guidance generally accepted in the United States of America. Topic 606 is effective for the Company as of January 1, 2019, and permits the use of either a retrospective or cumulative effect transition method. The Company has not selected a transition method and is currently evaluating the effect Topic 606 will have on its financial statements and related disclosures.

Leases:

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases. This standard requires all entities that lease assets with terms of more than 12 months to capitalize the assets and related liabilities on the balance sheet. The standard is effective for the Company as of January 1, 2020 and requires the use of a modified retrospective transition approach for its adoption. The Company is currently evaluating the effect ASU 2016-02 will have on its financial statements and related disclosures. Management expects the assets leased under operating leases similar to the leases disclosed in Note 8 to the financial statements will be capitalized together with the related lease obligations on the balance sheet upon the adoption of ASU 2016-02.

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Spirox, Inc.

Notes to Financial Statements

Property and equipment consists of the following at December 31:

The Company applies the provisions set forth in FASB ASC Topic 740, to account for uncertainty in income taxes.

Deferred income taxes result from the tax effect of transactions that are recognized in different periods for financial statement and income tax reporting purposes. The Company’s net deferred income tax assets at December 31, 2016, were approximately $11,555,000 ($4,563,000 at December 31, 2015), and have been fully offset by a valuation allowance, as their realization is not reasonably assured. These deferred income tax assets consist primarily of net operating losses and income tax credits, which may be carried forward to offset future income tax liabilities. The Company has federal and state net operating loss carryforwards of $24,399,000 and $24,397,000, respectively, at December 31, 2016 ($10,318,000 and $10,308,000, respectively, at December 31, 2015), which begin to expire in 2032. Additionally, the Company has federal and state research and development income tax credits totaling $464,000 and $467,000, respectively, at December 31, 2016 ($50,000 and $22,000, respectively, at December 31, 2015). The federal income tax credits may be carried forward until 2034. The state income tax credits may be carried forward indefinitely.

Under certain 1986 Tax Reform Act provisions, the availability of the Company’s net operating loss and income tax credit carryforwards are subject to limitation if it should be determined there has been a change in the ownership of more than 50% of the value of the Company’s capital stock. Such a determination could substantially limit the eventual utilization of these tax carryforwards.

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Spirox, Inc.

Notes to Financial Statements

The Company uses the “more likely than not” criterion for recognizing the tax benefit of uncertain tax positions and establishing measurement criteria for income tax benefits. The Company has evaluated the impact of its tax positions and believes that all income tax filing positions and deductions will be sustained upon examination and, accordingly, has not recorded any reserves or related accruals for interest and penalties for uncertain income tax positions as of December 31, 2016. In the event the Company should need to recognize interest and penalties related to unrecognized tax liabilities, this amount will be recorded as an accrued liability and an increase to income tax expense.

The Company files income tax returns in the U.S. federal jurisdiction and the state of California. The Company believes the tax years 2011 through 2015 remain open to examinations by the appropriate government agencies in the federal and state jurisdictions.

In February 2012, the Company entered into a Loan and Security Agreement (the Agreement) with a venture lender that allowed for total borrowings of up to $400,000, under which the Company borrowed the full amount. In 2015, the Company repaid the outstanding borrowings under the Agreement.

In connection with the Agreement, the Company issued a warrant for the purchase of 48,000 shares of Series A redeemable convertible preferred stock (Series A) with an exercise price of $1.00 per share. The warrant was immediately exercisable and expires, if not exercised, in February 2022. At the time of issuance, the Company determined the fair value of the warrant using the Black-Scholes option pricing model to be $36,576, assuming a risk-free interest rate of 2.01%, contractual life of 10 years, volatility of 70.6%, no dividends and no forfeiture rate applied. The amount was recorded as a preferred stock warrant liability and a discount to the debt on the accompanying balance sheets. The discount was being amortized as additional interest expense over the term of the Agreement using the effective interest method. In 2015, the Company recognized $223 of interest expense related to the discount and the discount was amortized fully as of December 31, 2015.

At December 31, 2016, the Company determined the fair value of the warrant using the Black-Scholes option pricing model to be $25,397 ($23,847 at December 31, 2015), assuming a risk-free interest rate of 1.93% (1.93% at December 31, 2015), remaining contractual life of 5.16 years (6.17 at December 31, 2015), volatility of 60% (50% at December 31, 2015), no dividends and no forfeiture rate applied.

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Spirox, Inc.

Notes to Financial Statements

Common Stock:

The Company is authorized to issue 70,000,000 shares of $0.0001 par value common stock. As of December 31, 2016, the Company had 1,400,000 common shares issued and outstanding.

At December 31, 2016, 33,334 shares of common stock were subject to repurchase (133,334 shares at December 31, 2015). The Company has estimated the liability related to the shares subject to repurchase and has determined it is not material to the financial statements at December 31, 2016 or 2015.

Convertible Preferred Stock:

Convertible preferred stock consists of the following at December 31, 2016:

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Spirox, Inc.

Notes to Financial Statements

Convertible Preferred Stock: (continued)

The rights, preferences, privileges and restrictions for the holders of Series C convertible preferred stock (Series C), Series B convertible preferred stock (Series B), Series A-1 convertible preferred stock (Series A-1) and Series A, (collectively, preferred stock) are as follows:

Liquidation Preferences:

In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, before any distribution or payment is made to the holders of any Series B, Series A-1, Series A or common stock, the holders of Series C will be entitled to receive a per share amount equal to $1.607, plus all declared but unpaid dividends. Should the Company’s legally available assets be insufficient to make payment in full to all holders of Series C, the funds will be distributed ratably among the holders of Series C. After the payment of the full liquidation preference of the Series C, before any distribution or payment is made to the holders of any Series A or common stock, the holders of Series B and Series A-1 will be entitled to receive a per share amount equal to $1.25 and $1.14, respectively, plus all declared but unpaid dividends. Should the Company’s legally available assets be insufficient to make payment in full to all holders of Series B and Series A-1, the funds will be distributed ratably among the holders of Series B and Series A-1? After the payment of the full liquidation preference of the Series C, Series B and Series A-1, the holders of Series A will be entitled to receive a per share amount equal to $1.00, plus all declared but unpaid dividends, prior and in preference to any distribution to the holders of common stock. Should the Company’s legally available assets be insufficient to make payment in full to all holders of Series A, the funds will be distributed ratably among the holders of Series A.

After the distributions described above have been paid in full, the remaining assets of the Company available for distribution will be distributed ratably among the holders of common stock and preferred stock, on an as-converted basis.

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Spirox, Inc.

Notes to Financial Statements

Convertible Preferred Stock: (continued)

Dividends:

Holders of Series C are entitled to receive non-cumulative dividends, prior and in preference to any dividends paid to the holders of Series B, Series A-1, Series A and common stock. Holders of Series C will receive dividends, if and when declared at the rate per annum of 8% of the original issuance price. After the payment in full of the dividends to Series C holders, holders of Series B and Series A-1 are entitled to receive non-cumulative dividends, prior and in preference to any dividends paid to the holders of Series A and common stock. Holders of Series B and Series A-1 will receive dividends, if and when declared, at the rate per annum of 8% and 6%, respectively, of the original issuance price. After the payment in full of the dividends to Series B and Series A-1 holders, holders of Series A are entitled to receive non-cumulative dividends, prior and in preference to any dividends paid to holders of common stock. Holders of Series A will receive dividends, if and when declared at the rate per annum of 6% of the original issuance price. In the event dividends are paid on any share of common stock, the Company will pay additional dividends on all outstanding shares of preferred stock in a per share amount equal (on an as-if-converted basis) to the amount paid or set aside for each share of common stock.

Redemption:

The preferred stock is not redeemable.

Conversion:

Shares of preferred stock are convertible into common stock at any time at the option of the holder. The number of shares of common stock into which each share of preferred stock may be converted is determined by dividing the number of shares of preferred stock by the conversion price. The conversion price is equal to the original issuance price for the respective series of preferred stock, as adjusted for any stock dividends, combinations, splits and the like. Each share of outstanding preferred stock will automatically convert into shares of common stock, based on the then-effective conversion price, upon the earlier of either (i) an initial public offering with aggregate gross proceeds of at least $50,000,000, or (ii) upon the written consent from the holders of a majority of the then outstanding shares of preferred stock.

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Spirox, Inc.

Notes to Financial Statements

Convertible Preferred Stock: (continued)

Voting Rights:

Each holder of preferred stock is entitled to the number of votes equal to the number of shares of common stock into which the shares of preferred stock could be converted on the record date for the vote or consent of the stockholders, except as otherwise required by law, and have voting rights and powers equal to the voting rights and powers of the holders of common stock.

For so long as at least 100,000 shares of Series C remain outstanding, the holders of Series C, voting as a separate class, are entitled to elect two members of the Board of Directors. For so long as at least 100,000 shares of Series B remain outstanding, the holders of Series B, voting as a separate class, are entitled to elect two members of the Board of Directors. For so long as at least 100,000 shares of Series A-1 remain outstanding, the holders of Series A-1, voting as a separate class, are entitled to elect one member of the Board of Directors. For so long as at least 100,000 shares of common stock remain outstanding, the holders of common stock, voting as a separate class, are entitled to elect one member of the Board of Directors. The holders of common stock and preferred stock, voting together as a single class on an as-if-converted basis, are entitled to elect two members of the Board of Directors.

For so long as at least 5,000,000 shares of Series C remain outstanding, the Company cannot take certain actions or enter into certain transactions without the consent from the holders of a majority of the then outstanding shares of Series C. For so long as at least 5,000,000 shares of Series A-1 remain outstanding, the Company cannot take certain actions or enter into certain transactions without the consent from the holders of a majority of the then outstanding shares of Series A-1. For so long as at least 5,000,000 shares of Series B remain outstanding, the Company cannot take certain actions or enter into certain transactions without the consent from the holders of a majority of the then outstanding shares of Series B.

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Spirox, Inc.

Notes to Financial Statements

In 2011, the Company adopted the 2011 Stock Plan (the Plan). The Plan provides for the granting of stock options and stock purchase rights to employees, directors and consultants of the Company. Options granted under the Plan may be either incentive stock options (ISO) or nonqualified stock options (NSO). ISOs may be granted only to Company employees and directors. NSOs may be granted to Company employees, directors and consultants. As of December 31, 2016, the Company has reserved 15,195,388 shares of common stock for issuance under the Plan.

Options under the Plan may be outstanding for periods of up to 10 years following the grant date. The exercise price of an ISO cannot be less than 100% of the estimated fair value of the shares on the date of grant, as determined by the Board of Directors. The exercise price of an ISO granted or the purchase price under the stock issuance program to a 10% stockholder cannot be less than 110% of the estimated fair value of the shares on the date of grant of issuance. The Plan allows for early exercise of options. The Company has a repurchase option for unvested options exercised early upon the voluntary or involuntary termination of the purchaser’s employment with, or service to, the Company for any reason.

In 2016, the Company recognized $314,176 of employee stock-based compensation ($81,884 in 2015). Stock-based compensation for non-employees was not material to the financial statements in 2016 or 2015. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the statements of operations for stock-based compensation arrangements and no stock-based compensation costs have been capitalized as part of property and equipment or inventory as of December 31, 2016 or 2015.

The fair value of each award to employees is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: expected term of 6.08 years (6.25 years in 2015); risk-free interest rate of 1.50% (1.73% in 2015); expected volatility of 60% (50% in 2015); no dividends during the expected life; and no forfeiture rate applied. Expected volatility is based on historical volatilities of public companies operating in the Company’s industry. The expected life of the options represents the period of time options are expected to be outstanding and is estimated considering vesting terms and employees’ historical exercise and post-vesting employment termination behavior. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The weighted-average grant date fair value of options granted to employees in 2016 was $0.13 per share ($0.10 per share in 2015).

Grants to non-employees in 2016 and 2015 were not material to the financial statements.

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Spirox, Inc.

Notes to Financial Statements

Stock option activity under the Plan is as follows:

At December 31, 2016, there were 2,498,986 shares vested and exercisable (1,276,594 shares at December 31, 2015) with a weighted-average exercise price of $0.17 ($0.15 at December 31, 2015) and a weighted-average remaining contractual life of 7.80 years (8.29 years at December 31, 2015).

Future stock-based compensation for unvested employee options granted and outstanding as of December 31, 2016 is $1,070,105 to be recognized over a remaining requisite service period of 3.05 years.

Facility Leases:

The Company leases three suites at an office facility in Menlo Park, California. As of December 31, 2016, all of the leases were on a month-to-month basis. Under the terms of lease agreements, the Company is also responsible for certain insurance, property tax and maintenance expenses. Rent expense was $228,995 in 2016 ($112,353 in 2015).

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Spirox, Inc.

Notes to Financial Statements

Facility Leases: (continued)

In January 2017, the Company entered into an agreement to sublease an office facility in Redwood City, California which required a security deposit of $211,000. The lease term is expected to begin in April 2017 and will continue through October 2021.

Future minimum lease payments required under the Redwood City lease are as follows:

Subsequent events have been evaluated through the date of the independent auditors’ report, which is the date the financial statements were approved by the Company and available to be issued.

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