Company: PFSA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112723
Chunk: 343

Company: Profusa, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 3
Chunk 343
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 not use proof-of-work
mining like the bitcoin network. For example, in late 2022, the ethereum network transitioned to a “proof-of-stake” mechanism
for validating transactions that requires significantly less computing power than proof-of-work mining. The ethereum network has completed
another major upgrade since then and may undertake additional upgrades in the future. If the mechanisms for validating transactions in
ethereum and other alternative digital assets are perceived as superior to proof-of-work mining, those digital assets could gain market
share relative to bitcoin.

Other alternative digital assets that compete with bitcoin in certain
ways include “stablecoins,” which are designed to maintain a constant price because of, for instance, their issuers’
promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the
total value of stablecoins in circulation. Stablecoins have grown rapidly as an alternative to bitcoin and other digital assets as a medium
of exchange and store of value, particularly on digital asset trading platforms. As of the date of this Report, two of the seven largest
digital assets by market capitalization are U.S. dollar-backed stablecoins.

55

Additionally, central banks in some countries have started to introduce
digital forms of legal tender. For example, China’s CBDC project was made available to consumers in January 2022, and governments
including the United States, the European Union, and Israel have been discussing the potential creation of new CBDCs. Whether or
not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or
replace, bitcoin and other digital assets as a medium of exchange or store of value. As a result, the emergence or growth of these or
other digital assets could cause the market price of bitcoin to decrease, which could have a material adverse effect on our financial
condition, and operating results.

Our bitcoin holdings are less liquid than our existing cash and
cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

Historically, the bitcoin markets have been characterized by significant
volatility in price, limited liquidity and trading volumes compared to sovereign currency markets, relative anonymity, a developing regulatory
landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various
other risks inherent in its entirely electronic, virtual form and decentralized network. During times