Company: PFSA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076861
Chunk: 154

Company: Profusa, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 154
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 Exchange Act or would otherwise not constitute a tender offer pursuant
to the Exchange Act. As of the Closing Date, the Company’s trust account balance was not below $1.25 million.

Critical Accounting Estimates

Certain of our accounting policies require that
management apply significant judgments in defining the appropriate assumptions integral to financial estimates. On an ongoing basis,
management reviews the accounting policies, assumptions, estimates and judgments to ensure that our condensed consolidated financial
statements are presented fairly and in accordance with U.S. GAAP. Judgments are based on historical experience, terms of existing contracts,
industry trends and information available from outside sources, as appropriate. Some of the more significant estimates are in connection
with determining the fair value of the warrant liabilities and convertible promissory note. However, by their nature, judgments are subject
to an inherent degree of uncertainty, and, therefore, actual results could differ from our estimates.

Convertible Promissory Note

The fair value of the Company’s convertible
promissory note is valued using a compound option formula on the convertible feature and a present value of the host contract. The valuation
technique requires inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s
own assumption about the assumptions a market participant would use in pricing the working capital loan.

30

Warrant Liabilities

We account for the warrants issued in connection
with the IPO in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the
criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, we classified each warrant as a
liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement,
the warrant liabilities will be adjusted to fair value, with the change in fair value recognized in our condensed consolidated statements
of operations.

In determining the fair value of the Private
Placement Warrants and the Representative’s Warrants assumptions related to expected share-price volatility, expected life and
risk-free interest rate are utilized. The Company estimates the volatility of its common stock based on historical volatility that matches
the expected remaining life of the warrants.

Securities Purchase Agreement

The fair value of the Company’s securities purchase agreement
is valued using Monte Carlo models on the convertible feature and a present value of the host contract. The valuation technique requires
inputs that are both unobservable and significant to the overall fair value measurement. The instrument is subject