Company: PFSA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112723
Chunk: 263

Company: Profusa, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 2
Chunk 263
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 fair presentation of the Company’s financial position as of September 30, 2025 and 2024 and the results of operations and cash
flows for the three and nine month periods then ended. The accompanying condensed consolidated financial statements include the accounts
of Profusa Inc. and its wholly owned subsidiary, APAC. All intercompany balances and transactions have been eliminated in consolidation.

39

Components of Results of Operations

Government Grant Revenue

Government grant revenue consists of amounts we earn under grants from
two government agencies: NIH and DARPA. These grants are provided either in the form of expense reimbursement (expense reimbursement grants)
or on a fixed fee basis (fixed fee grants). Under the expense reimbursement grants the government agencies reimburse us for a portion
of our expenses (allowable expenses) that have been incurred in a given period on the basis of reports that we provide to these agencies.
Fixed fee grants are awarded for specific research and development programs undertaken by us. Under these grants we receive milestone
payments from the government agencies upon our submission and approval by the government of agreed upon deliverables, consisting primarily
of the documented results of the specific research and development programs.

Research and Development Expenses

Research and development expenses consist primarily of personnel expenses,
including salaries, benefits, and stock-based compensation, costs of consulting, supplies, depreciation and amortization and allocations
of facility- related expenses. We expect our research and development expenses to increase as we increase staffing to support product
development, continue our clinical trials, build prototypes, and continue to explore and develop next generation technologies.

General and Administrative Expenses

General and administrative expenses consist of personnel
expenses, including salaries, benefits, and stock-based compensation, related to executive management, finance, legal, human
resource functions, and business development, contractor and professional services fees, audit and compliance expenses, insurance
costs and general corporate expenses, including allocated facility-related expenses and information technology costs.

Loss on Change in the Fair Value of Tasly Convertible Debt

We elected to apply fair value option to account for the convertible
loans issued between June 2023 and March 2024 (the “Tasly Convertible Debt”), under which none of the embedded conversion or
redemption features were bifurcated and separately accounted for. Rather, the Tasly Convertible Debt in its entirety was recorded at fair
value at inception and is subject to remeasurement to fair value at each balance sheet date, with the change in fair value reflected in
the statements of operations and comprehensive loss.