Company: PFSA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112723
Chunk: 22

Company: Profusa, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 1
Chunk 22
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0% and no value was associated with the milestone. On the Closing Date, Milestones I and II had a value of $1.7 million, while Milestone
IV had a value of $0 as this was also deemed improbable of occurring. Milestone III does not meet the indexed guidance as it is based
on an event occurring to achieve $6 million in, which is not a market data or input. The Milestone IV Earnout does meet the scope exception
ASC 815-10-15-59(d) from derivative accounting since payments under these milestones are based on revenue amounts.

Warrants

The Company reviews the terms of warrants to purchase its common stock
to determine whether warrants should be classified as liabilities or stockholders’ deficit in its condensed consolidated balance
sheets. In order for a warrant to be classified in stockholders’ deficit, the warrant must be (i) indexed to the Company’s
equity and (ii) meet the conditions for equity classification. Legal costs incurred in connection with the issuance of equity-classified
warrants are capitalized as a reduction to Additional Paid-In Capital if the warrants are issued in conjunction with an equity financing
or equity-linked arrangement, and expensed immediately only if the costs are not directly attributable to the issuance.

12

If a warrant does not meet the conditions for stockholders’ deficit
classification, it is carried on the condensed consolidated balance sheets as a warrant liability measured at fair value, with subsequent
changes in the fair value of the warrant recorded in other non-operating losses (gains) in the condensed consolidated statements of operations.
If a warrant meets both conditions for equity classification, the warrant is initially recorded, at its relative fair value on the date
of issuance, in stockholders’ deficit in the condensed consolidated balance sheets, and the amount initially recorded is not subsequently
remeasured at fair value. Legal and professional fees incurred in connection with the issuance of liability-classified warrants, including
those failing equity classification under ASC 815-40 are expensed immediately to the income statement as incurred.

Income Taxes

The Company has established deferred income tax assets and liabilities
for temporary differences between the financial reporting bases and the income tax bases of its assets and liabilities at enacted tax
rates expected to be in effect when such assets or liabilities are realized or settled pursuant to the provisions of ASC Topic 740,
“Income Taxes,” which prescribes a comprehensive model for the financial statement recognition, measurement, classification
and disclosure of uncertain tax positions. For those benefits to be recognized