Company: PFSA
Filing Date: 2025-07-18
Form Type: 8-K
Source: 0001213900-25-065686
Chunk: 7

Company: Profusa, Inc.
Filing Date: 2025-07-18
Form: 8-K
Item: Item 2.03
Chunk 7
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ulatory requirements and customary practices. We expect to incur additional annual expenses as a public company for, among other things,
directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal and administrative
resources.

Recent Developments

See above under
the heading “ Business Combination” regarding the closing of the Business Combination.

The world economy is experiencing
stubbornly high inflation, a challenge not faced for decades. Following the global financial crisis, with inflationary pressures muted,
interest rates were extremely low for years and investors became accustomed to low volatility. The resulting easing of financial conditions
supported economic growth, but it also contributed to a buildup of financial vulnerabilities. With inflation at multi-decade highs, monetary
authorities in advanced economies are accelerating the pace of policy normalization. Policymakers have continued to tighten policy against
a backdrop of rising inflation and currency pressures, albeit with notable differences across regions. Global financial conditions have
tightened notably this year, leading to capital outflows. Amid heightened economic and geopolitical uncertainties, investors have aggressively
pulled back from risk-taking and adjusted their investment preferences generally. Key gauges of systemic risk, such as higher dollar funding
costs and counterparty credit spreads, have risen. There is a risk of a disorderly tightening of financial conditions that may be amplified
by vulnerabilities built over the years.

Principles of Accounting and Consolidation

The accompanying unaudited
condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America (“ U. S. GAAP”) and pursuant to applicable rules and regulations of the Securities and Exchange Commission
(“ SEC”) and include all adjustments necessary for the fair presentation of the Company’s financial position as of March
31, 2025 and March 31, 2024 and the results of operations and cash flows for the periods ended March 31, 2025 and December 31 2024. The
accompanying unaudited condensed consolidated financial statements include the accounts of Profusa, Inc. and its wholly owned subsidiary,
Profusa Asia Pacific Pte. Ltd (“ APAC”). All intercompany balances and transactions have been eliminated in consolidation.

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