Company: PFSA
Filing Date: 2025-06-13
Form Type: 10-Q
Source: 0001213900-25-054386
Chunk: 174

Company: Profusa, Inc.
Filing Date: 2025-06-13
Form: 10-Q
Item: Part I, Item 2
Chunk 174
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 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 to re-measurement at
each balance sheet date, with changes in fair value recognized in the condensed consolidated statements of operations.

Recent Accounting Standards

Standards Adopted

In November 2023, the FASB issued ASU 2023-07, Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU require disclosures,
on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating officer decision maker
(“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss.
The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the COD