Company: PFSA
Filing Date: 2025-10-09
Form Type: S-1
Source: 0001213900-25-097860
Chunk: 168

Company: Profusa, Inc.
Filing Date: 2025-10-09
Form: S-1
Chunk 168
---
 volatility. These estimates require significant judgment, particularly for instruments classified as Level 3 in the fair value hierarchy. Changes in these assumptions could materially affect the reported fair values and related income or expense. We regularly review and update our valuation to reflect current market conditions and ensure consistency with accounting standards. Level 3 fair value financial liabilities consisted of solely the Tasly convertible debt which was $2.2 million as of December 31, 2024 and $2.5 million as of June 30, 2025. Share-Based Compensation

| ● | We account for share-based compensation arrangements with employees and non-employees using a fair value                                   
 method which requires the recognition of compensation expense for costs related to all share-based payments including stock options. The   
 fair value method requires us to estimate the fair value of share-based payment awards on the date of grant using an option pricing model. 
 We use the Black-Scholes pricing model to estimate the fair value of options granted that are then expensed on a straight-line basis over  
 the vesting period. We account for forfeitures as they occur. Option valuation models, including the Black-Scholes option-pricing model,   
 require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the grant-date fair value    
 of an award and affect the amount of compensation expense recognized. These assumptions include the risk-free rate of interest, expected   
 dividend yield, expected volatility, and the expected life of the award. These assumptions involve significant judgment and are based      
 on historical data and future expectations. We periodically reassess our estimates and assumptions to reflect actual experience and any    
 changes in future expectations.                                                                                                            |

| ● | Expected Term. The expected term is calculated using the simplified method, which is available                                              
 where there is insufficient historical data about exercise patterns and post-vesting employment termination behavior. The simplified method 
 is based on the vesting period and the contractual term for each grant, or for each vesting-tranche for awards with graded vesting. The     
 mid-point between the vesting date and the maximum contractual expiration date is used as the expected term under this method. For awards   
 with multiple vesting-tranches, the times from grant until the mid-points for each of the tranches may be averaged to provide an overall    
 expected term.                                                                                                                              |

| ● | Expected Volatility. The expected stock price volatility assumption was determined by examining                                          
 the historical volatilities for industry peers, as we did not have any trading history for our