Company: PFSA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112723
Chunk: 27

Company: Profusa, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 1
Chunk 27
---
 $6 million funding, during the fiscal year ended December 31, 2025 (“Milestone Event III”);

●Milestone IV Earnout Rights: achievement of revenue of $11,864,000 for the fiscal year ended December 31, 2026 (“Milestone Event
IV,” and, together with Milestone Event I, Milestone Event II and Milestone Event III, the “Milestone Events”). Milestone
I Earnout Rights, Milestone II Earnout Rights, Milestone III Earnout Rights and Milestone IV Earnout Rights are further referred to collectively
as “Milestone Earnout Rights”.

In the event that the above milestones are achieved, this will dilute
the ownership interests of existing shareholders.

Reverse recapitalization

The Business Combination was accounted for as a reverse recapitalization
in accordance with US GAAP. Accordingly, Legacy Profusa was deemed the accounting acquirer (and legal acquiree) and Northview was treated
as the accounting acquiree (and legal acquirer).

Under this method of accounting, the reverse recapitalization was treated
as the equivalent of Legacy Profusa issuing stock for the net assets (liabilities) of Northview, accompanied by a recapitalization. The
net assets of Northview are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets,
liabilities, and results of operations prior to the Business Combination are those of Legacy Profusa. All periods prior to the Business
Combination have been retrospectively adjusted in accordance with the Business Combination Agreement for the equivalent number of common
shares outstanding immediately after the Business Combination to effect the reverse recapitalization. The number of shares for all periods
prior to the Closing Date have been retrospectively decreased using the exchange ratio that was established (the “Exchange Ratio”).

All Milestones (Milestone I, II, III, and IV pass the criteria of liability
classification under ASC 480 as they are not mandatorily redeemable, it does not represent an obligation to repurchase the issuer’s
equity shares, and it is not settled by issuing a variable number of its equity shares. Milestone III however, does not pass the criteria
of liability classification under ASC 480 as the settlement condition is based partially on the occurrence of an event which fails the
index guidance for equity classification.

All four Earnouts have only two potential settlement alternatives,
i.e. either no shares are issued or 968,750 shares are issued (for each Earnout