Company: PFSA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112723
Chunk: 31

Company: Profusa, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 1
Chunk 31
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 a fixed-for-fixed option or forward on equity shares. As such, this provision would cause the warrants
to fail Step 2 of the indexation guidance. The Private Placement and Representative’s Warrants remained liability classified with
fair value adjustments being recorded through earnings each period.

16

Note 4 — Fair Value Measurement

Assets and liabilities recorded at fair value on a recurring basis
in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair
value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize
the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for
disclosure of fair value measurements as follows:

Level 1 — Inputs are unadjusted, quoted prices in active markets
for identical assets or liabilities at the measurement date;

Level 2 — Inputs are observable, unadjusted quoted prices in
active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that
are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of
the related assets or liabilities; and

Level 3 — Unobservable inputs that are significant to the measurement
of the fair value of the assets or liabilities that are supported by little or no market data.

In determining fair value, the Company utilizes valuation techniques
that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty
credit risk in its assessment of fair value.

Assets and liabilities measured at fair value are classified in their
entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance
of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific
to the asset or liability.

As of September 30, 2025 and December 31, 2024, the Company’s
financial assets and liabilities measured at fair value on a recurring basis, were as follows (in thousands):

    As of September 30, 2025 

    Level 1  
    Level 2  
    Level 3  
    Total 
  
    Assets: 

    Digital assets (Bitcoin)