Company: PFSA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112723
Chunk: 67

Company: Profusa, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 1
Chunk 67
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 conclusion date which is December 31, 2025 with changes in fair value recognized in earnings.

The earnouts that meet the criteria for equity classification—generally
those settled in a fixed number of shares and not requiring cash settlement—are recorded within additional paid-in capital at the
acquisition-date fair value and are not subsequently remeasured.

Warrants

The Company reviews the terms of warrants to purchase its common stock
to determine whether warrants should be classified as liabilities or stockholders’ deficit in its condensed consolidated balance
sheets. In order for a warrant to be classified in stockholders’ deficit, the warrant must be (i) indexed to the Company’s
equity and (ii) meet the conditions for equity classification.

If a warrant does not meet the conditions for stockholders’ deficit
classification, it is carried on the condensed consolidated balance sheets as a warrant liability measured at fair value, with subsequent
changes in the fair value of the warrant recorded in other non-operating losses (gains) in the condensed consolidated statements of operations.
If a warrant meets both conditions for equity classification, the warrant is initially recorded, at its relative fair value on the date
of issuance, in stockholders’ deficit in the condensed consolidated balance sheets, and the amount initially recorded is not subsequently
remeasured at fair value.

Gain on PPP Loan Forgiveness

On April 16, 2020 and May 25, 2021, we borrowed $1.2 million (the “PPP
Loan 1”) and $1.3 million (the “PPP Loan 2”), respectively, as a Paycheck Protection Program loan (together the “PPP
Loans”). The Paycheck Protection Program, established as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”)
Act, provides for loans to qualifying businesses and is administered by the U.S. Small Business Administration (the “SBA”).
The annual interest rate of the PPP Loans is 1%. The PPP Loans are eligible for forgiveness, provided the borrower has met the respective
forgiveness requirements, has timely submitted an application for forgiveness and the forgiveness has been granted by the SBA. PPP Loan
1 has been approved for loan forgiveness, and management intends to apply for PPP Loan 2 forgiveness in 2025. PPP Loan 2 is currently
in default due to non-payment, and is classified as a current liability on the balance sheet.

Interest Expense

Interest expense consists primarily of the interest on our convertible
notes, senior notes