Company: PFSA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112723
Chunk: 222

Company: Profusa, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 8
Chunk 222
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, regulatory and technical uncertainty” elsewhere in this Report.

Our bitcoin treasury strategy exposes us to risk of non-performance
by counterparties.

Our bitcoin treasury strategy exposes us to the risk of non-performance
by counterparties, whether contractual or otherwise. Risk of non-performance includes inability or refusal of a counterparty to perform
because of a deterioration in the counterparty’s financial condition and liquidity or for any other reason. For example, our execution
partners, custodians, or other counterparties might fail to perform in accordance with the terms of our agreements with them, which could
result in a loss of bitcoin, a loss of the opportunity to generate funds, or other losses.

We expect our primary counterparty risk with respect to our bitcoin
will be custodian performance obligations under the various custody arrangements we enter into. A series of recent high-profile bankruptcies,
closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry,
the closure or liquidation of certain financial institutions that provided lending and other services to the digital assets industry,
SEC enforcement actions against other providers, or placement into receivership or civil fraud lawsuit against digital asset industry
participants have highlighted the perceived and actual counterparty risk applicable to digital asset ownership and trading. Legal precedent
created in these bankruptcy and other proceedings may increase the risk of future rulings adverse to our interests in the event one or
more of our custodians becomes a debtor in a bankruptcy case or is the subject of other liquidation, insolvency or similar proceedings.

While our custodians will be subject to regulatory regimes intended
to protect customers in the event of a custodial bankruptcy, receivership or similar insolvency proceeding, no assurance can be provided
that our custodially-held bitcoin will not become part of the custodian’s insolvency estate if one or more of our custodians enters
bankruptcy, receivership or similar insolvency proceedings. Additionally, if we pursue any strategies to create income streams or otherwise
generate funds using our bitcoin holdings, we would become subject to additional counterparty risks. We will need to carefully evaluate
market conditions, including price volatility as well as service provider terms and market reputations and performance, among others,
prior to implementing any such strategy, all of which could effect our ability to successfully implement and execute on any such future
strategy. These risks, along with any significant non-performance by counterparties, including in particular the custodian or custodians
with which we will custody substantially all of our bitcoin,