Company: PFSA
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001013762-25-004396
Chunk: 1046

Company: Profusa, Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 7
Chunk 1046
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the fair value of the warrant liabilities and convertible promissory note. However, by their nature, judgments are subject to an inherent
degree of uncertainty, and, therefore, actual results could differ from our estimates.

Convertible
Promissory Note

The
fair value of the Company’s convertible promissory note is valued using a compound option formula on the convertible feature and
a present value of the host contract. The valuation technique requires inputs that are both unobservable and significant to the overall
fair value measurement. These inputs reflect management’s own assumption about the assumptions a market participant would use in
pricing the working capital loan.

Warrant
Liabilities

We
account for the warrants issued in connection with the IPO in accordance with the guidance contained in ASC 815-40. Such guidance provides
that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly,
we classified each warrant as a liability at its fair value. This liability is subject to re-measurement at each balance sheet date.
With each such re-measurement, the warrant liabilities will be adjusted to fair value, with the change in fair value recognized in our
consolidated statements of operations.

In
determining the fair value of the Private Placement Warrants and the Representative’s Warrants assumptions related to expected
share-price volatility, expected life and risk-free interest rate are utilized. The Company estimates the volatility of its common stock
based on historical volatility that matches the expected remaining life of the warrants.

48

Recent
Accounting Standards

Standards Adopted 

In November 2023, the FASB
issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The
amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are
regularly provided to the chief operating officer decision maker (“CODM”), as well as the aggregate amount of other
segment items included in the reported measure of segment profit or loss. The ASU requires that a public entity disclose
the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in
assessing segment performance and deciding how to allocate resources. Public entities will be required to provide all annual
disclosures currently required by Topic 280 in interim periods, and entities with a single reportable