Company: PFSA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112723
Chunk: 65

Company: Profusa, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 1
Chunk 65
---
 to actual or potential political or military conflict; or action
by the U.S. or foreign governments that may restrict our ability to transact business in a foreign country or with certain foreign individuals
or entities. A possible slowdown in global trade caused by increasing tariffs or other restrictions could decrease consumer or corporate
confidence and reduce consumer, government and corporate spending in countries inside or outside the U.S., which could adversely affect
our operations. Climate-related events, including extreme weather events and natural disasters and their effect on critical infrastructure
in the U.S. or internationally, could have similar adverse effects on our operations, users, or third-party suppliers.

Principles of Accounting and Consolidation

The accompanying condensed consolidated financial statements have been
prepared in conformity with U.S. GAAP and pursuant to applicable rules and regulations of the SEC and include all adjustments necessary
for the fair presentation of the Company’s financial position as of September 30, 2025 and 2024 and the results of operations and cash
flows for the three and nine month periods then ended. The accompanying condensed consolidated financial statements include the accounts
of Profusa Inc. and its wholly owned subsidiary, APAC. All intercompany balances and transactions have been eliminated in consolidation.

39

Components of Results of Operations

Government Grant Revenue

Government grant revenue consists of amounts we earn under grants from
two government agencies: NIH and DARPA. These grants are provided either in the form of expense reimbursement (expense reimbursement grants)
or on a fixed fee basis (fixed fee grants). Under the expense reimbursement grants the government agencies reimburse us for a portion
of our expenses (allowable expenses) that have been incurred in a given period on the basis of reports that we provide to these agencies.
Fixed fee grants are awarded for specific research and development programs undertaken by us. Under these grants we receive milestone
payments from the government agencies upon our submission and approval by the government of agreed upon deliverables, consisting primarily
of the documented results of the specific research and development programs.

Research and Development Expenses

Research and development expenses consist primarily of personnel expenses,
including salaries, benefits, and stock-based compensation, costs of consulting, supplies, depreciation and amortization and allocations
of facility- related expenses. We expect our research and development expenses to increase as we increase staffing to support product
development, continue our clinical trials, build prototypes, and continue to explore and develop next generation technologies.

General and Administrative Expenses

General and administrative expenses consist of personnel
expenses, including salaries, benefits, and stock-based