Company: PFSA
Filing Date: 2025-05-15
Form Type: 424B3
Source: 0001213900-25-044417
Chunk: 351

Company: Profusa, Inc.
Filing Date: 2025-05-15
Form: 424B3
Chunk 351
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 a derivative instrument (i.e. they contain an underlying, notional amount and payment provisions, they require initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors, and they contain net settlement provisions as they relate to publicly traded shares). However, the Milestone Earnout Rights, Sponsor Inducement Recoupment Earnout Rights and Profusa Inducement Recoupment Earnout Rights are considered to be indexed to the New Profusa’s own stock because: (a)they are contingently exercisable exclusively on the basis of the New Profusa’s own share price and/or by reference to the Company’s own operations (i.e. revenue targets); (b)their settlement amount is equal the difference between the fair value of a fixed number of the New Profusa’s equity shares and a fixed monetary amount (the amount initially invested by the equity holders), and any adjustments to the settlement amounts do not violate the “fixed -for -fixed” principle. The Company evaluated whether the Earnout milestones, and its considerations include whether the earnout milestones are within the scope of ASC 480 or ASC 815. Under ASC 480 -10-55-26, the Earnouts are not within the scope of ASC 480 as they do not embody an obligation. The Company has concluded that the Earnouts should be evaluated under ASC 815 and has analyzed the ASC 815 equity scope exceptions on the Earnouts. The Company originally concluded, in connection with the Merger agreement signed in November 2022, that Milestone I Earnout, Milestone II Earnout, Milestone III Earnout and Milestone IV Earnout represent freestanding financial instruments that each met the equity scope exception. Based on these conclusions, the Company has disclosed that Earnouts would be classified as equity and initially recorded at fair value with no subsequent remeasurement. The Company further reviewed the updated Milestone III and Milestone IV and updated their analysis with the conclusion that the revised Milestones continue to be indexed to the Company’s (or New Profusa’s) stock. Since the Milestone Earnout Rights, Sponsor Inducement Recoupment Earnout Rights and Profusa Inducement Recoupment Earnout Rights are considered to be indexed to the New Profusa’s own stock, and because other criteria of ASC 815 Derivatives and Hedging for equity classification are met, these instruments are expected to be classified as equity measured at fair value as at the