Company: PFSA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112723
Chunk: 144

Company: Profusa, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 8
Chunk 144
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 expenses (including salaries, bonuses, payroll taxes and
benefits), professional fees, interest expense, operating costs, and other incurred but unpaid obligations.

Management evaluates all known and estimated obligations at each reporting
period and updates accruals based on the best available information. Accrued liabilities are classified as current when the Company expects
to settle the obligation within one year. Changes in estimates are recognized in the period in which such changes become known.

11

Due to Related Parties

Amounts due to related parties represent
liabilities arising from transactions with entities or individuals that meet the definition of a related party under ASC 850, Related
Party Disclosures. Such balances generally consist of short-term, non-interest-bearing payables for advances, expense reimbursements,
shared services, or other operating costs incurred on behalf of the Company. These amounts are recorded at their carrying value, which
approximates fair value due to their short-term nature.

The Company recognizes related party payables when the underlying transaction
has occurred, and the amount is fixed or determinable. Settlements of related party balances typically occur in cash; however, amounts
may also be settled through offsets or other non-cash arrangements when appropriate.

Management evaluates related party balances each reporting period to
ensure proper classification, measurement, and disclosure. Amounts expected to be repaid within one year are classified as current liabilities.
All related party transactions are conducted on terms the Company believes approximate those that would be obtained in arm’s-length
transactions; however, because such arrangements are with related parties, the terms may differ from those obtainable from unrelated third
parties.

Fair Value of Financial Instruments

The Company’s financial instruments consist of other receivables,
accounts payable, warrant liabilities, earnout, promissory notes, convertible promissory notes and senior notes. The Company states accounts
payable at their carrying value, which approximates fair value due to the short time to the expected receipt or payment. See Note 4 Fair
Value Measurements for instruments valued under Level 2 or Level 3.

Earnout Arrangements

In connection with the Business Combination, the Company entered into
earnout arrangements that provide for the issuance of additional shares of the Company’s common stock to certain pre-Business Combination
holders upon the achievement of specified post-closing share-price or operational milestones. The earnout agreement allows for settlement
in shares of the company and does not allow for settlement in cash or other assets.

The Company evaluates earnout arrangements in a de-SPAC