Company: PFSA
Filing Date: 2025-02-12
Form Type: S-4/A
Source: 0001213900-25-012354
Chunk: 337

Company: Profusa, Inc.
Filing Date: 2025-02-12
Form: S-4/A
Chunk 337
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 Profusa’s equity shares and a fixed monetary amount (the amount initially invested by the equityholders), and any adjustments to the settlement amounts do not violate the “fixed -for-fixed” principle. The Company initially evaluated whether the Earnout milestones, and its initial 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 expects 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 initial conclusions, the Company had been disclosing that Earnouts would be classified as equity and initially recorded at fair value with no subsequent remeasurement. The Company understands that, in connection with reporting Profusa’s financial statements for the quarter ending March 31, 2024 (i.e., the period including the date of the modification) that it will be required to complete an updated analysis to determine if the revised Milestone III continues to be indexed to the Company’s (or New Profusa’s) stock. If the recent amendment to Milestone III is no longer considered to be indexed to the Company’s (or New Profusa’s) stock, the Company also understands that this milestone will be required to be classified as a liability and would therefore be subject to mark -to-marketfair value adjustment on a quarterly basis and the gain or loss on the fair value will be adjusted through earnings under GAAP. The Company and Profusa are currently working through the related accounting analysis and has considered the sensitivity of this potential 172 accounting modification on Milestone III. Upon initial consideration of the general facts and circumstances relating to valuation, management believes that any adjustment to fair value is expected to be immaterial. The basis for management’s preliminary judgment is described below: Based on the nature of Profusa’s business, the predominance of the cash inflows in its valuation model relate to the amounts and timing of revenue to be earned on products assumed to be approved for commercialization by the FDA in the future. Prior to commercialization, Profusa assumes primarily predictable cash outflows that relate to R&D activities that have been