Company: PFSA
Filing Date: 2025-04-03
Form Type: CORRESP
Source: 0001213900-25-028546
Chunk: 7

Company: Profusa, Inc.
Filing Date: 2025-04-03
Form: CORRESP
Chunk 7
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 and Milestone II Earnout, the issuance of Earnout Shares is only triggered by achievement of specified NorthView Common Stock prices. Additionally, upon the occurrence of a Subsequent Transaction, the term of the Earnout is early terminated (akin to a contingent exercise provision). The occurrence of a Subsequent Transaction is an event and is neither a market price nor an index in something other than the Company’s own operations. Therefore, Step 1 does not preclude Milestone I Earnout and Milestone II Earnout from being considered indexed to the entity’s own stock.

For Milestone III Earnout and Milestone Event IV earnout , the issuances of Earnout Shares are only triggered by achievement of the specified revenue targets. Since the exercise contingency is based on an index measured solely by reference to the Company’s own operation (i.e. its sales revenue), Milestone III Earnout and Milestone Event IV earnout are also not precluded from being considered indexed to the entity’s own stock under Step 1.

Step 2: Evaluation of the instrument’s settlement provisions

Under Step 2, the earn-out is considered indexed to equity if its settlement amount is equal the difference between the fair value of a fixed number of the Company’s equity shares and a fixed monetary amount. An instrument’s exercise price or number of shares used to calculate the settlement amount is not fixed if the terms provide for any potential adjustment, regardless of the probability of such adjustment or whether such adjustment is in the entity’s control. ASC 815-40-15-7D provides that: If the instrument’s strike price or the number of shares used to calculate the settlement amount are not fixed, the instrument (or embedded feature) shall still be considered indexed to an entity’s own stock if the only variables that could affect the settlement amount would be inputs to the fair value of a fixed-for-fixed forward or option on equity shares.

The Earnouts result in the issuance of shares for no consideration. The number of shares and the share price targets are also equitably adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to NorthView Common Stock. These adjustments represent standard antidilution adjustments and under ASC 815-40-15 do not preclude the Company from concluding that the Earnouts are indexed to NorthView Common Stock.

All four Earnouts have only two potential settlement alternatives, i.e. either no shares are issued or 968,