Company: PFSA
Filing Date: 2025-09-17
Form Type: S-1/A
Source: 0001213900-25-088333
Chunk: 156

Company: Profusa, Inc.
Filing Date: 2025-09-17
Form: S-1/A
Chunk 156
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 Financial Instruments The Company’s financial instruments consist of other receivables, accounts payable, 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 payment. The promissory notes are stated at amortized cost, which approximates their fair value, because the Company believes their terms approximate those that would be available to it on a similar loan from an unrelated party.

98 The Tasly convertible debt issued between June 2023 -February2024 (Notes 3 and 5) is carried at fair value based on unobservable market inputs. The fair value of financial instruments is determined using various valuation techniques, including the market approach. Where observable market prices are not available, we use models that incorporate assumptions about credit risk, interest rates, and market volatility. These estimates require significant judgment, particularly for instruments classified as Level 3 in the fair value hierarchy. Changes in these assumptions could materially affect the reported fair values and related income or expense. We regularly review and update our valuation to reflect current market conditions and ensure consistency with accounting standards. Level 3 fair value financial liabilities consisted of solely the Tasly convertible debt which was $2.2 million as of December 31, 2024 and $2.5 million as of June 30, 2025. Share-Based Compensation •We account for share -basedcompensation arrangements with employees and non -employeesusing a fair value method which requires the recognition of compensation expense for costs related to all share -basedpayments including stock options. The fair value method requires us to estimate the fair value of share -basedpayment awards on the date of grant using an option pricing model. We use the Black -Scholespricing model to estimate the fair value of options granted that are then expensed on a straight -linebasis over the vesting period. We account for forfeitures as they occur. Option valuation models, including the Black -Scholesoption -pricingmodel, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the grant -datefair value of an award and affect the amount of compensation expense recognized. These assumptions include the risk -freerate of interest, expected dividend yield, expected volatility, and the expected life of the award. These assumptions involve significant judgment and are based on historical data and future expectations. We periodically reassess our estimates and assumptions to reflect actual experience and any changes in future expectations. • Expected Term. The