8-K: Profusa, Inc. Modifies Note and Conversion Terms

Profusa, Inc. has entered into a Note Modification and Conversion Agreement with NorthView Sponsor I LLC, altering terms of an existing promissory note and establishing conditions for its conversion into company stock.

Summary

• Profusa, Inc. (the Company) and NorthView Sponsor I LLC (the Holder) have entered into a Note Modification and Conversion Agreement.
• This agreement amends a Promissory Note originally issued in April 2023, with an outstanding principal balance of $1,869,796 as of April 24, 2026.
• The Note is now non-interest bearing and has a maturity date of December 31, 2026.
• The Holder has the option to convert the principal balance into shares of the Company's Common Stock at a conversion price that is the greater of 95% of the closing price on the conversion date or $0.35 per share.
• This conversion is contingent upon the effectiveness of a registration statement for the resale of the Conversion Shares.
• A subsequent amendment (Amendment No. 1) on April 29, 2026, introduced an 'Exchange Cap' limiting the issuance of Conversion Shares to 19.99% of outstanding Common Stock without stockholder approval.
• The Company must seek stockholder approval for issuances exceeding this cap within 90 days and every four months thereafter if not obtained.
• An amendment to a Warrant held by Ascent Partners Fund LLC on April 29, 2026, removed provisions for automatic conversion or assumption in fundamental transactions.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a neutral to slightly negative filing, primarily due to the ongoing Nasdaq delisting concerns and the potential for significant dilution from the note conversion, despite the structured approach to managing it.

Positives

• The modification provides a clear path for the conversion of the outstanding note into equity, potentially strengthening the Company's balance sheet by reducing debt.
• The conversion price is set at a discount to market price (95% of closing price) or a floor price of $0.35, which could be favorable for the Holder.
• The Company has secured a commitment from the Holder to amend the note terms, indicating continued support.
• The inclusion of a beneficial ownership limitation (4.99%) and an Exchange Cap (19.99%) aims to manage potential dilution for existing shareholders.

Negatives

• The Company faces potential dilution from the conversion of the $1,869,796 note into common stock.
• The requirement to obtain stockholder approval for issuances exceeding the 19.99% Exchange Cap could lead to delays or failure to convert the full note if approval is not obtained.
• The Company is also facing delisting concerns from Nasdaq due to not meeting minimum market value of publicly held shares and minimum bid price requirements.
• The amendment to the Warrant held by Ascent Partners Fund LLC removes automatic conversion/assumption provisions in fundamental transactions, potentially altering the Holder's protections in such scenarios.

Risks

• Failure to obtain stockholder approval for issuances exceeding the 19.99% Exchange Cap could prevent the full conversion of the note.
• The Company's non-compliance with Nasdaq listing rules (minimum bid price, market value of publicly held shares) poses a significant risk of delisting.
• The conversion price is variable and dependent on the Company's stock price, meaning the number of shares issued could be substantial if the stock price is low.
• The Company may not be able to maintain the effectiveness of the registration statement for the Conversion Shares.
• The removal of automatic conversion/assumption provisions in the Warrant amendment could negatively impact the Holder in the event of a fundamental transaction.

Future Outlook

The Company must file a registration statement for the resale of Conversion Shares and use commercially reasonable efforts to have it declared effective by the SEC. The Company also needs to obtain stockholder approval for issuances exceeding the Exchange Cap, which will require holding meetings or soliciting written consents. The Company is also working to regain compliance with Nasdaq listing standards.

Management Comments

• Management acknowledges that the conversion of the Note into shares of Common Stock is subject to a beneficial ownership limitation and an Exchange Cap requiring stockholder approval.
• Management has obtained necessary board and committee approvals to ensure the conversion transactions qualify for exemption from Section 16(b) short-swing profit recovery provisions.
• Management intends to respond to the Nasdaq Hearings Panel regarding the MVPHS Rule deficiency and address the matter in its written submission.

Industry Context

StockSavvy.ai notes that this filing reflects common practices in the biotech/life sciences sector where early-stage companies often rely on convertible notes and warrants to finance operations. The need for stockholder approval for significant share issuances is a standard Nasdaq requirement to prevent excessive dilution. The company's ongoing struggle with Nasdaq listing standards highlights the financial pressures many smaller public companies face.

Comparison to Industry Standards

• The conversion price mechanism (discount to market or floor price) is a standard feature in convertible note agreements within the venture-backed and small-cap public company space.
• The beneficial ownership limitation (4.99%) and Exchange Cap (19.99%) are typical safeguards employed by companies to manage dilution and comply with exchange rules like those of Nasdaq (e.g., Listing Rule 5635).
• The requirement for stockholder approval for issuances exceeding 20% of outstanding stock is a common threshold set by exchanges like Nasdaq for listed companies.
• The company's struggle to meet Nasdaq's minimum bid price and market capitalization requirements is unfortunately common among micro-cap and small-cap companies, particularly in volatile sectors like biotech.

Corporate Governance

Legal Proceedings

• Profusa, Inc. is subject to potential delisting from Nasdaq due to failure to meet minimum market value of publicly held shares and minimum bid price requirements. A hearing panel will consider this matter.

Related Party Transactions

• The Note Modification and Conversion Agreement is between Profusa, Inc. and NorthView Sponsor I LLC. The filing notes that managing members of the Holder are officers and/or directors of the Company, and the conversion terms have been approved by the Company's board and Compensation Committee to qualify for Section 16(b) exemption.

Stakeholder Impact

• Shareholders: Potential for significant dilution if the note is fully converted, especially if the stock price is low. However, the Exchange Cap and beneficial ownership limitations provide some protection against immediate, excessive dilution. The company's Nasdaq listing status is a critical concern.
• Holder (NorthView Sponsor I LLC): Gains the right to convert the note into equity under specific terms, with a conversion price potentially below market. Faces limitations on conversion due to beneficial ownership and Exchange Cap.
• Holder (Ascent Partners Fund LLC): The amendment to their warrant removes certain automatic protections in fundamental transactions.
• Creditors: The conversion of debt to equity could impact the company's debt-to-equity ratio and overall financial leverage.

Next Steps

• Profusa, Inc. must file a registration statement with the SEC for the resale of Conversion Shares within 90 days of April 24, 2026.
• The Company must use commercially reasonable efforts to have the registration statement declared effective by the SEC.
• The Company must hold a stockholder meeting (or solicit written consent) within 90 days of April 29, 2026, to seek Stockholder Approval for issuances exceeding the Exchange Cap.
• If Stockholder Approval is not obtained, the Company must hold subsequent stockholder meetings every four months until approval is secured or the note is fully converted/repaid.
• The Company must present its views to the Nasdaq Hearings Panel regarding the MVPHS Rule deficiency by May 5, 2026.
• The Holder may elect to convert the Note into Common Stock at any time after the Registration Effective Date, subject to limitations.

Key Dates

Recommendation

The filing presents a mixed picture. While the note modification and conversion terms are structured, the company's ongoing struggle with Nasdaq listing requirements and the potential for significant dilution are major concerns. The outcome of the Nasdaq hearing and the ability to secure stockholder approval for share issuances are critical factors that warrant a 'hold' position until more clarity emerges.

Keywords

Profusa Inc, Note Modification, Conversion Agreement, Promissory Note, Common Stock, NorthView Sponsor I LLC, Nasdaq Listing, Stockholder Approval