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Following
validation of Profusa’s technology and application via Lumee Oxygen in the EU, Profusa’s next step in the development process
is to seek approval of both Lumee Oxygen as well as Lumee Glucose from the U.S. FDA. Profusa believes that the generation of additional
clinical data, which it plans to collect in connection with obtaining regulatory approval, combined with Profusa’s sophisticated
patent protection, will expand partnership interest from prospective medical partners in the U.S. and worldwide. Profusa’s plan
is to gain approval of Lumee Oxygen in the U.S. by early 2026, followed by approval of Lumee Glucose in late 2026 or early 2027. While
Lumee Oxygen is authorized for commercialization in the EU pending migration of CE approval to new MDR regulations, Lumee Glucose is
not yet authorized for commercial sale in any jurisdiction and Profusa does not yet have regulatory approval for the sale of any of its
products in the U.S. Profusa’s plans for commercialization of its products are dependent upon obtaining regulatory approval in
relevant jurisdictions on a timely basis, which cannot be assured. See “- Government Regulation - FDA Premarket Clearance and
Approval Requirements.”

Profusa’s
sensor platform has the potential to generate an individualized real time biochemistry data stream, with a substantially better user-friendly
form factor, accessibility for a broad user base, lower burden of healthcare costs, and significantly increased total addressable user
base compared to current market solutions. Profusa believes that the combination of the potential advantages of this platform will enable
it to generate both short-term revenue in the high-value clinical applications of wound care and diabetes management as noted above,
but to also leverage core technology and develop and add to Profusa’s product portfolio to potentially tackle the management of
other chronic conditions, while in the future creating the foundation for the technology enabled health care where the large volume of
biomarker data is aligned with up-to-the-minute actions and choices of the individual. Therefore, Profusa’s data stream could become
a key enabler for high-growth healthcare sectors such as telemedicine and health and wellness coaching, and sophisticated evaluation
of biomarkers for both molecular diagnostics and potentially therapeutic purposes.

1

Importantly
today, Profusa believes that Lumee’s biosensor and artificial intelligence platform compares very attractively with some of the
largest products in this market sector. Profusa believes its validated core technology can easily bridge the gap that exists in the current
technology landscape for monitoring real time biochemistry. The current approaches either have tailored clinical application at high
costs and burdensome user experiences, such as CGMs today; or broad potential user base in consumer-friendly costs and user experience,
but limited clinical utility, such as health and wellness wearables. Other products are strictly software and analytics-driven solutions
such as telemedicine and coaching apps which have limited clinical utility due to the lack of real time data. Profusa’s technology
today has the potential to provide the solution of bringing sophisticated, real-time to a broad population of needy patients globally
at a more reasonable cost.

Profusa’s
core platform technology is the foundation for its growth strategy, which includes:

●Near
term product revenue in Europe from the CE approved Lumee Oxygen which measures dissolved
tissue oxygen for up to six months following sensor injection. Initial product uses include
application for the management of wound care for critical limb ischemia patients in surgical
settings, followed by use in ambulatory settings, subject to future regulatory approval.
Profusa estimates that the current total addressable market size for critical limb ischemia
across the United States and European Union is approximately five million patients. Profusa
anticipates beginning commercialization of Lumee Oxygen in Europe in early 2026 and continuing
its U.S. study for submission for U.S. FDA marketing authorization late 2026. Lumee Oxygen
may not be commercialized in the U.S. until FDA marketing authorization has been obtained.

●Future
product revenues from Profusa’s second product, Lumee Glucose, a continuous glucose
monitoring platform, that will provide real time glucose levels for patients suffering from
diabetes, subject to regulatory approval. Profusa has generated proof-of-concept clinical
data from 54 diabetes subjects over four clinical sites (two in Europe and two in Asia) in
human trials during the time period 2019 -2022. Using Profusa’s current data analytics
algorithm, the glucose platform has demonstrated potential for mean absolute relative difference
(MARD) of approximately 11% with up to nine months of functionality post injection. To date,
there have been zero incidences of device-related severe adverse events (SAE). Profusa anticipates
the start of its next validation study in the first half of 2026 and regulatory submission
in early 2026. Profusa believes that its technological approach may create advantages to
current glucose monitoring solutions on the market to substantially increase the number of
users who can benefit from this data stream from the current type 1 diabetes population to
the much larger type 2 and pre-diabetes populations, as well as any individuals outside of
these aforementioned populations interested in having access to long-lasting continuous glucose
data.

●Potential
future product revenues from other analytes such as lactate, CO2, ethanol, pH and other important
metrics in the management of other chronic conditions, which may be targeted by Profusa’s
research and development.

●Potential
future revenues from the data streams of the above applications, which could become a key
enabler to achieve the technology-enabled future for healthcare being brought to bear by
nascent healthcare growth sectors such as telemedicine and health and wellness coaching platforms.
The total value of this space is expected to reach almost $400 billion by end of 2028. While
these platforms are beginning to gain users and engagement demonstrating some degree of clinical
utility, Profusa believes that the growth of these platforms suffer from the lack of real
time clinical data. In the field of telemedicine, physician and patient interactions still
require visits to labs for blood test to inform physician diagnosis and feedback. In the
case of coaching platforms, the lack of inexpensive real time data relegates the business
model to rely on expensive technologies and nurses/coaches to provide the clinical feedback
to users. Profusa believes that, at scale, the data Profusa’s platform generates from
its initial products will be a key enabler for the productivity and business models for both
of these sectors to expand and reach more of their full potential. Profusa’s plan is
to partner and provide such data streams as a further growth driver for Profusa.

2

Profusa’s
Addressable Market

There
have been many attempts to develop technologies that provide real time biochemistry and biomarker data for individuals. The most compelling
use case has been for measurement of glucose in the management of diabetes. The first traditional approach to glucose measurement is
to take measurements at discrete points in time via a self-monitoring of blood glucose (SMBG) method, which requires the collection of
a drop of blood via a lancet and applying that drop of blood in a test strip which is then read by a reader. A second approach is to
have a patient monitor their glucose levels by using a continuous glucose monitoring (CGM) device which provides a continuous stream
or real time glucose measurement. The CGM approach has the benefit of being able to provide a data stream which elucidate not just the
glucose level at any given time, but the trending of the glucose levels throughout the day. This ability to visualize trending of a patient’s
glycemic levels is important to predict significant excursions of an individual’s blood sugar levels and prevent serious adverse
events caused by hypoglycemic or hyperglycemic to the patient and enable the patient to inject insulin or take medication to manage the
disease. The following graphic illustrates the comparative advantage of CGM over SMBC.

Comparison
of finger-pricking self-monitoring of blood glucose (SMBC) and continuous glucose monitoring (CGM).

While
there have been attempts to use energy waves to non-invasively measure glucose in a patient’s body, those efforts have proven to
be unsuccessful due to their lack of ability to deliver accurate and reliable measurements. Other experimental approaches utilize molecular
spectroscopy, but have to date not received U.S. regulatory approval and, despite some attaining European Regulatory Approval, have not
gained significant commercial traction there. Profusa believes this demonstrates that the non-invasive nature of a technology, even in
the unlikely case it was of comparable accuracy to existing devices, has little bearing on marketability if other criteria are not met,
such as competitive pricing, low production costs, user-friendliness and as well as pre-existing relationships with larger CGM players
who can contribute to a plan to bring the product to market, all of which are areas where Profusa believes it has a winning advantage.

There
are also other non-invasive approaches to measure biomarkers and analytes available, such as those measuring steps, blood oxygen levels,
heart rate, and body temperature. These solutions provide some data for general wellness management; however, their clinical utility
has been limited since there is not a large defined set of clinical evaluation that links these parameters to specific clinical diagnosis
or outcomes. Accordingly, Profusa believes that for a technology platform to measure clinically reliable data that can inform high-value
clinical decisions, a sensing element inside the body to take direct measurements of the analyte of interest is of critical importance.

Current
CGM sensors typically have a small needle coated with a sensing chemistry which is placed through the skin so the needle can take measurements
in the interstitial space of a patient. These needles, however small, elicits a “foreign body response” within the patient
as the body’s natural defense mechanism against objects that are recognized as foreign. The foreign body response begins to encapsulate
the sensing needle of these CGMs in scar tissue and renders the data from these sensors unreliable within a matter of days. This is the
major reason the longevity of these CGMs is limited to approximately 7-14 days. A longer-term 12-month solution where a sensor is surgically
implanted into a patient’s body is available as well, however the sensor requires a surgical implantation with sutures to close
the surgical wound. This approach has a limitation of a much more invasive deployment procedure and associated higher cost.

3

All
data is from the manufacturer website. The products provided in this chart are:

●Dexcom
G6

●Abbott
Freestyle Libre 2

●Medtronic
Guardian Connect

●Senseonics
Eversense E3

Profusa’s
CGM Product (Lumee Glucose) is not approved in the United States. The > 270 days usage time is based on the data acquired through
Profusa’s glucose program clinical study.

Profusa’s
Technology

It
is Profusa’s belief, based on an understanding of the biological response to current available sensors, that a viable solution
that could provide data for clinical utility and wide-scale adoptions, needs to have the following three key characteristics: direct
measurement of the body’s chemistry to enable accuracy, ease of deployment of the platform and long-term functionality to encourage
adoption by a large population, and low cost to breakdown the economic barrier for adoption by those who can benefit from this data stream.

Profusa’s
sensor platform has the potential to deliver on these requirements and are composed of the following components:

●Hydrogel
Sensor

Profusa’s
passive sensor is composed of a class of materials called hydrogels, which are similar to the material from which modern contact lenses
are made. The sensor is designed to overcome the effect of the foreign body response and thus has been demonstrated to be able to collect
biochemical data for up to 6-months in the case of Lumee Oxygen, and up to 9-months based on the data acquired through Profusa’s
glucose program clinical study. This hydrogel scaffolding is soft and pliable and serves as the base material on which specific fluorescent
molecules are bound. These fluorescent molecules bind specifically to the analyte of interest and their fluorescent characteristics change
depending on whether the analyte is bound or unbound. The hydrogel sensors are devoid of any electronics or power source, and are simply
composed of the hydrogel scaffolding and the fluorescence sensing chemistry. Depending on the sensor type, Profusa may also imbed a reference
chemistry for reference purposes during data processing. The hydrogel sensor measures approximately 400 microns in diameter by 3 millimeters
in length and is injected subcutaneously via a hypodermic needle injection at a depth of 2 - 6 millimeters from the surface. Upon injection,
the sensor is designed to be integrated as a part of the tissue and is not noticeable. As this sensor is passive in nature, while the
binding and unbinding of the analyte of interest is constantly occurring, data from the sensor is not actively broadcasted outside of
the body until a reader (described below) is placed on the skin over the sensor.

By
“decoupling the sensor and the reading elements,” we believe that our approach has a few major advantages:

1.The
cost of the system is quite low as the sensors are low cost to manufacture and the more expensive
reader component can be reused through multiple sensor injections;

2.The
act of data acquisition is controlled by the user and action is secure;

3.The
sensor deployment is a common hypodermic needle procedure that can be performed by healthcare
professionals across a variety of common settings; and

4.The
sensor functionality lifetime is limited by the stability of the fluorescence molecule and
not by the foreign body response, which translates into months of functionality.

4

●Reusable
Reader

An
optical reader has been developed to be worn on the skin above the sensor and is designed to interrogate and gather sensor signal for
data processing. This optical reader has a small wearable form factor dimensions of the oxygen reader and is worn on the skin via a double-sided
medical grade adhesive. The readers are rechargeable via conductive charging and currently have a functional lifetime of 24 hours on
a single charge in the case of Lumee Oxygen. When a datapoint is desired, the firmware of the reader instructs the device to pulse a
light source shining an excitation light of a specific wavelength to illuminate the sensor under the skin. The return fluorescent light
from the sensor is then detected by the reader via a series of photo detectors and the data is captured for algorithm processing. By
continuously pulsing the light and capturing the return signal from the hydrogel sensor, the reader is designed to be able to collect
a stream of data allowing for the continuous monitoring of the biochemistry inside the body. This device is also designed to have the
capability to measure multiple wavelengths of light allowing for the capture of changes in tissue optical properties and reference chemistry
signals, providing input to the data algorithm to potentially correct for variability of subject tissue types and individuals change
in tissue properties over time. Additionally, the reader is designed to be able to include thermistors, or temperature-sensitive resistors,
and motion detectors, enabling the collection of additional parameters the algorithm may use to increase the accuracy of the analyte
measurement. The externally worn device is designed to be a durable component of the system and can be reused for multiple sensor injections.

5

●Data
Algorithm

Software
algorithms operating in firmware and mobile applications compute clinically relevant values based on optical signals and temperature
measurements provided by the reader hardware. Lumee Oxygen uses an oxygen sensor whose optical intensity, after excitation from an LED,
decreases at a rate that is a function of tissue oxygen. The hardware is designed to provide rapid optical intensity measurements. The
firmware fits the decrease in intensity to a model whose coefficients represent the oxygen intensity. The firmware produces a Lumee Oxygen
Index (LOI) value every few seconds and the tablet application visualizes the data and determines the percent change over time. The glucose
hydrogel is an intensity-based system with two dyes: a reference dye whose intensity is independent of glucose and other chemical properties
of its environment, and a glucose dye whose intensity after excitation changes predictably with glucose concentration. The ratio of the
glucose and reference intensity provides an approximation of the glucose signal. The glucose system is designed to use several wavelengths
of light from defined LED sources and optical detectors. Every measurement sample includes 84 unique optical measurements that form a
data set that is used to determine the glucose dye intensity, tissue optical properties, and position of the sensor. The hardware and
firmware in the glucose system capture and store these raw measurements. The data processing on the glucose system is performed primarily
on a mobile device. The mobile application computes glucose intensity changes and calibrates the values to establish a measurement of
blood glucose.

The
glucose algorithm in the mobile application is designed to perform a series of corrections to account for changes in the optical signals
that do not originate in the glucose dye. These include correcting for variability in the LED brightness at different temperatures; correcting
for changes in the reader’s position relative to the sensor, by triangulating the position of the sensor using 4 opposing LEDs
that excite the reference dye; and correcting for changes in the tissue’s light absorption using 72 source-detector pairs. The
reader position and tissue absorptions are computed by fitting the measurements to a principle-based optical model. Finally, the glucose
signal intensity is corrected for temperature changes to account for the glucose dye’s sensitivity to temperature. The corrected
optical glucose signal is calibrated into a measurement of blood glucose. Profusa’s calibration model includes support for different
user calibration schemes. Profusa has also developed a collection of machine-learning models which use these same optical signals as
inputs to improve corrections. These machine learning models include using the tissue optical property measurements as inputs to generate
background fluorescence, a deep learning model which uses all the optical signals to generate a blood glucose estimate, and machine learning
models to detect signal errors. Additionally, in conjunction of work with DARPA, Profusa developed machine learning models that operate
over time-series data to detect specific events.

Both
the glucose and oxygen systems have firmware and Bluetooth low energy (BLE) hardware designed to communicate between the reader and the
mobile device. The mobile device is initially paired with the reader using a passkey and later utilizes 128-bit encryption for data transmission.
The reader identifies if the connection between the reader and the mobile device is disconnected. It retains the data and transmits the
data once the connection is re-established. The mobile device also notifies the user if a disconnection occurs.

●App
and Data Visualization

Lumee
Oxygen includes a tablet device that is designed to provide real-time traces of tissue oxygen levels from multiple readers simultaneously,
and allow the operator to annotate events and normalize values at a point in time to identify the relative improvement of a patient’s
tissue oxygen. The system also supports PDF and CSV data export. Profusa has also developed Lumee O2 Go, currently for research use only,
that operates on a mobile phone and uploads data to the cloud. This mobile application is being developed to provide real-time visualization
of changes in oxygen, data annotation, and incorporation of third party data via Apple’s HealthKit.

6

The
initial glucose professional product, once approved, is intended to allow physicians and care providers to visualize a patient’s
glucose over a series of days. This first product mobile interface is designed to encourage compliance, log activities, and facilitate
correct operation without providing the patients access to the system’s measured blood glucose values. The second real time use
product, once approved, is planned to allow for users to have real time access to the system’s measured blood glucose values to
enable care decisions. An essential feature of the glucose system is a visualization that allows the patient to correctly locate the
reader over the sensor. This mobile user interface will show a real-time depiction of the reader as it is moved over the sensor in the
body to maximize signal quality and optimal position.

Profusa
uses Amazon Web Services (AWS) infrastructure to host and secure data. For authentication and authorization, Profusa’s web application
utilizes Amazon Cognito. To provide network security, data is transmitted over the public network using TLS. All data communication from
Profusa’s application is transmitted through Amazon’s Application Load Balancer which provides both data encryption and allows
Profusa’s system to reside entirely on a private network. Amazon’s systems provide the capabilities to ensure that data is
encrypted during transmission and at rest. Profusa’s mobile applications upload data regularly but do not rely on a network connection
to operate. Nonetheless, to deliver a robust service, Profusa’s cloud infrastructure is hosted on redundant, fault-tolerant application
servers, to improve availability.

The
core technology platform described above is the foundation for Profusa’s future products for the measurement of real time biochemistry,
including Lumee Oxygen and Lumee Glucose. By tailoring the fluorescence chemistry with the optical properties of the multi-channel reader,
Profusa believes that its ability to develop products to measure other analytes and expand our product portfolio is enhanced while maintaining
the key value propositions of the platform. It is conceivable in the future that Profusa may be able to develop a sensor and reader pair
to measure multiple analytes within one product, creating streams of data for a biochemical panel for broader applications.

Short-Term
Opportunity with Lumee Oxygen and Lumee Glucose

Realtime
monitoring of validated and clinically relevant data from individuals have profound upside. By monitoring real-time metabolic parameters
such as tissue oxygen and glucose, Profusa’s technology, if approved, could benefit chronic conditions affecting more than 500
million people across the world. Over the past two decades, the health care community has begun the trend of developing technology solutions
to create infrastructure and real time data in an effort to bring the potential of clinical decisions away from the costly hospital and
clinics to the individuals in the comfort of their homes and daily lives. From chronic conditions that can benefit from real time monitoring,
such as diabetes management, dialysis treatment, infection monitoring, surgical recovery, to the infrastructure of telemedicine and remote
access to healthcare professional for diagnosis and health data interpretation, the technology enabled future of health care has gained
greater footing to becoming more mainstream. The total market size of telemedicine platforms have doubled from $41 billion to over $80
billion from 2019 to 2021, and the market for remote coaching platforms has also grown from hundreds of millions to just under $14 billion
over the past decade. Additionally, CMS has implemented reimbursement codes for remote patient monitoring (RPM) for chronic conditions
and data interpretation. This can lead to reimbursement of more than $200 monthly per patient as of 2022. Furthermore, these codes can
be used in addition to existing Chronic Care Management (CCM) codes. These trends provide significant momentum for Profusa’s technology
platform to potentially be the indispensable data stream to support this vision of the technology-enabled health care future, potentially
replicating the impact that technology platforms such as Google have had in advertising to the high-value arena of healthcare. With respect
to oxygen and glucose monitoring specifically, the size of the continuous glucose monitoring market is estimated to be approximately
$2.8 billion in the U.S. and over $800 million in Europe by the end of 2024. The global oxygen monitoring market is estimated to be over
$3.1 billion and $3.4 billion in 2025 and 2026, respectively.

Profusa’s
plan to capture this opportunity is anchored by its product launch plan, beginning with the near-term launch of Lumee Oxygen, once approved,
as it serves the critical limb ischemia wound care population. Creating a solution that aligns to a critical clinical need and demonstrating
the benefit of a real time biochemical data stream from operating room to the home in ambulatory care would create credibility and capability
build for Profusa on this journey. The second phase would be to launch Profusa’s glucose product, once approved, for the well-defined
diabetes market and leveraging its value proposition to expand the number of patients who can benefit from CGM to beyond the current
type 1 diabetes population. Profusa believes that its solution could benefit those in the type 2 and pre-diabetes populations to both
potentially broaden the product reach beyond the currently available solutions, but also generate a broad set of clinical data across
a large heterogeneous population to inform the clinical science behind diabetes care throughout the disease spectrum. Lastly, by adding
additional analytes and partnering with the telemedicine and health and wellness coaching sectors, Profusa hopes to truly bring the power
of the broad real time biochemistry data stream and create enduring value.

7

Lumee
Oxygen for Critical Limb Ischemia management and management of peripheral arterial disease (PAD)

Peripheral
arterial disease (PAD) is a vascular condition caused by the blockage of arteries below the knee of a patient. These blockages decrease
the blood supply to the extremities, in this case the foot, and is characterized by pain in walking, neuropathy, resting pain, and ultimately
tissue death requiring amputation. The progression of PAD is described clinically by the Rutherford Scale, a medical classification describing
seven categories of peripheral artery disease, including both the patient’s clinical symptoms as well as objective findings, with
class 1 being the mildest form of the disease characterized by the patient experience foot pain from walking, to the most severe of class
6 characterized by major tissue death/loss in the foot. The classes of patients with Rutherford classes 4-6 are described as having Critical
Limb Ischemia (CLI). According to articles in Endovascular Today and various market research firms, the number of cases across the United
States and European Union of CLI has grown from approximately two to six million over the past 10 years and is growing at a compound
annual growth rate (CAGR) of 8.3% from 2022 to 2027 due to increased diagnosis rates. This patient population usually present with multiple
comorbidities, including diabetes in approximately 45% of cases CLI costs healthcare systems more than $200 billion in the United States
alone annually.

The
current therapeutic regimen for treating CLI is to debride the usually heavily infected wounds of the foot, to remove dead tissue to
prevent further infections, and to perform vascular therapy surgically or endovascularly through ballooning and stenting the blockages
of the arteries to restore blood flow to the foot. While surgical or endovascular procedures in restoring blood flow to the extremities
are usually achieved in the operating room, the causality of technical success in the OR leading to healing of the wounds caused by the
tissue loss of the disease is less certain. In approximately 50% of endovascularly treated cases, the wounds of these patients are not
healed within six months post-surgery. This is caused by the fact that the surgical procedure performed on the large arteries in the
leg does not necessarily restore oxygenation to the tissues to the wound. The need for healthy microvasculature that enables oxygen exchange
between blood and tissue are compromised in this patient population. Lumee Oxygen is designed to provide the physician the data to understand
whether their surgical procedure not only could restore blood flow to the lower extremities, but more importantly, whether the tissue
in the effective area is receiving sufficient oxygen as a result.

Lumee
Glucose for Diabetes Management

Diabetes
is a chronic metabolic disorder suffered by more than 400 million individuals globally, according to the World Health Organization, and
approximately 1 billion individuals when including pre-diabetic patients. The cause of this condition is due to the patient’s inability
to product or use insulin, which cause the body to ineffectively manage the level of blood glucose. The resulting inability to maintain
adequate control of blood glucose level cause a variety of serious downstream health conditions and complications including vascular
disorders, chronic wounds and tissue loss, amputations, heart disease, kidney malfunction, blindness, coma, and even death. Unfortunately,
diabetes is a condition that continues to see global rise in patient populations due to lifestyle choices, improvements in global living
standards which lead to dietary changes, and the increase in the aging population.

Diabetes
can be characterized into three populations: type 1 diabetes, type 2 diabetes, and pre-diabetes. Type 1 diabetes is a genetic disorder
that typically develops while the patient is in childhood and is primarily caused by the patient’s inability to produce insulin,
or inability to respond to the presence of insulin (insulin resistance). Patients suffering from type 1 diabetes must maintain their
glucose level in healthy range through the frequent and dose-specific administration of insulin. Type 1 diabetes is a genetic disorder
that is characterized by the patient’s inability to either produce the hormone insulin, or becomes resistant to the effect of insulin
in the management of their blood glucose levels. Individuals suffering from type 2 diabetes similarly have impairments that lead to the
body’s inability to manage glucose well. This is primarily caused by either the body’s insufficient production of insulin,
or cells’ poor response to insulin. Type 2 diabetes is primarily a chronic condition that is lifestyle driven, and usually present
symptoms later in a patient’s life. Those who suffer from type 2 diabetes usually require the management of their disease through
careful monitoring of their diet and nutritional intake, level of exercise, and maintaining a regimen of oral medications or the injection
of insulin to regulate their blood glucose levels within the healthy range. Pre-diabetes refers to those individuals whose blood glucose
levels are higher than normal, but not high enough yet to trigger the clinical definition of type 2 diabetes. Those identified as having
pre-diabetes have a much higher likelihood of developing type 2 diabetes without intervention. For individuals who have been diagnosed
as pre-diabetic, the management of their condition is typically through nutritional counseling, management of their dietary habits, and
exercise in an attempt to slow down the progression of their diabetes to the clinical threshold.

8

As
the monitoring of the blood glucose level in a patient is a critical component to effectively manage the disease or progress of the disease,
many individuals with diabetes utilize technologies to actively measure their blood glucose levels throughout the day. One traditional
method of monitoring blood glucose levels is through self-monitoring of blood glucose (SMBG). SMBG technology approach requires the collection
of a small drop of blood through lancing the fingertips and applying that drop of blood sample to a test strip which is read by a glucose
meter. This traditional approach, more commonly referred to as “fingersticks”, are usually done multiple times throughout
the day and night and generate a point-in-time measurement of the blood glucose level of the patient. This method is painful, at times
difficult to self-administer to get an accurate reading and does not provide the important information of blood glucose trends that is
important for effective disease management. Alternatively, continuous glucose monitoring (CGM) technologies are generally less painful
to deploy, create a stream of continuous glucose level data to the patient and care providers throughout the day and night, and have
the ability to present blood glucose trending data that is important to disease management. Current CGM solutions available to patients
are often inconvenient and require frequent changes. Deployment of the technology in certain cases requires surgical implantation that
is often a barrier to adoption from the points of view of both the user and physicians. Additionally, the cost of the current CGM solutions
are typically at a level where insurance reimbursement will only be available to the most brittle of type 1 and 2 patients (the latter
of which, to be covered by insurance, often require daily insulin intake). The high costs and cumbersome usability exclude the adoption
of such solutions to the larger type-2 population, particularly those not regularly using insulin, and pre-diabetes patients who can
benefit clinically from the real time glucose data.

Profusa’s
Product Path and Clinical Programs

Lumee
Oxygen

Lumee
Oxygen is designed to be an adjunct instrument intended for continuous and long-term monitoring of the oxygen in the subcutaneous tissue
in the upper extremity, shoulder, or lower extremity. In jurisdictions where it has received regulatory approval, the Platform is indicated
for use in patients with potential acute and/or chronic changes in tissue oxygen levels who may benefit from monitoring. Its use in those
jurisdictions in conjunction with the physician’s diagnosis and judgement has the potential to create a potential new paradigm
for wound care.

Lumee
Oxygen is designed, developed and manufactured by Profusa. The first generation Lumee Oxygen Platform received its CE Mark on September
27, 2016. The device had undergone significant design updates since to include wireless components. This updated platform is referred
to as the Wireless Lumee Oxygen Platform to reflect this change. The Wireless Lumee Oxygen Platform received CE Mark on January 14, 2020.
Profusa’s commercialization efforts of this product were critically hampered by the closure of hospitals and operating suites to
non-essential personnel due to the COVID pandemic. Profusa plans to take advantage of the relaxation of COVID protocols to execute on
its commercial plans in Europe beginning in early 2026.

There
have been ongoing communications with FDA along the device development path in consideration of submission for FDA marketing authorization.
Early during the development in 2014, it had been established with FDA that the Profusa Oxygen sensing device would be a good candidate
for an Investigational Device Exemptions (IDE) application with “significant risk designation” acknowledging permanent injection
of the hydrogel sensor in subcutaneous tissue. Frequent FDA communication followed during the time period 2015 - 2017 which resulted
in approval of an IDE application for performing studies in the U.S. as described below. Communications with FDA in 2019 did focus on
design questions for a pivotal study with the Wireless Lumee Oxygen Platform which would serve the needs of a subsequent De Novo submission.
An IDE application was approved in April 2019 and a supplement to accommodate Covid pandemic conditions was subsequently approved. Nevertheless,
the practical execution of the study had been significantly and negatively impacted by the pandemic due to the lack of access of non-essential
personnel in health care settings. Today the pilot phase of the study has been completed confirming the pivotal study phase design, and
the study will continue into the pivotal phase.

9

Lumee
Oxygen Clinical Study Overview

The
Profusa Wireless Lumee Oxygen Platform and its predecessor, the Lumee Oxygen Platform, are designed to measure changes of oxygen level
in the tissue, continuously and long-term. It is designed to report oxygen levels intra-operatively during an operation at a medical
facility, and/or used as a monitoring method pre- or post-operatively at a clinic. Up to four anatomical sites can be measured and reported
concurrently. It is intended for use in patients with potential acute and/or chronic changes in tissue oxygen levels who may benefit
from monitoring.

The
features of both the Profusa Wireless Lumee Oxygen Platform and the Lumee Oxygen Platform are expected to provide added value to clinicians
when compared with current alternative technologies. Both Lumee systems provide a new method for measuring tissue oxygen concentration
in the interstitial fluid without perturbing the tissue after the initial injection. In addition, the Wireless Lumee Platform uses a
small portable reader and tablet to display tissue oxygen. This increased usability lends itself to use within many settings, such as
ambulatory care settings.

The
Lumee Oxygen Platform and the Wireless Lumee Oxygen Platform do not estimate oxygen saturation in the vasculature, nor is it an averaged
measurement across a large volume of tissue, rather it provides a direct measure of oxygen availability in the interstitial fluid (referred
to as tissue oxygen concentration). The Lumee Oxygen sensor can be placed at a target depth of 3-6mm beneath the skin, enabling clinicians
to monitor tissues of interest, and it is not limited to measurement of superficial tissue layers. Furthermore, it can provide insight
into the changes occurring in tissue oxygen levels in both acute and chronic use cases. The Lumee Oxygen system has been tested in measuring
changes in oxygen in specific tissues due to systemic oxygen challenges (hypoxia model), peripheral flow disturbances (occlusion/reperfusion
protocols and monitoring of vascular interventions), and wound healing state (ulcerated feet in peripheral artery disease). Because of
its small footprint and a portable design, the Wireless Lumee Oxygen Platform especially provides a method for continuous and long-term
monitoring of tissue oxygen levels.

Lumee
Oxygen Clinical Study History

The
Wireless Lumee Oxygen Platform had been registered in various European countries upon CE Mark following a determination that it was equivalent
to its predecessor platform, Lumee Oxygen Platform. The sensors involved are the same. The following is a description of Profusa’s
clinical study history for this product from proof-of-concept through approval in Europe. To date, these clinical studies have involved
328 sensor insertions, in 45 of subjects, with no device related serious adverse events (SAE). Study results served investigational device
development purposes in support of the CE approval of the first generation device in 2016.

●Proof-of-Concept
study - A Feasibility Study to Characterize the Performance of the PROFUSA Oxygen Sensor
System. The first-in-human “Si Se Puede” Study used micro-oxygen sensors
that were injected into the feet of patients with limb-threatening ischemia to measure oxygen
changes during endovascular therapy. A total of 48 sensors were studied in 10 CLI patients
and 4 healthy volunteers. The injected sensors could be readily located during measurement
attempts. There were no adverse events of safety concern related to the investigational product.

●Feasibility
of Continuous Tissue Oxygen Monitoring in Healthy Adults. This study was an interventional
feasibility study that was designed to characterize the performance of the Lumee Oxygen Platform
in healthy adult volunteers. The analysis summarized here includes data on multiple study
end points, including usability, safety, and effectiveness. Tissue oxygen levels were measured
in 7 subjects (total of 14 sensors) during provocation tests that were used to induce changes
in peripheral tissue oxygen. During provocations, local tissue oxygen was measured continuously
using both Lumee Oxygen sensors and a commercially available transcutaneous oximetry (non-invasive
measuring of oxygen levels through the skin) device. Results showed that Lumee Oxygen measurements
were reliably obtained and provided signals sufficiently above a signal to noise threshold.
There were no adverse events of safety concern related to the investigational product.

●OMNIA
(Oxygen Monitoring Near Ischemic Areas) European Registry Study. This study was a Post-Market
Follow-up study which explored use cases and characterizing the diagnostic value of the Lumee
Oxygen Platform in Critical Limb Ischemia patients. As a registry, the study intended to
provide real-world experience and to prepare implementation of the Lumee Oxygen Platform
in the European market. Enrollment of the study has concluded with a total of 35 subjects.
There was no indication of adverse reactions specific to the hydrogels. Data analysis confirmed
Lumee Oxygen is responsive to interventions during revascularization therapies.

10

●Physiology
Baseline Data of Tissue Oxygen Levels in Healthy Volunteers. This study was a development
study was conducted in the U.S. toward the development of a next generation device and was
aimed at collecting physiological integration and baseline data of tissue oxygen levels in
various anatomical locations and usability data in healthy adult volunteers in daily life
using a prototype version of Profusa’s Wireless Lumee Oxygen Platform. The study has
been completed, it generated observations to inform wireless technology development, attachment
and formfactor design, as well as software considerations for a next generation device. No
design changes to Lumee Oxygen will occur prior to regulatory approval of the current existing
device. Once FDA marketing authorization has been obtained, any design changes for a next
generation of Lumee Oxygen will be planned, implemented, and verified and additional performance
data or proof of equivalency will be submitted to FDA in an amendment to the original submission.

●Ongoing
Pivotal Study in the U.S. for submission purposes to FDA - Effectiveness of Measuring
Local Tissue Oxygen in Response to Induced Hemodynamic Changes with The Profusa Wireless
Lumee Oxygen Platform in Patients with PAD. This is an ongoing IDE study in the United
States with the objective to assess the effectiveness of monitoring changes in local tissue
oxygen with Profusa’s Wireless Lumee Oxygen Platform in comparison to transcutaneous
oxygen measurements in patients with peripheral artery disease (PAD). This study characterizes
the response to hemodynamic changes, or changes in cardiovascular function such as arterial
pressure or cardiac output, induced by vascular occlusion tests and positional maneuvers.
The study has been approved for conduct at four study sites with enrollment of up to 65 subjects.

Device
Safety

As
of April 14, 2026, the company is not aware of any serious adverse events (SAEs) that occurred related to Lumee Oxygen.

Continuous
Glucose Monitoring product

Lumee
Glucose is an investigative product development system as Profusa has yet to receive the regulatory approval necessary for commercialization
in any jurisdiction. It is under development to monitor optical signals that represent glucose levels in the interstitial fluid of subcutaneous
tissue continuously and long-term. This glucose sensing system is composed of 1) a Glucose Sensing Hydrogel, 2) a Hydrogel delivery/injection
pen, and 3) a Hydrogel Reader and software. The software is designed to be used with a User Interface on a Tablet or Smartphone.

Lumee
Glucose is designed and developed by Profusa. The Profusa Glucose First-In-Human (FIH) Platform had been approved for investigational
use by the Competent Authority in Germany (BfArM) on May 4, 2018. Follow-up development studies with significantly improved Glucose Platform
components, including the sensing hydrogel and reader, received approval for investigational use in several jurisdictions: by the Competent
Authority in Austria (AGES) on May 8, 2020 and January 11, 2021; by the Competent Authority in Germany (BfArM) on November 26, 2020;
by the Competent Authority in Vietnam (Ministry of Health) on September 10, 2020. Study conduct took place in all jurisdictions with
a total enrollment of 54 subjects. The active glucose monitoring phase for up to 12 months had been completed by the end of 2021. The
European studies are still open for extended safety monitoring per protocol for up to 3 years observation. The study in Vietnam does
allow amendments for additional device iterations, which will be implemented as soon as practical for the next phase of Profusa’s
clinical study program.

Profusa
continues to have ongoing communication with the Competent Authorities in Europe for the current studies periodically reporting on extended
safety observations for long-term sensor placement. Submission of new study protocols is expected in 2026, employing the first commercial
generation platform demonstrating safety and effectiveness (accuracy and intended use performance) aiming at regulatory clearance purposes,
i.e. CE Mark.

11

In
parallel, the technology is going be presented to FDA to obtain Investigational Device Exemptions for study conduct in the U.S. Potential
clinical study sites have been targeted and respective IDE submission documentation is in preparation. A PMA (Pre-Market Approval) pathway
is expected for marketing authorization in the U.S. It will likely require a pivotal study performed in the United States with an estimated
enrollment of 120 - 160 subjects and an active glucose measurement period of at least 3 months.

The
first commercial implementation of Lumee Glucose will be, subject to regulatory approval, a professional-use device for retrospective
data download and data evaluation by health care professionals. This approach is typical in the CGM market and will be a controlled and
limited use case in preparation for the release of a fully featured real-time use CGM device generation in the near future, subject to
obtaining required regulatory approval.

Lumee
Glucose Clinical Study History

Lumee
Glucose is a CGM product candidate that was first entered into clinical study through our first-in-human (FIH) study in 2018. To date,
we have tested 108 sensors in 54 subjects in our clinical program for the glucose product, and tested 20 sensors in our FIH study in
10 subjects. These studies have been conducted in global sites in Germany, Austria, and Vietnam. No serious adverse events related to
the device have been reported with safety data neither during the active 12 months post injection period nor during extended observation
up to three years per protocol.

●Proof
of Concept Feasibility Assessment: The study was conducted in Germany in 2018/19. The
objective of the study was to evaluate the Lumee Glucose FIH Platform in human subjects,
establishing long-term Lumee Glucose measurements in the subcutaneous interstitial space
as representation of glycemia. The Lumee hydrogel signal was to be compared to established
glucose reference measurements of capillary blood under controlled conditions for potential
signal artefacts like movement, temperature, and ambient light. Initial signal processing
algorithms would be established including retrospective accuracy evaluation considering a
defined relationship between the Lumee signal and blood glucose reference measurements. 10
subjects had been enrolled with insulin-dependent diabetes, male and female, of 18 years
and older. The study served as Proof-of Concept for the technology and for safe use in human.
Both the hydrogel sensor and the reader design have been significantly modified since in
order to improve sensing sensitivity/responsiveness of the system for the subsequent study.

●Tissue
Integration and Monitoring with the Lumee Glucose Hydrogel in the Subcutaneous Interstitium:
The study was conducted in Austria in 2020/21 employing two versions of the reader system
and an upgraded sensor version. Twelve subjects with insulin-dependent diabetes, 18 years
and older have been enrolled. The objective of the study was to evaluate tissue integration,
location reliability and glucose response characteristics over a period of three and six
months after sensor placement. Correlation of Lumee signals with IV sampled blood reference
values was to be established during glucose excursions at meals at repeated in clinic visits.
Reader localization effectiveness was checked additionally by using an infrared sensitive
camera and by high frequency ultrasound. The active monitoring phase has been completed.
Long-term safety observations are ongoing.

●Glucose
Monitoring with the Lumee Glucose Hydrogel in the Subcutaneous Tissue: The multi-site
study was initiated in Austria, Germany, and Vietnam in August/October 2021. Total of 54
subjects across all sites with insulin-dependent diabetes, 18 years and older have been enrolled.
The objective of the study was to evaluate glucose response characteristic of the Lumee Glucose
hydrogel in tissue over a period >3 months with active monitoring sessions and 3 years
of placement safety observations. Analysis endpoints did include: Correlation of Lumee signals
with IV sampled blood reference values, Signal processing/algorithm effectiveness, correction
approaches for motion, temperature, ambient light, signal stability over time. Selected in-clinic
24-hour monitoring sessions were performed.

12

Demographics
For Lumee Glucose Studies

A
total of 54 subjects have been enrolled with 108 Lumee Glucose sensors injected and 398 study visits completed. These visits have yielded
745 glucose traces and more than 18,000 paired reference points.

Site
1
2
3
4

Location
Germany
Austria
Vietnam
Vietnam

Subjects
12
12
16
7
7

Data
Sets
121
60
124
63
68

Diabetes
Type
1
12
9
15
0
1

Type
2
0
3
1
7
6

Gender
Male
10
8
9
2
6

Female
2
4
7
5
1

Age
(years)
Mean
60
55
43
57
55

Min
44
29
20
45
40

Max
69
82
72
66
62

BMI
(kg/m2)
Mean
27.2
26.5
26
25.3
26.3

Min
22.7
21.6
19.7
18.2
19.3

Max
40.2
40.1
40.3
31.1
34.9

Therapy
(%)
Insulin
100
100
94
0
29

Oral
0
0
0
71
29

Both
0
0
6
29
42

HbA1C
(%)
Mean
6.9
7.5
-
9.6
8.6

Min
6
6.3
-
6.7
7.7

Max
7.9
9.3
-
14.8
9.4

Results

The
feasibility study at the four clinical sites provided data on sensor locatability, system performance (the ability to accurately estimate
glucose), in addition to monitoring for adverse events. All the sensors were locatable. The feasibility study was not designed and powered
to provide a robust estimate of the commercial performance of the system, however, data collected in the study enabled the refinement
of the algorithm. Using the data, Profusa was able to show evidence of the system’s ability to track glucose. Data indicate that
the sensors were responsive to glucose during the study period and provided a significant body of data for algorithm development and
evaluation. Performance analysis of the data yielded an aggregate mean absolute relative difference (MARD) of 11.7% for sessions from
7 - 90 days post-injection. The consensus error grid and cumulative MARD distribution are presented below, representing 163 sessions
from 37 patients that passed the data quality filters, resulting in 2406 paired blood glucose reference points. Data quality filters
that were developed and automated during the algorithm development exclude problematic traces including poorly placed readers over the
sensor, unexpected fluorescence contamination of the skin surface over the sensor, and poor adhesion of the reader over the sensor yielding
low signal to noise.

13

The
figure above shows a standard Consensus Error grid, which is a tool used to evaluate the accuracy of blood glucose meters. It visualizes
the paired data points that passed the quality filters. This includes 163 sessions of data collection approximately 6 hours in duration
from 37 patients over the course of 90-days. Measured signals are calibrated using 3-point blood glucose calibration in each session.
Each dot on the figure shows the relationship between the Profusa reported blood glucose value (Y-axis) compared with the corresponding
reference measured blood glucose value (X-axis). The colors of the dots distinguish patients. The grid is divided into zones signifying
the degree of risk posed by the incorrect measurement: zone A represents no effect on clinical action; zone B represents altered clinical
action - little or no effect on clinical outcome; zone C represents altered clinical action - likely to affect clinical outcome; zone
D represents altered clinical action - could have significant medical risk; and zone E represents altered clinical action - could have
dangerous consequences.

The
pair of figures above shows an alternative visualization of the data presented above. For each data collection session, the system accuracy
(MARD) is computed. The per-session MARD distribution shows performance across the 163 sessions. “Held-out test set” refers
to the machine learning technique. Following the FDA’s recommendations for utilizing machine learning, the algorithm used to process
the data was not used in its training.

14

Glucose
predictions modeled from held-out clinical sessions

Performance
beyond 90 days was also evaluated in two separate groups - days 91 - 150 and days 151 - 275.

The
figures above were processed using the same filters and methods as in prior figures. Subjects had the opportunity to stay in the study
after 90 days from the initial injection. The population of 13 subjects in the 91 - 150 days period and 8 subjects in the 151 - 275 day
period is a subset of those in the initial 90 - day data.

Device
Safety

As
of April 14, 2026, the company is not aware of any serious adverse events (SAEs) that occurred related to Lumee Glucose. As of the study
closure at the end of 2023 and related study report, seven adverse events (AEs) related and four AEs possibly related to Lumee Glucose
were reported. All of the related and possibly related AEs were mild, such as slight pain or small induration, or thickening and hardening
of the skin. All but one of the AEs resolved within three days, and the last AE resolved within 12 days.

Commercial
Strategy

Profusa’s
commercial strategy centers around leveraging its core expertise in product development and scientific excellence, while augmenting its
capabilities through local partnerships in commercial execution. For Lumee Oxygen and Lumee Glucose, Profusa aims to continue investing
in its key opinion leader relationships and create clinical relevancy through building upon its current body of publications and conference
presentations. To date, Profusa has been featured in more than 25 publications in peer-reviewed journals and public presentations of
its science and product applications. None of these publications were commissioned by Profusa or written at the direction of Profusa’s
management, but certain service providers of Profusa have served as co-authors for some of these publications. Additionally, Profusa’s
goal is to build upon our distribution strategy to create a network of commercial partners covering key geographic regions, while building
focused technical sales leadership team to manage key local relationships and maintain performance excellence of its local distribution
partners. Lastly, Profusa plans to strategically engage in commercial B2B relationships to capture a portion of the large coaching, telemedicine,
and health and wellness segments.

15

Lumee
Oxygen

Profusa
received CE approval for Lumee Oxygen on January 28, 2020. Due to pandemic-related restrictions at hospitals and clinics for non-essential
personnel visits, Profusa was unable to carry out its commercialization plans in Europe. Profusa anticipates initiating its commercialization
effort beginning in early 2026. By taking advantage of the identified distributor partners in key countries in Europe, Profusa’s
marketing infrastructure and collateral, the KOL network and associated publications and conference presentations, Profusa expects to
be able to accelerate its product launch in Europe. Profusa is also in the midst of its clinical program for U.S. approval. Profusa anticipates
being able to launch Lumee Oxygen in the U.S. late 2026, subject to regulatory approval.

Glucose
Product

Profusa’s
strategy to commercialize its glucose CGM product will mirror that of Lumee Oxygen. While there are a few large companies with significant
CGM offering, the large patient population and the high cost to health care system have attracted many other attempts to provide alternative
solutions by other potential healthcare companies. Unfortunately, those attempts have historically been unsuccessful technically, and
unproductively economically for these companies. Profusa believes that upon achieving the clinical and regulatory milestones over the
next 18 months, it could become an attractive candidate to partner with one of these large players and leverage their commercial footprint
to enter this patient population.

Data
Partnerships

Profusa
believes that the data stream its platform can generate could become a critical component of solutions being offered today in sectors
such as telemedicine, pre-diabetes management, lifestyle coaching platforms/apps, and health and wellness apps. Profusa bases this hypothesis
on the belief that clinically relevant data, in real time, is central to these AI-driven platforms’ ability to deliver automated
meaningful insights to the users. In telemedicine, a physician/patient interaction would be more efficient if real time biochemistry
parameters are available during the tech-enabled visit. As these platforms and apps are also much more consumer-oriented, the user-experience
and cost of the real-time sensor technology need to be aligned to the user expectation and consumer cost levels. Profusa believes its
technology could ultimately be that enabling data stream to these other high-growth healthcare sectors.

Profusa’s
strategy to enter and create value in these more consumer sectors centers around a B2B approach. The relationships and expertise of reaching
a large scale consumer-based population belong with the telemedicine and apps providers. Additionally, the cost of customer acquisition
and marketing infrastructure to acquire users are high and complex. Profusa’s aim is to partner with these providers on a B2B level,
and make available our technology and data stream to enable our partner’s success. This approach would align the core competencies
of the respective organizations, while creating value for both partners. The partner would have a data stream that drives their adoption
and business model, while Profusa would benefit from accessing a large user population without the associated marketing and user acquisition
costs.

Key
Opinion Leaders (KOLs)

Profusa
has worked with a small number of key opinion leaders (KOLs) in both oxygen and glucose applications, receiving their advice and expertise
on product development, physician use cases, clinical needs, and clinical study support. In certain instances, KOLs are the principal
investigators in Profusa’s clinical studies and have summarized its product and clinical data in podium talks at major conferences
and through publications. With the exception of two KOLs who provided services to Profusa and received stock options for 10,000 shares
and 30,000 shares, respectively, of Profusa’s Common Stock, KOLs are not compensated or provided equity awards; however, KOLs do
receive customary expense reimbursement.

Intellectual
Property

Profusa
protects its intellectual property through patents, trade secrets, and copyright/trademarks. Additionally, Profusa requires all officers,
employees, and third parties to enter into standard agreements containing provisions requiring confidentiality of proprietary information
and assignment to Profusa of all inventions made during the course of their employment or consulting relationship. Profusa also enter
into nondisclosure agreements with its commercial counterparties and limits access to, and distribution of, its proprietary information.
Except in the case of certain software, Profusa currently require no third party licenses.

Patents
and applications cover several different technology classes, including in vivo sensors, sensor signaling chemistry compositions and scaffolding
compositions, methods of and apparatus for sensor interrogation by fluorescent readers, data reduction algorithms for signal processing,
and combined biochemical data and sensor data methods. As of April 14, 2026, Profusa owns 25 issued U.S. patents and 32 rest-of-world
patents, including patents in Australia, Canada, China, Europe, Hong Kong, India, Japan, South Korea, and Israel. Profusa’s issued
patents expire between March 2030 and January 2040.

16

The
table below summarizes Profusa’s portfolio of issued patents, all of which are utility patents and all of which are owned by Profusa:

Technology
Addressed

Jurisdiction

Expiration

Date

METHOD
AND SYSTEM FOR DIRECTING A

Hong
Kong

28-May-30

METHOD
AND SYSTEM FOR DIRECTING A

India

28-May-30

TISSUE-INTEGRATING
SENSORS

U.S.A.

6-Oct-31

TISSUE-INTEGRATING
ELECTRONIC

U.S.A.

27-May-30

TISSUE-INTEGRATING
SENSORS

U.S.A.

6-Oct-31

TISSUE-INTEGRATING
SENSORS

U.S.A.

6-Oct-31

TISSUE-INTEGRATING
SENSORS

Canada

6-Oct-31

TISSUE-INTEGRATING
SENSORS

Canada

6-Oct-31

TISSUE-INTEGRATING
SENSORS

Europe

6-Oct-31

TISSUE-INTEGRATING
SENSORS

India

6-Oct-31

APPARATUS
AND METHODS FOR DETECTING

U.S.A.

6-Jun-34

APPARATUS
AND METHODS FOR DETECTING

U.S.A.

6-Jun-34

APPARATUS
AND METHODS FOR DETECTING

Japan

6-Jun-34

OXYGEN
SENSORS

U.S.A.

13-Mar-34

OXYGEN
SENSORS

U.S.A.

13-Mar-34

OXYGEN
SENSORS

U.S.A.

13-Mar-34

OXYGEN
SENSORS

U.S.A.

13-Mar-34

OXYGEN
SENSORS

U.S.A.

4-Jun-35

OXYGEN
SENSORS

Australia

13-Mar-34

OXYGEN
SENSORS

Australia

13-Mar-34

OXYGEN
SENSORS

Canada

13-Mar-34

OXYGEN
SENSORS

Japan

13-Mar-34

METHOD
AND DEVICE FOR CORRECTING

U.S.A.

6-Mar-34

METHOD
AND DEVICE FOR CORRECTING

U.S.A.

6-Mar-34

METHOD
AND DEVICE FOR CORRECTING

U.S.A.

6-Mar-34

METHOD
AND DEVICE FOR CORRECTING

China

6-Mar-34

METHOD
AND DEVICE FOR CORRECTING

Hong
Kong

6-Mar-34

METHOD
AND DEVICE FOR CORRECTING

Japan

6-Mar-34

METHOD
AND DEVICE FOR CORRECTING

Japan

6-Mar-34

TRANSCUTANEOUS
READER FOR USE WITH

India

27-Jun-36

TRANSCUTANEOUS
READER FOR USE WITH

Japan

27-Jun-36

TRANSCUTANEOUS
READER FOR USE WITH

South
Korea

27-Jun-36

POLYMERIZABLE
NEAR-IR DYES

U.S.A.

9-Apr-40

POLYMERIZABLE
NEAR-IR DYES

China

21-Dec-37

SYSTEM
AND SINGLE-CHANNEL BIOSENSOR

U.S.A.

29-Dec-38

NEAR-IR
GLUCOSE SENSORS

U.S.A.

27-Dec-37

17

Technology
Addressed

Jurisdiction

Expiration

Date

NEAR-IR
GLUCOSE SENSORS

U.S.A.

27-Dec-37

NEAR-IR
GLUCOSE SENSORS

China

27-Dec-37

NEAR-IR
GLUCOSE SENSORS

Israel

27-Dec-37

NEAR-IR
GLUCOSE SENSORS

Japan

27-Dec-37

NEAR-IR
GLUCOSE SENSORS

South
Korea

27-Dec-37

MULI-ANALYTE
SENSING TISSUE-

U.S.A.

29-Jun-38

MULTI-ANALYTE
SENSING TISSUE-

India

29-Jun-38

OXIDASE-BASED
SENSORS AND METHOD

U.S.A.

28-Dec-38

NEAR-IR
GLUCOSE SENSORS

U.S.A.

12/27/2037

NEAR-IR
GLUCOSE SENSORS

U.S.A.

12/27/2037

NEAR-IR
GLUCOSE SENSORS

China

27-Jun-39

NEAR-IR
GLUCOSE SENSORS

Japan

27-Jun-39

NEAR-IR
GLUCOSE SENSORS

South
Korea

27-Jun-39

PD0130

U.S.A.

27-Jun-39

PD0130

Australia

20-Aug-40

PD0130

China

20-Aug-40

PD0130

India

20-Aug-40

PD0130

Japan

27-Jun-39

PD0130

South
Korea

20-Aug-40

OPTICAL
FILTER DEVICE, SYSTEM, AND

U.S.A.

19-Feb-41

OPTICAL
FILTER DEVICE, SYSTEM, AND

U.S.A.

19-Feb-41

Sensors
and Chemistry

US

12/21/2037

Misc

United States of America

10/20/2042

Sensors
and Chemistry

US

3/13/2034

Sensors
and Chemistry

US

2/7/2032

Sensors
and Chemistry

US

3/13/2034

Sensors
and Chemistry

US

3/13/2034

Sensors
and Chemistry

US

5/11/2031

Sensors
and Chemistry

US

10/6/2031

Sensors
and Chemistry

US

3/13/2034

Sensors
and Chemistry

US

10/6/2031

Sensors
and Chemistry

US

12/27/2037

Sensors
and Chemistry

US

6/16/2037

Sensors
and Chemistry

US

12/27/2037

Sensors
and Chemistry

US

3/14/2039

Sensors
and Chemistry

US

12/22/2037

Sensors
and Chemistry

US

1/3/2040

18

The
table below summarizes Profusa’s portfolio of pending patents, all of which are utility patents and all of which are owned by Profusa:

Technology
Addressed

Jurisdiction

Date
of

Application

Readers

Australia

8/20/2020

Readers

Canada

3/6/2014

Readers

Canada

6/27/2016

Readers

Canada

8/20/2020

Readers

China

3/6/2014

Readers

China

6/27/2016

Readers

China

8/20/2020

Readers

European
Patent Office

6/6/2014

Readers

European Patent Office

3/6/2014

Readers

European
Patent Office

6/27/2016

Readers

European
Patent Office

8/20/2020

Readers

Hong
Kong

3/6/2014

Readers

India

6/27/2016

Readers

India

8/20/2020

Readers

Japan

6/6/2014

Readers

Japan

3/6/2014

Readers

Japan

8/20/2020

Readers

Republic
of Korea

6/27/2016

Readers

Republic
of Korea

8/20/2020

Readers

United States of America

10/4/2021

Readers

United
States of America

6/27/2016

Readers

United
States of America

2/11/2022

Readers

United
States of America

2/19/2021

Sensors
and Chemistry

Australia

12/27/2017

Sensors
and Chemistry

Australia

6/27/2019

Sensors
and Chemistry

Australia

6/28/2019

Sensors
and Chemistry

Canada

12/27/2017

Sensors
and Chemistry

Canada

6/29/2018

Sensors
and Chemistry

Canada

6/27/2019

Sensors
and Chemistry

Canada

6/28/2019

Sensors
and Chemistry

China

3/13/2014

Sensors
and Chemistry

China

12/21/2017

Sensors
and Chemistry

China

12/27/2017

Sensors
and Chemistry

China

6/27/2019

Sensors
and Chemistry

China

6/28/2019

Sensors
and Chemistry

European
Patent Office

12/21/2017

Sensors
and Chemistry

European
Patent Office

12/27/2017

Sensors
and Chemistry

European
Patent Office

6/27/2019

Sensors
and Chemistry

European
Patent Office

6/28/2019

Sensors
and Chemistry

Hong
Kong

10/6/2011

Sensors
and Chemistry

India

12/27/2017

Sensors
and Chemistry

India

6/29/2018

Sensors
and Chemistry

India

6/27/2019

Sensors
and Chemistry

Japan

6/27/2019

Sensors
and Chemistry

Republic
of Korea

12/27/2017

19

Technology
Addressed

Jurisdiction

Date
of

Application

Sensors
and Chemistry

Republic
of Korea

6/29/2018

Sensors
and Chemistry

Republic
of Korea

6/27/2019

Sensors
and Chemistry

US

11/4/2019

Sensors
and Chemistry

US

6/26/2023

Sensors
and Chemistry

US

12/8/2020

Sensors
and Chemistry

US

5/26/2020

Sensors
and Chemistry

US

9/14/2020

Sensors
and Chemistry

US

6/27/2019

Misc

Canada

4/21/2021

Misc

Japan

4/21/2021

Misc

Patent
Cooperation Treaty

4/21/2021

Manufacturing
and Quality Systems

Profusa
manufactures class III medical device implantable sensors within an ISO compliant manufacturing facility and quality system. All internal
manufacturing activities are conducted and managed per current Good Manufacturing Practices (cGMP), which are the recognized standards
for the FDA and other global regulatory agencies. Profusa manufacturing processes comply with all aspects of cGMP and has procedures
in place for the following activities: Supplier selection, evaluation and monitoring, Incoming receiving inspection requirements, Documented
manufacturing procedures and work instructions, Operator training program, and compliant manufacturing spaces including a certified,
class 7, controlled environment room (CER). Over 90% of the implantable sensor manufacturing process, including production, cleaning,
sizing, testing and packaging is conducted within a clean room, which is inspected and certified on a quarterly basis.

Additionally,
all devices are produced utilizing a validated production process with multiple inspection and testing points to ensure quality throughout
the process. The overall process, including embedded test methods, is re-validated as necessary to ensure continued compliance with cGMP
over time. All manufacturing steps, materials, equipment, personnel and tools utilized in the production process are documented in highly
detailed Device History Records (DHR) to provide a written production history. The DHR also documents demonstrated compliance to Manufacturing
Process Instructions (MPI) used and followed throughout the process.

Externally,
Profusa only selects, utilizes, and monitors qualified vendors for services or products related to manufacturing processes, which include
Contract Manufacturers, and Testing and Sterilization services. Prior to selection, Profusa Quality Assurance conducts on-site Quality
System audits to ensure they are compliant with cGMP requirements and any other required regulatory requirements. Additionally, all external
produced products or services conducted for Profusa manufactured products undergo testing at nationally accredited and certified testing
facilities and must meet Incoming Inspection criteria which Profusa had previously established prior to acceptance and utilization.

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Competition

The
competitive landscape regarding both the Lumee Oxygen and Lumee Glucose sensing systems, if approved, is multi-faceted, with many companies
with device offerings that provide biochemical data in real time, as further described below.

Lumee
Oxygen is designed to be used complementarily with angiographic (radiographic visualization of blood vessels after injection of a radiopaque
substance) and computer tomographic (imaging of parts of the body with any kind of penetrating waves) technologies, or alone. We anticipate
the creation of a guidance algorithm to be used by a physician or other vascular specialist to incorporate both Lumee Oxygen values and
angiographic or computer tomographic readings.

Examples
of such technologies include digital subtraction angiography devices developed by Philips or Computed Tomography (CT) for peripheral
use developed by Siemens Healthineers.

Lumee
Oxygen will also compete with devices that use transcutaneous oximetry (TCPO2) to measure peripheral perfusion, such as those developed
by Perimed AB, Radiometer Medical or SenTec AG, to name examples.

Furthermore,
doppler or cuff devices measuring Ankle-Brachial Index (ABI), Toe-Brachial Index (TBI) or Segmental Pressure Values (SPP), as well as
those enabling Pulse Volume Recording (PVR) are anticipated to be competitive with Lumee Oxygen. Other experimental approaches include
Near-Infrared Spectroscopy (NIRS) for peripheral purposes.

In
the personal use case, Lumee Glucose will compete with existing Continuous Glucose Monitoring technologies, including those manufactured
by Dexcom, Abbott, Medtronic, Senseonics, Diamontech, Movano and Nemaura Medical. Each of these companies currently market Continuous
Glucose Monitoring products that target both Type 1 and Type 2 diabetes patients, as well as pre-diabetics.

In
the professional use case Lumee Glucose will compete with Dexcom, Abbott and Medtronic technologies. Profusa anticipates the launch of
multiple noninvasive technologies in the next years which may affect the competitive landscape, which may take the form of wristbands
or smartwatches.

Government
Regulation

United
States Food and Drug Administration

In
the United States, our products are subject to regulation by the FDA as medical devices pursuant to the Federal Food Drug and Cosmetic
Act (FDCA). The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling,
packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising, promotion,
marketing and distribution, and import and export of medical devices to ensure that medical devices distributed domestically are safe
and effective for their intended uses and otherwise meet the requirements of the FDCA.

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FDA
Premarket Clearance and Approval Requirements

Unless
an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a 510(k) premarket
notification, approval of a De Novo application, or approval of a premarket approval (PMA). Under the FDCA, medical devices are classified
into one of three classes - Class I, Class II or Class III - depending on the degree of risk associated with each medical device and
the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness. Class I includes devices with the lowest
risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls
for medical devices, which include compliance with the applicable portions of the Quality System Regulation (QSR) facility registration
and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety
and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries
and FDA guidance documents.

While
most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required
to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device.
The FDA’s permission to commercially distribute a device subject to a 510(k) premarket notification is generally known as 510(k)
clearance. Devices deemed by the FDA to pose the greatest risks, such as life sustaining, life supporting or some implantable devices,
or devices that have a new intended use, or use advanced technology that is not substantially equivalent to that of a legally marketed
device, are placed in Class III, requiring approval of a PMA. Some pre-amendment devices are unclassified, but are subject to FDA’s
premarket notification and clearance process in order to be commercially distributed. Based on discussion with FDA to date, we believe
that Lumee Oxygen is a Class III device and that Lumee Glucose is a Class III device.

510(k)
Clearance Marketing Pathway

To
obtain 510(k) clearance, we must submit to the FDA a premarket notification submission demonstrating that the proposed device is “substantially
equivalent” to a predicate device already on the market. A predicate device is a legally marketed device that is not subject to
PMA, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device
that has been reclassified from Class III to Class II or I, or a device that was found substantially equivalent through the 510(k) process.
The FDA’s 510(k) clearance process usually takes from three to twelve months, but often takes longer. The FDA may require additional
information, including clinical data, to make a determination regarding substantial equivalence. In addition, the FDA collects user fees
for certain medical device submissions and annual fees for medical device establishments.

If
the FDA agrees that the device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance
to commercially market the device. If the FDA determines that the device is “not substantially equivalent” to a previously
cleared device, the device is automatically designated as a Class III device. The device sponsor must then fulfill more rigorous PMA
requirements, or can request a risk-based classification determination for the device in accordance with the “De Novo” process,
which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate
device. If a De Novo request is granted, the device may be legally marketed and a new classification is established. If the device is
classified as Class II, the device may serve as a predicate for future 510(k) submissions. If the device is not approved through De Novo
review, then it must go through the standard PMA process for Class III devices.

After
a device receives 510(k) marketing clearance, any modification that could significantly affect its safety or effectiveness, or that would
constitute a major change or modification in its intended use, will require a new 510(k) clearance or, depending on the modification,
PMA approval. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k) or a PMA in
the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination. If the FDA disagrees
with a manufacturer’s determination, the FDA can require the manufacturer to cease marketing and/or request the recall of the modified
device until 510(k) marketing clearance or PMA approval is obtained. Also, in these circumstances, the manufacturer may be subject to
significant regulatory fines or penalties.

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PMA
Approval Pathway

Class
III devices require approval of a PMA before they can be marketed, although some pre-amendment Class III devices for which the FDA has
not yet required a PMA are cleared through the 510(k) process. The PMA process is more demanding than the 510(k) premarket notification
process. In a PMA application, the manufacturer must demonstrate that the device is safe and effective, and the PMA application must
be supported by extensive data, including data from preclinical studies and human clinical trials. The PMA application must also contain
a full description of the device and its components, a full description of the methods, facilities, and controls used for manufacturing,
and proposed labeling. Following receipt of a PMA application, the FDA determines whether the application is sufficiently complete to
permit a substantive review. If the FDA accepts the application for review, it has 180 days under the FDCA to complete its review of
a PMA application, although in practice, the FDA’s review often takes significantly longer, and can take up to several years. An
advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to
the FDA as to the approvability of the device. The FDA may or may not accept the panel’s recommendation. In addition, the FDA will
generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing
facility or facilities to ensure compliance with the QSR. PMA devices are also subject to the payment of user fees.

The
FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA application constitute
valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s). A PMA
may include post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions
on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported
the PMA or requirements to conduct additional clinical studies post-approval. The FDA may condition PMA approval on some form of post-market
surveillance when deemed necessary to protect the public health or to provide additional safety and efficacy data for the device in a
larger population or for a longer period of use. In such cases, the manufacturer might be required to follow certain patient groups for
a number of years and to make periodic reports to the FDA on the clinical status of those patients. Failure to comply with the conditions
of approval can result in material adverse enforcement action, including withdrawal of the approval.

Certain
changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the
design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement. PMA
supplements often require submission of the same type of information as a PMA, except that the supplement is limited to information needed
to support any changes from the device covered by the original PMA and may not require as extensive clinical data or the convening of
an advisory panel. Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes
a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new
generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change
in demonstrating a reasonable assurance of safety and effectiveness. None of our products are currently marketed pursuant to a PMA.

De
Novo Classification

Medical
device types that the FDA has not previously classified as Class I, II or III are automatically classified into Class III regardless
of the level of risk they pose. To market low to moderate risk medical devices that are automatically placed into Class III due to the
absence of a predicate device, a manufacturer may request a De Novo down-classification. This procedure allows a manufacturer whose novel
device is automatically classified into Class III to request classification of its medical device into Class I or Class II on the basis
that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA application. A medical device
may be eligible for De Novo classification if the manufacturer first submitted a 510(k) premarket notification and received a determination
from the FDA that the device was not substantially equivalent or a manufacturer may request De Novo classification directly without first
submitting a 510(k) premarket notification to the FDA and receiving a not substantially equivalent determination. The FDA is required
to classify the device within 120 calendar days following receipt of the De Novo application, although in practice, the FDA’s review
may take significantly longer. During the pendency of the FDA’s review, the FDA may issue an additional information letter, which
places the De Novo request on hold and stops the review clock pending receipt of the additional information requested. In the event the
De Novo requestor does not provide the requested information within 180 calendar days, the FDA will consider the De Novo request to be
withdrawn. If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for special controls
that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. In addition, the FDA may
reject the De Novo request for classification if it identifies a legally marketed predicate device that would be appropriate for a 510(k)
or determines that the device is not low to moderate risk or that general controls would be inadequate to control the risks and special
controls cannot be developed. In the event the FDA determines the data and information submitted demonstrate that general controls or
general and special controls are adequate to provide reasonable assurance of safety and effectiveness, the FDA will grant the De Novo
request for classification. When the FDA grants a De Novo request for classification, the device is granted marketing authorization and
further can serve as a predicate for future devices of that type, through a 510(k) premarket notification.

23

Clinical
Trials

Clinical
trials are almost always required to support a PMA and are sometimes required to support a 510(k) submission. All clinical investigations
of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s IDE regulations which govern investigational
device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities
of study sponsors and study investigators. If the device presents a “significant risk,” to human health, as defined by the
FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human
clinical trials. A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient
and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating
disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject. An IDE application
must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the device in humans
and that the testing protocol is scientifically sound. The IDE will automatically become effective 30 days after receipt by the FDA unless
the FDA notifies the company that the investigation may not begin. If the FDA determines that there are deficiencies or other concerns
with an IDE for which it requires modification, the FDA may permit a clinical trial to proceed under a conditional approval.

In
addition, the study must be approved by, and conducted under the oversight of, an Institutional Review Board (IRB) for each clinical
site. The IRB is responsible for the initial and continuing review of the IDE study, and may pose additional requirements for the conduct
of the study. If an IDE application is approved by the FDA and one or more IRBs, human clinical trials may begin at a specific number
of investigational sites with a specific number of patients, as approved by the FDA. If the device presents a non-significant risk to
the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval
from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators
obtain informed consent, and labeling and record-keeping requirements. Acceptance of an IDE application for review does not guarantee
that the FDA will allow the IDE to become effective and, if it does become effective, the FDA may or may not determine that the data
derived from the trials support the safety and effectiveness of the device or warrant the continuation of clinical trials. An IDE supplement
must be submitted to, and approved by, the FDA before a sponsor or investigator may make a change to the investigational plan that may
affect its scientific soundness, study plan or the rights, safety or welfare of human subjects.

During
a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting
clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping
and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators
in the clinical study are also subject to FDA regulations and must obtain patient informed consent, rigorously follow the investigational
plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements.
Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons,
including a belief that the risks to study subjects outweigh the anticipated benefits.

24

Post-Market
Regulation

After
a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply. These include:

●establishment
registration and device listing with the FDA;

●QSR
requirements, which require manufacturers, including third-party manufacturers, to follow
stringent design, testing, control, documentation and other quality assurance procedures
during all aspects of the design and manufacturing process;

●labeling
regulations and FDA prohibitions against the promotion of investigational products, or the
promotion of “off-label” uses of cleared or approved products;

●requirements
related to promotional activities;

●clearance
or approval of product modifications to 510(k)-cleared devices that could significantly affect
safety or effectiveness or that would constitute a major change in intended use of one of
our cleared devices, or approval of certain modifications to PMA-approved devices;

●medical
device reporting regulations, which require that a manufacturer report to the FDA if a device
it markets may have caused or contributed to a death or serious injury, or has malfunctioned
and the device or a similar device that it markets would be likely to cause or contribute
to a death or serious injury, if the malfunction were to recur;

●correction,
removal and recall reporting regulations, which require that manufacturers report to the
FDA field corrections and product recalls or removals if undertaken to reduce a risk to health
posed by the device or to remedy a violation of the FDCA that may present a risk to health;

●the
FDA’s recall authority, whereby the agency can order device manufacturers to recall
from the market a product that is in violation of governing laws and regulations; and

●post-market
surveillance activities and regulations, which apply when deemed by the FDA to be necessary
to protect the public health or to provide additional safety and effectiveness data for the
device.

25

Quality
Systems Regulation Requirements

Our
manufacturing processes are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and
controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution,
installation and servicing of finished devices intended for human use. The QSR requires that each manufacturer establish a quality systems
program by which the manufacturer monitors the manufacturing process and maintains records that show compliance with FDA regulations
and the manufacturer’s written specifications and procedures relating to the devices. The QSR also requires, among other things,
maintenance of records and certain documentation, a device master file, device history file, and complaint files. QSR compliance is necessary
to receive and maintain FDA clearance or approval to market new and existing products. As a manufacturer, we are subject to periodic
scheduled or unscheduled audits or inspections by the FDA. Our failure to maintain compliance with the QSR requirements could result
in the shut-down of, or restrictions on, our manufacturing operations and the recall or seizure of our products, which would have a material
adverse effect on our business. The discovery of previously unknown problems with any of our products, including unanticipated adverse
events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance
or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product
from the market or voluntary or mandatory device recalls.

The
FDA has broad regulatory compliance and enforcement powers. If the FDA determines that we failed to comply with applicable regulatory
requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions:

●FDA
untitled letters, FDA Form 483s, FDA warning letters, it has come to our attention letters,
fines, injunctions, consent decrees and civil penalties;

●unanticipated
expenditures to address or defend such actions;

●customer
notifications or repair, replacement, refunds, recall, detention or seizure of our products;

●recall,
detention or seizure of our products;

●operating
restrictions, partial suspension or total shutdown of production;

●refusing
or delaying our requests for regulatory approvals or clearances of new products or modified
products;

●withdrawing
of 510(k) clearances or PMA approvals that have already been granted;

●refusal
to grant export approval for our products; or

●criminal
prosecution.

The
FDA can also publish Safety Communications or Letters to Health Care Providers when the agency becomes aware of new issues involving
a specific product, or more broadly, a product family. These communications are posted on the FDA’s website and describe the FDA’s
analysis of a current issue and provide specific regulatory approaches and clinical recommendations for patient management.

26

Healthcare
Laws

Coverage
and Reimbursement

Our
ability to commercialize any products successfully will depend in part on the extent to which coverage and adequate reimbursement for
our product candidates, either directly or through procedures utilizing our products performed by health care providers, once approved,
will be available from government health administration authorities, private health insurers and other organizations. Government authorities
and third-party payors, such as private health insurers and health maintenance organizations, determine which items and services they
will cover and establish reimbursement levels. Assuming coverage is obtained for the relevant items and/or services covering a given
product by a third-party payor, the resulting reimbursement payment rates may not be adequate to cover our costs or may require co-payments
that patients find unacceptably high. Patients and their providers generally rely on third-party payors to reimburse all or part of the
costs associated with our products. Physicians are unlikely to order, and patients are unlikely to use, our products unless coverage
is provided and the reimbursement is adequate to cover all or a significant portion of the direct or indirect cost of our products. Therefore,
coverage and adequate reimbursement for new products is critical to the acceptance of such new products. Coverage decisions may depend
upon clinical and economic standards that disfavor new products when more established or lower cost alternatives are already available
or subsequently become available.

Government
authorities and third-party payors are developing increasingly sophisticated methods of cost containment, such as including price controls,
restrictions on coverage and reimbursement, and requirements for substitution of less expensive products and procedures. Government and
other third-party payors are increasingly challenging the prices charged for health care items and procedures, examining the cost effectiveness
of products, in addition to their safety and efficacy, and limiting or attempting to limit both coverage and the level of reimbursement.
Further, no uniform policy requirement for coverage and reimbursement exists among third-party payors in the United States, which causes
significant uncertainty related to the insurance coverage and reimbursement of newly approved products. Therefore, coverage and reimbursement
can differ significantly from payor to payor and health care provider to health care provider. As a result, the coverage determination
process is often a time-consuming and costly process that requires the provision of scientific and clinical support for the use of new
products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained
in the first instance.

There
may also be significant delays in obtaining coverage and reimbursement for newly approved products, and coverage may be more limited
than the purposes for which the product is approved or cleared by the FDA. Moreover, eligibility for coverage and reimbursement does
not imply that a product will be paid for, directly or indirectly, in all cases or at a rate which the health care providers who purchase
those products will find cost effective. Additionally, we expect pricing pressures in connection with the sale of any of our product
candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative
changes.

We
cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available,
what the level of reimbursement will be. Coverage and reimbursement may impact the demand for, or the price of, any product candidate
for which we obtain marketing approval or clearance. If coverage and reimbursement are not available or reimbursement is available only
to limited levels, we may not successfully commercialize any product candidate for which we obtain marketing approval or clearance.

27

Healthcare
Reform

The
United States and some foreign jurisdictions are considering, or have enacted, a number of legislative and regulatory proposals to change
the healthcare system in ways that could affect our ability to sell our products profitably. Among policy makers and payors in the United
States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare
costs, improving quality or expanding access.

In
the United States there have been, and continue to be, proposals by the federal government, state governments, regulators and third-party
payors to control or manage the costs of health care and, more generally, to reform the U.S. healthcare system. For example, in March
2010, the ACA was enacted, which included changes to the coverage and payment for products under government health care programs. This
law was designed to expand access to health insurance coverage for uninsured and underinsured individuals while containing overall healthcare
costs. The ACA and certain of its provisions have been subject to judicial challenges as well as legislative and regulatory efforts to
repeal or replace them or to alter their interpretation or implementation. For example, on June 17, 2021, the U.S. Supreme Court dismissed
a lawsuit challenging the constitutionality of certain aspects of the ACA without ruling on the merits of the constitutionality arguments.
The American Rescue Plan Act also temporarily increased premium tax credit assistance for individuals eligible for subsidies under the
ACA for 2021 and 2022 and removed the 400% federal poverty level limit that otherwise applies for purposes of eligibility to receive
premium tax credits.

Most
recently, the Inflation Reduction Act of 2022 (IRA) extended this increased tax credit assistance and removal of the 400% federal poverty
limit through 2025. In the future, there may be additional challenges and/or amendments to the ACA. It remains to be seen precisely what
any new legislation will provide, when or if it will be enacted, and what impact it will have on the availability and cost of healthcare
items and services, including medical devices.

Other
legislative changes designed to reduce healthcare expenditures have been proposed and adopted in the United States since the ACA was
enacted. For example, through the process created by the Budget Control Act of 2011, there are automatic reductions of Medicare payments
to providers up to 2% per fiscal year, which went into effect in April 2013 and, following passage of the BBA and the Infrastructure
Investment and Jobs Act, will remain in effect until 2031 unless additional Congressional action is taken (with the exception of a temporary
suspension from May 1, 2020 through March 31, 2022, and a subsequent reduction to 1% from April 1, 2022 until June 30, 2022). To offset
the temporary suspension during the COVID-19 pandemic, in 2030, the sequestration will be 2.25% for the first half of the year, and 3%
in the second half of the year. In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things,
further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and
increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

We
expect that these initiatives, as well as other healthcare reform measures that may be adopted in the future, as well as the trend toward
managed healthcare and increasing influence of managed care organizations, may result in more rigorous coverage criteria and lower reimbursement,
and in additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare
or other government-funded programs may result in a similar reduction in payments from private payors. The implementation of current
and future cost containment measures or other healthcare reforms may adversely affect our operations and prevent us from being able to
generate revenue, attain profitability or commercialize our product candidates.

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