NASDAQ: PULM

We
were incorporated in 2013 as a Delaware corporation.

2

After
a comprehensive review of strategic alternatives, including identifying and reviewing potential candidates for a strategic transaction,
on November 13, 2024, we entered into the Agreement and Plan of Merger and Reorganization, as amended by Amendment No. 1 (“Amendment
No. 1”) thereto on April 7, 2025 (as amended by Amendment No. 1, the “Merger Agreement”), pursuant to which, among
other matters, PCL Merger Sub, Inc., our direct wholly owned subsidiary, will merge with and into Cullgen Inc. (“Cullgen”),
with Cullgen surviving as our wholly owned subsidiary and the surviving corporation of the merger (the “Merger”). The Merger
Agreement was unanimously approved by our board of directors, which resolved to recommend approval of the Merger Agreement to our stockholders.

On
June 16, 2025, we held a special meeting in lieu of the annual meeting of Pulmatrix stockholders, at which special meeting our stockholders
approved the Merger and related proposals. The Closing is subject to other customary closing conditions, including Nasdaq’s approval
of the listing of the shares of Pulmatrix common stock to be issued in connection with the Merger and approval from the China Securities
Regulatory Commission (“CSRC”) pursuant to the Trial Administrative Measures of Overseas Securities Offering and Listing
by Domestic Enterprises (the “Trial Measures”), No. 1 to No. 6 Supporting Guidance Rules, the Notice on Administration Arrangements
for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official website
of the CSRC. These regulations established a filing-based regime to regulate overseas offerings and listings by Chinese domestic companies.
As of the date of this filing, we have not yet received approval from the CSRC to complete the Merger. As previously disclosed, on August
1, 2025, we and Cullgen, as provided for in the Merger Agreement, mutually agreed to extend the “End Date”, a term defined
in the Merger Agreement, by 60 days from August 13, 2025, to October 12, 2025. The Merger Agreement does not have a defined term and
does not terminate on the “End Date”. The “End Date” is simply the date at which certain termination options
become available to either party.

On
December 17, 2025, the Company, Cullgen and PLC Merger Sub, Inc. (collectively, the “Parties”) entered into a mutual waiver
agreement (the “Waiver Agreement”), pursuant to which the Parties agreed to mutually waive compliance with Section 5.4 of
the Merger Agreement, which such provision imposes restrictions on each party during the Pre-Closing Period (as defined in the Merger
Agreement). Except as expressly waived pursuant to the Waiver Agreement, the Merger Agreement continues to remain in full force and effect
in all respects, and no other provision of the Merger Agreement has otherwise been amended, waived, or modified.

If
the Merger is completed, the business of Cullgen will continue as the business of the combined company. We are currently seeking opportunities
to monetize iSPERSE™ and our existing clinical assets.

Our
future operations are highly dependent on the success of the Merger and there can be no assurances that the Merger will be successfully
consummated. There can be no assurance that the strategic review process or any transaction relating to a specific asset, including the
Merger and any asset sale, will result in us pursuing such a transaction, or that any transactions, if pursued, will be completed on
terms favorable to us and our stockholders in the existing Pulmatrix entity or any possible entity that results from a combination of
entities. If the strategic review process is unsuccessful, and if the Merger is not consummated, the Pulmatrix board of directors may
decide to pursue a dissolution and liquidation of the Company.

Business
Strategy

Our
goal has been to develop breakthrough therapeutic products that are safe, convenient, and more effective than the existing therapeutic
products for respiratory and other diseases where iSPERSE™ properties are advantageous.

Our
current pipeline of clinical assets is aligned to this goal and includes iSPERSE™-based therapeutic candidates, which target the
prevention and treatment of a range of diseases, including CNS disorders and pulmonary diseases. These therapeutic candidates include
PUR3100 for the treatment of acute migraine, PUR1800 for the treatment of acute exacerbations of chronic obstructive pulmonary disease
(“AECOPD”), and PUR1900 for the treatment of ABPA in patients with asthma and in patients with cystic fibrosis. Each program
is enabled by its unique iSPERSE™ formulation designed to achieve specific therapeutic objectives.

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In
connection with the Merger, we are exploring opportunities to monetize these clinical assets and have paused the development of these
product candidates. Continued development of these candidates, if that were to occur, would be contingent on securing additional funding
and would require significant expenditures to advance. Thereafter, if development of such product candidates were to be continued and
successfully advanced (of which there can be no assurance), it would be necessary to seek and obtain marketing approval to commercialize
such product candidates, which could be expected to require the expenditure of significant additional resources and expenses related
to regulatory, product sales, medical affairs, marketing, manufacturing and distribution.

Contingent
on securing additional funding and continuing development of these candidates, we would expect to continue to incur substantial expenses
and operating losses for at least the next several years, as we would:

●
Pursue
further clinical studies for PUR3100, an orally inhaled dihydroergotamine (“DHE”) including a Phase 2 clinical study
for the treatment of acute migraine. We received Food and Drug Administration (“FDA”) acceptance of our Investigational
New Drug Application (“IND”) and a “study may proceed” letter in September 2023, positioning PUR3100 as Phase
2-ready for potential financing or partnership discussions.

We
developed PUR3100, an iSPERSE™ formulation of DHE in 2020. We completed good laboratory practice (“GLP”) toxicology
studies in 2021 and 2022. In 2022, we completed a Phase 1 study designed as a double-blinded trial to assess the safety, tolerability,
and pharmacokinetics of three dose levels of single doses of inhaled PUR3100 with intravenous (“IV”) placebo, as compared
to IV DHE (DHE mesylate injection) with inhaled placebo.

On
January 4, 2023, we announced the Phase 1 topline results, indicating that PUR3100 was safe and tolerated with fewer gastrointestinal
side effects in all doses compared to IV DHE. PUR3100 showed a five-minute Tmax and Cmax within the targeted
therapeutic range for all three doses tested. The Phase 1 study data was presented at the American Headache Society 65th Annual Meeting
in June 2023. In May 2024, we announced a peer-reviewed publication of Phase 1 clinical results in the publication Headache: The
Journal of Head and Face Pain.

In
September 2023, we announced the FDA’s acceptance of an IND application for PUR3100 and receipt of a “study may proceed”
letter for a Phase 2 study. The IND includes a Phase 2 clinical protocol where safety and preliminary efficacy of PUR3100 will be
investigated in patients with acute migraine.

Based
on the rapid systemic exposure in the therapeutic range and the improved side effect profile relative to IV dosing, we believe the
PUR3100 formulation of DHE may differentiate from approved DHE products or those in development. If effectiveness is demonstrated,
PUR3100 may offer the convenience of being self-administered with a pharmacokinetic profile that may potentially provide rapid onset
of action.

●
Pursue
partnership or other alternatives to monetize or advance PUR1800, focusing on the development of an orally inhaled kinase inhibitor
for treatment of AECOPD.

We
completed preclinical safety studies for PUR1800, our iSPERSE™ formulation of RV1162, in 2018 and advanced
our formulation and process development efforts to support clinical testing in stable moderate-severe COPD patients. We completed
a Phase 1b safety, tolerability, and pharmacokinetics clinical study of PUR1800 for subjects with stable moderate-severe COPD and
received topline data from the Phase 1b clinical study in the first quarter of 2022. We analyzed data from the completed Phase 1b
clinical study of PUR1800 for AECOPD and presented study results at the American Academy of Allergy, Asthma & Immunology (AAAAI)
conference in the first quarter of 2023. The results indicated PUR1800 was safe and well tolerated with no observed safety signals.
The topline data, along with the results from chronic toxicology studies, support the continued development of PUR1800 for the treatment
of AECOPD and other inflammatory respiratory diseases. In 2024, Pulmatrix published an abstract titled “Ex vivo evaluation of the potential for Narrow Spectrum Kinase
inhibitors as a treatment for Idiopathic Pulmonary Fibrosis”.

●
Capitalize
on our proprietary iSPERSE™ technology and our expertise in inhaled therapeutics and particle engineering to identify new product
candidates for prevention and treatment of diseases, including those with important unmet medical needs.

To
add additional inhaled therapeutics to our development pipeline and facilitate additional collaborations, we are leveraging our iSPERSE™
technology and our expertise in inhaled therapeutics and particle engineering to identify potential product candidates.

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●
Invest
in protecting and expanding our intellectual property portfolio and file for additional patents to strengthen our intellectual property
rights.

The
status of our patent portfolio changes frequently in the ordinary course of patent prosecution. As of December 31, 2025, our patent
portfolio related to iSPERSE™ included approximately 149 granted patents, 18 of which are granted US patents,
with expiration dates from 2026 to 2043, and approximately 48 additional pending patent applications in the US and other jurisdictions.
Our in-licensed portfolio related to kinase inhibitors included approximately 284 granted patents, 33 of which are granted US patents,
with expiration dates from 2029 to 2035, and approximately 11 additional pending patent applications in the US and other jurisdictions.
We have national phase applications pending in Australia, Brazil, Canada, China, Europe, Israel, India, Japan, Korea, Mexico, New
Zealand, Russia, Hong Kong and the United States that cover certain formulations and methods of use relevant to our PUR3100 program.

●
Seek
partnerships and license agreements to support the product development and commercialization of our product candidates.

In
order to advance our clinical programs, we may seek partners or licensees in areas of pharmaceutical and clinical development.

iSPERSE™
Technology

We
use simple, safe excipients, including proprietary cationic salt formulations, to create a robust and flexible dry powder platform technology
that can accommodate a wide range of drug loads in highly dispersible particles. Our initial delivery platform emerged from development
of iCALM™ (inhaled Cationic Airway Lining Modulators), a non-steroidal anti-inflammatory therapy. The high degree of
aerosol efficiency and the density profile of our dry powder iCALM™ formulations provided the foundation for our development
of iSPERSE™ in 2012, which uses other monovalent and divalent salts.

iSPERSE™
particles are engineered with a small, dense and dispersible profile to exceed the performance of traditional dry powder particles
as the iSPERSE™ particles have the dispersibility advantages of porous engineered particles. We believe this
results in superior drug delivery compared to traditional oral and injectable forms of treatment for certain diseases. Unlike lactose-blended
carrier formulations or low-density particles which disperse poorly, we believe that the iSPERSE™ technology
platform offers several potential benefits, achieved through the following technological innovations:

●
Flexible
drug loading for delivery of a single microgram to tens of milligrams per dose.

iSPERSE™
particles can be engineered to include concentrations from less than one percent (1%) to greater than eighty percent (80%)
active pharmaceutical ingredients (“APIs”), which allows flexibility for dosing both high potency and high-drug load therapeutics.

●
Superior
flow rate independent lung delivery without carriers.

The
iSPERSE™ technology enables pulmonary delivery independent of lactose or other carriers, which results in significantly
greater lung dose at a matched nominal dose of conventional lactose-based formulations. iSPERSE™ formulations
are dispersible across a range of flow rates with consistent emitted dose and particle size. Performance across flow rates provides reliable
dose delivery across patient populations and reduces patient-to-patient variability.

●
Delivery
of macromolecules and biologics.

iSPERSE™
powders can be used with an array of dry powder inhaler technologies and can be formulated with a broad range of therapeutic
compounds ranging from small molecules to proteins for both local and systemic drug delivery applications.

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●
Homogenous
combinations of multiple drugs.

iSPERSE™
creates homogenous particles including excipients and API, which allow for the consistent delivery of multiple APIs in a product.
We have successfully formulated iSPERSE™-based products with dual and triple API combinations.

●
Strong
safety profile.

Current
iSPERSE™ products and planned clinical-stage products to be formulated in iSPERSE™ are
supported by robust preclinical safety profiles. iSPERSE™ excipients include those with inhalation precedent
and those that are generally regarded as safe by other routes of administration.

Therapeutic
Candidates

PUR3100

PUR3100 is still an investigational drug candidate and not authorized for commercialization, but we
are currently exploring other opportunities to monetize PUR3100.

In
2020, we developed PUR3100, the iSPERSE™ formulation of DHE, for the treatment of acute migraine. Currently DHE is only
available as subcutaneous, intravenous infusion or intranasal delivery. If approved for commercialization, PUR3100 has the opportunity
to be the first orally inhaled DHE treatment for acute migraine and an alternative to other acute therapies. Given the oral inhaled route
of delivery, PUR3100 is anticipated to provide rapid relief from migraine symptoms and provide a favorable tolerability profile.

Competition
and Market Opportunities

The
American Migraine Foundation estimates that at least 39 million people in the United States and 1 billion people worldwide live with
migraine, but because many people are not diagnosed or do not receive the treatment they need, the actual number may be higher. Current
treatments for migraine include oral, intranasal, IV or subcutaneous formulations of triptans, DHE, and calcitonin gene-related peptide
(“CGRP”) antagonists (gepants). Studies show that people with migraines are underdiagnosed, undertreated, and experience
substantial decreases in functioning and productivity, which translates into diminished quality of life for individuals and financial
burdens to patients, healthcare systems, and employers. All current treatments are limited by incomplete efficacy and/or intolerability.
Therefore, development of additional treatments for acute migraine is warranted.

DHE
has been shown to be effective in the treatment of migraine and, in particular, hard to treat migraines, such as menstrual migraine,
migraine upon awakening, and severe migraine. Utilization of DHE has been limited due to its poor oral bioavailability, requiring IV,
subcutaneous or intranasal dosing. IV dosing generally requires administration in a healthcare setting and may result in nausea and vomiting.
Hence, its use has generally been limited to patients with intractable or medication-overuse migraine. In May 2025, the FDA approved Brekiya (Amneal Pharmaceuticals, Inc.), a subcutaneous DHE autoinjector for acute treatment
of migraine with or without aura and cluster headaches in adults. Intranasal dosing with DHE, including
Migranal (Bausch Health US LLC), approved in December 1997, and Trudhesa (Impel NeuroPharma, Inc.), approved by the FDA in September
2021, have been poorly adopted due to incomplete efficacy and intolerability of nasal inhalation in patients during a migraine.

There
is precedent for an orally inhaled DHE therapy. MAP Pharmaceuticals, Inc. developed MAP0004, also known as Levadex or Semprana, a liquid
suspension formulation of DHE, designed to be dosed via a breath-actuated pMDI inhalation device. Their published data indicate a safe
and well tolerated formulation with rapid onset and long-lasting efficacy that compared favorably to existing treatments. Development
of MAP0004 led to a new drug application (“NDA”) but was halted after multiple complete response letters from the FDA citing
Chemistry, Manufacturing and Controls (“CMC”) issues related to dose uniformity and stability issues. Regardless of the failure
of MAP0004, the efficacy and tolerability of the formulation reported by MAP Pharmaceuticals provides proof of concept for an orally
inhaled DHE formulation. PUR3100, the iSPERSE™ formulation planned by Pulmatrix, is anticipated to deliver DHE
to the lung with efficacy and tolerability that compares favorably with MAP0004, while avoiding the device-related issues of MAP0004
by delivering PUR3100 as an iSPERSE™ dry powder.

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We
believe that an iSPERSE formulation of DHE can provide the positive rapid onset and long-lasting efficacy seen in the MAP0004 data by
enabling a similar pharmacokinetic profile while eliminating the manufacturing and device issues which led to the MAP0004 FDA complete
response letters.

Aspeya,
Inc. (“Aspeya”), a subsidiary of Philip Morris International, Inc. and formerly known as Vectura Fertin Pharma, Inc., is
developing a drug-device combination product for the pulmonary delivery of an inhaled dry-powder formulation of DHE for the acute treatment
of migraines in adults. Aspeya completed a Phase 1 clinical trial in New Zealand in 2024, later announcing the treatment was assessed
safe, well-tolerated and supporting further clinical development. Aspeya later completed a Phase 1 clinical trial in 2025 (NCT07226362),
with results pending. To the best of our knowledge, there are no other orally inhaled DHE formulations currently in development or on
the market.

Migranal,
Trudhesa and Atzumi are currently FDA approved intranasal formulations of DHE. While Migranal and Trudhesa are nasal liquid sprays, Atzumi
is a nasal powder formulation. Satsuma Pharmaceuticals, a subsidiary of Shin Nippon Biomedical Laboratories (“Satsuma”),
gained FDA approval during 2025 for Atzumi for acute treatment of migraine.

Non-Clinical
Development

A
total of three 14-day GLP toxicology studies have been completed with PUR3100 to support single-dose clinical studies. We are planning
to conduct a chronic toxicology study to support long-term dosing. Based on discussions with the FDA, this would complete the non-clinical
requirements to support an NDA.

Clinical
Development

All U.S. clinical development is currently on hold
while we work to license or monetize this asset.

Our
interactions with the FDA have indicated that, as part of Phase 2 and Phase 3 studies, long-term safety should be assessed in a minimum
of one hundred patients for six months of dosing and fifty patients for twelve months of dosing. The FDA also confirmed that it will
be necessary to perform a safety study administering PUR3100 to otherwise healthy patients with asthma before an NDA is submitted.

On
September 26, 2022, we announced the completion of patient dosing in a Phase 1 clinical study, performed in Australia. The study design
was a double-dummy, double-blinded trial to assess the safety, tolerability, and pharmacokinetics of three dose levels of single doses
of inhaled PUR3100 with IV placebo, as compared to IV DHE (DHE mesylate injection) with inhaled placebo. This study may also provide
preliminary comparative bioavailability data to support the use of the 505(b)(2) pathway for marketing authorization. Twenty-six healthy
subjects were enrolled and each of the four groups contained at least six subjects.

On
January 4, 2023, we announced topline results. We presented the Phase 1 study data at the American Headache Society 65th Annual Meeting
in June 2023. The study showed that PUR3100 achieved peak exposures in the targeted therapeutic range and time to maximum concentration
occurred at five minutes after dosing at all dosing levels. The PUR3100 dose groups also showed a lower incidence of nausea and no vomiting
compared to observations of nausea and vomiting in the IV administered DHE dose group.

Based
on the rapid systemic exposure in the therapeutic range and the improved side effect profile relative to IV dosing, we believe the PUR3100
formulation of DHE may differentiate from approved DHE products or those known to be in development. If effectiveness is demonstrated,
PUR3100 may offer the convenience of being self-administered with a pharmacokinetic profile that may potentially provide rapid onset
of action.

In
September 2023, we announced that the FDA accepted the PUR3100 IND and the receipt of a “study may proceed” letter for the
clinical study: “A Phase 2, Multicenter, Randomized, Double-Blind, Placebo-Controlled, Single Event Study to Evaluate the Safety,
Tolerability, and Efficacy of PUR3100 (Dihydroergotamine Mesylate Inhalation Powder) in the Acute Treatment of Migraine”. We anticipate
that this Phase 2 clinical study will initiate once financing or partnership arrangements have been made.

On
May 15, 2024, we announced publication of, “Safety, tolerability, and pharmacokinetics of a single orally inhaled dose of PUR3100,
a dry powder formulation of dihydroergotamine versus intravenous dihydroergotamine: A Phase 1 randomized, double-blind study in healthy
adults” in the peer-reviewed publication Headache: The Journal of Head and Face Pain.

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We
believe that in this trial, PUR3100 demonstrated the potential for rapid pain relief and improved DHE tolerability versus IV DHE. With
a Tmax of 5 minutes and a Cmax in the therapeutic window for all doses tested, we believe that PUR3100 has the
potential to address an unmet need for acute migraine sufferers and we are pursuing different options to advance PUR3100 into a Phase
2 clinical trial to further investigate its promising profile in treating acute migraine.

The
completed Phase 1 study demonstrated optimal pharmacokinetics and improved tolerability of PUR3100 compared to IV DHE. All doses of PUR3100
were generally well tolerated with a lower incidence of nausea (21% vs. 86%), vomiting (0% vs. 29%), and headache (16% vs. 57%) compared
to IV DHE. The PK profile of PUR3100 versus IV DHE was characterized by a similar mean time to Cmax (5 vs. 5.5 min), with
reduced AUC0–2h (1120–4320 vs. 6340 ng*h/mL), and a lower Cmax (3620–14,400 vs. 45,000 ng/mL).
All doses of PUR3100 were associated with mean Cmax above the minimum level required to achieve efficacy (1000 pg/mL).

PUR1800

PUR1800 is still an investigational drug candidate and not authorized for commercialization, but we
are currently exploring other opportunities to monetize PUR1800.

PUR1800
is a Narrow Spectrum Kinase Inhibitor, engineered with our iSPERSE™ technology, with a target indication for the treatment of
acute exacerbations in chronic obstructive pulmonary disease (AECOPD). PUR1800 targets p38 MAP kinases (p38MAPK), Src kinases, and Syk
kinases. These kinases play a critical role in chronic inflammation and airway remodeling.

Reduced
responsiveness to corticosteroids represents an important barrier to effective treatment of COPD and AECOPD and provides a clear rationale
to seek novel medicines to treat these respiratory diseases. In addition, current treatments generally fail to treat the underlying source
of the AECOPD, in particular when a viral or bacterial infection is the cause, which occurs in approximately 80% of exacerbations. RV1162,
the active ingredient of PUR1800, is a novel, potent anti-inflammatory that inhibits the phosphorylation of a narrow spectrum of kinases.
In pre-clinical studies, RV1162 demonstrated direct anti-inflammatory activity in a model of viral induced respiratory inflammation.
RV1162 also demonstrated a reduction in corticosteroid-resistant inflammatory responses in a model of cigarette smoke induced inflammation.
These findings suggested that RV1162 has the potential to deliver effective anti-inflammatory outcomes in corticosteroid-resistant patients
while also reducing the underlying source of inflammation in an exacerbation, such as a viral and/or bacterial respiratory infection.

Clinical
studies conducted by RespiVert/Janssen with RV1162 formulated as a lactose blend for inhalation demonstrated that the molecule was well
tolerated for up to 14 days of dosing in patients with COPD. Analysis of sputum collected from patients with COPD treated with RV1162
showed reduced levels of p38 phosphorylation in sputum cells and decreases in the number of neutrophils recovered in sputum after 12
days of dosing. These findings suggest that inhalation of RV1162 may confer anti-inflammatory benefits after a short dosing regimen.
Long-term toxicology studies with RV1162 as a lactose blend suggested that this formulation was not suitable for chronic dosing.

Based
upon the clinical results generated by RespiVert/Janssen for RV1162 and the anticipated benefits of an iSPERSE™
formulation of RV1162, we entered into a License, Development and Commercialization Agreement with RespiVert Ltd. (“RespiVert”),
a wholly owned subsidiary of Janssen Biotech, Inc. on June 9, 2017. RespiVert granted us an exclusive, royalty-bearing license in a portfolio
of narrow spectrum kinase inhibitor compounds (“NSKI”). We subsequently formulated RV1162 into PUR1800 for development as
a potential therapy for AECOPD. In January 2026, we provided RespiVert notice that, pursuant to our agreement, we are exercising our
option to abandon the prosecution of certain individual RespiVert patents. We do not consider these patents to be necessary to support
PUR1800 at this time.

Competition
and Market Opportunities

There
are 18 million moderate-to-severe episodes of AECOPD in the US each year. AECOPD are sudden onset increases in symptoms, including increased
dyspnea, sputum purulence and volume, and wheezing, coughing, and shortness of breath that require medical intervention and can lead
to hospitalization. The occurrence of an exacerbation greatly increases the likelihood of a further exacerbation within the following
6 months and creates a significant financial burden to healthcare systems.

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Steroids
are standard of care for moderate-to-severe acute exacerbations, which occur across all patient severity types. We believe a substantial
unmet need exists in AECOPD for those patients with underlying infection and/or steroid resistance. Acumapimod (BCT-197) is an oral p38
MAP kinase inhibitor being developed by Mereo BioPharma. BCT-197 completed Phase 2 development as first-line therapy for severe AECOPD.
In April 2019, Mereo BioPharma announced completion of an end of Phase 2 meeting with the FDA and stated the company is continuing discussions
with potential partners for BCT-197. We are not aware of any further progress in either clinical development or partnership efforts on
this product. A generic version of roflumilast, a phosphodiesterase inhibitor approved by the FDA for use in managing COPD exacerbations,
became available in 2022.

Non-Clinical
Development

We
conducted two 28-day GLP toxicology studies in rats and dogs. Results from the two GLP toxicology studies supported the potential for
PUR1800 to improve lung exposure, with reduced lung accumulation, as compared to RV1162 as a lactose blend formulation, suggesting potential
for chronic dosing.

Toxicology
studies in rats and dogs, with durations of six and nine months respectively, are complete. The data from both studies demonstrated
that PUR1800 is safe and well tolerated with chronic dosing, with little to no progression of findings from 28-day studies. We
believe that this indicates potential for chronic dosing of PUR1800, enabling us to explore PUR1800 therapy for chronic respiratory
diseases such as steroid resistant asthma, COPD, or idiopathic pulmonary fibrosis. While the program is currently in development for
treatment of acute exacerbation of COPD, these positive toxicology study results could expand potential indications and value of the
program. In 2024, Pulmatrix published an abstract titled “Ex vivo evaluation of the potential for Narrow Spectrum Kinase
inhibitors as a treatment for Idiopathic Pulmonary Fibrosis”.

Clinical
Development

All clinical development is currently on hold while
we work to license or monetize this asset.

We
completed a Phase 1b safety, tolerability, and pharmacokinetics of PUR1800 in patients with stable moderate-severe COPD. Topline data
were delivered in the first quarter of 2022 and presented at the American Academy of Allergy, Asthma and Immunology conference in the
first quarter of 2023.

The
clinical study, performed at the Medicines Evaluation Unit in Manchester, UK, was a randomized, three-way crossover double-blind study
with 14 days of daily dosing, which included placebo and one of two doses of PUR1800, and included a 28-day follow-up period after each
treatment period. A total of 18 adults with stable COPD were enrolled. Safety and tolerability, as well as systemic pharmacokinetics
(“PK”) were evaluated.

PUR1800
was well tolerated and there were no observed safety signals. The PK data indicate that PUR1800 results in low and consistent systemic
exposure when administered via oral inhalation. The topline data, along with the results from chronic toxicology studies, support the
continued development of PUR1800 for the treatment of AECOPD and other inflammatory respiratory diseases. These data will inform the
design of a potential Phase 2 study in the treatment of AECOPD.

PUR1900

PUR1900 is still an investigational drug candidate and not authorized for commercialization, but we
are currently exploring other opportunities to monetize PUR1900 within the United States.

PUR1900
is our iSPERSE™ inhaled formulation of itraconazole, an antifungal drug commercially available as an oral drug. We
developed PUR1900 for the prevention and potential treatment of fungal infections and allergic/hypersensitivity reactions to fungus
in patients with severe lung disease, including those with asthma and CF. On January 28, 2020, PUR1900 received Fast Track
designation from the FDA for the treatment of ABPA. Aspergillus colonization and infections are likely underdiagnosed and
occur frequently in patients of all ages. Colonization and infection with Aspergillus can lead to clinical disease with
differing severities and complications depending on the immune status of the host. Invasive aspergillosis is a frequently fatal
disease that occurs in patients that are typically immune suppressed as a result of treatment for hematologic cancers or
immunosuppression prior to solid organ transplantation. In patients with asthma and CF, Aspergillus can cause chronic
infections that may be associated with worsening disease and larger declines in lung function than patients without infection. A
subset of patients with asthma and CF with Aspergillus colonization and/or infection develop ABPA, which is a complex
hypersensitivity reaction to fungal antigens. ABPA is a disease resulting in mucus production, wheezing, pulmonary infiltrates,
worsening bronchiectasis, and fibrosis of the lung.

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In
patients with both asthma and CF, ABPA is commonly treated with oral steroids to treat inflammation and with oral antifungals to reduce
fungal infection. The inhalation administration of a drug affords direct delivery of the drug to the infected parts of the lung, maximizing
the dose to the affected sites and minimizing systemic exposure to the rest of the body where it could cause dose-limiting side effects.
Therefore, treatment of lung infections by direct administration of anti-infective products to the lung may improve both the safety and
efficacy of treatment compared to systemic administration by other routes, as well as improving patient convenience as compared to oral
and injectable forms of the treatment. We believe that local lung delivery by inhalation of our iSPERSE™ formulation
could provide convenient, effective and safe management of the debilitating and often life-threatening lung infections that are not currently
addressed by inhaled therapies.

Competition
and Market Opportunities

Current
treatments of pulmonary fungal infections highlight the limitations of oral or intravenous anti-infective treatments for lung infections.
Itraconazole is one of the most commonly prescribed therapies for treating Aspergillus infections in patients with asthma and
CF. Itraconazole is available commercially as Sporanox® in both a capsule and oral solution form. Itraconazole is metabolized
in the liver by CYP3A4 and coadministration with a large number of drugs is contraindicated due to the potential for severe drug-drug
interactions.

We
have demonstrated that PUR1900 achieves higher local lung itraconazole concentrations with lower systemic exposure relative to oral dosing,
thus allowing for the potential to improve upon both the efficacy and safety profiles observed with oral itraconazole. Furthermore, administration
by inhalation reduces the exposure of the drug in the rest of the body, which may be beneficial in reducing systemic side effects and
the risk of potentially toxic drug-drug interactions.

There
is precedent for both dry powder and nebulized inhaled anti-infective therapy to address specific pulmonary infections in patients which
demonstrates potential utility of inhaled drug delivery and market opportunity. Mylan currently markets TOBI Podhaler for treatment of
Pseudomonas aeruginosa infection in the United States and Teva markets inhaled colistin, Colobreathe, for the same infection in
Europe. Insmed currently markets Amikacin Liposome Inhalation Suspension (Arikayce) in the United States for the treatment of lung disease
caused by a group of bacteria, Mycobacterium avium complex in a limited population of patients with the disease who do not respond
to conventional treatment (refractory disease). There are currently no products specifically approved for treatment of ABPA, however,
there are several inhaled antifungal agents currently under development for the treatment of invasive aspergillosis or ABPA. Treatments
under development for invasive aspergillosis include PC945, a novel azole antifungal being developed by Pulmocide as a liquid for nebulization
prior to the termination of their Opera-T Phase 3 study with Opelconazole based on an interim analysis data. In addition, a dry powder
formulation of voriconazole was previously being developed by TFF Pharmaceuticals prior to announcing dissolution in 2025. In principle,
development of an orally inhaled antifungal for the treatment of invasive aspergillosis could also be effective for ABPA but would require
additional clinical studies in the target patient population. Zambon has also developed a dry powder formulation of voriconazole for
the treatment of ABPA and completed a Phase 1 study in the third quarter of 2020. However, no additional development has since been reported.
Regeneron Pharmaceuticals completed a clinical trial in 2024 with dupilumab (NCT04442269) for the treatment of ABPA in asthma. This trial
focused on prevention of exacerbations in individuals with at least one or more severe respiratory exacerbations. In 2025, Regeneron
announced dupilumab significantly improved lung function and substantially reduced severe exacerbations while enhancing quality of life
in patients with ABPA during the treatment period.

New
methods to detect Aspergillus infection in sputum have improved the sensitivity of diagnosis and clinical appreciation for these
infections. Pulmonary Aspergillus infections affect approximately 14 million patients worldwide according to the Global Action
Fund for Fungal Infections (Improving Outcomes for Patients with Fungal Infections across the World: A Road Map for the Next Decade).
The majority of these cases occur in patients with asthma who have allergic disease and also include invasive Aspergillus infections
that are associated with a high rate of mortality in immunocompromised patients. We believe that PUR1900 compares favorably to the products
discussed above and has the potential to generate substantial value based on treating and preventing pulmonary fungal infections in multiple
patient populations.

10

Clinical
Development

All clinical development is currently on hold while
our partner, Cipla, has completed a Phase 2 trial and is approved to proceed to a Phase 3 trial, both in India.

We
completed a Phase 1/1b clinical study in 2018, wherein PUR1900 appeared to be safe and well tolerated in healthy normal volunteers (Parts
1 and 2) and in patients with asthma (Part 3). In Part 3 of the Phase 1/1b clinical study, following a single dose of PUR1900, the pharmacokinetics
(“PK”) analysis of sputum samples demonstrated approximately 70-fold higher maximum lung concentration of itraconazole following
inhalation of PUR1900 compared to oral Sporanox® (Janssen Pharmaceuticals) despite inhaling only one-tenth the dose of
itraconazole (20 mg) relative to the dose of oral Sporanox® (200 mg). Lung exposure, as measured by sputum induction and
analysis, was approximately 50-fold higher and plasma exposure was approximately 85-fold lower following inhalation of 20 mg of PUR1900
compared to 200 mg of oral Sporanox®. All endpoints from the Phase 1/1b clinical study were successfully met.

Successful
completion of the Phase 1/1b clinical study enabled us to initiate a Phase 2 clinical study in 2019, entitled: “A Randomized, Double-Blind,
Multicenter, Placebo-Controlled, Phase 2 Study to Evaluate the Safety, Tolerability, and Pharmacokinetics of Itraconazole Administered
as a Dry Powder for Inhalation (PUR1900) in Adult Asthmatic Patients with ABPA.” This clinical study was terminated in July 2020
due to the impact of the COVID-19 pandemic on patient enrollment and clinical study conduct. The completion of a 6-month inhalation toxicology
study in dogs in 2020 enabled the conduct of a new Phase 2b clinical study.

The
new Phase 2b study included a 16-week dosing regimen and exploration of potential regulatory approval endpoints. We dosed the first patient
during the first quarter of 2023. In January 2024, pursuant to the Third Amendment (as defined herein), we announced plans to stop patient
enrollment at 8 subjects in this study, effective immediately, and to terminate the study as soon as reasonably possible between the
date of the Third Amendment and July 30, 2024. We completed all Phase 2b wind down activities in the third quarter of 2024. As such,
we no longer bear further financial responsibility for the commercialization and development with respect to the Product in the Cipla
Territory, with such commercialization and development expenses of the Product in the Cipla Territory to be borne at Cipla’s sole
cost and expense after January 6, 2024.

Business
Development

PUR3100

We
are currently exploring opportunities to monetize PUR3100.

In
September 2023, we announced the FDA’s acceptance of an IND application for PUR3100 and receipt of a “study may proceed”
letter for a Phase 2 study. The IND includes a Phase 2 clinical protocol where safety and preliminary efficacy of PUR3100 will be investigated
in patients with acute migraine.

PUR1800

We
are currently exploring opportunities to monetize PUR1800.

We
completed a Phase 1b safety, tolerability, and pharmacokinetics clinical study of PUR1800 for subjects with stable moderate-severe COPD
and received topline data from the Phase 1b clinical study in the first quarter of 2022. We analyzed data from the completed Phase 1b
clinical study of PUR1800 for AECOPD and presented study results at the American Academy of Allergy, Asthma & Immunology (AAAAI)
conference in the first quarter of 2023. The results indicated PUR1800 was safe and well tolerated with no observed safety signals. The
topline data, along with the results from chronic toxicology studies, support the continued development of PUR1800 for the treatment
of AECOPD and other inflammatory respiratory diseases.

11

PUR1900

We
are currently exploring opportunities to monetize PUR1900 within the United States.

On
April 15, 2019, we entered into a Development and Commercialization Agreement (the “Cipla Agreement”) with Cipla for the
co-development and commercialization, on a worldwide, except for the Cipla Territory defined below, exclusive basis, of PUR1900, our
inhaled iSPERSE™ drug delivery system (the “Product”) enabled formulation of the antifungal drug
itraconazole, which is only available as an oral drug, for the treatment of all pulmonary indications, including ABPA in patients with
asthma. We entered into an amendment to the Cipla Agreement on November 8, 2021 (the “Second Amendment”) and a subsequent
amendment on January 6, 2024 (the “Third Amendment”). All references to the Cipla Agreement herein refer to the Cipla Agreement,
as amended. The Cipla Agreement will remain in effect in perpetuity, unless otherwise earlier terminated in accordance with its terms.

Pursuant
to the Third Amendment, all development and commercialization activities with respect to the Product in all markets other than the United
States (the “Cipla Territory”) will be conducted exclusively by Cipla at Cipla’s sole cost and expense, and Cipla shall
be entitled to all profits from the sale of the Product in the Cipla Territory, except that we will receive 2% royalties on any potential
future net sales by Cipla outside the United States.

Also
pursuant to the Third Amendment, we and Cipla stopped patient enrollment for the ongoing Phase 2b clinical study. We agreed that during
the period commencing on January 6, 2024 and ending July 30, 2024 (the “Wind Down Period”), we would complete all Phase 2b
activities, assign or license all patents to Cipla and their registration with the appropriate authorities in the Cipla Territory, complete
a physical and demonstrable technology transfer and secure all data from the Phase 2b study for inclusion in the safety database for
the Cipla Territory.

For
the duration of the Wind Down Period, we and Cipla were each responsible for 60% and 40%, respectively, of our Direct Costs. We shared
all other development costs with Cipla that are not Direct Costs, such as the cost of clinical research organizations, manufacturing
costs and other third-party costs, on a 50/50 basis. Reimbursements from Cipla to us for these costs were subject to a maximum reimbursement
amount as approved by the joint steering committee.

We
completed all Phase 2b wind down activities in the third quarter of 2024. As such, we no longer bear further financial responsibility
for the commercialization and development with respect to the Product in the Cipla Territory, with such commercialization and development
expenses of the Product in the Cipla Territory to be borne at Cipla’s sole cost and expense after January 6, 2024.

Our
partner Cipla has continued clinical development outside the United States and India’s Central Drug Standard Control Organization
has accepted Cipla’s Phase 2 clinical trial results for inhaled itraconazole dry powder formulation and approved the company’s
proposal to proceed with Phase 3 trials. Should Cipla successfully market PUR1900 outside the United States, Pulmatrix will receive 2%
royalties on any potential future net sales by Cipla outside the United States. Within the United States, we and Cipla will seek to monetize
PUR1900 for indications where an orally inhaled antifungal may provide a therapeutic benefit or fulfill an unmet medical need.

Intellectual
Property

Patents
and Patent Applications

We
protect our intellectual property by filing and advancing patent applications and maintaining granted patents on our iSPERSE™
platform technology and in-licensed kinase inhibitors, which includes claims to compositions of matter and methods of use for
our PUR3100, PUR1800, PUR1900 and other programs, as well as manufacturing processes, devices and packaging relevant to our iSPERSE™
platform and product candidates.

The
status of our patent portfolio changes frequently in the ordinary course of patent prosecution. As of December 31, 2025, our patent portfolio
related to iSPERSE™ included approximately 149 granted patents, 18 of which are granted US patents, with expiration
dates from 2026 to 2043, and approximately 48 additional pending patent applications in the US and other jurisdictions. Our in-licensed
portfolio related to kinase inhibitors included approximately 284 granted patents, 33 of which are granted US patents, with expiration
dates from 2029 to 2035, and approximately 11 additional pending patent applications in the US and other jurisdictions. We have national
phase applications pending in Australia, Brazil, Canada, China, Europe, Israel, India, Japan, Korea, Mexico, New Zealand, Russia, Hong
Kong and the United States that cover certain formulations and methods of use relevant to our PUR3100 program.

12

There
can be no assurance that the patent applications will be granted. The term of individual patents depends upon the legal term of the patents
in the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the earliest date of
filing a non-provisional patent application. In the United States, the patent term of a patent that covers a FDA-approved drug may also
be eligible for patent term extension, which permits patent term restoration as compensation for the patent term lost during the FDA
regulatory review process. The length of the patent term extension is related to the length of time the drug is under regulatory review.
Patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only
one patent applicable to an approved drug may be extended. In the future, if and when our products receive FDA approval, we expect to
apply for patent term extensions on patents covering those products. Similar provisions are available in Europe and other foreign jurisdictions
to extend the term of a patent that covers an approved drug. We plan to seek patent term extensions to extend the patent coverage of
any of our products that received regulatory approval in any jurisdiction where these extensions are available. However, there is no
guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment on whether such extensions
should be granted, and if granted, the length of such extensions.

The
patent positions of biotechnology companies like ours are generally uncertain and involve complex legal, scientific and factual questions.
In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can
be reinterpreted after issuance. Consequently, we may not obtain or maintain adequate patent protection for any of our product candidates.
We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether
the claims of any issued patents will provide sufficient proprietary protection from competitors. Any patents that we hold may be challenged,
circumvented or invalidated by third parties.

Trade
Secrets

We
also rely on trade secret protection of our confidential and proprietary information, including the iSPERSE™
technology. Although we take steps to protect our proprietary information and trade secrets, including through contractual means with
our employees, consultants and others, third parties may independently develop substantially equivalent proprietary information and techniques
or otherwise gain access to our trade secrets or disclose our technology. Thus, we may not be able to meaningfully protect our trade
secrets. It is our policy to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors
to execute confidentiality agreements upon the commencement of employment or consulting relationships with us. These confidentiality
agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual
during the course of the individual’s relationship with us must be kept confidential and not disclosed to third parties except
in specific circumstances. Our confidentiality agreements with our employees also provide that all inventions conceived by the employee
in the course of employment with us or from the employee’s use of our confidential information are our exclusive property.

Manufacturing

We
do not currently own or operate manufacturing facilities for the production of clinical or commercial quantities of our product candidates.
We have historically maintained small-scale production capabilities and performed early process development for our product candidates
to produce the quantities necessary to conduct preclinical studies of our investigational product candidates. We do not have, and do
not currently plan to acquire or develop, the facilities or capabilities to manufacture bulk drug substance or drug product for use in
human clinical studies. We rely on contract manufacturing organizations (“CMOs”) and third-party contractors to manufacture
drug substance and drug product required for our clinical studies. We expect to continue to rely on CMOs to manufacture drug substances
and drug products under the appropriate current Good Manufacturing Practices (“cGMP”) conditions to perform clinical studies
for the foreseeable future. We also contract with CMOs for the labeling, packaging, storage and distribution of investigational drug
products. These arrangements allow us to maintain a more flexible infrastructure while focusing our expertise on researching and developing
our products.

13

We
expect to continue to rely on contract manufacturers to produce sufficient quantities of our product candidates in accordance with the
appropriate cGMPs for the pertinent phase of clinical trials. cGMP compliance includes strict adherence to regulations for quality control,
quality assurance, and the maintenance of records and documentation. The manufacturing facilities that manufacture our approved drug
products, if any are approved in the future, must comply with the FDA’s cGMP regulation requirements and have acquired FDA or other
regulatory approval for the manufacturing of our commercial products. Our contract manufacturers may also be subject to inspections of
facilities by regulatory authorities to ensure compliance with applicable regulations. Contract manufacturers often encounter difficulties
involving production yields, quality control and quality assurance, as well as shortages of qualified personnel. We have little or no
direct control over our manufacturers’ compliance with these regulations and standards. Failure to comply with applicable regulatory
requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure
or recall, or withdrawal of product approval. These actions could have a material impact on the availability of products.

Suppliers

We
also have relied on third-party contract manufacturers to supply the APIs that are used to formulate our therapeutic candidates. When
needed, we place purchase orders with different contract manufacturers for the APIs required for PUR3100, PUR1800 and PUR1900. We additionally
have relied on third-party vendors to supply raw materials for our APIs and drug products.

Research
and Development

For
fiscal years ended December 31, 2025 and 2024, we spent approximately less than $0.1 million and $7.2 million, respectively, on research
and development activities.

Government
Regulation

Pharmaceutical
companies are subject to extensive regulation by national, state and local agencies, such as the FDA, in the United States and the European
Medicines Agency in Europe. The manufacture, distribution, marketing, and sale of pharmaceutical products are subject to government regulation
in the United States and various foreign countries. Additionally, in the United States, we must follow rules and regulations established
by the FDA requiring the presentation of data indicating that our products are safe and efficacious and are manufactured in accordance
with cGMP regulations. If we do not comply with applicable requirements, we may be fined, the government may refuse to approve our marketing
applications or allow us to manufacture or market its products, and we may be criminally prosecuted. We and our manufacturers and clinical
research organizations may also be subject to regulations under other federal, state and local laws, including, but not limited to, the
U.S. Occupational Safety and Health Act, the Resource Conservation and Recovery Act, the Clean Air Act and import, export and customs
regulations as well as the laws and regulations of other countries. Pharmaceutical companies must ensure their compliance with the Foreign
Corrupt Practices Act and federal healthcare fraud and abuse laws, including the False Claims Act, and the U.S. government has increased
its enforcement activity regarding illegal marketing practices domestically and internationally.

These
regulatory requirements impact our operations and differ from one country to another, such that securing the applicable regulatory approvals
of one country does not imply the approval of another country. However, securing the approval of a more stringent body, e.g., the FDA,
may facilitate receiving the approval by a regulatory authority in a different country where the regulatory requirements are similar
or less stringent. The approval procedures involve high costs and are manpower intensive and usually extend over many years and require
highly skilled and professional resources.

14

FDA
Approval Process

The
steps required to be taken before a new drug may be marketed in the United States generally include:

●
Completion
of preclinical laboratory and animal testing;

●
The
submission to the FDA of an IND application, which must be evaluated, for safety and quality of scientific evaluation, and found
acceptable by the FDA before human clinical trials may commence;

●
Performance
of adequate and well-controlled human clinical trials in accordance with the protocols described in the accepted IND, as well as
FDA’s IND regulations to establish the safety and efficacy of the proposed drug for its intended use; and

●
Submission
and approval of an NDA.

Clinical
studies are conducted under protocols detailing, among other things, the objectives of the study, what types of patients may enter the
study, schedules of tests and procedures, drugs, dosages, and length of study, as well as the parameters to be used in monitoring safety,
and the efficacy criteria to be evaluated. A protocol for each clinical study and any subsequent protocol amendments must be submitted
to the FDA as part of the IND application and, subsequently adhered to in conducting clinical trials, if the IND application is accepted.

In
all the countries that are signatories of the Helsinki Declaration, the prerequisite for conducting clinical trials on human subjects
is securing the preliminary approval of the competent authorities of that country to conduct medical experiments on human subjects in
compliance with the other principles established by the Helsinki Declaration.

The
clinical testing of a product candidate (also commonly referenced as a “drug product candidate” or a “therapeutic product
candidate”) generally is conducted in three sequential phases prior to approval, but the phases may overlap or be combined. A fourth,
or post approval, phase may include additional clinical studies. The phases are generally as follows:

Phase
1. In Phase 1 clinical studies, the product is tested in a small number of patients with the target condition or disease or in healthy
volunteers. These studies are designed to evaluate the safety, dosage tolerance, metabolism and pharmacologic actions of the product
candidate in humans, side effects associated with increasing doses, and, in some cases, to gain early evidence on efficacy. The number
of participants included in Phase 1 studies is generally in the range of 20 to 80.

Phase
2. In Phase 2 studies, in addition to safety, the sponsor evaluates the efficacy of the product candidate on targeted indications
to determine dosage tolerance and optimal dosage and to identify possible adverse effects and safety risks. Phase 2 studies typically
are larger than Phase 1 but smaller than Phase 3 studies and may involve several hundred participants.

Phase
3. Phase 3 studies typically involve an expanded patient population at geographically-dispersed test sites. They are performed after
preliminary evidence suggesting effectiveness of the product candidate has been obtained and are designed to further evaluate clinical
efficacy and safety, to establish the overall benefit-risk relationship of the product candidate and to provide an adequate basis for
a potential product approval. Phase 3 studies usually involve several hundred to several thousand participants.

Phase
4. Phase 4 clinical trials are post marketing studies designed to collect additional safety data as well as potentially expand a
product indication. Post marketing commitments are required of, or agreed to by, a sponsor after the FDA has approved a product for marketing.
These studies are used to gain additional information from the treatment of patients in the intended therapeutic indication and to verify
a clinical benefit in the case of drugs approved under accelerated approval regulations. If the FDA approves a product while a company
has ongoing clinical trials that were not necessary for approval, a company may be able to use the data from these clinical trials to
meet all or part of any Phase 4 clinical trial requirement. These clinical trials are often referred to as Phase 4 post-approval or post
marketing commitments. Failure to promptly conduct Phase 4 clinical trials could result in the inability to deliver the product into
interstate commerce, misbranding charges, and civil monetary penalties.

15

Clinical
trials must be conducted in accordance with the FDA’s good clinical practices (“GCP”), requirements. The FDA may order
the temporary or permanent discontinuation of a clinical study at any time or impose other sanctions if it believes that the clinical
study is not being conducted in accordance with FDA requirements or that the participants are being exposed to an unacceptable health
risk. In addition, to support an IND or an application for marketing approval with the FDA, clinical studies conducted outside of the
United States must conform with GCP requirements. An institutional review board (“IRB”) generally must approve the clinical
trial design and patient informed consent at study sites that the IRB oversees and also may halt a study, either temporarily or permanently,
for failure to comply with the IRB’s requirements, or may impose other conditions. Additionally, some clinical studies are overseen
by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board or committee.
This group recommends whether or not a trial may move forward at designated check points based on access to certain data from the study.
The clinical study sponsor may also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate.

As
a product candidate moves through the clinical testing phases, manufacturing processes are further defined, refined, controlled and validated.
The level of control and validation required by the FDA would generally increase as clinical studies progress. We and the third-party
manufacturers on which we rely for the manufacture of our product candidates and their respective components (including the API) are
subject to requirements that drugs be manufactured, packaged and labeled in conformity with cGMP. To comply with cGMP requirements, manufacturers
must continue to spend time, money and effort to meet requirements relating to personnel, facilities, equipment, production and process,
labeling and packaging, quality control, recordkeeping and other requirements.

Assuming
completion of all required testing in accordance with all applicable regulatory requirements, detailed information on the product candidate
is submitted to the FDA in the form of an NDA, requesting approval to market the product for one or more indications, together with payment
of a user fee, unless waived. An NDA includes all relevant data available from pertinent nonclinical and clinical studies, including
negative or ambiguous results as well as positive findings, together with detailed information on the chemistry, manufacture, control
and proposed labeling, among other things. To support marketing approval, the data submitted must be sufficient in quality and quantity
to establish the safety and efficacy of the product candidate for its intended use to the satisfaction of the FDA.

If
an NDA submission is accepted for filing, the FDA begins an in-depth review of the NDA. Under the Prescription Drug User Fee Act (the
“PDUFA”), the FDA’s goal is to complete its initial review and respond to the applicant within twelve months of submission,
unless the application relates to an unmet medical need in a serious or life-threatening indication, in which case the goal may be within
eight months of NDA submission. However, PDUFA goal dates are not legal mandates and FDA response often occurs several months beyond
the original PDUFA goal date. Further, the review process and the target response date under PDUFA may be extended if the FDA requests
or the NDA sponsor otherwise provides additional information or clarification regarding information already provided in the NDA. The
NDA review process can, accordingly, be very lengthy. During its review of an NDA, the FDA may refer the application to an advisory committee
for review, evaluation and recommendation as to whether the application should be approved. The FDA is not bound by the recommendation
of an advisory committee, but it typically follows such recommendations. Data from clinical studies are not always conclusive and the
FDA and/or any advisory committee it appoints may interpret data differently than the applicant.

After
the FDA evaluates the NDA and inspects manufacturing facilities where the drug product and/or its API will be produced, it will either
approve commercial marketing of the drug product with prescribing information for specific indications or issue a complete response letter
indicating that the application is not ready for approval and stating the conditions that must be met in order to secure approval of
the NDA. If the complete response letter requires additional data and the applicant subsequently submits that data, the FDA nevertheless
may ultimately decide that the NDA does not satisfy its criteria for approval. The FDA could also approve the NDA with a Risk Evaluation
and Mitigation Strategies, plan to mitigate risks, which could include medication guides, physician communication plans, or elements
to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA also may condition
approval on, among other things, changes to proposed labeling, development of adequate controls and specifications, or a commitment to
conduct post-marketing testing. Such post-marketing testing may include Phase 4 clinical studies and surveillance to further assess and
monitor the product’s safety and efficacy after approval. Regulatory approval of products for serious or life-threatening indications
may require that participants in clinical studies be followed for long periods to determine the overall survival benefit of the drug.

16

If
the FDA approves one of our therapeutic candidates, we will be required to comply with a number of post-approval regulatory requirements.
We will also be required to report, among other things, certain adverse reactions and production problems to the FDA, provide updated
safety and efficacy information and comply with requirements concerning advertising and promotional labeling for any of its products.
Also, quality control and manufacturing procedures must continue to conform to cGMP after approval, and the FDA periodically inspects
manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural, substantive and record keeping requirements.
If we seek to make certain changes to an approved product, such as certain manufacturing changes, we will need FDA review and approval
before the change can be implemented. For example, if we change the manufacturer of a product or its API, the FDA may require stability
or other data from the new manufacturer, which will take time and is costly to generate, and the delay associated with generating this
data may cause interruptions in its ability to meet commercial demand, if any. While physicians may use products for indications that
have not been approved by the FDA, we may not label or promote the product for an indication that has not been approved. Securing FDA
approval for new indications is similar to the process for approval of the original indication and requires, among other things, submitting
data from adequate and well-controlled studies that demonstrate the product’s safety and efficacy in the new indication. Even if
such studies are conducted, the FDA may not approve any change in a timely fashion, or at all.

We
have relied, and expect to continue to rely, should we resume development of our product candidates, on third parties for the manufacture
of clinical and future commercial, quantities of its therapeutic candidates. Future FDA and state inspections may identify compliance
issues at these third-party facilities that may disrupt production or distribution or require substantial resources to correct. In addition,
discovery of previously unknown problems with a product or the failure to comply with applicable requirements may result in restrictions
on a product, manufacturer or holder of an approved NDA, including withdrawal or recall of the product from the market or other voluntary,
FDA-initiated or judicial action that could delay or prohibit further marketing. Newly discovered or developed safety or efficacy data
may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may
require the implementation of other risk management measures. Many of the foregoing could limit the commercial value of an approved product
or require us to commit substantial additional resources in connection with the approval of a product. Also, new government requirements,
including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent
regulatory approval of its products under development.

Section
505(b)(2) New Drug Applications

As
an alternate path for FDA approval of new indications or new formulations of previously approved products, a company may file a Section
505(b)(2) NDA, instead of a “stand-alone” or “full” NDA. Section 505(b)(2), was enacted as part of the Drug Price
Competition and Patent Term Restoration Act of 1984, otherwise known as the Hatch-Waxman Amendments. Section 505(b)(2) permits the submission
of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for
which the applicant has not obtained a right of reference. Some examples of products that may be allowed to follow a 505(b)(2) path to
approval are drugs that have a new dosage form, strength, route of administration, formulation or indication.

The
Hatch-Waxman Amendments permit the applicant to rely upon certain published nonclinical or clinical studies conducted for an approved
product or the FDA’s conclusions from prior review of such studies. The FDA may require companies to perform additional studies
or measurements to support any changes from the approved product. The FDA may then approve the new product for all or some of the labeled
indications for which the reference product has been approved, as well as for any new indication supported by the NDA. While references
to nonclinical and clinical data not generated by the applicant or for which the applicant does not have a right of reference are allowed,
all development, process, stability, qualification and validation data related to the manufacturing and quality of the new product must
be included in an NDA submitted under Section 505(b)(2).

17

To
the extent that the Section 505(b)(2) applicant is relying on the FDA’s conclusions regarding studies conducted for an already
approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s
Orange Book publication. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii)
the listed patent has expired; (iii) the listed patent has not expired but will expire on a particular date and approval is sought after
patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. The Section 505(b)(2) application
also will not be approved until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, listed
in the Orange Book for the reference product has expired. Thus, the Section 505(b)(2) applicant may invest a significant amount of time
and expense in the development of its products only to be subject to significant delay and patent litigation before its products may
be commercialized.

Orphan
Drug Designation

The
Orphan Drug Act of 1983 (the “Orphan Drug Act”) encourages manufacturers to seek approval of products intended to treat “rare
diseases and conditions” with a prevalence of fewer than 200,000 patients in the United States or for which there is no reasonable
expectation of recovering the development costs for the product. For products that receive Orphan Drug designation by the FDA, the Orphan
Drug Act provides tax credits for clinical research, FDA assistance with protocol design, eligibility for FDA grants to fund clinical
studies, waiver of the FDA application fee, and a period of seven years of marketing exclusivity for the product following FDA marketing
approval. In limited circumstances, the FDA may approve a competing product if the product shows clinical superiority over a product
with orphan drug designation exclusivity.

Foreign
Regulation

In
addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial
sales and distribution of its products. Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable
regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The
approval process varies from country to country and the time may be longer or shorter than that required for FDA approval. The requirements
governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

Under
European Union regulatory systems, a company may submit marketing authorization applications either under a centralized or decentralized
procedure. The centralized procedure, which is compulsory for medicines produced by biotechnology or those medicines intended to treat
acquired immunodeficiency syndrome, cancer, neurodegenerative disorders or diabetes and optional for those medicines which are highly
innovative, provides for the grant of a single marketing authorization that is valid for all European Union member states. Abridged applications
for the authorization of generic versions of drugs authorized by European Medicines Agency can be submitted to the European Medicines
Agency through a centralized procedure referencing the innovator’s data and demonstrating bioequivalence to the reference product,
among other things. The decentralized procedure provides for mutual recognition of national approval decisions. Under this procedure,
the holder of a national marketing authorization may submit an application to the remaining member states. Within 90 days of receiving
the applications and assessments report, each member state must decide whether to recognize approval. If a member state does not recognize
the marketing authorization, the disputed points are eventually referred to the European Commission, whose decision is binding on all
member states.

Reimbursement and Drug Pricing

In
the United States and other countries, sales of any products for which we decide to resume development of and receive regulatory approval
for commercial sale will depend in part on the availability of reimbursement from third-party payors, including government payors, managed
care providers, private health insurers and other organizations. Each third-party payor may have its own policy regarding what products
it will cover, the conditions under which it will cover such products, and how much it will pay for such products. Third-party payors
are increasingly examining the medical necessity and cost effectiveness of medical products and services in addition to safety and efficacy
and, accordingly, significant uncertainty exists as to the reimbursement status of newly approved therapeutics. Without adequate coverage
and reimbursement from third-party payors, patients and providers are unlikely to use or prescribe any products for which we decide to
resume development of and receive regulatory approval for commercial sale and may not enable us to realize an appropriate return on our
investment in research and product development may not be available for our products.

18

The
prices of prescription pharmaceuticals have also been the subject of considerable discussion in the United States. There have been
several proposed and enacted federal and state legislation designed to, among other things, bring more transparency to
pharmaceutical pricing, review the relationship between pricing and manufacturer patient programs, and reduce the costs of
pharmaceuticals. The passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “MMA”)
sets forth requirements for the distribution and pricing of prescription drugs for Medicare beneficiaries. The MMA also introduced a new reimbursement methodology. Moreover, while the MMA applies only to drug
benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their
own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from
non-governmental payors.

Additionally,
the Inflation Reduction Act of 2022 requires, among other things, the Secretary of the U.S. Department of Health and Human Services
(“HHS”) and the Centers for Medicare & Medicaid Services (“CMS”) to negotiate the price of a set number
of high Medicare spend drugs starting in 2026, requires rebates from manufacturers who increase their drug prices above inflation,
and makes several changes to the Medicare Part B and D that will increase manufacturer liability for drug costs previously
borne by the government and beneficiaries under the program. While it remains to be seen how the drug pricing provisions imposed by the IRA will affect the broader pharmaceutical
industry, several pharmaceutical manufacturers and other industry stakeholders have initiated and continue to pursue lawsuits challenging
the constitutionality and implementation of the IRA’s drug price negotiation provisions. It is uncertain how the drug pricing provisions
imposed by the IRA, or results on any related litigation, will impact the broader pharmaceutical industry or our business.

Further, the current presidential administration has
taken several initiatives to address drug pricing and access. For example, President Trump has signed multiple executive orders addressing
drug pricing including: on April 15, 2025, outlining several actions the Secretary of the Department of HHS must take to optimize healthcare
regulations that will provide access to prescription drugs at lower costs; on May 5, 2025, aiming to promote domestic production of critical
medicines; and on May 12, 2025, aiming to establish a “most favored nation” drug pricing policy that would tie U.S. drug prices
to the prices paid for drugs in other countries. Additionally, on November 6, 2025, CMS announced a new voluntary payment initiative called
the GENEROUS Model (GENErating cost Reductions for U.S. Medicaid Model) where drug manufacturers may voluntarily offer supplemental rebates
to participating state Medicaid programs that are intended to provide such Medicaid programs with a “most favored nation”
price for participating manufacturers’ products. It remains to be seen how such drug pricing initiatives will affect the broader
pharmaceutical industry.

At the state level, individual states are increasingly
aggressive in passing legislation and implementing regulations designed to control pharmaceutical pricing, including price or patient
reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures,
and, in some cases, designed to encourage importation from other countries and bulk purchasing. A number of states, for example, require
drug manufacturers and other entities in the drug supply chain, including health carriers, pharmacy benefit managers, wholesale distributors,
to disclose information about pricing of pharmaceuticals, including, but not limited to, information in connection with new product launches
that exceed certain levels as identified in the relevant statutes.

In some foreign countries, requirements governing drug pricing, coverage, and reimbursement vary widely from country
to country. For example, the European Union provides options
for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement
and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product,
or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on
the market.

We
expect that there will continue to be a number of federal, state, and foreign proposals to implement, among other things, drug reimbursement, coverage, and pricing controls. While we cannot
predict whether such legislative or regulatory proposals will be adopted, the adoption of such proposals could have a material adverse
effect on our business, financial condition, and profitability.

Compliance
with Environmental Laws

Compliance
with applicable environmental requirements during the years ended December 31, 2025, and 2024 has not had a material effect upon our
capital expenditures, earnings or competitive position.

19

Employees

As
of December 31, 2025, we had two full-time employees, both of whom were engaged in full-time administrative activities. None of our employees
are represented by any collective bargaining unit. We believe that we maintain good relations with our employees.

Properties

We
are a virtual company and do not lease or own any physical space. We maintain a mailing address at 945 Concord Street, Suite 1217, Framingham,
Massachusetts 01701.

Available
Information

We
are subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and, in accordance
therewith, we file periodic reports, proxy statements and other information with the Securities and Exchange Commission. We make available,
free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports
on our website at www.pulmatrix.com as soon as reasonably practicable after those reports and other information is electronically filed
with, or furnished to, the Securities and Exchange Commission.