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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (Mark
One)

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 or

 TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the transition period from ___________ to __________

 Commission
file number: 001-36199

INC.

 (Exact
name of registrant as specified in its charter)

 Delaware

 46-1821392

 (State
 or other jurisdiction of

 incorporation
 or organization)

 (I.R.S.
 Employer

 Identification
 No.)

 Crosby Drive, Suite 100

 Bedford,
 MA

 01730

 (Address
 of principal executive offices)

 (Zip
 Code)

 (781) 357-2333

 Registrant's
telephone number, including area code

 Securities
registered pursuant to Section 12(b) of the Exchange Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common
 Stock, par value $0.0001 per share

 PULM

 The
 Nasdaq Stock Market LLC

 Securities
registered pursuant to Section 12(g) of the Exchange Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes
 No

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer",
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 Emerging
 growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. Yes No

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The
aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates computed by reference to
the price at which the common equity was last sold, as of June 30, 2023, the last business day of registrant's most recently completed
second fiscal quarter, was $ 9,787,896.

 As
of March 25, 2024, the registrant had 3,652,285
shares of common stock, par value $0.0001 per share, issued and outstanding.

 DOCUMENTS
INCORPORATED BY REFERENCE

 None.

INC.

 TABLE
OF CONTENTS

 Page
 No.

 Forward-Looking
 Statements

 PART
 I

 Item
 1.

 Business.

 Item
 1A.

 Risk
 Factors.

 Item
 1B.

 Unresolved
 Staff Comments.

 Item
 1C.

 Cybersecurity.

 Item
 2.

 Properties.

 Item
 3.

 Legal
 Proceedings.

 Item
 4.

 Mine
 Safety Disclosures.

 PART
 II

 Item
 5.

 Market
 for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Item
 6.

 Reserved.

 Item
 7.

 Management's
 Discussion and Analysis of Financial Condition and Results of Operations.

 Item
 7A.

 Quantitative and Qualitative Disclosures About Market Risk.

 Item
 8.

 Financial Statements and Supplementary Data.

 Item
 9.

 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

 Item
 9A.

 Controls and Procedures.

 Item
 9B.

 Other Information.

 Item
 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

 Item
 10.

 Directors, Executive Officers and Corporate Governance.

 Item
 11.

 Executive Compensation.

 Item
 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 Item
 13.

 Certain Relationships and Related Transactions, and Director Independence.

 Item
 14.

 Principal Accountant Fees and Services.

 Item
 15.

 Exhibits, Financial Statement Schedules.

 Item
 16.

 Form 10-K Summary.

 Signatures

 i

 PART
I

 Forward-Looking
Statements

 This
Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical fact contained herein,
including statements regarding our business plans or strategies, projected or anticipated benefits or other consequences of our plans
or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings,
or other aspects of our operating results, are forward-looking statements. Words such as "anticipates," "assumes,"
"believes," "can," "could," "estimates," "expects," "forecasts,"
"guides," "intends," "is confident that," "may," "plans," "seeks,"
"projects," "targets," and "would," and their opposites and similar expressions, as well as statements
in future tense, are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of
future performance or results and may not be accurate indications of when such performance or results will actually be achieved. Forward-looking
statements are based on information we have when those statements are made or our management's good faith belief as of that time
with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially
from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include,
but are not limited to:

 the
 impact of the coronavirus ("COVID-19") pandemic and its continuing effects on the global economy and on the Company's
 ongoing and planned clinical trials;

 our
 history of recurring losses and negative cash flows from operating activities, significant future commitments and the uncertainty
 regarding the adequacy of our liquidity to pursue or complete our business objectives;

 our
 inability to carry out research, development and commercialization plans;

 our
 inability to manufacture our product candidates on a commercial scale on our own or in collaborations with third parties;

 our
 inability to complete preclinical testing and clinical trials as anticipated;

 our
 collaborators' inability to successfully carry out their contractual duties;

 termination
 of certain license agreements;

 our
 ability to adequately protect and enforce rights to intellectual property, or defend against claims of infringement by others;

 difficulties
 in obtaining financing on commercially reasonable terms, or at all;

 intense
 competition in our industry, with competitors having substantially greater financial, technological, research and development, regulatory
 and clinical, manufacturing, marketing and sales, distribution, personnel and resources than we do;

 entry
 of new competitors and products and potential technological obsolescence of our products;

 adverse
 market and economic conditions;

 our
ability to maintain compliance with the listing standards of the Nasdaq Capital Market ("Nasdaq");

 loss
 of one or more key executives or scientists; and

 difficulties
 in securing regulatory approval to market our product candidates.

 For
a more detailed discussion of these and other risks that may affect our business and that could cause our actual results to differ from
those projected in these forward-looking statements, see the risk factors and uncertainties described under the heading "Risk Factors"
in Part I, Item 1A of this Annual Report on Form 10-K. The forward-looking statements contained in this Annual Report on Form 10-K are
expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated
events, except as required by law.

 Unless
otherwise stated, references in this Annual Report on Form 10-K to "us," "we," "our," or "Company"
refer to Pulmatrix, Inc., a Delaware corporation, and its subsidiary, Pulmatrix Operating Company, Inc., a Delaware corporation.

 "iSPERSE "
is one of our trademarks used in this Annual Report on Form 10-K. Other trademarks appearing in this report are the property of their
respective holders. Solely for convenience, these and other trademarks, trade names and service marks referred to in this report appear
without the, TM and SM symbols, but those references are not intended to indicate, in any way, we or the owners of such
trademarks will not assert, to the fullest extent under applicable law, their rights to these trademarks and trade names.

 ITEM
1.
 BUSINESS.

 Overview

 We
are a clinical-stage biopharmaceutical company focused on the development of novel inhaled therapeutic products intended to prevent and
treat respiratory and other diseases with important unmet medical needs using our patented iSPERSE technology. Our
proprietary product pipeline includes treatments for central nervous system ("CNS") disorders such as acute migraine and
serious lung diseases such as Chronic Obstructive Pulmonary Disease ("COPD") and allergic bronchopulmonary aspergillosis
("ABPA"). Our product candidates are based on our proprietary engineered dry powder delivery platform, iSPERSE,
which seeks to improve therapeutic delivery to the lungs by optimizing pharmacokinetics and reducing systemic side effects to improve
patient outcomes.

 We
design and develop inhaled therapeutic products based on our proprietary dry powder delivery technology, iSPERSE, which
enables delivery of small or large molecule drugs to the lungs by inhalation for local or systemic applications. The iSPERSE
 powders are engineered to be small, dense particles with highly efficient dispersibility and delivery to airways. iSPERSE
 powders can be used with an array of dry powder inhaler technologies and can be formulated with a broad range of drug substances
including small molecules and biologics. We believe the iSPERSE dry powder technology offers enhanced drug loading
and delivery efficiency that outperforms traditional lactose-blend inhaled dry powder therapies.

 We
were incorporated in 2013 as a Delaware corporation.

 Business
Strategy

 Our
goal is 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 is aligned to this goal as we develop 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 ("CF"). Each program is
enabled by its unique iSPERSE formulation designed to achieve specific therapeutic objectives.

 We
intend to capitalize on our iSPERSE technology platform and our expertise in inhaled therapeutics to identify new product
candidates for the prevention and treatment of diseases, including those with considerable unmet medical needs and to build our product
pipeline beyond our existing candidates. In order to advance clinical trials for our therapeutic candidates and leverage the iSPERSE
 platform to enable delivery of partnered compounds, we intend to form strategic alliances with third parties, including pharmaceutical
and biotechnology companies or academic or private research institutes.

 We
expect to continue to incur substantial expenses and operating losses for at least the next several years based on our drug development
plans and in connection with our ongoing activities, as we:

 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
 T max and C max within the targeted therapeutic range for all three doses tested.
 The Phase 1 study data was presented at the American Headache Society 65 th Annual Meeting
 in June 2023.

 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.

 Terminate
 the PUR1900 Phase 2b study and seek to monetize PUR1900 in the United States.

 On
 January 8, 2024, in agreement with our partner, Cipla Technologies LLC ("Cipla"), pursuant to the Third Amendment to the
 Cipla Agreement (each as defined herein), we announced plans to stop patient enrollment at 8 subjects in the Phase 2b study of
 PUR1900, effective immediately. The decision to stop the study was unrelated to any safety concerns. This study had been ongoing
 since the first quarter of 2023. We expect to complete all Phase 2b activities by the third quarter of 2024.

 After
 the study winddown, Pulmatrix will bear no further financial responsibility for the commercialization and development activities
 as related to PUR1900 outside the United States and 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, our inhaled iSPERSE formulation
 of the antifungal drug itraconazole for indications where an orally inhaled antifungal may provide a therapeutic benefit or fulfill
 an unmet medical need.

 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 management's expertise in inhaled therapeutics and particle engineering to identify potential product
 candidates.

 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, 2023, our patent
 portfolio related to iSPERSE included approximately 143 granted patents, 19 of which are granted US patents,
 with expiration dates from 2024 to 2037, and approximately 56 additional pending patent applications in the US and other jurisdictions.
 Our in-licensed portfolio related to kinase inhibitors included approximately 276 granted patents, 33 of which are granted US patents,
 with expiration dates from 2029 to 2035, and approximately 22 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, 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.

 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.

 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.

 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.

 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.

 Homogenous
 combinations of multiple drugs.

 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

 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 be an alternative to other acute therapies. Given the oral inhaled
route of delivery, PUR3100 is anticipated to provide relief from the rapid onset of 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,
health-care 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. 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 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.

 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.

 To
the best of our knowledge, there are no other orally inhaled DHE formulations currently in development or on the market. Migranal
and Trudhesa are the two currently FDA approved intranasal formulations of DHE. Satsuma Pharmaceuticals, a subsidiary of Shin Nippon
Biomedical Laboratories ("Satsuma"), has developed a dry powder formulation of DHE for intranasal dosing and has
completed two Phase 3 clinical studies (ClinicalTrials.gov: NCT03901482 and NCT04940390). Despite failure of both clinical studies to
achieve primary endpoints, Satsuma filed an NDA in the first quarter of 2023 based on post-hoc analysis showing benefit in secondary
endpoints. In January 2024, the FDA declined to approve the treatment, citing manufacturing concerns. Satsuma plans to work with the
FDA to determine possible paths to resubmit the NDA.

 Non-Clinical

 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.

 Our
interactions with the FDA have indicated that, in addition to the planned 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. PUR3100 was well-tolerated and there was a lower incidence of nausea in PUR3100 dose groups
compared to IV DHE, and we presented the Phase 1 study data at the American Headache Society 65 th Annual Meeting in June 2023.
In contrast to IV DHE, no vomiting was observed in any of the PUR3100 dose groups. Oral inhalation of PUR3100 achieved peak exposures
in the targeted therapeutic range at all doses and the T max occurred at five minutes after dosing.

 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.

 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.

study starts may be affected by conditions related to the COVID-19 pandemic and its ongoing effects with respect to clinical study conduct
and patient enrollment. For more discussion of risks related to the COVID-19 pandemic, please see "Item 1A. RISK FACTORS—Risks
Related to Our Business".

 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.

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.

 Competition
and Market Opportunities

 There
are 18 million moderate-to-severe episodes of AECOPD in the U.S. 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.

 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

 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, were then completed. The data from both studies demonstrated
that PUR1800 is safe and well tolerated with chronic dosing, with no progression of findings from 28-day studies. We believe this indicates
potential for chronic dosing of PUR1800, within the safety margin identified, 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 AECOPD, these positive
toxicology study results could expand potential indications and value of the program.

 We
completed a Phase 1b safety, tolerability, and pharmacokinetics of PUR1800 for patients with stable moderate-severe COPD. Topline data
was 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 includes 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 PK were evaluated.

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 our iSPERSE inhaled formulation of itraconazole, an antifungal drug commercially available as an oral drug. We developed
PUR1900 for the prevention and 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.

 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, and a dry powder formulation of voriconazole being developed by TFF
Pharmaceuticals. 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 is currently running a clinical trial with Dupilumab
(NCT04442269) for the treatment of ABPA in asthma. This trial, which is focused on prevention of exacerbations in individuals with
at least one or more severe respiratory exacerbations, completed in February 2024 and is pending results.

 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.

 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.

 Our
partner Cipla plans to continue clinical development outside the United States and is currently conducting a Phase 2 study in India.
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.

 Business

 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.

 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.

 PUR1900

 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 if Cipla successfully transfers manufacturing
of the Product for the Cipla Territory to a manufacturing site determined by Cipla, we will become entitled to a royalty equal to 2%
of net sales in the Cipla Territory.

 We
and Cipla are each responsible for 60% and 40%, respectively, of our overhead costs and the time spent by our employees and consultants
on development of the Product ("Direct Costs"). We will share 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.

to the Third Amendment, we and Cipla agreed to stop patient enrollment at 8 subjects in the ongoing Phase 2b clinical study. During the
period commencing on January 6, 2024 and ending July 30, 2024 (the "Wind Down Period"), we will 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.
We will share costs with Cipla during the Wind Down Period in the same proportions discussed above, but subject to a maximum reimbursement
amount by Cipla as approved by the joint steering committee.

 After
the conclusion of the Wind Down Period, Pulmatrix will bear no 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. We will
receive 2% royalties on any potential future net sales by Cipla outside the United States.

 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, 2023, our patent portfolio
related to iSPERSE included approximately 143 granted patents, 19 of which are granted US patents, with expiration
dates from 2024 to 2037, and approximately 56 additional pending patent applications in the US and other jurisdictions. Our in-licensed
portfolio related to kinase inhibitors included approximately 276 granted patents, 33 of which are granted US patents, with expiration
dates from 2029 to 2035, and approximately 22 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, and
the United States that cover certain formulations and methods of use relevant to our PUR3100 program.

 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 small-scale production capabilities and generally perform 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.

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

and Development

 For
fiscal years ended December 31, 2023 and 2022, we spent approximately $15.5 million and $18.2 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.

 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 and found acceptable by the FDA before human clinical trials
 may commence;

 Performance
 of adequate and well-controlled human clinical trials in accordance with 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.

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.

 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.

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. 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.

 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
rely, and expect to continue to rely, 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).

 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

 In
the United States and other countries, sales of any products for which we receive regulatory approval for commercial sale will depend
in part on the availability of reimbursement from third-party payers, including government payers, managed care providers, private health
insurers and other organizations. Each third-party payer 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 payers 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. Third-party reimbursement adequate to enable us to
realize an appropriate return on our investment in research and product development may not be available for our products.

 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, which may affect the marketing of our products. The
MMA also introduced a new reimbursement methodology. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries,
private payers 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 payers.

 More
recently, the Inflation Reduction Act of 2022 requires, among other things, the Secretary of the U.S. Department of Health and Human
Services 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 D benefit that will increase manufacturer
liability for drug costs previously borne by the government and beneficiaries under the program.

 In
addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements
governing drug pricing 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 and state proposals to implement governmental 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, 2023 and 2022 has not had a material effect upon our capital
expenditures, earnings or competitive position.

 Employees

 As
of December 31, 2023, we had 22 full-time employees, 19 of whom were engaged in full-time research and development activities. None of
our employees are represented by any collective bargaining unit. We believe that we maintain good relations with our employees.

 Properties

 Our
corporate headquarters is located in Bedford, Massachusetts. We currently lease approximately 20,000 square feet of office and lab space
in Bedford, Massachusetts under a lease that was originally executed on January 7, 2022. We moved into our headquarters during the third
quarter of 2023. The lease has an initial noncancellable term of ten years.

 We
terminated our previous lease, as planned, for our previous headquarters in Lexington, Massachusetts, also during the third quarter of
2023.

 We
believe that our facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available
in the future on commercially reasonable terms for our future growth.

 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.

 ITEM
 1A.

 RISK
 FACTORS.

 The
following risk factors, together with all of the other information included or incorporated in this Annual Report on Form 10-K, should
be carefully considered. If any of the following risks, either alone or taken together, or other risks not presently known to us or that
we currently believe to not be significant, develop into actual events, then our business, financial condition, results of operations
or prospects could be materially adversely affected. If that happens, the market price of our common stock could decline, and stockholders
may lose all or part of their investment.

 Risk
Factor Summary

 We
are providing the following summary of the risk factors contained in this Annual Report on Form 10-K to enhance the readability and accessibility
of our risk factor disclosures. We encourage you to carefully review the full risk factors contained in this Annual Report on Form 10-K
in their entirety for additional information regarding the material factors that make an investment in our securities speculative or
risky. These risks and uncertainties include, but are not limited to, the following:

 We
 have a history of net losses and may experience future losses;

 We
 will need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult
 to obtain and could dilute our stockholders' ownership interests;

 We
 may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions
 to our management;

 We
 are a clinical development stage biopharmaceutical company and have never been profitable;

 All
 of our product candidates are still under development, and there can be no assurance of successful commercialization of any of our
 products;

 Drug
 development is a long, expensive, and inherently uncertain process with a high risk of failure at every stage of development,
 and results of earlier studies and trials may not be predictive of future trial results;

 If
 our collaborators are not successful, we may not effectively develop and market some of our therapeutic candidates;

 We
 may not be able to attract, retain, or manage highly qualified personnel, which could adversely impact our business;

 We
 face substantial competition in the development of our product candidates and may not be able to compete successfully, and our product
 candidates may be rendered obsolete by rapid technological change;

 If
 the third parties on which we rely to conduct our clinical trials, to manufacture clinical trial materials, and to assist us with
 preclinical development do not perform as contractually required or expected, we may not be able to obtain regulatory clearance or
 approval for, or to commercialize, our products;

 Our
 failure to successfully acquire, develop and market additional drug candidates or approved drug products could impair our ability
 to grow;

 We
 may be subject to claims that our employees, independent consultants or agencies have wrongfully used or inadvertently disclosed
 confidential information of third parties;

 Market
 and economic conditions may negatively impact our business, financial condition and share price;

 The
 COVID-19 pandemic and its ongoing effects have caused interruptions or delays of our clinical studies and may continue to have a
 substantial adverse effect on our business;

 Our
 ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations;

 Our business is subject to cybersecurity risks.

 Our product candidates
 must undergo rigorous nonclinical and clinical testing, and we must obtain regulatory approvals, which could be costly and time-consuming
 and subject us to unanticipated delays or prevent us from marketing any products;

 We cannot be certain that
 any of our current and future product candidates will receive regulatory approval, and without regulatory approval we will not be
 able to market our product candidates;

 We have limited experience
 in filing and pursuing applications necessary to gain regulatory approvals, which may impede our ability to obtain timely approvals
 from the U.S. Food and Drug Administration ("FDA") or foreign regulatory agencies, if at all;

 We and our third-party
 manufacturers are, and will be, subject to regulations of the FDA and other foreign regulatory authorities;

 We may be unable to adequately
 protect or enforce our rights to intellectual property, causing us to lose valuable rights. Loss of patent rights may lead us to
 lose market share and anticipated profits;

 Legal proceedings or third-party
 claims of intellectual property infringement and other challenges may require us to spend substantial time and money and could prevent
 us from developing or commercializing our product candidates;

 The price of our common
 stock is subject to fluctuation and has been, and may, continue to be volatile;

 Financial reporting obligations
 of being a public company in the United States are expensive and time-consuming, and our management may be required to devote substantial
 time to compliance matters;

 Anti-takeover provisions
 under Delaware corporate law may make it difficult for our stockholders to replace or remove our board of directors and could deter
 or delay third parties from acquiring us, which may be beneficial to our stockholders; and

 Protective provisions in
 our charter and bylaws could prevent a takeover which could harm our stockholders.

 Risks
Related to Our Business

 We
have a history of net losses and may experience future losses.

 We
have yet to establish any history of profitable operations. We reported a net loss of $14.1 million and $18.8 million for the fiscal
years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $287.6 million. We expect
to incur additional operating losses for the foreseeable future. There can be no assurance that we will be able to achieve sufficient
revenues throughout the year or be profitable in the future.

 We
will need to raise additional capital to meet our business requirements in the future and such capital raises may be costly or difficult
to obtain and could dilute our stockholders' ownership interests.

 Our
current capital will be sufficient to enable us to continue operations for at least 12 months following the filing date of this Annual
Report. In order to continue our operations and to fully realize all of our business objectives, absent any non-dilutive funding from
a strategic partner or some other strategic transactions, we will need to raise additional capital, which may not be available on reasonable
terms, or at all. For instance, we will need to raise additional funds to accomplish the following:

 advancing
 the research and development of our therapeutic candidates;

 investing
 in protecting and expanding our intellectual property portfolio, including filing for additional patents to strengthen our intellectual
 property rights;

 hiring
 and retaining qualified management and key employees;

 responding
 to competitive pressures; and

 maintaining
 compliance with applicable laws.

 Any
additional capital raised through the sale of equity or equity backed securities will dilute our stockholders' ownership percentages
and could also result in a decrease in the market value of our equity securities.

 The
terms of any securities issued by us in future financing transactions may be more favorable to new investors, and may include preferences,
superior voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect on the holders
of any of our securities then outstanding.

 Furthermore,
any additional capital financing that we may need in the future may not be available on terms favorable to us, or at all. If we are unable
to obtain such additional financing on a timely basis, we may have to curtail our development activities and growth plans and/or be forced
to sell assets, perhaps on unfavorable terms, which would have a material adverse effect on our business, financial condition and results
of operations, and ultimately could be forced to discontinue our operations and liquidate, in which event it is unlikely that stockholders
would receive any distribution on their shares. Further, we may not be able to continue operating if we do not generate sufficient revenues
from operations needed to stay in business.

 In
addition, we may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting
fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash
expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial
condition and cause further dilution to our stockholders.

 We
are a clinical development stage biopharmaceutical company and have never been profitable. We expect to incur additional losses in the
future and may never be profitable.

 We
are a clinical development stage biopharmaceutical company. We have not commercialized any product candidates or recognized any revenues
from our product sales. All of our product candidates are still in the preclinical or clinical development stage, and none have been
approved for marketing or are currently being marketed or commercialized. Our product candidates will require substantial additional
development, clinical studies, regulatory clearances, and additional investments of time and capital before they can be commercialized.
We cannot be certain when or if any of our product candidates will obtain the required regulatory approval.

 We
have never been profitable and have incurred net losses each year since our inception. Our losses are principally a result of research
and development and general administrative expenses in support of our operations. We may incur substantial additional losses as we continue
to focus our resources on prioritizing, selecting and advancing our product candidates. Our ability to generate revenue and achieve profitability
depends mainly upon our ability, alone or with others, to successfully develop our product candidates, obtain the required regulatory
approvals in various territories and commercialize our product candidates. We may be unable to achieve any or all of these goals with
regard to our product candidates. As a result, we may never be profitable or achieve significant and/or sustained revenues.

 All
of our product candidates are still under development, and there can be no assurance of successful commercialization of any of our products.

 All
of our research and development programs are in developmental stages. One or more of our product candidates may fail to meet safety and
efficacy standards in human testing, even if those product candidates are found to be effective in animal studies. To develop and commercialize
inhaled therapeutic treatment for allergic bronchopulmonary aspergillosis ("ABPA"), acute migraine, and other iSPERSE -based
product candidates, we must provide the FDA and foreign regulatory authorities with human clinical and non-clinical animal data that
demonstrate adequate safety and effectiveness. To generate these data, we will have to subject our product candidates to substantial
additional research and development efforts, including extensive non-clinical studies and clinical testing. Our approach to drug development
may not be effective or may not result in the development of any drug. Currently our development efforts are primarily focused on PUR3100,
PUR1800 and PUR1900. Even if PUR3100, PUR1800 and PUR1900 or our other product candidates are successful when tested in animals, such
success would not be a guarantee of the safety or effectiveness of such product candidates in humans. It can take several years for a
product to be approved and we may not be successful in bringing any therapeutic candidates to the market. A new drug may appear promising
at an early stage of development or after clinical trials and never reach the market, or it may reach the market and not sell, for a
variety of reasons. For example, the drug may:

 be
 shown to be ineffective or to cause harmful side effects during preclinical testing or clinical trials;

 fail
 to receive regulatory approval on a timely basis or at all;

 be
 difficult to manufacture on a large scale;

 not
 be economically viable;

 not
 be prescribed by doctors or accepted by patients;

 fail
 to receive a sufficient level of reimbursement from government, insurers or other third-party payors; or

 infringe
 on intellectual property rights of any other party.

 If
our delivery platform technologies or product development efforts fail to generate product candidates that lead to the successful development
and commercialization of products, our business and financial condition will be materially adversely affected.

 Drug
development is a long, expensive and inherently uncertain process with a high risk of failure at every stage of development, and results
of earlier studies and trials may not be predictive of future trial results.

 We
have a number of proprietary drug candidates in research and development ranging from the early research phase through preclinical testing
and clinical trials. Preclinical testing and clinical trials are long, expensive and highly uncertain processes. It will take us several
years to complete clinical trials and we may not have the resources to complete the development and commercialization of any of our proposed
drug candidates. The start or end of a clinical trial, such as our Phase 2b trial for PUR1900 and future trials, can often be delayed
or halted due to changing regulatory requirements, manufacturing challenges, required clinical trial administrative actions, slower than
anticipated patient enrollment, changing standards of care, availability or prevalence of use of a competitor drug or required prior
therapy, clinical outcomes, or financial constraints of us and our partners.

 Drug
development is a highly uncertain scientific and medical endeavor, and failure can unexpectedly occur at any stage of preclinical and
clinical development. Typically, there is a high rate of attrition for drug candidates in preclinical and clinical trials due to scientific
feasibility, safety, efficacy, changing standards of medical care and other variables. The risk of failure is heightened for our drug
candidates that are based on new technologies, such as the application of our dry powder delivery platform, iSPERSE,
including PUR3100, PUR1800, PUR1900 and other iSPERSE -based drug candidates currently in research or preclinical
development. The failure of one or more of our iSPERSE -based drug candidates could have a material adverse effect
on our business, financial condition, and results of operations.

 In
addition, the results of preclinical studies and clinical trials of previously published iSPERSE -based products
may not necessarily be indicative of the results of our future clinical trials. The design of our clinical trials is based on many assumptions
about the expected effects of inhaled drugs used historically in the industry and if those assumptions are incorrect, the trials may
not produce statistically significant results. Preliminary results may not be confirmed upon full analysis of the detailed results of
an early clinical trial. Product candidates in later stages of clinical trials may fail to show safety and efficacy sufficient to support
intended use claims despite having progressed through initial clinical trials. The data collected from clinical trials of our product
candidates may not be sufficient to obtain regulatory approval in the United States or elsewhere. Because of the uncertainties associated
with drug development and regulatory approval, we cannot determine if, or when, we may have an approved product for commercialization
or whether we will ever achieve sales of or profits on our product candidates or those we may pursue in the future.

 If
our collaborators are not successful, or breach their agreements with us, we may not effectively develop and market some of our therapeutic
candidates.

 At
this time, we have entered into a co-development agreement regarding one of our therapeutic candidates and, as a result, we no
longer have complete control over the development of this candidate. We may also enter into co-development agreements for our other
therapeutic candidates in the future. If our collaborators do not successfully carry out their contractual duties or meet expected
deadlines, or they otherwise breach their contractual obligations to us, we may be delayed or may not obtain regulatory approval
for, or commercialize, our product candidates. We are also subject to the terms of such co-development agreements that may affect
our ability to develop and manufacture our therapeutic candidates. As a result of such limitations, we may be unable to pursue the
most efficient or profitable path in developing our therapeutic candidates.

 If
our relationships with these collaborators terminate, we believe that we would be able to enter into arrangements with alternative third
parties. However, replacing any collaborator could delay our clinical trials and could jeopardize our ability to obtain regulatory approvals
and commercialize our product candidates on a timely basis, if at all.

 We
may not be able to attract, retain, or manage highly qualified personnel, which could adversely impact our business.

 Our
future success and ability to compete in the biopharmaceutical industry is substantially dependent on our ability to identify, attract,
and retain highly qualified key managerial, scientific, medical, and operations personnel. The market for key employees in the biopharmaceutical,
pharmaceutical and biotechnology industries is competitive. The loss of the services of any of our principal members of management or
key employees without an adequate replacement or our inability to hire new employees as needed could delay our product development efforts,
harm our ability to sell our products or otherwise negatively impact our business.

 The
scientific, research and development personnel upon whom we rely to operate our business have expertise in certain aspects of drug development
and clinical development, and it may be difficult to retain or replace these individuals. We conduct our operations at our facilities
in Bedford, Massachusetts, within the greater Boston area, and this region is headquarters to many other biopharmaceutical, biotechnology,
pharmaceutical, and medical technology companies, as well as many academic and research institutions, and, therefore, we face increased
competition for technical and managerial personnel in this region.

 In
addition, we have scientific, medical and clinical advisors who assist us in designing and formulating our products and with development
and clinical strategies. These advisors are not our employees and may have commitments to, or consulting or advisory contracts with,
other entities that may limit their availability to us, or may have arrangements with other companies to assist in the development of
products that may compete with ours.

 Despite
our efforts to retain valuable employees, members of our management and scientific and development teams may terminate their employment
with us at any time. Although we have written employment offer letter agreements with our executive officers, our executive officers
can leave their employment at any time, for any reason, with 30 days' notice. A sustained labor shortage or increased turnover
rates within our employee base, caused by the COVID-19 pandemic and its ongoing effects or as a result of general macroeconomic factors,
could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and
could negatively affect our ability to efficiently operate our manufacturing and distribution facilities and overall business. If we
are unable to hire and retain employees capable of performing at a high-level, or if mitigation measures we may take to respond to a
decrease in labor availability, such as overtime and third-party outsourcing, have unintended negative effects, our business could be
adversely affected. An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, caused by the COVID-19 pandemic
or as a result of general macroeconomic factors, could have a material adverse impact on our operations, results of operations, liquidity
or cash flows. The loss of the services of any of our executive officers or our other key employees and our inability to find suitable
replacements could potentially harm our business, financial condition and prospects. We do not maintain "key man" insurance
policies on the lives of these individuals or the lives of any of our other employees.

 We
face substantial competition in the development of our product candidates and may not be able to compete successfully, and our product
candidates may be rendered obsolete by rapid technological change.

 The
pharmaceutical and biotechnology industry is highly competitive, and we face substantial competition from many pharmaceutical, biopharmaceutical
and biotechnology companies that are researching and marketing products designed to address the indications for which we are currently
developing therapeutic candidates or for which we may develop product candidates in the future.

 Many
of our existing or potential competitors have, or have access to, substantially greater financial, research and development, production,
and sales and marketing resources than we do and have a greater depth and number of experienced managers. As a result, our competitors
may be better equipped than us to develop, manufacture, market and sell competing products. In addition, gaining favorable reimbursement
is critical to the success of our product candidates. We are aware of many established pharmaceutical companies in the United States
and other parts of the world that have or are developing technologies for inhaled drug delivery for the prevention and treatment of respiratory
diseases, including GlaxoSmithKline, Mereo BioPharma, Mylan, Savara, Insmed, Satsuma, Bristol-Meyers, TFF Pharmaceuticals, Zambon Pharma
and Pulmocide, which we consider our potential competitors in this regard. If we are unable to compete successfully with these and other
potential future competitors, we may be unable to grow or generate revenue.

 The
rapid rate of scientific discoveries and technological changes could result in one or more of our product candidates becoming obsolete
or noncompetitive. Our competitors may develop or introduce new products that render our iSPERSE delivery technology
and other product candidates less competitive, uneconomical or obsolete. Some of these technologies may have an entirely different approach
or means of accomplishing similar therapeutic effects compared to our drug candidates. Our future success will depend not only on our
ability to develop our product candidates but to improve them and keep pace with emerging industry developments. We cannot assure you
that we will be able to do so.

 We
also expect to face increasing competition from universities and other non-profit research organizations. These institutions carry out
substantial research and development in the areas of respiratory diseases. These institutions are becoming increasingly aware of the
commercial value of their findings and are more active in seeking patent and other proprietary rights as well as licensing revenues.

 The
potential acceptance of therapeutics that are alternatives to ours may limit market acceptance of our product candidates, even if commercialized.
Respiratory diseases, including our targeted diseases and conditions, can also be treated by other medication or drug delivery technologies.
These treatments may be widely accepted in medical communities and have a longer history of use. The established use of these competitive
drugs may limit the potential for our product candidates to receive widespread acceptance if commercialized.

 If
the third parties on which we rely to conduct our clinical trials and to assist us with preclinical development do not perform as contractually
required or expected, we may not be able to obtain regulatory clearance or approval for, or to commercialize, our products.

 We
do not have the ability to independently conduct our preclinical and clinical trials for our products and we must rely on third parties,
such as contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct such trials.
If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if
these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere
to our clinical protocols or regulatory requirements or for other reasons, our preclinical development activities or clinical trials
may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize,
our products on a timely basis, if at all, and our business, operating results and prospects may be adversely affected. Furthermore,
our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of our control, such
as, but not limited to, patient enrollment.

 We
rely on third-party contract vendors to manufacture and supply us with high quality active pharmaceutical ingredients and manufacture
our therapeutic candidates in the quantities we require on a timely basis.

 We
currently do not manufacture any active pharmaceutical ingredients ("APIs"). Instead, we rely on third-party vendors for
the manufacture and supply of our APIs that are used to formulate our therapeutic candidates. We also do not currently own or operate
manufacturing facilities and therefore rely, and expect to continue to rely, on third parties to manufacture clinical and commercial
quantities of our therapeutic candidates and for quality assurance related to regulatory compliance. If these suppliers or manufacturers
are incapable or unwilling to meet our current or future needs at our standards or on acceptable terms, if at all, we may be unable to
locate alternative suppliers or manufacturers on acceptable terms, if at all, or produce necessary materials or components on our own.

 While
there may be several alternative suppliers of API in the market, changing API suppliers or finding and qualifying new API suppliers can
be costly and can take a significant amount of time. Many APIs require significant lead time to manufacture. There can also be challenges
in maintaining similar quality or technical standards from one manufacturing batch to the next. We could experience a delay in conducting
clinical trials of or obtaining regulatory approval for PUR3100, PUR1800, PUR1900 or our other drug candidates and incur additional costs
if we changed API suppliers for any reason. Similarly, replacing our manufacturers could cause us to incur added costs and experience
delays in identifying, engaging, qualifying and training any such replacements.

 If
we are not able to find stable, affordable, high quality, or reliable supplies of the APIs, or if we are unable to maintain our existing
or future third-party manufacturing arrangements, we may not be able to produce enough supply of our therapeutic candidates or commercialize
any therapeutic candidates on a timely and competitive basis, which could adversely affect our business, financial condition or results
of operations.

 Supply
chain and shipping disruptions may result in shipping delays, a significant increase in shipping costs, and could increase product costs
and result in lost sales and reputational damage, which may have a material adverse effect on our business, operating results and financial
condition.

 Our
third-party manufacturers and suppliers have experienced, and may continue to experience, supply chain disruption and shipping
disruptions, including disruptions or delays in loading container cargo in ports of origin or off-loading cargo at ports of
destination, as a result of the COVID-19 pandemic and its ongoing effects, congestion in port terminal facilities, labor supply and shipping container
shortages, inadequate equipment and persons to load, dock and offload container vessels and for other reasons. These disruptions may
impact our ability to receive our raw materials and certain components required for the manufacture of our clinical trial materials
or products in the future, to distribute our products in a cost-effective and timely manner and to meet demand, all of which could
have an adverse effect on our financial condition and results of operations. There can be no assurance that further unforeseen
events impacting the supply chain will not have a material adverse effect on us in the future. Additionally, the impacts that supply
chain disruptions have on our third-party manufacturers and suppliers are not within our control. It is not currently possible to
predict how long it will take for these supply chain disruptions to cease or ease. Prolonged supply chain disruption that may impact
us or our manufacturers and suppliers could interrupt or delay our clinical trials, product manufacturing, increase raw material and
product lead times, increase raw material and product costs, impact our ability to meet customer demand and result in lost sales and
reputational damage, all of which could have a material adverse effect on our business, financial condition and results of
operations.

 We
may not be successful in negotiating for an appropriate price in a future sale or assignment of our rights related to our current drug
candidates.

 We
may seek to sell or assign our rights related to our current drug candidates. If completed, any such sale or assignment may be at a substantial
discount, the consideration received may not accurately represent the value of the assets sold or assigned and our stockholders may not
be entitled to participate in the future prospects of such drug candidates.

 Our
failure to successfully acquire, develop and market additional drug candidates or approved drug products could impair our ability to
grow.

 As
part of our growth strategy, we may evaluate, acquire, license, develop and/or market additional product candidates and technologies,
subject to the availability of adequate financing. However, our internal research capabilities are limited, and we may be dependent upon
pharmaceutical and biotechnology companies, academic scientists and other researchers to sell or license products or technology to us.
The success of this strategy depends partly upon our ability to identify, select and acquire promising pharmaceutical product candidates
and products. The process of proposing, negotiating and implementing a license or acquisition of a product candidate or approved product
is lengthy and complex. Other companies, including some with substantially greater financial, marketing and sales resources, may compete
with us for the license or acquisition of product candidates and approved products. We have limited resources to identify and execute
the acquisition or in-licensing of third-party products, businesses and technologies and integrate them into our current infrastructure.
Moreover, we may devote resources to potential acquisitions or in-licensing opportunities that are never completed, or we may fail to
realize the anticipated benefits of such efforts. We may not be able to acquire the rights to additional product candidates on terms
that we find acceptable, or at all.

 Any
product candidate that we acquire may require additional development efforts prior to commercial sale, including extensive clinical testing
and approval by the FDA and applicable foreign regulatory authorities. All product candidates are prone to risks of failure typical of
pharmaceutical product development, including the possibility that a product candidate will not be shown to be sufficiently safe and
effective for approval by regulatory authorities. In addition, we cannot provide assurance that any products that we develop or approved
products that we acquire will be manufactured profitably or achieve market acceptance. We cannot guarantee that we will be able to successfully
conduct the preclinical studies of the identified potential product candidates as anticipated.

 Our
business strategy may include entry into additional collaborative or license agreements. We may not be able to enter into collaborative
or license agreements or may not be able to negotiate commercially acceptable terms for these agreements.

 Our
current business strategy may include the entry into additional collaborative or license agreements for the development and commercialization
of our product candidates and technologies. The negotiation and consummation of these types of agreements typically involve simultaneous
discussions with multiple potential collaborators or licensees and require significant time and resources. In addition, in attracting
the attention of pharmaceutical and biotechnology company collaborators or licensees, we compete with numerous other third parties with
product opportunities as well as the collaborators' or licensees' own internal product opportunities. We may not be able
to consummate collaborative or license agreements, or we may not be able to negotiate commercially acceptable terms for these agreements.

 If
we do enter into such arrangements, we could be dependent upon the subsequent success of these other parties in performing their respective
responsibilities and the cooperation of our partners. Our collaborators may not cooperate with us or perform their obligations under
our agreements with them. We cannot control the amount and timing of our collaborators' resources that will be devoted to researching
our product candidates pursuant to our collaborative agreements with them. Our collaborators may choose to pursue existing or alternative
technologies in preference to those being developed in collaboration with us. If we do not consummate collaborative or license agreements,
we may use our financial resources more rapidly on our product development efforts, continue to defer certain development activities
or forego the exploitation of certain geographic territories, any of which could have a material adverse effect on our business prospects.
Further, we may not be successful in overseeing any such collaborative arrangements. If we fail to establish and maintain necessary collaborative
or license relationships, our business prospects could suffer.

 We
may be subject to claims that our employees, independent consultants or agencies have wrongfully used or inadvertently disclosed confidential
information of third parties.

 We
employ individuals and contract with independent consultants and agencies that may have previously worked at or conducted business with
third parties; and, we may be subject to claims that we or our employees, consultants or agencies have inadvertently or otherwise used
or disclosed confidential information of our employees' former employers or other third parties. We may also be subject to claims
that our employees' former employers or other third parties have an ownership interest in our patents. Litigation may be necessary
to defend against these claims. There is no guarantee of success in defending these claims, and if we are successful, litigation could
result in substantial cost and be a distraction to our management and other employees.

 Market
and economic conditions may negatively impact our business, financial condition and share price.

 Concerns
over inflation, geopolitical issues, the U.S. financial markets and a declining real estate market, unstable global credit markets and
financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished liquidity and credit
availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations
of slower global economic growth going forward, increased unemployment rates, and increased credit defaults in recent years. Our general
business strategy may be adversely affected by any such economic downturns, volatile business environments and continued unstable or
unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary
debt or equity financing more difficult to complete, more costly, and more dilutive. In addition, there is a risk that one or more of
our current and future service providers, manufacturers, suppliers, hospitals and other medical facilities, our third-party payors, and
other partners could be negatively affected by difficult economic times, which could adversely affect our ability to attain our operating
goals on schedule and on budget or meet our business and financial objectives.

 The
COVID-19 pandemic and its ongoing effects have caused interruptions or delays of our clinical studies and may continue to have a substantial
adverse effect on our business.

 In May 2023, the World Health Organization
determined that COVID-19 no longer fit the definition of a public health emergency and the U.S. government announced its plan to let
the declaration of a public health emergency associated with COVID-19 expire on May 11, 2023. The
global health crisis caused by the COVID-19 pandemic and its ongoing effects has and may continue to negatively impact global
economic activity, which, despite progress in vaccination efforts, remains uncertain and cannot be predicted with confidence. The
ultimate impact of current and new COVID-19 variants cannot be predicted at this time and could depend on numerous factors,
including vaccination rates among the population, the effectiveness of COVID-19 vaccines against new variants and the response by
governmental bodies and regulators. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact
of the COVID-19 pandemic and its ongoing effects on our business.

 Moreover, the COVID-19 pandemic has had and may continue to have indeterminable adverse effects on general commercial activity and the
world economy, including market disruption and volatility, and the market price of our common stock. Our business and results of operations
have been and may continue to be adversely affected to the extent that COVID-19 or any other epidemic harms the global economy generally.

 In the past, COVID-19 has delayed enrollment in our clinical trials. For example, in
April 2020, we were notified that 11 out of 21 clinical sites suspended enrollment in the PUR1900 clinical study due to issues associated
with the COVID-19 pandemic. In July 2020, we terminated our Phase 2 clinical study for PUR1900 as a result of the disruptions and safety
concerns caused by the COVID-19 pandemic.

 To
the extent we cannot secure sites to enroll patients, patients remain or become subject again to government "stay at home"
mandates, patients feel like they cannot safely visit trial sites or patients drop out due to COVID-19 related issues, such events could,
in the future, delay our current and future clinical trials and impact enrollment generally for clinical trials, which could have an
adverse effect on the operation of and results from our clinical trials and on our other business operations.

 If
we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be
impaired, which could harm our operating results, our ability to operate our business and investors' views of us.

 Ensuring
that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements
on a timely basis is a costly and time-consuming effort that will need to be evaluated frequently. Section 404 of the Sarbanes-Oxley
Act of 2002 (the "Sarbanes-Oxley Act") requires public companies to conduct an annual review and evaluation of their internal
controls. Our failure to maintain the effectiveness of our internal controls in accordance with the requirements of the Sarbanes-Oxley
Act could have a material adverse effect on our business. We could lose investor confidence in the accuracy and completeness of our financial
reports, which could have an adverse effect on the price of our common stock.

 Our
ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations

 Our
ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations. In general,
under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code") a corporation that undergoes an "ownership
change" is subject to annual limitations on its ability to use its pre-change net operating loss carryforwards or other tax attributes
("NOLs"), to offset future taxable income or reduce taxes. Our past issuances of stock and other changes in our stock ownership
may have resulted in ownership changes within the meaning of Section 382 of the Code; accordingly, our pre-change NOLs may be subject
to limitation under Section 382. If we determine that we have not undergone an ownership change, the Internal Revenue Service could challenge
our analysis, and our ability to use our NOLs to offset taxable income could be limited by Section 382 of the Code. Future changes in
our stock ownership, some of which are outside of our control, could result in ownership changes under Section 382 of the Code further
limiting our ability to utilize our NOLs. Furthermore, our ability to use NOLs of companies that we may acquire in the future may be
subject to limitations. For these reasons, we may not be able to use a material portion of the NOLs, even if we attain profitability.

 Our business is subject to cybersecurity
risks.

 Our
operations are increasingly dependent on information technologies and services. Threats to information technology systems associated
with cybersecurity risks and cyber incidents or attacks continue to grow, and include, among other things, storms and natural disasters,
terrorist attacks, utility outages, theft, viruses, phishing, malware, design defects, human error, and complications encountered as
existing systems are maintained, repaired, replaced, or upgraded. Risks associated with these threats include, among other things:

 theft
 or misappropriation of funds;

 loss,
 corruption, or misappropriation of intellectual property, or other proprietary, confidential
 or personally identifiable information (including supplier, clinical data or employee data);

 disruption
 or impairment of our and our business operations and safety procedures;

 damage
 to our reputation with our potential partners, patients and the market;

 exposure
 to litigation;

 increased
 costs to prevent, respond to or mitigate cybersecurity events.

 Although
we utilize various procedures and controls to mitigate our exposure to such risk, cybersecurity attacks and other cyber events are evolving
and unpredictable. Moreover, we have no control over the information technology systems of third parties conducting our clinical trials,
our suppliers, and others with which our systems may connect and communicate. As a result, the occurrence of a cyber incident could go
unnoticed for a period of time.

 We
have cybersecurity insurance coverage in the event we become subject to various cybersecurity attacks, however, we cannot ensure that
it will be sufficient to cover any particular losses we may experience as a result of such cyberattacks. Any cyber incident could have
a material adverse effect on our business, financial condition and results of operations.

 Risks
Related to Regulatory Matters

 Our
product candidates must undergo rigorous nonclinical and clinical testing, and we must obtain regulatory approvals, which could be costly
and time-consuming and subject us to unanticipated delays or prevent us from marketing any products. We cannot be certain that any of
our current and future product candidates will receive regulatory approval, and without regulatory approval we will not be able to market
our product candidates.

 Our
ability to generate revenue related to product sales, if ever, will depend on the successful development and regulatory approval of our
product candidates. We currently have no products approved for sale, and we cannot guarantee that we will ever have marketable products.
The development of a product candidate and issues relating to its approval and marketing are subject to extensive regulation, including
regulation for safety, efficacy and quality, by the FDA in the United States and comparable regulatory authorities in other countries,
with regulations differing from country to country. The FDA regulations and the regulations of comparable foreign regulatory authorities
are wide-ranging and govern, among other things:

 design, development, manufacture and testing;

 labeling;

 storage and shipping;

 pre-market
 clearance or approval;

 advertising
 and promotion; and

 sales and distribution.

testing can be costly and take many years, and the outcome is uncertain and susceptible to varying interpretations. We cannot predict
whether our current or future trials and studies will adequately demonstrate the safety and efficacy of any of our product candidates
or whether regulators will agree with our conclusions regarding the preclinical studies and clinical trials we have conducted to date,
including the clinical trials for PUR1900. The clinical trials of our product candidates may not be completed on schedule, the FDA or
foreign regulatory agencies may order us to stop or modify our research, or these agencies may not ultimately approve any of our product
candidates for commercial sale. The data collected from our clinical trials may not be sufficient to support regulatory approval of our
various product candidates. Even if we believe the data collected from our clinical trials are sufficient, the FDA has substantial discretion
in the approval process and may disagree with our interpretation of the data.

 We
are not permitted to market our product candidates in the United States until we receive approval of an NDA
from the FDA. Obtaining approval of an NDA is a lengthy, expensive and uncertain process, and we may not be successful in obtaining approval.
The FDA review processes can take years to complete and approval is never guaranteed. We cannot be certain that any of our submissions
will be accepted for filing and review by the FDA.

 The
requirements governing the conduct of clinical trials and manufacturing and marketing of our product candidates outside the United States
vary widely from country to country. Foreign approvals may take longer to obtain than FDA approvals and can require, among other things,
additional testing and different clinical trial designs. Foreign regulatory approval processes include essentially all of the risks associated
with the FDA approval processes. Some of those agencies also must approve prices of the products. Approval of a product by the FDA does
not ensure approval of the same product by the health authorities of other countries, or vice versa. In addition, changes in regulatory
policy in the United States or in foreign countries for product approval during the period of product development and regulatory agency
review of each submitted new application may cause delays or rejections.

 If
we are unable to obtain approval from the FDA or other regulatory agencies for our product candidates, or if, subsequent to approval,
we are unable to successfully market and commercialize our product candidates, we will not be able to generate sufficient revenue to
become profitable. Furthermore, the introduction of government price controls or other price-reducing regulations may affect the prices we obtain on our product
candidates, if approved and commercialized.

 We
have limited experience in filing and pursuing applications necessary to gain regulatory approvals, which may impede our ability to obtain
timely approvals from the FDA or foreign regulatory agencies, if at all.

 As
a company, we have no experience in late-stage regulatory filings, such as preparing and submitting NDAs, which may place us at risk
of delays, overspending and human resources inefficiencies. Any delay in obtaining, or inability to obtain, regulatory approval could
harm our business.

 Any
failure by us to comply with existing regulations could harm our reputation and operating results.

 We
will be subject to extensive regulation by U.S. federal and state and foreign governments in each of the markets where we intend to sell
our product candidates if and after we are approved. If we fail to comply with applicable regulations, including the FDA's pre-or
post-approval cGMP requirements, then the FDA or other foreign regulatory authorities could
sanction us. Even if a drug is FDA-approved, regulatory authorities may impose significant restrictions on a product's indicated
uses or marketing or impose ongoing requirements for potentially costly post-marketing studies.

 If
a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency,
or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of the product,
the regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If
we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may:

 issue
 warning letters;

 impose
 civil or criminal penalties;

 suspend
 regulatory approval;

 suspend
 any of our ongoing clinical trials;

 refuse
 to approve pending applications or supplements to approved applications submitted by us;

 impose
 restrictions on our operations, including closing our contract manufacturers' facilities; or

 seize
 or detain products or require a product recall.

 Any
government investigation of alleged violations of law could require us to expend significant time and resources in response and could
generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability
to commercialize and generate revenue from our product candidates. If regulatory sanctions are applied or if regulatory approval is withdrawn,
our value and operating results will be adversely affected. Additionally, if we are unable to generate revenue from sales of our product
candidates, our potential for achieving profitability will be diminished and the capital necessary to fund our operations will be increased.

 Any
action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses,
divert management's attention from the operation of our business and damage our reputation. We expend significant resources on
compliance efforts and such expenses are unpredictable and might adversely affect our results. Changing laws, regulations and standards
might also create uncertainty, higher expenses and increase insurance costs.

 We
and our third-party manufacturers are, and will be, subject to regulations of the FDA and other foreign regulatory authorities.

 We
and our contract manufacturers are, and will be, required to adhere to laws, regulations and guidelines of the FDA or other foreign regulatory
authorities setting forth current good manufacturing practices. These laws, regulations and guidelines cover all aspects of the manufacturing,
testing, quality control and recordkeeping relating to our therapeutic candidates. We and our third-party manufacturers may not be able
to comply with applicable laws, regulations and guidelines. We and our contract manufacturers are and will be subject to unannounced
inspections by the FDA, state regulators and similar foreign regulatory authorities outside the United States. Our failure, or the failure
of our third-party manufacturers, to comply with applicable laws, regulations and guidelines could result in the imposition of sanctions
on us, including fines, injunctions, civil penalties, refusal of regulatory authorities to grant marketing approval of our therapeutic
candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of our therapeutic candidates, operating
restrictions and criminal prosecutions, any of which could significantly and adversely affect regulatory approval and supplies of our
therapeutic candidates, and materially and adversely affect our business, financial condition and results of operations.

 Even
if we obtain regulatory approvals, our therapeutic candidates will be subject to ongoing regulatory review. If we fail to comply with
continuing U.S. and applicable foreign laws, regulations and guidelines, we could lose those approvals, and our business would be seriously
harmed.

 Even
if our therapeutic candidates receive regulatory approval, we or our commercialization partners, as applicable, will be subject to ongoing
reporting obligations, including pharmacovigilance, and the therapeutic candidates and the manufacturing operations will be subject to
continuing regulatory review, including inspections by the FDA or other foreign regulatory authorities. The results of this ongoing review
may result in the withdrawal of a therapeutic candidate from the market, the interruption of the manufacturing operations and/or the
imposition of labeling and/or marketing limitations. Since many more patients are exposed to drugs following their marketing approval,
serious but infrequent adverse reactions that were not observed in clinical trials may be observed during the commercial marketing of
the therapeutic candidate. In addition, the manufacturer and the manufacturing facilities that we or our commercialization partners use
to produce any therapeutic candidate will be subject to periodic review and inspection by the FDA and other foreign regulatory authorities.
Later discovery of previously unknown problems with any therapeutic candidate, manufacturer or manufacturing process, or failure to comply
with rules and regulatory requirements, may result in actions, including but not limited to the following:

 restrictions
 on such therapeutic candidate, manufacturer or manufacturing process;

 warning
 letters from the FDA or other foreign regulatory authorities;

 withdrawal
 of the therapeutic candidate from the market;

 suspension
 or withdrawal of regulatory approvals;

 refusal
 to approve pending applications or supplements to approved applications submitted by us or our commercial partners;

 voluntary
 or mandatory recall;

 fines;

 refusal
 to permit the import or export of our therapeutic candidates;

 seizure or detentions;

 injunctions
 or the imposition of civil or criminal penalties; or

 adverse
 publicity.

 If
we or our commercialization partners, suppliers, third-party contractors or clinical investigators are slow to adapt, or are unable to
adapt, to changes in existing regulatory requirements or the adoption of new regulatory requirements or policies, we or our commercialization
partners may lose marketing approval for any of our therapeutic candidates if any of our therapeutic candidates are approved, resulting
in decreased or lost revenue from milestones, product sales or royalties.

 Our
employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and
insider trading.

 We
are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with
any regulations applicable to us, to provide accurate information to regulatory authorities, to comply with manufacturing standards we
may have established, to comply with federal and state healthcare fraud and abuse laws and regulations, or to report financial information
or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare
industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive
practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission,
customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained
in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a Code
of Business Conduct, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and
prevent this activity may not be effective in controlling unknown or unmanaged risk.

 If
we fail to comply with federal or state "fraud and abuse" laws, the failure to comply with these laws may adversely affect
our business, financial condition and results of operations.

 In
the United States, we will be subject to various federal and state health care "fraud and abuse" laws, including anti-kickback
laws, false claims laws and other laws intended to reduce fraud and abuse the healthcare industry, which could affect us, particularly
upon successful commercialization of our products in the United States. The federal Anti-Kickback Statute makes it illegal for any person,
including a prescription drug manufacturer (or a party acting on our behalf), to knowingly and willfully solicit, receive, offer or pay
any remuneration in exchange for or to induce the referral of an individual for, or the purchase, order or recommendation of, any good
or service, including the purchase, order or prescription of a particular drug for which payment may be made under a federal health care
program, such as Medicare or Medicaid. Under federal government regulations, some arrangements, known as safe harbors, are deemed not
to violate the federal Anti-Kickback Statute. However, these laws are broadly written, and it is often difficult to determine precisely
how the law will be applied in specific circumstances. Accordingly, it is possible that our practices may be challenged under the federal
Anti-Kickback Statute. False claims laws prohibit anyone from knowingly and willfully presenting or causing to be presented for payment
to third-party payers, including government payers, claims for reimbursed drugs or services that are false or fraudulent, claims for
items or services that were not provided as claimed, or claims for medically unnecessary items or services. Cases have been brought under
false claims laws alleging that off-label promotion of pharmaceutical products or the provision of kickbacks has resulted in the submission
of false claims to governmental health care programs. Under the Health Insurance Portability and Accountability Act of 1996, we are prohibited
from knowingly and willfully executing a scheme to defraud any health care benefit program, including private payers, or knowingly and
willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in
connection with the delivery of or payment for health care benefits, items or services. Violations of fraud and abuse laws may be punishable
by criminal and/or civil sanctions, including fines, penalties and/or exclusion or suspension from federal and state health care programs
such as Medicare and Medicaid and debarment from contracting with the U.S. government. In addition, private individuals have the ability
to bring actions on behalf of the government under the federal False Claims Act as well as under the false claims laws of several states.

 Many
states have adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for, or purchase,
order or recommendation of, goods or services reimbursed by any source, not just governmental payers. The scope and enforcement of these
laws are uncertain and subject to change in the current environment of healthcare reform. We cannot predict the impact on our business,
financial condition nor results of operations of any changes in these laws. Any state or federal regulatory review of us, regardless
of the outcome, would be costly and time-consuming. Law enforcement authorities are increasingly focused on enforcing these laws, and
if we are challenged under of one of these laws, we could be required to pay a fine and/or penalty and could be suspended or excluded
from participation in federal or state health care programs, and our business, results of operations and financial condition may be adversely
affected.

 Risks
Related to Our Financial Position and Need for Additional Capital

 We
will be required to raise additional capital to fund our operations, and we may not be able to continue as a going concern if we are
unable to do so.

 Pharmaceutical
product development, which includes research and development, preclinical and clinical studies and human clinical trials, is a time-consuming
and expensive process that takes years to complete. We anticipate that our expenses will remain at a high level as we terminate our PUR1900
Phase 2b trial and pursue development of PUR3100 and PUR1800 or other iSPERSE -based product candidates, and/or
pursue development of iSPERSE -based pharmaceuticals in additional indications. Based upon our current expectations,
we believe that our existing capital resources will enable us to continue planned operations for at least 12 months following the filing
date of this Annual Report. We cannot assure you, however, that our plans will not change or that changed circumstances will not result
in the depletion of our capital resources more rapidly than we currently anticipate. We will need to raise additional funds, whether
through the sale of equity or debt securities, the entry into strategic business collaborations, the establishment of other funding facilities,
licensing arrangements, or asset sales or other means, in order to continue our research and development and clinical trial programs
for our iSPERSE -based product candidates and to support our other ongoing activities. However, it may be difficult
for us to raise additional funds on reasonable terms or at all. Since inception, we have incurred losses each year and have an accumulated
deficit of $287.6 million as of December 31, 2023, which may raise concerns about our solvency and affect our ability to raise additional
capital.

 The
amount of additional funds we need will depend on a number of factors, including:

 rate
 of progress and costs of our clinical trials and research and development activities, including costs of procuring clinical materials
 and operating our manufacturing facilities;

 our
 success in establishing strategic business collaborations or other sales or licensing of assets, and the timing and amount of any
 payments we might receive from any such transactions we are able to establish;

 actions
 taken by the FDA and other regulatory authorities affecting our products and competitive products;

 our
 degree of success in commercializing any of our product candidates;

 the
 emergence of competing technologies and products and other adverse market developments;

 the
 costs of preparing, filing, prosecuting, maintaining and enforcing patent claims and other intellectual property rights or defending
 against claims of infringement by others;

 the
 level of our legal expenses; and

 the
 costs of discontinuing projects and technologies.

 We
have raised capital in the past primarily through debt and public offerings and private placements of stock. We may in the future pursue
the sale of additional equity and/or debt securities, or the establishment of other funding facilities including asset-based borrowings.
There can be no assurances, however, that we will be able to raise additional capital through such an offering on acceptable terms, or
at all. Issuances of additional debt or equity securities could impact the rights of the holders of our common stock and may dilute their
ownership percentage. Moreover, the establishment of other funding facilities may impose restrictions on our operations. These restrictions
could include limitations on additional borrowing and specific restrictions on the use of our assets, as well as prohibitions on our
ability to create liens, pay dividends, redeem our stock or make investments.

 We
also may seek to raise additional capital by pursuing opportunities for the licensing or sale of certain intellectual property and other
assets. We cannot offer assurances, however, that any strategic collaborations, sales of securities or sales or licenses of assets will
be available to us on a timely basis or on acceptable terms, if at all.

 In
the event that sufficient additional funds are not obtained through strategic collaboration opportunities, sales of securities, funding
facilities, licensing arrangements and/or asset sales on a timely basis, we will be required to reduce expenses through the delay, reduction
or curtailment of our projects, including PUR3100, PUR1800 or PUR1900 development activities, or reduction of costs for facilities and
administration. Moreover, if we do not obtain such additional funds, doubt may arise about our ability to continue as a going concern
and increased risk of insolvency and loss of investment to the holders of our securities. If we are or become insolvent, investors in
our stock may lose the entire value of their investment.

 Our
long-term capital requirements are subject to numerous risks.

 Our
long-term capital requirements are expected to depend on many potential factors, including, among others:

 the
 number of product candidates in development;

 the
 regulatory clarity and path of each of our product candidates;

 the
 progress, success and cost of our clinical trials and research and development programs, including manufacturing;

 the
 costs, timing and outcome of regulatory review and obtaining regulatory clarity and approval of our product candidates and addressing
 regulatory and other issues that may arise post-approval;

 the
 costs of enforcing our issued patents and defending intellectual property-related claims;

 the
 costs of manufacturing, developing sales, marketing and distribution channels;

 our
 ability to successfully commercialize our product candidates, including securing commercialization agreements with third parties
 and favorable pricing and market share; and

 our
 consumption of available resources more rapidly than currently anticipated, resulting in the need for additional funding sooner than
 anticipated.

 We
may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our
management.

 From
time to time, we may consider strategic transactions, such as acquisitions of companies, business combinations, asset purchases and out-licensing
or in-licensing of products, product candidates or technologies. Additional potential transactions that we may consider include a variety
of different business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business
combinations and investments. Any such transaction may require us to incur non-recurring or other charges, may increase our near- and
long-term expenditures and may pose significant integration challenges or disrupt our management or business, which could adversely affect
our business, financial condition and results of operations. These transactions may entail numerous operational and financial risks,
including:

 exposure
 to unknown liabilities

 disruption
 of our business and diversion of our management's time and attention in order to develop acquired products, product candidates
 or technologies

 incurrence
 of substantial debt or dilutive issuances of equity securities to pay for such transactions

 higher-than-expected
 transaction and integration costs

 write-downs
 of assets or goodwill or impairment charges

 increased
 amortization expenses

 difficulty
 and cost in combining the operations and personnel of any acquired businesses or product lines with our operations and personnel

 impairment
 of relationships with key suppliers or customers of any acquired businesses or product lines due to changes in management and ownership
 and

 inability
 to retain key employees of any acquired businesses.

 Accordingly,
although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, any
transactions that we do complete may be subject to the foregoing or other risks and could have a material adverse effect on our business,
financial condition and results of operations.

 Risks
Related to Our Intellectual Property

 We
may be unable to adequately protect or enforce our rights to intellectual property, causing us to lose valuable rights. Loss of patent
rights may lead us to lose market share and anticipated profits.

 Our
success, competitive position and future revenues depend, in part, on our ability to obtain patent protection for our products, methods,
processes and other technologies, to preserve our trade secrets, to prevent third parties from infringing on our proprietary rights and
to operate without infringing the proprietary rights of third parties. Despite our efforts to protect our proprietary technologies and
processes, it is possible that competitors or other unauthorized third parties may obtain, copy, use or disclose proprietary technologies
and processes.

 We
try to protect our proprietary position by, among other things, filing U.S., European and other patent applications related to our product
candidates, methods, processes and other technologies, to prevent third parties from infringing on our proprietary rights and to operate
without infringing the proprietary rights of third parties.

 Because
the patent position of pharmaceutical companies involves complex legal and factual questions, we cannot predict the validity and enforceability
of patents with certainty. Our issued patents may not provide us with any competitive advantages or may be held invalid or unenforceable
as a result of legal challenges by third parties or could be circumvented. Our competitors may also independently develop inhaled drug
delivery technologies or products similar to iSPERSE and iSPERSE -based product candidates
or design around or otherwise circumvent patents issued to us. Thus, any patents that we own may not provide any protection against competitors.
Our pending patent applications, those we may file in the future or those we may license from third parties may not result in patents
being issued. Even if these patents are issued, they may not provide us with proprietary protection or competitive advantages. The degree
of future protection to be afforded by our proprietary rights is uncertain because legal means afford only limited protection and may
not adequately protect our rights or permit us to gain or keep our competitive advantage.

 Furthermore,
the issuance of a patent, while presumed valid and enforceable, is not conclusive as to its validity or its enforceability and it may
not provide us with adequate proprietary protection or competitive advantages against competitors with similar products. Competitors
may also be able to design around our patents. Other parties may develop and obtain patent protection for more effective technologies,
designs or methods. We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by consultants,
vendors, former employees and current employees.

 Patent
rights are territorial, and accordingly, the patent protection we do have will only extend to those countries in which we have issued
patents. Even so, the laws of certain countries do not protect our intellectual property rights to the same extent as do the laws of
the United States and the European Union. Competitors may successfully challenge our patents, produce similar drugs or products that
do not infringe our patents, or produce drugs in countries where we have not applied for patent protection or that do not respect our
patents. Furthermore, it is not possible to know the scope of claims that will be allowed in published applications and it is also not
possible to know which claims of granted patents, if any, will be deemed enforceable in a court of law.

 We
have not pursued or maintained, and may not pursue or maintain in the future, patent protection for our product candidates in every country
or territory in which we may sell our products, if approved. The laws of some foreign countries do not protect intellectual property
rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from
infringing our patents in all countries outside the United States, or from selling or importing products that infringe our patents in
and into the United States or other jurisdictions.

 Indeed,
several companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
The legal systems of some countries do not favor the enforcement of patents and other intellectual property rights, which could make
it difficult for us to stop the infringement, misappropriation or other violation of our intellectual property rights generally. Proceedings
to enforce our intellectual property rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention
from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications
at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate,
and the damages or other remedies awarded, if any, may not be commercially meaningful.

 After
the completion of prosecution and granting of our patents, third parties may still manufacture and/or market therapeutic candidates in
infringement of our patent protected rights. Such manufacture and/or market of our product candidates in infringement of our patent protected
rights is likely to cause us damage and lead to a reduction in the prices of our product candidates, thereby reducing our anticipated
profits.

 In
addition, due to the extensive time needed to develop, test and obtain regulatory approval for our therapeutic candidates, any patents
that protect our product candidate may expire during early stages of commercialization. This may reduce or eliminate any market advantages
that such patents may give us. Following patent expiration, we may face increased competition through the entry of generic products into
the market and a subsequent decline in market share and profits.

 In
addition, in some cases we may rely on our licensors to conduct patent prosecution, patent maintenance or patent defense on our behalf.
Therefore, our ability to ensure that these patents are properly prosecuted, maintained, or defended may be limited, which may adversely
affect our rights in our therapeutic products. Any failure by our licensors or development partners to properly conduct patent prosecution,
patent maintenance or patent defense could harm our ability to obtain approval or to commercialize our products, thereby reducing our
anticipated profits.

 Furthermore,
our ability to enforce our patent rights depends on our ability to detect infringement. It is difficult to detect infringers who do not
advertise the components that are used in their products. Moreover, it may be difficult or impossible to obtain evidence of infringement
in a competitor's or potential competitor's product, particularly in litigation in countries other than the U.S. that do
not provide an extensive discovery procedure. Any litigation to enforce or defend our patent rights, if any, even if we were to prevail,
could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations. We
may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded if we were to prevail may not be commercially
meaningful.

 If
we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to
compete against us.

 In
addition to filing patents, we generally try to protect our trade secrets, know-how and technology by entering into confidentiality or
non-disclosure agreements with parties that have access to us, such as our development and/or commercialization partners, employees,
contractors and consultants. We also enter into agreements that purport to require the disclosure and assignment to us of the rights
to the ideas, developments, discoveries and inventions of our employees, advisors, research collaborators, contractors and consultants
while employed or engaged by us. However, these agreements can be difficult and costly to enforce or may not provide adequate remedies.
Any of these parties may breach the confidentiality agreements and willfully or unintentionally disclose our confidential information,
or our competitors might learn of the information in some other way. The disclosure to, or independent development by, a competitor of
any trade secret, know-how or other technology not protected by a patent could materially adversely affect any competitive advantage
we may have over any such competitor.

 To
the extent that any of our employees, advisors, research collaborators, contractors or consultants independently develop, or use independently
developed, intellectual property in connection with any of our products, disputes may arise as to the proprietary rights to this type
of information. If a dispute arises with respect to any proprietary right, enforcement of our rights can be costly and unpredictable,
and a court may determine that the right belongs to a third party.

 Legal
proceedings or third-party claims of intellectual property infringement and other challenges may require us to spend substantial time
and money and could prevent us from developing or commercializing our product candidates.

 Our
commercial success also depends upon our ability, and the ability of any third party with which we may partner, to develop, manufacture,
market and sell our product candidates and/or products, if approved, and use our patent-protected technologies without infringing the
patents of third parties. There is considerable patent litigation in the pharmaceutical industry. As the pharmaceutical industry expands
and more patents are issued, we face increased risks that there may be patents issued to third parties that relate to our product candidates
and technology of which we are not aware or that we must challenge to continue our operations as currently contemplated.

 We
may not have identified all patents, published applications or published literature that affect our business either by blocking our ability
to commercialize our products or product candidates, by preventing the patentability of one or more aspects of our products or product
candidates to us or our licensors, or by covering the same or similar technologies that may affect our ability to market our products
and product candidates. For example, we (or the licensor of a product or product candidate to us) may not have conducted a patent clearance
search sufficient to identify potentially obstructing third-party patent rights. Moreover, patent applications in the United States are
maintained in confidence for up to 18 months after their filing. In some cases, however, patent applications remain confidential in the
U.S. Patent and Trademark Office, or the USPTO, for the entire time prior to issuance as a U.S. patent. Patent applications filed in
countries outside of the United States are not typically published until at least 18 months from their first filing date. Similarly,
publication of discoveries in the scientific or patent literature often lags behind actual discoveries. We cannot be certain that we
or our licensors were the first to invent, or the first to file, patent applications covering our products and candidates. We also may
not know if our competitors filed patent applications for technology covered by our pending applications or if we were the first to invent
the technology that is the subject of our patent applications. Competitors may have filed patent applications or received patents and
may obtain additional patents and proprietary rights that block or compete with our patents.

 The
development, manufacture, use, offer for sale, sale or importation of our product candidates may therefore infringe on the claims of
third-party patents or other intellectual property rights. The nature of claims contained in unpublished patent filings around the world
is unknown to us, and it is not possible to know which countries patent holders may choose for the extension of their filings under the
Patent Cooperation Treaty or other mechanisms. We may also be subject to claims based on the actions of employees and consultants with
respect to the usage or disclosure of intellectual property learned at other employers. The cost to us of any intellectual property litigation
or other infringement proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain
the costs of such litigation or proceedings more effectively because of their substantially greater financial resources. Uncertainties
resulting from the initiation, continuation or defense of intellectual property litigation or other proceedings could have a material
adverse effect on our ability to compete in the marketplace. Intellectual property litigation and other proceedings may also absorb significant
management time. Consequently, we are unable to guarantee that we will be able to manufacture, use, offer for sale, sell or import our
therapeutic candidates in the event of an infringement action.

 In
the event of patent infringement claims, or to avoid potential claims, we may choose or be required to seek a license from a third party
and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms,
or at all. Even if we were able to obtain a license, the rights may be non-exclusive, which could potentially limit our competitive advantage.
Ultimately, we could be prevented from commercializing a product candidate or be forced to cease some aspect of our business operations
if, as a result of actual or threatened patent infringement or other claims, we are unable to enter into licenses on acceptable terms.
This inability to enter into licenses could harm our business significantly.

 We
may be subject to other patent-related litigation or proceedings that could be costly to defend and uncertain in their outcome.

 In
addition to infringement claims against us, we may in the future become a party to other patent litigation or proceedings before regulatory
agencies, including interference, re-examination inter partes review, or post grant review proceedings filed with the U.S. Patent and
Trademark Office or opposition proceedings in other foreign patent offices regarding intellectual property rights with respect to our
therapeutic candidates, as well as other disputes regarding intellectual property rights with development and/or commercialization partners,
or others with whom we have contractual or other business relationships. Post-issuance oppositions are not uncommon and we or our development
and/or commercialization partners will be required to defend these opposition procedures as a matter of course. Opposition procedures
may be costly, and there is a risk that we may not prevail, which could harm our business significantly.

 Obtaining
and maintaining patent protection depends on compliance with various procedures and other requirements, and our patent protection could
be reduced or eliminated in case of non-compliance with these requirements.

 Periodic
maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to the relevant
patent agencies in several stages over the lifetime of the patents and /or applications. The relevant patent agencies require compliance
with a number of procedural, documentary, fee payment and other provisions during the patent application process. In many cases, an inadvertent
lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations
in which the failure to comply with the relevant requirements can result in the abandonment or lapse of the patent or patent application,
resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able
to use our technologies and know-how which could have a material adverse effect on our business, prospects, financial condition and results
of operation.

 If
we fail to comply with our obligations under our license agreements, we could lose the rights to intellectual property that is important
to our business.

 Our
current license agreements impose on us various development obligations, payment of royalties and fees based on achieving certain milestones
as well as other obligations. If we fail to comply with our obligations under these agreements, the licensor may have the right to terminate
the license. In addition, if the licensor fails to enforce its intellectual property, the licensed rights may not be adequately maintained.
The termination of any license agreements or failure to adequately protect such license agreements could prevent us from commercializing
our product candidates or possible future products covered by the licensed intellectual property. Any of these events could materially
adversely affect our business, prospects, financial condition and results of operation.

 We
may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of their
former employers.

 Our
employees may have been previously employed at other companies in the industry, including our competitors or potential competitors. Although
we are not aware of any claims currently pending against us, we may be subject to claims that these employees or we have inadvertently
or otherwise used or disclosed trade secrets or other proprietary information of the former employers of our employees. Litigation may
be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in
substantial costs and be a distraction to management. If we fail in defending such claims, in addition to paying money claims, we may
lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability
to commercialize product(s), which would materially adversely affect our commercial development efforts.

 Risks
Related to Our Common Stock

 The
price of our common stock is subject to fluctuation and has been and may continue to be volatile.

 The
stock market in general, and Nasdaq in particular, as well as biotechnology companies, have experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance of small companies. The market price of our common stock
may fluctuate as a result of, among other factors:

 the
 announcement of new products, new developments, services or technological innovations by us or our competitors;

 actual
 or anticipated quarterly increases or decreases in revenue, gross margin or earnings, and changes in our business, operations or
 prospects;

 announcements
 relating to strategic relationships, mergers, acquisitions, partnerships, collaborations, joint ventures, capital commitments, or
 other events by us or our competitors;

 conditions
 or trends in the biotechnology and pharmaceutical industries;

 changes
 in the economic performance or market valuations of other biotechnology and pharmaceutical companies;

 general
 market conditions or domestic or international macroeconomic and geopolitical factors unrelated to our performance or financial
 condition (including, for example, the coronavirus outbreak, the conflicts in Ukraine and Israel, supply chain and recent inflationary
 pressures);

 purchase
 or sale of our common stock by stockholders, including executives and directors;

 volatility
 and limitations in trading volumes of our common stock;

 our
 ability to obtain financings to conduct and complete research and development activities including, but not limited to, our human
 clinical trials, and other business activities;

 any
 delays or adverse developments or perceived adverse developments with respect to the FDA's review of our planned preclinical
 and clinical trials;

 ability
 to secure resources and the necessary personnel to conduct clinical trials on our desired schedule;

 failures
 to meet external expectations or management guidance;

 changes
 in our capital structure or dividend policy, future issuances of securities, sales or distributions of large blocks of our common
 stock by stockholders;

 our
 cash position;

 announcements
 and events surrounding financing efforts, including debt and equity securities;

 our
 inability to enter into new markets or develop new products;

 reputational
 issues;

 analyst
 research reports, recommendations and changes in recommendations, price targets, and withdrawals of coverage;

 departures
 and additions of key personnel;

 disputes
 and litigation related to intellectual property rights, proprietary rights, and contractual obligations;

 changes
 in applicable laws, rules, regulations, or accounting practices and other dynamics; and

 other
 events or factors, many of which may be out of our control.

 In
addition, if the market for stocks in our industry or industries related to our industry, or the stock market in general, experiences
a loss of investor confidence, the trading price of our common stock could fluctuate or decline for reasons unrelated to our business,
financial condition and results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose
us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.

 Moreover,
the COVID-19 pandemic and its ongoing effects have resulted in significant financial market volatility and uncertainty since March 2020.
A continuation or worsening of the levels of market disruption and volatility seen in the past as a result of the COVID-19 pandemic and
its ongoing effects could have an adverse effect on our ability to access capital, on our business, results of operations and financial
condition, and on the market price of our common stock.

 Financial
reporting obligations of being a public company in the United States are expensive and time-consuming, and our management may be required
to devote substantial time to compliance matters.

 As
a publicly traded company, we incur significant additional legal, accounting and other expenses. The obligations of being a public reporting
company require significant expenditures, including costs resulting from public company reporting obligations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations regarding corporate governance practices, including
those under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the Nasdaq Capital Market. These
rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal control over
financial reporting and corporate governance practices, among many other complex rules that are often difficult and time consuming to
implement, monitor and maintain compliance with. Moreover, despite reforms made possible by the Jumpstart Our Business Startups Act of
2012, the reporting requirements, rules, and regulations will make some activities more time-consuming and costly, particularly as we
are no longer an "emerging growth company."

 In
addition, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance.
Compliance with such requirements also places demands on management's time and attention.

 In
the foreseeable future, we do not intend to pay cash dividends on shares of our common stock so any investor gains will be limited to
the value of our shares.

 We
currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate
declaring or paying any cash dividends for the foreseeable future. Any gains to stockholders will therefore be limited to the increase,
if any, in our share price.

 We
may be at risk of securities class action litigation.

 We
may be at risk of securities class action litigation. This risk is especially relevant due to our dependence on positive clinical trial
outcomes and regulatory approvals. In the past, biotechnology and pharmaceutical companies have experienced significant stock price volatility,
particularly when associated with binary events such as clinical trials and product approvals. If we face such litigation, it could result
in substantial costs and a diversion of management's attention and resources, which could harm our business and result in a decline
in the market price of our common stock.

 In
the event that we fail to satisfy any of the listing requirements of Nasdaq, our common stock may be delisted, which
could affect our market price and liquidity.

 Our
common stock is listed on Nasdaq. For continued listing on Nasdaq, we will be required to comply with the continued listing
requirements, including the minimum market capitalization standard, the minimum stockholders' equity requirement, the
corporate governance requirements and the minimum closing bid price requirement, among other requirements. In the event that we fail
to satisfy any of the listing requirements of Nasdaq, our common stock may be delisted. If our securities are
delisted from trading on the Nasdaq Stock Market, and we are not able to list our securities on another exchange or to have them
quoted on the Nasdaq Stock Market, our securities could be quoted on the OTC Markets. As a result, we could face significant adverse
consequences including:

 a
 limited availability of market quotations for our securities;

 a
 determination that our common stock is a "penny stock," which would require brokers trading in our common stock to adhere
 to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

 a
 limited amount of news and analyst coverage; and

 a
 decreased ability to issue additional securities (including pursuant to short-form registration statements on Form S-3 or obtain
 additional financing in the future).

 We
are likely to issue additional equity securities in the future, which are likely to result in dilution to existing investors.

 We
may seek the additional capital necessary to fund our operations through public or private equity offerings, debt financings, and collaborative
and licensing arrangements. To the extent we raise additional capital by issuing equity securities, including in a debt financing where
we issue convertible notes or notes with warrants and any shares of our common stock to be issued in a private placement, our stockholders
may experience substantial dilution. We may, from time to time, sell additional equity securities in one or more transactions at prices
and in a manner we determine. If we sell additional equity securities, existing stockholders may be materially diluted. In addition,
new investors could gain rights superior to existing stockholders, such as liquidation and other preferences. In addition, the exercise
or conversion of outstanding options or warrants to purchase shares of capital stock may result in dilution to our stockholders upon
any such exercise or conversion.

 In
addition, as of March 25, 2024, 470,800 shares remained available to be awarded under our Amended and Restated 2013 Employee,
Director and Consultant Equity Incentive Plan (the "Incentive Plan"). Further, an aggregate of 344,306 shares of our
common stock could be delivered upon the exercise or conversion of outstanding stock options or restricted stock units under the
Incentive Plan and other equity incentive plans we previously assumed. We may also issue additional options, warrants and other
types of equity in the future as part of stock-based compensation, capital raising transactions, technology licenses, financings,
strategic licenses or other strategic transactions. To the extent these options are exercised, existing stockholders would
experience additional ownership dilution. In addition, the number of shares available for future grant under our equity compensation
plans may be increased in the future, as our equity compensation plan contains an "evergreen" provision, pursuant to
which additional shares may be authorized for issuance under the plan each year.

 Anti-takeover
provisions under Delaware corporate law may make it difficult for our stockholders to replace or remove our board of directors and could
deter or delay third parties from acquiring us, which may be beneficial to our stockholders.

 We
are subject to the anti-takeover provisions of Delaware law, including Section 203 of the General Corporation Law of Delaware (the "DGCL").
Under these provisions, if anyone becomes an "interested stockholder," we may not enter into a "business combination"
with that person for three (3) years without special approval, which could discourage a third party from making a takeover offer and
could delay or prevent a change of control. For purposes of Section 203 of the DGCL, "interested stockholder" means, generally,
someone owning fifteen percent (15%) or more of our outstanding voting stock or an affiliate that owned fifteen percent (15%) or more
of our outstanding voting stock during the past three (3) years, subject to certain exceptions as described in Section 203 of the DGCL.

 Protective
provisions in our charter and bylaws could prevent a takeover which could harm our stockholders.

 Our
certificate of incorporation and bylaws contain a number of provisions that could impede a takeover or prevent us from being acquired,
including, but not limited to, a classified board of directors and limitations on the ability of our stockholders to remove a director
from office without cause. Each of these charter and bylaw provisions give our board of directors the ability to render more difficult
or costly the completion of a takeover transaction that our stockholders might view as being in their best interests.

 ITEM
 1B.

 UNRESOLVED
 STAFF COMMENTS.

 None.

 ITEM
 1C.

 CYBERSECURITY.

 We
operate in the biopharmaceutical industry, which is subject to various cybersecurity risks that could adversely affect our business,
financial condition, and results of operations, including intellectual property theft, fraud, extortion, harm to employees or customers,
violation of privacy laws and other litigation and legal risk, and reputational risk. We recognize the critical importance of developing,
implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity,
and availability of our data. We currently have security measures in place to protect information and prevent data loss and other security
breaches, including a cybersecurity risk assessment program. Both management and the board of directors are actively involved in the
continuous assessment of risks from cybersecurity threats, including prevention, mitigation, detection, and remediation of cybersecurity
incidents.

 We
have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated
these processes into our overall risk management systems and processes. We routinely assess material risks from cybersecurity threats,
including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on
the confidentiality, integrity, or availability of our information systems or any information residing therein.

 Our
current cybersecurity risk assessment program includes identification of reasonably foreseeable internal and external risks, the likelihood
and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards
in place to manage such risks. The program outlines governance, policies and procedures, and technology we use to oversee and identify
risks from cybersecurity threats and is informed by previous cybersecurity incidents we have observed in our industry.

 Following
these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address
any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards. Primary responsibility for the
day-to-day assessment and management of risks from cybersecurity, including the prevention, mitigation, detection, and remediation of
cybersecurity incidents, rests with an IT consultant who reports to management.

 As
part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards. Personnel
at all levels and departments are made aware of our cybersecurity policies through trainings.

 We
engage consultants, or other third parties in connection with our risk assessment processes. These service providers assist us to design
and implement our cybersecurity policies and procedures, as well as to monitor and test our safeguards. We require each third-party service
provider to certify that it has the ability to implement and maintain appropriate security measures, consistent with all applicable laws,
to implement and maintain reasonable security measures in connection with their work with us, and to promptly report any suspected breach
of its security measures that may affect our company.

 One
of the key functions of our board of directors is informed oversight of our risk management process, including risks from cybersecurity
threats. Our board of directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible
for the day-to-day management of the material risks we face. Our board of directors administers its cybersecurity risk oversight function
directly as a whole, as well as through the audit committee.

 To date, no cybersecurity incident (or aggregation of incidents) or cybersecurity threat has materially affected our results of operations
or financial condition. However, an actual or perceived breach of our security could damage our reputation, interfere with the progress
of our clinical trials, interfere with our efforts to pursue regulatory approvals for our product candidates, or subject us to third-party
lawsuits, regulatory fines or other actions or liabilities, any of which could adversely affect our business, operating results or financial
condition. We have attempted to preemptively mitigate the financial impact of any cybersecurity incident and currently maintain a cyber
liability insurance policy. However, our cyber liability insurance may be inadequate or may not be available in the future on acceptable
terms, or at all. In addition, our cyber liability insurance policy may not cover all claims made against us, and defending a suit, regardless
of its merit, could be costly and divert management's attention from our business and operations. For further information regarding
risks from cybersecurity threats, please refer to "Item 1A. RISK FACTORS—Risks Related to Our Business".

 ITEM
 2.

 PROPERTIES.

 Our
corporate headquarters is located at 36 Crosby Drive, Suite 100, Bedford, Massachusetts. We currently lease approximately 20,000 square
feet of office and lab space in Bedford, Massachusetts under a lease that was originally executed on January 7, 2022. We moved into our
headquarters during the third quarter of 2023. The lease has an initial noncancellable term of ten years.

 We
terminated our previous lease, as planned, for our previous headquarters in Lexington, Massachusetts, also during the third quarter of
2023.

 We
believe that our facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available
in the future on commercially reasonable terms for our future growth.

 ITEM
 3.

 LEGAL
 PROCEEDINGS.

 From
time to time, we may be involved in litigation that arises through the normal course of business. As of the date of this filing, we are
not aware of any material legal proceedings to which we or our subsidiary is a party or to which any of our property is subject, nor
are we aware of any such threatened or pending litigation or proceedings known to be contemplated by governmental authorities.

 There
are no material proceedings in which any of our directors, officers or affiliates or any registered or beneficial stockholder of more
than 5% of our common stock, or any associate of any of the foregoing, is an adverse party or has a material interest adverse to our
interest.

 ITEM
 4.

 MINE
 SAFETY DISCLOSURES.

 Not

 PART
II

 ITEM
 5.

 MARKET
 FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 Market
Information

 Our
common stock trades on The Nasdaq Capital Market under the symbol "PULM".

 Stockholders

 As
of March 25, 2024, there were approximately 43 stockholders of record of our common stock.

 Dividends

 We
have not paid dividends to our stockholders since inception and do not plan to pay cash dividends in the foreseeable future. Any future
declaration of dividends will depend on our earnings, capital requirements, financial condition, prospects and any other factors that
our board of directors deems relevant, as well as compliance with the requirements of state law. In general, as a Delaware corporation,
we may pay dividends out of surplus capital or, if there is no surplus capital, out of net profits for the fiscal year in which a dividend
is declared and/or the preceding fiscal year. We currently intend to retain earnings, if any, for reinvestment in our business.

 Unregistered
Sales of Securities

 None.

 Issuer
Purchases of Equity Securities

 Not

 ITEM
 6.

 RESERVED.

 ITEM
 7.

 MANAGEMENT'S
 DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 The
information set forth below should be read in conjunction with our consolidated financial statements and related notes thereto
included elsewhere in this Annual Report on Form 10-K. This discussion and analysis contain forward-looking statements based on our
current expectations, assumptions, estimates and projections. These forward-looking statements involve risks and uncertainties. Our
actual results could differ materially from those indicated in these forward-looking statements as a result of certain factors,
including those discussed in Item 1 of this Annual Report on Form 10-K, entitled "Business," under
"Forward-Looking Statements" and Item 1A of this Annual Report on Form 10-K, entitled "Risk Factors."
References in this discussion and analysis to "us," "we," "our," or our "Company"
refer to Pulmatrix, Inc., a Delaware corporation, and our subsidiary, Pulmatrix Operating Company, Inc., a Delaware corporation.

 Overview

 We
are a clinical-stage biopharmaceutical company focused on the development of novel inhaled therapeutic products intended to prevent and
treat respiratory and other diseases with important unmet medical needs using our patented iSPERSE technology. Our
proprietary product pipeline includes treatments for central nervous system ("CNS") disorders such as acute migraine and
serious lung diseases such as Chronic Obstructive Pulmonary Disease ("COPD") and allergic bronchopulmonary aspergillosis
("ABPA"). Our product candidates are based on our proprietary engineered dry powder delivery platform, iSPERSE,
which seeks to improve therapeutic delivery to the lungs by optimizing pharmacokinetics and reducing systemic side effects to improve
patient outcomes.

 We
design and develop inhaled therapeutic products based on our proprietary dry powder delivery technology, iSPERSE, which
enables delivery of small or large molecule drugs to the lungs by inhalation for local or systemic applications. The iSPERSE
 powders are engineered to be small, dense particles with highly efficient dispersibility and delivery to airways. iSPERSE
 powders can be used with an array of dry powder inhaler technologies and can be formulated with a broad range of drug substances
including small molecules and biologics. We believe the iSPERSE dry powder technology offers enhanced drug loading
and delivery efficiency that outperforms traditional lactose-blend inhaled dry powder therapies.

 We
believe the advantages of using the iSPERSE technology include reduced total inhaled powder mass, enhanced dosing efficiency,
reduced cost of goods, and improved safety and tolerability profiles.

 Our
goal is 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 is aligned to this goal as we develop 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 ("CF"). Each program is
enabled by its unique iSPERSE formulation designed to achieve specific therapeutic objectives.

 We
intend to capitalize on our iSPERSE technology platform and our expertise in inhaled therapeutics to identify new product candidates
for the prevention and treatment of diseases, including those with considerable unmet medical needs, and to build our product pipeline
beyond our existing candidates. In order to advance clinical trials for our therapeutic candidates and leverage the iSPERSE
 platform to enable delivery of partnered compounds, we intend to form strategic alliances with third parties, including pharmaceutical
and biotechnology companies or academic or private research institutes.

 We
expect to continue to incur substantial expenses and operating losses for at least the next several years based on our drug development
plans. We expect our expenses and capital requirements will increase substantially in connection with our ongoing activities, as we:

 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.

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

 Terminate
 the PUR1900 Phase 2b study and seek to monetize PUR1900 in the United States.

 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.

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

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

 We
do not have any products approved for sale and have not generated any revenue from product sales. We will not generate product sales
unless and until we successfully complete clinical developments and obtain regulatory approvals for our product candidates. Additionally,
we currently utilize third-party contract research organizations ("CROs") to carry out our clinical development activities
and third-party contract manufacturing organizations ("CMOs") to carry out our clinical manufacturing activities as we do
not yet have a commercial organization. If we obtain regulatory approval for any of our product candidates, we expect to incur substantial
expenses related to developing our internal commercialization capability to support product sales, marketing and distribution. Accordingly,
we anticipate that we will seek to fund our operations through public or private equity or debt financings, licensing arrangements, collaborations
with third parties, non-dilutive grants or other sources, potentially including collaborative commercial arrangements. Likewise, we intend
to seek to limit our commercialization costs by partnering with other companies with complementary capabilities or larger infrastructure
including sales and marketing.

 Because
of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased
expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not
become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to
continue our operations at planned levels and be forced to reduce or terminate our operations.

 Therapeutic
Candidates

 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 be an alternative to other acute therapies. Given the oral inhaled
route of delivery, PUR3100 is anticipated to provide relief from the rapid onset of migraine symptoms and provide a favorable tolerability
profile.

 A
total of three 14-day good laboratory practice 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 a new drug application ("NDA").

 We
have completed several interactions with the FDA, and they have confirmed that, in addition to the planned 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, designed to assess
not only safety, tolerability, and pharmacokinetics of PUR3100 in humans, but also provide preliminary comparative bioavailability data
to support the use of the 505(b)(2) pathway for marketing authorization. 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 intravenous ("IV")
placebo, as compared to IV DHE (DHE mesylate injection) with inhaled placebo. 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. PUR3100 was well-tolerated and there was a lower incidence of nausea in PUR3100 dose groups
compared to IV DHE, and we presented the Phase 1 study data at the American Headache Society 65 th Annual Meeting in June 2023.
In contrast to IV DHE, no vomiting was observed in any of the PUR3100 dose groups. Oral inhalation of PUR3100 achieved peak exposures
in the targeted therapeutic range at all doses and the T max occurred at five minutes after dosing.

 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.

 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.

is a Narrow Spectrum Kinase Inhibitor, engineered with our iSPERSE technology, being developed 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.

 We
completed the Phase 1b safety, tolerability, and pharmacokinetics clinical study of PUR1800 for patients with stable moderate-severe
COPD. Topline data was delivered in the first quarter of 2022.

 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.

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, was delivered
in the first quarter of 2022 and presented at the American Academy of Allergy, Asthma & Immunology (AAAAI) conference in the first
quarter of 2023 and support the continued development of PUR1800 for the treatment of AECOPD and other inflammatory respiratory diseases.
We completed all data analysis to inform a study design for a potential Phase 2 efficacy and safety study, treating subjects with AECOPD.
We plan to pursue an appropriate partner as a path forward to advance PUR1800 into a Phase 2 clinical trial.

 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.

 PUR1900

 On
April 15, 2019, we entered into a Development and Commercialization Agreement (the "Cipla Agreement") with Cipla Technologies
LLC ("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 if Cipla successfully transfers manufacturing
of the Product for the Cipla Territory to a manufacturing site determined by Cipla, we will become entitled to a royalty equal to 2%
of net sales in the Cipla Territory.

 We continued to develop PUR1900 pursuant to the Cipla Agreement during 2023. We and Cipla were each responsible for 60% and 40%,
respectively, of our overhead costs and the time spent by our employees and consultants on development of the Product ("Direct
Costs"). We have 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.

to the Third Amendment, we and Cipla agreed to stop patient enrollment at 8 subjects in the ongoing Phase 2b clinical study. During the
period commencing on January 6, 2024 and ending July 30, 2024 (the "Wind Down Period"), we will 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.
We will share costs with Cipla during the Wind Down Period in the same proportions discussed above but subject to a maximum reimbursement
amount by Cipla as approved by the joint steering committee.

 After
the conclusion of the Wind Down Period, Pulmatrix will bear no further financial responsibility for the commercialization and development
of PUR1900 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. We will receive 2% royalties on any potential future net sales by Cipla
outside the United States.

 Financial
Overview

 Revenues

 To
date, we have not generated any product sales. The 2023 and 2022 revenues were primarily generated from the Cipla Agreement as related to our PUR1900 program.

 For
more discussion on the Cipla Agreement, please see Note 6, Significant Agreements, to our consolidated financial statements included
in this report.

and Development Expenses

and development expenses consist primarily of costs incurred for the research and development of our preclinical and clinical candidates,
and include:

 employee-related
 expenses, including salaries, benefits and stock-based compensation expense;

 expenses
 incurred under agreements with CROs or CMOs, and consultants that conduct our clinical trials and preclinical activities;

 the
 cost of acquiring, developing and manufacturing clinical trial materials and lab supplies;

 facility,
 depreciation and other expenses, which include direct and allocated expenses for rent, maintenance of our facility, insurance and
 other supplies;

 costs
 associated with preclinical activities and clinical regulatory operations; and

 consulting
 and professional fees associated with research and development activities.

 We
expense research and development costs to operations as incurred. We recognize costs for certain development activities, such as clinical
trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations
or information provided to us by our vendors.

and development activities are central to our business model. We utilize a combination of internal and external efforts to advance product
development from early-stage work to clinical trial manufacturing and clinical trial support. External efforts include work with consultants
and substantial work at CROs and CMOs. We support an internal research and development team and facility for our pipeline and other potential
development programs. To move these programs forward along our development timelines, a large portion (approximately 86%) of our staff
are research and development employees. In addition, we maintain an office and research and development facility which includes capital
equipment for the manufacture and characterization of our iSPERSE powders for our development efforts. As we
identify opportunities for iSPERSE in additional indications, we anticipate additional headcount, capital, and
development costs will be incurred to support these programs. Because of the numerous risks and uncertainties associated with product
development, however, we cannot determine with certainty the duration and completion costs of these or other current or future preclinical
studies and clinical trials. The duration, costs and timing of clinical trials and development of our product candidates will depend
on a variety of factors, including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment
rates and changing government regulation. In addition, the probability of success for each product candidate will depend on numerous
factors, including competition, manufacturing capability and commercial viability.

 General
and Administrative Expenses

 General
and administrative expenses consist principally of salaries, benefits and related costs such as stock-based compensation for personnel
and consultants in executive, finance, business development, corporate communications and human resource functions, facility costs not
otherwise included in research and development expenses, patent filing fees and legal fees. Other general and administrative expenses
include travel expenses, expenses related to being a publicly traded company and professional fees for consulting, auditing and tax services.

 We
anticipate that our general and administrative expenses will increase in the future as they relate to audit, legal, regulatory, and tax-related
services associated with maintaining compliance with exchange listing and Securities and Exchange Commission ("SEC") requirements,
director and officer liability insurance, investor relations costs and other costs associated with being a public company. Additionally,
if and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in staffing and related
expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our product
candidates.

 Critical
Accounting Estimates

 Our
management's discussion and analysis of our financial condition and results of operations is based on our consolidated
financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of
America ("U.S. GAAP"). The preparation of our consolidated financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and
liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events, and
other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Actual
results may differ from these estimates under different assumptions or conditions.

 Our
significant accounting policies are described in the notes to our consolidated financial statements appearing elsewhere in this
Annual Report on Form 10-K. We believe the following are our critical accounting estimates which involve a significant level of uncertainty at the time the estimate was made, and changes in them have had or are reasonably likely to have a material effect on our financial condition or results of operations.

 Revenue
Recognition

 Our principal source of revenue during the
years ended December 31, 2023 and 2022 was derived from the Cipla Agreement. Revenue
is recognized for the Cipla Agreement over the period of performance using a measure of progress based on costs incurred to date
relative to the total expected costs (i.e., cost-to-cost method). A significant level of judgment is necessary to estimate the total
expected costs. The amount of revenue recognized in a given period is dependent on the accuracy of our estimate of the total
expected costs. When estimating total expected costs, we make assumptions and estimates regarding the total amount of internal and
external resources required to satisfy the performance obligation, including the contracted scope of work with Cipla and tasks
required to be completed, along with our ability and that of our contracted third parties to successfully carry out expected duties,
achieve certain regulatory requirements and meet expected deadlines. We evaluate our measure of progress to recognize revenue for
these agreements at each reporting date and, as necessary, adjust the measure of progress and related revenue recognition. We also
evaluate contract modifications and amendments to determine whether any changes should be accounted for prospectively or on a
cumulative catch-up basis.

 Accrued
Research and Development Costs

 We
have various contracts with third parties related to our research and development activities. Research and development costs are expensed
as incurred. Costs that are incurred but not billed to us as of the end of the period are accrued. Estimating the expense incurred with
CROs and CMOs involves significant uncertainty because these service providers may invoice us several months in arrears, on a pre-determined
schedule or when contractual milestones are met; however, some require advance payments. We make estimates of the expense incurred in
each period based on the information available to us, our knowledge of the nature of the contractual activities generating such costs
and communications with the service providers. Although we do not expect our estimates to be materially different from amounts actually
incurred, such estimates for the status and timing of services performed relative to the actual status and timing of services performed
may vary and could result in us reporting amounts that are too high or too low in any particular period. To date, our estimates have
not been materially different than amounts actually incurred.

 Results
of Operations

 Comparison
of the Years Ended December 31, 2023 and 2022

 The
following table sets forth our results of operations for each of the periods set forth below (in thousands):

 2023

 2022

 Change

 Revenues

 $
 7,298

 $
 6,071

 $
 1,227

 Operating expenses:

 Research and development

 15,518

 18,240

 (2,722
)

 General and administrative

 6,520

 6,778

 (258
)

 Total operating expenses

 22,038

 25,018

 (2,980
)

 Loss from operations

 (14,740
)

 (18,947
)

 4,208

 Other income (expense):

 Interest income

 Other expense, net

 (248
)

 (198
)

 (50
)

 $
 (14,121
)

 $
 (18,836
)

 $
 4,715

 Revenues
 — Revenues were $7.3 million for the year ended December 31, 2023, as compared to $6.1 million for the year ended December
31, 2022, an increase of $1.2 million. The increase is related to higher activity under the Cipla Agreement during the period.

and development expenses — Research and development expenses were $15.5 million for the year ended December 31, 2023, as
compared to $18.2 million for the year ended December 31, 2022, a decrease of approximately $2.7 million. The decrease was primarily
due to decreased spend of $2.7 million in costs related to our PUR3100 program, $1.0 million of employment costs, and $0.7 million in
costs related to our PUR1800 program, partially offset by an increase of $1.3 million in costs related to our PUR1900 program and $0.4
million of other operating costs.

 General
and administrative expenses — General and administrative expenses were $6.5 million for the year ended December 31, 2023,
as compared to $6.8 million for the year ended December 31, 2022, a decrease of approximately $0.3 million. The decrease was primarily
due to decreased spend of $0.7 million in employment costs, partially offset by an increase of $0.4 million in legal and professional
services costs.

 Liquidity
and Capital Resources

 Through
December 31, 2023, we incurred an accumulated deficit of $287.6 million, primarily as a result of expenses incurred through a combination
of research and development activities related to our various product candidates and general and administrative expenses supporting those
activities. We have financed our operations since inception primarily through the sale of preferred and common stock, the issuance of
convertible promissory notes, term loans, and collaboration and license agreements. Our total cash and cash equivalents balance as of
December 31, 2023 was $19.2 million.

 We
anticipate that we will continue to incur losses over the next several years due to development costs associated with our
iSPERSE pipeline programs. We expect that we will need additional capital to fund our operations as we continue to
incur research and development and general and administrative expenses. We may raise such capital through a combination of equity
offerings, debt financings, other third-party funding and other collaborations and strategic alliances. We are currently exploring
financing or partnership arrangements to develop and initiate a potential Phase 2 clinical study for PUR3100.

 We
expect that our existing cash and cash equivalents as of December 31, 2023 will enable us to fund our operating expenses and capital
expenditure requirements for at least the next 12 months following the date of this Annual Report on Form 10-K and into the first
quarter of 2026. Such projections reflect the Third Amendment with Cipla and operational efficiencies and prioritization of spending
implemented in the second quarter of 2023 and the first quarter of 2024. We have based our projections of operating capital
requirements on assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than we
expect. Because of the numerous risks and uncertainties associated with research, development, achievement of contingent milestones
and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital
requirements.

 We
have no material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that is material to investors.

 The
following table sets forth the major sources and uses of cash for each of the periods set forth below (in thousands):

 2023

 2022

 Net cash used in operating activities

 $
 (15,985
)

 (19,356
)

 Net cash used in investing activities

 (676
)

 (86
)

 Net cash provided by financing activities

 1,230

 Net decrease in cash, cash equivalents, and restricted cash

 $
 (16,608
)

 (18,212
)

 Net
cash used in operating activities

 Net
cash used in operating activities for the year ended December 31, 2023 was $16.0 million, which was primarily the result of a net loss
of $14.1 million and $4.3 million in cash outflows associated with changes in operating assets and liabilities, partially offset by $2.4
million of net non-cash adjustments.

 Net
cash used in operating activities for the year ended December 31, 2022 was $19.4 million, which was primarily the result of a net loss
of $18.8 million and $3.2 million in cash outflows associated with changes in operating assets and liabilities, partially offset by $2.7
million of net non-cash adjustments.

 Net
cash used in investing activities

 Net
cash used in investing activities for the years ended December 31, 2023 and 2022 was due to purchases of property and equipment.

 Net
cash provided by financing activities

 Net
cash provided by financing activities for the year ended December 31, 2023 resulted from proceeds from the issuance of common stock,
net of issuance costs, under the Sales Agreement (as defined below).

 Net
cash provided by financing activities for the year ended December 31, 2022 resulted from proceeds from the issuance of common stock,
net of issuance costs, under the Sales Agreement (as defined below), partially offset by the payment of preferred stock issuance costs
from a registered direct offering in December 2021.

 Financings

 In
May 2021, we entered into an At-The-Market Sales Agreement (the "Sales Agreement") with H.C. Wainwright and Co., LLC ("HCW")
to act as our sales agent with respect to the issuance and sale of up to $20,000,000 of our shares of common stock, from time to time
in an at-the-market public offering (the "ATM Offering"). Sales of common stock under the Sales Agreement are made pursuant
to an effective shelf registration statement on Form S-3, which was filed with the SEC on May 26, 2021, and subsequently declared effective
on June 9, 2021 (File No. 333-256502), and a related prospectus. HCW acts as our sales agent on a commercially reasonable efforts basis,
consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of
Nasdaq. If expressly authorized by us, HCW may also sell our common stock in privately negotiated transactions. There is no specific
date on which the ATM Offering will end, there are no minimum sale requirements and there are no arrangements to place any of the proceeds
of the ATM Offering in an escrow, trust or similar account. HCW is entitled to compensation at a fixed commission rate of 3.0% of the
gross proceeds from the sale of our common stock pursuant to the Sales Agreement. During the year ended December 31, 2023, we sold 13,100
shares of common stock under the Sales Agreement at a weighted-average price of approximately $4.25 per share, which resulted in net
proceeds of approximately $53 thousand. During the year ended December 31, 2022, we sold 252,013 shares of common stock under the Sales
Agreement at a weighted-average price of approximately $5.70 per share, which resulted in net proceeds of approximately $1.4 million.

 Known
Trends, Events and Uncertainties

 In
May 2023, the World Health Organization determined that COVID-19 no longer fit the definition of a public health emergency and the U.S.
government announced its plan to let the declaration of a public health emergency associated with COVID-19 expire on May 11, 2023. The
COVID-19 pandemic and its ongoing effects are expected to remain a serious threat for an indefinite future period and may continue to
create significant economic uncertainty and volatility in the credit and capital markets, supply chain issues, global shortages of supplies,
materials and products, and contribute to rising global inflation. In addition, the ongoing conflicts in Ukraine and Israel, including related sanctions and countermeasures, are difficult to predict, and could adversely
impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn
adversely affect our business and operations. We may not be able to raise sufficient additional capital and may tailor our drug candidate
development program based on the amount of funding we are able to raise in the future. Nevertheless, there is no assurance that these
initiatives will be successful.

 Other
than as discussed above and elsewhere in this report, we are not aware of any trends, events or uncertainties that are likely to have
a material effect on our financial condition.

 ITEM
 7A.

 QUANTITATIVE
 AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 Not

 ITEM
 8.

 FINANCIAL
 STATEMENTS AND SUPPLEMENTARY DATA.

 The
information required by this Item 8 is included at the end of this Annual Report on Form 10-K beginning on page F-1.

 ITEM
 9.

 CHANGES
 IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 Not

 ITEM
 9A.

 CONTROLS
 AND PROCEDURES.

 Disclosure
Controls and Procedures

 Our
Principal Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Annual Report on Form 10-K, have
concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to
be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the SEC's rules and forms, and is accumulated and communicated to our management, including our Principal
Executive Officer and Principal Financial Officer as appropriate to allow timely decisions regarding required disclosure.

 Internal
Control over Financial Reporting

 Management's
Annual Report on Internal Control over Financial Reporting

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f)
under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, our Principal
Executive Officer and Principal Financial Officer, and effected by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external
purposes in accordance with GAAP, including those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect our transactions and the disposition of our assets, (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP and that receipts and expenditures
are being made only in accordance with authorizations of our management and board of directors, and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect
on the consolidated financial statements.

 Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with policies and procedures may deteriorate.

evaluates the effectiveness of our internal control over financial reporting based on the 2013 framework in Internal Control —
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management
concluded that our internal control over financial reporting was effective as of December 31, 2023.

 Changes
in Internal Controls over Financial Reporting

 There
were no changes in our internal control over financial reporting that occurred during our last fiscal quarter ended December 31, 2023
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 ITEM
 9B.

 OTHER
 INFORMATION.

 None.

 ITEM
 9C.

 DISCLOSURE
 REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

 Not

 PART
III

 ITEM
 10.

 DIRECTORS,
 EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

and the Board of Directors

 The
following table sets forth the persons who serve as our executive officers and directors, and their ages as of December 31, 2023.

 Name

 Age

 Position

 Raad

 Chief
 Executive Officer and Director

 Peter
 Ludlum

 Interim
 Chief Financial Officer

 Margaret
 Wasilewski, M.D.

 Chief
 Medical Officer

 Richard
 Batycky, Ph. D.

 Todd
 Bazemore

 Christopher
 Cabell M.D.

 Michael
 J. Higgins

 Anand
 Varadan

Raad. Mr. Raad was appointed Chief Executive Officer in May 2019. Prior to his appointment, he served as Pulmatrix's Chief
Business Officer and led commercial and business development efforts. He has more than 20 years of commercial healthcare and life science
leadership experience and most recently served as Chief Commercial Officer at Option Care from 2013-2016, where he helped separate the
specialty home infusion business unit from Walgreens to create the nation's largest independent home infusion provider. Prior to
that, he was Vice President and business unit head at Sunovion with overall responsibility for CNS and respiratory products, including
assets in asthma and COPD from 2010 to 2012. During his time at Sunovion, Mr. Raad led multiple products through clinical development
to commercialization and implemented new strategic alliances in the US and Japan. Earlier in his career, he also gained direct launch
experience with Sporanox, Janssen's oral itraconazole product to treat fungal infections, and brings that experience
to the Company's programs. Mr. Raad holds a BS in Business Administration from University of Colorado at Boulder and an MBA from
Thunderbird Global School of Global Management. We believe that Mr. Raad has extensive business experience running the operations of
biopharmaceutical companies and qualifies him to serve as a member of the Board.

 Peter
Ludlum. Mr. Ludlum has served as our interim Chief Financial Officer, principal accounting officer and principal financial officer
since April 2022, and since December 2021, he has served as our Strategic Advisor – Finance, both pursuant to a November 30, 2021
consulting agreement between the Company and Danforth. Mr. Ludlum has served as an employee with Danforth Advisors, LLC ("Danforth"),
a provider of strategic and operational finance and accounting for life science companies, since December 2021. Prior to Danforth, Mr.
Ludlum has worked as an independent financial consultant. Previously, Mr. Ludlum served in several executive roles at Emmaus Life Sciences,
Inc. (n/k/a EMI Holding, Inc.), a commercial-stage biopharmaceutical company, including Co-President, Chief Business Officer, Executive
Vice President and Chief Financial Officer, during his tenure from April 2012 until May 2017. Mr. Ludlum previously served as the Chief
Financial Officer of Energy and Power Solutions, Inc., an energy intelligence company, from April 2008 to December 2011. He received
a B.S. in Business and Economics with a major in accounting from Lehigh University and an MBA with a concentration in Finance from California
State University, Fullerton.

 Margaret
Wasilewski, M.D. Dr. Wasilewski has served as our Chief Medical Officer since March 2022 and brings extensive experience across different
stages of pharmaceutical drug development in various therapeutic areas. She leverages over 20 years of experience in pharmaceutical drug
development. Dr. Wasilewski held various leadership roles at Eli Lilly and Company, Targanta Therapeutics, Shire, and Summit Therapeutics.
As President of ID Remedies LLC, Dr. Wasilewski has provided scientific, medical, and clinical development consultation to various biopharmaceutical
companies. Her clinical development experience includes bacterial and viral infections, sepsis, neurology, and rare disease. Dr. Wasilewski
received a medical degree from Tufts University School of Medicine and is board certified in Internal Medicine and completed fellowships
in Infectious Diseases and Clinical Pharmacology at the University of California-San Francisco. Dr. Wasilewski received an MBA from Indiana
University, Kelly School of Business; a master's degree in Nutrition from the University of California-Berkeley and an undergraduate
degree in Chemistry from Rutgers University.

 Board
of Directors (Non-Employee Directors)

 Richard
Batycky, Ph. D. Dr. Batycky was appointed to serve as a director of our Company in November 2019. He is currently the President and
Chief Executive Officer of Nocion Therapeutics, Inc. having served in such position since 2018. Dr. Batycky has over two decades of experience
with biotech start-ups from founding to acquisition across an array of platforms and disease states with notable expertise in inhaled
drug development. From 2009 to 2014, he was the Chief Scientific Officer and a founder of Civitas Therapeutics, which was acquired by
Acorda Therapeutics, Inc., or Acorda. At Acorda, he served as Chief Technology Officer from 2014 to 2018 where he led its novel dry powder
inhalation therapy to treat motor issues in Parkinson's patients through to FDA approval as Inbrija. Prior to
Civitas Therapeutics, he was Chief Scientific Officer and Senior VP of R&D at Pulmatrix from 2007 to 2009 and held prior positions
at Alkermes and Advanced Inhalation Research from 1998 to 2007. Dr. Batycky received his B.Sc. in Chemical Engineering from the University
of Calgary and his S.M. and Ph. D. in Chemical Engineering from the Massachusetts Institute of Technology (MIT). We believe that Dr. Batycky's
noteworthy experience in inhaled drug development in biotechnology companies qualifies him to serve as a member of the Board.

 Todd
Bazemore. Mr. Bazemore was appointed to serve as a director of our Company in October 2020. Todd Bazemore has served as the President
and Chief Operating Officer of KALA BIO, Inc. since December 2021 and as the Chief Operating Officer from November 2017 through November
2021. Previously, he served as Executive Vice President and Chief Operating Officer of Santhera Pharmaceuticals (USA) Inc., or Santhera,
a pharmaceutical company and subsidiary of Santhera Pharmaceuticals Holdings AG, from September 2016 until November 2017. Prior to joining
Santhera, Mr. Bazemore served as Executive Vice President and Chief Commercial Officer of Dyax Corp., or Dyax, a biopharmaceutical company
focused on orphan diseases, between April 2014 and January 2016, when Dyax was acquired by Shire plc. Between April 2012 and September
2013, he served as Vice President, Managed Markets at Sunovion Pharmaceuticals, Inc., or Sunovion (a subsidiary of Dainippon Sumitomo
Pharma Co. Ltd.), a global biopharmaceutical company focused on serious medical conditions. Prior to that, Mr. Bazemore held several
roles of increasing responsibility at Sunovion, including Vice President of Sales and Vice President of the Respiratory Business Unit.
He received his Bachelor of Science from the University of Massachusetts, Lowell. We believe that Mr. Bazemore has extensive business
experience running the commercial operations of biopharmaceutical companies and qualifies him to serve as a member of the Board.

 Christopher
Cabell, M.D. Dr. Cabell was appointed to serve as a director of our Company in June 2020. He is currently the Chief Medical Officer
and Executive Vice President at Zura Bio Ltd., having joined in January 2023. Prior to joining Zura Bio, Dr. Cabell was Chief Medical
Officer and Head of Clinical Development at Emergent BioSolutions, Inc., having joined in February 2021. Previously, Dr. Cabell spent
three (3) years at Arena Pharmaceuticals, Inc. with increasing responsibilities including Head of Research and Development, and Chief
Medical Officer from October 2017 to November 2020. Dr. Cabell spent 10 years at Quintiles Inc. and QuintilesIMS in a variety of management
positions including Chief Medical and Scientific Officer, Global Head of Medical and Project Management, and Global Head of Business
Development from October 2007 to September 2017. Prior to joining Quintiles, Dr. Cabell was on faculty at Duke University School of Medicine
in the Division of Cardiology. Dr. Cabell is a Fellow of the American College of Cardiology and has over 100 peer reviewed publications
including in the New England Journal of Medicine, JAMA, and Annals of Internal Medicine. Board certified in both internal medicine and
cardiovascular diseases, Dr. Cabell is an honors graduate of Pennsylvania State University and Duke University, earning both his Medical
Degree and a Masters in Health Sciences from the latter. We believe that Dr. Cabell's noteworthy experience in clinical drug development
in biotechnology companies qualifies him to serve as a member of the Board.

 Michael
J. Higgins. Mr. Higgins was appointed Chairman of the Board in April 2020. He has been a member of the Board of Directors since June
2015. He has served as chairman of the board of directors of Voyager Therapeutics., a publicly traded biopharmaceutical company, since
June 2019, and served as Voyager's Interim CEO from June 2021 through March 2022. He has served as a board member of Genocea Biosciences
Inc., a publicly traded immuno-oncology company, from 2015 to June 2022; Nocion Therapeutics, Inc., a biopharmaceutical company, since
September 2020; Camp4 Therapeutics Corporation, a biopharmaceutical company, since October 2017 and KinDex Pharmaceuticals, Inc., a biotechnology
company, since March 2016. Mr. Higgins is a serial entrepreneur who has helped launch/build numerous companies during his career. He
served as Entrepreneur-in-Residence at Polaris Partners, an investment company, from 2015 to 2020. From 2003 to 2014 he served as Senior
Vice President, Chief Operating Officer at Ironwood Pharmaceuticals Inc, a biopharmaceutical company. Prior to 2003, Mr. Higgins held
a variety of senior business positions at Genzyme Corporation, including Vice President of Corporate Finance and Vice President of Business
Development. Prior to joining Genzyme Corporation, Mr. Higgins led Procept, Inc.'s financial team from founding through its initial
public offering. Mr. Higgins earned a B.S. from Cornell University and an M.B.A. from the Amos Tuck School of Business Administration
at Dartmouth College. We believe that Mr. Higgins' financial and business expertise, including his diversified background as an
executive officer in public pharmaceutical companies, qualifies him to serve as a member of the Board.

 Anand
Varadan. Mr. Varadan was appointed to serve as a director of our Company in July 2021. He is currently the founder and President
of Ignition Insights, LLC, a consulting firm providing commercial and strategic consultancy services to biopharma companies and investors.
Previously, he was Executive Vice President, Chief Commercial Officer at Chiasma Inc., a commercial-stage biopharmaceutical company,
until its acquisition by Amryt PLC. Mr. Varadan also served as Executive Vice President, Chief Commercial Officer of Karyopharm Therapeutics,
Inc, an oncology-focused pharmaceutical company, where he started up commercial operations leading to the successful launch of XPOVIO
for multiple myeloma. Earlier in his career, Mr. Varadan held executive leadership roles at Amgen Inc., a biopharmaceutical company,
in the U.S., E.U., and Canada including Vice President, U.S. Inflammation and Nephrology Business Unit and Vice President and General
Manager, Amgen Canada. Prior to Amgen, Mr. Varadan was a brand manager at Procter and Gamble Company. Mr. Varadan has a B.A. from George
Washington University and an M.B.A. from the Simon Business School at the University of Rochester. Mr. Varadan's extensive executive
leadership experience and his in-depth knowledge of the biopharmaceutical industry make him well qualified to serve on the Board.

 Corporate
Governance

 Pulmatrix,
with the oversight of the Board and its committees, operates within a comprehensive plan of corporate governance for the purpose of defining
independence, assigning responsibilities, setting high standards of professional and personal conduct and assuring compliance with such
responsibilities and standards. We regularly monitor developments in the area of corporate governance.

 Code
of Corporate Conduct and Ethics and Whistleblower Policy

 We
have adopted a Code of Corporate Conduct and Ethics and Whistleblower Policy that applies to all of our associates, as well as each of
our directors and certain persons performing services for us. The Code of Corporate Conduct and Ethics and Whistleblower Policy addresses,
among other things, competition and fair dealing, conflicts of interest, protection and proper use of Company assets, government relations,
compliance with laws, rules and regulations and the process for reporting violations of the Code of Corporate Conduct and Ethics and
Whistleblower Policy, employee misconduct, improper conflicts of interest or other violations. Our Code of Corporate Conduct and Ethics
and Whistleblower Policy is available on our website at www.pulmatrix.com in the "Corporate Governance" section found under
the "Investors" tab. We intend to disclose any amendments to, or waivers from, our Code of Corporate Conduct and Ethics and
Whistleblower Policy at the same website address provided above.

 Board
Composition

 Our
Amended and Restated Certificate of Incorporation and our Restated Bylaws ("Bylaws") provide that our Board will consist
of such number of directors as determined from time to time by resolution adopted by our Board. Effective April 6, 2021, the size of
our Board has been fixed at six directors. Subject to any rights applicable to any then outstanding shares of preferred stock, any vacancies
or newly created directorships resulting from an increase in the authorized number of directors may be filled by a majority of the directors
then in office. Our Board is classified into three classes, with the term of office of one class expiring each year. The term of Class
I directors expires at the 2024 Annual Meeting, the term of office of Class II directors expires at the Company's annual meeting
of stockholders to be held in 2025 and the term of Class III directors expires at the Company's annual meeting of stockholders
to be held in 2026. Stockholders vote to elect directors of the class with a term then expiring each year at our annual meeting.

 We
have no formal policy regarding Board diversity. Our Board believes that each director should have a basic understanding of the principal
operational and financial objectives and plans and strategies of the Company, our results of operations and financial condition and relative
standing in relation to our competitors. We take into consideration the overall composition and diversity of the Board and areas of expertise
that director nominees may be able to offer, including business experience, knowledge, abilities and customer relationships. Generally,
we will strive to assemble a Board that brings to us a variety of perspectives and skills derived from business and professional experience
as we may deem are in our and our stockholders' best interests. In doing so, we will also consider candidates with appropriate
non-business backgrounds.

 The
table below provides additional diversity information regarding our directors. Each of the categories listed in the below table has the
meaning as it is used in Nasdaq Listing Rule 5605(f).

 Board Diversity Matrix (as of March 25, 2024)

 Total number of Directors:

 Gender Identity:

 Female

 Male

 Non-Binary

 Did Not Disclose Gender

 Directors

 Demographic Background:

 African American or Black

 Alaskan Native or Native American

 Asian

 Hispanic or LatinX

 Native Hawaiian or Pacific Islander

 White

 Two or More Races or Ethnicities

 LGBTQ+

 Did Not Disclose Demographic Background

Independence

 We
are currently listed on the Nasdaq Capital Market and therefore rely on the definition of independence set forth in the Nasdaq Listing
Rules ("Nasdaq Rules"). Under the Nasdaq Rules, a director will only qualify as an "independent director" if,
in the opinion of our Board, that person does not have a relationship that would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director. Based upon information requested from and provided by each director concerning his
background, employment, and affiliations, including family relationships, we have determined that Mr. Bazemore, Dr. Batycky, Dr. Cabell,
Mr. Higgins, and Mr. Varadan have no material relationships with us that would interfere with the exercise of independent judgment and
are "independent directors" as that term is defined in the Nasdaq Rules.

 Board
Committees, Meetings and Attendance

2023, the Board held six meetings. We expect our directors to attend Board meetings, meetings of any committees and subcommittees on
which they serve, and each annual meeting of stockholders, either in person or by teleconference. During 2023, each director attended
at least seventy-five percent (75%) of the total number of meetings held by the Board and Board committees of which such director was
a member. Five of our directors attended our 2023 annual meeting of stockholders.

 The
Board delegates various responsibilities and authority to different Board committees. Committees regularly report on their activities
and actions to the full Board. Currently, the Board has established an Audit Committee, a Compensation Committee and a Nominating and
Corporate Governance Committee. Committee assignments are re-evaluated annually. Each of these committees operates under a charter that
has been approved by our Board. The current charter of each of these committees is available on our website at www.pulmatrix.com
in the "Corporate Governance" section under "Investors." As of the date of this report, the following table sets forth
the membership of each of the Board committees listed above.

 Name

 Audit
 Committee

 Committee

 Nominating
 and Corporate Governance Committee

 Raad

 Richard
 Batycky, Ph. D.

 Todd
 Bazemore

 Christopher
 Cabell, M.D.

 Michael
 J. Higgins*

 Anand
 Varadan

 *

 of the Board of Directors

 Audit
Committee

 Our
Audit Committee is responsible for, among other matters:

 approving
 and retaining the independent auditors to conduct the annual audit of our financial statements;

 the proposed scope and results of the audit;

 and pre-approving audit and non-audit fees and services;

 accounting and financial controls with the independent auditors and our financial and accounting staff;

 and approving transactions between us and our directors, officers and affiliates;

 recognizing
 and preventing prohibited non-audit services;

 establishing
 procedures for complaints received by us regarding accounting matters;

 overseeing
 internal audit functions, if any; and

 preparing
 the report of the audit committee that the rules of the SEC require to be included in our annual meeting proxy statement.

 Our
Audit Committee is composed of Michael J. Higgins (chairman), Richard Batycky, Ph. D. and Todd Bazemore. Our Board has determined that
Mr. Higgins, Dr. Batycky and Mr. Bazemore were independent in accordance with Nasdaq Rules and Rule 10A-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Our Board has also reviewed the education, experience and other qualifications
of each member of the Audit Committee. Based upon that review, our Board has determined that Michael J. Higgins qualifies as an "audit
committee financial expert," as defined by the rules of the SEC. The Audit Committee met four times during 2023.

Committee

 Our
Compensation Committee is responsible for, among other matters:

 and recommending the compensation arrangements for management, including the compensation for our president and chief executive officer;

 appointing,
 compensating and overseeing the work of any compensation consultant, legal counsel or other advisor retained by the Compensation
 Committee;

 establishing
 and reviewing general compensation policies with the objective to attract and retain superior talent, to reward individual performance
 and to achieve our financial goals;

 administering
 our stock incentive plans; and

 preparing
 the report of the compensation committee to the extent that the rules of the SEC require such report to be included in our annual
 meeting proxy statement.

 Our
Compensation Committee is composed of Richard Batycky, Ph. D. (chairman), Christopher Cabell, M.D. and Anand Varadan. Our Board has determined
that Dr. Batycky, Dr. Cabell and Mr. Varadan were independent in accordance with Nasdaq Rules. The Compensation Committee has the authority
to delegate to subcommittees of the Compensation Committee any of the responsibilities of the full committee. The Compensation Committee
met two times during 2023. The Compensation Committee did not engage its own compensation consultant but did consider the analyses and
recommendations of a consultant engaged by management.

 Nominating
and Corporate Governance Committee

 Our
Nominating and Corporate Governance Committee is responsible for, among other matters:

 evaluating
 the current composition, organization and governance of the Board and its committees, and making recommendations for changes thereto;

 each director and nominee annually;

 determining
 desired Board member skills and attributes and conducting searches for prospective members accordingly;

 evaluating
 nominees, and making recommendations to the Board concerning the appointment of directors to Board committees, the selection of Board
 committee chairs, proposal of the slate of directors for election to the Board, and the termination of membership of individual directors
 in accordance with the Board's governance principles;

 overseeing
 the process of succession planning for the chief executive officer and, as warranted, other senior officers of the Company;

 developing,
 adopting and overseeing the implementation of a code of business conduct and ethics; and

 administering
 the annual Board performance evaluation process.

 Our
Nominating and Corporate Governance Committee is composed of Todd Bazemore (chairman), Christopher Cabell, M.D. and Michael J. Higgins.
The Nominating and Corporate Governance Committee did not meet during 2023.

Nominations

 Our
Nominating and Corporate Governance Committee considers all qualified candidates identified by members of the Board, by senior management
and by stockholders. The Nominating and Corporate Governance Committee follows the same process and uses the same criteria for evaluating
candidates proposed by stockholders, members of the Board and members of senior management. We did not pay fees to any third party to
assist in the process of identifying or evaluating director candidates during 2023.

 Our
Bylaws contain provisions that address the process by which a stockholder may nominate an individual to stand for election to the Board
at our Annual Meeting. To recommend a nominee for election to the Board, a stockholder must submit his or her recommendation to our Secretary
at our corporate offices at 36 Crosby Drive, Suite 100, Bedford, Massachusetts 01730. Such nomination must satisfy the notice, information
and consent requirements set forth in our Bylaws and must be received by us prior to the date set forth under "Submission of Future
Stockholder Proposals" below. A stockholder's recommendation must be accompanied by the information with respect to stockholder
nominees as specified in our Bylaws, including among other things, the name, age, address and occupation of the recommended person, the
proposing stockholder's name and address, the ownership interests of the proposing stockholder and any beneficial owner on whose
behalf the nomination is being made (including the number of shares beneficially owned, any hedging, derivative, short or other economic
interests and any rights to vote any shares) and any material monetary or other relationships between the recommended person and the
proposing stockholder and/or the beneficial owners, if any, on whose behalf the nomination is being made.

 In
evaluating director nominees, the Nominating and Corporate Governance Committee considers the following factors:

 the
 appropriate size and diversity of our Board;

 our
 needs with respect to the particular knowledge, skills and experience of nominees, including experience in corporate finance, technology,
 business, administration and sales, in light of the prevailing business conditions and the knowledge, skills and experience already
 possessed by other members of the Board;

 experience
 with accounting rules and practices, and whether such a person qualifies as an "audit committee financial expert" pursuant
 to SEC rules; and

 balancing
 continuity of our Board with periodic injection of fresh perspectives provided by new Board members.

 Our
Board believes that each director should have a basic understanding of our principal operational and financial objectives and plans and
strategies, our results of operations and financial condition and our relative standing in relation to our competitors.

 In
identifying director nominees, the Board will first evaluate the current members of the Board willing to continue in service. Current
members of the Board with skills and experience that are relevant to our business and who are willing to continue in service will be
considered for re-nomination.

 If
any member of the Board does not wish to continue in service or if the Board decides not to re-nominate a member for re-election, the
Board will identify another nominee with the desired skills and experience described above. The Board takes into consideration the overall
composition and diversity of the Board and areas of expertise that director nominees may be able to offer, including business experience,
knowledge, abilities and customer relationships. Generally, the Board will strive to assemble a Board that brings to us a variety of
perspectives and skills derived from business and professional experience as it may deem are in our and our stockholders' best
interests. In doing so, the Board will also consider candidates with appropriate non-business backgrounds.

 Board
Leadership Structure and Role in Risk Oversight

 The
positions of Chairman of the Board and Principal Executive Officer are filled by two separate individuals. Mr. Higgins currently serves
as our Chairman of the Board, and Mr. Raad currently serves as our Principal Executive Officer. The Board acknowledges that there are
different leadership structures that could allow it to effectively oversee the management of the risks relating to the Company's
operations and believes its current leadership structure enables it to effectively provide oversight with respect to such risks. Our
Audit Committee is primarily responsible for overseeing the Company's risk management processes on behalf of the full Board. The
Audit Committee receives reports from management concerning the Company's assessment of risks. In addition, the Audit Committee
reports regularly to the full Board, which also considers the Company's risk profile. The Audit Committee and the full Board focus
on the most significant risks facing the Company and the Company's general risk management strategy. In addition, as part of its
oversight of our Company's executive compensation program, the Compensation Committee considers the impact of such program, and
the incentives created by the compensation awards that it administers, on our Company's risk profile. In addition, the Compensation
Committee reviews all of our compensation policies and procedures, including the incentives that they create and factors that may reduce
the likelihood of excessive risk taking, to determine whether they present a significant risk to our Company. The Compensation Committee
has determined that, for all employees, our compensation programs do not encourage excessive risk and instead encourage behaviors that
support sustainable value creation.

 Communications
with Directors

 The
Board welcomes communication from our stockholders. Stockholders and other interested parties who wish to communicate with a member or
members of our Board or a committee thereof may do so by addressing correspondence to the Board member, members or committee, c/o Secretary,
Pulmatrix, Inc., 36 Crosby Drive, Suite 100, Bedford, Massachusetts 01730. Our Secretary will review and forward correspondence to the
appropriate person or persons.

 All
communications received as set forth in the preceding paragraph will be opened by our Secretary for the sole purpose of determining whether
the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions of a product or
service or patently offensive material will be forwarded promptly to the addressee(s). In the case of communications to the Board or
any group or committee of directors, our Secretary will make sufficient copies of the contents to send to each director who is a member
of the group or committee to whom the communication is addressed. If the amount of correspondence received through the foregoing process
becomes excessive, our Board may consider approving a process for review, organization and screening of the correspondence by our Secretary
or another appropriate person.

 Family
Relationships

 There
are no family relationships amongst our directors and executive officers, or person nominated or chosen by the Company to become a director
or executive officer.

 Involvement
in Certain Legal Proceedings

 There
have been no material legal proceedings that would require disclosure under the federal securities laws that are material to an evaluation
of the ability or integrity of our directors or executive officers, or in which any director, officer, nominee or principal stockholder,
or any affiliate thereof, is a party adverse to us or has a material interest adverse to us.

 Insider
Trading Policy and Anti-Hedging Policy

 We
maintain an insider trading policy that applies to our officers and directors that prohibits trading our securities during certain established
periods and when in possession of material non-public information. It also prohibits, unless approved in advance in limited circumstances
by the policy administrator, the hedging of our securities, including short sales or purchases or sales of derivative securities based
on our securities, and the use of our securities to secure a margin or other loan. Since the adoption of our insider trading policy,
the policy administrator has not granted any such exemptions to the policy's general prohibition on hedging or pledging.

 ITEM
 11.

 EXECUTIVE
 COMPENSATION

 Executive

 This
section discusses the material components of our executive compensation program. We comply with the executive compensation disclosure
rules applicable to "smaller reporting companies," as such term is defined in the rules promulgated under the Securities
Act, which require compensation disclosure for (i) our principal executive officer; (ii) the two most highly compensated executive officers
other than our principal executive officer; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant
to clause (ii) but for the fact that the individual was not serving as an executive officer at the end of 2023. These current officers
are referred to as our Named Executive Officers.

Compensation Table

 The
following table sets forth information concerning the compensation of our Named Executive Officers for the years ended December 31, 2023
and 2022.

 Name and Principal Position

 Year

 Salary
 ($)

 Bonus
 ($)

 Option Awards
 ($) (1)

 Non-Equity Incentive Plan Compensation
 ($)

 All Other Compensation
 ($)

 Total
 ($)

 2023

 567,294

 -

 114,172

 -

 10,422
 (2)

 691,888

 (Chief Executive Officer)

 2022

 525,272

 -

 234,375

 237,003

 10,422
 (3)

 1,007,072

 Peter Ludlum (8)

 2023

 -

 -

 -

 -

 510,224
 (4)

 510,224

 (Interim Chief Financial Officer)

 2022

 -

 -

 -

 -

 398,583
 (4)

 398,583

 Margaret Wasilewski, M.D. (9)

 2023

 461,890

 -

 37,294

 -

 10,422
 (2)

 509,606

 (Chief Medical Officer)

 2022

 368,333

 -

 101,882

 133,755

 10,085
 (5)

 614,055

 Michelle S. Siegert (7)

 2023

 -

 -

 -

 -

 -

 -

 (Vice President, Finance)

 2022

 299,700

 43,035
 (6)

 57,594

 81,135

 10,422
 (3)

 491,886

 (1)

 In
 accordance with SEC rules, this column reflects the aggregate fair value of the option awards granted during the respective fiscal
 year computed as of their respective grant dates in accordance with Financial Accounting Standard Board Accounting Standards Codification
 Topic 718 for share-based compensation transactions. The assumptions made in the valuation of the share-based payments are contained
 in Note 9 to our consolidated financial statements for the fiscal year ended December 31, 2023 in our Annual Report on Form 10-K
 for the year ended December 31, 2023.

 (2)

 Company 401(k) plan contributions of $9,900 and payment made by the Company for life, AD&D and LTD premiums in the amount of
 $522.

 (3)

 Company 401(k) plan contributions of $9,150, payment made by the Company for life, AD&D and LTD premiums in the amount of $522
 and cell phone reimbursement of $750.

 (4)

 The
 amount shown in the "All Other Compensation" column for Mr. Ludlum includes fees paid to Danforth Advisors, LLC on his
 behalf during the years ended December 31, 2023 and 2022.

 (5)

 Company 401(k) plan contributions of $9,150, payment made by the Company for life, AD&D and LTD premiums in the amount of $435
 and cell phone reimbursement of $500.

 (6)

 a retention bonus which was paid on March 31, 2022.

 (7)

 As
 of April 18, 2022, Michelle S. Siegert no longer served as the Principal Accounting Officer and the Principal Financial Officer.
 Ms. Siegert was terminated effective July 31, 2023.

 (8)

 Peter
 Ludlum was appointed as our Interim Chief Financial Officer in April 2022.

 (9)

 Margaret
 Wasilewski, M.D. was appointed as our Chief Medical Officer in March 2022. On March 7, 2024, the Board approved the termination of Dr. Wasilewski.

 Narrative
Disclosure to Summary Compensation Table

 Executive
Employment Agreements

 We
have entered into executive employment agreements with each of our Named Executive Officers. The executive employment agreements provide
for "at will" employment and set forth the terms and conditions of employment, including annual base salary, discretionary
bonus opportunities, benefits and eligibility to participate in our employee benefit plans and programs. As a condition of their employment,
our Named Executive Officers were each required to execute our standard proprietary information, inventions, and non-competition agreement.
The material terms of these executive employment agreements are summarized below.

 Retirement
Plans

 As
part of our overall compensation program, we provide all full-time employees, including our named executive officers, with the opportunity
to participate in a defined contribution 401(k) plan. Our 401(k) plan is intended to qualify under Section 401 of the Internal Revenue
Code so that employee pre-tax contributions and income earned on such contributions are not taxable to employees until withdrawn. Employees
may elect to defer up to 100 percent of their eligible compensation (not to exceed the statutorily prescribed annual limit) in the form
of elective deferral contributions to our 401(k) plan. Our 401(k) plan also has a "catch-up contribution" feature for employees
aged 50 or older (including those who qualify as "highly compensated" employees) who can defer amounts over the statutory
limit that applies to all other employees.

 Employee
Benefits and Perquisites

their employment, Mr. Raad, Ms. Siegert, and Dr. Wasilewski are eligible to participate in our health and welfare plans, including medical
and dental benefits, short-term and long-term disability insurance, and life insurance.

 No
Tax Gross-Ups

 We
do not make gross-up payments to cover our executives' personal income taxes that may pertain to any of the compensation or perquisites
paid or provided by us.

 Mr.
Raad

 On
May 16, 2019, the Board appointed Mr. Raad to serve as Chief Executive Officer and a Class II director. Prior to Mr. Raad's
appointment as the Chief Executive Officer, Mr. Raad served as our Chief Business Officer pursuant to an employment agreement, dated
April 28, 2017. On June 28, 2019, we and Mr. Raad entered into an amended and restated employment agreement (the "Raad
Agreement"), with Mr. Raad to serve as our President and Chief Executive Officer. Mr. Raad's employment with us is
"at-will," and the Raad Agreement does not include a specified term. As consideration for his services as Chief
Executive Officer, the Raad Agreement provided that Mr. Raad would receive (i) an annual base salary of $450,000 and (ii) a target
annual cash bonus equal to 45% of his base salary. Both Mr. Raad's salary and bonus are subject to review and adjustment by
the Board or an appropriate committee thereof. The actual bonus amount is based on both our and Mr. Raad's individual
performance during the year. Effective as of January 1, 2022, after taking into consideration previous increases, Mr. Raad's
base salary was increased to $525,272 and the target annual cash bonus equaled 50% of the base salary. Effective as of January 1,
2023, Mr. Raad's base salary was increased to $567,294 and the target annual cash bonus remained at 50% of the base salary. No
incentive bonus was paid to Mr. Raad for the year ended December 31, 2023. Effective January 6, 2024, Mr. Raad was granted a
Retention Bonus (defined below) totaling $340,000 payable in two equal installments following each of the first two calendar
quarters in 2024.

 We
initially agreed in the Raad Agreement to grant Mr. Raad an option to purchase 6,831 shares of our common stock, subject to the terms
and conditions of the Amended and Restated 2013 Employee, Director and Consultant Equity Incentive Plan (the "Incentive Plan")
and our standard form of stock option agreement, as soon as practicable upon execution of the Raad Agreement. On January 9, 2020, after
taking into consideration the results of a compensation survey, the Compensation Committee of the Board made various compensation adjustments,
which included a grant to Mr. Raad, in lieu of the option to purchase 6,831 shares of our commons stock, of (i) an option to purchase
23,572 shares, of which 3,437 optioned shares were fully vested and exercisable as of January 9, 2020, and the remaining optioned shares
to vest and become exercisable in 41 equal monthly installments on the 16th day of each of the 41 calendar months following January 2020,
and (ii) an option to purchase 39,089 shares of common stock, 1/48th of the optioned shares to vest and become exercisable on each of
the 48 monthly anniversaries of January 9, 2020. On April 2, 2020, Mr. Raad was granted an option to purchase 499 shares of common stock,
1/48th of the optioned shares to vest and become exercisable on each of the 48 monthly anniversaries of April 2, 2020.

 On
January 28, 2021, Mr. Raad was granted an option to purchase 28,274 shares of common stock, with 2.08333% of the optioned shares to vest
and become exercisable on each of the 48 monthly anniversaries of grant date. On January 27, 2022, Mr. Raad was granted an option to
purchase 37,500 shares of common stock, with 2.08333% of the optioned shares to vest and become exercisable on each of the 48 monthly
anniversaries of grant date. On January 26, 2023, Mr. Raad was granted an option to purchase 34,900 shares of common stock, with 2.08333%
of the optioned shares to vest and become exercisable on each of the 48 monthly anniversaries of grant date.

 Termination
Benefits

to the Raad Agreement, if Mr. Raad's employment is terminated (i) by us without Cause (as defined in the Raad Agreement) or
(ii) by Mr. Raad for good reason, then we must pay Mr. Raad, in addition to any then-accrued and unpaid obligations owed to him, (a)
twelve (12) months of his then-current base salary, (b) a pro-rated bonus in an amount equal to the target annual performance bonus
to which Mr. Raad may have been entitled for the year in which the termination occurs, (c) a separation bonus equal to one hundred
percent (100%) of the target annual performance bonus to which Mr. Raad may have been entitled for the year in which the termination
occurs, and (d) up to twelve (12) months of COBRA health insurance premiums at our then-normal rate of contribution. In addition,
all unvested equity awards held by Mr. Raad that would have vested during the twelve (12) months following the termination date will
immediately vest and become exercisable. If Mr. Raad's employment is terminated (i) by us without Cause or (ii) by Mr. Raad
for good reason, within twelve (12) months following a change in control, then Mr. Raad shall be entitled to receive, in addition to
any then-accrued and unpaid obligations owed to him, (a) a lump sum payment equal to eighteen (18) months of his then-current base
salary, (b) a pro-rated bonus in an amount equal to the target annual performance bonus to which Mr. Raad may have been entitled for
the year in which the termination occurs, (c) a separation bonus equal to one hundred percent (100%) of the target annual
performance bonus to which Mr. Raad may have been entitled for the year in which the termination occurs, and (d) up to twelve (12)
months of COBRA health insurance premiums at our then-normal rate of contribution. In addition, in that case, all unvested equity
awards will immediately vest and become exercisable. Receipt of Mr. Raad's severance and other termination benefits is subject
to his execution of a release of claims and his compliance with the restrictive covenants contained in his agreements with the
Company.

 Under
Mr. Raad's employment agreement, "good reason" is defined as (i) relocation of Mr. Raad's principal business
location to a location more than fifty (50) miles from his then-current business location; (ii) a material diminution in Mr. Raad's
duties, authority, responsibilities, or reporting lines in a manner whereby Mr. Raad no longer reports to the Board; or (iii) a material
reduction in Mr. Raad's base salary; provided that (A) Mr. Raad provides the Company with written notice that he intends to terminate
his employment for good reason within thirty (30) days of such circumstance occurring, (B) if such circumstance is capable of being cured,
we have failed to cure such circumstance within a period of thirty (30) days from the date of such written notice, and (C) Mr.
Raad terminates his employment within sixty five (65) days from the date that good reason first occurs.

 Retention
Bonus and Letter Agreement

 On
January 6, 2024, we and Mr. Raad entered into a letter agreement (the "Letter Agreement"), pursuant to which Mr. Raad shall
be granted a retention bonus of $170,000 per quarter, for each of the full calendar quarters ending March 31, 2024 and June 30, 2024,
respectively, less applicable payroll and other tax withholdings (such bonus, the "Retention Bonus"). Pursuant to the Letter
Agreement, Mr. Raad must be employed by us on the last day of such applicable calendar quarter unless Mr. Raad's employment is
terminated on the closing date of a potential acquisition of us by an unrelated third party, merger by us with or into an unrelated third
party or other liquidation event (such closing date, the "Retention Date"), in which case, Mr. Raad shall receive the full
Retention Bonus for the calendar quarter in which the Retention Date occurs.

 Notwithstanding
the foregoing, if Mr. Raad's employment with us is terminated by us without Cause prior to the Retention Date, or due to death
or disability, then we shall pay to Mr. Raad the full Retention Bonus with respect to the calendar quarter of such termination, subject
to the receipt of a release of claims by us (the "Release"). We shall not be obligated to pay the Retention Bonus if (i)
Mr. Raad terminates his employment with us prior to the Retention Date, (ii) we terminate Mr. Raad's employment prior to the Retention
Date for Cause, or (iii) Mr. Raad's employment is terminated due to his death, disability or by us without Cause, and a Release
has not been received.

 Mr.
Ludlum

 On
April 14, 2022, we appointed Peter Ludlum as Interim Chief Financial Officer, effective as of April 18, 2022. Since December
2021, Mr. Ludlum has served as a consultant with Danforth Advisors, LLC ("Danforth"), a provider of strategic and operational
finance and accounting for life science companies, and, since December 2021, Mr. Ludlum has served as our Strategic Advisor
– Finance pursuant to a November 30, 2021 consulting agreement (the "Consulting Agreement") between the Company and
Danforth.

to the Consulting Agreement, Danforth will receive cash compensation at a rate of $400 per hour for Mr. Ludlum's services.
Each month we and Danforth shall evaluate jointly the current fee structure and scope of Services. Danforth reserves
the right to an annual increase in consultant rates of up to 4%, effective January 1 of each year. Upon termination of the
Consulting Agreement, no compensation or benefits of any kind shall be payable or issuable to Danforth after the effective date of
such termination. In addition, we will reimburse Danforth for reasonable out-of-pocket business expenses, including but not
limited to travel and parking, incurred by Danforth in performing the services, upon submission by Danforth of supporting
documentation reasonably acceptable to us. Any such accrued expenses in any given three (3) month period that exceed $1,000
shall be submitted to us for our prior written approval.

to the Consulting Agreement, Mr. Ludlum will provide services to us under the Consulting Agreement as an independent contractor
and employee of Danforth. The term of the Consulting Agreement will continue until such time as either party has given notice of termination.
The Consulting Agreement may be terminated by either party hereto: (a) with cause (as defined in the Consulting Agreement) upon written
notice to the other party; or (b) without cause upon 30 days prior written notice to the other party.

 Dr.
Wasilewski

 On
March 1, 2022, we appointed Dr. Wasilewski to serve as Chief Medical Officer. Dr. Wasilewski's employment with us is "at-will,"
pursuant to an employment agreement (the "Wasilewski Agreement"). As consideration for her services as Chief Medical Officer,
the Wasilewski Agreement provided that Dr. Wasilewski would receive (i) an annual base salary of $442,000 and (ii) a target annual cash
bonus equal to 40% of her base salary. Both Dr. Wasilewski's salary and bonus are subject to review and adjustment by the Board
or an appropriate committee thereof. The actual bonus amount is based on both our and Dr. Wasilewski's individual
performance during the year.

 Pursuant to the Wasilewski Agreement, we agreed to grant Dr. Wasilewski an option to purchase 21,060 shares of our common stock, subject to the terms
and conditions of the Incentive Plan and our standard form of stock option agreement, as soon as practicable upon execution of the Wasilewski
Agreement. Effective January 1, 2023, Dr. Wasilewski's base salary was increased to $461,890 and the target annual cash bonus remained
at 40% of the base salary. No incentive bonus was paid to Dr. Wasilewski for the year ended December 31, 2023. On March 7, 2024, the Board approved the termination of Dr. Wasilewski. Termination benefits to be provided to Dr. Wasilewski are described
below.

 Termination
Benefits

to the Wasilewski Agreement, if Dr. Wasilewski's employment is terminated (i) by us other than cause or (ii) by Dr. Wasilewski
for good reason, then we must pay Dr. Wasilewski, in addition to any then-accrued and unpaid obligations owed to her, the following
(i) severance in the amount equal to six (6) months of her base salary, less all customary and required taxes and employment-related
deductions, paid in equal installments commencing on the first payroll date following the date on which the release of claims referenced
above becomes effective and non-revocable, provided that, if the release consideration period plus the revocation period spans two taxable
years, payments will commence in the later taxable year; (ii) payment for any approved, but unpaid bonus for the year immediately preceding
the year her employment terminates, less all customary and required taxes and employment-related deductions; (iii) payment of a pro-rated
bonus in an amount equal to her target bonus to which she may have been entitled for the year in which her employment terminates, less
all customary and required taxes and employment-related deductions; (iv) up to twelve (12) months of COBRA health insurance premiums
at our then-normal rate of contribution. and (v) she shall become fully vested in any and all equity awards outstanding
as of the date of her termination.

 In
the event that a change of control occurs and within a period of one (1) year following the change of control, either her employment
is terminated by us other than for cause or she terminates her employment for good reason, in exchange for her execution and
non-revocation of a release of claims, she shall receive the payments and benefits set forth above, provided that the severance shall
be for twelve (12) months (rather than six (6) months).

 Ms.
Siegert

 Ms.
Siegert was terminated effective July 31, 2023. Previously, on November 13, 2019, the Board had appointed Ms. Siegert to serve as Vice
President, Finance, and as our Principal Accounting Officer and the Principal Financial Officer, effective as of November
16, 2019. As of April 18, 2022, Ms. Siegert no longer served as the Principal Accounting Officer and the Principal Financial Officer.
Ms. Siegert's employment with us was "at-will" with no specified term, subject to an offer letter dated November 7,
2019 (the "Offer Letter"). As consideration for her services as Vice President, Finance, the Offer Letter provided that Ms.
Siegert would receive (i) an annual base salary of $240,000 and (ii) a target annual cash bonus equal to 25% of her base salary, to be
determined by the Chief Executive Officer at his or her sole discretion. Both Ms. Siegert's salary and bonus are subject to review
and adjustment by the Board or an appropriate committee thereof. The actual bonus amount is based on both our and Ms.
Siegert's individual performance during the year. Effective January 1, 2022, after taking into consideration previous increases,
Ms. Siegert's base salary was increased to $299,700 and the target annual cash bonus equaled 30% of the base salary.

 Outstanding
Equity Awards at Fiscal Year-End

 The
following table sets forth information concerning the outstanding equity awards that have been previously awarded to each of our Named
Executive Officers and which remain outstanding as of December 31, 2023:

 Name

 Number of securities underlying unexercised options (#) exercisable

 Number of securities underlying unexercised options (#) unexercisable

 Option exercise price ($)

 Option expiration date

 1,651

 —

 540.00

 05/01/2027

 3,704

 —

 93.60

 06/05/2028

 15,999

 —

 21.20

 05/16/2029

 23,572

 —

 30.80

 01/09/2030

 38,269
 (1)

 30.80

 01/09/2030

 (1)

 25.60

 04/02/2030

 20,615
 (1)

 7,659

 29.40

 01/28/2031

 18,749
 (1)

 18,751

 7.41

 01/27/2032

 8,724
 (1)

 26,176

 3.99

 01/26/2033

 Margaret Wasilewski, M.D.

 9,213
 (2)

 11,847

 5.72

 03/01/2032

 2,850
 (1)

 8,550

 3.99

 01/26/2033

 (1)

 Each
 of these options vests over a four (4) year period, with 2.08333% vesting on each monthly anniversary subsequent to the date of grant
 for a total of forty-eight (48) months.

 (2)

 This
 option award vests over a four (4) year period, with 25% vesting on the first anniversary and 2.08333% vesting on the last day of
 each of the subsequent thirty-six 36 months.

Recovery Policy

 In
November 2023, our board of directors approved a Compensation Recovery Policy, which states that in the event
we are required to prepare an accounting restatement, then we are directed, to the fullest extent permitted by governing
law, to recover from each executive officer the amount, if any, of previously awarded compensation that has been determined to be erroneously
awarded. This policy applies to incentive-based compensation received by executive officers on or after October 2, 2023.

 We
have entered into a director's agreement with each of our non-employee directors. In 2023, under these agreements, non-employee
directors were paid cash compensation payable in four quarterly payments as set forth in the table below.

 Annual Retainer
 Non-Employee
 Directors

 Board of Directors:

 Members

 $
 35,000

 Chairperson

 $
 65,000

 Audit Committee:

 Members

 $
 7,500

 Chairperson

 $
 15,000

 Compensation Committee:

 Members

 $
 5,000

 Chairperson

 $
 11,500

 Nominating and Corporate Governance Committee:

 Members

 $
 5,000

 Chairperson

 $
 10,000

 The
agreements also provide that such directors will be reimbursed for reasonable out-of-pocket expenses incurred in connection with the
attendance of board and committee meetings.

Compensation Table

 The
following table presents the total compensation for each person who served as a member of our Board during 2023. Other than as set forth
in the table and described more fully below, we did not pay any compensation, reimburse any expense of, make any equity awards or non-equity
awards to, or pay any other compensation to any of the other members of our Board in such period. Mr. Raad receives no additional compensation
for his service as a director, and, consequently, is not included in this table. The compensation received by Mr. Raad as our President
and Chief Executive Officer for 2023 is set forth in the "Summary Compensation Table" under the section "Executive
Compensation".

 Name

 Fees earned
 or paid in cash
 ($)

 Option
 awards (1)(2)
 ($)

 Total
 ($)

 Richard Batycky, Ph. D.

 54,000

 5,561

 59,561

 Todd Bazemore

 52,500

 5,561

 58,061

 Christopher Cabell, M.D.

 45,000

 5,561

 50,561

 Michael J. Higgins

 85,000

 7,969

 92,969

 Anand Varadan

 40,000

 5,561

 45,561

 (1)

 In
 accordance with SEC rules, this column reflects the aggregate fair value of option awards granted during the fiscal year ended December
 31, 2023, computed as of their respective grant dates in accordance with Financial Accounting Standard Board Accounting Standards
 Codification Topic 718 for share-based compensation transactions. The assumptions made in the valuation of the share-based payments
 are contained in Note 9 to our consolidated financial statements, found elsewhere in this report.

 (2)

 As
 of December 31, 2023, our non-employee directors held the following aggregate number of options to purchase shares of our common
 stock: Dr. Batycky, 5,555 options; Mr. Bazemore, 5,055 options; Dr. Cabell, 5,055 options; Mr. Higgins, 9,151 options; and Mr. Varadan,
 4,305 options.

 ITEM
 12.

 SECURITY
 OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 The
following table sets forth information regarding the beneficial ownership of our common stock as of March 25, 2024 by (i) each person
known to us to beneficially own five percent (5%) or more of our common stock, (ii) each director and Named Executive Officer (as defined
below) and (iii) all of our directors and executive officers as a group. The persons named in the table have sole voting and investment
power with respect to all shares of common stock owned by them and have an address of c/o Pulmatrix Inc., 36 Crosby Drive, Suite 100,
Bedford, MA 01730, unless otherwise noted. Percentage of ownership is based on 3,652,285 shares of common stock issued and outstanding
as of March 25, 2024.

 Beneficial
ownership is determined in accordance with the rules of the SEC. For the purpose of calculating the number of shares beneficially owned
by a stockholder and the percentage ownership of that stockholder, shares of common stock subject to options or warrants that are currently
exercisable or exercisable within sixty (60) days of March 25, 2024 by that stockholder are deemed outstanding.

 Name

 Number of Shares Beneficially Owned

 Percentage of Shares outstanding (1)

 Beneficially Owned as a result of stock ownership

 Beneficially Owned as a result of stock option ownership

 Beneficially Owned as a result of warrant ownership

 Named Executive Officers and Directors

 Richard Batycky, Ph. D.

 3,852

 *

 3,827

 -

 Todd Bazemore

 3,141

 *

 -

 3,141

 -

 Christopher Cabell M.D.

 3,265

 *

 -

 3,265

 -

 Michael J. Higgins

 6,531

 *

 -

 6,531

 -

 Anand Varadan

 2,247

 *

 -

 2,247

 -

 140,988

 3.72
 %

 -

 140,988

 -

 Peter Ludlum

 -

 *

 -

 -

 -

 Margaret Wasilewski, M.D.

 14,767

 *

 -

 14,767

 -

 All directors and executive officers as a group of eight persons

 174,791

 4.57
 %

 174,766

 -

 5% Stockholders

 Sabby Volatility Warrant Master Fund, Ltd (2)
 c/o Ogier Fiduciary Services (Cayman) Limited
 89 Nexus Way, Camana Bay, Grand Cayman KY1-9007 Cayman Islands

 182,249

 4.99
 %

 182,249

 -

 -

 *

 Less
 than 1%.

 (1)

 Beneficial
 ownership as reported in the above table has been determined in accordance with Rule 13d-3 promulgated under the Exchange Act and
 is not necessarily indicative of beneficial ownership for any other purpose. The number of shares of common stock shown as beneficially
 owned in column one includes shares of common stock issuable upon the exercise of stock options and warrants that are currently exercisable or will become exercisable within sixty (60) days of March
 25, 2024.

 (2)

 This
 information is based on the information reported on the Schedule 13G filed on January 2, 2024 by Sabby Volatility Warrant Master
 Fund, Ltd., Sabby Management, LLC, and Hal Mintz, and other information available to the Company. Sabby Volatility Warrant Master
 Fund, Ltd ("Sabby") is the beneficial owner of 182,249 shares of common stock. As of March 25, 2024, Sabby owns
 warrants that would be exercisable up to 248,409 additional shares of common stock, except for a limitation set forth in the warrant
 agreements that restricts Sabby's ability to exercise the warrants if such exercise would result in Sabby Volatility Warrant
 Master Fund, Ltd owning more than 4.99% of the Company's currently outstanding number of shares of common stock. The principal
 address of Sabby is 89 Nexus Way, Camana Bay, Grand Cayman KY1-9007 Cayman Islands.

 Equity
Compensation Plan Information

 The
following table provides information regarding the number of securities to be issued under the Incentive Plan, the 2013 Employee, Director
and Consultant Equity Incentive Plan (the "Original 2013 Plan") and the 2003 Employee, Director, and Consultant Stock Plan
(the "2003 Plan"), the weighted-average exercise price of options issued under the Incentive Plan, Original 2013 Plan and
the 2003 Plan, and the number of securities remaining available for future issuance under the Incentive Plan, the Original 2013 Plan
and the 2003 Plan, in each case as of December 31, 2023:

 Plan category

 Number of securities to be issued upon exercise of outstanding options, warrants and rights

 Weighted-average exercise price of outstanding options, warrants and rights

 Number of securities remaining available for future issuance under equity compensation plans (3)

 Equity compensation plans approved by security holders (1)

 344,306

 $
 20.92

 288,186

 Equity compensation plans not approved by security holders (2)

 —

 —

 —

 Total

 344,306

 $
 20.92

 288,186

 (1)

 shares available for issuance under the Incentive Plan.

 (2)

 Excludes
 8 shares of our common stock issuable upon outstanding options granted under equity compensation plans granted under the Original
 2013 Plan. No additional awards may be issued under the Original 2013 Plan nor the 2003 Plan. As of December 31, 2023, there were
 8 options with a weighted average exercise price of $3.40 per share outstanding pursuant to the Original 2013 Plan and no options
 outstanding pursuant to the 2003 Plan.

 (3)

 The
 number of authorized shares under the Incentive Plan is subject to annual increases based upon an "evergreen" provision,
 which allows for an annual increase in the number of shares of our common stock available for issuance under the plan on the first
 day of each fiscal year. Pursuant to the "evergreen" provision currently in effect, the annual increase in the number
 of shares shall be equal to five percent (5%) of the number of shares of our common stock outstanding as of such date.

 ITEM
 13.

 CERTAIN
 RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 Transactions
with related persons are governed by our Code of Corporate Conduct and Ethics and Whistleblower Policy, which applies to all of our associates,
as well as each of our directors and certain persons performing services for us. This code covers a wide range of potential activities,
including, among others, conflicts of interest, self-dealing and related party transactions. Waiver of the policies set forth in this
code will only be permitted when circumstances warrant. Such waivers for directors and executive officers, or that provide a benefit
to a director or executive officer, may be made only by our Board, as a whole, or the Audit Committee and must be promptly disclosed
as required by applicable law or regulation. Absent such a review and approval process in conformity with the applicable guidelines relating
to the particular transaction under consideration, such arrangements are not permitted. All related party transactions for which disclosure
is required to be provided herein were approved in accordance with our Code of Corporate Conduct and Ethics and Whistleblower Policy.

 Since January 1, 2022, there were no transactions nor proposed transactions
with related persons outside the normal course of business in which any related person has or will have a direct or indirect material interest involving an
amount that exceeds the lesser of $120,000 or one percent (1%) of the average of the Company's total assets as of the end of last
two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the
Company's common stock, or an immediate family member of any of those persons.

 ITEM
 14.

 PRINCIPAL
 ACCOUNTANT FEES AND SERVICES

 Fees
to Independent Registered Public Accounting Firm

 The
following is a summary of the fees billed to us by Marcum LLP for professional services rendered in the years ended December 31, 2023
and 2022:

 2023

 2022

 Audit Fees

 $
 272,926

 $
 238,885

 Audit-Related Fees

 —

 —

 Tax Fees

 —

 —

 All Other Fees

 —

 —

 Total Fees

 $
 272,926

 $
 238,885

 Audit
Fees. This category includes the audit of our annual consolidated financial statements, reviews of our interim financial
statements included in our Form 10-Qs and services that are normally provided by our independent registered public accounting firm
in connection with its engagements for those years. This category also includes advice on audit and accounting matters that arose
during, or as a result of, the audit or the review of our unaudited interim financial statements.

 Audit-Related
Fees. This category consists of assurance and related services by our independent registered public accounting firm that are reasonably
related to the performance of the audit or review of our financial statements and are not reported above under "Audit Fees."
The services for the fees disclosed under this category include consents regarding equity issuances.

 Tax
Fees. This category typically consists of professional services rendered by our independent registered public accounting firm for
tax compliance and tax advice.

 All
Other Fees. This category includes aggregate fees billed in each of the last two fiscal years for products and services provided
by the Marcum LLP, other than the services reported in the categories above.

 Pre-Approval
Policies and Procedures

 Under
the Audit Committee's pre-approval policies and procedures, the Audit Committee is required to pre-approve the audit and non-audit
services performed by our independent registered public accounting firm. On an annual basis, the Audit Committee pre-approves a list
of services that may be provided by the independent registered public accounting firm without obtaining specific pre-approval from the
Audit Committee. In addition, the Audit Committee sets pre-approved fee levels for each of the listed services. Any type of service that
is not included on the list of pre-approved services must be specifically approved by the Audit Committee or its designee. Any proposed
service that is included on the list of pre-approved services but will cause the pre-approved fee level to be exceeded will also require
specific pre-approval by the Audit Committee or its designee.

 The
Audit Committee has delegated pre-approval authority to the Audit Committee chairman and any pre-approved actions by the Audit Committee
chairman as designee are reported to the Audit Committee for approval at its next scheduled meeting.

 All
of the services rendered by Marcum LLP in 2023 were pre-approved by the Audit Committee.

 PART
IV

 ITEM
 15.

 EXHIBITS,
 FINANCIAL STATEMENT SCHEDULES.

 (a)

 The
 following documents are filed as part of this Annual Report on Form 10-K:

 (1)

 Financial Statements:

 Report of Independent Registered Public Accounting Firm (PCAOB ID: 688)

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022

 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022

 Notes to Consolidated Financial Statements

 (2)

 Financial
 Statement Schedules:

 None.
Financial statement schedules have not been included because they are not applicable, or the information is included in the consolidated
financial statements or notes thereto.

 (3)

 Exhibits:

 See
"Index to Exhibits" for a description of our exhibits.

 ITEM
 16.

 FORM
 10-K SUMMARY

 Not

TO EXHIBITS

 Exhibit

 Number

 Exhibit
 Description

 Filed

 with
 this

 Report

 Incorporated

 by
 Reference

 herein
 from Form

 or

 Filing
 Date

 SEC

 File/Reg.

 Number

 1.1

 At the Market Offering Agreement, dated May 26, 2021, by and between Pulmatrix, Inc. and H.C. Wainwright & Co., LLC

 Form
 S-3

 1.2)

 05/26/21

 333-256502

 3.1

 Amended and Restated Certificate of Incorporation of Pulmatrix, Inc., as amended through June 15, 2015

 Form

 (Exhibit 3.1)

 08/14/15

 3.2

 Restated Bylaws of Pulmatrix, Inc., as amended through June 15, 2015

 Form

 (Exhibit 3.2)

 08/14/15

 3.3

 Certificate of Amendment to Amended and Restated Certificate of Incorporation of Pulmatrix, Inc., dated as of June 5, 2018

 Form

 (Exhibit 3.1)

 06/07/18

 3.4

 Form of Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock.

 Form
 8-K/A

 3.1)

 12/17/21

 3.5

 Certificate of Correction to the Certificate of Designation, filed December 16, 2021

 Form
 8-K/A

 3.2)

 12/17/21

 3.6

 Certificate of Amendment to Amended and Restated Certificate of Incorporation of Pulmatrix, Inc., dated as of February 5, 2019

 Form

 3.1)

 02/06/19

 3.7

 Certificate of Amendment to Amended and Restated Certificate of Incorporation of Pulmatrix, Inc., dated as of February 28, 2022

 Form

 3.7)

 03/29/22

 3.8

 Amendment to the Restated Bylaws of Pulmatrix Inc., dated as of April 28, 2022

 Form

 3.1)

 04/29/22

 4.1

 Form of Specimen Stock Certificate

 Form

 06/16/15

 4.2

 Form of Representative's Warrant Agreement

 Form
 S-1/A

 (Exhibit 4.2)

 02/24/14

 333-190476

 4.3

 Warrant Agreement, dated June 16, 2015, by and between Pulmatrix, Inc. and Hercules Technology Growth Capital, Inc.

 Form

 (Exhibit 10.3)

 06/16/15

 4.4

 Form of Warrant issued in Pulmatrix Operating Private Placement, dated June 15, 2015

 Form

 (Exhibit 10.8)

 08/14/15

 4.5

 Form of Series B Warrant issued in Pulmatrix Public Offering, dated March 28, 2018

 Form
 S-1/A

 (Exhibit 4.8)

 03/28/18

 333-223630

 4.6

 Form of Pre-Funded Warrant issued in Pulmatrix Public Offering, dated March 28, 2018

 Form
 S-1/A

 (Exhibit 4.7)

 03/28/18

 333-223630

 4.7

 Form of Pre-Funded Warrant issued in Pulmatrix Public Offering, dated December 3, 2018

 Form

 12/03/18

 4.8

 Form of Common Warrant issued in Pulmatrix Public Offering, dated December 3, 2018

 Form

 (Exhibit 4.2)

 12/03/18

 4.9

 Form of Underwriter Warrant issued in Pulmatrix Public Offering, dated January 31, 2019

 Form

 1/30/19

 4.10

 Form of Underwriter Warrant issued in Pulmatrix Public Offering, dated February 4, 2019

 Form

 02/01/19

 4.11

 Form of Common Warrant issued in Pulmatrix Direct Registered Offering, dated February 12, 2019

 Form

 02/11/19

 4.12

 Form of Placement Agent Warrant issued in Pulmatrix Registered Direct Offering, dated February 12, 2019

 Form

 (Exhibit 4.2)

 02/11/19

 4.13

 Form of Common Stock Warrant issued in Pulmatrix Public Offering, dated April 1, 2019

 Form
 S-1/A

 (Exhibit 4.13)

 04/01/19

 333-230395

 4.14

 Form of Pre-Funded Warrant issued in Pulmatrix Public Offering, dated April 1, 2019

 Form
 S-1/A

 (Exhibit 4.11)

 04/01/19

 333-230395

 4.15

 Form of Underwriter Warrant issued in Pulmatrix Public Offering, dated April 1, 2019

 Form
 S-1/A

 (Exhibit 4.12)

 04/01/19

 333-230395

 4,16

 Form of Common Warrant issued in Pulmatrix Public Offering, dated April 16, 2020

 Form

 4.1)

 04/16/20

 4.17

 Form of Placement Agent Warrant issued in Pulmatrix Public Offering dated April 16, 2020

 Form

 4.1)

 04/20/20

 4.18

 Form of Warrant Dated July 9, 2020

 Form

 07/09/20

 4.19

 Form of Common Stock Purchase Warrant, dated December 17, 2021

 Form

 4.1)

 12/15/21

 4.20

 Form of Placement Agent Warrant dated December 17, 2021

 Form

 4.2)

 12/15/21

 4.21

 Description of Securities

 Form

 4.21)

 03/29/22

 4.22

 Form of Placement Agent Warrant dated February 16, 2021

 Form

 4.1)

 02/16/21

 10.1*

 Pulmatrix, Inc. Amended and Restated 2013 Employee, Director and Consultant Equity Incentive Plan

 Form

 (Exhibit 10.6)

 06/16/15

 10.2*

 Pulmatrix, Inc. 2013 Employee, Director and Consultant Equity Incentive Plan

 Form
 S-8

 (Exhibit 99.2)

 07/20/15

 333-205752

 10.3*

 Pulmatrix Inc. 2003 Employee, Director and Consultant Stock Plan

 Form
 S-8

 (Exhibit 99.3)

 07/20/15

 333-205752

 10.4

 License, Development and Commercialization Agreement, dated June 9, 2017, by and between Pulmatrix, Inc. and Respivert Ltd.

 Form

 (Exhibit 10.1)

 08/04/17

 10.5

 First Amendment to the Pulmatrix, Inc. Amended and Restated 2013 Employee, Director and Consultant Equity Incentive Plan, dated as of June 5, 2018

 Form

 (Exhibit 10.1)

 06/07/18

 10.6*

 Amended and Restated Employment Agreement, dated June 28, 2019, by and between the Company and Teofilo Raad

 Form
 10-K/A

 (Exhibit 10.1)

 06/28/19

 10.7

 Development and Commercialization Agreement, dated as of April 15, 2019, by and between Cipla Technologies, LLC and Pulmatrix, Inc.

 Form

 (Exhibit 10.4)

 08/05/19

 10.8*

 Second Amendment to the Pulmatrix, Inc. Amended and Restated 2013 Employee, Director and Consultant Equity Incentive Plan, dated March 11, 2019

 Form
 S-8

 (Exhibit 99.3)

 06/04/19

 333-231935

 10.9*

 Third Amendment to the Pulmatrix, Inc. Amended and Restated 2013 Employee, Director and Consultant Equity Incentive Plan, dated as of September 6, 2019

 Form

 (Exhibit 10.1)

 09/09/19

 10.10**

 License, Development and Commercialization Agreement, by and between Pulmatrix, Inc. and Johnson & Johnson Enterprise Innovation, Inc., dated as of December 26, 2019

 Form

 10.13)

 03/26/20

 10.11

 Securities Purchase Agreement

 Form

 10.1)

 04/16/20

 10.12

 Form of Letter Agreement

 Form

 10.1)

 07/09/20

 10.13

 Form of Securities Purchase Agreement dated December 15, 2021, by and between Pulmatrix, Inc. and the purchaser parties thereto

 Form

 10.1)

 12/15/21

 10.14**

 Second Amendment to Development and Commercialization Agreement, dated as of November 8, 2021, by and between Cipla Technologies, LLC and Pulmatrix, Inc.

 Form

 10.1)

 11/09/21

 10.15

 Form of Securities Purchase Agreement dated February 11, 2021, by and between Pulmatrix, Inc. and the purchaser parties thereto

 Form

 10.1)

 02/16/21

 10.16*

 Consulting Agreement, dated November 30, 2021, by and between Pulmatrix, Inc. and Danforth Advisors, LLC

 Form

 10.1)

 04/14/22

 10.17***

 Third Amendment to the Development and Commercialization Agreement, dated as of January 6, 2024, by and among Pulmatrix, Inc., Pulmatrix Operating Company, Inc., and Cipla Technologies LLC.

 Form

 10.1)

 01/08/24

 10.18*

 Letter Agreement, dated January 6, 2024, by and between Teofilo Raad and the Company

 Form

 10.2)

 01/08/24

 21.1

 List of Subsidiaries

 Form

 (Exhibit 21.1)

 03/13/18

 23.1

 Consent of Marcum LLP, independent registered public accounting firm, to the Form 10-K

 X

 31.1

 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 X

 31.2

 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 X

 32.1

 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 X

 (furnished herewith)

 32.2

 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 X

 (furnished herewith)

 97.01

 Compensation Recovery Policy

 X

 101.
 INS

 X

 101.SCH

 X

 101.CAL

 X

 101.DEF

 X

 101.LAB

 X

 101.PRE

 X

 Cover

 *

 These
 exhibits are management contracts or compensatory plans or arrangements.

 **

 Portions
 of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K under the Securities Act of 1933, as amended,
 because they are both (i) not material and (ii) the type that the registrant treats as private or confidential. A copy of the omitted
 portions will be furnished to the SEC upon its request.

 ***

 Certain of the schedules (and similar attachments) to this exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K
under the Securities Act because they do not contain information material to an investment or voting decision and that information is
not otherwise disclosed in the exhibit or the disclosure document. The registrant hereby agrees to furnish a copy of all omitted schedules
(or similar attachments) to the Securities and Exchange Commission upon its request.

 SIGNATURES

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

 INC.

 Date:
March 28, 2024

 By:

 /s/

 Raad

 Chief
 Executive Officer and President

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated below and on the dates indicated.

 Signature

 Title

 Date

 /s/

 Chief
 Executive Officer, President and Director

 (Principal
 Executive Officer)

 March

 Raad

 /s/
 Peter Ludlum

 Interim
 Chief Financial Officer

 March

 Peter
 Ludlum

 (Principal
 Financial and Accounting Officer)

 /s/
 Michael J. Higgins

 of the Board of Directors

 March

 Michael
 J. Higgins

 /s/
 Richard Batycky, Ph. D.

 March

 Richard
 Batycky, Ph. D.

 /s/
 Todd Bazemore

 March

 Todd
 Bazemore

 /s/
 Christopher Cabell, M.D.

 March

 Christopher
 Cabell, M.D.

 /s/
 Anand Varadan

 March

 Anand
 Varadan

INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

 Page

 Report of Independent Registered Public Accounting Firm (PCAOB ID: 688)

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022

 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022

 Notes to Consolidated Financial Statements

 F- 1

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Stockholders and Board of Directors of

 Pulmatrix,
Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheets of Pulmatrix, Inc. (the "Company") as of December 31, 2023 and
2022, the related consolidated statements of operations, stockholders' equity and cash flows for each of the two years in the period
ended December 31, 2023 and the related notes (collectively referred to as the "financial statements"). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and
2022 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023 in conformity
with accounting principles generally accepted in the United States of America.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

 Critical
Audit Matters

 The
critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

 Revenue
Recognition – Estimated Total Contract Costs

 Description
of the Matter

 As
described in Note 2 and Note 6 to the financial statements the Company recognizes revenue from non-refundable, upfront fees allocated
to a license, when such license is transferred to the customer through collaboration arrangements and the customer is able to use and
benefit from the license. For licenses that are combined with other promises, the Company utilizes judgment to assess the nature of the
combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time
and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company uses the input method,
with estimated costs to satisfy the performance obligation being the input, as the best measure of the transfer of control of the performance
obligation.

uses significant assumptions and estimates when determining the total estimated costs expected upon satisfying the performance obligation,
which in turn led to significant auditor judgment, subjectivity and effort in performing procedures to evaluate the total estimate of
the costs expected upon satisfying the performance obligation.

 How
We Addressed the Matter in Our Audit

 Addressing
the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial
statements. These procedures included, among others, (i) obtaining an understanding of management's process in developing the cost
estimates (ii) discussion with the Company's clinical and manufacturing personnel to understand the estimates used in developing
the cost estimates (iii) evaluating the appropriateness of management's estimates of total costs to satisfy the performance obligation;
(iv) evaluating whether the cost estimates used by management were reasonable considering consistency with company-specific data; and
(v) determining the reasonableness of the assumptions used in management's estimation process.

 /s/
Marcum llp

 Marcum
LLP

 We
have served as the Company's auditor since 2015.

 New
York, NY

 March

 F- 2

INC.

Balance Sheets

 (in
thousands, except share and per share data)

 December 31, 2023

 December 31, 2022

 Assets

 Current assets:

 Cash and cash equivalents

 $
 19,173

 $
 35,628

 Restricted cash

 -

 Accounts receivable

 1,298

 Prepaid expenses and other current assets

 1,068

 Total current assets

 20,843

 38,147

 Property and equipment, net

 1,158

 Operating lease right-of-use asset

 10,309

 Long-term restricted cash

 1,472

 1,472

 Other long-term assets

 Total assets

 $
 33,958

 $
 40,953

 Liabilities and stockholders' equity

 Current liabilities:

 Accounts payable

 $
 1,915

 $
 1,188

 Accrued expenses and other current liabilities

 1,638

 Operating lease liability

 Deferred revenue

 1,339

 Total current liabilities

 3,909

 5,022

 Deferred revenue, net of current portion

 3,727

 4,822

 Operating lease liability, net of current portion

 8,327

 -

 Total liabilities

 15,963

 9,844

 Commitments and contingencies (Note 10)

 -

 -

 Stockholders' equity:

 Preferred stock, $ 0.0001 par value — 500,000 shares authorized; 6,746 shares designated Series A convertible preferred stock; no shares issued and outstanding at December 31, 2023 and 2022

 -

 -

 Common stock, $ 0.0001 par value — 200,000,000 shares authorized; 3,652,285 and 3,639,185 shares issued and outstanding at December 31, 2023 and 2022, respectively

 -

 -

 Additional paid-in capital

 305,592

 304,585

 Accumulated deficit

 ( 287,597
)

 ( 273,476
)

 Total stockholders' equity

 17,995

 31,109

 Total liabilities and stockholders' equity

 $
 33,958

 $
 40,953

 The
accompanying footnotes are an integral part of these consolidated financial statements.

 F- 3

INC.

Statements of Operations

 (in
thousands, except share and per share data)

 2023

 2022

 2023

 2022

 Revenues

 $
 7,298

 $
 6,071

 Operating expenses

 Research and development

 15,518

 18,240

 General and administrative

 6,520

 6,778

 Total operating expenses

 22,038

 25,018

 Loss from operations

 ( 14,740
)

 ( 18,947
)

 Other income (expense)

 Interest income

 Other expense, net

 ( 248
)

 ( 198
)

 Total other income, net

 $
 ( 14,121
)

 $
 ( 18,836
)

 Net loss per share attributable to common stockholders – basic and diluted

 $
 ( 3.87
)

 $
 ( 5.46
)

 Weighted average common shares outstanding – basic and diluted

 3,651,911

 3,447,701

 The
accompanying footnotes are an integral part of these consolidated financial statements.

 F- 4

INC.

Statements of Stockholders' Equity

 (in
thousands, except share data)

 Shares

 Amount

 Shares

 Amount

 Capital

 Deficit

 Equity

 Preferred Stock

 Common Stock

 Additional Paid-in

 Accumulated

 Total Stockholders'

 Shares

 Amount

 Shares

 Amount

 Capital

 Deficit

 Equity

 Balance — January 1, 2022

 1,830

 $
 1,081

 3,222,037

 $
 -

 $
 301,008

 $
 ( 254,640
)

 $
 47,449

 Conversion of preferred stock to common stock

 ( 1,830
)

 ( 1,081
)

 152,500

 -

 1,081

 -

 -

 Issuance of common stock, net of issuance costs

 -

 -

 252,013

 -

 1,382

 -

 1,382

 Adjustment due to reverse stock split

 -

 -

 12,635

 -

 -

 -

 -

 Stock-based compensation

 -

 -

 -

 -

 1,114

 -

 1,114

 -

 -

 -

 -

 -

 ( 18,836
)

 ( 18,836
)

 Balance — December 31, 2022

 -

 $
 -

 3,639,185

 $
 -

 $
 304,585

 $
 ( 273,476
)

 $
 31,109

 Balance

 -

 $
 -

 3,639,185

 $
 -

 $
 304,585

 $
 ( 273,476
)

 $
 31,109

 Issuance of common stock, net of issuance costs

 -

 -

 13,100

 -

 -

 Stock-based compensation

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 14,121
)

 ( 14,121
)

 Balance — December 31, 2023

 -

 $
 -

 3,652,285

 $
 -

 $
 305,592

 $
 ( 287,597
)

 $
 17,995

 Balance

 -

 $
 -

 3,652,285

 $
 -

 $
 305,592

 $
 ( 287,597
)

 $
 17,995

 The
accompanying footnotes are an integral part of these consolidated financial statements.

 F- 5

INC.

Statements of Cash Flows

 (in
thousands)

 2023

 2022

 2023

 2022

 Cash flows from operating activities:

 $
 ( 14,121
)

 $
 ( 18,836
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Depreciation and amortization

 Amortization of operating lease right-of-use asset

 1,341

 1,383

 Stock-based compensation

 1,114

 Loss on disposal of property and equipment

 -

 Changes in operating assets and liabilities:

 Accounts receivable

 ( 1,231
)

 Prepaid expenses and other current assets

 ( 197
)

 Other long-term assets

 ( 389
)

 Accounts payable

 Accrued expenses and other current liabilities

 ( 1,080
)

 Operating lease liability

 ( 3,041
)

 ( 1,431
)

 Deferred revenue

 ( 1,816
)

 ( 847
)

 Net cash used in operating activities

 ( 15,985
)

 ( 19,356
)

 Cash flows from investing activities:

 Purchases of property and equipment

 ( 676
)

 ( 86
)

 Net cash used in investing activities

 ( 676
)

 ( 86
)

 Cash flows from financing activities:

 Proceeds from issuance of common stock, net of issuance costs

 1,382

 Preferred stock issuance costs

 -

 ( 152
)

 Net cash provided by financing activities

 1,230

 Net decrease in cash, cash equivalents and restricted cash

 ( 16,608
)

 ( 18,212
)

 Cash, cash equivalents and restricted cash — beginning of period

 37,253

 55,465

 Cash, cash equivalents and restricted cash — end of period

 $
 20,645

 $
 37,253

 Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets:

 Cash and cash equivalents

 $
 19,173

 $
 35,628

 Restricted cash

 -

 Long-term restricted cash

 1,472

 1,472

 Total cash, cash equivalents and restricted cash

 $
 20,645

 $
 37,253

 Supplemental disclosures of non-cash investing and financing information:

 Operating lease right-of-use asset obtained in exchange for operating lease liability

 $
 9,116

 $
 -

 Purchases of property and equipment not yet paid

 $

 $
 -

 Conversion of preferred stock to common stock

 $
 -

 $
 1,081

 The
accompanying footnotes are an integral part of these consolidated financial statements.

 F- 6

INC.

 Notes
to Consolidated Financial Statements

 (in
thousands, except share and per share data)

 1.
 Nature of the Business

 Pulmatrix,
Inc. (the "Company") was incorporated in 2013 as a Delaware corporation. The Company is a clinical-stage biopharmaceutical
company focused on the development of a novel class of inhaled therapeutic products. The Company's proprietary dry powder delivery
platform, iSPERSE, is engineered to deliver small, dense particles with highly efficient dispersibility and
delivery to the airways, which can be used with an array of dry powder inhaler technologies and can be formulated with a variety of drug
substances. The Company is developing a pipeline of iSPERSE -based therapeutic candidates targeted at prevention
and treatment of a range of respiratory and other diseases with important unmet medical needs.

 2.
 Summary of Significant Accounting Policies and Recent Accounting Standards

 Principles
of Consolidation

 The
consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiary in conformity with generally
accepted accounting principles in the United States of America ("U.S. GAAP"). All intercompany accounts and transactions
have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the U.S. GAAP as found
in the Accounting Standards Codification ("ASC") and Accounting Standards Update ("ASU") of the Financial Accounting
Standards Board ("FASB").

 Risks,
Uncertainties and Liquidity

 The
ongoing research and development activities will be subject to extensive regulation by numerous governmental authorities in the United
States. Prior to marketing in the United States, any drug developed by the Company must undergo rigorous preclinical and clinical testing
and an extensive regulatory approval process implemented by the United States Food and Drug Administration ("FDA") under
the Food, Drug and Cosmetic Act. The Company has limited experience in conducting and managing the preclinical and clinical testing necessary
to obtain regulatory approval. There can be no assurance that the Company will not encounter problems in the clinical trials that will
cause the Company or the FDA to delay or suspend clinical trials.

 The
Company's success will depend in part on its ability to obtain patents and product license rights, maintain trade secrets, and
operate without infringing on the property rights of others, both in the United States and other countries. There can be no assurance
that patents issued to or licensed by the Company will not be challenged, invalidated, circumvented, or that the rights granted thereunder
will provide proprietary protection or competitive advantages to the Company.

 Based
on its current operating plan, the Company believes that its cash and cash equivalents as of December 31, 2023, will be adequate to
fund its currently anticipated operating expenses for at least twelve months from the date these financial statements are issued.
The Company will need to secure additional funding in the future, from one or more equity or debt financings, collaborations, or
other sources, in order to carry out all of the Company's planned research and development activities and regulatory
activities; commercialize product candidates; or conduct any substantial, additional development requirements requested by the FDA.
Additional funding may not be available to the Company on acceptable terms, or at all. If the Company is unable to secure additional
capital, it will be required to significantly decrease the amount of planned expenditures and may be required to cease operations.
In addition, any disruption in the capital markets could make any financing more challenging, and there can be no assurance that
Pulmatrix will be able to obtain such financing on commercially reasonable terms or at all. Curtailment of operations would cause
significant delays in the Company's efforts to develop and introduce its products to market, which is critical to the
realization of its business plan and the future operations of the Company.

 Use
of Estimates

 In
preparing the consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in
making estimates, actual results may differ from these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions.
The most significant estimates and assumptions in the Company's consolidated financial statements include, but are not limited
to, estimates of future expected costs in order to derive and recognize revenue and estimates related to clinical trial accruals and
upfront deposits.

 F- 7

 Concentrations
of Credit Risk

 Cash
is a financial instrument that potentially subjects the Company to concentrations of credit risk. For all periods presented, substantially
all of the Company's cash was deposited in accounts at a single financial institution that management believes is creditworthy,
and the Company has not incurred any losses to date. The Company is exposed to credit risk in the event of default by this financial
institution for amounts in excess of the Federal Deposit Insurance Corporation insured limits.

 For
the year ended December 31, 2023, revenue from one customer accounted for 100 % of revenue recognized in the accompanying consolidated
financial statements. For the year ended December 31, 2022, revenue from one customer accounted for approximately 99 % of revenue recognized
in the accompanying consolidated financial statements. As of both December 31, 2023 and 2022, one customer accounted for 100 % of accounts
receivable.

 Accounts
Receivable

 The
Company's accounts receivable generally relate to amounts reimbursable under its collaboration agreements with partners. The contractual
life of the Company's receivables is generally short term. The Company makes judgments as to its ability to collect outstanding
receivables and provides reserves against receivables for estimated losses that may result from a customer's inability to pay.
Specific amounts determined to be uncollectable are charged against the reserve. The Company believes that credit risks associated with
its partners are not significant. For the years ended December 31, 2023 and 2022, the Company did not record any expected credit losses
related to accounts receivable.

 Cash,
Cash Equivalents and Restricted Cash

 Cash
and cash equivalents are held in US banks and consist of cash deposited in operating and money market accounts.

 Restricted
cash represents cash held in a depository account at a financial institution to collateralize conditional stand-by letters of credit
related to the Company's current office and laboratory facility lease agreement in the amounts of $ 1,421, as well as $ 51 deposited
in a money market account as security for a credit card as of December 31, 2023.

the year ended December 31, 2023, $ 153 of restricted cash collateralizing a letter of credit related to the Company's former headquarters
lease became unrestricted, providing additional cash available for operations.

 Property
and Equipment, net

 Property
and equipment are recorded at cost less accumulated depreciation and amortization. Property and equipment are depreciated over their
estimated useful lives using the straight-line method. Leasehold improvements are amortized over the shorter of the estimated remaining
lease term or the useful lives of the related assets. Repairs and maintenance costs are expensed as incurred, whereas major improvements
are capitalized as additions to property and equipment.

 Depreciation
and amortization is provided over the following estimated useful lives:

of Finite Lived Intangible Assets Estimated Useful Lives

 Asset
 Description

 Estimated
 Useful Lives

 Laboratory
 equipment

 years

 Computer
 equipment

 years

 Office
 furniture and equipment

 years

 Leasehold
 improvements

 Shorter
 of estimated useful life or remaining lease term

 Upon
retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is
reflected in operations.

 Impairment
of Long-Lived Assets

 The
Company accounts for long-lived assets in accordance with FASB ASC Topic 360, Property, Plant, and Equipment. Long-lived assets,
other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the
assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable
market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change
that would indicate that the carrying amount of an asset or group of assets may not be recoverable. Application of alternative assumptions,
such as changes in estimate of future cash flows, could produce significantly different results.

 F- 8

 For
long-lived assets used in operations, impairment losses are only recorded if the asset's carrying amount is not recoverable through
its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the
carrying amount and estimated fair value.

 Fair
Value of Financial Instruments

 The
Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs
used in determining the reported fair values. FASB ASC Topic 820, Fair Value Measurement, establishes a hierarchy of inputs used
in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the
observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability
based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's
assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best
information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported
fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are
described below:

 Level
1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the
ability to access at the measurement date.

 Level
2 — Valuations based on quoted prices for similar assets or liabilities in markets that are not active, or for which all significant
inputs are observable, either directly or indirectly.

 Level
3 — Valuations that require inputs that reflect the Company's own assumptions that are both significant to the fair value
measurement and unobservable.

 To
the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair
value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for
instruments categorized in Level 3. A financial instrument's level within the fair value hierarchy is based on the lowest level
of any input that is significant to the fair value measurement.

 As
of December 31, 2023 and 2022, the Company did not hold any financial assets or liabilities that were measured at fair value on a recurring
or nonrecurring basis. During the years ended December 31, 2023 and 2022, there were no transfers between Level 1, Level 2 and Level
3.

 Leases

 The
Company accounts for leases in accordance with FASB ASC Topic 842, Leases. At the inception of an arrangement, the Company determines
whether the arrangement is or contains a lease based on the unique facts and circumstances present. The Company has elected not to recognize
on the balance sheet leases with terms of one year or less. Options to renew a lease are not included in the Company's initial
lease term assessment unless there is reasonable certainty that the Company will renew. The Company monitors its plans to renew its material
leases on a quarterly basis.

 Operating
lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected
remaining lease term. However, certain adjustments to the right-of-use asset may be required for items, such as incentives received.
The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental
borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments
in a similar economic environment. The Company has elected to account for the lease and non-lease components as a combined lease component.
Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

 Revenue
Recognition

 The
Company's principal source of revenue during the years ended December 31, 2023 and 2022 was derived from a collaboration arrangement
and license agreement that relate to the development and commercialization of PUR1900 under the Cipla Agreement (as defined below).

 At
inception, management determines whether contracts are within the scope of FASB ASC Topic 606, Revenue from Contracts with Customers
 ("ASC 606") or other topics, including FASB ASC Topic 808, Collaborative Arrangements ("ASC 808").
For contracts that are within the scope of ASC 808, the Company evaluates whether the counterparty is a customer for any of the units
of account (i.e., distinct goods and services) in the contract. For units of account where the counterparty is considered a customer,
the Company applies ASC 606 to those unit(s) of account, including recognition, measurement, presentation, and disclosure guidance. To
date, the Company has determined it is appropriate to apply ASC 606 to all contracts and units of account for contracts within the scope
of ASC 808.

 F- 9

 For
contracts and units of account that are determined to be within the scope of ASC 606, revenue is recognized when a customer obtains control
of promised goods or services. The amount of revenue recognized reflects the consideration to which management expects to be entitled
to receive in exchange for these goods and services. To achieve this core principle, management applies the following five steps (i)
identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price;
(iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as the Company
satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will
collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

 Identification
of Performance Obligations. Performance obligations promised in a contract are identified at contract inception based on the goods
and services that are both capable of being distinct and are distinct in the context of the contract. To the extent a contract includes
multiple promised goods and services, management applies judgment to determine whether promised goods and services are both capable of
being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted
for as a combined performance obligation.

 Transaction
Price and Milestone Payments. The transaction price is determined based on the consideration to which the Company will be entitled
in exchange for transferring goods and services to the customer. At the inception of each contract that includes research or development
milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to
be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would
not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company's
control or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.
Management evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve
the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that
a significant revenue reversal would not occur. At the end of each reporting period, management reevaluates the probability of achievement
of all milestones subject to constraint and, if necessary, adjust the estimate of the overall transaction price. Any such adjustments
are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

 Exclusive
Licenses. If the license to the Company's intellectual property is determined to be distinct from the other promises or performance
obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license
when the license is transferred to the customer and the customer is able to use and benefit from the license. In assessing whether a
promise or performance obligation is distinct from the other promises, the Company considers factors such as the research, development,
manufacturing and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the
general marketplace. In addition, the Company considers whether the counterparty can benefit from a promise for its intended purpose
without the receipt of the remaining promise, whether the value of the promise is dependent on the unsatisfied promise, whether there
are other vendors that could provide the remaining promise, and whether it is separately identifiable from the remaining promise. For
licenses that are combined with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation
to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate
method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress each reporting period
and, if necessary, adjusts the measure of performance and related revenue recognition. The measure of progress, and thereby periods over
which revenue should be recognized, are subject to estimates by management and may change over the course of the research and development
and licensing agreement. Such a change could have a material impact on the amount of revenue the Company records in future periods.

and Development Services. The promises under the Company's arrangements may include research and development services to be
performed by the Company on behalf of the counterparty. Payments or reimbursements from customers resulting from the Company's
research and development efforts are recognized as the services are performed and presented on a gross basis because the Company is the
principal for such efforts. The Company uses an input method, according to the ratio of costs incurred to the total costs expected to
be incurred in the future to satisfy the performance obligation. In management's judgment, this input method is the best measure
of the transfer of control of the performance obligation. Amounts received prior to revenue recognition are recorded as deferred revenue.
Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current portion
of deferred revenue in the accompanying consolidated balance sheets. Amounts not expected to be recognized as revenue within the 12 months
following the balance sheet date are classified as deferred revenue, net of current portion. Reimbursements from and payments to the
counterparty that are the result of a collaborative relationship, instead of a customer relationship, such as co-development activities,
are recognized as the services are performed and presented as a reduction to research and development expense. To date, the Company has
determined that all arrangements which include research and development services have been transacted with customers and recognized on
a gross basis using ASC 606.

 Royalties.
 For contracts that include sales-based royalties, including milestone payments upon first commercial sales and milestone payments
based on a level of sales, which are the result of a customer-vendor relationship and for which the license is deemed to be the predominant
item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the
performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied.

 F- 10

 Customer
Options. If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services,
the goods and services underlying the customer options that are not determined to be material rights are not considered to be performance
obligations at the outset of the arrangement, as they are contingent upon option exercise. The Company evaluates the customer options
for material rights, or options to acquire additional goods or services for free or at a discount. If the customer options are determined
to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement.
The Company allocates the transaction price to material rights based on the relative standalone selling price, which is determined based
on the identified discount and the probability that the customer will exercise the option. Amounts allocated to a material right are
not recognized as revenue until, at the earliest, the option is exercised.

 For
a complete discussion of accounting for the Company's revenue contracts, see Note 6, Significant Agreements.

and Development Costs

and development costs are expensed as incurred and include salaries, benefits, bonus, stock-based compensation, license fees, milestone
payments due under license agreements, costs paid to third-party contractors to perform research, conduct clinical trials, and develop
drug materials and delivery devices; and associated overhead and facilities costs. Clinical trial costs are a substantial component of
research and development expenses and include costs associated with third-party contractors, clinical research organizations ("CROs")
and clinical manufacturing organizations ("CMOs"). Invoicing from third-party contractors for services performed can lag
several months. The Company accrues the costs of services rendered in connection with third-party contractor activities based on management's
estimate of fees and costs associated with the contract that were rendered during the period and they are expensed as incurred. Research
and development costs that are paid in advance of performance are capitalized as prepaid expenses and amortized over the service period
as the services are provided.

 Stock-based

 The
Company recognizes all employee stock-based compensation as a cost in the consolidated financial statements. Equity-classified awards
principally related to stock options, which are measured at the grant date fair value of the award. The Company determines grant-date
fair value of stock option awards using the Black-Scholes option-pricing model. For service-based vesting grants, expense is recognized
over the requisite service period based on the number of options or shares expected to ultimately vest. For performance-based vesting
grants, expense is recognized over the requisite period until the performance obligation is met, assuming that it is probable. No expense
is recognized for performance-based grants until it is probable the vesting criteria will be satisfied.

 Stock-based
payments to non-employees are recognized as services are rendered, generally on a straight-line basis. The Company believes that the
fair values of these awards are more reliably measurable than the fair values of the services rendered.

 Convertible
Financial Instruments

 The
Company bifurcates conversion options from their host instruments and accounts for them as freestanding derivative financial instruments
if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative
instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument
that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable
generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument
with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when
the host instrument is deemed to be conventional, as that term is described under applicable U.S. GAAP.

 When
the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded
for the intrinsic value of any beneficial conversion options embedded in the instruments based upon the differences between the fair
value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.
Deemed dividends are also recorded for the intrinsic value of beneficial conversion options embedded in preferred stock based upon the
differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion
price embedded in the preferred stock.

 Common
Stock Warrants

 The
Company classifies as equity any warrants that (i) require physical settlement or net-share settlement or (ii) provide the Company with
a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies
as assets or liabilities any warrants that (i) require net-cash settlement (including a requirement to net cash settle the contract if
an event occurs and if that event is outside the Company's control), (ii) gives the counterparty a choice of net-cash settlement
or settlement in shares (physical settlement or net-share settlement) or (iii) that contain reset provisions that do not qualify for
the scope exception. The Company assesses classification of its common stock warrants and other freestanding derivatives at each reporting
date to determine whether a change in classification between assets and liabilities is required. The Company's freestanding derivatives
consist of warrants to purchase common stock that were issued in connection with its (i) convertible preferred stock, (ii) private placements,
(iii) term loan, (iv) consulting services and (v) underwriting and representative services. The Company evaluated these warrants to assess
their proper classification and determined that the common stock warrants meet the criteria for equity classification in the consolidated
balance sheets.

 F- 11

 Basic
and Diluted Net Loss Per Share

 Basic
and diluted earnings (loss) per share are computed using the two-class method, which is an earnings allocation method that determines
earnings (loss) per share for common shares and participating securities. The participating securities consist of the Company's
preferred stock. The undistributed earnings are allocated between common shares and participating securities as if all earnings had been
distributed during the period. In periods of loss, no allocation is made to the preferred shares and diluted net loss per share is the
same as basic net loss per share because common stock equivalents are excluded as their inclusion would be anti-dilutive.

 Income
Taxes

 Income
taxes are recorded in accordance with FASB ASC Topic 740, Income Taxes ("ASC 740"), which provides for deferred taxes
using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse. A valuation allowance is provided, if, based upon the weight of available
evidence, it is more likely than not that some or all of the net deferred tax assets will not be realized.

 The
Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company
recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as
to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position, as well as consideration
of the available facts and circumstances.

 Recent
Accounting Pronouncements

 From
time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as
of the specified effective date. Except as set forth below, the Company did not adopt any new accounting pronouncements during the year
ended December 31, 2023 that had a material effect on its consolidated financial statements.

 In
June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on
Financial Instruments ("ASU 2016-13"), which has been subsequently amended. The provisions of ASU 2016-13 modify the
impairment model for financial instruments to utilize an expected loss methodology in place of the currently used incurred loss methodology
and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted
the standard as of January 1, 2023. The adoption of this standard did not have a material effect on the Company's consolidated
financial statements.

 As
of December 31, 2023, there are no new, or existing recently issued, accounting pronouncements that are of significance, or potential
significance, that impact the Company's consolidated financial statements.

 3.
 Prepaid Expenses and Other Current Assets

 Prepaid
expenses and other current assets consisted of the following:

of Prepaid Expenses and Other Current Assets

 2023

 2022

 Insurance

 $

 $

 Software and hosting costs

 Clinical and consulting

 Other

 Total prepaid expenses and other current assets

 $

 $
 1,068

 F- 12

 4.
 Property and Equipment, Net

 Property
and equipment, net consisted of the following:

 Schedule of Property and Equipment

 2023

 2022

 Laboratory equipment

 $
 1,656

 $
 1,827

 Capital in progress

 -

 Office furniture and equipment

 Computer equipment

 Leasehold improvements

 -

 Total property and equipment

 2,894

 2,983

 Less accumulated depreciation and amortization

 ( 1,736
)

 ( 2,748
)

 Property and equipment, net

 $
 1,158

 $

 Depreciation
and amortization expense for the year ended December 31, 2023 and 2022 was $ 134 and $ 162, respectively. During the year ended December
31, 2023, the Company disposed of certain property and equipment primarily in connection with moving to its new office, resulting in
a loss on disposal of $ 8. During the year ended December 31, 2022, the Company disposed of certain fixed assets with immaterial gross
costs and accumulated depreciation.

 5.
 Accrued Expenses and Other Current Liabilities

 Accrued
expenses and other current liabilities consisted of the following:

 Schedule of Accrued Expenses and Other Current Liabilities

 2023

 2022

 Accrued purchases of property and equipment

 $

 $
 -

 Clinical and consulting

 Wages and incentives

 1,130

 Legal and patents

 -

 Other

 Total accrued expenses and other current liabilities

 $

 $
 1,638

 6.
 Significant Agreements

and Commercialization Agreement with Cipla Technologies LLC ("Cipla")

 On
April 15, 2019, the Company entered into a Development and Commercialization Agreement (the "Cipla Agreement") with Cipla
for the co-development and commercialization, on a worldwide exclusive basis, of PUR1900, the Company's 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 allergic bronchopulmonary aspergillosis ("ABPA")
in patients with asthma. The Company 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
Company received a non-refundable upfront payment of $ 22.0 million (the "Upfront Payment") under the Cipla Agreement. Upon
receipt of the Upfront Payment, the Company irrevocably assigned to Cipla the following assets, solely to the extent that each covers
the Product in connection with any treatment, prevention, and/or diagnosis of diseases of the pulmonary system ("Pulmonary Indications"):
all existing and future technologies, current and future drug master files, dossiers, third-party contracts, regulatory filings, regulatory
materials and regulatory approvals, patents, and intellectual property rights, as well as any other associated rights and assets directly
related to the Product, specifically in relation to Pulmonary Indications (collectively, the "Assigned Assets"), excluding
most specifically the Company's iSPERSE technology. A portion of the Upfront Payment was deposited by
the Company into a bank account, along with an equal amount from the Company, and was dedicated to the development of the Product (the
"Initial Development Funding"). The Initial Development Funding was depleted during the year ended December 31, 2021, at
which point the Company and Cipla each became responsible for a portion of the development costs actually incurred as described below
(the "Co-Development Phase").

 F- 13

to the Second Amendment, the Company and Cipla were each responsible for 60% and 40%, respectively, of the Company's overhead costs
and the time spent by the Company's employees and consultants on development of the Product ("Direct Costs"). The Company
will share 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.

to the Third Amendment, the Company and Cipla agreed that, during the period commencing on January 6, 2024 and ending July 30, 2024 (the
"Wind Down Period"), the Company will complete all Phase 2b activities, assign or license all patents to Cipla and their
registration with the appropriate authorities in regions other than the United States, complete a physical and demonstrable technology
transfer and secure all data from the Phase 2b study for inclusion in the safety database. The Company will share costs with Cipla during
the Wind Down Period in the same proportions in effect with the Second Amendment discussed above, but subject to a maximum reimbursement
amount by Cipla as approved by the joint steering committee.

 Accounting
Treatment

 The
Company concluded that because both it and Cipla are active participants in the arrangement and are exposed to the significant risks
and rewards of the collaboration, the Company's collaboration with Cipla is within the scope of ASC 808. The Company concluded
that Cipla is a customer since they contracted with the Company to obtain research and development services and a license to the Assigned
Assets, each of which is an output of the Company's ordinary activities, in exchange for consideration. Therefore, the Company
has applied the guidance in ASC 606 to account for the research and development services and a license within the contract. The Company
determined that the research and development services and license to the Assigned Assets are considered highly interdependent and highly
interrelated and therefore are considered a single combined performance obligation because Cipla cannot benefit from the license without
the performance by the Company of the research and development services. Such research and development services are highly specialized
and proprietary to the Company and therefore not available to Cipla from any other third party.

 The
Company initially determined the total transaction price to be $ 22.0 million – comprised of $ 12.0 million for research and development
services for the Product and $ 10.0 million for the irrevocable license to the Assigned Assets. Any consideration related to the Co-Development
Phase was not initially included in the transaction price as such amounts are subject to the variable consideration constraint. Additionally,
upon commercialization, Cipla and the Company will share equally, both positive and negative total free cash-flows earned by Cipla in
respect of the Product. However, the Company has not included such free cash-flows in the transaction price as these milestones are constrained.

 The
Company concluded that the Second Amendment represented a contract modification that is treated for accounting purposes as the termination
of the Cipla Agreement and a creation of a new contract (the "Amended Cipla Agreement"). Accordingly, the modification is
accounted for on a prospective basis. The total transaction price for the Amended Cipla Agreement includes variable consideration from
the Second Amendment as well as $ 7.4 million deferred under the Cipla Agreement as of the Second Amendment execution date.

 The
Company concluded that the Third Amendment, executed on January 6, 2024, is a nonrecognized subsequent event for the year ended December
31, 2023. Accordingly, the Company's accounting for the Cipla Agreement as of and during the year ended December 31, 2023 reflects
the contract and estimates in effect as of December 31, 2023.

 Revenue
is recognized for the Cipla Agreement as the research and development services are provided using an input method, according to the ratio
of costs incurred to the total costs expected to be incurred in the future to satisfy the Company's obligations. In management's
judgment, this input method is the best measure of the transfer of control of the combined performance obligation. The amounts received
that have not yet been recognized as revenue are recorded in deferred revenue on the Company's consolidated balance sheets, with
amounts expected to be recognized in the next 12 months recorded as current.

the years ended December 31, 2023 and 2022, the Company recognized $ 7.3 million and $ 6.1 million, respectively, in revenue related to
the research and development services and irrevocable license to the Assigned Assets in the Company's consolidated statements of
operations. Of the revenue recognized during the years ended December 31, 2023 and 2022, $ 1.1 million and $ 0.8 million, respectively,
was included in deferred revenue at the beginning of the period. As of December 31, 2023, the aggregate transaction price related to
the Company's unsatisfied obligations was $ 4.3 million and was recorded in deferred revenue, $ 0.6 million of which was current.

 F- 14

 7.
 Common Stock

 In
May 2021, the Company entered into an At-The-Market Sales Agreement (the "Sales Agreement") with H.C. Wainwright and Co.,
LLC ("HCW") to act as the Company's sales agent with respect to the issuance and sale of up to $ 20.0 million of the
Company's shares of common stock, from time to time in an at-the-market public offering (the "ATM Offering"). Sales
of common stock under the Sales Agreement are made pursuant to an effective shelf registration statement on Form S-3, which was filed
with the Securities and Exchange Commission ("SEC") on May 26, 2021, and subsequently declared effective on June 9, 2021
(File No. 333-256502), and a related prospectus. HCW acts as the Company's sales agent on a commercially reasonable efforts basis,
consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of
The Nasdaq Capital Market ("Nasdaq"). If expressly authorized by the Company, HCW may also sell the Company's common
stock in privately negotiated transactions. There is no specific date on which the ATM Offering will end, there are no minimum sale requirements
and there are no arrangements to place any of the proceeds of the ATM Offering in an escrow, trust or similar account. HCW is entitled
to compensation at a fixed commission rate of 3.0 % of the gross proceeds from the sale of the Company's common stock pursuant to
the Sales Agreement.

the year ended December 31, 2023, the Company sold 13,100 shares of its common stock under the Sales Agreement at a weighted-average
price of approximately $ 4.25 per share, which resulted in net proceeds of approximately $ 53 thousand.

the year ended December 31, 2022, the Company sold 252,013 shares of its common stock under the Sales Agreement at a weighted-average
price of approximately $ 5.70 per share which resulted in net proceeds of approximately $ 1.4 million.

 8.
 Warrants

 The
following table summarizes warrant activity for the year ended December 31, 2023:

of Rollforward of Common Stock Warrants Outstanding

 Number of Common Warrants

 Weighted Average Exercise Price

 Average Remaining Contractual Term (Years)

 Aggregate Intrinsic Value

 Outstanding January 1, 2023

 1,284,803

 $
 61.30

 -

 -

 Warrants Expired

 ( 123,310
)

 149.99

 Outstanding December 31, 2023

 1,161,493

 $
 51.89

 1.78

 $
 -

 The
following represents a summary of the warrants outstanding and exercisable at December 31, 2023, all of which are equity-classified:

of Warrants Outstanding

 Adjusted

 Number of Shares
 Underlying Warrants

 Issue Date

 Exercise Price

 Expiration Date

 Outstanding

 Exercisable

 December 17, 2021

 $
 14.99

 December 15, 2026

 36,538

 36,538

 December 17, 2021

 $
 13.99

 December 17, 2026

 281,047

 281,047

 February 16, 2021

 $
 49.99

 February 11, 2026

 65,003

 65,003

 August 7, 2020

 $
 35.99

 90,743

 90,743

 August 7, 2020

 $
 44.99

 10,939

 10,939

 July 23, 2020

 $
 35.99

 77,502

 77,502

 July 13, 2020

 $
 44.99

 21,846

 21,846

 July 13, 2020

 $
 35.99

 334,800

 334,800

 April 8, 2019

 $
 26.99

 April 8, 2024

 65,907

 65,907

 April 8, 2019

 $
 33.74

 April 3, 2024

 39,871

 39,871

 February 12, 2019

 $
 36.62

 February 7, 2024

 5,548

 5,548

 February 12, 2019

 $
 26.79

 August 12, 2024

 66,675

 66,675

 February 4, 2019

 $
 42.49

 January 30, 2024

 1,732

 1,732

 January 31, 2019

 $
 42.49

 January 26, 2024

 December 3, 2018

 $
 77.99

 June 3, 2024

 46,876

 46,876

 June 15, 2015

 $
 1,509.99

 Five years after milestone achievement

 15,955

 -

 Total

 1,161,493

 1,145,538

 F- 15

 9.
 Stock-based Compensation

 The
Company sponsors the Pulmatrix, Inc. Amended and Restated 2013 Employee, Director and Consultant Equity Incentive Plan (the "Incentive
Plan"). As of December 31, 2023, the Incentive Plan provided for the grant of up to 636,322 shares of the Company's common
stock, of which 288,186 shares remained available for future grant. In addition, the Company sponsors two legacy plans under which no
additional awards may be granted. As of December 31, 2023, the two legacy plans have a total of 8 options outstanding, all of which are
fully vested and for which common stock will be issued upon exercise.

 The
following table summarizes stock option activity for the year ended December 31, 2023:

of Stock Option Activity

 Number of
 Options

 Weighted-
 Average
 Exercise
 Price

 Weighted-
 Average
 Remaining
 Contractual Term
 (Years)

 Aggregate
 Intrinsic
 Value

 Outstanding — January 1, 2023

 304,823

 $
 28.66

 -

 -

 Granted

 118,472

 $
 3.98

 Forfeited or cancelled

 ( 78,965
)

 $
 25.27

 Expired

 ( 24
)

 $
 376.25

 Outstanding — December 31, 2023

 344,306

 $
 20.92

 7.54

 $
 -

 Exercisable — December 31, 2023

 206,695

 $
 29.99

 6.88

 $
 -

 The
Company records stock-based compensation expense related to stock options based on their grant-date fair value. During the years ended
December 31, 2023 and 2022, the Company used the Black-Scholes option-pricing model to estimate the fair value of stock option grants
and to determine the related compensation expense. The assumptions used in calculating the fair value of stock-based payment awards represent
management's best estimates. The weighted-average grant-date fair value of options granted during the years ended December 31,
2023 and 2022 was $ 3.27 per share and $ 5.41 per share, respectively. The weighted-average assumptions used in determining fair value
of the stock options for the years ended December 31, 2023 and 2022 are as follows:

of Calculation of Fair Value Assumptions

 2023

 2022

 Expected option life (years)

 6.0

 6.0

 Risk-free interest rate

 3.53
 %

 2.06
 %

 Expected volatility

 104.24
 %

 113.25
 %

 Expected dividend yield

 -
 %

 -
 %

 The
expected life of the Company's options was determined using the simplified method as a result of limited historical data regarding
the Company's activity. The risk-free interest rate was obtained from U.S. Treasury rates for the expected life of the stock options.
The Company's expected volatility was based upon the historical volatility of the Company's common stock. The dividend yield
considers that the Company has not historically paid dividends and does not expect to pay dividends in the foreseeable future.

 As
of December 31, 2023, there was $ 0.8 million of unrecognized stock-based compensation expense related to unvested stock options granted
under the Company's stock award plans. This expense is expected to be recognized over a weighted-average period of approximately
 2.0 years.

 The
following table presents total stock-based compensation expense for the years ended December 31, 2023 and 2022:

of Stock-based Compensation Expenses

 2023

 2022

 2023

 2022

 Research and development

 $

 $

 General and administrative

 Total stock-based compensation expense

 $

 $
 1,114

 F- 16

 10.
 Commitments and Contingencies

and Development Activities

 The
Company contracts with various other organizations to conduct research and development activities, including clinical trials. The scope
of the services under contracts for research and development activities may be modified and the contracts, subject to certain conditions,
may generally be cancelled by the Company upon written notice. In some instances, the contracts, subject to certain conditions, may be
cancelled by the third party. As of December 31, 2023, the Company had no material noncancellable commitments not expected to be reimbursed under the Cipla Agreement.

 Legal
Proceedings

 In
the ordinary course of its business, the Company may be involved in various legal proceedings involving contractual and employment relationships,
patent or other intellectual property rights, and a variety of other matters. The Company is not aware of any pending legal proceedings
that would reasonably be expected to have a material impact on the Company's financial position or results of operations.

 11.
 Leases

 New
Corporate Headquarters

 The
Company has limited leasing activities as a lessee which are primarily related to its corporate headquarters, which were relocated during
the year ended December 31, 2023. On January 7, 2022, the Company executed a lease agreement with Cobalt Propco 2020, LLC for its new
corporate headquarters at 36 Crosby Drive, Bedford, Massachusetts. The leased premises comprise approximately 20,000 square feet of office
and lab space, and the lease provides for base rent of $ 0.1 million per month, payment of which began in March 2024, and which will increase 3%
each year over the ten-year noncancellable term. The Company has the option to extend the lease for one additional five-year term and
is responsible for real estate taxes, maintenance, and other operating expenses applicable to the leased premises.

 The
lease commenced on August 1, 2023, following substantial completion of construction to prepare the premises for the Company's use,
and the Company has included the lease as a component of its operating lease right-of-use asset and operating lease liabilities upon
commencement. The improvements to prepare the leased premises for the Company's intended use have been funded by (i) the landlord,
through a tenant allowance of $ 3.9 million, (ii) a landlord-funded advance on tenant improvements of $ 0.5 million which will be repaid
over the lease term, and (iii) approximately $ 2.2 million funded by the Company.

 Other
Leasing Activities

the first quarter of 2023, the Company executed a two-month lease extension for its previous corporate headquarters in Lexington, Massachusetts,
through August 31, 2023. The Company terminated that lease extension, as planned, during the third quarter of 2023.

 The
Company also leases small office equipment which is primarily short-term or immaterial in nature. Therefore, no right-of-use assets and
lease liabilities are recognized for these leases.

 The
components of lease expense for the Company for the years ended December 31, 2023 and 2022 were as follows:

of Components of Lease Expenses

 2023

 2022

 2023

 2022

 Lease cost

 Fixed lease cost

 $
 1,753

 $
 1,430

 Variable lease cost

 Total lease cost

 $
 2,346

 $
 2,125

 Other information

 Cash paid for amounts included in the measurement of lease liabilities

 $
 3,454

 $
 1,478

 Weighted-average remaining lease term — operating leases

 9.9 years

 0.5 years

 Weighted-average discount rate — operating leases

 11.00
 %

 2.97
 %

 F- 17

 Maturities
of lease liabilities due under these lease agreements as of December 31, 2023 are as follows:

 Schedule of Maturities of Lease Liabilities

 Operating Leases

 Maturity of lease liabilities

 2024

 $
 1,357

 2025

 1,326

 2026

 1,364

 2027

 1,402

 2028

 1,442

 2029 and thereafter

 7,711

 Total lease payments

 14,602

 Less: interest

 ( 5,846
)

 Total lease liabilities

 $
 8,756

 Reported as of December 31, 2023

 Lease liabilities — short term

 $

 Lease liabilities — long term

 8,327

 Total lease liabilities

 $
 8,756

 12.
Income Taxes

 The
Company had no income tax expense due to operating losses incurred for the years ended December 31, 2023 and 2022.

 A
reconciliation of the provision for income taxes computed at the statutory federal income tax rate to the provision for income taxes
as reflected in the consolidated financial statements is as follows:

of Reconciliation of Expected Income Tax Benefit Computed Using Federal Statutory Income Tax Rate To Company's Effective Income Tax Rate

 2023

 2022

 Income tax computed at federal statutory tax rate

 21.0
 %

 21.0
 %

 State taxes, net of federal benefit

 5.9
 %

 6.0
 %

 Research and development credits

 7.9
 %

 4.9
 %

 Expiration of stock options

 ( 3.1
)%

 ( 2.5
)%

 Permanent differences

 1.4
 %

 0.9
 %

 Limitations on credits and net operating losses

 ( 1.7
)%

 ( 0.8
)%

 Change in valuation allowance

 ( 31.4
)%

 ( 29.5
)%

 Total

 -

 -

 The
significant components of the Company's deferred tax assets as of December 31, 2023 and 2022 were as follows:

of Components of Deferred Tax Assets

 2023

 2022

 Deferred tax assets:

 Net operating loss carryforwards

 $
 12,866

 $
 11,557

 Capitalized research and development expenses

 7,642

 4,460

 Lease liability

 2,977

 Research and development credit carryforwards

 1,528

 Stock-based compensation

 Capitalized start-up expenses

 Other

 1,303

 2,206

 Total deferred tax assets

 27,342

 20,308

 Deferred tax liabilities:

 Right-of-use-asset

 ( 2,816
)

 ( 194
)

 Total deferred tax liabilities

 ( 2,816
)

 ( 194
)

 Valuation allowance

 ( 24,526
)

 ( 20,114
)

 Net deferred tax liabilities

 $
 -

 $
 -

 F- 18

 Subject
to the limitations described below, as of December 31, 2023, the Company had federal net operating loss carryforwards of approximately
$ 58.1 million available to reduce future taxable income, of which $ 3.8 million is subject to expiration between 2026 and 2037 and $ 54.3
million may be carried forward indefinitely. As of December 31, 2023, the Company had state net operating loss carryforwards of approximately
$ 10.5 million, which is subject to expiration between 2030 and 2043. The Company also had research and development credits of approximately
$ 1.6 million as of December 31, 2023 to offset future federal and state income taxes, which is subject to expiration at various times
through 2043.

 Under
the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment
by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual
limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period
in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions.
This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount
of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership
changes may further affect the limitation in future years. The Company has completed several financings since its inception which it
believes has resulted in changes in control as defined by Sections 382 and 383 of the Internal Revenue Code.

of the Company evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and determined
that it is more likely than not that the Company will not recognize the benefits of the deferred tax assets. As a result, a full valuation
allowance was recorded as of December 31, 2023 and 2022. The valuation allowance increased by $ 4.4 million during the year ended December
31, 2023, primarily due to the capitalization of research and development expenses and increase in loss carryforwards by the Company.

 As
part of the Tax Cuts and Jobs Act that was enacted in December of 2017, taxpayers are required to capitalize research and development
expenses and amortize them over five years if the expense is incurred in the US and over fifteen years if incurred in a foreign jurisdiction.
The effective date for that provision is for tax years beginning on or after January 1, 2022. The capitalization requirement increased
deferred tax assets related to research and development expenses and decreased taxable loss in the current year, both of which were offset
by a full valuation allowance.

 The
Company applies ASC 740, Income Taxes, for the financial statement recognition, measurement, presentation, and disclosure of uncertain
tax positions taken or expected to be taken in income tax returns. Unrecognized tax benefits represent tax positions for which reserves
have been established. A full valuation allowance has been provided against the Company's deferred tax assets, so that the effect
of the unrecognized tax benefits is to reduce the gross amount of the deferred tax asset and the corresponding valuation allowance.

 The
Company is currently not under examination by the Internal Revenue Service or any other jurisdictions for any tax years. The Company
files income tax returns in the United States for federal and state income taxes. In the normal course of business, the Company is subject
to examination by tax authorities in the United States. Since the Company is in a loss carryforward position, the Company is generally
subject to U.S. federal and state income tax examinations by tax authorities for all years for which a loss carryforward is utilized.
The Company's returns remain subject to federal and state audits for the years 2020 through 2023. However, carryforward attributes
from prior years may still be adjusted upon examination by tax authorities if they are used in an open period.

 The
Company may from time to time be assessed interest or penalties by major tax jurisdictions. The Company recognizes interest and penalties
related to uncertain tax positions in income tax expense. The Company has not recorded interest or penalties on any unrecognized tax
benefits since its inception.

 The
Company anticipates that the amount of unrecognized tax benefits will not materially change in the next twelve months.

 The
roll-forward of the Company's gross uncertain tax positions is as follows:

of Roll-forward of Gross Uncertain Tax Positions

 Gross
 Uncertain
 Tax Position

 Balance — January 1, 2022

 $
 -

 Additions for current year tax positions

 Balance — December 31, 2022

 Additions for current year tax positions

 Balance — December 31, 2023

 $

 F- 19

 The
Company's total uncertain tax positions increased during the year ended December 31, 2023 as a result of a reserve established
on federal and state research and development credits generated in the current year. None of the uncertain tax positions, if realized,
would affect the Company's effective tax rate in future periods due to a valuation allowance provided against the Company's
net deferred tax assets.

 13.
 Net Loss Per Share

 Basic
and diluted earnings (loss) per share are computed using the two-class method, which is an earnings allocation method that determines
earnings (loss) per share for common shares and participating securities. The participating securities consist of the Company's
Series A Preferred Stock. The undistributed earnings are allocated between common shares and participating securities as if all earnings
had been distributed during the period. In periods of loss, no allocation is made to the Series A Preferred Stock and diluted net loss
per share is the same as basic net loss per share because common stock equivalents are excluded as their inclusion would be antidilutive.

 The
following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding,
because such securities had an antidilutive impact:

of Computation of Anti-Dilutive Weighted-Average Shares Outstanding

 2023

 2022

 Options to purchase common stock

 344,306

 304,823

 Warrants to purchase common stock

 1,161,493

 1,284,803

 Total potentially dilutive securities excluded

 1,505,799

 1,589,626

 14.
 Subsequent Events

 The
Company has completed an evaluation of all subsequent events after the balance sheet date of December 31, 2023 through the date the consolidated
financial statements were issued to ensure that the consolidated financial statements include appropriate disclosure of events both recognized
in the consolidated financial statements as of December 31, 2023, and events which occurred subsequently but were not recognized in the
consolidated financial statements. The Company has concluded that no subsequent events have occurred that require disclosure, except
as disclosed within the consolidated financial statements.

 F- 20