Pulmatrix, Inc. Annual Report Summary: A Pivotal Crossroads

Pulmatrix, Inc. stands at a critical juncture, as detailed in its latest annual report. This summary highlights key developments and risks, offering investors a clear view of the company's operations and strategic direction.

Business Overview Pulmatrix, Inc. is a biopharmaceutical company focused on developing innovative inhaled medicines. It uses its proprietary iSPERSE™ technology to deliver drugs directly to the lungs. This approach aims to improve treatment effectiveness and reduce side effects for various conditions. Pulmatrix's pipeline includes:

• PUR3100 for acute migraines.
• PUR1800 targeting acute exacerbations of chronic obstructive pulmonary disease (COPD).
• PUR1900 for allergic bronchopulmonary aspergillosis (ABPA), a fungal lung infection affecting asthma and cystic fibrosis patients.

Pivotal Strategic Shift: Proposed Merger with Cullgen Inc. The most significant development is Pulmatrix's planned merger with Cullgen Inc., a move set to fundamentally reshape the company.

• Agreement: Pulmatrix initially signed the merger agreement on November 13, 2024.
• Shareholder Approval: Pulmatrix stockholders approved the merger on June 16, 2025.
• Key Condition: The merger still requires approval from the China Securities Regulatory Commission (CSRC).
• Timeline Adjustments: The companies extended the original "End Date" for the merger from August 13, 2025, to October 12, 2025. Additionally, on December 17, 2025, both companies mutually waived certain restrictions, likely to streamline the merger process or allow for greater operational flexibility during the interim.
• Post-Merger Vision: If the merger completes, the combined entity will primarily focus on Cullgen's business. Pulmatrix is actively exploring options to sell or license its iSPERSE™ technology and existing drug candidates, indicating a potential divestiture of its current assets.

Impact on Drug Development Due to the pending merger, Pulmatrix has paused all development activities for its existing drug candidates (PUR3100, PUR1800, PUR1900). Resuming these programs would require substantial new funding, which remains uncertain given the company's current strategic direction.

Key Risk Factors for Investors Investors should be aware of several significant risks, particularly concerning the proposed merger and the company's ongoing operations:

• Merger Uncertainty: The merger with Cullgen is not guaranteed to close, primarily due to the pending CSRC approval. Failure to complete the merger could severely impact Pulmatrix.
• Potential for Liquidation: If the merger fails, Pulmatrix's board of directors may decide to dissolve and liquidate the company. This scenario would involve selling assets and closing operations, potentially leading to a significant loss for current shareholders.
• Stalled Drug Development: The indefinite pause in drug development means the company's existing pipeline assets are not advancing, potentially diminishing their value and future revenue potential. Restarting these programs would require substantial, currently uncommitted, funding.
• Financial Health and Liquidity: Without specific financial details, the company's ability to sustain operations independently, especially if the merger falls through, is a major concern. Access to capital and managing cash burn are critical.
• Customer Concentration: In 2024, a significant portion of Pulmatrix's revenue came from just two customers. Such concentration creates a dependency that could negatively impact financial performance if these relationships change or end.
• General Biopharmaceutical Risks: Like all companies in this sector, Pulmatrix faces inherent risks including the need for substantial funding, intense competition, challenges in protecting intellectual property, the high cost and uncertainty of clinical trials, and the complex process of obtaining regulatory approvals for new drugs.
• Share Dilution: Should the company need to raise additional capital in the future, it could issue new shares, diluting the value of existing holdings.
• Stock Price Volatility: Small biopharmaceutical companies, particularly those undergoing significant strategic changes, often experience high volatility in their stock price.

Management's Discussion & Analysis (MD&A) Highlights

• Management focuses primarily on the proposed merger with Cullgen Inc., which is expected to fundamentally reshape the company's strategic direction and operational focus.
• Due to the pending merger, the company paused all development activities for its existing drug candidates (PUR3100, PUR1800, PUR1900). Management indicated that resuming these programs would require substantial new funding, the availability of which remains uncertain.
• Pulmatrix actively explores options to sell or license its iSPERSE™ technology and existing drug candidates, aligning with the post-merger vision where the combined entity would focus on Cullgen's business.
• Operational metrics, such as the public float ($25.2 million as of June 30, 2025) and shares outstanding (3,652,285 as of February 23, 2026), reflect its current market capitalization and share structure.
• The company's classification as a "smaller reporting company" and a "non-accelerated filer" impacts its reporting requirements and investor perception.

Future Outlook

• Pulmatrix's future hinges on the successful completion of the proposed merger with Cullgen Inc. If finalized, the combined entity will focus entirely on Cullgen's business.
• Pulmatrix plans to divest its current iSPERSE™ technology and existing drug candidates through sale or licensing agreements.
• The development of Pulmatrix's existing pipeline has been paused indefinitely. Their future advancement depends on securing substantial new funding, which remains uncertain.
• If the merger fails, the company faces significant uncertainty, including potential liquidation, and must reassess its strategic direction and funding requirements.