INFLARX N.V. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - MARCH 31, 2020 These unaudited condensed financial statements are consolidated financial statements for the group consisting of InflaRx N.V. and its wh

UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS - MARCH 31, 2020

These unaudited condensed financial statements are consolidated financial statements for the group consisting of InflaRx N.V. and its wholly-owned subsidiaries InflaRx GmbH, and InflaRx Pharmaceutical

Inc., Ann Arbor, Michigan, United States (together, the "Group"). The financial statements are presented in Euro ( ).

InflaRx N.V. is a company limited by shares, incorporated and domiciled in Amsterdam, The Netherlands.

Its registered office and principal place of business is in Germany, Jena, Winzerlaer Str. 2.

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

InflaRx N.V. and subsidiaries

Unaudited Condensed Consolidated Statements of Comprehensive Loss

for the three months ended March 31, 2020 and 2019

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

InflaRx N.V. and subsidiaries

Unaudited Condensed Consolidated Statements of Financial Position

as of March 31, 2020 and December 31, 2019

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

InflaRx N.V. and subsidiaries

Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity

for the three months ended March 31, 2020 and 2019

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

InflaRx N.V. and subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

for the nine months ended March 31, 2020 and 2019

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

InflaRx N.V. and subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

1. Net Financial Result

The net financial result is comprised of the following items for the three months ended March 31:

Interest income results from marketable securities and short-term deposits in U.S. Dollar held by the Company and its subsidiary InflaRx GmbH.

Foreign exchange income and expense is mainly derived from the translation of the U.S. Dollar cash, cash equivalents and securities held by InflaRx GmbH.

2. Other non-financial assets

Prepaid expense mainly consists of accrued insurance expense. Total prepaid expense mainly has decreased compared to December 31, 2019, because Directors and Officers insurance is an annual insurance payment in the

fourth quarter of the year.

Current tax assets in 2020 include tax reclaims because of capital yields tax withheld. Such tax is withheld by our banks from securities interest payments, and the Company is reimbursed after filing the tax return. The

decrease is due to lower interest rates compared to the first quarter of 2019.

3. Financial assets and financial liabilities

Set out below is an overview of financial assets and liabilities, other than cash and short-term deposits, held by the Group as of March 31, 2020 and December 31, 2019:

The fair value of current and non-current financial assets (primarily quoted debt securities) amounted to 86,661 thousand (level 1). The Group's debt instruments at amortized cost consist solely of quoted securities

that are graded in the top investment category (AAA) by credit rating agencies such as S&P Global and, therefore, are considered low credit risk investments. Based on statistical historical probabilities of default, adjusted for forward-looking

factors specific to the debtors and the economic environment, the Group believes that the expected credit losses for these debt instruments are immaterial. Furthermore, since the acquisition of these debt securities, their credit ratings have

4. Cash and cash equivalents information

5. Related party transactions

The Group's executive management comprises the following persons:

The Group's board of directors comprises the following persons:

Non-executive Directors

The compensation of the Group's executive management comprises the following for the three months ended March 31:

Remuneration of InflaRx's executive management consists of fixed and variable components and share-based payment awards. In addition, the executive management receives supplementary benefits and allowances.

We entered into indemnification agreements with our directors and senior management. The indemnification agreements and our articles of association require us to indemnify our directors and certain officers and employees

as designated by our board of directors to the fullest extent permitted by law.

6. Share-based payments

In conjunction with the closing of its initial public offering, InflaRx N.V. established a new incentive plan (the "2017 Long-Term Incentive Plan"). The initial maximum number of common shares available for issuance

under equity incentive awards granted pursuant to the 2017 Long Term Incentive Plan equals 2,341,097 common shares. The number of share options under the plan was as follows:

Expected dividends are nil for all share options listed above.

None of the options were granted to the executive management or board of directors.

On January 1, 2021 and on January 1 of each calendar year thereafter, an additional number of shares equal to 3% of the total outstanding common shares on December 31 of the immediately preceding year (or any lower

number of shares as determined by the board of directors) will become available for issuance under equity incentive awards granted pursuant to the 2017 Long-Term Incentive Plan.

In 2020 no stock options were exercised.

In 2019, 140,876 shares were issued following the exercise of stock options, resulting in proceeds to the Company in the amount of 1.7 thousand. All stock options exercised were granted under the 2012 Stock Option Plan.

The fair value of options granted under the 2017 long-term incentive plan was determined using the Black-Scholes valuation model. As the Company's common shares are listed on the Nasdaq Global Select Market, the closing

price of the common shares at grant date was used.

Expected volatility has been based on the historical volatility of InflaRx' share price. Considering a significant price drop on June 5, 2019, we calculated averages including and excluding said trading day which results

in an average volatility of 124%. For grants after June 2019 we have selected a volatility of 135% that accounts for expectations of the management.

The range of outcomes for the expected life of the instruments has been based on expectations on option holder behavior in the scenarios considered.

The dividend yield has no impact due to the anti-dilution clause as defined in the 2017 Long-Term Incentive Plan.

Expenses are determined based on the number of stock options granted within a tranche and the vesting period of a tranche. This implies two effects:

For example, 33.33% of all stock options granted are allocated to the first tranche which vests over 1 year after the grant date, whereas 8.33% of all stock options granted are allocated to the ninth tranche which vests

The following table shows the recognized compensation expenses per stock option plan and the repricing of stock options, consummated on July 3, 2019. Anticipated expenses for the twelve-month period ending December 31,

2022, 2021 and 2020 were converted with the exchange rate as of March 31, 2020, 1 Euro = 1.0956 USD:

For the three months ended March 31, 2020, the Company has recognized 793 thousand of share-based payment expense in the statement of profit or loss (March 2019: 2,098 thousand).

None of the share-based payments awards were dilutive in determining earnings per share due to the Group's loss position.

7. Protective foundation

According to the articles of association of the Company, up to 55,000,000 common shares and up to 55,000,000 preferred shares with a nominal value of 0.12 per share are authorized to be issued. All shares are registered

shares. No share certificates shall be issued.

In order to deter acquisition bids, the Company`s general meeting of shareholders approved the right of an in-dependent foundation under Dutch law, or protective foundation, to exercise a call option pursuant to the call

option agreement, upon which preferred shares will be issued by the Company to the protective foundation of up to 100% of the Company's issued capital held by others than the protective foundation, minus one share. The protective foundation is

expected to enter into a finance arrangement with a bank or, subject to applicable restrictions under Dutch law, the protective foundation may request us to provide, or cause the Company`s subsidiaries to pro-vide, sufficient funding to the

protective foundation to enable it to satisfy its payment obligation under the call option agreement.

These preferred shares will have both a liquidation and dividend preference over the Company`s common shares and will accrue cash dividends at a pre-determined rate. The protective foundation would be expected to

re-quire us to cancel its preferred shares once the perceived threat to the Company and its stake-holders has been removed or sufficiently mitigated or neutralized. We are of the opinion that the call option does not represent a significant fair

value based on a level 3 valuation, since the preference shares are restricted in use and can be can-celled by us as stated above.

In the quarter ended March 31, 2020, the Company expensed 17 thousand of ongoing costs to reimburse expenses incurred by the protective foundation.

8. Summary of significant accounting policies

InflaRx N.V. is a Dutch public company with limited liability (naamloze vennootschap) with its corporate seat in Amsterdam, The Netherlands, and is registered in the Commercial Register of The Netherlands Chamber of

Commerce Business Register under CCI number 68904312. The Company's registered office is at Winzerlaer Stra e 2 in 07745 Jena, Germany. Since November 10, 2017, InflaRx N.V.'s common shares have been listed on The NASDAQ Global Select Market under

InflaRx is a clinical-stage biopharmaceutical Group focused on applying its proprietary anti-C5a technology to discover and develop first-in-class, potent and specific inhibitors of the complement activation factor known

These consolidated financial statements of InflaRx comprise the Company and its wholly-owned subsidiaries InflaRx GmbH and InflaRx Pharmaceutical Inc., Ann Arbor, Michigan, United States.

InflaRx GmbH is a clinical-stage biopharmaceutical company founded in 2008. In 2017, InflaRx N.V. became the sole shareholder of InflaRx GmbH through the contribution of the subsidiary's shares to InflaRx N.V. by its