D. Notes to the consolidated statements of financial position

1. Property and equipment

2. Right-of-use assets

Amortization of intangible assets is included in the line items ‘research and development expenses’ (2025: €-, 2024: €785, 2023: €858) and ‘general and administrative expenses’ (2025: €15,963, 2024: €41,400, 2023: €95,205) in the consolidated statements of operations and comprehensive loss.

4. Leases

Lease obligations consist of payments pursuant to non-cancellable lease agreements mainly relating to the Company’s leases of office space. The lease terms of the Company’s premises expire as follows: Jena, Germany in December 2028, Martinsried, Germany in July 2030 and Ann Arbor, Michigan, United States in April 2026.

Set out below, are the carrying amounts and the movements of the Group’s lease liabilities:

The following are the amounts recognized in profit or loss:

The Group had total cash outflows for leases of €0.4 million in 2025 (€0.4 million in 2024, €0.4 million in 2023).

5. Inventory

As of December 31, 2025, inventory amounted to €0.0 million compared to €6.9 million as of December 31, 2025.

In 2025 the Group recorded in cost of sales write downs of raw materials and supplies of €0.1 million (€0.3 million in 2024 and €0.0 million in 2023), write downs of unfinished goods of €7.1 million (€2.7 million in 2024 and €0.0 million in 2023) and write downs of finished goods of €0.3 million (€0.3 million in 2024, €0.5 million in 2023). As part of its strategic focusing the Group carried out significant reductions in Gohibic (vilobelimab) commercial spending and related functions. Due to this scale back/discontinuation of Gohibic sales activities in the United States inventory has been fully written down.

6. Other assets

As of December 31, 2025, prepayments on research and development projects amounted to €2.2 million compared to €4.6 million as of December 31, 2024, and consist of prepayments on CRO contracts.

Prepaid expenses consist mainly of prepaid D&O insurance expense for the year 2026, which will be recognized into general and administrative expenses pro rata over the year.

As of December 31, 2025 other assets from research allowances were €2.5 million compared to €5.1 million in the previous year which represent reimbursements the Company qualifies for under the German Research Allowance Act (government grants). The decrease is due to the received payment in 2025 for the years 2020 to 2024 in the amount of €5.2 million. Additional receivables recognized for eligible expenses incurred in the twelve months ended December 31, 2025, amount to €2.5 million.

7. Income tax

The table below shows a reconciliation between the product of loss before tax multiplied by the Company's applicable tax rate and current income taxes recognized in profit or loss.

The tax rate applied above represents the weighted average of the statutory tax rates in Germany and the United States. In Germany, InflaRx N.V. and its subsidiary InflaRx GmbH are subject to corporate income tax (2025/2024/2023: 15%), a solidarity surcharge (2025/2024/2023: 0.8%) and trade taxes (2025: 13.171%; 2024: 13.202%;2023: 13.065%). This equals an average total tax rate of 29.03 % in 2025 (2024: 29.03%;2023: 28.99%). On July 11th 2025 the German Federal Council approved the reduction of the corporate tax rate from 15% to 10%, over a period of 5 years starting in 2028. This change will not affect the valuation of deferred tax assets and deferred tax liabilities, as these are calculated based on the tax rate applicable in the future. In 2023, the InflaRx GmbH established a managing director's permanent establishment (PE) in the UK. The taxable remuneration is subject to a tax rate of 25% less a deduction (small profits relief). The taxes prior year result from the established PE. InflaRx Pharmaceuticals, Inc., Ann Arbor, Michigan, United States is subject to an average total tax rate of 25.74% in 2025 (2024 25.74%; 2023: 25.74%), which is made up of U.S. federal tax (2025, 2024, 2023: 21%) and state tax of 4.74% in 2025 (2024 and 2023: 4.74%). As of December 31, 2025 there were no deferred tax liabilities in connection with investments in subsidiaries and no uncertain tax positions.

a) Tax losses carried forward

The Group has total tax loss carryforwards of €324.51 million (2024: €288.95 million) from three areas that cannot be utilized outside these areas:

As of December 31, 2025 the Group had €257.7 million (2024: €238.4 million) for corporate income purposes and €256.4 million (2024: €206.7 million) for trade tax purposes of unrecognized and unused tax losses carried forward attributable to the tax group formed by InflaRx N.V. since 2018; these tax losses do not expire and may not be used to offset taxable income elsewhere in the Group. Since January 1, 2018, InflaRx GmbH has distributed its losses to the parent Company InflaRx N.V. under a profit and loss transfer agreement. This tax group was formed in Germany and is subject to German tax legislation.

As of December 31, 2025, 2024 and 2023, no net deferred tax assets were recognized for the carryforward of unused tax losses.

b) Current income tax receivable

Current income tax receivable includes tax claims because of income tax withheld on interest income earned by the Group on the financial assets (2025: €1,084,053, 2024: €1,281,649). The Company is reimbursed for the payments after filing a tax return.

8. Financial assets and financial liabilities

Set out below is an overview of financial assets and liabilities, other than cash and short-term deposits included in cash equivalents, held by the Group as at December 31, 2025 and December 31, 2024:

In February 2025, the Company issued 6,750,000 pre-funded warrants to certain investors in the context of a public offering of securities. As of December 31, 2025, the fair value of the warrants amounted to €5.8 million (Level 1).

As of December 31, 2025, the fair value of current and non-current financial assets quoted debt securities) amounted to €33.5 million (as of December 31, 2024: €42.6 million) (Level 1). The Group’s debt instruments at amortized cost consist solely of quoted securities that are graded highly by credit rating agencies such as S&P Global and, therefore, are considered low credit risk investments.

As of December 31, 2025, current and non-current financial assets decreased by €6.9 million to €30.7 million compared to €37.6 million of December 31, 2024.

As of December 31, 2025, trade and other payables decreased by €5.9 million to €5.6 million compared to €11.5 million as of December 31, 2024. As of December 31, 2024 the Company temporarily had lower trade payables from CRO’s.

The maturities of all securities held as of December 31, 2025, are between one and nine months (2024: between one and thirteen months); they bear nominal fixed interest in the range of 0.250% to 5.200% (2024: 0.3% to 6.250%).

9. Cash and cash equivalents

All deposits held as of December 31 had contractual maturities of less than 90 days and are therefore classified as cash equivalents.

10. Equity

a) Issued capital

As of December 31, 2025, the issued capital of the Company is divided into 72,292,859 ordinary shares (2024: 59,351,710). The nominal value per share is €0.12. All shares issued are fully paid and have the same rights on the distribution of dividends and the repayment of capital.

On July 8, 2020, we filed a Form F-3 registration statement with the SEC with respect to the offer and sale of securities of the Company, or 2020-Shelf Registration Statement. We also filed a prospectus supplement with the SEC relating to an at-the-market program providing for the sales of our stock over time of up to $50.0 million of our ordinary shares pursuant to a Sales Agreement with SVB Leerink LLC. During the fiscal year 2023, we issued 3,235,723 ordinary shares under its at-the-market program resulting in €14.4 million or $15.7 million in net proceeds. As of December 31, 2023, and throughout the term of the at-the-market program, we have issued an aggregate total of 5,803,931 ordinary shares, resulting in a total of €26.2 million in net proceeds to us. The term of the at-the-market program expired on July 8, 2023.

Through an underwritten public offering in April 2023, we sold and issued an aggregate of 10,823,529 ordinary shares, at a price of $4.25 per share and have a nominal value of €0.12 per share, of which 1,411,764 were sold pursuant to the exercise of an overallotment option by the underwriters. Net proceeds of this offering amounted to €38.7 million, after accounting for underwriting discounts and other offering expenses.

During the fiscal year 2023, we issued and registered a total of 120,257 ordinary shares resulting from the exercise of stock option rights by former employees. All stock option rights had been granted under the 2017 Long-Term Incentive Plan. 14,930 stock options thereof were already exercised in December 2022 and 105,327 were exercised during fiscal year 2023. The ordinary shares have a nominal value of €0.12 per share. 98,754 ordinary shares were sold at a price of $1.85 per share, and 21,503 ordinary shares were sold at a price of $3.35 per share.

On June 30, 2023, we filed a Form F-3 (2023-Registration Statement) with the SEC with respect to the offer and sale of securities of the Company, which became effective on July 11, 2023. The aggregate initial offering price of the securities that the Company may offer and sell under this prospectus will not exceed $250 million. In 2024, we subsequently filed a prospectus supplement with the SEC relating to an at-the-market program providing for the sale of up to $75.0 million of our ordinary shares over time pursuant a sales agreement with Leerink Partners LLC, or the Sales Agreement.

We did not issue any ordinary shares under the 2023-Registration Statement in 2023. As of December 31, 2024, we had issued 468,438 ordinary shares under the Sales Agreement, resulting in €0.8 million in net proceeds.

In the fiscal year 2025, we issued an additional 4,691,149 ordinary shares under its Sales Agreement, resulting in $8.0 million in net proceeds. As of December 31, 2025, the remaining value authorized for sale under the Sales Agreement is $65.7 million.

In February 2025, we completed an underwritten public offering of an aggregate of 8,250,000 ordinary shares and pre-funded warrants to purchase 6,750,000 ordinary shares. The ordinary shares were sold at a price of $2.00 per share with a nominal value of €0.12 per share. The public offering price for each pre-funded warrant was equal to the price per share at which the ordinary shares were sold to the public, minus $0.001, which is the exercise price of each pre-funded warrant. The gross proceeds from the offering amounted to approximately $30 million before deducting underwriting discounts and offering expenses.

b) Authorized capital

According to the articles of association of the Company, up to 169,300,000 ordinary shares and up to 169,300,000 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 independent 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 the Company to provide, or cause the Company’s subsidiaries to provide, 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 ordinary shares and will accrue cash dividends at a pre-determined rate. The protective foundation would be expected to require the Company to cancel its preferred shares once the perceived threat to the Company and its stakeholders has been removed or sufficiently mitigated or neutralized. The Company believes that the call option does not represent a significant fair value based on a level 3 valuation since the preferred shares are restricted in use and can be cancelled by the Company.

For the year ended December 31, 2025, the Company expensed €60,000 of ongoing costs to reimburse expenses incurred by the protective foundation.

c) Nature and purpose of equity reserves

In addition to the issued capital, the Company discloses the following other reserves:

Other components of equity exclusively include currency reserves from the conversion of financial statements in foreign currencies.

11. Trade payables and other accrued liabilities

Accrued liabilities from R&D projects include third party services from the Company’s ongoing R&D projects that have not yet been invoiced to the Company as of the reporting date.

Accrued liabilities from commercial activities include services provided by commercial manufacturing partners that have not yet been invoiced to the Company as of the reporting date.

12. Financial risk management

a) Financial risk management objectives and policies

The Group’s financial risks are predominantly controlled by central treasury activities under an investment policy approved by the Board of Directors on July 31, 2024 as revised on November 17, 2025. Those treasury activities identify, evaluate and manage financial risks consistent with the Group’s operating needs. The Board of Directors provides policies for overall risk management, covering specific areas, such as foreign exchange risk and credit risk. The Company does not intend to use derivative financial instruments because the Group’s future risk exposures cannot be reliably forecasted (volume of business activity, liquidity needs, foreign exchange exposure).

Hedging is not applied as most of the business activity is intended to be executed in U.S. dollars and paid with the U.S. dollars funds raised in public offerings. The foreign exchange exposure from costs incurred in currencies other than Euro is deemed immaterial.

The Group’s principal financial assets comprise quoted debt securities with high credit ratings. Besides these financial assets, the Group has significant cash and cash equivalents. The Group’s principal financial liabilities comprise trade and other payables. The main purpose of these financial assets, cash/cash equivalents and liabilities are to finance the Group’s development activities.

The Group is exposed to market risk, credit risk and liquidity risk. The Board of Directors reviews and adopts policies for managing each of these risks, which are summarized below. The Group’s senior management oversees the management of these risks.

b) Market risk

Market risk is the risk that changes in market prices (e.g., due to foreign exchange rates) will affect the Group’s income, expenses or the value of its holdings of financial instruments. The objective of market risk management is to identify, manage and control market risk exposures within acceptable parameters.

Foreign exchange risk arises when commercial transactions or recognized assets or liabilities are denominated in a currency that is not an entity’s functional currency. The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which costs and purchases are denominated and the respective functional currencies of Group companies. The functional currencies of Group companies are primarily the Euro and U.S. dollars. The currencies in which these transactions and financial assets are primarily denominated are Euro and U.S. dollars. The Group is exposed to the exchange rate between the Euro and the U.S. dollars. Due to the Company’s various registered offerings of ordinary shares in U.S. dollars, the Group has significant cash and cash equivalents in U.S. dollars. Currently the Group does not hedge U.S. dollars but intends to achieve a natural hedge by contracting suppliers in U.S. dollars in the future. In 2025 and 2024, the Group recognized significant foreign exchange gains and losses as the natural hedge is not yet achieved and the functional currency for InflaRx N.V. and InflaRx GmbH is Euro.

The Group is primarily exposed to changes in U.S. dollar to Euro exchange rates. The sensitivity of profit or loss to changes in the exchange rates arises mainly from U.S. dollar denominated financial instruments at InflaRx N.V. and InflaRx GmbH.

In 2025, if the Euro had weakened/strengthened by 10% against the U.S. dollar with all other variables held constant, the Group’s loss would have been €4.0 million higher/€3.3 million lower, mainly as a result of foreign exchange on translation of U.S. dollar-denominated assets of InflaRx N.V. and InflaRx GmbH.

Based on the exchange rate fluctuations from the last three years, the Company expects that exchange rate fluctuations of the Euro to the U.S. dollar between 1.0575 and 1.2925 could be reasonably possible. Compared to the exchange rate on the statement of financial position date (Euro to U.S. dollar at reporting date is 1/1.1750), these rates could have a material impact on the Company’s total loss of the period.

c) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations leading to a financial loss for the Company. The Company is exposed to credit risk mainly from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Company’s investment policy. Investment of financial resources which are currently not used to fund R&D or G&A activities, are made only with counterparties within the credit limits approved by the investment policy. For investments in Euro or U.S. dollar debt securities, a BBB+ to AAA credit rating (Standard & Poors and Fitch ratings; or equivalent ratings by Moody’s and DBRS) is required. Complex financial products as well as other investments denominated in currencies other than Euros or U.S. dollars are not permitted by the investment policy. Counterparty credit limits and the investment policy are discussed with the Company’s Audit Committee on an annual basis and may be updated throughout the year subject to approval of the Company’s Audit Committee. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through a counterparty’s potential failure to make payments.

The maximum exposure to counterparty credit risk is €46.7 million at December 31, 2025 (December 31, 2024: €61.0 million). This amount equals the carrying amount at year end of cash and cash equivalents (2025:€16.0 million; 2024: €18.4 million) and financial assets (2025:€30.7 million; 2024: €42.6 million).

d) Liquidity risk

The Company monitors its risk of a shortage of funds in every quarterly forecast as well as on an ongoing basis. The Company disclosed the maturities of its principal liabilities under Note E ‘Commitments’. Prudent liquidity risk management involves maintaining sufficient cash and marketable securities and the availability of funding to meet obligations when due. The Group continually monitors its risk of a shortage of funds using short and mid-term liquidity planning. This takes into account of the expected cash flows from all activities. The management team performs regular reviews of the budget.

The Company has a history of significant operating losses. Management expects that the Company incurs significant and increasing losses for the foreseeable future; as the Company may not achieve or maintain profitability in the near future, it is dependent on capital contributions or other funding.

The Group raised significant funding from various registered offerings, most recently from an underwritten public offering in February 2025, that it estimates will enable the Group to fund operating expenses and capital expenditure requirements for at least 12 months from December 31, 2025. The Group expects to require additional funding to continue to advance the development of product candidates. In the event regulatory approval is received and the Company implements a strategy to commercialize the products itself, the Group would require additional capital.

At the end of the reporting period, the Group held the following deposits that are expected to readily generate cash inflows to meet the outstanding financial commitments.

13. Capital management

The Group’s policy for capital management is to ensure that it maintains its liquidity in order to finance its operating activities, future business development and meet its liabilities when due. The Group manages its capital structure primarily through equity. The Group does not have any financial liabilities, other than trade and other payables or leasing liabilities.

No changes were made in the objectives, policies or processes for managing capital during the year.