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Inflarx N.V. 2020 Dutch Board Report

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Inflarx N.V. 2020 Dutch Board Report InflaRx N.V. Dutch statutory board report and financial statements for the financial year ended December 31, 2020 - 1 - TABLE OF CONTENTS 1 Introduction ............................................................................................................................... 4 1.1 Preparation ................................................................................................................................. 4 1.2 Forward-looking statements ...................................................................................................... 4 2* Risk factors ................................................................................................................................ 7 2.1 Summary of key risk factors ...................................................................................................... 7 2.2 Risk factors ................................................................................................................................ 7 2.2.1 Risks related to our financial position and need for additional capital. ..................................... 7 2.2.2 Risks related to the discovery, development and commercialization of our product candidates. ................................................................................................................................................... 9 2.2.3 Risks related to our dependence on third parties ..................................................................... 20 2.2.4 Risks related to our intellectual property ................................................................................. 21 2.2.5 Risks related to employee matters and managing growth ....................................................... 24 2.2.6 Risks related to COVID-19 ..................................................................................................... 25 2.2.7 General Risk Factors ............................................................................................................... 27 2.3 Risk Control Measures ............................................................................................................ 28 2.3.1 Risks related to our financial position and need for additional capital. ................................... 28 2.3.2 Risks related to the discovery, development and commercialization of our product candidates. ................................................................................................................................................. 28 2.3.3 Risks related to our dependence on third parties ..................................................................... 29 2.3.4 Risks related to our intellectual property ................................................................................. 29 2.3.5 Risks related to employee matters and managing growth ....................................................... 29 2.3.6 Risks related to COVID-19 ..................................................................................................... 29 2.3.7 General Risk Factors ............................................................................................................... 29 3* Information on the Company ................................................................................................... 29 3.1 History and development of the Company .............................................................................. 29 3.2 Business overview ................................................................................................................... 30 3.3 Organizational structure .......................................................................................................... 73 3.4 Property, plant and equipment ................................................................................................. 73 3.5 Stakeholder dialogue ............................................................................................................... 73 4* Operating and financial review and prospects ......................................................................... 73 4.1 Operating results ...................................................................................................................... 73 4.2 Liquidity and capital resources ................................................................................................ 79 5 Legal proceedings .................................................................................................................... 81 6 Controls and procedures .......................................................................................................... 82 - 2 - 6.1 Disclosure controls and procedures ......................................................................................... 82 7* Corporate Governance ............................................................................................................. 84 7.1 Dutch Corporate Governance Code ......................................................................................... 84 7.2 Code of conduct and other corporate governance practices .................................................... 85 7.3 Risk management and control systems .................................................................................... 85 7.4 General meeting of shareholders ............................................................................................. 86 7.4.1 Functioning of our general meeting of shareholders ............................................................... 86 7.4.2 Powers of our general meeting of shareholders ....................................................................... 86 7.4.3 Shareholder rights .................................................................................................................... 87 7.5 Board of directors .................................................................................................................... 87 7.6 Committees .............................................................................................................................. 89 7.6.1 General .................................................................................................................................... 89 7.6.2 Audit committee ...................................................................................................................... 89 7.6.3 Compensation committee ........................................................................................................ 90 7.6.4 Nomination and corporate governance committee .................................................................. 90 7.7 Evaluation ................................................................................................................................ 91 7.8 Diversity .................................................................................................................................. 91 7.9 Corporate values and code of conduct ..................................................................................... 91 8* Compensation REPORT .......................................................................................................... 92 8.1 Compensation policy ............................................................................................................... 92 8.2 Compensation of directors and senior managment .................................................................. 92 9* Related Party Transactions ...................................................................................................... 94 10* Protective Measures ................................................................................................................. 94 Appendix A - InflaRx N.V. Consolidated Financial Statements .......................................................... 96 Appendix B - InflaRx N.V. Company Financial Statements ............................................................. 134 OTHER INFORMATION* ................................................................................................................ 147 __________________ *Constitutes the statutory board (bestuursverslag) report as referred to in Section 2:391 DCC - 3 - 1 INTRODUCTION 1.1 Preparation In this report, the terms "we", "us", "our" and "the Company" refer to InflaRx N.V. and, where appropriate, its subsidiaries. This report has been prepared by the Company's board of directors pursuant to Section 2:391 of the Dutch Civil Code ("DCC") and also contains (i) the Company's statutory annual accounts within the meaning of Section 2:361(1) DCC and (ii) to the extent applicable, the information to be added pursuant to Section 2:392 DCC. This report relates to the financial year ended December 31, 2020 and, unless explicitly stated otherwise, information presented in this report is as at December 31, 2020. The statutory board (“bestuursverslag”) report as referred to in Section 2:391 DCC is formed by chapters 2, 3, 4, 7, 8, 9, 10 and OTHER INFORMATION. The consolidated financial statements enclosed with this report (the "Consolidated Financial Statements") have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRSs) and with Section 2:362(9) DCC. The Company financial statements enclosed with this report (the "Company Financial Statements") have been prepared in accordance with the accounting principles promulgated by Title 9 of Book 2 DCC. In this report, unless otherwise indicated,
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