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Item 5. Other Information

2024-08-14 compared with 2024-05-15 · 42 added, 18 removed, 25 unchanged (71% of the section changed)

1 unchanged sentence

Insider Adoption or Termination of Trading Arrangements

During the fiscal quarter ended March 31, 2024, none of our directors or officers informed us of the adoption , modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

During the fiscal quarter ended June 30, 2024 , none of our directors or officers informed us of the adoption , modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

Secured Notes Issuance

1 unchanged sentence

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant and Item 8.01:

On March 28, 2024, we closed the previously announced issuance of $2.0 million in aggregate principal amount of Secured Notes (the “Initial Secured Notes”).

On May 13, 2024, we closed an additional issuance of $1.6 million of Secured Notes (the “Additional Secured Notes”) to our Founder and Chief Executive Officer.

The Additional Secured Notes were issued pursuant to the previously announced Note Purchase Agreement, dated as of March 28, 2024, between us and the Purchasers (as defined in the Note Purchase Agreement) party thereto.

The material terms of the Additional Secured Notes are identical to the terms of the previously disclosed Initial Secured Notes.

The issuance of the Additional Secured Notes was exempt from the registration requirements of the Securities Act of 1933, as amended, in accordance with Section 4(a)(2) and/or Regulation 506 promulgated thereunder, as a transaction by an issuer not involving a public offering.

As of June 30, 2024, all existing investors approved an Amended and Restated Note Purchase Agreement (“Amended and Restated Note Purchase Agreement,” representing $3.7 million of the outstanding principal for the Secured Notes (“Initial Secured Notes”), including an investment of $2.2 million from Dr.

Wong, Founder and Chief Executive Officer;

$220,000 from Rebecca Byam, Chief Financial Officer;

$90,000 from Scott T.

Garrett, the Chairman of our board of directors;

and $60,000 from Gary M.

Winer, a member of our board of directors.

On July 2, 2024, the Company closed on an additional issuance of $1.5 million (this investment and all subsequent investments known as “Additional Secured Notes”).

The Additional Secured Notes were issued pursuant to the Amended and Restated Note Purchase Agreement, dated as of July 2, 2024, between us and the Purchasers (as defined in the Amended and Restated Note Purchase Agreement) party thereto.

The material terms of the Additional Secured Notes are identical to the terms of the Initial Secured Notes.

As of August 5, 2024, the Company closed on an issuance of $250,000 of Additional Secured Notes, including an investment of $75,000 from Dr.

$50,000 from Mr.

$25,000 from Rick S.

Greene, a member of the board of directors;

and $25,000 from Lee Flowers, Senior Vice President of Business Development.

The issuance of the Additional Secured Notes was exempt from the registration requirements of the Securities Act of 1933, as amended, in accordance with Section 4(a)(2), as a transaction by an issuer not involving a public offering.

In addition, our Board of Directors and the Audit Committee of our Board of Directors reviewed the transaction under our policy for Related Party Transactions (the “Policy”) and determined that the issuance of the Additional Secured Notes was in compliance with the Policy.

Please refer to the Annual Report for a description of the agreements entered into in connection with Initial Secured Notes and the Additional Secured Notes.

The Senior Notes bear interest at a rate of 9% per annum, payable quarterly in arrears, and mature on August 30, 2026 (the “Maturity Date”), on which date the principal balance, accrued but unpaid interest, and other amounts that may be due under the terms of the Amended and Restated Note Purchase Agreement shall be due and payable.

The Secured Notes may be prepaid on or prior to December 31, 2024, but will be subject to a 5% prepayment penalty (“Premium Amount”).

Thereafter, the Senior Notes may be repaid upon a Mandatory Redemption event or at the end of the term.

As a condition to entering into the Amended and Restated Note Purchase Agreement, the Company, Mercedes M.

(“Escrow Agent”), and the Purchasers entered into that certain Escrow Agreement and Amended and Restated Pledge Agreement, dated July 2, 2024, pursuant to which the Company agreed to pledge our equity ownership interest in Wugen, which was equivalent to a 5.6% ownership stake in that company as of June 30, 2024 (the “Pledged Collateral”), to be held and released by Escrow Agent according to the terms of the Escrow Agreement, as security for the Secured Notes.

Upon a qualifying event Mandatory Redemption involving a transaction such as an acquisition, merger or initial public offering in which the Pledged Collateral can be sold or liquidated prior to the Maturity Date, subject to certain limitations (such as a threshold price per share in the case of an initial public offering), the Company agreed to repay all indebtedness (including accrued interest) related to the Secured Notes plus a Bonus Payment (as defined in the Amended and Restated Note Purchase Agreement).

If there is no such Mandatory Redemption prior to the Maturity Date, the Company agreed to pay the holders of Secured Note a Bonus Payment under certain circumstances.

Upon a bona fide equity offering (as defined in the Amended and Restated Note Purchase Agreement), Senior Note holders have the right to convert to shares of the Company’s common stock (as defined in the Amended and Restated Note Purchase Agreement).

The Amended and Restated Note Purchase Agreement sets forth preliminary terms that are subject to final documentation.

Upon an Event of Default (as defined in the Amended and Restated Note Purchase Agreement), the Company will have a thirty (30) day cure period (the “Cure Period”), and if the Event of Default is not so cured at the end of the Cure Period, the Company is required to distribute the Pledged Collateral to the Purchasers on a pro rata basis, determined based on the issuance of $10.0 million in Secured Notes, in full satisfaction of the indebtedness evidenced by the Secured Notes.

The foregoing descriptions of the Amended and Restated Note Purchase Agreement, Amended and Restated Senior Notes, Escrow Agreement and Amended and Restated Pledge Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Form of Amended and Restated Senior Secured Note Purchase Agreement, Form of Senior Secured Promissory Note, Form of the Amended and Restated Pledge Agreement and Form of Amended and Restated Escrow Agreement, copies of which are filed as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, to this Quarterly Report and are incorporated herein by reference.

The exhibits filed or furnished as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which Exhibit Index is incorporated herein by reference.

Incorporated by Reference

Senior Secured Note Purchase Agreement, dated March 28, 2024, by and between the Company and the Purchaser party thereto

Senior Secured Promissory Note, dated March 28, 2024, by and between the Company and the Holder party thereof

Pledge Agreement, dated March 28, 2024, by and between the Company, Escrow Agent and Noteholder party thereto

Escrow Agreement, dated March 28, 2024, by and between the Company, Escrow Agent and Noteholder party thereto

Form of Subscription Agreement, dated February 20, 2024, by and between the Company and the Subscribers party thereto

Form of Amended and Restated Senior Secured Note Purchase Agreement, dated July 2, 2024, by and between the Company and the Purchaser party thereto

Form of Senior Secured Promissory Note by and between the Company and the Holder party thereof

Form of Amended and Restated Pledge Agreement, dated July 2, 2024, by and among the Company, Escrow Agent and Noteholder parties thereto

Form of Escrow Agreement, dated July 2, 2024, by and among the Company, Escrow Agent and Noteholder parties thereto

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

4 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language):

(i) the Condensed Balance Sheets as of December 31, 2023 and March 31, 2024 (unaudited);

(ii) the Condensed Statements of Operations for the three months ended March 31, 2023 (unaudited) and March 31, 2024 (unaudited);

(iv) the Condensed Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2023 (unaudited) and March 31, 2024 (unaudited);

(v) the Condensed Statements of Cash Flows for the three months ended March 31, 2023 (unaudited) and March 31, 2024 (unaudited);

and (vi) the notes to the Condensed Financial Statements (unaudited).

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language):

(i) the Condensed Interim Balance Sheets as of December 31, 2023 and June 30, 2024 (unaudited);

(ii) the Condensed Interim Statements of Operations for the three and six months ended June 30, 2023 (unaudited) and June 30, 2024 (unaudited);

(iv) the Condensed Interim Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2023 (unaudited) and June 30, 2024 (unaudited);

(v) the Condensed Interim Statements of Cash Flows for the six months ended June 30, 2023 (unaudited) and June 30, 2024 (unaudited);

and (vi) the notes to the Condensed Interim Financial Statements (unaudited).

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

4 unchanged sentences

HCW Biologics Inc.

August 14, 2024

Chief Executive Officer

(Principal Executive Officer)

August 14, 2024

/s/ Rebecca Byam

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 5. Other Information