What changed in this filing

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Item 1. Financial Statements

2025-05-15 compared with 2024-11-14 · 285 added, 166 removed, 243 unchanged (65% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

September 30,

Current assets:

5 unchanged sentences

Property, plant and equipment, net

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

5 unchanged sentences

Commitments and contingencies (Note 9)

Stockholders’ equity (deficit):

Stockholders’ deficit:

Common stock:

3 unchanged sentences

250,000,000 shares

authorized and 37,823,394 shares issued at September 30, 2024

authorized and 44,934,120 shares issued at March 31, 2025

Additional paid-in capital

Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

( 100,556,137

( 102,753,012

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

See accompanying notes to the unaudited condensed interim financial statements.

2 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenues

2 unchanged sentences

General and administrative

Legal expenses

Nonoperating loss

Legal expenses, net

Total operating expenses

1 unchanged sentence

Interest expense

Other (expense) income, net

Other income, net

Net loss per share, basic and diluted

3 unchanged sentences

Condensed Statements of Changes in Stockholders’ Equity (Deficit)

For the Nine Months Ended September 30, 2023 and 2024

For the Three Months Ended March 31, 2024 and 2025

Stockholders’ Equity

Stockholders’

Balance, December 31, 2022

Balance, January 1, 2024

Issuance of Common Stock upon exercise of stock options

Issuance of Common Stock upon equity subscription

Stock-based compensation

Balance, March 31, 2024

Issuance of Common Stock upon exercise of stock options

Stock-based compensation

Balance, June 30, 2023

Issuance of Common Stock upon exercise of stock options

Stock-based compensation

Balance, September 30, 2023

Stockholders’ Equity (Deficit)

Stockholders’ Deficit

Stockholders’

Equity (Deficit)

Balance, December 31, 2023

Balance, January 1, 2025

( 100,556,137

Issuance of Common Stock upon exercise of stock options

Issuance of Common Stock upon equity subscription

Issuance of Common Stock to Square Gate

Issuance cost of Common Stock

Stock-based compensation

Balance, March 31, 2025

Issuance of Common Stock upon exercise of stock options

Stock-based compensation

Balance, June 30, 2024

Issuance of Common Stock upon exercise of stock options

Stock-based compensation

Balance, September 30, 2024

( 102,753,012

See accompanying notes to the unaudited condensed interim financial statements.

1 unchanged sentence

Condensed Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

2 unchanged sentences

Stock-based compensation

Unrealized loss (gain) on investments, net

Realized loss (gain) on investments, net

Commitment fee

Changes in the carrying amount of right-of-use asset

1 unchanged sentence

Accounts receivable

Deposit for interest reserve

Prepaid expenses and other assets

4 unchanged sentences

Purchases of property and equipment

Proceeds for sale or maturities of short-term investments

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock

Proceeds from issuance of debt

Offering costs

Proceeds from issuance of debt, net

Issuance costs for common stock

Debt repayment

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

4 unchanged sentences

Capital expenditures accrued, but not yet paid

Purchases of property and equipment included in accounts payable and other liabilities

See accompanying notes to the unaudited condensed interim financial statements.

6 unchanged sentences

The Company is located in Miramar, Florida and was incorporated in the state of Delaware in April 2018.

Reverse Stock Split

On March 31, 2025, at a Special Meeting of the Stockholders (the “Special Meeting”), the stockholders of the Company approved a reverse stock split of all outstanding shares of the Common Stock, and the Board approved a reverse stock split of the Common Stock at a final ratio of one-for-forty ( 1 ::40) (the “Reverse Stock Split”).

The Reverse Stock Split was effective at 12:01 a.m.

Eastern Time on April 11, 2025.

The Common Stock commenced trading on a reverse split-adjusted basis when the markets opened on April 11, 2025, under the existing trading symbol “HCWB.”

The stockholders approved two other proposals at the Special Meeting, including approval of the use of an equity line of credit up to $ 40.0 million and the principal terms for the conversion of up to $ 6.6 million of the outstanding principal of Secured Notes.

The condensed interim financial statements included in this Quarterly Report on Form 10-Q for the period ended March 31, 2025 contained herein, are presented without giving effect to the Reverse Stock Split, except where the context otherwise requires.

Subsequent Events.

Liquidity and Going Concern

In accordance with FASB Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements – Going Concern (“Topic 205-40”), management is required to evaluate whether there are conditions and events, considered in the aggregate that raise substantial doubt about the Company’s ability to continue as a going concern for at least 12 months from the issuance date of the Company’s condensed interim financial statements.

In accordance with ASC 205-40, Presentation of Financial Statements – Going Concern (“Topic 205-40”), we are required to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for at least 12 months from the issuance date of the Company’s condensed interim financial statements.

This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the financial statements are issued.

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The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

As of September 30, 2024, the Company had not generated any revenue from commercial product sales of its internally developed immunotherapeutic products for the treatment of cancer and other age-related diseases.

During its development activities, the Company has sustained operating losses and expects to continue to incur operating losses for the foreseeable future.

Since inception to September 30, 2024, the Company incurred cumulative net losses of $ 94.5 million.

These losses reflects the events reported in the Form 8-K filed on May 1, 2024 with the Securities and Exchange Commission (“SEC”), involving a scheme that resulted in the misdirection of approximately $ 1.3 million held in Company accounts to a fraudulent account controlled by a third party.

The Company has pursued relief through insurance claims and has reported the crime to legal authorities.

Management expects to incur additional losses in the future to conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan.

As of September 30, 2024 , the Company had $ 1.0 million in cash and cash equivalents.

On August 15, 2022, the Company entered into a loan and security agreement (the “2022 Loan Agreement”) with Cogent Bank, pursuant to which it received $ 6.5 million in proceeds to purchase a building that will become the Company's new headquarters.

The loan is secured by a first priority lien on the building.

As of September 30, 2024, certain subcontractors have filed mechanics liens related to unpaid invoices issued in connection with the Company’s construction of its new manufacturing facilities and upgraded research laboratories.

As of March 31, 2025, the Company had not generated any revenue from commercial product sales of its internally developed immunotherapeutic products for the treatment of cancer and other age-related diseases.

During its development activities, the Company has sustained operating losses, experienced negative operating cash flows and negative working capital position and it expects to continue to incur operating losses for the foreseeable future.

Since inception to March 31, 2025, the Company incurred cumulative net losses of $ 100.0 million.

These losses reflect the events previously reported in the Form 10-K/A filed on May 15, 2024 with the Securities and Exchange Commission (“SEC”), involving reserve for credit losses and other expenses of $ 6.6 million.

The reserve for credit losses and other expenses arose from two events previously reported by the Company on the Form 8-K filed on January 12, 2024 and the Form 8-K filed on May 1, 2024.

On August 15, 2022, the Company entered into a loan and security agreement (the “2022 Loan Agreement”) with Cogent Bank, pursuant to which it received $ 6.5 million in proceeds to purchase a property at which the Company planned to build a facility to manufacture biologics and upgrade its research laboratory facilities.

The loan is secured by a first priority lien on the property.

As of March 31, 2025, certain subcontractors had filed mechanics liens related to unpaid invoices issued in connection with construction of the Company’s new manufacturing facilities and upgraded research laboratories.

The 2022 Loan Agreement contains a provision for a discretionary default in the event that the Company fails to pay sums due in connection with construction of any improvements;

however, as of the reporting date, the lender has not elected to do so.

See Part I, Item 4.

-- “Controls and Procedures.” As of September 30, 2024, the Company has reflected this loan as Short-term debt, net, to reflect that the lender has the right to accelerate the loan under a discretionary default provision.

The Company continues to seek the financing required to complete the construction project, with the cooperation of the lender and lien holders.

To date, the Company has funded operations primarily through the sale of stock, issuance of senior secured notes and revenues generated from the Company’s exclusive worldwide license with Wugen, Inc.

As of March 31, 2025, the Company has reflected this loan as Short-term debt, net, to reflect that the lender has the right to accelerate the loan under a discretionary default provision.

On January 22, 2025, the Company entered into a forbearance agreement with BE&K Building Group (“BE&K”), its general contractor, to allow the Company until March 31, 2025 to continue efforts to find the financing required to complete the construction and renovation of the property.

Pursuant to the forbearance agreement, the Company made an initial payment of $ 1.0 million in partial satisfaction of amounts owing to BE&K and its subcontractors.

As the Company reported in a Form 8-K, on April 17, 2025, the Company received a summons and a copy of a complaint filed by BE&K in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida (the “BE&K Complaint”).

Other Defendants named in the BE&K Complaint who are subcontractors elected to file counterclaims and cross-claims as part of their responses to the BE&K Complaint.

Cogent Bank, also named as a Defendant in the BE&K Complaint, has not elected to take legal action at this time.

In addition, on April 28, 2025, the Company received a summons and a copy of a complaint filed by Fisk Electric Company (which is a defendant in the BE&K Complaint) in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida (the “Fisk Complaint”) against the Company, BE&K, and the other defendants in the BE&K Complaint.

The Company intends to respond in a timely fashion to the BE&K and Fisk Complaints and cross-claims.

To date, the Company has funded operations primarily through the sale of stock, issuance of Senior Notes and other debt, and revenues generated from the Company’s exclusive worldwide license with Wugen, Inc.

(“Wugen”), pursuant to which Wugen licensed limited rights to develop, manufacture, and commercialize cell therapy treatments for cancer based on two of the Company’s internally-developed multi-cytokine fusion protein molecules, and its manufacturing and supply arrangement with Wugen.

In the three months ended September 30, 2023 and 2024, the Company recognized revenues generated from the supply of clinical and research grade material to Wugen of $ 853,102 and $ 426,423 , respectively.

In the nine months ended September 30, 2023 and 2024, the Company recognized revenues generated from the supply of clinical and research grade material to Wugen of $ 1.5 million and $ 2.2 million, respectively.

The Company launched a financing plan in the third quarter of 2024.

The plan includes several capital-raising activities, such as issuance of secured notes, equity financings, as well as business development transactions, such as license agreements with guaranteed minimum payments.

Through October 31, 2024, the Company issued an aggregate of $ 6.9 million in secured notes.

September 25, 2024, the Company entered into a nonbinding term sheet with a party interested in licensing one of the Company’s preclinical molecules.

The Company expects to close this license transaction in the fourth quarter of 2024.

The proposed license agreement includes guaranteed minimum payments which are expected within the first year of the term.

On November 13, 2024, we entered into an engagement letter with the Maxim Group to act as the exclusive placement agent for a multi-step equity financing.

If the Company is not successful in raising additional capital through these activities, management intends to revise its business plan.

If such revisions are insufficient, the Company may have to curtail or cease operations.

The Company has received written notices from the Listing Qualifications Staff of the Nasdaq Stock Market LLC (“Nasdaq”) informing the Company it is not in compliance with continued listing requirements on the Nasdaq Global Market for the market value of listed securities.

Under Nasdaq Listing Rules, the Company has a period of 180 calendar days from the date of notice in which to regain compliance, and its first deadline is currently scheduled for December 16, 2024.

The Company intend to take all reasonable measures available to us to regain compliance with the continued listing requirements for the Nasdaq Global Market, including utilizing the right to appeal to Nasdaq to extend the deadline to regain compliance based on a solid financial plan to do so.

While the Company is exercising diligent efforts to maintain the listing of its common stock on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with the applicable continued listing standards set forth in the Nasdaq Listing Rules.

As of September 30, 2024, the conclusion of a going concern assessment was that there is substantial doubt about the Company’s ability to continue as a going concern.

The Company considered its financing plans for the next 12 months, along with expected continuing operating losses and the burden of expenses incurred in connection with past legal proceedings.

Management concluded that there were no mitigating circumstances which alleviated the substantial doubt over its ability to continue as a going concern.

In the three months ended March 31, 2024 and 2025, the Company recognized revenues generated from the supply of clinical and research grade material to Wugen of $ 1.1 million and $ 5,065 , respectively.

As reported in the Company’s Form 8-K filed on July 18, 2024 and further described in Part II, Item 1.

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The Settlement Agreement includes mutual general releases by and among the parties thereto.

No party is required to make any monetary payments to any other party or person under the Settlement Agreement and each party will bear its own expenses incurred in connection with the matter.

The Company has substantially completed remediation procedures required to be in compliance with the terms of the Settlement Agreement.

The Company entered into the Settlement Agreement to avoid the costs, disruption and distraction of further litigation.

In the accompanying condensed balance sheet as of September 30, 2024, the Company reported a balance of $ 14.4 million for legal fees incurred but not yet paid that were included within Accounts payable and an accrual of $ 35,000 for accrued legal fees within Accrued liabilities and other current liabilities.

No party was required to make any monetary payments to any other party or person under the Settlement Agreement and each party will bear its own expenses incurred in connection with the matter.

The Arbitration and related Complaint were dismissed on December 24, 2024.

With the execution of the Settlement Agreement, the Company resolved the attendant uncertainties for the outcome of the Arbitration and additional complexities, and it launched its new financing plan.

In the accompanying condensed balance sheet as of March 31, 2025, the Com pany reported a balance of $ 12.4 million for legal fees incurred but not yet paid that were included within Accounts payable and an accrual of $ 10,000 for accrued legal fees within Accrued liabilities and other current liabilities.

The Company is engaged in discussions with the law firms involved with this matter to arrange a reasonable payment plan with respect to those legal fees.

In the three months ended March 31, 2025, the Company received a $ 2.0 million insurance payment, which was paid directly to the law firm who represented Dr.

Wong for his defense during the Arbitration.

The insurance payment is reported within Legal expenses, net in the condensed interim statement of operations.

In multiple closings that occurred from March to October 2024, the Company issued an aggregate of $ 6.9 million in Secured Notes, which are secured by the Company’s shares of Wugen common stock.

The Company’s holdings in Wugen common stock are reported within Investments on the accompanying condensed interim financial statements.

The holders of $ 6.6 million of the outstanding principal for the Secured Notes agreed to Principal Terms for the conversion into shares of the Company’s common stock, par value $ 0.0001 (“Common Stock”), which were approved by the stockholders of the Company at the Special Meeting.

On May 1, 2025, the converting holders of Secured Notes entered into the Second Amendment to Amended and Restated Senior Secured Note Purchase Agreement and Related Agreements to effect the conversion.

The conversion occurred on May 7, 2025.

Subsequent Events.

The accompanying interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

Since that time, the Company has issued $ 11.9 million through issuance of equity securities.

In November 2024, the Company raised gross proceeds of $ 6.9 million in a registered direct offering and a concurrent private placement of common stock and warrants.

The offering, priced above market under Nasdaq rules and closed on November 20, 2024.

On May 15, 2025, the Company closed an equity offering with gross proceeds of $ 5.0 million.

As the Company disclosed in the Form 8-K filed on March 19, 2025, the Company and WY Biotech Co., Ltd.

(“WY Biotech”) agreed on the principal terms for an amendment to the WY Biotech License Agreement, an exclusive worldwide license agreement with WY Biotech for the rights to develop and commercialize one of HCWB’s preclinical product candidates, HCW11-006, for in vivo applications (the “Agreement”).

Under the amended terms, the parties agreed to restructure the payment schedule for the $ 7.0 million upfront license fees, including delaying the initial $ 4.0 million portion thereof that was originally due on or about March 17, 2025 .

There were no other material changes to the Agreement.

In particular, the Company will retain the Opt-In Right thereunder, which gives the Company the option to assume all control and responsibility for the development, manufacture and commercialization of HCW11-006 for in vivo applications in the North America, South America, and Central America.

The Company retains ex vivo rights.

The Company completed its performance obligation to deliver a report on the characterization of the licensed molecule on May 13, 2025 .

As agreed under the amended terms, WY Biotech has 30 days to study this report and elect whether to continue with the Agreement, as which time the Agreement will be binding and the full $ 7.0 million upfront license fee will be due.

On February 20, 2025 , the Company entered into an Equity Purchase Agreement (the “ELOC Purchase Agreement”) and a related Registration Rights Agreement with Square Gate Capital Master Fund, LLC - Series 4 (the “Investor”), pursuant to which the Company will have the right, but not the obligation, to sell to the Investor, and the Investor will have the obligation to purchase from the Company, up to $ 20.0 million (the “Maximum Commitment Amount”) worth of the Company’s shares of Common Stock, at the Company’s sole discretion, over the next 36 months (the “Put Shares”), subject to certain conditions precedent and other limitations.

On March 12, 2025, the Company issued 384,615 shares of the Company’s Common Stock (subject to adjustment for the Reverse Stock Split) to the Investor in payment of the Commitment Fee (“Commitment Shares”).

At the Special Meeting, stockholders approved the Company’s use of the ELOC Purchase Agreement.

On April 16, 2025, the U.S.

Securities and Exchange Commission (“SEC”) declared a registration statement effective to register the Commitment Shares and shares required to sell up to $ 40.0 million of the Company’s shares to the Investor, according to provisions of the ELOC Purchase Agreement.

In addition, this registration statement also registered the underlying shares for the warrant issued in November 2024, which gives the holder the right to exercise the warrant for 6,717,000 shares of common stock at an exercise price of $ 1.03 per share (subject to adjustment for the Reverse Stock Split).

On March 3, 2025, the Nasdaq Hearings Panel (the “Panel”) of The Nasdaq Stock Market LLC (“Nasdaq” or the “Exchange”) granted the Company an extension in which to regain compliance with all Nasdaq continued listing rules for the Capital Markets tier.

The Panel’s determination follows a hearing on February 13, 2025, at which the Panel considered the Company’s plan to regain compliance with Listing Rules 5450(a)(1), 5450(b)(2)(A) and 5450(b)(2&3)(C), the minimum bid price (“Bid Price”), the market value of publicly held securities (“MVPHS”) and the market value of listed securities (“MVLS”) rules, respectively.

As a result of the extension and a clarifying amendment that the Company received on April 8, 2025, the Panel granted the Company’s request for continued listing on the Exchange on the Capital Markets tier, provided that the Company demonstrates compliance with the Bid Price Rule by April 28, 2025, and all other Exchange continued listing rules by June 16, 2025.

As of the date of issuance of this Quarterly Report, the Company has completed several elements of its compliance plan to regain and maintain compliance with all Nasdaq Listing Rules.

On March 31, 2025, there was a Special Meeting of the Stockholders of the Company, at which three matters were put to a vote, and all three proposals were approved, as noted below.

Each proposal represented a critical element in the Company’s plan to regain compliance with all Listing Rules for the Nasdaq Exchange.

On May 13, 2025, the Company received a letter from Nasdaq confirming that the Company has regained compliance with the Bid Price Rule, the public float requirement in Listing Rule 5550(a)(4) and the MVPHS Rule, as required by the Nasdaq Panel decision of April 8, 2025, as amended.

The Company remains subject to the remaining terms of the Panel’s April 8, 2025, decision to provide an extension to the compliance period for other Listing Rules.

Since December 31, 2024, the Company completed the following transactions in furtherance of regaining compliance with the Nasdaq Listing Rule for the market value of listed securities under the alternative measure based on a minimum balance in stockholders’ equity:

• An increase of $ 2.0 million on January 14, 2025, upon receipt of a $ 2.0 million insurance reimbursement for legal fees incurred for the defense of Dr.

Wong, the Company’s Founder and Chief Executive Officer, in connection with the Arbitration.

• Access to up to $ 40.0 million through the ELOC Purchase Agreement.

On February 20, 2025, the Company entered into the ELOC Purchase Agreement;

and with a registration statement effective as of April 16, 2025, the Company may access up to $ 40.0 million of capital through the sale of stock to the Investor under the terms of the ELOC Purchase Agreement.

The Company has not issued any shares under the ELOC Purchase Agreement as of the date of issuance of this Quarterly Report.

• On April 17, 2025, the Company formally applied to move to the Nasdaq Capital Markets tier, thus we will refer to the Listing Rules for that tier for the compliance with all Listing Rules.

• The Company completed the conversion of $ 6.6 million of the outstanding principal of the Secured Notes.

Participating noteholders converted their outstanding principal into shares of the Company’s Common Stock at a conversion price of $ 0.65 per share (post-split, $ 26.00 per share), received warrants that may be exercised for a period of five years to purchase $ 3.3 million of Common Stock at an exercise price of $ 0.65 per share (post-split, $ 26.00 per share), and rights to receive their pro rata shares of 49.1 % of the proceeds of the liquidation of the Company’s Wugen shares, if such an event occurs.

• On May 15, 2025, the Company closed an equity offering with gross proceeds of $ 5.0 million through a follow-on offering of an aggregate of 671,140 units at a purchase price of $ 7.45 per unit priced at-the-market under Nasdaq rules.

Each unit consisted of one share of Common Stock or one Pre-Funded Warrants to purchase one share of Common Stock, with two warrants, each of which can be exercised for one share of Common Stock for $ 7.45 per share.

In addition, the Company entered into a privately negotiated agreement with the holder of certain existing outstanding warrants to purchase up to 167,925 shares of common stock (the “Existing Warrants”) to reduce the exercise price of such Existing Warrants from $41.20 per share to $7.45 per share.

As of March 31, 2025, the conclusion of a going concern assessment, before consideration of our financing plans, was that there is substantial doubt about the Company’s ability to continue as a going concern.

The Company considered future elements of its financing plan that were probable and likely to be implemented within the next year to determine if financing activities currently underway are sufficient mitigate the substantial doubt in the going concern analysis, in addition to considering continued operating losses and the burden of obligations for expenses incurred in connection with past legal proceedings.

Management concluded that there were no mitigating circumstances which alleviated the substantial doubt over its ability to continue as a going concern.

If the Company is not successful in raising additional capital through these activities, management intends to revise its business plan and reduce costs.

If such revisions are insufficient, the Company may have to curtail or cease operations.

The accompanying condensed interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

The Company believes that substantial doubt exists regarding its ability to continue as a going concern for at least 12 months from the date of issuance of the Company’s condensed interim financial statements and that the substantial doubt that existed in its going concern analysis was not alleviated.

The Company believes that substantial doubt exists regarding its ability to continue as a going concern for at least 12 months from the date of issuance of the Company’s audited financial statements and that the substantial doubt that existed in its going concern analysis was not alleviated.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed balance sheet as of September 30, 2024, the condensed statements of operations, and condensed statements of changes in stockholders’ equity (deficit) for the three and nine-month periods ended September 30, 2023 and 2024 and the condensed statements of cash flows for the nine months ended September 30, 2023 and 2024, and all related disclosures contained in the accompanying notes have been prepared in accordance with accounting principles that are generally accepted in the United States of America (“U.S.

Unaudited Interim Financial Information

The accompanying unaudited condensed interim financial statements as of March 31, 2025 and for the three-month periods ended March 31, 2024 and 2025 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”).

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These unaudited condensed interim financial statements include only normal and recurring adjustments that the Company believes are necessary to fairly state the Company’s financial position and the results of its operations and cash flows.

The results for the three and nine-month periods ended September 30, 2024 are not necessarily indicative of the results expected for the full fiscal year or any subsequent interim period.

The condensed interim balance sheet at December 31, 2023 has been derived from the audited financial statements at that date but does not include all disclosures required by

The results for the three-month period ended March 31, 2025 are not necessarily indicative of the results expected for the full fiscal year or any subsequent interim period.

The condensed interim balance sheet at December 31, 2024 has been derived from the audited financial statements at that date but does not include all disclosures required by U.S.

GAAP for complete financial statements.

Because all of the disclosures required by U.S.

GAAP for complete financial statements are not included herein, these unaudited condensed interim financial statements and the notes accompanying them should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2023, which appear in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on May 15, 2024 (the “Annual Report”) and in other filings with the SEC.

GAAP for complete financial statements are not included herein, these unaudited condensed interim financial statements and the notes accompanying them should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2024 which appear in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on March 28, 2025 (the “Annual Report”) and in other filings with the SEC.

Segment Reporting

The Company operates and manages its business as one reportable and operating segment, which is the business of developing and commercializing novel immunotherapies for diseases promoted by chronic inflammation, especially age-related diseases.

The Company’s chief executive officer, who is the chief operating decision maker (“CODM”), reviews financial information on an aggregate basis for allocating and evaluating financial performance.

In addition, our CODM is regularly provided with detailed results of preclinical and clinical data which is considered in his decision for the allocation of resources.

Segment Reporting for further details.

The single operating segment constitutes all of the Company activity, the chief operating decision maker regularly reviews the entity-wide operating results and performance .

All long-lived assets are maintained in the United States of America.

Reclassification of Prior Period Presentation of Legal Expenses

Certain prior period amounts have been reclassified to distinguish between General and administrative expenses in the ordinary course of business and legal expenses incurred in connection with the arbitration and Settlement Agreement described in Notes 1.

Reclassification of legal expenses incurred in connection with legal proceedings impacts the consolidated interim statements of operations.

Reclassification of legal expenses incurred in connection with legal proceedings impacts the condensed interim statements of operations.

There is no effect on reporting results of operations from prior periods.

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Revenue Recognition

The Company accounts for revenues in accordance with ASC 606, Revenue from Contracts with Customers (“Topic 606”).

The Company accounts for revenues in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“Topic 606”).

To determine revenue recognition for arrangements that fall within the scope of Topic 606, the Company performs the following five steps:

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The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

To date, the Company's revenues have been generated solely from transactions with Wugen.

The Wugen License includes

licenses of intellectual property, cost reimbursements, upfront signing fees, milestone payments and royalties on future licensee’s product sales.

In addition, the Company and Wugen have an agreement for supply of materials, from which the Company also recognizes revenues.

To date, the Company's revenues have been generated exclusively from the Wugen License, which consists of licenses of intellectual property, cost reimbursements, upfront signing fees, milestone payments and royalties on future licensee’s product sales.

In addition, the Company and Wugen have an agreement for the supply of clinical and research grade materials under which the Company also recognized revenues.

License Grants:

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The Company provides clinical and research grade materials so that licensees may develop products based on the licensed molecules.

The Company plans to enter into commercialization supply agreements when licensees enter the commercial stage of their company.

The amounts billed are recognized as revenue as the performance obligations are satisfied by the Company, once the Company determines that a contract exists.

On June 18, 2021, the Company entered into a master services agreement for the supply of materials for clinical development of licensed products.

To meet all the criteria to qualify as a contract under Topic 606, the Company must enter into statements-of-work for purchases of clinical and research grade materials.

The Company has determined that the manufacturing of the clinical and research materials supplied by the Company each represents a single performance obligation that is satisfied over time.

On June 18, 2021, the Company entered into a master services agreement (“MSA”) with Wugen for the supply of materials for clinical development of licensed products.

Each of these transactions represents a single performance obligation that is satisfied over time.

The Company recognizes revenue using an input method based on the costs incurred relative to the total expected cost, which determines the extent of the Company’s progress toward completion.

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The Company reviews its estimate of the progress toward completion based on the best information available to recognize the cumulative progress toward completion as of the end of each reporting period, and makes revisions to such estimates, if facts and circumstances change during each reporting period.

For the three and nine months ended September 30, 2023, the Company recognized $ 853,102 and $ 1.5 million in revenue related to the sale of development supply materials to Wugen, respectively.

For the three and nine months ended September 30, 2024 , the Company recognized $ 426,423 and $ 2.2 million in revenue related to sale of development supply materials to Wugen, respectively.

For each in process SOW, amounts are billed in the same quarter the costs are incurred.

For the three months ended March 31, 2024 and March 31, 2025, the Company recogni zed $1.1 million and $ 5,065 in re venue, respectively, all of which is related to sale of development supply materials to our licensee, Wugen.

The Company holds a minority interest in Wugen which is accounted for using the measurement alternative whereby the investment is recorded at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same investee.

No impairment has been recognized.

As of September 30, 2024 and December 31, 2023, the Compa ny included $ 1.6 million for the investment in Wugen in Investments in the accompanying condensed interim balance sheets.

As of March 31, 2025 and December 31, 2024, the Company included $ 1.6 million for the investment in Wugen in Investments in the accompanying condensed interim balance sheets.

The Company used its equity interest in Wugen to collateralize the Secured Notes.

Subsequent to March 31, 2025, the Company transferred some of its rights to receive proceeds from the sale or liquidation of Wugen shares, if such an event occurs.

Subsequent Events.

The Company invests excess cash in bills and notes issued by the U.S.

Treasury which are classified as trading securities.

As of December 31, 2024 and March 31, 2025 , the Company had no Short-term investments.

Operating Leases

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Operating leases are included in Other assets, Accrued liabilities and other current liabilities, and Other liabilities on its condensed interim balance sheets.

Operating lease Right of Use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over

the lease term at commencement date.

Operating lease Right of Use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

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Accrued Liabilities and Other Current Liabilities

As of December 31, 2023 , the Company had a balance of $ 2.6 million included in Accrued liabilities and other current liabilities i n the audited balance sheet, consisting of $ 392,000 for construction expenses, $ 105,000 for manufacturing expenses, $ 1.1 million for legal fees, $ 262,000 for clinical expenses, $ 365,000 for bonus payable, $ 160,000 for salary expenses, $ 119,000 for the current portion of long-term debt, $ 28,500 for a lease liability and $ 68,500 for other liabilities.

As of September 30, 2024 , the Company had a balance of $ 1.2 million included in Accrued liabilities and other current liabilities in the accompanying condensed interim balance sheet, consisting of $ 170,000 for legal fees, $ 422,000 for construction in progress, $ 49,000 for manufacturing expenses, $ 104,000 for property taxes, $ 117,000 for clinical expenses, $ 57,000 for bonus payable, $ 126,000 for the current portion of long-term debt and $ 90,000 for salary and benefits.

As of December 31, 2024 , the Company had a balance of $ 981,940 included in Accrued liabilities and other current liabilities in the audited condensed balance sheet, consisting of $ 422,000 for construction expenses, $ 49,000 for manufacturing expenses, $ 155,000 for legal fees, $ 121,000 for clinical expenses, $ 5,000 for bonus expense, $ 202,000 for salary expenses and $ 28,000 for other liabilities.

As of March 31, 2025 , the Company had a balance of $ 1.2 million included in Accrued liabilities and other current liabilities in the accompanying condensed interim balance sheet, consisting of $ 422,000 for construction in progress, $ 49,000 for manufacturing expenses, $ 409,000 for legal fees, $ 127,000 for clinical expenses, $ 103,000 for salary and benefits and $ 54,000 for other liabilities.

Cogent Bank Loan

On August 15, 2022, the Company entered into the 2022 Loan Agreement with Cogent Bank, pursuant to which it received $ 6.5 million in proceeds to purchase a building that will become the Company's new headquarters.

On August 15, 2022, the Company entered the 2022 Loan Agreement with Cogent Bank, pursuant to which it received $ 6.5 million in proceeds to purchase a property where the Company planned to construct a manufacturing facility for biologics and upgraded research laboratory facilities.

The loan is secured by a first priority lien on the building.

As of March 31, 2025, the Company had $ 6.3 million in principal outstanding under the 2022 Loan Agreement.

The interest-only period was one year followed by 48 months of equal payments of principal and interest beginning on September 15, 2023 based on a 25-year amortization rate.

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Upon the Maturity Date, a final payment of unamortized principal will be due.

The Company is in compliance with covenants related to current payment of principal and interest as of March 31, 2025.

The Company has the option to prepay the outstanding balance of the loan prior to the Maturity Date without penalty.

As of December 31, 2024 and March 31, 2025, certain subcontractors filed mechanics liens related to unpaid invoices issued in connection with the Company’s construction of its new manufacturing facilities and upgraded research laboratories.

The 2022 Loan Agreement contains a provision for a discretionary default in the event that the Company fails to pay sums due in connection with construction of any improvements;

however, as of the reporting date, the lender has not elected to do so.

As of September 30, 2024, the Company has reflected this loan as Short-term debt, net, to reflect that the lender has the right to accelerate the loan under a discretionary default provision.

As of September 30, 2024 , $ 6.3 million is included in Short-term debt, net in the accompanying condensed interim balance sheet.

As of December 31, 2024 and March 31, 2025, the Company has reflected this loan as Short-term debt, net, to reflect that the lender has the right to accelerate the loan under a discretionary default provision.

As of March 31, 2025, $ 6.3 million is included in Short-term debt, net in the accompanying condensed interim balance sheet.

Senior Secured Notes

On March 31, 2024, the Company entered into a Note Purchase Agreement with the Purchasers (as defined in the Note Purchase Agreement), pursuant to which the Company may issue secured notes up to an aggregate principal amount up to $ 10.0 million (“Secured Notes”).

As of September 30, 2024, the Company received $ 6.5 million in funding from the issuance of Secured Notes, which is included within Debt, Net on the accompanying condensed interim balance sheet.

Investors included Dr.

As of March 31, 2024, the Company issued $ 2.0 million of Secured Notes which were classified as non-current liabilities in the accompany condensed interim balance sheet.

Purchasers (as defined in the Note Purchase Agreement) included:

Wong, Founder and Chief Executive Officer, who invested $ 620,000 ;

Rebecca Byam, Chief Financial Officer, who invested $ 220,000 ;

Winer, member of our Board of Directors, who invested $ 50,000 , as well as unrelated parties.

As of March 31, 2024, the Company received $ 1.8 million in cash payments for the Secured Notes.

A check payment of $ 250,000 , that has since cleared, is included in Secured note receivable in the accompanying condensed interim balance sheet.

As of March 31, 2025, the Company issued $ 6.9 million of Secured Notes which were classified as non-current liabilities in the accompanying condensed interim balance sheet.

Purchasers included Dr.

Wong, Founder and Chief Executive Officer, who invested $ 2.4 million;

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No other terms were changed.

Under the terms of the Amended and Restated Note Purchase Agreement, the Secured Notes continu e to bear interest at a rate of 9 % per annum , payable quarterly in arrears.

Under the terms of the Amended and Restated Note Purchase Agreement, the Secured Notes continue to bear interest at a rate of 9 % per annum, payable quarterly in arrears.

The Secured Notes will mature on August 30, 2026 (the “Maturity Date”), on which date the principal balance, accrued but unpaid interest and other amounts owed under the terms of the Amended and Restated Note Purchase Agreement shall be due and payable.

The Company pledged its equity ownership interest in Wugen, which was equivalent to a 5.6 % ownership stake in that company as of September 30, 2024 (“Pledged Collateral”).

The Company pledged its equity ownership interest in Wugen, which was equivalent to a 5.6 % ownership stake in that company as of March 31, 2025 (“Pledged Collateral”).

The Pledged Collateral will be held and released according to the terms of the Escrow Agreement, as security for the Secured Notes.

If the Company elects to prepay the Senior Notes on or before December 31, 2024, there is a 5 % prepayment penalty.

The Secured Notes have a Mandatory Prepayment provision, according to which the Company is required to prepay the Secured Notes before the Maturity Date under certain circumstances.

In the event of a Mandatory Prepayment, Secured Notes may receive a bonus payment based on the gross proceeds of the sale of the Pledged Collateral.

If the Secured Notes are repaid on the Maturity Date, holders will receive a fixed bonus payment in addition to payment of outstanding principal and accrued and unpaid interest.

If the Secured Notes are repaid on the Maturity Date, holders will receive their pro rata share of a fixed bonus payment of $ 3.4 million in addition to payment of outstanding principal and accrued and unpaid interest.

If a bonus payment is paid, then there is no prepayment penalty.

The Amended and Restated Note Purchase Agreement also contains default provisions, according to which, following an event of default, the Company may be required to distribute the Pledged Collateral to the Purchasers on a pro rata basis based on a $ 10.0 million issuance of Secured Notes, in full satisfaction of the indebtedness evidenced by the Secured Notes.

As of September 30, 2024, the fair value of the embedded derivative, which incorporated the likelihood of certain events occurring, was immaterial.

Thus, as of September 30, 2024, the Company did not recognize the embedded derivative in the accompanying condensed financial statements.

The Company accounts for the bonus payment to be paid if the Secured Notes are repaid on the Maturity Date by accreting the bonus payment to the full amount due on the Maturity Date, utilizing the effective interest rate method.

As of September 30, 2024, the Company did not recognize accretion of the bonus payment, which was not considered material to the accompanying condensed financial statements.

In the three months ended March 31, 2025, the Company recognized $ 273,059 in expenses for accretion of the fixed bonus payment due in the event the Secured Notes are repaid on the Maturity Date.

On May 7, 2025, certain Purchasers elected to convert $ 6.6 million of outstanding principal into shares of the Company’s Common Stock, warrants to purchase Common Stock and rights to a portion of the Company’s Wugen shares, according to Principal Terms of Conversion approved by the stockholders at the Special Meeting held on March 31, 2025.

Subsequent Events.

Preferred Stock

As of December 31, 2023 and September 30, 2024 , the Company had 10,000,000 shares of preferred stock authorized and no such shares issued.

As of December 31, 2024 and March 31, 2025 , the Company had 10,000,000 shares of preferred stock authorized and no shares issued.

Net Loss Per Share

The following table summarizes the computation of the basic and diluted net loss per share:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Weighted-average common shares outstanding

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The following table summarizes the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:

At September 30,

Common stock options

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No transfers between levels occurred during the periods presented.

The following table presents the Company’s assets, which were measured at fair value at December 31, 2023 and September 30, 2024:

The following table presents the Company’s assets which were measured at fair value at December 31, 2024 and March 31, 2025:

At December 31, 2024:

Money market funds

At September 30, 2024:

At March 31, 2025:

Money market funds

The Company computes its quarterly income tax expense/(benefit) by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter.

The Company did no t have a provision for income taxes (current or deferred tax expense) as of December 31, 2023 and September 30, 2024.

The Company did no t have a provision for income taxes (current or deferred tax expense) as of December 31, 2024 and March 31, 2025.

The Company will continue to maintain a 100 % valuation allowance on total deferred tax assets.

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As a result, the Company’s effective tax rate will remain at 0.00 % because no items either estimated or discrete items would impact the tax provision.

Segment Reporting

HCW Biologics, Inc.

has one reportable segment:

life science.

The life science segment consists of operations focused on discovering and developing novel immunotherapies to lengthen health span by disrupting the link between chronic, low-grade inflammation and diseases.

The Company’s CODM is the chief executive officer .

The accounting policies of the life science segment are the same as those described in the summary of significant accounting policies.

The CODM assesses performance for the life science segment based on net loss, which is reported on the statement of operations as net loss.

The measure of segment assets is reported on the balance sheet as total assets.

The Company has not generated any product revenue from commercial product sales of internally-developed immunotherapeutic products for the treatment of diseases, as no products have been approved for commercial sale as of March 31, 2025.

The Company expects to continue to incur significant expenses and operating losses for the foreseeable future as it advances molecules through all stages of development and clinical trials and, ultimately, seek approval for commercial sale.

As such, the CODM uses cash forecast models in deciding how to invest into the life science segment.

Such cash forecast models are reviewed to assess the entity-wide operating results and performance in conjunction with monitoring the results of R&D experiments for preclinical compounds and clinical trial data for clinical-stage compounds.

The assessment of results of preclinical and clinical studies are critical to the allocation of resources by the CODM.

There were no material changes to the measures for segment revenue, profit or loss, and other metrics since December 31, 2024.

The tables below summarizes the significant expense categories regularly reviewed by the CODM for the three months ended March 31, 2024 and March 31, 2025:

Three Months Ended

Cost of revenues

Operating expenses:

Research and development expenses

Salaries, benefits and related expenses

Manufacturing and materials

Preclinical expenses

Clinical trials

Overhead allocations

Total research and development expenses

General and administrative

Salaries, benefits and related expenses

Professional services (a)

Facilities and office expenses

Depreciation expenses

Rent and occupancy expenses

Other expenses

Total general and administrative expenses

Other segment items (b)

Total operating expenses

Net segment loss

Professional services consist primarily of audit and accounting advisory services, tax advisory services, corporate legal services related to SEC compliance, and legal fees related to patent filings.

Other segment items include the following unusual or nonrecurring items:

Three Months Ended

Arbitration legal fees, net

Accretion of fixed bonus upon maturity of Senior Notes, net

Interest expense

Other income, net

Other segment items

Commitments and Contingencies

Operating Leases

As of March 1, 2022, the Company entered a two-year lease, comprised of two operating leases, for approximately 12,250 square feet of space located in Miramar, Florida.

Upon the commencement of those leases, the Company used its incremental borrowing rate of 6.0 % to determine the amounts to recognize for a ROU asset and a lease liability.

On March 1, 2024, the Company entered a one-year lease for the same space, which expires on February 28, 2025 .

If a lease has a term that is 12 months or less in duration, the lease qualifies for a short-term lease exemption under ASC 842-20-25-2.

The Company elected to take advantage of this exemption, and it will account for this lease on a straight-line basis over the lease term and will not recognize a ROU asset and a lease liability as a result.

The remaining lease payments under the new short-term lease ar e $ 114,510 .

T he Company has no obligations under financing leases.

For the three months ended September 30, 2023 and 2024 , rent expense recognized by the Company was $ 42,400 and $ 49,500 , respectively, of which $ 22,200 and $ 25,900 , respectively, are included in research and development in the accompanying condensed interim statements of operations.

For the nine months ended September 30, 2023 and 2024, rent expense recognized by the Company was $ 127,200 and $ 146,400 , respectively, of which $ 66,600 and $ 75,300 , respectively are included in research and development in the accompanying condensed interim statements of operations.

The Company has operating leases for approximately 12,250 square feet of space located in Miramar, Florida.

On February 29, 2024, the lease on the Company's current location reached the end of its term and the Company entered a new one-year lease for the same location which commenced on March 1, 2024 and terminated on February 28, 2025 .

On January 27, 2025, the Company entered a new one-year lease for the same location which commenced on March 1, 2025 and terminates on February 28, 2026 .

As a lease of 12 months or less in duration and qualifies for a short-term lease exemption under ASC 842-20-25-2.

The Company elected to account for this lease on a straight-line basis over the lease term and will not recognize a ROU asset and a lease liability as a result.

The Company has no obligations under financing leases.

For the three months ended March 31, 2024 and 2025 , rent expense recognized by the Company was $ 47,838 and $ 50,556 , respectively, of which $ 23,453 and $ 26,476 , respectively, are included in research and development in the accompanying condensed interim statements of operations .

Contractual Commitments

The Company has commitments with a third-party manufacturing organization to supply us with clinical grade materials.

As of September 30, 2024, it is under contract for obligations of $ 12,500 it expects to pay during the year ending December 31, 2024.

As of December 31, 2023 and September 30, 2024, the Company had commitments to fund $ 4.4 million an d $ 2.5 million, respectively, in construction costs related to the buildout of its new headquarters and manufacturing facility.

As of March 31, 2025, it is under contract for obligatio ns of $ 12,500 it expects to pay during the year ending December 31, 2025.

On January 22, 2025, the Company entered into a forbearance agreement with BE&K to allow the Company until March 31, 2025 to continue efforts to find the financing required to complete the construction and renovation of the building.

Pursuant to the forbearance agreement, the Company made an initial payment of $ 1.0 million in partial satisfaction of amounts owing to BE&K and its subcontractors.

Upon the expiration of the forbearance agreement, BE&K took additional legal actions.

See Legal - Other Matters below.

The Company has continued to pursue financing alternatives to provide the funding needed to come current in past amounts due and complete the construction and renovation of the property.

Project Financing

On January 10, 2024 (the “Termination Date”), the Company exercised its right to terminate its credit agreement (the “Credit Agreement”), dated April 21, 2023, with Prime Capital Ventures, LLC (the “Lender”), as permitted under the terms of the Credit Agreement.

These funds were intended to finance the construction and renovation of the Company’s new headquarters (the “Property”).

The termination followed repeated delays in funding and related concerns.

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Upon exercising its right to terminate the Agreement, the Company was entitled to receive the return of the $ 5.3 million that the Company placed on deposit to establish an interest reserve account with the Lender.

However, the Lender defaulted on its obligation to return the interest reserve deposit.

In the three months ended March 31, 2024, the Lender defaulted on its obligation to return the interest reserve deposit.

Given the uncertainty of when or if funds will be recovered from the Lender, the Company recognized a reserve for a credit loss for $ 5.3 million as of December 31, 2023.

The Company intends to pursue all available remedies to recover these funds, including legal actions, receivership and insurance.

The Company continues to seek financing to complete the construction and renovation of its Property, where it intends to build a new headquarters, including a biologics manufacturing facility, upgraded research laboratory facilities, vivarium, and upgraded office and common areas.

Nonoperating Loss

As reported in the Company’s Form 8-K filed on May 1, 2024 with the SEC, the Company became aware that it was the victim of a criminal scheme involving the impersonation of a purchaser upon the default on a legally binding commitment to purchase $ 8.0 million of secured notes from the Company.

The scheme resulted in the misdirection of approximately $ 1.3 million held in Company accounts to a fraudulent account controlled by a third party.

The Company is pursuing all available remedies to recover this loss.

Given the limited success that these efforts have had to date for the recovery of funds, the Company recognized a loss of $ 1.3 million in the three- and nine-month periods ended September 30, 2024.

Legal Proceedings

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On December 23, 2022, Altor BioScience, LLC and NantCell, Inc.

(“Altor/NantCell”) initiated an arbitration against Dr.

(collectively “ImmunityBio”) initiated an arbitration against Dr.

Wong, the Company’s Founder and Chief Executive Officer, in California alleging breach of contract and fiduciary duty, among other claims .

On that same date, Altor/NantCell filed a lawsuit against the Company in federal court alleging misappropriation of trade secrets, inducement of breach of contract and breach of fiduciary duty, among other claims against the Company.

On April 26, 2023, the parties stipulated that Altor/NantCell’s action against the Company would be consolidated with the Altor/NantCell arbitration demand against Dr.

On that same date, ImmunityBio filed a lawsuit against the Company in federal court alleging misappropriation of trade secrets, inducement of breach of contract and breach of fiduciary duty, among other claims against the Company.

On April 26, 2023, the parties stipulated that ImmunityBio’s action against the Company would be consolidated with the ImmunityBio Arbitration demand against Dr.

On April 27, 2023, the Court approved the parties’ stipulation and ordered the parties to Arbitration.

On May 1, 2023, Altor/NantCell filed a demand against the Company before JAMS.

On May 3, 2023, Altor/NantCell dismissed the federal court action without prejudice and the Court ordered the case dismissed without prejudice and closed the case.

Altor/NantCell’s proceeding against the Company proceeded in arbitration before JAMS and consolidated with the arbitration Altor/NantCell initiated against Dr.

On May 1, 2023, ImmunityBio filed a demand against the Company before JAMS.

On May 3, 2023, ImmunityBio dismissed the federal court action without prejudice and the Court ordered the case dismissed without prejudice and closed the case.

ImmunityBio’s proceeding against the Company proceeded in Arbitration before JAMS and consolidated with the arbitration ImmunityBio initiated against Dr.

Wong (the “Arbitration”).

On March 26, 2024, Altor/NantCell filed a complaint (the “Complaint”) against the Company in the Chancery Court of the State of Delaware for the contribution of legal fees and expenses advanced to Dr.

On March 26, 2024, ImmunityBio filed a complaint (the “Complaint”) against the Company in the Chancery Court of the State of Delaware for the contribution of legal fees and expenses advanced to Dr.

As reported in the Company’s Form 8-K filed on July 18, 2024 and described in Part II, Item 1.

– “Legal Proceedings” below, as of July 13, 2024, the Company and Dr.

– “Legal Proceedings,” as of July 13, 2024, the Company and Dr.

Wong, the Company’s Founder and Chief Executive Officer, entered into a confidential Settlement Agreement and Release (the “Settlement Agreement”) with Altor BioScience, LLC (“Altor”), NantCell, Inc.

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The Settlement Agreement includes mutual general releases by and among the parties thereto.

No party is required to make any monetary payments to any other party or person under the Settlement Agreement and each party will bear its own expenses incurred in

connection with the matter.

The Company has substantially completed remediation procedures required to be in compliance with the terms of the Settlement Agreement.

The Settlement Agreement provides that, upon completion of these procedures, the parties mutually agreed to stipulate that the Arbitration and Complaint should be dismissed.

As of the filing date, the parties to the Settlement Agreement are working together to finalize the notices and related final documentation to obtain dismissal of the Arbitration and Complaint.

No party is required to make any monetary payments to any other party or person under the Settlement Agreement and each party will bear its own expenses incurred in connection with the matter.

The Arbitration and the Complaint were dismissed as of December 31, 2024.

Other Matters

The 2022 Loan Agreement contains a provision for a discretionary default in the event that the Company fails to pay sums due in connection with construction of any improvements;

however, as of the reporting date, to the Company’s knowledge, the lender has not elected to do so.

Other Defendants named in the BE&K Complaint who are subcontractors elected to filed counterclaims and cross-claims in response to the BE&K Complaint.

Cogent Bank, also named as a Defendant in the BE&K Complaint, has not elected to take legal action at this time.

The Company intends to respond in a timely fashion to the BE&K and Fisk Complaints and cross-claims.

Inflationary Cost Environment, Banking Crisis, Supply Chain Disruption and the Macroeconomic Environment

The Company’s operations have been affected by many headwinds, including inflationary pressures, rising interest rates, ongoing global supply chain disruptions resulting from increased geopolitical tensions such as the war in the Middle East, the conflict between Russia and Ukraine, China-Taiwan relations, financial market volatility and currency movements.

The Company has been impacted by inflation, and may continue to be so, when procuring materials required for the buildout of our new headquarters, the costs for recruiting and retaining employees and other employee-related costs.

The Company’s operations have been affected by many headwinds, including inflationary pressures, including those brought about by tariffs and other economic policies, high interest rates, ongoing global supply chain disruptions resulting from increased geopolitical tensions such as the war in the Middle East, the conflict between Russia and Ukraine, China-Taiwan relations as well as U.S.

trade policies, financial market volatility and currency movements.

The Company has been impacted by inflation, and may continue to be so, when procuring materials required for the buildout of our new manufacturing and laboratory facilities, the costs for recruiting and retaining employees and other employee-related costs.

Management employs a number of strategies to effectively navigate these issues, including product redesign, alternate sourcing, and establishing contingencies in budgeting and timelines.

Future developments in these and other areas present material uncertainty and risk with respect to the Company's clinical trials, IND-enabling activities, buildout of the new headquarters, as well as the Company's financial condition and results of operations.

Future developments in these and other areas present material uncertainty and risk with respect to the Company's clinical trials, IND-enabling activities, buildout of the new manufacturing and laboratory facilities, as well as the Company's financial condition and results of operations.

The extent and duration of such events and conditions, and resulting disruptions to our operations, are highly unpredictable.

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In addition to the required recognition or disclosure disclosed in the footnotes herein, there were also the following subsequent events after the reporting date:

During October 2024, the Company issued $ 375,000 in Additional Secured No tes, including a $5 0,000 purchase by Dr.

Wong on October 31, 2024.

On November 13, 2024, we entered into an engagement letter with the Maxim Group to act as the exclusive placement agent for a multi-step equity financing.

As of the filing date, the parties to the Settlement Agreement are working together to finalize the notices and related final documentation to obtain dismissal of the Arbitration and Complaint.

At the Special Meeting, Stockholders approved three proposals, including the Reverse Stock Split, the issuance of up to $ 40.0 million of shares of the Company’s Common Stock to Investor under the terms of the ELOC Purchase Agreement, and the Principal Terms of Conversion for the conversion of at least $ 6.6 million of the outstanding principal of Secured Notes.

Each proposal represented a critical element in the Company’s plan to regain compliance with all Listing Rules for the Nasdaq Exchange.

Subsequent to March 31, 2025, the Company completed the following elements of its plan to regain compliance with all Nasdaq Listing Rules:

• On April 17, 2025, the Company formally applied to move to the Capital Markets tier, thus will refer to the Listing Rules for that tier for the compliance with all Listing Rules.

• The Reverse Split was effective on April 11, 2025.

On April 28, 2025, the Company completed 10 consecutive trading days with a trading price for its listed securities at $ 1.00 or above, thus achieving compliance with the minimum bid price rule.

The Company remains in compliance as of the date of issuance of this Quarterly Report.

• On April 16, 2025, after the SEC declared a registration statement effective, the Company has registered the underlying shares of Common stock for up to $ 40.0 million of shares issuable to Investor under the terms of a Equity Purchase Agreement.

• On April 16, 2025, after the SEC declared a registration statement effective, the Company has registered the underlying shares of Common Stock for the Common Stock Warrant issued in its November 2024 financing.

• On May 1, 2025, the noteholders of $ 6.6 million of outstanding principal of Secured Notes entered a definitive conversion agreement with the Company.

On April 17, 2025, the Company received a summons and a copy of a complaint filed by BE&K in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida (the “BE&K Complaint”).

The BE&K Complaint was filed by BE&K Building Group, LLC as Plaintiff and each of the Company, Cogent Bank, B&I Contractors, Southern Painting, Dash Door & Closer Service, Inc., Fisk Electric Company and Lotspeich Co.

of Florida as Defendants.

BE&K Building Group, LLC v.

HCW Biologics, et al., CACE-25-004668 (Fla.

2025) (the “BE&K Litigation”).

The Company was also served with a cross claim from B&I Contractors and Dash Door & Closer Service, Inc.

and a complaint filed by Fisk Electric Company.

Commitments and contingencies - Legal, Other Matters.

On May 7, 2025, the noteholders of $ 6.6 million of the outstanding principal of the Secured Notes (participating noteholders) effected the conversion of the Secured Notes held by them into shares of the Company’s Common Stock at a conversion price of $ 26.00 per share (adjusted for the Reverse Stock Split), warrants to purchase approximately $ 3.3 million of the Company’s Common Stock at an exercise price of $ 26.00 per share (as adjusted for the Reverse Stock Split), and the right to their pro rata share of 49.1 % of the proceeds of the Company’s shares of Wugen common stock, if and when such shares are ever sold.

This transaction was effected pursuant to the terms of a Second Amendment to Amended and Restated Senior Secured Note Purchase Agreement and Related Agreements dated as of May 1, 2025 (the “Conversion Agreement”).

The conversion was completed on May 7, 2025 , pursuant to the Conversion Amendment, the Secured Notes held by the participating noteholders were cancelled, and the Company issued unregistered shares of Common Stock (which are subject to a 180-day lock-up from the conversion date) and warrants to purchase up to $ 3.3 million of Common Stock that may be exercised at any time up to five years from the closing date (any such shares also subject to a 180-day lock-up from the conversion date).

As of May 5, 2025, the Company issued a total of $ 270,000 principal amount of unsecured convertible promissory notes that mature on May 5, 2026 with paid in kind interest accruing thereon, payable quarterly in arrears at 10 % per annum (the “Convertible Bridge Notes”).

In accordance with their terms, following the completion of a qualified offering, the Convertible Bridge Notes will be converted into shares of our Common Stock at the final offering price in an o ffering that closed on May 15, 2025.

In addition, holders of the Convertible Bridge Notes have the right to receive a portion of the proceeds of the Company’s shares of Wugen common stock, if and when such shares are ever sold, determined by the number of the Wugen shares equal to 0.25 multiplied by the original principal amount, in dollars, of the Convertible Bridge Notes.

Investors included:

$ 60,000 invested by Hing C.

Wong, the Company’s Founder and CEO;

$ 100,000 invested by Scott T.

Garrett, the Chairman of the Company’s Board of Directors;

and $ 10,000 invested by Gary M.

Winer, a member of the Company’s Board of Directors.

On May 13, 2025, the Company completed its performance obligation under the WY Biotech Agreement, as amended.

By doing so, the Company delivered a technology transfer report which characterized the licensed molecules, HCW11-006.

WY Biotech has a 30-day due diligence period during which it will assess the contents of this report.

At the end of the due diligence period, WY may either elect to terminate the Agreement with no penalties or continue with the Agreement, as which point it would become binding.

On May 15, 2025, the Company closed on an equity offering with gross proceeds of $5.0 million through a follow-on offering of an aggregate of 671,140 units at a purchase price of $7.45 per unit priced at-the-market under Nasdaq rules.

In addition, the Company has entered into a privately negotiated agreement with the holder of certain existing outstanding warrants to purchase up to 167,925 shares of common stock (the “Existing Warrants”) to reduce the exercise price of such Existing Warrants from $41.20 per share to $7.45 per share.

Also on May 15, 2025, the Company received a notification for exercise of 177,140 of its 513,140 Pre-Funded Warrants.

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 1. Financial Statements