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Item 5. Other Information

2025-05-15 compared with 2024-11-14 · 37 added, 32 removed, 34 unchanged (67% of the section changed)

1 unchanged sentence

Insider Adoption or Termination of Trading Arrangements

During the fiscal quarter ended September 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

The following information is being included in this Item 5 in lieu of filing such information on a Current Report on Form 8-K under Item 2.03.

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, the Company entered into a senior secured note purchase agreement (the “Note Purchase Agreement”) with the Purchasers (as defined in the Note Purchase Agreement), pursuant to which we agreed to issue senior secured notes in an aggregate principal amount of up to $10.0 million (“Secured Notes”) to certain accredited investors, including unrelated parties as well

as officers and directors of the Company.

During the fiscal quarter ended March 31, 2025, 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 Note Financing

As of March 31, 2024, the Company had an initial closing and issued $2.0 million in Initial Secured Notes.

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As of September 30, 2024, the Amended and Restated Note Purchase Agreement was amended to extend the last closing date to issue Additional Secured Notes to October 31, 2024.

See Exhibit 10.25.

No other terms were amended.

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

As of September 30, 2024, the Company issued an aggregate of $6.5 million of Secured Notes, with $2.8 million from the Company’s officers and members of the board of directors, including $2.4 million purchased by Dr.

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

Secured Notes.

As of October 31, 2024, the Company issued an aggregate of $6.9 million of Secured Notes, with $2.9 million from the Company’s officers and members of the board of directors, including $2.4 million purchased by Dr.

Wong, Founder and CEO, $220,000 purchased by Rebecca Byam, Chief Financial Officer, $140,000 purchased by Scott T.

2 unchanged sentences

Greene, member of the board of directors.

During October 2024, the Company issued $375,000 of Additional Secured Notes, including $50,000 purchased by Dr.

Wong on October 31, 2024.

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.

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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 September 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.

(“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 December 31, 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 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 Notes a Bonus Payment under certain circumstances.

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 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 10.21 (and Exhibit 10.25 for the first amendment thereto as amended on September 30, 2024), Exhibit 10.22, Exhibit 10.23 and Exhibit 10.24, respectively, to our Annual Report and on Form 10-K are incorporated herein by reference.

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.

On February 20, 2025, the Company and certain Noteholders agreed to Principal Terms for Conversion of their Secured Notes.

Noteholders and the Company agreed that, subject to stockholder approval, at least $6.6 million principal amount of the Secured Notes will be converted into shares of our Common Stock at a conversion price of $0.65 per share ($26.00 per share, as adjusted for the Reverse Stock Split).

As part of the conversion, the Company will issue warrants to purchase shares of our Common Stock to the converting Noteholders for up to an additional $3.3 million of shares of our Common Stock, at an exercise price of $0.65 per share ($26.00 per share, as adjusted for the Reverse Stock Split).

Upon conversion, converting Noteholders would be subject to a lock-up period of 180 days from the date of conversion.

Further, the Escrow Agreement will be amended such that the proceeds from the Pledged Collateral will be allocated among the Company and the converting Noteholders, as provided for in the Principal Terms.

The conversion of principal amount of the Secured Notes will result in a dollar-for-dollar increase in stockholders’ equity (partially offset by the carrying value of the portion of the Company’s investment in the Pledged Collateral the proceeds of which will be paid to converting Noteholders), contributing to the Company’s plan to gain compliance with the Nasdaq Minimum Shareholder Equity Rule and to maintaining listing of the our Common Stock on Nasdaq.

The Principal Terms of Conversion were approved at a Special Meeting of Stockholders held on March 31, 2025 and were effected pursuant to the terms of that certain Second Amendment to Amended and Restated Senior Secured Note Purchase Agreement and Related Agreements dated as of May 1, 2025 (the “Conversion Amendment”).

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 and warrants to purchase an up to $3.3 million of Common Stock with terms as agreed in the Principal Terms for Conversion.

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

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

Form of First Amendment to the Amended and Restated Senior Secured Note Purchase Agreement, dated September 30, 2024, by and between the Company and Purchaser parties thereto

Settlement Agreement and Release, dated July 13, 2024, by and between the Company and Altor BioScience, LLC, NantCell, Inc., and ImmunityBio, Inc.

Equity Purchase Agreement, dated February 20, 2025, between the Company and Square Gate Master Fund - Series 4.

Registration Rights Agreement, dated February 20, 2025, between the Company and Square Gate Master Fund - Series 4

Definitive Proxy Statement dated February 21, 2025, on Form 14A, including Appendices

Form of Promissory Note, dated May 8, 2025, between the Company and Holder

Form of Guaranty and Pledge Agreement, dated May 8, 2025, between the Dr.

Wong and Lender

Form of Unsecured Convertible Promissory Note, dated May 5, 2025, between the Company and Holder

Form of Placement Agency Agreement, dated May 13, 2025, between Company and Maxim Group LLC

Form of Securities Purchase Agreement, dated May 13, 2025, between the Company and Purchaser

Form of Pre-Funded Warrant Purchase Agreement, dated May 13, 2025, between Company and Holder

Form of Common Stock Warrant Purchase Agreement, dated May 13, 2025, between Company and Holder

Form of Common Stock Warrant, original issue date November 20, 2024, between Company and Holder, as amended

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 September 30, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language):

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

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

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

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

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

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, 2024 and March 31, 2025 (unaudited);

(ii) the Condensed Statements of Operations for the three months ended March 31, 2024 (unaudited) and March 31, 2025 (unaudited);

(iv) the Condensed Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2024 (unaudited) and March 31, 2025 (unaudited);

(v) the Condensed Statements of Cash Flows for the three months ended March 31, 2024 (unaudited) and March 31, 2025

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

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

This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

Certain information in this document has been excluded pursuant to Item 601(a)(5) or (a)(6) of Regulation S-K.

The Registrant agrees to furnish supplementally such information to the SEC upon request.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HCW Biologics Inc.

November 14, 2024

Chief Executive Officer

(Principal Executive Officer)

November 14, 2024

/s/ Rebecca Byam

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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