HCW Biologics Inc. 10-K

Item 8 Financial Statements and Supplementary Data. HCW Biologics Inc. Index to Financial Statements Years ended December 31, 2024 and 2025 Audited Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID Number 173 ) 98 Balance Sheets 103 Statements of Operations 104 Statements of Changes in Stockholders’ Equity (Deficit) 105 Statements of Cash Flows 106 101 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Stockholders and the Board of Directors of HCW Biologics Inc. Miramar, Florida Opinion on the Financial Statements We have audited the accompanying balance sheet of HCW Biologics Inc (the "Company") as of December 31, 2025 and 2024, the related statements of operations, stockholders’ equity (deficit), and cash flows for the year ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the year ended December 31, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, negative cash flows from operations, negative working capital and the need for funding to support its operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion. /s/ Crowe LLP We have served as the Company's auditor since September 2024. Indianapolis, Indiana March 31, 2026 102 HCW Biologics Inc. Bal ance Sheets December 31, December 31, 2024 2025 ASSETS Current assets: Cash and cash equivalents $ 4,674,572 $ 1,952,464 Accounts receivable, net 582,201 32,175 Prepaid expenses 328,181 222,156 Other current assets 113,528 77,564 Total current assets 5,698,482 2,284,359 Investments 1,599,751 1,326,329 Property, plant and equipment, net 22,909,869 20,880,849 Other assets 28,476 28,476 Total assets $ 30,236,578 $ 24,520,013 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Liabilities Current liabilities: Accounts payable $ 22,332,261 $ 13,143,394 Accrued liabilities and other current liabilities 981,940 1,110,104 Short-term debt, net 6,314,684 6,809,215 Total current liabilities 29,628,885 21,062,713 Debt, net 7,377,865 — Contingent liability - related party — 692,531 Total liabilities 37,006,750 21,755,244 Commitments and contingencies (Note 17) Stockholders’ equity (deficit): Common stock: Common, $ 0.0001 par value; 250,000,000 shares authorized and 1,113,532 shares issued at December 31, 2024; 250,000,000 shares authorized and 3,279,812 shares issued at December 31, 2025 111 328 Additional paid-in capital 93,785,854 111,280,287 Accumulated deficit ( 100,556,137 ) ( 108,515,846 ) Total stockholders’ equity (deficit) ( 6,770,172 ) 2,764,769 Total liabilities and stockholders’ equity (deficit) $ 30,236,578 $ 24,520,013 The accompanying notes are an integral part of these financial statements. 103 HCW Biologics Inc. State ments of Operations Years Ended December 31, 2024 2025 Revenues: Revenues $ 2,566,792 $ 54,232 Cost of revenues ( 1,607,389 ) ( 43,386 ) Net revenues 959,403 10,846 Operating expenses: Research and development 6,388,994 5,442,884 General and administrative 6,816,449 7,701,281 Legal expenses (recoveries), net 15,910,480 ( 1,470,809 ) Impairment of long-lived asset — 1,500,000 Nonoperating loss 1,300,000 — Total operating expenses 30,415,923 13,173,356 Loss from operations ( 29,456,520 ) ( 13,162,510 ) Interest expense ( 654,284 ) ( 845,051 ) Change in fair value of investment — ( 273,422 ) Change in fair value of contingent liability — 1,055,826 Loss on sale of put shares — ( 263,974 ) Gain on extinguishment of liability — 5,461,046 Other income, net 86,990 68,376 Net loss $ ( 30,023,814 ) $ ( 7,959,709 ) Equity dividend to investor — ( 14,338,993 ) Net loss attributable to Common Stockholders $ ( 30,023,814 ) $ ( 22,298,702 ) Net loss per share, basic and diluted $ ( 30.96 ) $ ( 10.63 ) Weighted average shares outstanding, basic and diluted 969,825 2,097,701 The accompanying notes are an integral part of these financial statements. 104 HCW Biologics Inc. Statem ents of Changes in Stockholders’ Equity (Deficit) Stockholders’ Equity (Deficit) Common Stock Additional Paid-In Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity (Deficit) Balance, January 1, 2024 900,628 $ 90 $ 83,993,950 $ ( 70,532,323 ) $ 13,461,717 Issuance of Common Stock upon exercise of stock options 336 — 2,444 — 2,444 Issuance of Common Stock upon equity subscription 44,643 5 2,500,001 — 2,500,006 Issuance of Common Stock 104,000 10 2,452,655 — 2,452,665 Issuance of warrants — — 4,465,588 — 4,465,588 Exercise of pre-funded warrants 63,925 6 250 — 256 Issuance cost of Common Stock — — ( 226,201 ) — ( 226,201 ) Issuance costs of Common Stock warrants — — ( 411,844 ) — ( 411,844 ) Stock-based compensation — — 1,009,011 — 1,009,011 Net loss — — — ( 30,023,814 ) ( 30,023,814 ) Balance, December 31, 2024 1,113,532 $ 111 $ 93,785,854 $ ( 100,556,137 ) $ ( 6,770,172 ) Issuance of Common Stock (1) 727,447 73 4,496,855 — 4,496,928 Issuance of pre-funded warrants — - 4,207,718 — 4,207,718 Issuance of Common Stock warrants — - 14,948,620 — 14,948,620 Exercise of pre-funded warrants 513,140 51 - — 51 Issuance cost of Common Stock — - ( 269,680 ) — ( 269,680 ) Issuance cost of Common Stock warrants — - ( 712,453 ) — ( 712,453 ) Issuance cost of pre-funded warrants — - ( 227,646 ) — ( 227,646 ) Equity dividend to investor — - ( 14,338,993 ) — ( 14,338,993 ) Issuance of Common Stock upon exercise of stock options 205 - 1,654 — 1,654 Issuance of Common Stock to Square Gate 9,616 1 149,999 — 150,000 Issuance of Common Stock under Standby Equity Purchase Agreement 600,000 60 2,804,845 — 2,804,905 Issuance of Common Stock to extinguish restructured debt 253,083 25 1,774,087 — 1,774,112 Issuance of Common Stock warrants to extinguish restructured debt — - 544,249 — 544,249 Gain on conversion of debt with related parties — - 3,346,562 — 3,346,562 Stock-based compensation — - 768,623 — 768,623 Adjustment for reverse stock split 62,789 7 ( 7 ) — — Net loss — - - ( 7,959,709 ) ( 7,959,709 ) Balance, December 31, 2025 3,279,812 $ 328 $ 111,280,287 $ ( 108,515,846 ) $ 2,764,769 (1) Represents the aggregate fair value of 1,704,447 shares of common stock, which includes 727,447 shares that have been issued and 977,000 shares held in abeyance (See Note 7 - Sale of Common Stock Warrants). The accompanying notes are an integral part of these financial statements. 105 HCW Biologics Inc. State ments of Cash Flows Years Ended December 31, 2024 2025 Cash flows from operating activities: Net loss $ ( 30,023,814 ) $ ( 7,959,709 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and accretion 1,184,389 1,041,771 Stock-based compensation 1,009,011 768,623 Commitment fee — 150,000 Change in fair value of investment — 273,422 Change in fair value of contingent liability — ( 1,055,826 ) Gain on extinguishment of liability — ( 5,461,046 ) Loss on sale of put shares — 263,974 Loss on conversion of debt with related parties — ( 131,135 ) Impairment of long-lived asset — 1,500,000 Changes in the carrying amount of right-of-use asset ( 418 ) — Changes in operating assets and liabilities: Accounts receivable 953,556 550,026 Prepaid expenses and other assets 831,622 141,989 Accounts payable and other liabilities 11,874,767 ( 3,473,706 ) Operating lease liability ( 56,541 ) — Net cash used in operating activities ( 14,227,428 ) ( 13,391,617 ) Cash flows from investing activities: Purchases of property and equipment ( 261,617 ) — Net cash used in investing activities ( 261,617 ) — Cash flows from financing activities: Proceeds from issuance of Common Stock, net 6,462,834 5,493,086 Proceeds from issuance of Common Stock under SEPA, net — 2,540,931 Proceeds from issuance of pre-funded warrants, net — 3,822,894 Proceeds from Common Stock warrants 2,958,125 - Proceeds from issuance of debt 6,905,000 150,000 Issuance costs for Common Stock, pre-funded warrants, and Common Stock warrants ( 638,045 ) ( 1,209,779 ) Debt repayment ( 119,398 ) ( 127,623 ) Net cash provided by financing activities 15,568,516 10,669,509 Net increase (decrease) in cash and cash equivalents 1,079,471 ( 2,722,108 ) Cash and cash equivalents at the beginning of the period 3,595,101 4,674,572 Cash and cash equivalents at the end of the period $ 4,674,572 $ 1,952,464 Supplemental disclosure of cash flow information: Cash paid for interest, net of amounts capitalized $ 569,770 $ 601,661 Noncash investing activities: Capital expenditures accrued, but not yet paid $ 2,010,478 $ — Purchases of property and equipment included in accounts payable $ 829,207 $ 22,000 Noncash financing activities: Extinguishment of restructured debt with related parties $ — $ 7,440,462 Issuance of Common Stock, warrants and other rights upon extinguishment of restructured debt with related parties $ — $ 3,962,766 Gain on extinguishment of debt with related parties $ — $ 3,477,696 Equity dividend to investor $ — $ 14,338,993 The accompanying notes are an integral part of these financial statements. 106 HCW Biologics Inc. Notes to the Financial Statements December 31, 2024 and 2025 1. Organization and Summary of Significant Accounting Policies Organization HCW Biologics Inc. (“HCW Biologics” or the “Company”) is a clinical-stage biopharmaceutical company developing transformative fusion immunotherapeutics to support or treat diseases promoted by chronic inflammation. Our assets include both clinical-stage immunotherapeutics as well as commercial-ready proprietary compounds for use as reagents in the production of immunotherapeutics for the treatment of infectious diseases and cancer. The Company believes low-grade chronic inflammation is a significant contributing factor to several diseases and conditions, such as autoimmune disorders and other proinflammatory diseases such as neurodegenerative disease, cancer, and senescence-associated dysplasia. 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 Company’s common stock (“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.” In addition to the Reverse Stock Split, the stockholders approved two other proposals at the Special Meeting: (1) use of the Company’s equity line of credit to raise up to $ 40.0 million through sales of shares of the Company’s Common Stock thereunder and (2) execution of the principal terms for the conversion of up to approximately $ 6.9 million of the outstanding principal of Secured Notes into shares of Common Stock. See Note 5. Debt -- Troubled Debt Restructuring of Secured Notes. All authorized, issued, and outstanding shares of Common Stock, Preferred Stock, stock option awards, and per share data included in these audited financial statements have been recast to give retrospective effect to the adjusted authorized shares and Reverse Stock Split for all periods presented. The Reverse Stock Split did not have any effect on the stated par value of the Company’s Common Stock or the rights and privileges of the holders of shares of Common Stock. Options, warrants and convertible securities outstanding immediately prior to the Reverse Stock Split were appropriately adjusted to reflect the Reverse Stock Split. Liquidity and Going Concern In accordance with Financial Accounting Standards Board (“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 audited 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. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. 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 December 31, 2025, the Company had not generated any revenue from commercial product sales of its internally developed immunotherapeutic products. During its development activities, the Company has sustained operating losses experienced negative operating cash flows and negative working capital position and expects to continue to incur operating losses for the foreseeable future. Since inception to December 31, 2025, the Company incurred cumulative net losses of $ 105.8 million. 107 For the year ended December 31, 2025, the Company has funded operations primarily through the sale of stock; issuance of Senior Notes; 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. For the years ended December 31, 2024 and 2025, the Company recognized revenues generated from the supply of clinical and research grade material to Wugen of $ 2.6 million and $ 54,232 , respectively. From inception on December 24, 2020 to December 31, 2025, the Company recognized over $ 16.2 million in revenue as a result of the Wugen license. For the year ended December 31, 2025, the Company agreed to Wugen’s request to suspend the Wugen License for a period of one year, ending on May 29, 2026. Until the end of the term, the Company has the right to seek another licensee for the molecules HCW9206 and HCW9201, which were the subject of the Wugen license. During the period of suspension, Wugen plans to focus its ongoing pivotal clinical trials for its CAR-T clinical program. In January 2026, Wugen received a Breakthrough Therapy Designation from the U.S. Food and Drug Administration (“FDA”) for its investigational CAR-T cell therapy, Sofi-cel. Sofi-cel is an investigational, potential first-in-class, allogeneic, anti-CD7 CAR-T cell therapy currently under evaluation in a pivotal trial (T-RRex) for patients with relapsed or refractory (R/R) T cell acute lymphoblastic leukemia or T cell lymphoblastic lymphoma (T-ALL/LBL). Breakthrough Therapy Designation is intended to expedite the development and review of medicines for serious or life-threatening conditions with evidence of a substantial clinical improvement. Wugen plans to file a BLA in 2027. This therapy holds the potential to be the first approved “off-the-shelf” CART-T for T-cell malignancies. The Company continues to hold a significant number of shares of Wugen common stock. On November 17, 2025, the Company and Trimmune entered into an Amended and Restated License, Research and Co-Development Agreement (“Trimmune License”) following the assignment of the original WY Biotech License to Trimmune. In accordance with the terms of the Trimmune License, the deal closing took place upon receipt of the upfront payment. On March 16, 2026, the Company received the full upfront license fee, which consisted of $ 3.5 million in gross proceeds, or $ 2.9 million net of taxes, and a transferable minority equity interest in Trimmune. See Note 18. Subsequent Events. Pursuant to the terms of the Trimmune License, the Company retains a payment-free, milestone-free, and royalty-free option to recapture all rights to the development and commercialization of the licensed molecule for in vivo applications in the United States, Canada, Central America, and South America ( the “Opt-in Territory”) following completion of the Phase 1 clinical trial. Trimmune is responsible for funding all costs associated with research and development, manufacturing, clinical development, regulatory approval, and commercialization activities for the licensed molecule in its territory. On December 30, 2025, the Company entered a settlement agreement with Cooley LLP (“Cooley”) related to legal fees incurred in connection the defense of Dr. Wong. As a result of that agreement, the Company, Dr. Wong and Cooley agreed to settle a $ 7.5 million obligation for $ 2.0 million in cash and contingent payments up to $ 5.5 million upon achievement of certain triggering events, all of which were deemed to be remote as of December 31, 2025. In accordance with the terms of the settlement agreement, $ 500,000 was paid on December 31, 2025. Based on an amendment to the settlement agreement, the Company paid $ 750,000 on March 20, 2026, and will pay the remaining $ 750,000 upon the earlier of the completion of a financing for at least $ 4.0 million in gross proceeds or August 31, 2026. After this settlement, as of December 31, 2025, the Company has a liability of $ 6.2 million for remaining amounts owed for legal fees related to the Arbitration which continue to remain outstanding. On December 9, 2025, the Company entered into a settlement agreement with its contract development and manufacturing organization, EirGenix, Inc. (“EirGenix”). Outstanding obligations owed to EirGenix related to manufacturing costs were $ 1.7 million. The parties agreed to reduce this amount to $ 1.2 million if the amount was paid in full by April 30, 2026, but if the Company fails to do so, the entire $ 1.7 million plus interest and penalties will be due. The Company paid $ 620,000 on March 3, 2026. See Note 18. Subsequent Events. Subsequent to the year ended December 31, 2025, the Company raised $ 5.0 million in gross cash proceeds. See Note 18. Subsequent Events. Proceeds were derived from the following transactions: • On February 19, 2026, the Company completed a $ 1.5 million follow-on public offering, before offering costs with an existing institutional investor. • As of March 16, 2026, we received the the upfront license fee from Trimmune, including $ 3.5 million before taxes. 108 As of December 31, 2025, the conclusion of a going concern assessment, before consideration of the Company’s 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. The Company expects to complete other capital-raising transactions in 2026, with an emphasis on strategic investors and business development transactions. 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 audited 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 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 audited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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, primarily legal expenses incurred in connection with the Arbitration and Settlement Agreement described above in Liquidity and Going Concern. There is no effect on reporting results of operations from prior periods. Legal expenses related to the Arbitration are presented in Legal expenses (recoveries), net in the accompanying statements of operations. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Management must apply significant judgment in this process. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from estimates. 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. 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. See Note 16. Segment Reporting for further details. The single operating segment constitutes all of the Company activity, the CODM regularly reviews the entity-wide operating results and performance . All long-lived assets are maintained in the United States of America. Cash and Cash Equivalents Cash and cash equivalents consist of demand deposits at financial institutions, money market funds, and highly liquid investments with original maturities of three months or less. 109 Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820, Fair Value Measurement (“Topic 820”), establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between fair value measurements based on market data (observable inputs) and those based on the Company’s own assumptions (unobservable inputs). This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, which are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions. Fair value measurements are classified based on the lowest level of input that is significant to the measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values, as disclosed in Note 3, takes into account the market for the Company’s financial assets and liabilities, the associated credit risk, and other factors as required. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash, cash equivalents, accounts receivable, and investments. The Company’s cash and cash equivalents are deposited in accounts with financial institutions that management believes are of high credit quality. Such deposits may, at times, exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents. For the year ended December 31, 2025, the Company recognized revenues of $ 54,232 . A ll of the Company's revenues were derived from the supply of clinical grade material to Wugen under the supply agreement between Wugen and the Company, as contemplated in the Wugen License. As of December 31, 2025 , there was a balance of $ 32,175 in accounts receivable related to sales to Wugen on the accompanying audited balance sheets, which was collected as of the date of issuance of the Annual Report. Since December 24, 2020, the Company holds 2,174,311 shares of Wugen common stock, which were received as consideration for the Wugen License on December 24, 2020. Currently, these shares represent 1.61 % equity ownership inter est of Wugen, based on fully diluted, issued and outstanding shares as of December 31, 2025. The Company has not been able to realize any benefit from the sale of these shares, as they are not currently traded on any public market and thus have limited marketability. A portion of these shares have been pledged to certain noteholders as part of the terms for restructure debt or conversion. See Note 5. Debt - Troubled Debt Restructuring of Secured Notes. The Company is highly dependent on a third-party manufacturer to supply drug products for i ts research and development activities of its programs, including clinical and non-clinical studies. To mitigate this risk, the Company endeavors to use multiple organizations for third-party manufacturing. These programs could be adversely affected by a significant interruption in the supply of such drug products. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements. 110 Property, Plant and Equipment, Net Property, plant and equipment are stated at cost less accumulated depreciation. The Company has elected to use component depreciation for property, plant and equipment, which is permitted but not required under US GAAP. A long-lived asset may consist of several different and significant physical components. A component is a tangible part or portion of property, plant and equipment that (a) can be separately identified as an asset and depreciated or amortized over its own separate expected useful life and (b) is expected to provide economic benefit for more than one year. If a component has an expected useful life that differs from the expected useful life of the asset to which it relates, the cost should be accounted for separately and depreciated or amortized over its separate expected useful life. The Company identifies the components at the time of the acquisition or construction of the long-lived asset. The total capitalized costs of the long-lived asset is allocated to components either on a specific identification basis or based on relative fair value. Depreciation expense for each component is calculated using the straight-line method over the estimated useful lives of the assets within the component, which range from 3 to 39 years. Land is not subjected to the recording of depreciation expense because it has an infinite life. Leasehold improvements are amortized on a straight-line method over the shorter of the useful life of the leasehold improvement or the term of the lease. Construction-in-progress represents property and buildings under construction and consists of construction expenditures, equipment procurement, and other direct costs attributable to the construction. Construction-in-progress is not depreciated. Upon completion and becoming ready for intended use, construction-in-progress is reclassified to the appropriate component within property, plant and equipment. If a component that is separately identified and depreciated is replaced, the replacement should be capitalized at the time of its installation if the capitalization criteria have been met. The net book value of the component that was replaced, if any, should be charged to depreciation expense in the period it is replaced. If not separately identifiable in the accounting records, the estimated net book value of an item to be replaced should be calculated by estimating the previously capitalized costs of the replaced component and subtracting an estimate of accumulated depreciation. The estimate of accumulated depreciation is calculated using the same depreciation method and expected useful life previously used to depreciate the total asset to which the component relates. The following table sets forth the estimated useful lives for property, plant and equipment: Estimated Useful Lives Building 39 years Property 5 - 15 years Laboratory equipment 5 years Office equipment 3 years Furniture and fixtures 7 years Leasehold improvements The lesser of the lease term or life of the asset Costs, such as repairs and maintenance, associated with replacing items not identified as a component are expensed as incurred. Impairment of Long-Lived Assets Long-lived assets are reviewed for indications of possible impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amounts to the future undiscounted cash flows attributable to these assets. An impairment is recognized to the extent an asset group is not recoverable, and the carrying amount exceeds the projected discounted future cash flows arising from these assets. Impairments, if any, are recognized in earnings. There was a $1.5 million impairment to the group of assets that comprise the building project the Company has undertaken to build a manufacturing facility, upgraded laboratories, a vivarium and common areas. There was no impairment for the years ended December 31, 2024. 111 Collaborative Arrangements When the Company enters into collaboration arrangements, it assesses whether the arrangements fall within the scope of FASB issued ASC 808, Collaborative Arrangements, based on whether the arrangements involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. If the payments from the collaboration partner to the Company represent consideration from a customer, such as license fees and contract research and development activities, the Company accounts for those payments within the scope of FASB issued ASC 606, Revenue from Contracts with Customers (“Topic 606”). However, if the Company concludes that the payments are not from a customer, for certain activities and associated payments, such as for certain collaborative research, development, manufacturing, and commercial activities, these payments are presented as a reduction of research and development expense or general and administrative expense, based on where the Company presents the underlying expense. Revenue Recognition The Company accounts for revenues in accordance with Topic 606. To determine revenue recognition for arrangements that fall within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services transferred to the customer. At contract inception, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. 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 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 For out-licensing arrangements that include a grant of a license to the Company’s intellectual property, the Company considers whether the license grant is distinct from the other performance obligations included in the arrangement. For licenses that are distinct, the Company recognizes revenues from nonrefundable, upfront payments and other consideration allocated to the license when the license term has begun and the Company has provided all necessary information regarding the underlying intellectual property to the customer, which generally occurs at or near the inception of the arrangement. Milestone and Contingent Payments At the inception of the arrangement and at each reporting date thereafter, the Company assesses whether it should include any milestone and contingent payments or other forms of variable consideration in the transaction price using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur upon resolution of the uncertainty, the associated milestone value is included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of each such milestone and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Since milestone and contingent payments may become payable to the Company upon the initiation of a clinical study or filing for or receipt of regulatory approval, the Company reviews the relevant facts and circumstances to determine when the Company should update the transaction price, which may occur before the triggering event. When the Company updates the transaction price for milestone and contingent payments, the Company allocates the changes in the total transaction price to each performance obligation in the agreement on the same basis as the initial allocation. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment, which may result in recognizing revenue for previously satisfied performance obligations in such period. The Company’s licensees will generally pay milestones payments subsequent to achievement of the triggering event. 112 Materials Supply: The Company provides clinical and research grade materials so that licensees may develop products based on the licensed molecules. 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 (“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. As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgement to determine the progress towards completion. 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. Any such revisions are recorded on a cumulative catch-up basis, noting no material revisions during the years ended December 31, 2024 and 2025. For each in process SOW, amounts are billed in the same quarter the costs are incurred. For the years ended December 31, 2024 and 2025 , the Company recognized revenues related to sale of development supply materials to Wugen of $ 2.6 million and $ 54,232 , respectively. Accounts Receivable, Net Accounts receivable is presented in accordance the current expected credit losses (“CECL”) impairment model as required under FASB ASC 326, Financial Instrument - Credit Losses (“Topic 326”). The Company estimates a reserve for expected credit losses based on existing contractual payment terms, actual payment patterns of its customers, current and future economic and market conditions and individual customer circumstances. As of December 31, 2024 and 2025, the Company determined that a reserve for expected credit losses was not required. No accounts were written off during the periods presented. Deferred Revenue Deferred revenue represents amounts billed, or in certain cases, yet to be billed to the Company’s customer for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The current portion of deferred revenue represents the amount to be recognized within one year from the balance sheet date based on the estimated performance period of the underlying performance obligations. There were no deferred revenue balances as of December 31, 2024 and 2025. Investments As part of its financing strategy, the Company may enter into licensing or collaboration agreements under which it receives consideration in the form of a minority equity interest in a counterparty, in lieu of or in addition to cash payments. These financial instruments are presented within Investments in the accompanying audited balance sheets. When consideration is an equity interest in a private entity whose equity has limited marketability with no readily determinable fair value and for which the Company does not have significant influence over the investee, the Company measures the equity interest using the measurement alternative, at cost less impairment, adjusted for observable price changes in orderly transactions for the identical or similar investment of the same issuer (ASC Topic 321, Investments - Equity Securities), unless the fair value method is otherwise elected. If the Company elects to measure an equity security at fair value, the entity shall measure all identical or similar investments of the same issuer, including future purchases of identical or similar investments of the same issuer, at fair value. The election to measure those securities at fair value shall be irrevocable. Any resulting gains or losses on the securities for which that election is made shall be recorded in earnings at the time of the election. See Note 3. Fair Value of Financial Instruments. For the year ended December 31, 2025, the Company elected to account for its Wugen shares, previously accounted for under the measurement alternative, at fair value as determined using financial valuation techniques and market information available. Further, the Company will remeasure the change in fair value of the Wugen shares, and related contingent liability, in subsequent reporting periods and recognize the change in earnings. From time to time, the Company invests excess cash in U.S. Treasury bills and notes, which are classified as trading securities. As of December 31, 2024 and 2025, the Company had no short-term investments. 113 Operating Leases The Company determines if an arrangement is a lease at inception. Unless the Company elects to use the practical expedient available under US GAAP lease accounting guidance, operating leases are included in Other assets, Accrued liabilities and Other current liabilities, and Other liabilities in the Company’s 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. 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. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company has a lease agreement with lease and non-lease components, which are accounted for separately. For short-term leases with a term of one year or less, the Company adopts the practical expedient and does not record an ROU asset or lease liability for such short-term leases. Research and Development Expenses Research and development costs are expensed as incurred and include salaries, benefits, and other operating costs such as outside services, supplies and allocated overhead expenses. The Company may perform research and development for its own proprietary drug candidates and technology development or for certain third parties under collaborative arrangements. For its proprietary drug candidates and its own internal technology development programs, the Company invests its own funds without reimbursement from a third party. Where the Company performs research and development activities under a clinical joint development collaboration, it records the partner’s share of collaboration expenses as a reduction to research and development expense when reimbursement amounts are due under the agreement. The Company records an accrued expense for the estimated costs of its contract manufacturing activities performed by third parties if there is no invoice. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows to vendors. Payments under the contracts include upfront payments and milestone payments, which depend on factors such as the achievement of the completion of certain stages of the manufacturing process. For purposes of recognizing expense, the Company assesses whether the production process is sufficiently defined to be considered the delivery of a good, as evidenced by predictive or contractually required yields in the production process, or the delivery of a service, where processes and yields are developing and less certain. If the Company considers the process to be the delivery of a good, the Company recognizes the expense when the drug product is delivered, or otherwise bears risk of loss. If the Company considers the process to be the delivery of a service, the expense is recognized based on its best estimates of the contract manufacturer’s progress towards completion of the stages in the contracts. The Company recognizes and amortizes upfront payments and accrues for liabilities based on the specific terms of each arrangement. Arrangements may provide upfront payments for certain stages of the arrangement and milestone payments for the completion of certain stages, and, accordingly, may result in advance payments for services that have not been completed or goods not delivered and liabilities for stages where the contract manufacturer is entitled to a milestone payment. Advance payments for goods or services that will be used or rendered for future research and development activities are capitalized as prepaid expenses and recognized as expense as the related goods are delivered or the related services are performed. The Company bases its estimates on the best information available at the time. However, additional information may become available to the Company which may allow it to make a more accurate estimate in future periods. In this event, the Company may be required to record adjustments to research and development expenses in future periods when the actual level of activity becomes more certain. Such increases or decreases in cost are generally considered to be changes in estimates and will be reflected in research and development expenses in the period identified. Accrued Research and Development Expenses In order to properly record services that have been rendered but not yet billed to the Company, the Company reviews open contracts and purchase orders, communicates with personnel and estimates the level of service performed and the associated cost incurred for the service when has not yet been invoiced or otherwise notified of the Company of the actual cost. The majority of the Company’s service providers invoice monthly or quarterly in arrears for services performed or when contractual milestones are met. The Company makes estimates of accrued expenses as of each balance sheet date in financial statements based on facts and circumstances known at that time. The Company periodically confirms the accuracy of its estimates with the service providers and adjusts if necessary. Examples of accrued research and development expenses include amounts owed to clinical sites for clinical trial expenses, collaborators, toxicology testing, and other service providers in connection with research and development activities. 114 Patent Costs Costs related to filing and pursuing patent applications are recorded as general and administrative expenses in the statements of operations and expensed as incurred, since recoverability of such expenditures is uncertain. Stock-based Compensation The Company measures its stock-based awards granted to employees and directors based on the estimated fair value of the option on the date of grant (grant date fair value) and recognizes compensation expense over the vesting period. Compensation expense is recorded as either research and development or general and administrative expenses in the statements of operations based on the function to which the related services are provided. The Company has granted options with service-based and performance-based vesting conditions. The Company uses the Black-Scholes option pricing model for the respective grant to determine the grant date fair value. The Black-Scholes option pricing model requires the input of highly subjective assumptions. These variables include, but are not limited to, its stock price volatility over the term of the awards and actual and projected employee stock option exercise behaviors. Management will continue to assess the assumptions and methodologies used to calculate the estimated grant date fair value of stock-based compensation. Circumstances may change and additional data may become available over time, which could result in changes to these assumptions and methodologies and materially impact the Company’s grant date fair value determination. For stock option grants with service-based vesting, stock-based compensation expense represents the portion of the grant date fair value of employee stock option grants recognized over the requisite service period of the awards on a straight-line basis, net of estimated forfeitures. For options that vest upon the achievement of performance milestones, the Company estimates fair value at the date of grant and compensation expense is recognized using the accelerated attribution method when it is determined that the performance criteria are probable of being met. Debt Issuance Costs Debt issuance costs are presented in the balance sheets as a direct deduction from the carrying amount of the related debt and are amortized, using the effective interest method, as interest expense over the contractual life of the related debt. Deferred Offering Costs The Company defers offering costs consisting of legal, accounting and other fees and costs directly attributable to offering costs. For offerings expected to occur within 90 days, the deferred offering costs will be offset against the proceeds received upon the completion of the offering. Deferred offering costs will be recorded under Other noncurrent assets on the balance sheets. In the event an offering is terminated or the timing for completing the offering is uncertain, all of the deferred offering costs will be expensed within the Company’s statements of operations in the reporting period in which the determination is made. Income Taxes The Company accounts for income taxes using an asset and liability approach in accordance with applicable guidance prescribed by FASB issued ASC 740, Income Taxes (“Topic 740”). Topic 740 requires that the deferred tax consequences of temporary differences between the amounts recorded in the financial statements and the amounts included in the federal and state income tax returns to be recognized in the balance sheets. The Company makes judgments regarding the realizability of its deferred tax assets. The balance sheet carrying value of its deferred tax assets is based on whether the Company believes it is more likely than not that the Company will generate sufficient future taxable income to realize these deferred tax assets after consideration of all available evidence. The Company regularly reviews its deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. In assessing the need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses. Generally, cumulative losses in recent years is a significant piece of negative evidence that is difficult to overcome in determining that a valuation allowance is not needed. 115 The Company’s tax positions may be subject to income tax audits. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit which is more likely than not to be realized upon settlement with the taxing authority. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in its tax provision. The Company evaluates uncertain tax positions on a regular basis. The evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of the audit, and effective settlement of audit issues. The provision for income taxes includes the effects of any accruals that the Company believes are appropriate, as well as the related net interest and penalties. The Company had no accrual for interest or penalties on its balance sheets as of December 31, 2024 and 2025 , and has no t recognized interest or penalties in its statements of operations for the years ended December 31, 2024 and 2025 . Tax Credit Receivable The Company may be eligible for research and development credits for its research and development activities, in accordance with Internal Revenue Code (“I.R.C.”) § 41(c). The credits are generally available to offset income tax liabilities. As of December 31, 2024 and 2025 , the outstanding payroll tax receivables is included in Other current assets in the accompanying balance sheets. Net Loss Per Share Basic net loss per share is calculated by divid ing the net loss attributable to Common Stockholders by the daily weighted-average number of common shares outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to Common Stockholders by the sum of the daily weighted average number of common shares plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is anti-dilutive. The Company’s potentially dilutive securities, which include convertible redeemable preferred stock and outstanding stock options under the 2019 Equity Incentive Plan (“2019 Plan”) and the 2021 Equity Incentive Plan (“2021 Plan”), have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position. Standby Equity Purchase Agreement The Company and Square Gate Capital Master Fund, LLC - Series 4 (“Square Gate”) entered a Standby Equity Purchase Agreement (“SEPA”) providing for an equity line of credit with Square Gate on February 20, 2025. This agreement provides a mechanism for submission by the Company and acceptance by Square Gate of Put Notices under the SEPA pursuant to which Square Gate and the Company may agree to and execute one purchase and sale of Put Shares (“Standard Put Shares”). The Standard Put Notice has a pricing mechanism based on a volume-adjusted weighted average trading price over three days following the acceptance of the Standard Put. On August 14, 2025, the parties entered into a First Amendment to the SEPA (the “First Amendment”) to provide a mechanism for submission by the Company and acceptance by Square Gate of Put Notices under the SEPA pursuant to which Square Gate and the Company may agree to and execute multiple purchases and sales of Put Shares on the same trading day (“Intraday Put Shares”). Under the First Amendment, among other things, the purchase price of the Intraday Put Shares will be the lowest traded price during a specified valuation time period which begins with the acceptance of the Intraday Put and ends when trading volume reaches 1000% of the amount of shares included in the Intraday Put. A SEPA is an equity-linked instrument for which an investor has the right, but not the obligation, to purchase shares of the entity’s common stock over a specified period of time. The SEPA creates a purchase put option for the overarching arrangement which was determined to be a derivative. Economically, before the entity has elected to sell shares, a SEPA represents a purchased put option on the entity’s own equity. However, once the entity “draws” on the SEPA, the related number of shares issued constitutes a financial instrument. Thus, a SEPA contains both a purchased put option element and a forward share issuance element. This generally means that a SEPA generally does not qualify for equity classification. Accordingly, entities must recognize an asset or liability for its SEPA. Such asset or liability must be measured at fair value, with changes in fair value recognized in net (loss) income. Further, individual draws must also be evaluated to determine if they meet criteria for equity classification. With regards to the individual draws for a Standard Put under the SEPA, an individual draw would create a separate financial instrument with settlement criteria that does not meet indexation guidance. While the number of shares is known at inception and therefore not subject to the overarching share cap, there are two inputs into the settlement amount paid by the Investor which are not inputs into a fixed-for-fixed option: (1) the maximum amount to be funded under the SEPA of $ 20 million, which inherently limits the settlement amount regardless of the Company’s stock price and (2) the discount which reduces the amount to be paid upon settlement. 116 With regards to the individual draws for an Intraday Put under the First Amendment to the SEPA, an individual draw would create a separate financial instrument with settlement criteria that does not meet the indexation guidance. While the number of shares is known at inception and therefore not subject to an overarching share cap, the only inputs into its settlement is the Company’s stock price and trading volume during the pricing period. Inputs noted above are not all inputs into a fixed-for-fixed option pricing model, thus the individual draw issuances are not eligible for equity classification in accordance with Subtopic 815-40, and therefore an asset or liability will be recorded and marked to market while the financial instrument is outstanding. Upon settlement of the financial instruments, the Company should recognize the following amounts in earnings: • The gain (loss) for the excess (deficit) of (a) the carrying amount of the asset or liability for the financial instrument plus the proceeds received and (b) the fair value of the common shares. • Any discount, issuance or transaction costs incurred in conjunction with the settlement of the put shares. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (ASU 2024-03) which requires public business entities to provide enhanced disaggregation of expenses in financial statements, including detailed disclosures on inventory purchases, employee compensation, depreciation, and amortization. The new guidance is effective for the Company for fiscal periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is evaluating the impact of the standard on the Company’s financial statements. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires enhanced disclosures regarding the rate reconciliation and income taxes paid, among other items. The standard is effective for annual periods beginning after December 15, 2024. The Company adopted this standard as required. The adoption of this ASU did not have a significant impact on the Company’s financial statements. In September 2025, the FASB issued Accounting Standards Update (ASU) 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Accounting for and Disclosure of Software Costs to update the accounting for internal use software costs. The guidance requires entities to start capitalizing eligible costs when (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended. The guidance, which applies to all entities, is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Entities may apply the guidance using a prospective, retrospective or modified transition approach. Early adoption is permitted. The Company is evaluating the impact of the standard on the Company’s financial statements. In September 2025, the FASB issued Accounting Standards Update (ASU) 2025-07—Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-based Noncash Consideration from a Customer in a Revenue Contract to expand the scope of contracts that are excluded from derivative accounting (i.e., measured at fair value through earnings). ASU 2025-07 addresses stakeholders’ concerns about (1) the application of derivative accounting to contracts with features based on the operations or activities of one of the parties to the contract and (2) the diversity in accounting for share-based noncash consideration from a customer that is consideration for the transfer of goods or services. The guidance is effective for annual reporting periods beginning after 15 December 2026, and interim periods within those annual periods. Entities may apply the guidance either on a modified retrospective or prospective basis. Early adoption is permitted. The Company is evaluating the impact of the standard on the Company’s financial statements. 117 2. Property, Plant and Equipment, Net Property, plant and equipment, net consists of the following: December 31, 2024 2025 Land $ 2,150,038 $ 2,150,038 Building 6,105,570 6,105,570 Property 1,767,231 1,767,231 Laboratory equipment 2,146,637 2,146,637 Office equipment 225,369 225,369 Furniture and fixtures 292,045 292,045 Leasehold improvements 354,276 354,276 Construction in progress 13,545,161 12,023,161 $ 26,586,327 $ 25,064,327 Less: Accumulated depreciation and amortization ( 3,676,458 ) ( 4,183,478 ) Property, plant and equipment, net $ 22,909,869 $ 20,880,849 Construction in progress of $ 13.5 million represents direct costs of construction and equipment incurred for the Company’s new research lab and manufacturing facilities, which are not ready for their intended use. Depreciation and amortization expense for the year ended December 31, 2024 was $ 644,616 , of which $ 390,209 is included in research and development expenses in the accompanying audited statements of operations. Depreciation and amortization expense for the year ended December 31, 2025 was $ 507,021 , of which $ 270,016 is included in research and development expenses in the accompanying audited statements of operations. During the years ended December 31, 2024 and 2025, the Compan y capitalized interest expense of $ 189,416 and $ 0 , respectively, which is presented within Construction in progress in the accompanying audited balance sheets. For the year ended December 31, 2025, the Company recognized an impairment of $ 1.5 million related to the group of assets related to the property it is refurbishing to create a biologics manufacturing facility, upgraded laboratory space, vivarium and common areas. As a result a result of the impairment, the net book value of this asset group is $16.6 million. In its assessment of potential indicators of impairment of the asset, the Company concluded that during the year, legal procedures were initiated by holders of mechanics liens against the Company’s property with claims for nonpayment on April 17, 2025, and the Company was notified by Cogent Bank that it exercised its discretion to make a demand that the Company cure the mechanics liens on October 24, 2025. See Note 17. Commitment and Contingencies - Other Matters. 3. Fair Value of Financial Instruments The carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, U.S. government-backed securities with maturity dates up to one year, accounts payable and accrued liabilities, approximate fair value due to their short-term maturities. Money market funds included in cash and cash equivalents and U.S. government-backed securities are measured at fair value based on quoted prices in active markets, which are considered Level 1 inputs. The Company measures its investment in shares of Wugen common stock and related contingent liability at fair value based on a combination of valuation techniques, consisting of the adjusted enterprise valuation method and the backsolve method, which are considered Level 3 inputs. No transfers between levels occurred during the periods presented. The following table presents the Company’s assets and liabilities which were measured at fair value at December 31, 2024 and 2025: 118 December 31, 2024 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 3,748,325 $ — $ — $ 3,748,325 Total $ 3,748,325 $ — $ — $ 3,748,325 December 31, 2025 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 1,607,009 $ — $ — $ 1,607,009 Investment — — 1,326,329 1,326,329 Liabilities: Contingent liability — — ( 692,531 ) ( 692,531 ) Total $ 1,607,009 $ — $ 633,798 $ 2,240,807 4. Accrued Liabilities and Other Current Liabilities As of December 31, 2024 , the Company had a balance of $ 981,940 included in Accrued liabilities and other current liabilities in the accompanying audited balance sheet, consisting of $ 422,000 for construction expenses, $ 49,000 for manufacturing expenses, $ 155,000 for legal expenses, $ 121,000 for clinical expenses, $ 5,000 in bonus expense, $ 202,000 for salary expenses and $ 28,000 of other liabilities. As of December 31, 2025 , the Company had a balance of $ 1.1 million included in Accrued liabilities and other current liabilities in the accompanying audited balance sheet, consisting of $ 422,000 for construction expenses, $ 87,000 for accrued interest expense, $ 49,000 for manufacturing expenses, $ 159,000 for legal fees, $ 186,000 for clinical expenses, $ 79,000 for salary expenses and $ 118,000 for other accrued expenses or current liabilities. 5. Debt Cogent Bank Loan On August 15, 2022, the Company entered the 2022 Loan Agreement with Cogent Bank (the “2022 Loan Agreement”), 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 December 31, 2025, the Company had $ 6.2 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. The unamortized balance is due on August 15, 2027 (the “2022 Loan Agreement Maturity Date”), and bears interest at a fixed per annum rate equal to 5.75 %. Upon the 2022 Loan Agreement 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 December 31, 2025. The Company has the option to prepay the outstanding balance of the loan prior to the 2022 Loan Agreement Maturity Date without penalty. 119 As of December 31, 2024 and 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. As of December 31, 2024 and 2025, the Company has reported this loan as Short-term debt, net. On October 24, 2025, the Company was notified by Cogent Bank that it exercised its discretion to make a demand that the Company cure the mechanics liens no later than thirty (30) days after receipt of this letter in strict compliance with Section 7.2(3) of the Loan Agreement by: (i) paying and discharging all of the Claims of Lien and causing satisfactions to be recorded in the Public Records of Broward County, Florida for all of the Claims of Lien, and (ii) resolving all litigation against the Borrower and the mortgaged property described in the Mortgage and causing such claims in the Foreclosure Actions to be dismissed and all related notices of lis pendens to be released. The Company and Cogent Bank have had negotiations to come to terms on a forbearance agreement to provide additional time for the Company to comply with the demands it made in the demand letter. Secured Notes As of December 31, 2024, the Company received $ 6.9 million in funding from the issuance of Secured Notes, which is included within Debt, net on the accompanying audited balance sheet. Investors included Dr. Hing C. Wong, Founder and Chief Executive Officer, who invested $ 2.4 million; Rebecca Byam, Chief Financial Officer, who invested $ 220,000 ; Lee Flowers, Senior Vice President of Business Development, who invested $ 25,000 ; Scott T. Garrett, the Chairman of the Company’s board of directors, who invested $ 140,000 ; Gary M. Winer, a member of the Company’s board of directors at the time of his investment, who invested $ 60,000 ; Rick S. Greene, a member of the board of directors, who invested $ 25,000 , and other significant investors. In July and October 2024, the terms of the Secured Notes were amended, including but not limited to a fixed bonus payable on Maturity. As of December 31, 2025, there was $ 325,000 of outstanding principal amount of Secured Notes reported in Short-term debt, net in the accompanying audited balance sheet. As of December 31, 2025, the Company restructured $ 6.6 million outstanding principal of Secured Notes by conversion to equity. The Company pledged a portion of the proceeds of the sale or liquidation of its shares of Wugen common stock (“Pledged Collateral”). The Pledged Collateral will be held and released according to the terms of the Escrow Agreement, as security for the Secured Notes. 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. The 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. 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 interest. If a bonus payment is paid, there is no prepayment penalty. For the years ended December 31, 2024 and 2025, the Company recognized $ 527,304 and $ 405,222 , respectively, as an expense for accretion of the fixed bonus payment due in the event the Secured Notes are repaid on the Maturity Date, presented within General and administrative expenses in the accompanying audited statements of operations. The Secured Notes were deemed to be a hybrid instrument, consisting of a debt host with embedded derivatives requiring bifurcation and accounting for separately. The embedded derivatives consist of the Mandatory Redemption, which depends on certain events occurring, and the fixed bonus payable upon the Maturity Date. The fair value of the embedded derivative, which incorporated the likelihood of certain events occurring, was immaterial. Thus, as of December 31, 2024 and 2025, the Company did not recognize the embedded derivative in the accompanying audited balance sheets. The Company accounts for the fixed 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. 120 On May 1, 2025, the noteholders holding $ 6.6 million of the principal of the outstanding Secured Notes elected to convert their outstanding indebtedness to equity and entered the Second Amendment to the Amended and Restated Note Purchase Agreement (the “Conversion Agreement”). On May 7, 2025, $ 6.6 million of outstanding principal amount of Secured Notes and an obligation of $ 860,462 of accumulated accretion as of the conversion date of a fixed bonus to be paid on the Maturity Date to these noteholders were extinguished upon conversion. For those noteholders who converted to equity, the right to a fixed bonus payable on the Maturity Date was terminated and previously accumulated fixed bonus was waived. See section “Troubled Debt Restructuring of Secured Notes” below. For those Secured Notes which remain outstanding, as of December 31, 2025, the Company reported $ 397,065 for the outstanding principal and accumulated accretion of a fixed bonus payment due upon maturity as a current liability in Short-term debt, net in the accompanying audited balance sheet. Troubled Debt Restructuring of Secured Notes The Company entered into the Second Amendment to its Secured Note in which certain Secured Note noteholders and the Company agreed to the terms to effectively extinguished $ 7.4 million of debt through the issuance of 253,083 shares of Common Stock, warrants to purchase 126,540 shares of Common Stock, and rights to receive a pro rata share of 49.11 % of the proceeds or shares from the Company’s investment in Wugen. The transaction was accounted for under ASC Subtopic 470-50, Debt Modifications and Extinguishments, and ASC Subtopic 470-60, Troubled Debt Restructurings by Debtors as a troubled debt extinguishment, as the Company was experiencing financial difficulty and it was granted a concession by Secured Note noteholders whereby the fair value of consideration transferred was less than the carrying amount of the Secured Notes. The net carrying amount of the restructured Secured Notes was $ 7.4 million, including principal of $ 6.6 million and accumulated accretion of a fixed bonus payable upon Maturity Date of $ 860,462 . The fair value of consideration transferred including Common Stock, warrants to purchase Common Stock, and rights to proceeds of a portion of the Company’s shares of Wugen common stock was $ 4.0 million, with the difference of $ 3.5 million being recognized as a troubled debt restructuring gain. Due to the related party nature of the converting noteholders, the gain was recorded to additional paid-in capital as of December 31, 2025 in the accompanying audited statements of stockholders’ equity (deficit). Unsecured Promissory Notes 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 were converted into shares of our Common Stock at the final offering price in an offering 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, who was a member of the Company’s Board of Directors at the time of his investment. As of May 15, 2025, the outstanding principal of Convertible Bridge Notes were converted. The fair value of consideration transferred including 36,242 shares of Common Stock and rights to proceeds of a portion of the Company’s shares of Wugen common stock was $ 401,134 , with the difference of $ 131,135 being recognized as a loss on conversion. Due to the related party nature of the converting noteholders, the loss was recorded to additional paid-in capital in the accompanying audited statements of stockholders’ equity (deficit). Promissory Note with Personal Guarantee On May 8, 2025, the Company issued a promissory note for $ 150,000 , secured by a personal guaranty and pledge given by the Company’s Founder and CEO, Dr. Hing C. Wong (“Guarantor”) in accordance with the provisions of that certain Guaranty and Pledge Agreement of even date herewith between the Company and the Holder. The promissory note was issued with an original issue discount of $ 75,000 . On the Maturity Date of February 7, 2026 , the Company will repay $ 225,000 . There are provisions which allow the Company to prepay the promissory note before the Maturity Date. The proceeds of this promissory note were used to pay the expenses required to be paid prior to the equity financing which closed on May 15, 2025. The Company is accreting the original issue discount on a straight-line basis over the seven-month term. There is no current interest due on the promissory note with personal guarantee. As of December 31, 2025, the Company reported a balance of $ 214,722 in the audited balance sheet. For the year ended December 31, 2025, the Company recognized accretion of original issue discount of $ 64,722 in Interest expense in the accompanying audited statement of operations. The Company repaid the Promissory Note in full on February 6, 2026. 121 Contingent Liabilities In connection with the Trouble Debt Restructuring and the conversion of the Unsecured Promissory Note discussed above, the converting noteholders have a right to receive proceeds of a portion of the Company’ shares of Wugen common stock in the event of a liquidation or sale of these shares. The Company retained ownership of all of its Wugen shares which is presented in Investments on the accompanying audited balance sheets. The Company recognized a contingent liability for the rights transferred to the converting noteholders presented in Contingent liability - related party on the accompanying audited balance sheets. As of December 31, 2025, the carrying value of the Company’s Wugen shares was $ 1.3 million, and carrying value for the Contingent liability - related party was $ 692,531 in the accompanying audited balance sheet. See Note 3. Fair Value of Financial Instruments. Five-Year Maturities The Company classifies the total undiscounted contractual payments that are due in the next 12 months as current. The loan was initially measured on a present value basis. An amortization schedule is used to determine how much of each payment is applied to interest and principal each period. The payment is first applied to interest, and the remainder reduces the principal balance. The table below shows the amount of maturities for each of the five years following the date of the latest balance sheet: Cogent Bank Loan Maturities per Year 2026 $ 135,266 2027 6,079,440 Total Debt $ 6,214,706 Senior Secured Notes Maturities per Year 2026 $ 435,500 Total Debt $ 435,500 Promissory Note Maturities per Year 2026 $ 225,000 Total Debt $ 225,000 Note that the total debt in the table above includes the full accretion of debt issuance costs for the Cogent Bank Loan and the full accretion of the fixed bonus payment for the Secured Notes. 6. License Agreements Wugen License On December 24, 2020, the Company entered into the Wugen License transferring rights to Wugen to develop, manufacture, and commercialize certain cellular therapy products based on two of the Company’s fusion protein molecules. The term of the agreement will expire on a product-by-product and country-by-country basis, upon the later of (i) ten years from the first commercial sale of the product or (ii) the expiration of the last-to-expire valid patent claim of such product. The Company concluded that Wugen is a customer and the Wugen License is a functional license under the provisions of Topic 606. During the year ended December 31, 2025, the Company agreed to a request from Wugen to suspend the Wugen License, which will run for a period of one year from the effective date of the suspension, or until May 29, 2026. The Company expects to generate revenue for ancillary services provided to Wugen during this time, as provided for under the amended Wugen License. During the suspension, the Company is free to enter licenses with other parties for the molecules that are subject of the Wugen license. We are seeking a large biologics manufacturer who has a use for a reagent based on HCW9206 and like molecules to improve the efficacy of their manufacturing process of CAR-T products. 122 T rimmune License On November 17, 2025, the Company and Beijing Trimmune Biotech Co., Ltd. (“Trimmune”) entered into an Amended and Restated License, Research and Co-Development Agreement (“Trimmune License”) following the assignment of the original License, Research and Co-Development Agreement, which includes an exclusive license to HCW11-006 for in vivo applications (“WY Biotech License”) from WY Biotech Co., Ltd. to Trimmune. The parties restructured the terms of the original WY Biotech License to include the assignment of rights to Trimmune and an option to license HCW9302 for in vivo applications in China or Asia. In the Trimmune License, the parties agreed to restructure the upfront license fee to consist of a $ 3.5 million cash payment from which the government of China would withhold taxes which are refundable, and a transferable minority equity ownership interest in Trimmune. In addition, the parties agreed that for additional consideration, Trimmune has an option to license the exclusive China rights to clinical development and commercialization for in vivo applications of HCW9302, the Company’s clinical-stage molecule currently being evaluated for the treatment of an autoimmune disorder. In addition to the upfront license fee, the Company is eligible to receive additional development milestone payments and double-digit royalties on future product sales. The Company will receive a substantial portion of the proceeds from certain future transaction(s) involving the molecule, if such a transaction(s) occur. We also have a payment-free, milestone-free, and royalty-free option to recapture the development and commercialization rights for this molecule for the United States, Canada, Central America, and South America (Opt-in Territory) after the conclusion of the Phase 1 clinical trial in China. Trimmune is financially responsible for all costs associated with research and development, manufacturing, clinical development, regulatory approval, and commercialization for the molecule. Each party will be financially responsible for all costs associated with research and development, manufacturing, clinical development, regulatory approval, and commercialization for the licensed molecule in its territory. Therefore, expenses to complete the first Phase 1 clinical trial in China will be paid by Trimmune. This arrangement allows HCW Biologics to have direct access to the Phase 1 results without financial responsibility for the costs incurred prior to the time a decision must be made regarding the Opt-In Right. In accordance with the terms of the Trimmune License, the deal closing took place upon receipt of the upfront payment. On March 16, 2026, the Company received the full upfront license fee, which consisted of $ 3.5 million in gross proceeds, or $ 2.9 million net of taxes, and a transferable minority equity interest in Trimmune. See Note 18. Subsequent Events. Milestones and Royalties In addition to upfront fees and revenues from other transactions that took place upon entering the these licenses, the licenses includes milestone payments and royalties. The Company uses judgment to determine whether milestones or other variable consideration should be included in the transaction price. For revenue-based royalties, including milestone payments based on the level of sales, the Company will include royalties in the transaction price at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalties are allocated has been satisfied (or partially satisfied). As part of management’s evaluation of the transaction price, the Company considers numerous factors, including whether the achievement of the milestones is outside of its control, contingent upon the efforts of others or subject to scientific risks of success. If the Company concludes it is probable that a significant revenue reversal would not occur, the associated milestone payment is included in the transaction price. Milestone payments that are not within its control, such as regulatory approvals, are generally not considered probable until those milestones are achieved. The Company reevaluates the transaction price, including estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur. 7. Sale of Common Stock and Warrants Sale of Shares of Common Stock through SEPA During the year ended December 31, 2025, the Company submitted Put Shares to Square Gate which were accepted and resulted in the sale of 600,000 shares of Common Stock. See Note 8. Standby Equity Purchase Agreement. November 2025 Inducement Transaction On November 19, 2025, the Company entered into a warrant inducement agreement with an investor (“Investor”) for the immediate exercise of certain outstanding warrants that the Company issued on November 20, 2024 (the “November 2024 Warrants”) and May 15, 2025 (the “May 2025 Warrants”), respectively. Pursuant to a warrant inducement agreement, the Investor agreed to a reduced exercise price of the outstanding November 2024 Warrants and May 2025 Warrants to an amended exercise price of $ 2.66 , 123 and to exercise the outstanding November 2024 Warrants to purchase an aggregate of 167,925 shares of the Company’s Common Stock and the outstanding May 2025 Warrants to purchase an aggregate of 1,342,280 shares of the Company’s Common Stock, at the amended exercise price of $ 2.66 . Investor exercised the November 2024 and May 2025 for an aggregate of 1,510,205 shares of the Company’s Common Stock. Of these shares, approximately 299,000 were issued at closing, and the remaining 1,211,205 shares were held in abeyance, subject to issuance as and when permitted pursuant to the beneficial ownership limitations contained in the November 2024 and May 2025 Warrants. As of December 31, 2025, of the shares purchased in the Inducement transaction, 533,205 shares were issued and outstanding and 977,000 shares were held in abeyance. On March 16, 2026, the Investor requested the Company to issue the remaining shares held in abeyance. In consideration for the immediate exercise of the November 2024 and May 2025 Warrants, the Company also agreed to issue to the Investor unregistered warrants to purchase an aggregate of 3,020,410 shares of the Company’s Common Stock with an exercise price of $ 2.41 per share (the “New Warrants” or “Common Stock Warrants”). The New Warrants will be immediately exercisable and will expire on the five and one-half year anniversary of the original issuance date. The Company agreed to file a registration statement with the SEC covering the resale of the shares of Common Stock issuable upon exercise of the New Warrants. On January 29, 2026, the SEC declared effective a resale registration statement on Form S-1 (File Number 333-292652) covering the resale of shares underlying the New Warrants. The gross proceeds to the Company from the Offering were approximately $ 4.0 million before deducting the placement agent’s fees and other offering expenses of $ 321,379 payable by the Company. The fair value of the securities issued and the modification of the warrant in this transaction was $ 8.2 million. This included a fair value of $ 2.9 million for the shares of Common Stock issued based on the number of shares purchased (including shares held in abeyance) times the closing price on November 20, 2025, or $ 1.92 per share. In addition, the fair value of the Common Stock Warrants issued in this transaction was estimated at $ 4.9 million using the Black-Scholes option pricing model with assumptions including a term of 5.5 years, volatility of 121.4 % and a risk-free rate of 3.68 %. As this was a transaction with an existing stockholder, the difference between the gross proceeds and the fair value of securities issued and the modification of the warrant, or $ 4.2 million, was deemed to be an equity dividend to the Investor which was recorded in additional-paid-in capital as of December 31, 2025. The Investor may not exercise any portion of the Common Stock Warrants to the extent it would beneficially own more than the limits defined in the respective Warrant Purchase Agreement. The exercise price and number of shares of Common Stock issuable upon the exercise of the Common Stock Warrants are subject to adjustment in the event of any stock dividends and distributions, stock splits, stock combinations or stock reclassifications, as described in the respective warrant agreements. Under certain circumstances, the warrants may be exercised on a “cashless” basis. The Common Stock Warrants were classified as a component of permanent stockholders’ equity within additional paid-in-capital and were recorded at the issuance date. The Common Stock Warrants are equity classified because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, permit the holders to receive a fixed number of shares of Common Stock upon exercise, are indexed to the Company’s Common Stock and meet the equity classification criteria. In addition, the Common Stock Warrants and the Pre-Funded Warrants do not provide any guarantee of value or return. May 2025 Equity Financing On May 13, 2025, the Company entered into a securities purchase agreement with a single institutional investor (the “Investor”) for the issuance and sale of (i) 158,000 shares (the “Shares”) of the Company’s Common Stock and (ii) Pre-funded Warrants to purchase up to 513,140 shares of Common Stock (the “Pre-Funded Warrants”) in a follow-on public offering (the “Offering”), pursuant to a registration statement filed under Rule 424(b)(4) (File No. 333-287136), which was declared effective by the SEC on May 15, 2025. The Company also issued warrants to purchase up to an aggregate of 1,342,280 shares of Common Stock (“Common Stock Warrants”) for $ 7.45 per share. The Company sold the Common Stock and Pre-Funded Warrants with an accompanying two Common Stock Warrant, each of which may purchase one share of Common Stock, and the Common Stock and Pre-Funded Warrants were immediately separated from the Common Stock Warrants and issued separately. The combined purchase price for each Share and the two accompanying Common Stock Warrant was $ 7.45 per unit and the combined purchase price for each Pre-Funded Warrant and the two accompanying Common Stock Warrant was $ 7.4999 per unit. The Common Stock Warrants have an exercise price of $ 7.45 per share, are exercisable immediately, and expire on the five-year anniversary of the date of issuance. The Pre-Funded Warrants have an exercise price of $ 0.0001 per share, are exercisable immediately, and will not expire until exercised in full. 124 The gross proceeds to the Company from this financing were approximately $ 5.0 million before deducting the placement agent’s fees and other offering expenses of $ 802,602 payable by the Company. This transaction closed on May 15, 2025, at which time the closing stock price was $ 8.20 per share. In this financing, the Company issued shares of Common Stock of Pre-Funded Warrants that may be exercised to purchase Common Stock in lieu thereof, and Warrants that may be exercised to purchase Common Stock. In a contemporaneous private agreement entered into with the investor, the Company agreed to reprice warrants to purchase up to 167,925 shares of Common Stock that were issued to the investor in a financing that closed on November 20, 2024 to an exercise price of $ 7.45 per share. The fair value of the Common Stock was determined based on the shares issued and the closing price on the date the transaction closed. The Company estimated the fair value of the Warrants issued, using the Black Scholes valuation model to estimate the fair value of the warrants with assumptions including a term of 5 - 0 years, volatility of 120.6 % and a risk-free rate of 4.07 % - 4.45 %. The fair value of securities issued was $ 15.2 million. As this was a transaction with an existing stockholder, the Company recognized a $ 10.2 million deemed equity dividend to the Investor which was recorded in additional-paid-in capital for the year ended December 31, 2025. The Investor may not exercise any portion of the Common Stock Warrants or Pre-Funded Warrants to the extent it would beneficially own more than the limits defined in the respective Warrant Purchase Agreement. The exercise price and number of shares of Common Stock issuable upon the exercise of the Common Stock Warrants and Pre-Funded Warrants are subject to adjustment in the event of any stock dividends and distributions, stock splits, stock combinations or stock reclassifications, as described in the respective warrant agreements. Under certain circumstances, the warrants may be exercised on a “cashless” basis. Both the Common Stock Warrants and Pre-Funded Warrants were classified as a component of permanent stockholders’ equity within additional paid-in-capital and were recorded at the issuance date. The Common Stock Warrants and Pre-Funded Warrants are equity classified because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, permit the holders to receive a fixed number of shares of Common Stock upon exercise, are indexed to the Company’s Common Stock and meet the equity classification criteria. In addition, the Common Stock Warrants and the Pre-Funded Warrants do not provide any guarantee of value or return. As of December 31, 2025, the Investor exercised all of the Pre-Funded Warrants by delivering a notice of exercise to the Company and paying the exercise price for 513,140 shares of registered Common Stock. The Common Stock Warrants issued on May 15, 2025 were all exercised on November 20, 2025, in connection with the Inducement Transaction described above. November 2024 Equity Financing On November 18, 2024, the Company entered into a securities purchase agreement with the Investor for the issuance and sale of (i) 104,000 shares (the “Shares”) of the Company’s Common Stock, par value $ 0.0001 per share (the “Common Stock”) and (ii) Pre-funded Warrants to purchase up to 63,925 shares of Common Stock (the “Pre-Funded Warrants”) in a registered direct offering (the “Registered Offering”), pursuant to a shelf registration statement on Form S-3 (File No. 333-266991), which was declared effective by the SEC on August 26, 2022. The Registered Offering was made by means of a prospectus supplement filed with the SEC on November 20, 2024 that forms a part of such registration statement. In a concurrent private placement (the “Private Placement”) and together with the Registered Offering, the Company also issued unregistered warrants to purchase up to an aggregate of 167,925 shares of Common Stock (“Common Stock Warrants”). The Common Stock Warrants have an exercise price of $ 7.45 per share, are exercisable immediately, and expire on the five-year anniversary of the date of issuance. The Company sold the Common Stock and Pre-Funded Warrants with an accompanying Common Stock Warrant to purchase one share of Common Stock, and the Common Stock and Pre-Funded Warrants were immediately separated from the Common Stock Warrants and issued separately. The combined purchase price for each Share and accompanying Common Stock Warrant was $ 41.20 per unit and the combined purchase price for each Pre-Funded Warrant and accompanying Common Stock Warrant was $ 41.1999 per unit. The Pre-Funded Warrants have an exercise price of $ 0.0001 per share, are exercisable immediately, and will not expire until exercised in full. 125 The gross proceeds to the Company from the offering were approximately $ 6.9 million before deducting the placement agent’s fees and other offering expenses of $ 638,045 payable by the Company. It closed on November 20, 2024. The Investor may not exercise any portion of the Common Stock Warrants or Pre-Funded Warrants to the extent it would beneficially own more than the limits defined in the respective Warrant Purchase Agreement. The exercise price and number of shares of Common Stock issuable upon the exercise of the Common Stock Warrants and Pre-Funded Warrants are subject to adjustment in the event of any stock dividends and distributions, stock splits, stock combinations or stock reclassifications, as described in the respective warrant agreements. Under certain circumstances, the warrants may be exercised on a “cashless” basis. Both the Common Stock Warrants and Pre-Funded Warrants were classified as a component of permanent stockholders’ equity within additional paid-in-capital and were recorded at the issuance date. The Common Stock Warrants and Pre-Funded Warrants are equity classified because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, permit the holders to receive a fixed number of shares of Common Stock upon exercise, are indexed to the Company’s Common Stock and meet the equity classification criteria. In addition, the Common Stock Warrants and the Pre-Funded Warrants do not provide any guarantee of value or return. On November 20, 2024, the Investor exercised all of the Pre-Funded Warrants by delivering a notice of exercise to the Company and paying the exercise price. The Company issued 63,925 registered shares of Common Stock to the Investor on November 21, 2024. On April 16, 2025, the 167,925 shares of Common Stock underlying the Common Stock Warrants issued to the Investor on November 20, 2024 were registered in a registration statement filed pursuant to Rule 424(b)(3) (File No. 333-286409). On May 15, 2025, the Company entered into a privately negotiated agreement with the Investor for its Common Stock Warrants to reduce the exercise price of such warrants from $ 41.20 per share to $ 7.45 per share. The Company considered the change in fair value of this modification of the warrant as a deemed dividend to the Investor related to the equity offering that closed in May 2025 with the Investor. The Common Stock Warrants issued on November 20, 2024 were all exercised on November 20, 2025, in connection with the Inducement Transaction described above. 8. Standby Equity Purchase Agreement On February 20, 2025 , the Company entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) with Square Gate Capital Master Fund, LLC - Series 4 (“Square Gate”), which the Company deemed to be a Standby Equity Purchase Agreement (“SEPA”). Under the Equity Purchase Agreement, the Company will have the right, but not the obligation, to sell to Square Gate, and Square Gate will have the obligation to purchase from the Company, up to $ 20,000,000 (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. Square Gate has covenanted not to cause or engage in any short sales or hedging transactions with respect to the shares of the Company’s Common Stock. The Maxim Group LLC acted as the Company’s exclusive Placement Agent in connection with this transaction. 126 Unless earlier terminated, the Equity Purchase Agreement will remain in effect until the earlier of February 18, 2028 (i.e., the expiry of the 36-month period commencing on the date of the Equity Purchase Agreement) or the date on which Square Gate has purchased the Maximum Commitment Amount (the “Commitment Period”). The Company has the right to terminate the Equity Purchase Agreement at any time, subject to certain provisions as set forth in the Equity Purchase Agreement. Square Gate has the right to terminate the Equity Purchase Agreement under certain provisions as set forth in the Equity Purchase Agreement, including the continued listing of the Company’s Common Stock on an Eligible Market. The Equity Purchase Agreement and Registration Rights Agreement contain customary representations, warranties and agreements by the Company and customary conditions to Square Gate’s obligation to purchase the Put Shares. Actual sales of shares of our Common Stock, if any, to Square Gate under the Equity Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Company’s Common Stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. The net proceeds to us from sales of our Common Stock to Square Gate under the Equity Purchase Agreement, if any, will depend on the frequency and prices at which the Company sells shares to Square Gate under the Equity Purchase Agreement. Any proceeds that the Company receives from sales of shares of our Common Stock to Square Gate under the Equity Purchase Agreement will be used to advance our clinical development programs and expand our discovery, research and preclinical activities in the near term and in the future. During the Commitment Period, the Company will have the right, but not the obligation, to direct Square Gate to make a purchase of the Put Shares by delivering written notice (a “Put Notice”) to Square Gate on any trading day (the “Put Date”) to purchase a number of Put Shares pursuant to a formula set forth in the Equity Purchase Agreement. The number of Put Shares that the Company can issue to Square Gate from time to time under the Equity Purchase Agreement may not exceed 4.99 % of the number of shares of our Common Stock outstanding immediately after giving effect to the issuance of shares issuable pursuant to a Put Notice. On March 12, 2025, the Company issued 9,616 shares of the Company’s Common Stock (subject to adjustment for the Reverse Stock Split) to Square Gate in payment of the Commitment Fee (“Commitment Shares”). At the Special Meeting of Stockholders, stockholders approved the Company’s use of the Equity Purchase Agreement. On April 16, 2025, the 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 Square Gate, according to provisions of the Equity Purchase Agreement. As of December 31, 2025, the Company concluded that the Equity Purchase Agreement for Standard Put Shares does not qualify for equity classification. On the effective date, the Company concluded that the fair value of the Equity Purchase Agreement at inception was zero and no asset or liability was recorded. As a result, fees paid to Square Gate in excess of the fair value of the Equity Purchase Agreement were expensed as incurred. Any issuance costs or other transaction costs attributable to a freestanding equity-linked financial instrument that is classified as an asset or liability should be recognized in earnings in the period incurred. The Commitment Fee and issuance costs for the registration statement to register the underlying shares of Common Stock issued under the Equity Purchase Agreement were expensed for the year ended December 31, 2025. For the year ended December 31, 2025, the Company expensed the $ 150,000 Commitment Fee which was incurred in the period ended March 31, 2025. The Commitment Fee was paid in-kind with an equivalent value of shares of the Company’s Common Stock. For the year ended December 31, 2025, the Company recorded commission expenses of $ 76,216 payable to the Company’s exclusive Placement Agent. The Standby Equity Purchase Agreement (“SEPA”) provide two mechanisms for submission by the Company and acceptance by the investor of Put Notices under the SEPA pursuant to which the investor and the Company may agree to and execute s single purchase and sale of Put Shares (“Standard Put Shares”) or multiple purchases and sales of Put Shares on the same trading day (“Intraday Put Shares”). 127 Standard Put Shares For a Standard Put, the Company submits a put order to Square Gate on Day 0. After Square Gate accepts the Standard Put on Day 0, the Company issues the shares on Day 1. The amount that Square Gate will pay for the shares is determined in a pricing period that occurs from Day 1 – 3 trading days. The price to be paid by Square Gate is determined using the minimum volume-weighted average trading price in one of the three trading days after the put order is accepted, less fixed discount. Under the terms of the SEPA, Square Gate is required to transfer proceeds to the Company for the Put Shares by Day 5. The Company accounts a Standard Put as a financial instrument with a gain or loss recognized in earnings upon settlement. The discount and cost of issuance for each put will be recognized in earnings upon settlement. Intraday Put Shares On August 14, 2025, the Company and the investor entered into a First Amendment to the SEPA (the “First Amendment”) to provide a mechanism for submission by the Company and acceptance by Square Gate of Put Notices under the SEPA pursuant to which Square Gate and the Company may agree to and execute multiple purchases and sales of Put Shares on the same trading day (“Intraday Put Shares”). The Intraday Put Shares have a pricing period that is based on trading volume and a price that is lowest traded price during the pricing period. When there is a lag between the issuance of the shares and the pricing of the shares, the Company accounts for an Intraday Put as a financial instrument with a gain or loss recognized in earnings upon the settlement. The cost of issuance for each put will be recognized in earnings upon settlement. Put Shares Accepted by Square Gate During the year ended December 31, 2025, the Company issued 600,000 shares of Common Stock through issuance of shares under the SEPA which resulted in net proceeds of $ 2.5 million. Loss on the sale of put shares was $ 263,974 and was presented in Loss on sale of put shares in the accompanying audited statement of operations for the year ended December 31, 2025. 9. Preferred Stock At December 31, 2024 and December 31, 2025, the Company had 10,000,000 shares of preferred stock authorized and no such shares issued. 10. Net Loss Per Share The following table summarizes the computation of the basic and diluted net loss per share. The 977,000 of shares held in abeyance as of December 31, 2025 were included in the weighted-average common shares outstanding since all necessary conditions for issuance have been met. Years Ended December 31, 2024 2025 Numerator: Net loss $ ( 30,023,814 ) $ ( 7,959,709 ) Equity dividend to investor — ( 14,338,993 ) Net loss attributable to Common Stockholders $ ( 30,023,814 ) $ ( 22,298,702 ) Denominator: Weighted-average common shares outstanding, basic and diluted 969,825 2,097,701 Net loss per share, basic and diluted $ ( 30.96 ) $ ( 10.63 ) 128 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: December 31, 2024 2025 Common stock options 44,601 44,193 Common stock warrants — 3,146,950 Potentially dilutive securities 44,601 3,191,143 11. Stock-based Compensation On June 21, 2021, the 2021 Plan was adopted by the Company’s board of directors and approved by the Company’s stockholders. As of the adoption date, the 2019 Plan was terminated. No terms were changed for grants previously awarded under the 2019 Plan, and the Company concluded a modification did not occur. Under the 2019 Plan, the Company primarily granted employees incentive stock options, which had a maximum term of ten years from the date of the grant. Generally, the incentive stock options granted under the 2019 Plan have a four-year , service-based vesting period. All of the options granted under the 2019 Plan had an exercise price equal to the fair value of a share of Common Stock on the date of the grant, according to Company policy. The 2021 Plan permits the grant of incentive stock options, nonstatutory stock options, stock a ppreciation rights, restricted stock, restricted stock units, and stock bonus awards. The 2021 Plan initially reserved 86,109 shares of Common Stock, including the transfer of remaining shares reserved under the 2019 Plan. In addition, the number of shares reserved for issuance under the 2021 Plan will increase automatically on the first day of each fiscal year beginning with the 2022 fiscal year. Under the 2021 Plan, the term of each stock option must be stated in the stock award agreement. In the case of an incentive stock option, the term will be ten years from the date of grant, or such shorter term as may be provided in the stock award agreement. Moreover, in the case of an incentive stock option granted to a participant who owns stock representing more than 10 % of the total combined voting power of all classes of our stock or the stock of any of our affiliates, the term of the incentive stock option will be five years from the date of grant or such shorter term as may be provided in the stock award agreement. Under the 2021 Plan, the Company continues to have a policy to grant options with an exercise price equal to the fair value of a share of Common Stock, as determined by the closing price on Nasdaq on the grant date. 129 The following summarizes the Company’s stock option activity for the years ended December 31, 2024 and 2025: Shares Weighted Weighted Average Issuable Average Remaining Aggregate under Exercise Contract Intrinsic Options Price Term Value Outstanding at January 1, 2024 44,483 $ 132.4 7.7 years $ 238,210 Granted 1,250 44.8 Exercised ( 337 ) 7.2 Forfeited or cancelled ( 548 ) 67.6 Expired ( 248 ) 76.4 Outstanding at December 31, 2024 44,601 $ 131.9 6.8 years $ 56,352 Exercisable at December 31, 2024 33,422 $ 127.2 6.7 years $ 56,352 Outstanding at December 31, 2024 44,601 $ 131.9 6.8 years $ 56,352 Granted 400 3.6 Exercised ( 200 ) 8.0 Forfeited or cancelled ( 95 ) 82.8 Expired ( 160 ) 35.8 Adjustment for reverse stock split ( 353 ) Outstanding at December 31, 2025 44,193 $ 131.8 5.8 years $ — Exercisable at December 31, 2025 42,965 $ 134.0 5.8 years $ — The exercise price of the underlying stock options and the fair value of the Company’s Common Stock for stock options as of the reporting date. The intrinsic value of stock options exercised during the years ended December 31, 2024 and 2025 was $ 14,484 and $ 1,654 , respectively. The weighted-average fair value of options granted during the years ended December 31, 2024 and 2025 was $ 33.77 and $ 2.44 per share, respectively. For stock option grants with service-based vesting, stock-based compensation expense represents the portion of the grant date fair value of employee stock option grants recognized over the requisite service period of the awards on a straight-line basis, net of estimated forfeitures. For options that vest upon the achievement of performance milestones, the Company estimates fair value at the date of grant and compensation expense is recognized using the accelerated attribution method when it is determined that the performance criteria are probable of being met. In determining the grant date fair value of the stock-based awards, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and its determination generally requires significant judgment. Fair Value of Common Stock —Since the completion of our initial public offering on July 19, 2021, the fair value of each share of Common Stock underlying stock option grants is based the quoted market price on the primary stock exchange on which our Common Stock is traded on the day the stock award or option is granted. Expected term —The expected term of stock options is determined using the “simplified” method, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to the Company’s lack of sufficient historical data. Expected volatility —The expected volatility was derived from the historical stock volatilities of comparable peer public companies within our industry. Risk-free interest rate —The risk-free interest rate is based on the U.S. Treasury Bond in effect at the time of grant for periods corresponding with the expected term. Dividend yield —The expected dividend yield is 0 % because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its Common Stock. 130 For the years ended December 31, 2024 and 2025, the fair value of employee and director stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions: Years Ended December 31, 2024 2025 Expected term (years) 5.5 4.15 Expected volatility 92.93 % 94.52 % Risk-free interest rate 4.22 % 3.55 % Dividend yield — — Fair value underlying common stock $ 33.77 $ 2.44 For the year ended December 31, 2024 , for options with service-based vesting conditions, the Company recognized $ 61,250 of employee stock-based compensation expense in research and development expenses and $ 947,762 of employee stock-based compensation in general and administrative expenses in the accompanying audited statement of operations. For the year ended December 31, 2025 , for options with service-based vesting conditions, the Company recognized $ 48,069 of employee stock-based compensation expense in research and development expenses and $ 720,555 of employee stock-based compensation in general and administrative expenses in the accompanying audited statement of operations. As of December 31, 2025 , the Company had an aggregate of $ 23,697 of unrecognized employee stock-based compensation cost for options with service-based vesting, which is expected to be recognized over a weighted average vesting period of 1.14 years. 12. Employee Benefit Plan The Company offers a defined contribution savings plan (the “Benefit Plan”) under Section 401 of the Internal Revenue Code for all eligible employees. The Benefit Plan allows for discretionary contributions which are limited to the maximum allowable for federal tax purposes. The total expense related to the discretionary payments made by the Company to the Benefit Plan for the years ended December 31, 2024 and 2025 was $ 160,851 and $ 127,295 , respectively. 13 . Collaborative Arrangements The Company has certain contract research agreements with contractors and research institutions that were entered during the two years ended December 31, 2025 for the (i) hybridoma development, (ii) cell line manufacturing productivity improvement, and (iii) research to support pre-clinical studies. Under the hybridoma development and cell line manufacturing productivity improvement agreements, we own all rights to the resulting intellectual property, including the antibodies, sequences, and data. For certain contractors, the Company is obligated to pay one future milestone payment upon filing and acceptance of an IND for each respective human antibody or protein from cell line; however no additional future development or financial obligations are due under these contract research agreements as of December 31, 2024 or 2025. For certain research collaborations agreements, the research intellectual property may be jointly owned or ownership may be based upon inventorship. In those circumstances, the Company has obtained the exclusive option to an exclusive license for the research intellectual property. 131 14. Income Taxes The Company di d no t have a provision for income taxes (current or deferred tax expense) for tax years ended December 31, 2024 and 2025. In accordance with ASU 2023-09, the following table summarizes differences between income tax expense (benefit) at the statutory federal income tax rate and as presented on the statements of operations: Rate Reconciliation 2024 2025 Net Loss Before Taxes $ ( 30,023,814 ) $ ( 7,959,709 ) Tax at U.S. federal statutory tax rate ( 6,305,001 ) 21.00 % ( 1,671,539 ) 21.00 % Tax Credits Research and development tax credit ( 324,035 ) 1.08 % ( 187,192 ) 2.35 % Change in valuation allowance 6,540,349 ( 21.78 %) 1,017,795 ( 12.79 %) Nontaxable and nondeductible items Gain on Conversion of Sr. Secured Notes — 0.00 % 702,778 ( 8.83 %) Other 34,362 ( 0.11 %) 144,120 ( 1.81 %) Other Adjustments Other 54,325 ( 0.18 %) ( 5,962 ) 0.07 % Income tax expense/(benefit) $ — 0.00 % $ — 0.00 % The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2025 are presented below: 2024 2025 Deferred tax assets: Federal net operating loss carryforward $ 13,058,574 $ 14,691,145 State net operating loss carryforward 2,707,319 3,051,100 Capitalized section 174 R&D expenses 4,113,266 2,958,575 Reserve for credit losses 1,330,613 1,330,613 R&D Tax Credit 1,530,652 1,709,745 Depreciable assets - 454,612 Accrued expenses 37,786 64,758 Capitalized legal fees for patents 2,698,931 2,197,457 Stock-based compensation 792,057 959,388 Charitable contributions 65 65 Unrealized loss on investment — 33,115 Total deferred tax assets 26,269,263 27,450,573 Deferred tax Liabilities: Unrealized gain/loss $ ( 5,238 ) $ ( 5,238 ) Depreciable assets ( 27,054 ) - Deferred revenue/costs ( 8,617 ) ( 19,659 ) Total deferred tax liability ( 40,909 ) ( 24,897 ) Net deferred tax asset 26,228,354 27,425,676 Less: valuation allowance ( 26,228,354 ) ( 27,425,676 ) Net deferred tax asset (after valuation allowance) $ — $ — 132 A valuation allowance is recorded to reduce the deferred tax asset if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of December 31, 2025, after consideration of all the evidence, both positive and negative, management has determined that a valuation allowance of $ 27.4 million is necessary to reduce the deferred tax asset to the amount that will more likely than not be realized. During the year ended December 31, 2025, the valuation allowance increased by $ 1.2 million. As of December 31, 2024 and 2025, the Company had available federal NOL carryforwards of $ 62.2 million and $ 70.0 million, respectively. The Company also has available state NOLs carryforwards of approximately $ 62.3 million and $ 70.2 million, as of December 31, 2024 and 2025, respectively. The federal and state NOLs will carryforward indefinitely. The Federal NOLs are available to offset 80 % of taxable income. In addition, the Company had federal research and development credits carryforwards of $ 1.5 million and $ 1.7 million, as of December 31, 2024 and 2025, respectively, to reduce future federal income taxes, if any. These carryforwards expire from 2038 through 2045 and are subject to review and possible adjustment. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, (the Code), substantial changes in the Company’s ownership may limit the amount of net operating loss and research and development credit carryforwards that could be used annually in the future to offset taxable income. A formal Section 382 study has not been completed to determine if an ownership change has occurred and if its net operating losses are subject to an annual limitation. Such annual limitations could affect the utilization of NOL and tax credit carryforwards in the future. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The provisions in the OBBBA have multiple effective dates, with certain provisions effective in 2025 and others implemented through future years. One of the most significant provisions for the Company is the repeal of the requirement to capitalize and amortize domestic research and experimental (R&E) expenditures under Section 174 of the Internal Revenue Code. Effective for tax years beginning after December 31, 2024, the Company is permitted to immediately deduct domestic R&E expenditures as incurred for federal income tax purposes. The requirement to amortize foreign R&E expenditures over 15 years remains unchanged. The Company has included the impact of the provisions effective in 2025, including the Section 174 change, in its Consolidated Financial Statements. The impact of these provisions was not material to the Company’s results of operations and financial condition for the year ended December 31, 2025. The Company’s tax returns remain subject to examination by tax authorities beginning with the tax year ended December 31, 2021. However, due to NOLs and credits carried forward from prior tax years, substantially all tax years may also be subject to examination. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon review by the taxing authorities based on the technical merits. The Company recognizes interest accrued and penalties for unrecognized tax benefits in its tax provision. As of December 31, 2024 and 2025, the Company had no t recognized any expense related to uncertain tax position in its statements of operations. 15. Related Party Transactions On February 20, 2024, the Company completed a $ 2.5 million private placement of shares of Common Stock with certain of its officers and directors at a price of $ 1.40 per share. The Company issued 1,785,718 shares of Common Stock in connection with the offering. The shares have not been registered and will not be sold or transferred except as permitted under law and pursuant to registration or exemption therefrom. The Board of Directors and Audit Committee of the Board of Directors reviewed the transaction under the Company’s policy for Related Party Transactions (the “Policy”) and determined that the transaction was in compliance with the Policy. 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. Hing C. Wong, Founder and CEO, $ 220,000 purchased by Rebecca Byam, Chief Financial Officer, $ 140,000 purchased by Scott T. Garrett, Chairman of the board of directors, $ 60,000 purchased by Gary M. Winer, who was a member of the board of directors at the time of his investment, $ 25,000 purchased by Lee Flowers, Senior Vice President for Business Development, and $ 25,000 purchased by Rick S. Greene, member of the board of directors. In addition, other significant stockholders invested in Secured Notes totally $ 3.7 million. 133 In May 2025, as part of the Nasdaq Compliance Plan, the Company entered into the Second Amendment to its Secured Note in which certain Secured Note noteholders agreed to restructure their Secured Notes. At the time of the restructuring, the net carrying amount of the restructured Secured Notes was $ 7.4 million including principal of $ 6.6 million and accumulated accretion of a fixed bonus payable upon Maturity Date of $ 860,462 . On May 7, 2025, the Company extinguished $ 7.4 million of debt through the issuance of 253,083 shares of Common Stock, warrants to purchase 126,540 shares of Common Stock, and rights to receive a pro rata share of 49.11 % of the proceeds or shares from the Company’s investment in Wugen. The fair value of consideration transferred including Common Stock, warrants to purchase Common Stock, and rights to proceeds of a portion of the Company’s shares of Wugen common stock was $ 4.0 million, with the difference of $ 3.5 million being recognized as a troubled debt restructuring gain. Due to the related party nature of the converting noteholders, the gain was recorded to additional paid-in capital as of December 31, 2025 in the accompanying audited statements of stockholders’ equity (deficit). 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. In accordance with their terms, following the completion of a qualified offering, the unsecured convertible promissory notes were converted into shares of our Common Stock at the final offering price in an offering that closed on May 15, 2025. In addition, holders of these 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, who was a member of the Company’s Board of Directors at the time of his investment. As of May 15, 2025, the outstanding principal of unsecured promissory notes were converted. See Note 5. Debt - Unsecured Promissory Notes. On May 15, 2025, the Company completed an offering (the “Offering”) with an existing stockholder of the Company in which the Company issued (i) 158,000 shares of the Company’s Common Stock and (ii) Pre-funded Warrants to purchase up to 513,140 shares of Common Stock in a follow-on public offering. The Company also issued Warrants to purchase up to an aggregate of 1,342,280 shares of Common Stock. The gross proceeds to the Company from the Offering were approximately $ 5.0 million before deducting the placement agent’s fees and other offering expenses of $ 802,602 payable by the Company. The Company estimated the fair value of the securities issued, using the Black Scholes valuation model to estimate the fair value of the warrants, and determined the fair value of securities issued was $ 15.2 million. As this was a transaction with an existing stockholder of the Company, the Company recognized a $ 10.2 million deemed equity dividend to the Investor which was recorded in additional-paid-in capital for the year ended December 31, 2025. See Note 7. Sale of Common Stock and Warrants - May Equity Financing. On November 20, 2025, the Company completed an inducement transaction (the “Inducement Transaction”) with an existing stockholder of the Company. Pursuant to a warrant inducement agreement, the related-party stockholder agreed to a reduced exercise price of the outstanding Warrants issued in previous transactions in November 2024 and May 2025. In consideration for the immediate exercise of the Warrants, the Company also agreed to issue to the related-party stockholder unregistered warrants to purchase an aggregate of 3,020,410 shares of the Company’s Common Stock. The gross proceeds to the Company from the Offering were approximately $ 4.0 million before deducting the placement agent’s fees and other offering expenses of $ 321,379 payable by the Company. The fair value of the securities issued, using the Black Scholes valuation model to estimate the fair value of securities issued and the modification of the warrant, was $ 8.2 million. As this was a transaction with an existing stockholder of the Company, the Company recognized $ 4.2 million deemed equity dividend to investor which was recorded in additional-paid-in-capital for the year ended December 31, 2025. See Note 7. Sale of Common Stock and Warrants - November 2025 Inducement Transaction. 16. 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 statements of operations as net loss. The measure of segment assets is reported on the balance sheet as total assets. 134 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 December 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. The tables below summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2024 and 202 5: Years Ended December 31, 2024 2025 Revenues: Revenues $ 2,566,792 $ 54,232 Cost of revenues ( 1,607,389 ) ( 43,386 ) Net revenues 959,403 10,846 Operating expenses: Research and development expenses Salaries, benefits and related expenses 2,797,370 3,069,364 Manufacturing and materials 1,425,734 354,705 Preclinical expenses 859,701 930,899 Clinical trials 558,215 470,592 Overhead allocations 747,974 617,324 Total research and development expenses 6,388,994 5,442,884 General and administrative Salaries, benefits and related expenses 2,563,936 2,784,753 Professional services (a) 1,171,885 1,995,446 Facilities and office expenses 654,996 433,288 Depreciation expenses 254,407 237,005 Rent and occupancy expenses 205,511 191,598 Insurance 952,199 1,011,034 Taxes 196,804 174,398 Other expenses 289,407 468,537 Total general and administrative expenses 6,289,145 7,296,059 Other segment items (b) 18,305,078 ( 4,768,388 ) Total operating expenses 30,983,217 7,970,555 Net segment loss $ ( 30,023,814 ) $ ( 7,959,709 ) (a) 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. (b) Other segment items include the following unusual or nonrecurring items: 135 Years Ended December 31, 2024 2025 Arbitration legal fees (recoveries), net $ 15,910,480 $ ( 1,470,809 ) Accretion of fixed bonus upon maturity of Secured Notes 527,304 405,222 Interest expense 654,284 845,051 Change in fair value of investment — 273,422 Change in fair value of contingent liability — ( 1,055,826 ) Nonoperating loss 1,300,000 — Loss on sale of put shares — 263,974 Gain on extinguishment of liability — ( 5,461,046 ) Impairment of long-lived asset 1,500,000 Other income, net ( 86,990 ) ( 68,376 ) Other segment items $ 18,305,078 $ ( 4,768,388 ) 17. Commitments and Contingencies Operating Leases The Company has operating leases for approximately 12,250 square feet of space located in Miramar, Florida. On January 27, 2025, the Company entered a new one-year lease for the same location which commenced on March 1, 2025 and terminated on February 28, 2026 . On February 2, 2026, the Company entered a new one-year lease for the same location which commenced on March 1, 2026 and terminates on February 28, 2027 . As a lease of 12 months or less in duration and qualifies for a short-term lease exemption under FASB ASC 842, Leases, for short-term leases, as provided for in ASC 842-20-25-2, which is the short-term lease exception whereby a lessee recognizes the lease payments in profit or loss on a straight-line basis over the lease term. 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. As of December 31, 2025, the remaining lease payments were as follows: 2026 $ 49,316 Total future minimum lease payments $ 49,316 For the years ended December 31, 2024 and 2025 , rent expense recognized by the Company was $ 196,000 and $ 208,413 , respectively, of which $ 101,300 and $ 109,147 , respectively, is included in Research and development in the statements of operations included in the audited financial statements. Contractual Commitments The Company has commitments with R&D outsourcing and development companies to supply us with clinical grade materials or other development services. As of December 31, 2025, it is under contract for future obligations of $ 396,100 it expects to pay during the year ending December 31, 2026. 136 Company Victim to Fraudulent Criminal Scheme 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 (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 recognized a $ 1.3 million loss reported as a Nonoperating loss in the accompanying audited statements of operations for the year ended December 31, 2024. The Company has pursued all available remedies to recover this loss, including reporting it to law enforcement. Legal Matters Legal Proceedings From time to time, the Company is a party to or otherwise involved in legal proceedings, including suits, assessments, regulatory actions and investigations generally arising out of the normal course of business. In addition, the Company enters into agreements that may include indemnification provisions, pursuant to which the Company agrees to indemnify, hold harmless and defend the indemnified parties for losses suffered or incurred by the indemnified party. When the Company believes that the outcome of such a matter will result in a liability that is probable to be incurred and result in a potential loss, or range of loss, that can be reasonably estimated, the Company will accrue a liability and make the appropriate disclosure in the footnotes to the financial statements. Arbitration, Settlement and General Release On December 23, 2022, ImmunityBio initiated an arbitration against Dr. Hing C. 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, 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. Wong. On April 27, 2023, the Court approved the parties’ stipulation and ordered the parties to Arbitration. 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, 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. Wong. As of July 13, 2024, the Company and Dr. Hing C. Wong, the Company’s Founder and Chief Executive Officer, entered into a confidential Settlement Agreement with Altor BioScience, LLC (“Altor”), NantCell, Inc. (“NantCell”), and ImmunityBio, Inc. (the parent of Altor and NantCell, together with Altor and NantCell, “ImmunityBio”), to resolve the previously disclosed Arbitration before JAMS brought by Altor and NantCell as well as the Complaint Altor filed against the Company in the Chancery Court of the State of Delaware for the contribution of legal fees and expenses advanced to Dr. Wong. 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 Arbitration and related Complaint were dismissed with prejudice as of December 31, 2024. As of December 31, 2024, the Company owed $ 13.5 million in legal fees for costs incurred in connection with mounting a legal defense for the Company and Dr. Wong. In January 2025, the Company received a $ 2.0 million insurance reimbursement which was paid directly to Cooley LLP (“Cooley”), the law firm that represented Dr. Wong in his defense. On December 30, 2025, the Company and Dr. Wong entered into a settlement agreement with Cooley related to legal fees incurred in connection the defense of Dr. Wong. As a result of that agreement, the Company, Dr. Wong and Cooley agreed to settle an approximately $ 7.5 million obligation for $ 2.0 million in cash payments and a commitment to potential contingent payments up to approximately $ 5.5 million upon achievement of certain triggering events (including a sale of the Company above a certain threshold or receipts of substantial cash amounts for future business development transactions), all of which were deemed to be remote as of December 31, 2025. In accordance with the terms of the settlement agreement, $ 500,000 was paid on December 31, 2025. Based on an amendment to the settlement agreement, the Company paid $ 750,000 on March 20, 2026, and will pay the remaining $ 750,000 upon the earlier of the completion of a financing for at least $ 4.0 million in gross proceeds or August 31, 2026. After this settlement, as of December 31, 2025, the Company recognized a liability of $ 6.2 million for remaining amounts owed for legal fees related to the Arbitration which continue to remain outstanding. 137 Other Matters As of December 31, 2025, certain subcontractors had filed mechanics liens related to unpaid invoices issued in connection with the facility. 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. To our knowledge as of the date hereof, 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. On August 8, 2025, B&I Contractors, Inc. (“B&I), one of the defendants in the BE&K Complaint, filed a motion for summary judgment (the “MSJ”) as to the Count I (Foreclosure of Construction Lien). The Company has responded to the BE&K and Fisk Complaints and cross-claims and filed a timely response to the B&I MSJ. The cases were consolidated, and a Case Management conference was held. On February 19, 2026, a stipulation was submitted to the Court for a settlement and release agreement between the Company and B&I calling for payment of a total of $ 860,000 installments in settlement of amounts owed and an allowance for interest and other fees, the last installment of which is payable on or before May 31, 2026. On October 24, 2025, the Company was notified by Cogent Bank that it exercised its discretion to make a demand that the Company cure the mechanics liens no later than thirty (30) days after receipt of this letter in strict compliance with Section 7.2(3) of the Loan Agreement by: (i) paying and discharging all of the Claims of Lien and causing satisfactions to be recorded in the Public Records of Broward County, Florida for all of the Claims of Lien, and (ii) resolving all litigation against the Borrower and the mortgaged property described in the Mortgage and causing such claims in the Foreclosure Actions to be dismissed and all related notices of lis pendens to be released. The Company and Cogent Bank have had in negotiations to come to terms on a forbearance agreement to provide additional time for the Company to comply with the demands it made in the demand letter. Inflationary Cost Environment, Geopolitical Risks and Other Macroeconomic Factors The Company’s operations have been affected by many headwinds, including inflationary pressures, tariffs, 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. 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. The extent and duration of such events and conditions, and resulting disruptions to our operations, are highly unpredictable. 18. Subsequent Events Subsequent events have been evaluated through the date the financial statements were filed. In addition to the required recognition or disclosure disclosed in the footnotes herein, there were also the following subsequent events after the reporting date: February 2026 Sale of Common Stock and Warrants On February 17, 2026, the Company entered into a securities purchase agreement with an existing stockholder of the Company, a single institutional investor (the “Investor”) pursuant to which the Company agreed to offer and sell, in a follow-on public offering (the “2026 Offering”), 2,477,292 units (the “Units”) consisting of (i) 2,477,292 shares (the “Common Shares”) of the Company’s Common Stock, $ 0.0001 par value per share (the “Common Stock”) or, in lieu thereof, up to 2,477,292 Pre-Funded Warrants (as defined below) to purchase up to 2,477,292 shares of Common Stock (the “Pre-Funded Warrant Shares”), and (ii) up to 2,477,292 Common Stock purchase warrants the exercise of which is conditioned on stockholder approval (the “Common Warrants”, and together with the Pre-Funded Warrants, the “Warrants”) to purchase up to 2,477,292 shares of Common Stock. 138 On February 17, 2026, the Company also entered into a privately negotiated agreement with the Investor, which holds certain existing outstanding warrants to purchase up to 3,020,410 shares of Common Stock (the “Prior Warrants”) to seek stockholder approval in accordance with applicable Nasdaq rules to reduce the exercise price of such Prior Warrants to the public offering price per Unit paid in the Offering (the “Existing Warrants Amendment Agreement”). There can be no assurance that we will obtain such stockholder approval or amend the Prior Warrants or as to the final terms of any amendments to the Prior Warrants. The combined purchase price for each Unit consisting of one share of Common Stock or Pre-Funded Warrant in lieu thereof and accompanying Common Stock Warrant to purchase one share of Common Stock was $ 0.6055 per unit, and the combined purchase price for each unit consisting of one Pre-Funded Warrant that may be exercised for one share of Common Stock and accompanying Common Stock Warrant to purchase one share of Common Stock is $ 0.6054 . The Common Stock Warrants have an exercise price of $ 0.6055 per share, will be exercisable only upon receipt of stockholder approval thereof in accordance with applicable Nasdaq rules, and expire on the five-year anniversary of such stockholder approval. The Pre-Funded Warrants have an exercise price of $ 0.0001 , are exercisable immediately and will not expire until exercised in full. The Company filed a definitive proxy statement for a Special Stockholders’ Meeting to be held on April 27, 2026. The securities described above were offered pursuant to a registration statement on Form S-1, as amended (File No. 333-293396), which was declared effective by the Securities and Exchange Commission on February 17, 2026. The gross proceeds to the Company from the 2026 Offering are approximately $ 1.5 million before deducting the placement agent’s fees and other offering expenses payable by the Company. The 2026 Offering closed on February 19, 2026. On March 16, 2026, the Investor exercised all of its Pre-Funded Warrants issued in the 2026 Offering, and the Company issued 2,477,292 shares of Common Stock. Also on February 25, 2026 and March 16, 2026, the Investor requested the Company issue 237,000 and 740,000 , respectively, of the remaining shares in abeyance. B&I Contractors Settlement Agreement and Release On February 19, 2026, a stipulation was submitted to the Court for a settlement and release agreement between the Company and B&I calling for payment of a total of $ 860,000 in installments in settlement of amounts owed and an allowance for interest and other fees the last installment of which is payable on or before May 31, 2026. The Company did not recognize any gain or loss as a result of this settlement. Compliance with Nasdaq Continued Listing Requirements On February 26, 2026, the Nasdaq Hearings Panel found that the Company regained compliance with all continued listing rules of The Nasdaq Capital Market. Pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor. Pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor for a period of one year from the date of this letter. If, within that one-year monitoring period, Staff finds the Company again out of compliance with the Equity Rule that was the subject of the exception, the Staff will issue a Delist Determination Letter. In such a case, the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable. On March 26, 2026, the Company received a written notice from the Staff which notified the Company that, for the 30 consecutive business days, the Company’s security did not maintain a minimum bid price of $ 1 per share, in accordance with Nasdaq Listing Rule 5810(c)(3)(A) (“Bid Price Rule”). Due to the fact that the Company effected a 1 -for-40 reverse stock split on April 11, 2025, the Company was not afforded a 180-calendar day period to demonstrate compliance. The Company plans to request an appeal of this determination in a timely manner. Beijing Trimmune Biotech Co., Ltd. License As of March 16, 2026, the Company received the full payment of the upfront licensing fee for the exclusive worldwide license for HCW11-006, a preclinical molecule, from Trimmune. In accordance with the terms of the Trimmune License, the deal closing took place upon receipt of the upfront payment. The upfront license fee consisted of a payment of $ 3.5 million in gross proceeds, or $ 2.9 million net of taxes, and a transferable minority equity interest in Trimmune. Settlement Agreement with EirGenix, Inc. On December 9, 2025, the Company and EirGenix entered into a settlement agreement. On March 3, 2026, the Company paid $ 620,000 to EirGenix for the first payment in the $ 1.2 million settlement agreement. On March 17, 2026, the parties agreed to amend the terms of the settlement agreement such that the settlement of $ 1.2 million must be paid in full by April 30, 2026, or the entire amount of $ 1.7 million in past due amounts plus interest and penalties thereon will be due. 139 Settlement Agreement with Cooley LLP On March 23, 2026, the Company and Cooley LLP entered into an Amendment to Settlement Agreement and Mutual Release the parties entered on December 30, 2025. In accordance with the amended agreement, the Company paid Cooley $ 750,000 on March 24, 2026. The remaining $ 750,000 owed will be paid upon the earlier of the completion of a financing for at least $ 4.0 million in gross proceeds or August 31, 2026. Engagement Letter with E.F. Hutton & Co. On March 26, 2026, the Company entered into an engagement letter with the E.F. Hutton & Co. to act as the exclusive placement agent for a private placement. 140 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . As the Company reported in its Form 8-K filed on September 20, 2024, on September 19, 2024, the Audit Committee (the “Audit Committee”) of the Board of Directors (the “Board”) of HCW Biologics Inc. (the “Company”) dismissed Grant Thornton LLP (“Grant Thornton”) as the Company’s auditing firm, effective immediately. This decision was not related to any disagreements with Grant Thornton on any matter of accounting principles, financial statements disclosures, auditing scope or auditing procedure. The Audit Committee appointed Crowe LLP (“Crowe”), as the successor independent registered public accounting firm beginning in the quarter ended September 30, 2024, and it was effective immediately.