Company: HCWB
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0000950170-25-046724
Chunk: 146

Company: HCW Biologics Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 7
Chunk 146
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, partially offset by decreases of $138,158 in Delaware franchise taxes and $12,434 in travel-related expenses.  

Reserve for credit losses and other expenses

In the year ended December 31, 2023, the Company recognized a Reserve for credit losses of $5.3 million, reflecting our conclusion that it was not probable that we would recover the interest reserve deposit established upon entering the credit agreement with Prime Capital Ventures (the “Lender”) based on facts known as of December 31, 2023.  Subsequent to December 31, 2023, the Lender defaulted on its obligation to refund the interest reserve deposit.  In coordination with other entities who were also defrauded by the Lender, the Company continues efforts to recover funds paid for an interest reserve through ongoing receivership and legal remedies.  

As reported in the Company’s Form 8-K filed on May 1, 2024 with the SEC, the Company became aware that it was the victim of a criminal scheme involving the impersonation of a purchaser upon the default on a legally binding commitment to purchase $8.0 million of secured notes from the Company. The scheme resulted in the misdirection of approximately $1.3 million held in Company accounts to a fraudulent account controlled by a third party.  The Company pursued all available remedies to recover this loss and reported this matter to legal authorities.  Given the limited success that these efforts for the recovery of funds, the Company recognized a loss of $1.3 million in the year ended December 31, 2024.   

Interest

On August 15, 2022, we entered into a loan and security agreement with Cogent Bank to partially fund our purchase of the property we acquired on that same date.  We borrowed $6.5 million under this agreement.  Amounts outstanding on the term loan  accrue interest at a rate per annum equal to 5.75%.  We were obligated to make interest-only payments on this loan from September 2022 through August 2023 and principal and interest payments in 47 equal monthly installments, based on a 25-year maturity schedule, commencing September 15, 2023.  We paid $283,042 and $280,794 for interest on this loan for the years ended December 31, 2023 and 2024, respectively.

During the year ended December 31, 2024, the Company issued $6.9 million of Secured Notes, which bear