Company: HCWB
Filing Date: 2025-02-21
Form Type: DEF 14A
Source: 0001193125-25-032115
Chunk: 29

Company: HCW Biologics Inc.
Filing Date: 2025-02-21
Form: DEF 14A
Chunk 29
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 the Purchase Agreement and the transactions contemplated hereby would exceed
19.99% of the shares of our Common Stock issued and outstanding immediately prior to the execution of the Purchase Agreement) which number of shares is to be reduced, on a
share-for-share basis, by the number of shares of our Common Stock issued or issuable pursuant to any transaction or series of transactions that may be aggregated with
the transactions contemplated by the Purchase Agreement under applicable rules of the trading market (such maximum number of shares, the “Exchange Cap”), unless the Company’s stockholders approved the issuance of Common Stock in
excess of the Exchange Cap in accordance with the applicable rules of the trading market. While the Company is asking the stockholders to approve the issuance of all of the shares available under the Purchase Agreement, the Company may not need to
issue and sell all such shares.

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To meet the Nasdaq 20% Rule, we need stockholder approval under the listing rules of Nasdaq to remove
the Exchange Cap provisions in the Purchase Agreement to permit the potential issuance of more than 20% of our outstanding Common Stock in accordance with the terms of the Purchase Agreement.

What is the Effect on Current Stockholders if Proposal Two is Approved?

If our stockholders approve this proposal, we will be able to eliminate the Exchange Cap in the Purchase Agreement and therefore have the option to issue the
maximum number of shares of common stock issuable under the Purchase Agreement which would exceed 19.99% of the issued and outstanding shares of our Common Stock as of the date we executed the Purchase Agreement. This would allow the Company
flexibility in accessing the equity line of credit to pursue its business growth, current announced partnerships and collaborations and maintain compliance with the Nasdaq Minimum Shareholder Equity Rule if other sources of capital are insufficient
to fulfill these goals. If stockholders approve the Proposal Two, the rights or privileges of our existing stockholders will not be affected, except that the economic and voting interests of each of our existing stockholders will be significantly
diluted should we choose to require Square Gate to purchase those shares pursuant to the Purchase Agreement. Although the number of shares of our Common Stock that our existing stockholders own will not decrease, the shares of our Common Stock owned
by our existing stockholders will represent a smaller percentage of our total outstanding shares of our Common Stock after any such issuance.

What is the Effect on Current Stockholders if the Proposal Two is NOT approved?

If our stockholders do not approve this Proposal Two, we may be limited