Company: HCWB
Filing Date: 2025-04-16
Form Type: 424B3
Source: 0001193125-25-082835
Chunk: 24

Company: HCW Biologics Inc.
Filing Date: 2025-04-16
Form: 424B3
Chunk 24
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 manufacture a commercial scale product or arrange for a third party to do so on our behalf,
or conduct sales and marketing activities necessary for successful product commercialization. Additionally, we expect our financial condition and operating results to continue to fluctuate significantly from period to period due to a variety of
factors, many of which are beyond our control. Consequently, any predictions you may make about our future success or viability may not be as accurate as they could be if we had a longer operating history.

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We have identified certain material weaknesses in our internal control over financial reporting and if our remediation of such material weaknesses is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which may cause investors to lose confidence in our reported financial information and may lead to a decline in the market price of our Common Stock.

Two of such material weaknesses were identified and reported in the Company’s Annual Report on Form
10-K for the year ended December 31, 2023. As the Company reported in a Current Report on Form 8-K filed with the SEC on May 1, 2024, we were a victim of a
criminal scheme involving the impersonation of a purchaser of Secured Notes. The scheme resulted in the misdirection of approximately $1.3 million held in Company accounts to a fraudulent account controlled by a third party and a default on a
legally binding commitment to purchase Secured Notes. As a result of the default and the related misdirection of funds, management re-evaluated the effectiveness of our disclosure controls and procedures and
internal control over financial reporting as of December 31, 2023. Based on this assessment, management identified material weaknesses in two areas, including the methods used to review, evaluate and accept financing proposals from investors
and lenders and the process used to enter unusual significant transactions. As a result of the material weakness to protect the Company’s assets from fraud committed by third parties, there was a $1.3 million loss recognized on the
Company’s audited financial statements.

As of September 30, 2024, the Company identified two additional material weaknesses in
internal controls over financing reporting related to the classification of the Cogent Loan and accounting for the Secured Notes. On August 15, 2022, the Company entered into the 2022 Loan Agreement with Cogent Bank, pursuant to which we