Company: HCWB
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0000950170-25-046724
Chunk: 285

Company: HCW Biologics Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1B
Chunk 285
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 C. Wong, the Company’s Founder and Chief Executive Officer, entered into a confidential Settlement Agreement and Release (the “Settlement Agreement”) with ImmunityBio and its affiliates.  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.  In accordance with the provisions of the Settlement Agreement, upon completion of remedial procedures, the parties stipulated that the Arbitration and Complaint should be dismissed.  The Arbitration and related Complaint were dismissed on December 24, 2024.  The Company entered into the Settlement Agreement to avoid the costs, disruption and distraction of further litigation.  In the accompanying condensed balance sheet as of December 31, 2024, the Company reported a balance of $14.4 million for legal fees incurred but not yet paid that were included within Accounts payable and an accrual of $42,800 for accrued legal fees within Accrued liabilities and other current liabilities. The Company is engaged in discussions with the law firms involved with this matter to arrange a reasonable payment plan with respect to those legal fees.  With the execution of the Settlement Agreement, the Company resolved the attendant uncertainties for the outcome of the Arbitration and additional complexities, and it launched its new financing plan.  Subsequent to the year end, the Company received a $2.0 million insurance payment, which was paid directly to the law firm who represented Dr. Wong for his defense during the Arbitration. See Note 18. Subsequent Events.   Prior to the resolution of the Arbitration, the Company had limited options to raise capital required to operate. 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.  In multiple closings that occurred from March 31, 2024 to October 31, 2024,