Company: HCWB
Filing Date: 2025-02-21
Form Type: DEF 14A
Source: 0001193125-25-032115
Chunk: 28

Company: HCW Biologics Inc.
Filing Date: 2025-02-21
Form: DEF 14A
Chunk 28
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Under the applicable Nasdaq rules, in no event may we issue any shares of our Common Stock pursuant to the ELOC if the issuance of such
shares of Common Stock would exceed 19.99% of the shares of our Common Stock outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”), unless we obtain stockholder approval to issue shares of our Common
Stock in excess of the Exchange Cap. In any event, we may not issue any shares of our Common Stock under the Purchase Agreement if such issuance or sale would breach any applicable rules or regulations of Nasdaq.

The Company may be limited in its ability to draw down on the ELOC and issue shares of our Common Stock under the Purchase Agreement unless and until the
stockholders approve the issuance of shares in excess of 19.99%.

In order to gain compliance with the minimum stockholders’ equity of $2,500,000
required for listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(1) (the “Minimum Stockholder Equity Rule”), the Company may need to draw down on the ELOC and issue shares of our Common Stock under the Purchase
Agreement in excess of the Exchange Cap.

Why Does the Company Need Stockholder Approval?

Our Common Stock is listed on Nasdaq and, as such, we are subject to the Nasdaq Stock Market Rules. Nasdaq Stock Market Rule 5635(d) is referred to as the
“Nasdaq 20% Rule.” In order to comply with the Nasdaq 20% Rule and to satisfy conditions under the Purchase Agreement, we are seeking stockholder approval to permit the potential issuance of more than 19.99% of the outstanding shares of
our Common Stock in accordance with the Purchase Agreement.

The Nasdaq 20% Rule requires that an issuer obtain stockholder approval prior to certain
issuances of Common Stock or securities convertible into or exchangeable for Common Stock at a price less than the greater of market price or book value of such securities (on an as exercised basis) if such issuance equals 20% or more of our Common
Stock or voting power of the issuer outstanding before the transaction. Upon entering into the Purchase Agreement, we could not issue or sell any shares of Common Stock, and Square Gate could not purchase or acquire any shares of our Common Stock
pursuant to the Purchase Agreement, to the extent that after giving effect thereto, the aggregate number of shares of our Common Stock that would be issued pursuant to