Company: HCWB
Filing Date: 2025-05-09
Form Type: S-1
Source: 0001193125-25-116745
Chunk: 29

Company: HCW Biologics Inc.
Filing Date: 2025-05-09
Form: S-1
Chunk 29
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, 2024
and December 31, 2024, there was no impact to the financial statements related to correcting the accounting treatment for embedded derivatives. Another amended term for the Secured Notes is a fixed bonus payment that holders will receive if the
Secured Notes are repaid on the Maturity Date. The Company determined that the fixed bonus payment should be accreted to the principal owed to holders over the term. As of and for the three and nine months ended September 30, 2024, the Company
did not accrete the fixed bonus payment. Accretion during the reporting period ended September 30, 2024 did not materially misstate the amount owed to the holders. Accretion was reported in the year ended December 31, 2024 and reported
within Depreciation expense. If the Company did not correct the accounting treatment for the accretion of the fixed bonus payment at maturity, we would understate our obligations. Over the term, this could have resulted in a material misstatement in
the Company’s financial statements.

In the year ended December 31, 2024, the Company implemented various steps to remediate
these material weaknesses. In the second quarter of 2024, a remediation plan was adopted to strengthen controls and procedures used by the Company to review and accept financial proposals, particularly where there are upfront payments and other
forms of payments made by the Company to third parties. These efforts include development of a process for assessment and communication, as well as involvement of additional key stakeholders, such as members of

17

our Board of Directors. In the fourth quarter of 2024, the Company enhanced its controls to evaluate triggering events in debt and other financial instruments, to ensure the appropriate
classification of obligations as current or noncurrent in the correct period. In addition, the Company strengthened controls to ensure timeliness in the determination of proper accounting and reporting for complex transactions by engaging
consultants with technical accounting expertise to support the Company in our accounting analysis and conclusions for complex transactions. Also, in the fourth quarter of 2024, the Company engaged advisors to support and assist in the review and
augmentation of design and effectiveness of controls over financial reporting.

As of December 31, 2024, our management assessed the
effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based upon that evaluation, our principal
executive