Company: HCWB
Filing Date: 2025-02-21
Form Type: DEF 14A
Source: 0001193125-25-032115
Chunk: 33

Company: HCW Biologics Inc.
Filing Date: 2025-02-21
Form: DEF 14A
Chunk 33
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 per share (as these amounts may be
adjusted to account for a Reverse Stock Split or similar transaction). Upon conversion, converting Noteholders would be subject to a lock-up period of 180 days from the date of conversion. Further, the Escrow Agreement will be amended such that the
proceeds from the Pledged Collateral will be allocated among the Company and the converting Noteholders. Specifically, assuming $6,580,000 principal amount of Secured Notes will be converted, upon a sale of the Pledged Collateral, converting
Noteholders will have the right to receive their pro rata share of 49.11% of the net proceeds received in such sale. The Company will retain the remaining 50.89% of proceeds upon the sale of the Pledged Collateral (subject to the rights of any
non-converting Noteholders in such proceeds as collateral for repayment of their Notes). As described below, conversion of principal amount of the Secured Notes will result in a
dollar-for-dollar increase in stockholders’ equity (partially offset by the carrying value of 49.11% of the Company’s investment in the Pledged Collateral the
proceeds of which will be paid to converting Noteholders of approximately $785,000), contributing to the Company’s plan to gain compliance with the Nasdaq Minimum Shareholder Equity Rule and to maintaining listing of the our Common Stock on
Nasdaq.

Possible Effects if Proposal Three is Approved

If our stockholders approve Proposal Three, we would be able to convert up to approximately $6.6 million principal amount of debt to stockholders equity
by issuance of shares of our Common Stock and warrants to purchase shares of our Common Stock, and agreeing that a portion of the proceeds from the Pledged Collateral will be paid to the converting Noteholders, thus increasing the Company’s
stockholders’ equity by up to approximately $5.8 million, significantly contributing to the Company gaining compliance with the Nasdaq Minimum Shareholder Equity Rule. After the 180-day lock-up period for converting Noteholders expires,
shares of our Common Stock that would be issuable to the Noteholders in connection with the conversion of the Notes would have the same rights and privileges as the shares of our currently authorized Common Stock. The issuance of such shares will
not affect the rights of the holders of outstanding Common Stock, but such issuance will have a dilutive effect on our existing stockholders, including on the voting power and economic rights of our existing stockholders, and may result