Company: HCWB
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0000950170-25-046724
Chunk: 325

Company: HCW Biologics Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1B
Chunk 325
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, contracts, legal proceedings, major projects, credit or loans, and consulting agreements.  

•Internal controls were strengthened for the methods used to review, evaluate and accept financing proposals from investors or lenders, as well as improvements to the process used to enter significant transactions.  

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•To assess potential financial partners, management must conduct rigorous background checks, present analysis and recommendation for an opportunity to the board of directors, seek the approval from the board of directors for all significant transactions, limiting upfront payments that are not refundable to immaterial amounts and only after a successful background check is completed and parties have agreed to principal terms.  

•Management only uses Company accounts and devices to conduct transactions and only in U.S. dollars.  

•The Company has enhanced its controls to evaluate triggering events in debt or other agreements, to appropriately classify obligations as current or noncurrent in the correct period. 

•The Company engaged consultants with technical accounting expertise to support management in preparing technical accounting analysis and conclusions for complex transactions.

•Designed and implemented enhanced policies and procedures related to management’s review controls over key processes and segregation of duties.  

•Increased documentation and evidence related to management review controls associated with cash disbursements, vendor record modifications in the general ledger system, board presentations and discussion, and analysis and conclusions for accounting for complex transactions.  

•Conducted training addressing disclosure controls and procedures, including educating control owners concerning the principles and requirements of each control impacting financial reporting and disclosures. 

Based on the remediation efforts described above that were performed in 2024, the principal executive officer and principal financial officer, along with management, concluded that the previously disclosed material weaknesses had been remediated as of December 31, 2024.  These included: 

•Enhance and improve processes for assessing the quality of potential financial partners.  This is the remediation of a material weakness reported in the Company’s  Form 8-K filed with the SEC on May 1, 2024.

•Enhance and improve process used to enter unusual or significant transactions.  This is the remediation of a material weakness reported in the Company’s  Form 8-K filed with the SEC on May 1, 2024.

•Enhance and improvement controls to evaluate triggering events in debt or other agreements, to appropriately classify obligations as current or noncurrent in the correct period.  This is the remediation of a material weakness reported in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2024. 

•Improve