HCW Biologics Inc.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by the SEC Rules 13a-15(e) and 15d-15(e), we carried out an evaluation under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2024.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States.

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 on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2024.

Remediation of Previously Reported Material Weaknesses

During 2024, executive management made a strong commitment to the importance of internal control and to create and maintain an effective internal control environment commensurate with the Company’s growth. Management continued to implement improvements to the Company’s system of internal control, including reevaluating the adequacy of design and the operational effectiveness of internal controls over financial reporting in all financially significant processes. These improvements and remediation efforts include:

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The board of directors adopted a Delegation of Management Authorities (“Authorization Matrix”), which provides for authorization thresholds for significant and unusual transactions, budgets and strategic plans, audit and policies, personnel actions, contracts, legal proceedings, major projects, credit or loans, and consulting agreements.

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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.

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

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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.

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

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

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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.

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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:

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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.

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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.

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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.

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Improve process and use experts to determine proper accounting for complex transactions in a timely manner. This is the remediation of a material weakness reported in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.

Inherent Limitations of Internal Controls

While we strive to create a stronger control environment, we recognize that it is impossible for our internal controls over financial reporting to prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. While we are committed to continuously improve and strengthen our control environment, over time, our internal controls over financial reporting may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Projections of any evaluation of effectiveness to future periods are subject to the risk that internal controls over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

Except as described above, there were no changes in the Company’s internal control over the financial reporting during the fourth quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of the Independent Registered Public Accounting Firm

This Annual Report does not include an attestation report of our registered public accounting firm. For as long as we remain an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, we intend to take advantage of the exemption permitting us not to comply with the requirement that our independent registered public accounting firm provide an attestation on the effectiveness of our internal control over financial reporting.