HCW Biologics Inc.

1. Organization and Summary of Significant Accounting Policies

Organization

HCW Biologics Inc. (the “Company”) is a clinical-stage biopharmaceutical company developing transformative fusion immunotherapeutics to treat diseases promoted by chronic inflammation, including autoimmune diseases, cancer, and senescence-associated dysplasia. The Company also has commercial-ready reagents that are based on two of its proprietary immunotherapeutic compounds that are designed to support the production of immunotherapeutics for cancer and infectious diseases. The Company is located in Miramar, Florida and was incorporated in the state of Delaware in April 2018.

Reverse Stock Splits

On March 31, 2025, at a Special Meeting of the Stockholders, the stockholders of the Company approved a reverse stock split of all outstanding shares of the Company’s common stock (“Common Stock”), and the Board approved a reverse stock split of the Common Stock at a final ratio ofone-for-forty (1::40). This reverse stock split was effective on April 11, 2025, and the Common Stock commenced trading on a reverse split-adjusted basis when the markets opened on April 11, 2025, under the existing trading symbol “HCWB.”

On June 15, 2026, at the Company’s Annual Meeting of Stockholders, the stockholders of the Company approved a reverse stock split of all outstanding shares of Common Stock, and on June 24, 2026, the Board approved areverse stock split at a final ratio of one-for-six (1::6), or the Reverse Stock Split, which was effective at 12:01 a.m. Eastern Time on Tuesday, June 30, 2026 (the “Effective Date”). The Common Stock commenced trading on a Reverse Stock Split-adjusted basis under the Company’s existing trading symbol, “HCWB,” at market open on Tuesday, June 30, 2026.

All issued and outstanding shares of Common Stock, stock option awards, and per share data included in this Quarterly Report on Form 10-Q have been recast to give retrospective effect to the reverse stock splits for all periods presented. The reverse stock splits did not have any effect on the stated par value of the Company’s Common Stock or the rights and privileges of the holders of shares of Common Stock. Options, warrants and convertible securities outstanding immediately prior to the reverse stock splits were appropriately adjusted to reflect the reverse stock splits.

Liquidity and Going Concern

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements – Going Concern (“Topic 205-40”), management is required to evaluate whether there are conditions and events, considered in the aggregate that raise substantial doubt about the Company’s ability to continue as a going concern for at least 12 months from the issuance date of the Company’s condensed financial statements. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the condensed financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the condensed financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the condensed financial statements are issued.

As of June 30, 2026, the Company had not generated any revenue from commercial product sales of its internally developed immunotherapeutic products. During its development activities, the Company has sustained operating losses, experienced negative operating cash flows and negative working capital position and expects to continue to incur operating losses for the foreseeable future. Since inception to June 30, 2026, the Company incurred cumulative net losses of $107.5 million. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

The accompanying condensed financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain debt or equity financings to continue operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. The Company believes that substantial doubt exists regarding its ability to continue as a going concern for at least 12 months from the date of issuance of the Company’s condensed financial statements and that the substantial doubt that existed in its going concern analysis was not alleviated.

Summary of Significant Accounting Policies

Basis of Presentation

Unaudited Interim Financial Information

The accompanying unaudited condensed financial statements as of June 30, 2026 and for the three and six months ended June 30, 2025 and 2026 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements include only normal and recurring adjustments that the Company believes are necessary to fairly state the Company’s financial position and the results of its operations and cash flows. The results for the three and six months ended June 30, 2026 are not necessarily indicative of the results expected for the full fiscal year or any subsequent interim period. The condensed balance sheet at December 31, 2025 has been derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP for complete financial statements. Because all of the disclosures required by U.S. GAAP for complete financial statements are not included herein, these unaudited condensed financial statements and the notes accompanying them should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2025 which appear in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2026 (the “Annual Report”) and in other filings with the SEC.

Segment Reporting

The Company operates and manages its business as one reportable and operating segment, which is the business of developing and commercializing transformative fusion immunotherapeutics for diseases promoted by chronic inflammation, including autoimmune disorders and other inflammatory diseases, cancer and senescence-associated dysplasia. The Company’s chief executive officer, who is the chief operating decision maker (“CODM”), reviews financial information on an aggregate basis for allocating and evaluating financial performance. In addition, the Company’s CODM is regularly provided with detailed results of preclinical and clinical data which is considered in his decision for the allocation of resources. See Note 11. Segment Reporting for further details. The single operating segment constitutes all of the Company activity, and the CODM regularly reviews the entity-wide operating results and performance. All long-lived assets are maintained in the United States of America.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Management uses estimates in financial statements to approximate monetary amounts for items that cannot be measured precisely, such as asset valuations, liabilities, and revenue recognition. These estimates are based on subjective judgments, experience, and future assumptions. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from estimates.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC820, Fair Value Measurement (“Topic 820”) establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between fair value measurements based on market data (observable inputs) and those based on the Company’s own assumptions (unobservable inputs). This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Fair value measurements are classified based on the lowest level of input that is significant to the measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values takes into account the market for the Company’s financial assets and liabilities, the associated credit risk, and other factors as required. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. See Note 2. Fair Value of Financial Instruments.

Revenue Recognition

The Company accounts for revenues in accordance with FASB ASC 606, Revenue from Contracts with Customers (“Topic 606”). To determine revenue recognition for arrangements that fall within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services transferred to the customer.

At contract inception, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. To date, the Company’s revenues have been generated exclusively from license agreements, which consist of licenses of intellectual property, research and development cost reimbursements and service fees, upfront signing fees, milestone payments and royalties on future licensee’s product sales. From time to time, the Company may retain manufacturing rights when it enters license agreements, and in this case, the Company and its licensee will enter a separate supply agreement, under which the Company will agree to sell clinical materials needed for research and clinical trials to the licensee, for which the Company will recognize revenue.

License Grants:

For out-licensing arrangements that include a grant of a license to the Company’s intellectual property, the Company considers whether the license grant is distinct from the other performance obligations included in the arrangement. For licenses that are distinct, the Company recognizes revenues from nonrefundable, upfront payments and other consideration allocated to the license when the license term has begun and the Company has provided all necessary information regarding the underlying intellectual property to the customer, which generally occurs at or near the inception of the arrangement.

License related Services:

For license agreements that include service-based performance obligations, the Company evaluates whether these separately identifiable services are distinct performance obligations. The Company considers whether the customer could benefit from the licensed intellectual property with other readily available resources, whether the performance of the service would significantly modify or customize the licensed intellectual property or whether the service is highly interrelated or interdependent with the licensed intellectual property. Revenue attributable to services that are deemed distinct performance obligations are recognized over time as the customer simultaneously receives and consumes the benefits of the Company’s performance. The Company measures progress toward completion using an input method, typically cost-to-cost, which reflects the pattern in which services are delivered. Amounts received in advance for optional future services are recorded as deferred revenue and recognized as revenue when the related services are performed or when the option expires. The transaction price is allocated to the service performance obligations based on their relative standalone selling prices.

Milestone and Contingent Payments:

At the inception of the arrangement and at each reporting date thereafter, the Company assesses whether it should include any milestone and contingent payments or other forms of variable consideration in the transaction price using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur upon resolution of the uncertainty, the associated milestone value is included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of each such milestone and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Since milestone and contingent payments may become payable to the Company upon the initiation of a clinical study or filing for or receipt of regulatory approval, the Company reviews the relevant facts and circumstances to determine when the Company should update the transaction price, which may occur before the triggering event. When the Company updates the transaction price for milestone and contingent payments, the Company allocates the changes in the total transaction price to each performance obligation in the agreement on the same basis as the initial allocation. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment, which may result in recognizing revenue for previously satisfied performance obligations in such period. The Company’s licensees will generally pay milestones payments subsequent to achievement of the triggering event.

Materials Supply:

The Company provides clinical and research grade materials so that licensees may develop products based on the licensed molecules. The amounts billed are recognized as revenue as the performance obligations are satisfied by the Company, once the Company determines that a contract exists.

Investments

As part of its financing strategy, the Company may enter into licensing or collaboration agreements under which it receives consideration in the form of a minority equity interest in a counterparty, in lieu of or in addition to cash payments. These financial instruments are presented within Investments in the accompanying condensed balance sheets.

When consideration is an equity interest in a private entity whose equity has limited marketability with no readily determinable fair value and for which the Company does not have significant influence over the investee, the Company measures the equity interest using the measurement alternative, at cost less impairment, adjusted for observable price changes in orderly transactions for the identical or similar investment of the same issuer (ASC Topic 321, Investments - Equity Securities or Topic 321), unless the fair value method is otherwise elected. If the Company elects to measure an equity security at fair value, the entity shall measure all identical or similar investments of the same issuer, including future purchases of identical or similar investments of the same issuer, at fair value. The election to measure those securities at fair value shall be irrevocable. Any resulting gains or losses on the securities for which that election is made shall be recorded in earnings at the time of the election and each reporting period thereafter.

In the second quarter of 2025, the Company elected to account for its shares of AlloTera Therapeutics, Inc. (“AlloTera Therapeutics”) formerly Wugen, Inc. (“Wugen”), previously accounted for under the measurement alternative, at fair value determined by using financial valuation techniques and market information available. The Company will remeasure the change in fair value of the AlloTera Therapeutics shares in reporting periods subsequent to the second quarter of 2025 and recognize the change in fair value in earnings. In May 2025, the Company transferred the rights to proceeds of a sale or liquidation of AlloTera Therapeutics shares to certain holders of Secured Notes and Convertible Bridge Notes who agreed to restructure and convert their notes to equity, which gave rise to a contingent liability which is also measured based on the fair value of the relevant number of shares with the change in fair value recognized in earnings beginning in the second quarter of 2025 and each reporting period thereafter. See Note 2. Fair Value of Financial Instruments and Note 4. Debt, Net.

On March 16, 2026, the Company received full payment of the nonrefundable upfront license fee from Beijing Trimmune Biotech Co. Ltd. (“Trimmune”), a private company based in China, which included an in-kind payment of a transferable equity interest in Trimmune. The Company has elected to use the measurement alternative under ASC 321-10-35-2 to account for this investment. The initial fair value was derived by reference to the implied post-financing valuation of Trimmune of RMB 175,000,000 of a contemporaneous Licensee Funding Transaction (“LFT”) with unrelated third party investors (a Level 2 fair value indicator under Topic 820), using the exchange rate on the closing date of the LFT. In subsequent reporting periods, the Company will measure the value of this investment at cost less impairment, adjusted for observable price changes in orderly transactions for the identical or similar investment of the same issuer. See Note 5. License Agreements.

From time to time, the Company invests excess cash in U.S. Treasury bills and notes, which are classified as trading securities. As of June 30, 2025 and 2026, the Company hadno short-term investments.

Standby Equity Purchase Agreement

The Company and Square Gate Capital Master Fund, LLC - Series 4 (“Square Gate”) entered a Standby Equity Purchase Agreement (“SEPA”) providing for an equity line of credit with Square Gate on February 20, 2025. This agreement provides a mechanism for submission by the Company and acceptance by Square Gate of Put Notices under the SEPA pursuant to which Square Gate and the Company may agree to and execute one purchase and sale of Put Shares (“Standard Put Shares”). The Standard Put Notice has a pricing mechanism based on a volume-adjusted weighted average trading price over three days following the acceptance of the Standard Put.

On August 14, 2025, the parties entered into a First Amendment to the SEPA (the “First Amendment”) to provide a mechanism for submission by the Company and acceptance by Square Gate of Put Notices under the SEPA pursuant to which Square Gate and the Company may agree to and execute multiple purchases and sales of Put Shares on the same trading day (“Intraday Put Shares”). Under the First Amendment, among other things, the purchase price of the Intraday Put Shares will be the lowest traded price during a specified valuation time period which begins with the acceptance of the Intraday Put and ends when trading volume reaches 1000% of the amount of shares included in the Intraday Put.

A SEPA is an equity-linked instrument for which an investor has the right, but not the obligation, to purchase shares of the entity’s common stock over a specified period of time. The SEPA creates a purchase put option for the overarching arrangement which was determined to be a derivative. Economically, before the entity has elected to sell shares, a SEPA represents a purchased put option on the entity’s own equity. However, once the entity “draws” on the SEPA, the related number of shares issued constitutes a financial instrument. Thus, a SEPA contains both a purchased put option element and a forward share issuance element. This means that a SEPA generally does not qualify for equity classification. Accordingly, entities must recognize an asset or liability for its SEPA. Such asset or liability must be measured at fair value, with changes in fair value recognized in net (loss) income. Further, individual draws must also be evaluated to determine if they meet criteria for equity classification.

With regards to the individual draws for a Standard Put under the SEPA, an individual draw would create a separate financial instrument with settlement criteria that does not meet indexation guidance. While the number of shares is known at inception and therefore not subject to the overarching share cap, there are two inputs into the settlement amount paid by the Investor which are not inputs into a fixed-for-fixed option: (1) the maximum amount to be funded under the SEPA of $20.0 million, which inherently limits the settlement amount regardless of the Company’s stock price and (2) the discount which reduces the amount to be paid upon settlement. See Note 7. Standby Equity Purchase Agreement.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing the net income (loss) attributable to Common Stockholders by the daily weighted-average number of common shares outstanding for the period, without consideration of potential dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to Common Stockholders by the sum of the daily weighted average number of common shares plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted income or loss per share if the effect of such inclusion is anti-dilutive. The Company’s potentially dilutive securities, which include options granted under the 2019 Equity Incentive Plan (“2019 Plan”) and the 2021 Equity Incentive Plan (“2021 Plan”) as well as the Company’s Common Stock Warrants, have been excluded from the computation of diluted net income (loss) per share as their exercise prices exceeded the average market price of the Company’s Common Stock during the period. Options and warrants are considered dilutive to the income per share calculation when their exercise price is below the average market price of the stock (“in-the-money”).

The Company has issued certain Common Stock Warrants that have a provision for participation in earnings. Under ASC 260, Earnings per Share, undistributed earnings shall be allocated to Common Stock and participating securities utilizing the two-class method. The Company reports distributed and undistributed allocations of earnings on a cumulative period basis in accordance with contractual participation rights using the two-class method.

Restatement of Previously Issued Interim Financial Information

The Company has restated its previously issued unaudited condensed financial statements for the three months ended March 31, 2026 (the “Amendment”) in a Form 10-Q/A filed on August 14, 2026 to correct the misapplication of the two-class method of calculating earnings per share under ASC 260, Earnings Per Share. The Company originally calculated earnings per share without identifying certain outstanding warrants as participating securities in a Quarterly Report on Form 10-Q for the three months ended March 31, 2026 filed on May 14, 2026 (“Original Filing”). The Amendment reflects the identification of these warrants as participating securities and the resulting correction of the calculation of earnings per shares by applying the two-class method.

As of March 31, 2026, after giving effect to the Reverse Stock Split, the Company had 904,312 weighted-average shares of Common Stock outstanding and participating warrants which may be exercised for 524,501 shares of Common Stock issued. The correct application of the two-class method required that undistributed earnings are allocated according to shares held or shares that may be held upon exercise, specifically, the Company must allocate 63.3% of undistributed earnings to Common Stockholders and 36.7% of undistributed earnings to holders of participating securities. Prior to the Amendment, the Company reported basic and diluted EPS of $2.19 per share for the three months ended March 31, 2026, an overstatement of $0.80 per share. In the Amendment, for the three months ended March 31, 2026, the Company reported basic and diluted EPS of $1.39 per share. See Note 9. Net income (loss) per share. Due to the cumulative nature of the two-class method, this error had no impact on the unaudited condensed financial statements for the three and six months ended June 30, 2026, nor any other reporting period.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued Accounting Standards Update (ASU) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (ASU 2024-03) which requires public business entities to provide enhanced disaggregation of expenses in financial statements, including detailed disclosures on inventory purchases, employee compensation, depreciation, and amortization. The new guidance is effective for the Company for fiscal periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is evaluating the impact of the standard on the Company’s financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Accounting for and Disclosure of Software Costs to update the accounting for internal use software costs. The guidance requires entities to start capitalizing eligible costs when (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended. The guidance, which applies to all entities, is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Entities may apply the guidance using a prospective, retrospective or modified transition approach. Early adoption is permitted. The Company is evaluating the impact of the standard on the Company’s financial statements.

In September 2025, the FASB issued ASU 2025-07—Derivatives and Hedging (“Topic 815”) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-based Noncash Consideration from a Customer in a Revenue Contract, to expand the scope of contracts that are excluded from derivative accounting (i.e., measured at fair value through earnings). ASU 2025-07 addresses stakeholders’ concerns about (1) the application of derivative accounting to contracts with features based on the operations or activities of one of the parties to the contract and (2) the diversity in accounting for share-based noncash consideration from a customer that is consideration for the transfer of goods or services. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual periods. Entities may apply the guidance either on a modified retrospective or prospective basis. Early adoption is permitted. The Company is evaluating the impact of the standard on the Company’s financial statements.

As of December 31, 2026, the Company will cease to be an ‘emerging growth company’ as defined in the Jumpstart Our Business Startups Act of 2012. We expect to remain a non-accelerated filer and smaller reporting company. The Company is currently assessing potential regulatory and operational changes that may be required as a result.

2. Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, U.S. government-backed securities with maturity dates up to one year, accounts payable and accrued liabilities, approximate fair value due to their short-term maturities.

Money market funds included in cash and cash equivalents and U.S. government-backed securities are measured at fair value based on quoted prices in active markets, which are considered Level 1 inputs.

During the three months ended March 31, 2026, the Company agreed to modify certain outstanding warrants, subject to stockholder approval. Since there was a contingency in the terms of settlement, the Company recognized a warrant liability as of March 31, 2026. The warrant liability is measured at fair value using the Black-Scholes option pricing model. The fair value is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs. The change in fair value is recognized in earnings. On June 15, 2026, at the Company’s Annual Meeting of Stockholders, the stockholders approved the repricing of the warrants underlying this warrant liability, after which the warrants met all requirements for classification as equity. On that date, the Company remeasured the warrant liability at fair value and recognized the change in fair value in earnings. In the three and six months ended June 30, 2026, the Company recognized the change in fair value of the warrant liability of $2.4 million and $1.8 million, respectively. There was no warrant liability outstanding as of June 30, 2026. See Note 6. Sale of Common Stock and Warrants.

The Company’s investment in shares of AlloTera Therapeutics common stock is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs. The fair value is estimated using a combination of valuation techniques, including an adjusted enterprise valuation method and a backsolve method, which incorporates information from recent financing transactions and the Company’s assessment of the underlying enterprise value of AlloTera Therapeutics. Significant unobservable inputs used in these valuations include assumptions related to the enterprise value of AlloTera Therapeutics discounts for lack of marketability, the capital structure of the investee, and the probability and timing of potential liquidity events. The fair value of the AlloTera Therapeutics investment is reassessed each reporting period based on updated assumptions and available market information with the change in fair value recognized in earnings.

A contingent liability arose in May 2025 when the Company agreed to transfer some of the proceeds from the sale or liquidation of shares in AlloTera Therapeutics, if such event occurs, to certain holders of Secured Notes and Convertible Bridge Notes as part of the terms to restructure and convert their debt to equity. The valuation of the contingent liability is based on assumptions that are consistent with those used in valuing the related AlloTera Therapeutics investment, including the expected distribution of proceeds upon a liquidity event. The fair value of the contingent liability is reassessed each reporting period with the change in fair value recognized in earnings. See Note 4. Debt, Net.

There were no material changes in the valuation techniques or significant unobservable inputs used to measure these Level 3 instruments during the six months ended June 30, 2026.

The following table presents the Company’s assets and liabilities which were measured at fair value at December 31, 2025 and June 30, 2026:

3. Accrued Liabilities and Other Current Liabilities

As of December 31, 2025, the Company had a balance of $1.1 million included in Accrued liabilities and other current liabilities in the accompanying condensed balance sheet, consisting of $422,000 for construction expenses, $87,000 for accrued interest expense, $49,000 for manufacturing expenses, $159,000 for legal fees, $186,000 for clinical expenses, $79,000 for salary expenses and $118,000 for other accrued expenses or current liabilities.

As of June 30, 2026, the Company had a balance of $1.1 million included in Accrued liabilities and other current liabilities in the accompanying condensed balance sheet, consisting of $422,000 for construction expenses, $74,000 for manufacturing expenses, $74,000 for legal fees, $240,000 for clinical expenses, $166,000 for salary expenses and $124,000 for other accrued expenses or current liabilities.

4. Debt, Net

Cogent Bank Loan

On August 15, 2022, the Company entered into the 2022 Loan Agreement with Cogent Bank (the “2022 Loan Agreement”), pursuant to which it received $6.5 million in proceeds to purchase a property where the Company planned to construct a manufacturing facility for biologics and upgraded research laboratory facilities. The loan is secured by a first priority lien on the property.

As of June 30, 2026, the Company had $6.1 million in principal outstanding under the 2022 Loan Agreement. The interest-only period was one year followed by 48 months of equal payments of principal and interest beginning on September 15, 2023 based on a 25-year amortization rate. The unamortized balance is due on August 15, 2027 (the “2022 Loan Agreement Maturity Date”), and bears interest at a fixed per annum rate equal to 5.75%. The Company is in compliance with covenants related to current payment of principal, interest, property taxes and insurance as of June 30, 2026. The Company has the option to prepay the outstanding balance of the loan prior to the 2022 Loan Agreement Maturity Date without penalty.

As of December 31, 2025 and June 30, 2026, certain subcontractors filed mechanics liens related to unpaid invoices issued in connection with the Company’s construction of its new manufacturing facilities and upgraded research laboratories. The 2022 Loan Agreement contains a provision for a discretionary default in the event that the Company fails to pay sums due in connection with construction of any improvements. As of December 31, 2025 and June 30, 2026, the Company has reported this loan as Short-term debt, net. On October 24, 2025, the Company was notified by Cogent Bank that it exercised its discretion to make a demand that the Company cure the mechanics liens no later than thirty (30) days after receipt of this letter in strict compliance with Section 7.2(3) of the Loan Agreement by: (i) paying and discharging all of the Claims of Lien and causing satisfactions to be recorded in the Public Records of Broward County, Florida for all of the Claims of Lien, and (ii) resolving all litigation against the Borrower and the mortgaged property described in the Mortgage and causing such claims in the Foreclosure Actions to be dismissed and all related notices of lis pendens to be released. On June 26, 2026, B&I Contractors, Inc. (“B&I”) filed a Voluntary Dismissal with Prejudice and a final Satisfaction of Lien removing a lien of $1.1 million against the Company. The Company and Cogent Bank continue to negotiate the terms of a forbearance agreement to provide additional time for the Company to comply with the demands it made in the demand letter.

Senior Secured Notes

During the year ended December 31, 2024, the Company received $6.9 million in funding from the issuance of Secured Notes. Investors included Dr. Hing C. Wong, Founder and Chief Executive Officer, who invested $2.4 million; Rebecca Byam, Chief Financial Officer, who invested $220,000; Lee Flowers, Senior Vice President of Business Development, who invested $25,000; Scott T. Garrett, the Chairman of the Company’s board of directors, who invested $140,000; Gary M. Winer, who was serving as a member of the Company’s board of directors at the time of his investment, who invested $60,000; Rick S. Greene, a member of the board of directors, who invested $25,000, and other significant investors. In July and October 2024, the terms of the Secured Notes were amended, including but not limited to a fixed bonus payable on Maturity, or August 30, 2026 (the “Maturity Date”).

As a condition to entering into the Amended and Restated Note Purchase Agreement, the Company, Mercedes M. Sellek, P.A. (“Escrow Agent”), and the Purchasers entered into that certain Escrow Agreement and Amended and Restated Pledge Agreement, dated July 2, 2024, pursuant to which the Company agreed to pledge its equity ownership interest in AlloTera Therapeutics (the “Pledged Collateral”), to be held and released by Escrow Agent according to the terms of the Escrow Agreement, as security for the Secured Notes.

The Secured Notes bear interest at a rate of 9% per annum, payable quarterly in arrears, and mature on August 30, 2026 (the “Maturity Date”), on which date the principal balance, accrued but unpaid interest, and other amounts that may be due under the terms of the Amended and Restated Note Purchase Agreement shall be due and payable. The Senior Notes may be repaid upon a Mandatory Redemption event or at the end of the term.

The Secured Notes have a Mandatory Prepayment provision, according to which the Company is required to prepay the Secured Notes before the Maturity Date under certain circumstances. In the event of a Mandatory Prepayment, Secured Notes may receive a bonus payment based on the gross proceeds of the sale of the Pledged Collateral. The agreement also contains default provisions, according to which, following an event of default, the Company may be required to distribute the Pledged Collateral to the Purchasers on a pro rata basis based on a $10.0 million issuance of Secured Notes, in full satisfaction of the indebtedness evidenced by the Secured Notes. The Pledged Collateral will be held and released according to the terms of the Escrow Agreement, as security for the Secured Notes.

If the Secured Notes are repaid on the Maturity Date, holders will receive their pro rata share of a fixed bonus payment of $3.4 million in addition to payment of outstanding principal and accrued interest. If a bonus payment is paid, there isno prepayment penalty.

The Secured Notes were deemed to be a hybrid instrument, consisting of a debt host with embedded derivatives requiring bifurcation and accounting for separately. The embedded derivatives consist of the Mandatory Redemption, which depends on certain events occurring, and the fixed bonus payable upon the Maturity Date. The fair value of the embedded derivative, which incorporated the likelihood of certain events occurring, was immaterial. Thus, as of December 31, 2025 and June 30, 2026, the Company did not recognize the embedded derivative in the accompanying condensed balance sheets. The Company accounts for the fixed bonus payment to be paid if the Secured Notes are repaid on the Maturity Date by accreting the bonus payment to the full amount due on the Maturity Date, utilizing the effective interest rate method.

On May 1, 2025, noteholders holding $6.6 million of the principal of the outstanding Secured Notes elected to convert their outstanding indebtedness to equity and entered the Second Amendment to the Amended and Restated Note Purchase Agreement (the “Conversion Agreement”). On May 7, 2025, the conversion date, the Company extinguished $6.6 million of the outstanding principal amount of Secured Notes and $860,462 of accumulated accretion of a fixed bonus to be paid on the Maturity Date. For those noteholders who converted to equity, the right to a fixed bonus payable on the Maturity Date was terminated and the previously accumulated fixed bonus was waived. See section “Troubled Debt Restructuring of Secured Notes” below.

For those Secured Notes which remain outstanding as of December 31, 2025 and June 30, 2026, the Company reported $397,065 and $425,891, respectively, for the outstanding principal and accumulated accretion of a fixed bonus payment due upon Maturity Date as a current liability in Short-term debt, net in the accompanying condensed balance sheets.

For the three months ended June 30, 2025 and 2026, the Company recognized $102,248 and $14,413, respectively, as an expense for accretion of the fixed bonus payment due in the event the Secured Notes are repaid on the Maturity Date, presented within General and administrative expenses in the accompanying condensed statements of operations. For the six months ended June 30, 2025 and 2026, the Company recognized $375,308 and $28,826, respectively, for this expense.

Troubled Debt Restructuring of Secured Notes

The Company entered into the Second Amendment to its Amended and Restated Note Purchase Agreement in which certain Secured Note noteholders and the Company agreed to the terms to effectively extinguish $7.4 million of debt through the issuance of 42,181 shares of Common Stock, warrants to purchase 21,090 shares of Common Stock, and rights to receive a pro rata share of 49.11% of the proceeds or shares from the Company’s investment in AlloTera Therapeutics. The transaction was accounted for under ASC Subtopic 470-50, Debt Modifications and Extinguishments, and ASC Subtopic 470-60, Troubled Debt Restructurings by Debtors as a troubled debt extinguishment, as the Company was experiencing financial difficulty and it was granted a concession by Secured Note noteholders whereby the fair value of consideration transferred was less than the carrying amount of the Secured Notes.

The net carrying amount of the restructured Secured Notes was $7.4 million, including principal of $6.6 million and accumulated accretion of a fixed bonus payable upon Maturity Date of $860,462. The fair value of consideration transferred including Common Stock, warrants to purchase Common Stock, and rights to proceeds of a portion of the Company’s shares of AlloTera Therapeutics common stock was $4.0 million, with the difference of $3.5 million being recognized as a troubled debt restructuring gain. Due to the related party nature of the converting noteholders, the gain was recorded to additional paid-in capital and is reflected in the beginning balance as of January 1, 2026 for the period ended June 30, 2026, in the accompanying condensed statements of stockholders’ equity (deficit).

Unsecured Promissory Notes

During the year ended December 31, 2025, the Company issued a total of $270,000 principal amount of unsecured convertible promissory notes that mature on May 5, 2026 with paid in kind interest accruing thereon, payable quarterly in arrears at 10% per annum (the “Convertible Bridge Notes”). In accordance with their terms, following the completion of a qualified offering, the Convertible Bridge Notes were converted into shares of our Common Stock at the final offering price in an offering that closed on May 15, 2025. In addition, holders of the Convertible Bridge Notes have the right to receive a portion of the proceeds of the Company’s shares of AlloTera Therapeutics common stock, if and when such shares are ever sold, determined by the number of the AlloTera Therapeutics shares equal to 0.25 multiplied by the original principal amount, in dollars, of the Convertible Bridge Notes. Investors included: $60,000 invested by Hing C. Wong, the Company’s Founder and CEO; $100,000 invested by Scott T. Garrett, the Chairman of the Company’s board of directors; and $10,000 invested by Gary M. Winer, who was serving as a member of the Company’s board of directors at the time of his investment.

As of May 15, 2025, the outstanding principal of the Convertible Bridge Notes were converted. The fair value of consideration transferred including 6,041 shares of Common Stock and rights to proceeds of a portion of the Company’s shares of AlloTera Therapeutics common stock was $401,134, with the difference of $131,135 being recognized as a loss on conversion. Due to the related party nature of the converting noteholders, the loss was recorded to additional paid-in capital and is reflected in the beginning balance as of January 1, 2026 for the period ended June 30, 2026, in the accompanying condensed statements of stockholders’ equity (deficit).

Contingent Liabilities

In connection with the Trouble Debt Restructuring and the conversion of the Unsecured Promissory Note discussed above, the converting noteholders have a right to receive a portion of the proceeds of the sale or liquidation of the Company’ shares of AlloTera Therapeutics common stock if such an event occurs. The Company retained ownership of all of its AlloTera Therapeutics shares which is presented in Investments on the accompanying condensed balance sheets. The Company recognized a contingent liability for the rights transferred to the converting noteholders presented as a contingent liability on the accompanying condensed balance sheets. As of December 31, 2025 and June 30, 2026, the fair value of the Company’s AlloTera Therapeutics shares was $1.3 million and the fair value for the Contingent liability was $692,531 in the accompanying condensed balance sheets. See Note 2. Fair Value of Financial Instruments.

Promissory Note with Personal Guaranty

On May 8, 2025, the Company issued a promissory note for $150,000, secured by a personal guaranty and pledge given by the Company’s Founder and CEO, Dr. Hing C. Wong in accordance with the provisions of that certain Guaranty and Pledge Agreement of even date herewith between the Company and the holder. The promissory note was issued with an original issue discount of $75,000. On the Maturity Date of February 7, 2026, the Company was obligated to repay $225,000. The Company repaid the promissory note in full on February 6, 2026.

For the three and six months ended June 30, 2025, the Company recognized accretion of original issue discount of $14,722 and for the six months ended June 30, 2026 the Company recognized accretion of original issue discount of $10,278, in Interest expense in the accompanying condensed statement of operations. As of December 31, 2025, the Company reported a balance of $214,722 for the promissory note in Short-term debt, net in the accompanying condensed balance sheet.

5. License Agreements

AlloTera Therapeutics License

On May 21, 2026, the Company elected to exercise its option to terminate the exclusive worldwide license agreement with AlloTera Therapeutics, Inc. (the “AlloTera Therapeutics License”) forex vivo rights to the Company’s molecules HCW9201 and HCW9206. The termination was made pursuant to Section 1(b) of the 12-month suspension letter agreement the parties entered into on May 29, 2025.

Beijing Trimmune Biotech Co. Ltd. License

On November 17, 2025, the Company and Trimmune entered into an Amended and Restated License, Research and Co-Development Agreement (“Trimmune License”) following the assignment of the original License, Research and Co-Development Agreement, which includes an exclusive license to HCW11-006 for in vivo applications (“WY Biotech License”) from WY Biotech Co., Ltd. to Trimmune. The parties restructured the terms of the original WY Biotech License to include the assignment of rights to Trimmune. In addition to the license for HCW11-006, the parties agreed that for additional consideration, Trimmune has an option to license the exclusive China rights to clinical development and commercialization forin vivo applications of HCW9302, the Company’s clinical-stage molecule currently being evaluated for the treatment of an autoimmune disorder.

On March 16, 2026, the Company received the full nonrefundable upfront license fee, consisting of $3.5 million in gross cash proceeds, or $2.9 million net of foreign taxes, and a transferable minority equity ownership interest in Trimmune with a fair value of $3.5 million, whereupon the transaction was deemed closed and the contract was binding.

In addition, the Company is eligible to receive up to $16.0 million in development and regulatory milestone payments, royalties on future product sales, and a share of proceeds from certain future transactions involving the licensed molecule. Trimmune is responsible for all research, development, manufacturing, regulatory, and commercialization costs in its territory, including the Phase 1 clinical trial in China. Following completion of that trial, the Company has a payment-free, milestone-free, and royalty-free option (the “Opt-in Right”) to recapture development and commercialization rights to HCW11-006 in the United States, Canada, Central America, and South America (the “Opt-in Territory”). If the Company exercises its Opt-in Right, it will be responsible for the costs of clinical development in its territory.

Because the Trimmune License and the equity interest were negotiated as a package with a single commercial objective, the Company combined and accounted for them as a single arrangement under ASC 606. The equity interest represents non-cash consideration, measured at its fair value of $3.5 million at contract inception. The corresponding equity investment is accounted for under the measurement alternative in ASC 321. The Company identified two distinct performance obligations: (i) the delivery of licensed intellectual property— comprising the licensed patent rights, licensed know-how, a related license to HCW9109, and a technology transfer (collectively, the “Licensed IP”); and (ii) post-transfer development services consisting of an improved cell line and a master cell bank (collectively, the “Services”). The transaction price at inception was $6,650,000, reflecting the $7.0 million in upfront consideration, less $350,000 that was carved out as a contract liability related to prepaid optional post-transfer services. Development and regulatory milestone payments, royalties, and sales-based sublicensing consideration are fully constrained at inception and excluded from the transaction price. Non-sales-based sublicensing consideration remains constrained until the related uncertainty is resolved.

The Company allocated the transaction price to the two performance obligations using a relative standalone selling price basis. The standalone selling price of the Services was estimated using contemporaneous third-party Contract Research Organization (“CRO”) and Contract Manufacturing Organization (“CMO”) contracted pricing. The standalone selling price of the Licensed IP was estimated using the residual approach. The Licensed IP has significant standalone functionality and the Company does not expect to undertake activities that will change that functionality. Accordingly, the license is a right to use the Company’s functional intellectual property, and revenue allocated to the Licensed IP performance obligation was recognized at the point in time control of the Licensed IP transferred to Trimmune. Trimmune simultaneously receives and consumes the benefits of the Services as they are performed; accordingly, revenue allocated to the Services is recognized over time using a cost-to-cost measure of progress. Milestone payments will be recognized when the related constraint is resolved, typically upon achievement of the underlying clinical or regulatory event. Royalties and sales-based sublicensing consideration will be recognized when the underlying sales occur. The Opt-in Right is not a repurchase feature and does not require deferral of revenue at inception. If exercised, the Opt-in Right will be accounted for as a contract modification at that time.

For the three and six months ended June 30, 2026, the Company recognized $121,730 and $6.7 million of revenue, respectively, under the Trimmune License. For the three months ended June 30, 2026, revenues were comprised of $121,730 of Services revenue. For the six months ended June 30, 2026, revenues were comprised of $6.3 million allocated to the Licensed IP recognized at closing and $351,730 of Services revenue earned through the reporting period. As of June 30, 2026, the contract liability of $348,270 reported in the accompanying condensed consolidated balance sheet represents $40,000 of remaining Services consideration and the $308,270 prepayment associated with the optional post-transfer services. The carrying value of the Company’s equity interest in Trimmune was $3.5 million as of June 30, 2026, which is included in investments in the accompanying condensed balance sheet. See Note 1. Organization and Significant Accounting Policies – Investments.

Transaction Price and Contract Liability as of June 30, 2026

Trimmune is a variable interest entity. Through equity ownership in Trimmune, licensing fees, Opt-In Rights, milestone payments and other potential payments, the Company has variable interests. The investment at risk is limited to the Company’s shares in Trimmune and contractual rights. As of the closing date of the Trimmune License, the Company concluded that it is not the primary beneficiary and should not consolidate the entity. There have been no reconsideration events in the three months ended June 30, 2026 that change the conclusion. The Company has no control over the operating and business activities that most significantly impact the entity’s economic performance. The Company has contractually agreed to cede its voting rights as they relate to operations of the entity. This was accomplished through a voting rights agreement in which all shares are voted by the Chief Executive Officer of Trimmune and an agreement related to voting on the joint steering committee by which the Company agreed that Trimmune will have the tie-breaking vote. As a result, the Company’s role is to act as an advisor and expert for technical advice, but it does not have any power to control the activities of the entity. The Company’s exposure to loss is limited to its investment and rights under the contractual arrangement with Trimmune. Risk of economic loss is borne by Trimmune’s investors, who are not related parties with the Company. The Company is not obligated to participate in future investment rounds in Trimmune, nor does the Company have contractual obligations or guarantees to Trimmune or any of its employees or investors.

6. Sale of Common Stock and Warrants

May 2025 Equity Financing

On May 13, 2025, the Company entered into a securities purchase agreement with a single institutional investor (the “Investor”) for the issuance and sale of (i)26,334 shares of the Company’s Common Stock and (ii) pre-funded warrants to purchase up to 85,524 shares of Common Stock (the “Pre-Funded Warrants”) in a follow-on public offering (the “May 2025 Offering”), pursuant to a registration statement filed under Rule 424(b)(4) (File No. 333-287136), which was declared effective by the SEC on May 15, 2025. The Company also issued warrants to purchase up to an aggregate of 223,714 shares of Common Stock (“Common Stock Warrants”).

The gross proceeds to the Company from the May 2025 Offering were approximately $5.0 million before deducting the placement agent’s fees and other offering expenses of $802,602 payable by the Company. The May 2025 Offering closed on May 15, 2025. In this financing, the Company issued shares of Common Stock or Pre-Funded Warrants that may be exercised to purchase Common Stock in lieu thereof, and warrants that may be exercised to purchase Common Stock. In a contemporaneous private agreement entered into with the Investor, the Company agreed to reprice warrants to purchase up to 27,988 shares of Common Stock that were issued to the Investor in a financing that closed on November 20, 2024. The Company estimated the fair value of the securities issued, using the Black Scholes valuation model to estimate the fair value of the warrants, and determined the fair value of securities issued was $15.2 million. As this was a transaction with an existing stockholder, the Company recognized a $10.2 million deemed equity dividend to the Investor which was recorded in additional-paid-in capital for the period ended June 30, 2025.

Both the Common Stock Warrants and Pre-Funded Warrants were classified as a component of permanent stockholders’ equity within additional paid-in-capital and were recorded at the issuance date. The Common Stock Warrants and Pre-Funded Warrants are equity classified because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, permit the holders to receive a fixed number of shares of Common Stock upon exercise, are indexed to the Company’s Common Stock and meet the equity classification criteria. In addition, the Common Stock Warrants and the Pre-Funded Warrants do not provide any guarantee of value or return.

As of June 30, 2025, all Pre-Funded Warrants issued in the May 2025 offering had been exercised. The May 2025 Common Warrants exercisable for up to 223,714 shares of Common Stock, together with the November 2024 Common Warrants (as repriced in connection with the May 2025 offering) exercisable for up to 27,988 shares of Common Stock, were subsequently exercised in the November 2025 inducement transaction discussed below.

Inducement Transaction and Shares held in Abeyance

On November 19, 2025, the Company entered into a warrant inducement agreement with the Investor (the “Inducement Agreement”), pursuant to which the Investor agreed to immediately exercise in full all of its outstanding Common Stock Warrants originally issued on November 20, 2024 (as amended on May 15, 2025) and on May 15, 2025 to purchase 251,702 shares of Common Stock, resulting in aggregate gross proceeds to the Company of approximately $4.0 million before fees and expenses. At closing, the Company issued 49,834 shares and held 201,868 shares in abeyance, until such time as the Investor requested issuance.

In consideration for the immediate exercise of the Common Stock Warrants, the Company issued to the Investor, in a private placement pursuant to Section 4(a)(2) of the Securities Act, new Common Stock Warrants to purchase up to 503,402 shares of Common Stock at an exercise price of $14.46 per share. In a private transaction entered into contemporaneously with the February 2026 Sale of Common Stock and Warrants discussed below, the Company agreed to an amendment to reduce the exercise price of these Common Stock Warrants to $3.633 per share, which was approved by the Company’s stockholders on June 15, 2026 at the Annual Meeting of Stockholders.

As of December 31, 2025 and June 30, 2026, there were 162,834 shares andno shares held in abeyance, respectively.

Inducement Transaction and Shares held in Abeyance

On November 19, 2025, the Company entered into a warrant inducement agreement with the Investor (the “November 2025 Inducement Transaction”), pursuant to which the Investor agreed to immediately exercise in full all of its outstanding Common Stock Warrants originally issued on November 20, 2024 (as amended on May 15, 2025) and on May 15, 2025 to purchase 251,702 shares of Common Stock, resulting in aggregate gross proceeds to the Company of approximately $4.0 million before fees and expenses. At closing, the Company issued 49,834 shares and held 201,868 shares in abeyance, until such time as the Investor requested issuance.

In consideration for the immediate exercise of the Common Stock Warrants, the Company issued to the Investor, in a private placement pursuant to Section 4(a)(2) of the Securities Act, new Common Stock Warrants to purchase up to 503,404 shares of Common Stock at an exercise price of $14.46 per share. In a private transaction entered into contemporaneously with the February 2026 Sale of Common Stock and Warrants discussed below, the Company agreed to an amendment to reduce the exercise price of these Common Stock Warrants to $3.633 per share, which was approved by the Company’s stockholders on June 15, 2026 at the Annual Meeting of Stockholders.

As of December 31, 2025 and June 30, 2026, there were 162,834 shares andno shares held in abeyance, respectively.

February 2026 Sale of Common Stock and Warrants

On February 17, 2026, the Company entered into a securities purchase agreement (“February 2026 SPA”) with the Investor, pursuant to which the Company issued 412,882 units (the “Units”) consisting of (i)412,882 pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 412,882 shares of Common Stock, and (ii) up to 412,882 Common Stock purchase warrants (the “Common Warrants”, and together with the Pre-Funded Warrants, the “Warrants”) to purchase up to 412,882 shares of Common Stock. The issuance of the Common Warrants was subject to stockholder approval, which was obtained at the Company’s Annual Meeting of Stockholders held on June 15, 2026. The securities were offered pursuant to a registration statement on Form S-1, as amended (File No. 333-293396), which was declared effective by the Securities and Exchange Commission on February 17, 2026.

The combined purchase price for each Unit consisting of one Pre-Funded Warrant that may be exercised for one share of Common Stock and an accompanying Common Stock Warrant to purchase one share of Common Stock was $3.6329. The Common Stock Warrants have an exercise price of $3.633 per share and expire on thefive-year anniversary of receipt of stockholder approval. The Pre-Funded Warrants have an exercise price of $0.0001, are exercisable immediately and will not expire until exercised in full.

On February 17, 2026, the Company also entered into a privately negotiated agreement with the Investor, which holds certain existing outstanding warrants to purchase up to 503,402 shares of Common Stock (the “Existing Warrants”), which were issued in the November 2025 Inducement Transaction, and agreed to reprice these warrants from $14.46 to $3.633, which was approved by the Company’s stockholders on June 15, 2026 at the Annual Meeting of Stockholders.

Stockholder approval was required for the warrants issued or modified in the February 2026 transaction in order to comply with Nasdaq Stock Market Rules. Nasdaq Stock Rule 5635(d) is referred to as the “Nasdaq 20% Rule.” In order to comply with the Nasdaq 20% Rule, the Company must seek stockholder approval to permit the potential issuance of more than 19.99% of outstanding Common Stock upon exercise of the Common Warrants in accordance with their terms. To meet the Nasdaq 20% Rule, the Company required stockholder approval under the listing rules of Nasdaq to remove the Exchange Cap provisions in the February 2026 SPA to permit the potential issuance of more than 20% of its outstanding Common Stock in accordance with the terms of the SPA.

The gross proceeds to the Company from the February 2026 Offering were approximately $1.5 million before deducting the placement agent’s fees and other offering expenses of $389,056 payable by the Company. The offering closed on February 19, 2026.

The Investor may not exercise any portion of the Common Stock Warrants to the extent it would beneficially own more than the limits defined in the respective Warrant Purchase Agreement. The exercise price and number of shares of Common Stock issuable upon the exercise of the Common Stock Warrants are subject to adjustment in the event of any stock dividends and distributions, stock splits, stock combinations or stock reclassifications, as described in the respective warrant agreements. Under certain circumstances, the warrants may be exercised on a “cashless” basis.

The fair value of the Common Stock Warrants issued in this transaction was estimated at $1.3 million using the Black-Scholes option pricing model with assumptions including a term of 5 years, volatility of 131.8% and a risk-free rate of 3.57%. The change in fair value of the Existing Warrants which were amended to lower the exercise price from $14.46 to $3.633 per share was estimated at $193,910 using the Black Scholes pricing model with the assumptions including a term of 5.26 years, volatility of 131.8% and a risk-free rate of 3.57%. As this was a transaction with an existing stockholder, the difference between the gross proceeds of $1.5 million and the fair value of securities issued and the modification of the warrant, or $3.0 million, was deemed to be an equity dividend to the Investor, which was recorded in additional-paid-in capital as of June 30, 2026.

On March 16, 2026, the Investor exercised all of its Pre-Funded Warrants issued from the February 2026 offering, and the Company issued 412,882 shares of Common Stock. As of June 30, 2026, there were no Pre-Funded Warrants outstanding that were purchased in the February 2026 transaction.

February 2026 Offering and Warrant Classification

The February 2026 Common Stock Warrants that may be exercised to purchase up to 412,882 shares of Common Stock issued on February 17, 2026 were classified as a component of permanent stockholders’ equity within additional paid-in-capital and were recorded at the issuance date. The Common Stock Warrants are equity classified because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, permit the holders to receive a fixed number of shares of Common Stock upon exercise, are indexed to the Company’s Common Stock and meet the equity classification criteria. In addition, the Common Warrants and the Pre-Funded Warrants do not provide any guarantee of value or return.

Upon modification of the November 2025 Common Stock Warrants on February 17, 2026, these warrants were reclassified from equity to a warrant liability due to a contingency in the settlement terms, and were therefore reclassified as a warrant liability. As a result, the Company recognized a warrant liability, which was measured at fair value as of March 31, 2026. Upon stockholder approval of the new strike price of $3.633 per share on June 15, 2026, the contingent strike price adjustment was resolved, all requirements for equity classification were met and the November 2025 Common Stock Warrants were reclassified to permanent equity. See Note 2. Fair Value of Financial Instruments.

May 2026 Sale of Common Stock and Warrants

On May 21, 2026, the Company completed a private placement with existing accredited investors, including the Investors in which it entered into a Securities Purchase Agreement (the “May 2026 SPA”), pursuant to which the Company agreed to issue and sell an aggregate of 474,496 units, with each unit consisting of (i) one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock” or “Shares”), at a purchase price of $7.68 per Share, or, in lieu thereof, one pre-funded warrant, and (ii) one warrant to purchase one share of Common Stock (the “Common Stock Warrants”) at a purchase price of $0.75 per Common Warrant. The units were sold at a purchase price of $8.43 per unit, and the Shares or Pre-Funded Warrants and Common Warrants comprising the units are immediately separable and were issued separately. In lieu of Shares that would otherwise result in a purchaser’s beneficial ownership exceeding 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of such Shares, certain purchasers elected to receive pre-funded warrants (the “Pre-Funded Warrants”) at a purchase price of $7.6799 per Pre-Funded Warrant (equal to the per Share purchase price less $0.0001). Each Pre-Funded Warrant is exercisable immediately upon issuance for one share of Common Stock at an exercise price of $0.0001 per share and will remain exercisable until exercised in full. Each Common Stock Warrant is exercisable immediately upon issuance for one share of Common Stock at an exercise price of $7.68 per share and will expire on the five and one-half year anniversary of the original issuance date. The shares of Common Stock issuable upon exercise of the Pre-Funded Warrants and the Common Stock Warrants are referred to herein as the “Warrant Shares.”

Pursuant to the May 2026 SPA, the Company issued and sold an aggregate of 71,174 Shares,403,322 Pre-Funded Warrants, and Common Warrants to purchase an aggregate of up to 474,496 shares of Common Stock for aggregate gross proceeds of approximately $4.0 million at the closing, before deducting fees payable to the placement agent and other offering expenses payable by the Company. The Investors included officers, directors and significant stockholders. Scott Garrett, Chairman of our board of directors, purchased $250,000 of securities, Hing C. Wong, our Founder and Chief Executive Officer, purchased $160,000 of securities, and Rebecca Byam, our Chief Financial Officer, purchased $20,000 of securities. Such purchases were made on the same terms and conditions as those offered to other investors.

In connection with the May 2026 SPA, the Company also entered into a Registration Rights Agreement with the Investors (the “Registration Rights Agreement”), pursuant to which the Company agreed to provide certain registration rights with respect to the resale of the Shares and the Warrant Shares. On June 18, 2026, the SEC declared effective a resale registration statement on Form S-1 (File No. 333-296577) covering the resale of shares of Common Stock and warrants issued in this private placement.

The Common Warrants may not be exercised to the extent that, after giving effect to such exercise, the holder would beneficially own more than 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such exercise.

On June 22, 2026, the holder exercised all Pre-Funded Warrants issued in the May 2026 offering, and the Company issued 403,322 shares of Common Stock.

Participating Warrants

Certain warrants issued by the Company are participating warrants. Under U.S. GAAP, participating warrants are instruments that grant the holder the right to receive non-forfeitable dividends or dividend equivalents on an equal basis with common stockholders before exercise. Because they are considered “participating securities,” the Company utilizes the two-class method to calculate and report basic and diluted Earnings Per Share (EPS). See Note 9. Net Loss per Share.

As of June 30, 2025, outstanding participating warrants included: November 2024 Common Stock Warrants to purchase up to 27,988 shares of Common Stock, May 2025 Common Stock Warrants to purchase up to 223,714 shares of Common Stock, and Conversion Common Stock Warrants issued to the Noteholders who converted Secured Notes to equity to purchase up to 21,099 shares of Common Stock.

As of June 30, 2026, outstanding participating warrants included: November 2025 Common Stock Warrants to purchase up to 503,402 shares of Common Stock and Conversion Common Stock Warrants to purchase up to 21,099 shares of Common Stock.

7. Standby Equity Purchase Agreement

On February 20, 2025, the Company entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) with Square Gate Capital Master Fund, LLC - Series 4 (“Square Gate”), which the Company deemed to be a Standby Equity Purchase Agreement (“SEPA”). Under the Equity Purchase Agreement, the Company will have the right, but not the obligation, to sell to Square Gate, and Square Gate will have the obligation to purchase from the Company, up to $20,000,000 (the “Maximum Commitment Amount”) worth of the Company’s shares of Common Stock, at the Company’s sole discretion, over the next 36 months (the “Put Shares”), subject to certain conditions precedent and other limitations. Square Gate has covenanted not to cause or engage in any short sales or hedging transactions with respect to the shares of the Company’s Common Stock. The Maxim Group LLC acted as the Company’s exclusive Placement Agent in connection with this transaction.

On August 14, 2025, the Company and the Square Gate entered into a First Amendment to the Equity Purchase Agreement to provide a mechanism for submission by the Company and acceptance by the Square Gate of Put Notices under the Equity Purchase Agreement pursuant to which the Square Gate and the Company may agree to and execute multiple purchases and sales of Put Shares on the same trading day. Under the First Amendment, among other things, the purchase price of the intraday Put Shares will be the lowest traded price during a specified shortened valuation time period.

Unless earlier terminated, the Equity Purchase Agreement will remain in effect until the earlier of February 18, 2028 (i.e., the expiry of the 36-month period commencing on the date of the Equity Purchase Agreement) or the date on which Square Gate has purchased the Maximum Commitment Amount (the “Commitment Period”). The Company has the right to terminate the Equity Purchase Agreement at any time, subject to certain provisions as set forth in the Equity Purchase Agreement. Square Gate has the right to terminate the Equity Purchase Agreement under certain provisions as set forth in the Equity Purchase Agreement, including the continued listing of the Company’s Common Stock on an Eligible Market.

As of June 30, 2025, the Company concluded that the Equity Purchase Agreement for Standard Put Shares does not qualify for equity classification. On the effective date, the Company concluded that the fair value of the Equity Purchase Agreement at inception was zero and no asset or liability was recorded. As a result, fees paid to Square Gate in excess of the fair value of the Equity Purchase Agreement were expensed as incurred. Any issuance costs or other transaction costs attributable to a freestanding equity-linked financial instrument that is classified as an asset or liability should be recognized in earnings in the period incurred

The Commitment Fee was paid in-kind with an equivalent value of shares of the Company’s Common Stock. On March 12, 2025, the Company issued 1,603 shares of the Company’s Common Stock to Square Gate in payment of the Commitment Fee. At the Special Meeting of Stockholders held on March 31, 2025, stockholders approved the Company’s use of the Equity Purchase Agreement. Pursuant to the Registration Agreement, the Company filed a registration statement to register the underlying shares. On April 16, 2025, the SEC declared a registration statement effective to register the Commitment Shares and shares required to sell up to $40.0 million of the Company’s shares to Square Gate, according to provisions of the Equity Purchase Agreement. The Commitment Fee and issuance costs for the registration statement to register the underlying shares of Common Stock issued under the Equity Purchase Agreement were expensed.

For the six months ended June 30, 2025, the Company expensed the $150,000 Commitment Fee in the accompanying condensed statement of operations. During the three and six months ended June 30, 2025 and 2026, the Company did not put any shares to Square Gate under the SEPA.

8. Preferred Stock

As of December 31, 2025 and June 30, 2026, the Company had 10,000,000 shares of preferred stock authorized andno shares of preferred stock issued.

9. Net Loss Per Share

The following table summarizes the computation of the basic and diluted net loss per share:

The following table summarizes the outstanding warrants provision to participate in distribution of earnings. For the three and six months ended June 30, 2025 and 2026, these securities were excluded in the calculation for distribution of net loss:

The following table summarizes the outstanding potentially dilutive securities. For the three and six months ended June 30, 2025 and 2026, these securities were excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:

10. Income Taxes

The Company accounts for income taxes under ASC 740, Income Taxes. The income tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items, if any, recognized in the period in which they occur.

For the six months ended June 30, 2025 and 2026, the Company recorded an income tax provision of $0 and $330,186 on pre-tax losses of $4.1 million and $1.4 million for effective tax rates of (23.28)% and 0%, respectively. The effective tax rate differed from the statutory rate primarily because the Company recorded foreign withholding tax expense on China licensing revenue while receiving no corresponding U.S. tax benefit due to its full valuation allowance.

The following are income taxes paid by jurisdiction:

11. Segment Reporting

HCW Biologics Inc. hasone reportable segment: life science. The life science segment consists of operations focused on discovering and developing novel immunotherapies to lengthen health span by disrupting the link between chronic, low-grade inflammation and diseases. The Company’s CODM is the chief executive officer.

The accounting policies of the life science segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the life science segment based on net segment income (loss). The measure of segment assets is reported on the condensed balance sheet as total assets.

The Company has not generated any product revenue from commercial product sales of internally-developed immunotherapeutic products for the treatment of diseases, as no products have been approved for commercial sale as of June 30, 2026. The Company expects to continue to incur significant expenses and operating losses for the foreseeable future as it advances molecules through all stages of development and clinical trials and, ultimately, seek approval for commercial sale.

As such, the CODM uses cash forecast models in deciding how to invest into the life science segment. Such cash forecast models are reviewed to assess the entity-wide operating results and performance in conjunction with monitoring the results of R&D experiments for preclinical compounds and clinical trial data for clinical-stage compounds. The assessment of results of preclinical and clinical studies is critical to the allocation of resources by the CODM.

The tables below summarize the significant expense categories regularly reviewed by the CODM for the three and six months ended June 30, 2025 and 2026**:**

12. Commitments and Contingencies

Operating Leases

The Company has operating leases for approximately 12,250 square feet of space located in Miramar, Florida. On January 27, 2025, the Company entered into aone-year lease for the same location which commenced on March 1, 2025 and terminated on February 28, 2026. On February 2, 2026, the Company entered into a one-year lease for the same location which commenced on March 1, 2026 and terminates on February 28, 2027. FASB ASC 842, Leases, provides for an exception for short-term leases in ASC 842-20-25-2, whereby a lessee may elect to recognize lease payments in profit or loss on a straight-line basis over the lease term and forego the requirement to recognize a ROU asset and lease liability. The Company elected to account for its short-term operating leases on a straight-line basis over the lease term and did not recognize a ROU asset or lease liability, as allowed for under the exception in ASC842-20-25-2. The Company has no obligations under financing leases.

For the three months ended June 30, 2025 and 2026, rent expense recognized by the Company was $52,619 and $55,715, respectively, of which $27,557 and $29,178, respectively, are included in research and development in the accompanying condensed statements of operations. For the six months ended June 30, 2025 and 2026, rent expense recognized by the Company was $103,175 and $109,365, respectively, of which $54,033 and $57,275, respectively, are included in research and development in the accompanying condensed statements of operations.

Contractual Commitments

The Company has commitments with R&D outsourcing and development companies to supply us with clinical grade materials or other development services. As of June 30, 2026, it is under contract for future obligations of $266,880 it expects to pay during the year ending December 31, 2026.

Legal Matters

Legal Proceedings

From time to time, the Company is a party to or otherwise involved in legal proceedings, including suits, assessments, regulatory actions and investigations generally arising out of the normal course of business. In addition, the Company enters into agreements that may include indemnification provisions, pursuant to which the Company agrees to indemnify, hold harmless and defend the indemnified parties for losses suffered or incurred by the indemnified party. When the Company believes that the outcome of such a matter will result in a liability that is probable to be incurred and result in a potential loss, or range of loss, that can be reasonably estimated, the Company will accrue a liability and make the appropriate disclosure in the footnotes to the condensed financial statements.

Arbitration, Settlement and General Release

As of July 13, 2024, the Company and Dr. Hing C. Wong, the Company’s Founder and Chief Executive Officer, entered into a confidential Settlement Agreement with Altor BioScience, LLC (“Altor”), NantCell, Inc. (“NantCell”), and ImmunityBio, Inc. (the parent of Altor and NantCell, together with Altor and NantCell, “ImmunityBio”), to resolve the previously disclosed Arbitration. The Arbitration and related Complaint were dismissed with prejudice as of December 31, 2024.

In January 2025, the Company received a $2.0 million insurance reimbursement which was paid directly to Cooley LLP (“Cooley”), the law firm that represented Dr. Wong in his defense in the Arbitration. On December 30, 2025, the Company entered a settlement agreement with Cooley related to legal fees incurred in connection with the defense of Dr. Wong. As a result of that agreement, the Company, Dr. Wong and Cooley agreed to settle a $7.5 million obligation for $2.0 million in cash and contingent payments up to $5.5 million upon achievement of certain triggering events, all of which were deemed to be remote as of December 31, 2025 and June 30, 2026. In accordance with the terms of the settlement agreement, $500,000 was paid on December 31, 2025. Based on amendments to the settlement agreement, the Company paid $750,000 on March 20, 2026, and will pay the remaining $750,000 upon the earlier of the completion of a financing for at least $4.0 million in gross proceeds or August 31, 2026.

After this settlement, as of December 31, 2025 and June 30, 2026, the Company recognized a liability of $6.2 million and $5.4 million, respectively, for remaining amounts owed for legal fees related to the Arbitration which continue to remain outstanding in the accompanying condensed balance sheets.

Legal Matters related to Real Estate

During the year ended December 31, 2025, certain subcontractors had filed mechanics liens related to unpaid invoices issued in connection with the construction and renovation of a property owned by the Company. On April 17, 2025, the Company received a summons and a copy of a complaint filed by BE&K in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida (the “BE&K Complaint”). Other Defendants named in the BE&K Complaint who are subcontractors elected to file counterclaims and cross-claims as part of their responses to the BE&K Complaint. To our knowledge as of the date hereof, Cogent Bank, also named as a Defendant in the BE&K Complaint, has not elected to take legal action at this time. The cases have been consolidated. The court has set the BE&K matter for a five-day jury trial in December 2026. There will also be a pretrial conference on November 20, 2026.

On June 26, 2026, as part of a settlement with B&I Contractors, Inc. (“B&I”), we received notice that B&I had filed a voluntary dismissal with prejudice of its crossclaims against us in the matterBE&K Building Group, LLC v. HCW Biologics Inc., et al. pending in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida. The matter arose from a mechanics’ lien filed by B&I in connection with allegedly unpaid invoices relating to renovation work at our facility located at 3300 Corporate Way, Miramar, Florida, which is being renovated for future office and laboratory use. In connection with the settlement, B&I filed a final satisfaction of lien releasing a lien in the amount of approximately $1.1 million. The dismissal and satisfaction of lien completed the parties’ settlement and fully resolved all amounts claimed to be owed by us to B&I. There wasno gain or loss on the settlement with B&I.

On October 24, 2025, the Company was notified by Cogent Bank that it exercised its discretion to make a demand that the Company cure the Defaults no later than thirty (30) days after receipt of this letter in strict compliance with Section 7.2(3) of the Loan Agreement by: (i) paying and discharging all of the Claims of Lien and causing satisfactions to be recorded in the Public Records of Broward County, Florida for all of the Claims of Lien, and (ii) resolving all litigation against the Borrower and the mortgaged property described in the Mortgage and causing such claims in the Foreclosure Actions to be dismissed and all related notices of lis pendens to be released. The Company and Cogent Bank are negotiating terms for a forbearance agreement to provide additional time for the Company to comply with the demands Cogent Bank made in their demand letter. As of June 30, 2026, the balance due under the Loan Agreement is $6.1 million.

Other Matters

On May 26, 2026, we paid in full all amounts due under a settlement agreement with EirGenix, Inc. (“EirGenix”), our contract development and manufacturing organization, relating to manufacturing costs. Pursuant to the settlement agreement entered into on December 9, 2025, EirGenix agreed to accept $1.2 million in full satisfaction of approximately $1.7 million of outstanding amounts, provided payment was made by an agreed deadline. As a result, all obligations under the settlement agreement were satisfied and the related unpaid invoices and disputed credits were fully resolved. As a result, the Company recognized $483,383 as a Gain on extinguishment of a liability for the three and six months ended June 30, 2026 in the accompany condensed statements of operations.

On June 26, 2025, the Company received formal notice from The Nasdaq Stock Market LLC (“Nasdaq”) that the Company is in compliance with Listing Rule 5550(b)(1) (the “Equity Rule”). On June 29, 2026, the Company received written notice from the Nasdaq Listing Staff that the Nasdaq Hearings Panel found that the Company had regained compliance with the Bid Price Rule, subject to certain restrictions.

On July 29, 2026, the SEC temporarily stayed the effectiveness of its July 22, 2026 order approving the Nasdaq’s proposed rule change to adopt a new $5 million Market Value of Listed Securities continued listing requirement (the “$5 Million MVLS Requirement”). The SEC received, pursuant to Rule 430 of the Commission’s Rules of Practice, 17 CFR 201.430, notices of intention to petition for review of the delegated action. In accordance with Rule 431(e), the July 22, 2026, order is stayed until the Commission orders otherwise.

New Nasdaq Rules 5450(a)(3) (Nasdaq Global Select and Global Market) and 5550(a)(6) (Nasdaq Capital Market) would have required listed companies to maintain a Market Value of Listed Securities (MVLS) of at least $5 million (MVLS is the consolidated closing bid price multiplied by the total shares outstanding of the listed class). If a company failed the $5 million MVLS Requirement for 30 consecutive business days, it would receive an immediate Staff Delisting Determination, with no compliance plan or cure period available. A company may appeal the Staff Delisting Determination, however, timely Nasdaq Hearings Panel (the “Panel”) appeal would not stay the suspension from trading for an MVLS-based delisting determination. It means that the securities would trade on the over-the-counter market (“OTC”) while the appeal is pending. After an appeals hearing, the Panel may, in its discretion, grant an exception of up to 180 days from the Staff Delisting Determination if it determines that the company has presented a credible plan to regain compliance and, within that period, the company must demonstrate compliance with all applicable Nasdaq initial listing requirements, not merely the $5 million MVLS standard, which are materially more stringent than the continued listing standards, e.g., initial listing on the Nasdaq Capital Market requires Market Value of Unrestricted Publicly Held Shares of at least $15 million, versus the $5 million MVLS needed to maintain listing.

Inflationary Cost Environment, Banking Crisis, Supply Chain Disruption and the Macroeconomic Environment

The Company’s operations have been affected by many headwinds, including inflationary pressures, tariffs, rising interest rates, ongoing global supply chain disruptions resulting from increased geopolitical tensions such as the war in the Middle East, the conflict between Russia and Ukraine, China-Taiwan relations, financial market volatility and currency movements. The Company has been impacted by inflation, and may continue to be so, when securing materials needed for our operations, the costs for recruiting and retaining employees and other employee-related costs. Management employs a number of strategies to effectively navigate these issues, including product redesign, alternate sourcing, and establishing contingencies in budgeting and timelines. Future developments in these and other areas present material uncertainty and risk with respect to the Company’s clinical trials, IND-enabling activities, as well as the Company’s financial condition and results of operations. The extent and duration of such events and conditions, and resulting disruptions to our operations, are highly unpredictable.

13. Subsequent Events

Subsequent events have been evaluated through the date the financial statements were filed. In addition to the required recognition or disclosure disclosed in the footnotes herein, there were also the following subsequent events after the reporting date:

Pursuant to the Purchase Agreement, the Company agreed to issue and sell Units that include an aggregate of 218,682 shares of Common Stock and 400,000 Pre-Funded Warrants for aggregate gross proceeds of approximately $1.6 million before deducting offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for working capital and general corporate purposes, including continuing clinical development activities.

The Pre-Funded Warrants have an exercise price of $0.0001 per share, are exercisable immediately and will remain exercisable until exercised in full. The Pre-Funded Warrants may not be exercised to the extent that, after giving effect to such exercise, the holder would beneficially own more than 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such exercise.

The Investors are entitled to receive Common Warrants exercisable for an aggregate of up to 618,682 shares of Common Stock. Under the terms of the Purchase Agreement, issuance of the Common Warrants is subject to stockholder approval required under Nasdaq Listing Rule 5635(d). Following receipt of such stockholder approval, the Company will issue the Common Warrants to the Investors. The Common Warrants will have an exercise price of $2.585 per share, be exercisable immediately upon issuance and expire on the date that is five and one-half (5.5) years from the date of issuance. The Common Warrants will contain a beneficial ownership limitation of 4.99%, subject to adjustment by the holder in accordance with their terms.

In connection with the Purchase Agreement, Hing C. Wong, Ph.D., the Company’s Founder and Chief Executive Officer, Scott Garrett, a member and the Chairman of the Company’s Board of Directors, and Lee Flowers, the Company’s Senior Vice President of Business Development, participated in the private placement on the same terms and conditions as the other Investor.

In connection with the Purchase Agreement, the Company also entered into a Registration Rights Agreement with the Investors (the “Registration Rights Agreement”), pursuant to which the Company agreed to provide certain registration rights with respect to the resale of the shares of Common Stock issued in the offering, the shares issuable upon exercise of the Pre-Funded Warrants and the shares issuable upon exercise of the Common Warrants. The Company agreed to file an initial registration statement within 15 trading days following the closing of the offering and to use commercially reasonable efforts to cause such registration statement to be declared effective by the SEC within 60 days following the closing.