HCW Biologics Inc. Segments Disclosure
16. Segment Reporting
HCW Biologics, Inc. has one 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 .
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 loss, which is reported on the statements of operations as net loss. The measure of segment assets is reported on the 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 December 31, 2025. 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 are critical to the allocation of resources by the CODM.
The tables below summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2024 and 2025:
|
|
Years Ended |
|
|||||
|
|
2024 |
|
|
2025 |
|
||
Revenues: |
|
|
|
|
|
|
||
Revenues |
|
$ |
2,566,792 |
|
|
$ |
54,232 |
|
Cost of revenues |
|
|
(1,607,389 |
) |
|
|
(43,386 |
) |
Net revenues |
|
|
959,403 |
|
|
|
10,846 |
|
|
|
|
|
|
|
|
||
Operating expenses: |
|
|
|
|
|
|
||
Research and development expenses |
|
|
|
|
|
|
||
Salaries, benefits and related expenses |
|
|
2,797,370 |
|
|
|
3,069,364 |
|
Manufacturing and materials |
|
|
1,425,734 |
|
|
|
354,705 |
|
Preclinical expenses |
|
|
859,701 |
|
|
|
930,899 |
|
Clinical trials |
|
|
558,215 |
|
|
|
470,592 |
|
Overhead allocations |
|
|
747,974 |
|
|
|
617,324 |
|
Total research and development expenses |
|
|
6,388,994 |
|
|
|
5,442,884 |
|
General and administrative |
|
|
|
|
|
|
||
Salaries, benefits and related expenses |
|
|
2,563,936 |
|
|
|
2,784,753 |
|
Professional services(a) |
|
|
1,171,885 |
|
|
|
1,995,446 |
|
Facilities and office expenses |
|
|
654,996 |
|
|
|
433,288 |
|
Depreciation expenses |
|
|
254,407 |
|
|
|
237,005 |
|
Rent and occupancy expenses |
|
|
205,511 |
|
|
|
191,598 |
|
Insurance |
|
|
952,199 |
|
|
|
1,011,034 |
|
Taxes |
|
|
196,804 |
|
|
|
174,398 |
|
Other expenses |
|
|
289,407 |
|
|
|
468,537 |
|
Total general and administrative expenses |
|
|
6,289,145 |
|
|
|
7,296,059 |
|
Other segment items(b) |
|
|
18,305,078 |
|
|
|
(4,768,388 |
) |
Total operating expenses |
|
|
30,983,217 |
|
|
|
7,970,555 |
|
Net segment loss |
|
$ |
(30,023,814 |
) |
|
$ |
(7,959,709 |
) |
(a) |
Professional services consist primarily of audit and accounting advisory services, tax advisory services, corporate legal services related to SEC compliance, and legal fees related to patent filings.
|
(b) |
Other segment items include the following unusual or nonrecurring items: |
|
|
Years Ended |
|
|||||
|
|
2024 |
|
|
2025 |
|
||
Arbitration legal fees (recoveries), net |
|
$ |
15,910,480 |
|
|
$ |
(1,470,809 |
) |
Accretion of fixed bonus upon maturity of Secured Notes |
|
|
527,304 |
|
|
|
405,222 |
|
Interest expense |
|
|
654,284 |
|
|
|
845,051 |
|
Change in fair value of investment |
|
|
— |
|
|
|
273,422 |
|
Change in fair value of contingent liability |
|
|
— |
|
|
|
(1,055,826 |
) |
Nonoperating loss |
|
|
1,300,000 |
|
|
|
— |
|
Loss on sale of put shares |
|
|
— |
|
|
|
263,974 |
|
Gain on extinguishment of liability |
|
|
— |
|
|
|
(5,461,046 |
) |
Impairment of long-lived asset |
|
|
|
|
|
1,500,000 |
|
|
Other income, net |
|
|
(86,990 |
) |
|
|
(68,376 |
) |
Other segment items |
|
$ |
18,305,078 |
|
|
$ |
(4,768,388 |
) |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.