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Subscription Agreement

9 Months Ended

Sep. 30, 2025

Note 7 — Subscription Agreement

On December 18, 2023, the Company entered into a subscription agreement (the “Subscription Agreement”) with the PMX Investor, who became a stockholder of Onconetix at the closing of the PMX Transaction (see Note 11), for the sale of 5,882 units, each comprised of 1 share of common stock and 0.30 pre-funded warrants (the “Units”) at $850 per Unit. The Subscription Agreement includes a make-whole provision (the “Make-Whole Provision”) which requires the issuance of additional shares of common stock in the event that the 270-day volume weighted average price after the closing of the Subscription Agreement, is below $850, and the PMX Investor still holds the common shares acquired upon closing of the Subscription Agreement 270 days after such closing. The Subscription Agreement would only close upon obtaining stockholder approval for certain transactions involving the Company’s Series B Preferred Stock. The Subscription Agreement was amended on January 23, 2024 to include a provision for interest on the $5 million debenture, accruing at a rate of 4%, to be included in the calculation of the units to be issued upon the conversion. Stockholder approval was obtained on September 5, 2024, and as a result, the conversion and the issuance of 5,882 units, attributable to the Subscription Agreement, and 158 units, attributable to additional accrued interest under the debenture to the PMX Investor took place on September 24, 2024.

On June 24, 2025, the 270-day volume weighted average price after the closing of the Subscription Agreement was below $850. In accordance with the Make-Whole Provision under the Subscription Agreement, the Company issued 241,514 shares of common stock (the “Make-Whole Shares”) to Altos Venture AG, following the determination that the 270-day volume weighted average price (“Issuer VWAP”) was below the $850 threshold. The Company recorded common stock of $2 and additional paid in capital of $995,036 related to the issuance of the 241,514 shares in the accompanying condensed consolidated balance sheet as of September 30, 2025.

The Subscription Agreement was accounted for as a liability in accordance with ASC 480, Distinguishing Liabilities from Equity, (“ASC 480”), as the make-whole provision could result in a variable number of shares being issued upon settlement. The related party subscription agreement liability was measured at fair value at the commitment date and remeasured at each subsequent reporting period, with changes in fair value recorded as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

During the nine months ended September 30, 2025, the subscription agreement liability - related party expired and was settled resulting in the recognition of $2 in common stock and $995,036 in additional paid in capital as of September 30, 2025.

The following table summarizes the activity for the related party subscription agreement liability, using unobservable Level 3 inputs, for the three and nine months ended September 30, 2025:

	Subscription Agreement Liability
Balance at December 31, 2024	$	4,123,000
Change in fair value		(3,319,000	)
Balance at March 31, 2025	$	804,000
Change in fair value		191,038
Settlement		(995,038	)
Balance at June 30, 2025		—
Change in fair value		—
Balance at September 30, 2025	$	—

As of September 30, 2025 and December 31, 2024, the fair value of the related party subscription agreement liability was approximately $0 and $4,123,000, respectively. For the three and nine months ended September 30, 2025, the Company recognized a change in fair value of the related party subscription agreement liability of approximately $0 and $3,128,000, respectively.

The fair value was determined using a Monte-Carlo option pricing model, and as of December 31, 2024, the Company utilized 100% probability that the Subscription Agreement will close. The significant assumptions used in the Monte-Carlo model, which utilizes Level 3 inputs (see Note 3), are as follows as of December 31, 2024:

	December 31, 2024
Exercise price	$	10
Term (years)		0.48
Expected stock price volatility		100	%
Risk-free rate of interest		4.25	%