Note 8 — 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 Notes 5 and 11), for the sale of 500,000 units, each comprised of 1 share of common stock and 0.30 pre-funded warrants (the “Units”) at $10 per Unit. The Subscription Agreement includes a 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 $10, 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, as further described in Note 5. 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 500,000 units, attributable to the Subscription Agreement, and 13,424 units, attributable to additional accrued interest under the debenture to the PMX Investor took place on September 24, 2024. Due to the issuance, the make-whole took effect and remains in place until June 24, 2025.

The Subscription Agreement is 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 is measured at fair value at the commitment date and at each subsequent reporting period, with changes in fair value recorded as a component of other income (expense), net in the consolidated statements of operations and comprehensive loss. As of December 31, 2024 and December 31, 2023, the fair value of the related party subscription agreement liability is estimated to be approximately $4,123,000 and $864,000, respectively, and the change in fair value of the related party subscription agreement liability for the year ended December 31, 2024 was an increase of approximately $3,259,000. The fair value was determined using a Monte-Carlo option pricing model, and as of December 31, 2024 and 2023, the Company utilized 100% and 55% probability, respectively, 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 and 2023: