Note 4 – Fair Value Measurements

ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 – Instruments with primarily unobservable value drivers.

As of March 31, 2026 and September 30, 2025, the Company has investments in equity securities consisting of 1,196 and 3,125 shares, respectively, of Series D Convertible Preferred Stock (the “ONCO Series D Preferred Stock”) of Onconetix, Inc. (“ONCO”) and a warrant to purchase 169,395 shares of common stock of ONCO (the “ONCO Warrant”). ONCO effected a 1-for-5 reverse stock split for all of its issued and outstanding shares of common stock on March 25, 2026. All ONCO common stock amounts presented have been retroactively adjusted for all periods presented. The ONCO Series D Preferred Stock and the ONCO Warrant were received on September 22, 2025 as a settlement of the ONCO Promissory Notes. See Note 15 for additional information. The Company has elected to measure the ONCO Series D Preferred Stock and the ONCO Warrant at fair value in accordance with ASC 825. The investments in the ONCO Series D Preferred Stock and the ONCO Warrant are classified within Level 3 of the fair value hierarchy because there is no market for these types of securities and the fair value is determined using significant unobservable inputs. The fair value of the ONCO Series D Preferred Stock and the ONCO Warrant have been determined using a Monte Carlo simulation model. This valuation model incorporates the contractual terms of the instruments and assumptions including the stock price of ONCO Common Stock, expected volatility, and a selected discount rate. Additionally, the ONCO Series D Preferred Stock and the ONCO Warrant were issued by ONCO as part of a Securities Purchase Agreement, which included the sale of 16,099 shares of Series D convertible preferred stock and warrants to purchase 872,565 shares of ONCO Common Stock to eleven institutional investors, for an aggregate purchase price of $12.9 million. The valuation of the ONCO Series D Preferred Stock and ONCO Warrant at issuance included a calibration discount to the proceeds of the original transaction, which was done at arms’ length. The calibration discount was reduced to zero as of March 31, 2026 as the Company began to convert the ONCO Series D Preferred Stock during the three months ended March 31, 2026, which had the effect of increasing the fair value of the ONCO Series D Preferred Stock and the ONCO Warrant. The assumptions used in calculating the fair value of the financial instruments represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, the use of different estimates or assumptions would result in a higher or lower fair value and different amounts being recorded in the Company’s financial statements. Material changes in any of these inputs could result in a significantly higher or lower fair value measurement at future reporting dates, which could have a material effect on our results of operations. The following table summarizes the significant unobservable inputs used in the Monte Carlo Simulations as of March 31, 2026 and September 30, 2025:

The following table provides a reconciliation of the beginning and ending balance associated with the ONCO Series D Preferred Stock and the ONCO Warrant measured at fair value for the six months ended March 31, 2026 and 2025, which are presented as investments in equity securities on the accompanying consolidated balance sheet:

During the three months ended March 31, 2026, the Company converted 1,929 shares of the ONCO Series D Preferred Stock into 771,091 shares of ONCO common stock and sold 770,772 shares of ONCO common stock for net proceeds of $3.2 million. Subsequent to March 31, 2026, the Company converted the remaining outstanding 1,196 shares of ONCO Series D Preferred Stock into 1,041,743 shares of ONCO common stock and sold 1,042,062 shares of ONCO common stock for net proceeds of $1.8 million. 

The Company also had an investment in equity securities consisting of 28,549 shares of common stock of ONCO (the “ONCO Common Stock”), which were sold during the six months ended  March 31, 2025 for net proceeds of $0.4 million. The Company recognized a loss from the change in fair value of equity securities related to the ONCO Common Stock of $0.3 million during the six months ended March 31, 2025. 

The following is a summary of unrealized and realized gains and losses on equity securities recognized during the three and six months ended March 31, 2026 and 2025: