Decoy Therapeutics Inc.
For the period ended Dec 31, 2025. Filed Mar 31, 2026.
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FY2025 · Filed Mar 31, 2026
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Decoy Therapeutics Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Decoy Therapeutics Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
The Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a lack of revenue from product sales and has had recurring losses from operations since its inception and has stated that substantial doubt exists about the Company's ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
| Valuation of preferred stock | |
| Description of the Matter | As discussed in Note 3 to the consolidated financial statements, the Company issued preferred stock as part of the consideration transferred in its asset acquisition with a fair value of $4,302,000 as of November 12, 2025. The fair value of the preferred stock was estimated using a Monte Carlo simulation, which considers various potential scenarios. We identified the valuation of the preferred stock as a critical audit matter because it required the use of a complex valuation model that included a subjective equity volatility assumption. Changes in this assumption could have had a significant effect on the fair value of the preferred stock. |
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| How We Addressed the Matter in Our Audit | Our audit procedures included, among others, testing inputs by comparing them to external market data and contractual terms and involving our valuation specialists to assist in assessing the reasonableness of the valuation model, validating significant assumptions, and performing a corroborative calculation. |
/s/Ernst & Young LLP
We have served as the Company’s auditor since 2019.
Houston, Texas
March 31, 2026
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