Financial Performance - The company reported a net income of $102,958,139 for the three months ended March 31, 2025, compared to a net loss of $2,429,417 for the same period in 2024[22]. - For the three months ended March 31, 2025, Nukkleus Inc. reported a net income from continuing operations of $103,140,894, compared to a net loss of $(2,095,201) for the same period in 2024[28]. - The basic net income per common share for continuing operations was $20.80 in Q1 2025, compared to a loss of $(1.19) in Q1 2024[22]. - Other income (expense), net, increased approximately $104,658,000, or 1,043,970.3%, for the three months ended March 31, 2025, primarily due to gains from changes in fair value of stock purchase warrant liabilities[177]. - The accumulated deficit improved from $(201,075,743) on December 31, 2024, to $(98,117,604) on March 31, 2025, indicating a reduction of approximately 51.2%[21]. Revenue and Expenses - For the three months ended March 31, 2025, total revenues were $187,469, a decrease of 27.8% from $259,757 in the same period of 2024[101]. - Total operating expenses decreased to $317,352 in Q1 2025 from $531,235 in Q1 2024, a reduction of 40.2%[101]. - Operating expenses decreased from $2,085,176 in Q1 2024 to $1,507,107 in Q1 2025, a reduction of approximately 27.7%[22]. - The net loss from discontinued operations for the three months ended March 31, 2025, was $182,755 compared to a loss of $334,216 in the same period of 2024, indicating an improvement of 45.2%[101]. - Total other general and administrative expenses increased by approximately $266,000, or 119.1%, for the three months ended March 31, 2025, compared to the same period in 2024[176]. Assets and Liabilities - Total assets decreased from $9,109,284 on December 31, 2024, to $8,601,827 on March 31, 2025, representing a decline of approximately 5.6%[19]. - Current liabilities significantly decreased from $171,450,366 to $64,709,245, a reduction of about 62.2%[19]. - As of March 31, 2025, total current assets were $2,127,120, an increase of 95.5% from $1,089,052 as of December 31, 2024[100]. - Total liabilities increased to $4,453,142 as of March 31, 2025, compared to $3,179,877 as of December 31, 2024, reflecting a rise of 40.0%[100]. - The company had a working capital deficit of $56,246,392 as of March 31, 2025, including $4,462,916 of cash[179]. Cash Flow - The company incurred cash flow used in operating activities from continuing operations of approximately $1,621,478 for the three months ended March 31, 2025, compared to $(174,899) in the prior year[43]. - The company experienced a net cash used in operating activities of $(1,341,514) for the three months ended March 31, 2025, compared to $(1,122,709) in the prior year[28]. - Net cash flow used in investing activities was approximately $810,221 for the three months ended March 31, 2025, primarily due to an advance payment to Star of $800,000[186]. - There were no cash flows provided by financing activities for the three months ended March 31, 2025[188]. Stock and Equity - The number of common shares outstanding increased from 4,930,531 to 5,013,863, reflecting an increase of about 1.7%[20]. - The Company has authorized 15,000,000 shares of preferred stock, with no shares issued and outstanding as of March 31, 2025[124]. - The Company issued 100,000 stock options to a consultant on November 13, 2024, with a total share-based compensation expense of $177,905 for the three months ended March 31, 2025[140]. - The Company completed a private placement on December 20, 2024, raising approximately $9.99 million by selling 1,666,666 units at $6.00 per unit[127]. - The Company established the 2025 Equity Incentive Plan with 1,950,000 shares of common stock reserved for issuance, subject to shareholder approval[159]. Business Strategy and Operations - The company plans to focus its business on the defense sector following the acquisition of a controlling 51% interest in Star 26 Capital Inc., which supplies defense products[33]. - The Company entered into a Securities Purchase Agreement with Star 26 Capital Inc. to acquire a controlling 51% interest in Star for an aggregate investment of $21,000,000[153]. - The Company shifted its business focus to the defense sector following the Settlement Agreement related to the acquisition of Star[166]. - The company plans to cease operations of its General Support Services operating segment, which meets the discontinued operations criteria as of December 15, 2024[98]. Internal Controls and Compliance - As of March 31, 2025, the company concluded that its disclosure controls and procedures were effective[210]. - Material weaknesses in internal control over financial reporting were identified as of December 31, 2024, related to the evaluation of intangible assets and cost-method investments[212]. - Remediation actions for the identified material weaknesses began in Q4 of fiscal year 2024, including the use of external consultants for technical accounting issues[213]. - The material weaknesses will not be considered fully remediated until additional controls have operated effectively for a sufficient period[214]. - As of March 31, 2025, the company has not remediated the material weakness related to resources for evaluating intangible assets[215].

Financial Performance - The company reported a net income of $102,958,139 for the three months ended March 31, 2025, compared to a net loss of $2,429,417 for the same period in 2024[22]. - Basic net income per common share for continuing operations was $20.80 for Q1 2025, compared to a loss of $(1.19) for Q1 2024[22]. - For the three months ended March 31, 2025, the net income from continuing operations was approximately $103.14 million, compared to a net loss of approximately $2.10 million for the same period in 2024[28]. - Other income (expense), net, increased approximately $104,658,000, or 1,043,970.3%, for the three months ended March 31, 2025, primarily due to gains from changes in fair value of stock purchase warrant liabilities[177]. - Pre-tax net income from continuing operations was $103,140,894 for the three months ended March 31, 2025, compared to a pre-tax net loss of $2,095,201 for the same period in 2024[179]. Assets and Liabilities - Total assets decreased from $9,109,284 on December 31, 2024, to $8,601,827 on March 31, 2025, a decline of approximately 5.6%[19]. - Current liabilities significantly decreased from $171,450,366 to $64,709,245, representing a reduction of about 62.2%[19]. - The accumulated deficit improved from $(201,075,743) on December 31, 2024, to $(98,117,604) on March 31, 2025, indicating a reduction of approximately 51.2%[21]. - The total stockholders' deficit decreased from $(163,350,109) on December 31, 2024, to $(57,217,016) on March 31, 2025, a reduction of approximately 65%[21]. - As of March 31, 2025, total current assets were $2,127,120, an increase of 95.5% from $1,089,052 as of December 31, 2024[100]. - Total liabilities increased to $4,453,142 as of March 31, 2025, compared to $3,179,877 as of December 31, 2024, representing a rise of 40.0%[100]. Cash Flow and Operating Activities - The company incurred a cash flow used in operating activities from continuing operations of approximately $1.62 million for the three months ended March 31, 2025, compared to $174,899 for the same period in 2024[43]. - The company experienced a net cash used in operating activities of approximately $1.34 million for the three months ended March 31, 2025, compared to $1.12 million for the same period in 2024[28]. - Net cash used in operating activities was approximately $1,341,514 for the three months ended March 31, 2025, compared to $1,122,709 for the same period in 2024[183]. - Net cash flow used in investing activities was approximately $810,221 for the three months ended March 31, 2025, primarily due to an advance payment to Star of $800,000[186]. Business Strategy and Operations - The company plans to focus its business on the defense sector following the acquisition of a controlling 51% interest in Star 26 Capital Inc., which supplies defense products[33]. - The company plans to cease operations of its General Support Services operating segment, which meets the discontinued operations criteria[98]. - The Company entered into a Securities Purchase Agreement with Star 26 Capital Inc. to acquire a controlling 51% interest in Star for an aggregate investment of $21,000,000[153]. - The cash advances to be made by the Company to Star were increased from $1,800,000 to $3,000,000 as per Amendment No. 2 to the Star Agreement[160]. Stock and Equity - The company issued 83,332 shares of common stock from the exercise of pre-funded warrants, contributing $3,055,814 to additional paid-in capital[24]. - The weighted average common shares outstanding increased from 1,754,449 in Q1 2024 to 4,959,516 in Q1 2025[23]. - The Company established the 2025 Equity Incentive Plan with 1,950,000 shares of common stock reserved for issuance, subject to shareholder approval[159]. - The company issued 100,000 stock options to a consultant on November 13, 2024, with a total stock options activity resulting in 104,823 options outstanding as of March 31, 2025[140]. Expenses and Cost Management - Operating expenses decreased from $2,085,176 in Q1 2024 to $1,507,107 in Q1 2025, a reduction of approximately 27.7%[22]. - Total operating expenses for the three months ended March 31, 2025, were $1,507,107, a decrease of 27.7% from $2,085,176 in the same period of 2024[173]. - Professional fees decreased by approximately $878,000, or 47.9%, for the three months ended March 31, 2025, primarily due to a reduction in advisory and legal fees[174]. - Total other general and administrative expenses increased by approximately $266,000, or 119.1%, for the three months ended March 31, 2025, compared to the same period in 2024[176]. Internal Controls and Compliance - The company has substantial doubt about its ability to continue as a going concern for at least one year from the issuance of the financial statements due to its liquidity condition[45]. - Material weaknesses in internal control over financial reporting were identified as of December 31, 2024, related to the evaluation of intangible assets and cost-method investments[212]. - Remediation actions for the identified material weaknesses began in Q4 of fiscal year 2024, including the use of external consultants for technical accounting issues[213]. - As of March 31, 2025, the company has not remediated the material weakness related to resources for evaluating intangible assets[215]. - Management acknowledges that no controls can provide absolute assurance that all control issues and instances of fraud have been detected[217].

Stock Repurchase and Financial Performance - The company spent $37.6 million to repurchase 377,154 shares of its common stock during fiscal 2025, with a total of approximately $832 million spent on repurchases since the program's inception in 1997[20] - The company has repurchased a total of 114,476,691 shares of its common stock since the start of its repurchase program, with 2,523,309 shares remaining authorized for repurchase as of March 31, 2025[20] - The company has authorized a stock repurchase program for up to 117,000,000 shares, with 114,476,691 shares repurchased to date[135] - As of March 31, 2025, the average price paid for repurchased shares was $111.50, with a total of 80,661 shares repurchased in the first quarter of 2025[156] - The company's common stock has shown significant growth, increasing from 100.00 in 2020 to 616.24 in 2025, outperforming both the Nasdaq Composite and the Nasdaq Healthcare Services Index[161] - The company has never paid cash dividends and intends to retain future earnings for business use and stock repurchases[154] Employee and Workplace Dynamics - As of March 31, 2025, CorVel had 5,075 employees, with 91% working from home or in a hybrid arrangement due to the COVID-19 pandemic[71][72] - The company has been recognized as a "Great Place to Work Company" for five consecutive years, reflecting its commitment to employee satisfaction and organizational culture[73] - Over one-third of CorVel's employees identified as racially or ethnically diverse, and over 79% of employees identify as women[76] - The company has assessed its lease obligations and expects a reduction in office space needs due to more employees working from home[149] Technology and Innovation - The company’s proprietary bill review technology includes over 100 million individual rules, significantly improving the efficiency of the claims management process[25] - CorVel's CareMC® platform enhances claims management by providing real-time access to claims information and streamlining healthcare transaction processing through artificial intelligence[58][61] - The company continues to modernize its claims system capabilities, aiming to provide real-time information and rapid feedback through the CareMC® online portal[62] - The introduction of new technologies and software products is essential for competitiveness, but development may take longer and cost more than anticipated[102] Claims and Case Management Services - The company’s virtual care platform allows injured workers to access 24/7 nurse triage and telehealth services, facilitating timely medical intervention[49] - The company’s case management services include telephonic and field case management, focusing on early intervention and rehabilitation to reduce disability duration[45] - CorVel's vocational rehabilitation program assists injured workers with services such as ergonomic assessments and job placement, tailored to individual case needs[51] - Patient management services include claims management, case management, and 24/7 nurse triage, designed to expedite return to work for injured employees[209] Financial Risks and Competition - The healthcare cost containment industry is competitive, with CorVel facing significant competition from larger firms and potential in-house capabilities developed by customers[64] - Increased competition from national managed care providers and insurance companies could adversely affect growth and profitability[89] - A decline in referrals for patient management services has previously led to decreased revenue, influenced by factors such as workplace injury rates and regional competition[90] - Declines in workers' compensation claims could materially harm the company's financial results, as fewer work-related injuries are reported[91] - The company faces inflation risks that could increase operational costs, impacting overall profitability[98] Regulatory and Compliance Issues - The company is subject to increased scrutiny regarding privacy and data security laws, which may lead to higher liabilities and operational challenges[131] - Regulatory changes in healthcare and workers' compensation could increase operational costs and reduce demand for services, impacting overall business performance[127] - There is a risk of litigation related to the company's recommendations on medical treatment plans, which could result in significant liabilities if claims are successful[124] Internal Controls and Governance - The management assessed the effectiveness of internal control over financial reporting and concluded it was effective as of March 31, 2025, providing reasonable assurance regarding the reliability of financial reporting[173] - The independent registered public accounting firm, Haskell & White LLP, audited the consolidated financial statements and issued an attestation report on the effectiveness of internal control over financial reporting as of March 31, 2025[174] - The company has established an insider trading policy applicable to all directors, officers, and employees to ensure compliance with securities laws[181] - The Board of Directors adopted a code of ethics and business conduct applicable to all employees, officers, and directors, promoting ethical behavior within the company[182] Operational Challenges - The company may face significant operational disruptions due to natural disasters, severe weather, or pandemics, which could materially impact its financial position and results[110] - Cybersecurity risks are increasing, with a notable rise in the frequency and sophistication of attacks, potentially leading to reputational harm and financial losses[113] - The company has invested significantly in information technology and data security measures to protect sensitive information, but these expenditures may adversely affect financial condition and operational focus[113] - The company relies on its information systems for efficient data processing, and any interruptions could lead to customer cancellations and competitive disadvantages[118] Market Position and Strategy - The company operates as an independent nationwide provider of medical cost containment and managed care services, focusing on workers' compensation, automobile insurance claims, and group health insurance benefits[207] - The company serves a diverse customer base, including insurers and government agencies, with no single customer accounting for 10% or more of revenue in fiscal years 2025, 2024, or 2023[63] - The company aims for internal growth and strategic acquisitions in the workers' compensation managed care industry, but faces risks related to personnel retention and resource acquisition[85] - Future growth is contingent on the ability to manage and process claims data effectively, with no assurance that current systems will meet future demands[119]

Financial Performance - Net revenue for fiscal year 2025 was $2,015,458 thousand, a 12.3% increase from $1,794,792 thousand in fiscal year 2024 [192]. - Total homes sold increased to 19,753 in fiscal year 2025, up 16.7% from 16,928 in fiscal year 2024 [192]. - Gross profit for factory-built housing increased to $441,796 thousand, a 10.7% rise from $398,919 thousand in the previous year [195]. - Income before income taxes for fiscal year 2025 was $211,070 thousand, reflecting a 6.0% increase from $199,180 thousand in fiscal year 2024 [200]. - The effective tax rate for fiscal year 2025 was 19.0%, down from 20.7% in fiscal year 2024, attributed to increased tax credits [201]. Order Backlog - The company's home order backlog as of March 29, 2025, was approximately $197 million, an increase of $6 million from $191 million a year earlier [185]. Expenses - Selling, general and administrative expenses rose to $275,315 thousand, an 11.0% increase from $247,920 thousand in fiscal year 2024 [196]. Cash Flow - Cash and cash equivalents at the beginning of fiscal year 2025 were $368.8 million, an increase from $283.5 million in fiscal year 2024, representing a change of $85.3 million [205]. - Net cash provided by operating activities decreased by $46.2 million to $178.5 million in fiscal year 2025, primarily due to increased working capital needs [205]. - Net cash used in financing activities increased by $40.2 million to $147.9 million in fiscal year 2025, primarily related to common stock repurchases [209]. Loan Originations - Consumer loan originations decreased by $24.7 million to $66.1 million in fiscal year 2025, down from $90.8 million in fiscal year 2024 [206]. - Commercial loan originations increased by $32.1 million to $143.4 million in fiscal year 2025, compared to $111.2 million in fiscal year 2024 [207]. Financial Services - The financial services segment's net revenue increased by 5.3% to $82,347 thousand, primarily due to higher insurance premiums [194]. Market Challenges - The company continues to face challenges in the secondary market for manufactured home-only loans, impacting industry growth [188]. Production and Workforce Management - The company is focused on balancing production levels and workforce size with demand to maximize efficiencies [185]. Debt and Credit Facilities - The company has a $75.0 million revolving credit facility, with no amounts outstanding as of March 29, 2025 [203]. - The company anticipates compliance with its debt covenants, projecting cash availability to exceed operational needs for the next year [203]. Interest Rate and Exchange Rate Sensitivity - A 1% unfavorable change in average interest rates would reduce the fair value of consumer loans receivable by approximately $1.2 million [221]. - A 10% change in exchange rates could have resulted in a revaluation loss of approximately $0.7 million as of March 29, 2025 [223].

Interim Financial Statements [Individual and Consolidated Interim Balance Sheets](index=10&type=section&id=INDIVIDUAL%20AND%20CONSOLIDATED%20INTERIM%20BALANCE%20SHEETS) As of March 31, 2025, consolidated total assets increased to BRL **126.61 billion**, liabilities grew to BRL **58.46 billion**, and equity decreased to BRL **68.14 billion**, primarily due to a BRL **2.0 billion** capital reduction Consolidated Balance Sheet Summary (in thousands of BRL) | Account | 03.31.2025 | 12.31.2024 | | :--- | :--- | :--- | | **Total Current Assets** | 25,797,480 | 22,814,327 | | **Total Non-current Assets** | 100,807,585 | 102,126,346 | | **TOTAL ASSETS** | **126,605,065** | **124,940,673** | | **Total Current Liabilities** | 26,757,842 | 24,257,939 | | **Total Non-current Liabilities** | 31,702,897 | 30,883,239 | | **TOTAL LIABILITIES** | **58,460,739** | **55,141,178** | | **Total Equity** | **68,144,326** | **69,799,495** | | **TOTAL LIABILITIES AND EQUITY** | **126,605,065** | **124,940,673** | - The company's equity decreased from BRL **69.73 billion** at year-end 2024 to BRL **68.08 billion** at the end of Q1 2025, mainly due to a BRL **2.0 billion** capital reduction executed during the quarter[15](index=15&type=chunk)[17](index=17&type=chunk) [Individual and Consolidated Statements of Income](index=12&type=section&id=INDIVIDUAL%20AND%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) For Q1 2025, consolidated net operating revenue increased 6.2% to BRL **14.39 billion**, with net income attributable to controlling shareholders rising to BRL **1.06 billion** and basic EPS to BRL **0.65** Consolidated Statement of Income Summary (in thousands of BRL) | Account | Q1 2025 | Q1 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net operating revenue | 14,390,273 | 13,545,635 | +6.2% | | Gross profit | 6,354,391 | 6,027,143 | +5.4% | | Operating income | 1,984,968 | 1,910,488 | +3.9% | | Net income for the period | 1,056,270 | 896,109 | +17.9% | | Net income (Controlling shareholders) | 1,058,212 | 895,631 | +18.1% | | Basic and diluted EPS (R$) | 0.65 | 0.54 | +20.4% | [Individual and Consolidated Statements of Changes in Equity](index=13&type=section&id=INDIVIDUAL%20AND%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20EQUITY) Q1 2025 equity changes include a BRL **2.0 billion** capital reduction, BRL **1.06 billion** net income appropriation, BRL **326.5 million** share repurchases, and BRL **380 million** interim interest on equity declaration - A capital reduction of BRL **2.0 billion** was executed in Q1 2025[17](index=17&type=chunk) - The company repurchased BRL **326.5 million** worth of common shares for its treasury in Q1 2025[17](index=17&type=chunk) - Interim interest on equity declared in the period amounted to BRL **380 million**[17](index=17&type=chunk) [Individual and Consolidated Statements of Comprehensive Income](index=14&type=section&id=INDIVIDUAL%20AND%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Consolidated comprehensive income for Q1 2025 was BRL **1.051 billion**, slightly below net income of BRL **1.056 billion** due to a BRL **5.3 million** net other comprehensive loss from derivatives and currency adjustments Consolidated Comprehensive Income (in thousands of BRL) | Description | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income for the period | 1,056,270 | 896,109 | | Other comprehensive income (loss) | (5,290) | 2,250 | | **Comprehensive income for the period** | **1,050,980** | **898,359** | [Individual and Consolidated Statements of Cash Flows](index=16&type=section&id=INDIVIDUAL%20AND%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) In Q1 2025, net cash from operating activities was BRL **5.09 billion**, investing activities used BRL **2.38 billion**, and financing activities used BRL **1.21 billion**, resulting in a BRL **1.49 billion** net increase in cash and cash equivalents Consolidated Statement of Cash Flows Summary (in thousands of BRL) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash generated by operating activities | 5,090,843 | 4,925,206 | | Net cash used in investing activities | (2,383,618) | (1,909,384) | | Net cash used in financing activities | (1,213,209) | (618,349) | | **Increase in cash and cash equivalents** | **1,494,016** | **2,397,473** | - Significant cash outflows in financing activities included BRL **869.7 million** for debt and lease payments, and BRL **326.5 million** for treasury share repurchases[20](index=20&type=chunk) Notes to the Individual and Consolidated Quarterly Information [1. Operations](index=17&type=section&id=1.%20OPERATIONS) Telefônica Brasil provides diverse telecommunication services across Brazil, facing evolving ANATEL regulations, recent acquisitions like Samauma, and a significant migration from fixed-line concession to authorization regime - On March 21, 2025, Terra Networks acquired Samauma Brands for up to BRL **80 million**, strengthening the company's smartphone accessories market presence[53](index=53&type=chunk)[56](index=56&type=chunk) - The company finalized its STFC concession migration to an authorization regime with ANATEL on April 11, 2025, involving BRL **4.5 billion** in NPV investment commitments[37](index=37&type=chunk)[38](index=38&type=chunk) - Significant regulatory risks from ANATEL include potential changes to competition rules, interconnection fees, consumer rights, and spectrum licensing, which could adversely affect business and financial results[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - The company is adapting to Tax Reform (EC No. 132) introducing a dual VAT model (CBS and IBS) and a Selective Tax (IS), with the full impact pending further legislation[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) [2. Basis of Preparation and Presentation](index=24&type=section&id=2.%20BASIS%20OF%20PREPARATION%20AND%20PRESENTATION%20OF%20INDIVIDUAL%20AND%20CONSOLIDATED%20QUARTERLY%20FINANCIAL%20INFORMATION) The quarterly financial information for Q1 2025 was prepared under Brazilian CPC 21 and International IAS 34 standards, presented in Brazilian Reais, and consistent with 2024 annual accounting policies - The financial statements comply with both Brazilian (CPC 21) and International (IAS 34) interim reporting standards[74](index=74&type=chunk) - The accounting policies applied are consistent with those from the annual financial statements for the year ended December 31, 2024[89](index=89&type=chunk) - The company operates as a single operating segment: providing telecommunications services[88](index=88&type=chunk) [19. Provision and Contingencies](index=45&type=section&id=19.%20PROVISION%20AND%20CONTINGENCIES) As of March 31, 2025, consolidated provisions for probable losses totaled BRL **7.04 billion**, while contingent liabilities with possible risk amounted to BRL **45.99 billion**, primarily from tax disputes Consolidated Provisions for Probable Losses (in thousands of BRL) | Nature | 03.31.2025 | 12.31.2024 | | :--- | :--- | :--- | | Tax | 2,089,043 | 2,022,987 | | Regulatory | 984,726 | 1,151,095 | | Civil | 1,408,496 | 1,411,141 | | Labor | 1,005,763 | 935,541 | | Other | 1,550,120 | 1,619,121 | | **Total** | **7,038,148** | **7,139,785** | Consolidated Contingencies with Possible Risk of Loss (in thousands of BRL) | Nature | 03.31.2025 | 12.31.2024 | | :--- | :--- | :--- | | Tax | 41,549,347 | 40,850,071 | | Regulatory | 2,894,724 | 3,066,637 | | Civil | 1,962,944 | 2,000,926 | | Labor | 1,312,421 | 1,346,257 | | **Total** | **47,719,436** | **47,263,891** | - In December 2024, the company finalized a regulatory amnesty program in February 2025, settling pending federal obligations at approximately a **55%** discount[164](index=164&type=chunk)[165](index=165&type=chunk) [20. Loans, Financing, Debentures, and Leases](index=54&type=section&id=20.%20LOANS%2C%20FINANCING%2C%20DEBENTURES%2C%20LEASES%20AND%20OTHER%20CREDITORS) As of March 31, 2025, consolidated debt and lease liabilities slightly decreased to BRL **20.56 billion**, primarily comprising lease liabilities and debentures, with new Q1 2025 liabilities from acquisitions and tax programs Consolidated Debt and Lease Summary (in thousands of BRL) | Category | 03.31.2025 | 12.31.2024 | | :--- | :--- | :--- | | Leases | 14,864,936 | 15,246,606 | | Debentures (7th issue) | 3,600,772 | 3,695,214 | | Loans and financing | 2,093,682 | 1,804,710 | | **Total** | **20,559,390** | **20,746,530** | - The company's 7th issue of debentures are Sustainability-linked and complied with all covenants as of March 31, 2025[185](index=185&type=chunk)[187](index=187&type=chunk) - New Q1 2025 financing events include BRL **58.3 million** from Samauma acquisition, BRL **52.4 million** for a Minas Gerais ICMS tax program, and BRL **176.6 million** for the federal Desenrola Program[189](index=189&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) [23. Equity](index=58&type=section&id=23.%20EQUITY) Q1 2025 equity management included a BRL **2.0 billion** capital reduction, a new BRL **1.75 billion** share buyback program with BRL **326.5 million** repurchased, a reverse stock split followed by a split, and BRL **380 million** in interim interest on equity declared - A BRL **2.0 billion** capital reduction became effective in February 2025, with a BRL **1.233 per share** payment scheduled for July 15, 2025[203](index=203&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk) - A new share buyback program for up to BRL **1.75 billion** was approved on February 25, 2025, with **6.64 million** common shares repurchased for BRL **326.5 million** in Q1 2025[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - The company completed a reverse stock split (**40-for-1**) followed by a split (**1-for-80**) on April 15, 2025, to increase share liquidity[208](index=208&type=chunk)[211](index=211&type=chunk) Interim Interest on Equity Declared for 2025 (in thousands of BRL) | Approval Date | Gross Amount | Net Value | Payment Limit | | :--- | :--- | :--- | :--- | | 13.02.2025 | 180,000 | 153,000 | 30.04.2026 | | 13.03.2025 | 200,000 | 170,000 | 30.04.2026 | | **Total** | **380,000** | **323,000** | | [24. Net Operating Revenue](index=65&type=section&id=24.%20NET%20OPERATING%20REVENUE) In Q1 2025, consolidated net operating revenue reached BRL **14.39 billion**, primarily driven by service revenue growth to BRL **13.38 billion** and increased sale of goods revenue to BRL **1.01 billion** Consolidated Net Operating Revenue Breakdown (in thousands of BRL) | Revenue Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Services | 13,378,802 | 12,594,113 | | Sale of goods | 1,011,471 | 951,522 | | **Total Net Operating Revenue** | **14,390,273** | **13,545,635** | - No single customer accounted for more than **10%** of the company's operating revenue in Q1 2025 or Q1 2024[236](index=236&type=chunk) [28. Balances and Transactions with Related Parties](index=67&type=section&id=28.%20BALANCES%20AND%20TRANSACTIONS%20WITH%20RELATED%20PARTIES) The company conducts arm's length transactions with Telefónica Group related parties, with key balances including BRL **48.1 million** in receivables and BRL **564.7 million** in payables, and BRL **25.2 million** in Q1 2025 key management compensation - Major related party transactions involve services with Telefónica Group companies, including Telefónica Global Solutions, FiBrasil, and Telefónica S.A[242](index=242&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) Key Management Compensation (Consolidated, in thousands of BRL) | Period | Total Compensation | | :--- | :--- | | Q1 2025 | 25,166 | | Q1 2024 | 19,352 | [31. Financial Instruments and Risk and Capital Management](index=74&type=section&id=31.%20FINANCIAL%20INSTRUMENTS%20AND%20RISK%20AND%20CAPITAL%20MANAGEMENT) The company manages market risks using non-speculative derivatives like swaps, with a BRL **914.4 million** notional value as of March 31, 2025, while its capital management focuses on credit rating and capital allocation, alongside liquidity and credit risk controls - The company uses derivative instruments, primarily swaps, to hedge against inflation (IPCA) and foreign exchange risks (USD, EUR) on its liabilities[258](index=258&type=chunk)[266](index=266&type=chunk) - A sensitivity analysis indicates a **50%** adverse change in risk variables would result in a net negative impact of BRL **17.2 million** on the derivative portfolio's fair value[273](index=273&type=chunk) - The company's capital management focuses on maintaining a strong credit rating and maximizing shareholder value through dividends and share buybacks[286](index=286&type=chunk)[287](index=287&type=chunk) - Credit risk from accounts receivable is managed through strict customer base control, credit scoring, and service cut-offs for overdue invoices[298](index=298&type=chunk)[299](index=299&type=chunk) [35. Subsequent Events](index=87&type=section&id=35.%20SUBSEQUENT%20EVENTS) Subsequent events include the April 1, 2025, declaration of BRL **240 million** in gross interest on equity, the April 11, 2025, signing of the ANATEL Single Authorization Term, and joining a Rio Grande do Sul tax amnesty program on April 15, 2025 - On April 1, 2025, the Board declared BRL **240 million** in gross interest on equity, payable by April 30, 2026[320](index=320&type=chunk) - The company signed the Single Authorization Term with ANATEL on April 11, 2025, concluding its STFC concession migration to a private authorization regime[323](index=323&type=chunk) - On April 15, 2025, the company joined a Rio Grande do Sul tax amnesty program to settle BRL **163.5 million** in ICMS debts for a reduced BRL **73.6 million**, payable in installments[324](index=324&type=chunk)[325](index=325&type=chunk)

Investment Performance - The company has a strong investment performance track record, outperforming the MSCI ACWI Index with a net IRR of 11.2% compared to the benchmark's 0.9%[49] - The company has over 225 investment programs with the potential to earn performance fees, totaling over $95 billion in committed capital[54] - Approximately 75% of the accrued carried interest allocations of $1,496 million are from StepStone Fund vintages of 2019 or prior[54] Financial Growth - Management and advisory fees increased from $235 million in fiscal 2020 to $767 million in fiscal 2025, reflecting a 27% compounded annual growth rate[51] - As of March 31, 2025, the company had $24.6 billion of committed but undeployed fee-earning capital, expected to generate management fees upon deployment[52] - NAV-based management fees represented approximately 14% of total net management and advisory fees as of March 31, 2025, compared to 9% in 2024[601] Client Relationships - The company has maintained a high client retention rate of approximately 95% since inception[99] - Approximately 34% of the company's clients engage for both asset management and advisory services[99] - The company aims to expand existing client mandates and deploy already raised committed capital to drive growth[57][58] Global Expansion and Strategy - The company is focused on adding new clients globally, leveraging its established local presence and global investment capabilities[60] - The company plans to pursue selective strategic acquisitions to complement its platform and enhance distribution[64] Responsible Investment and Sustainability - The company became a signatory to the United Nations Principles for Responsible Investment (UNPRI) in 2013 and adopted a Responsible Investment policy in 2014, which is reviewed annually[88] - The company has engaged a consultant annually since 2019 to conduct a comprehensive carbon footprint measurement and analysis of its operations[95] - The company has implemented a standalone climate policy and incorporated TCFD-aligned climate considerations within its investment process in 2022[88] - The company has observed a growing focus on impact investing, targeting commercial returns while investing in thematic opportunities such as climate change and the United Nations' Sustainable Development Goals[92] Employee Development and Culture - As of March 31, 2025, the company had approximately 1,130 employees globally, including over 375 investment professionals[137] - The company emphasizes a culture of belonging and continuous improvement, fostering an environment where data and analysis drive decision-making[141] - The company’s investment in employee development includes structured training programs and mentorship opportunities to support professional growth[140] Financial Risks and Compliance - The company is preparing for compliance with the new anti-money laundering and customer identification programs required by the SEC and FinCEN by the end of 2025[124] - The SEC adopted amendments to Regulation S-P in May 2024, mandating notification to clients in the event of privacy breaches[124] - The company is subject to the EU Alternative Investment Fund Managers Directive II (AIFMD II), which entered into force on April 15, 2024, with a two-year implementation period[130] Borrowings and Interest Rates - The company had $175.0 million in borrowings outstanding under its Notes and $100.0 million under its Revolver as of March 31, 2025[605] - Interest expense is estimated to increase by $2.8 million in 2025 and $1.5 million in 2024 due to a 100 basis point increase in interest rates[605] - Interest income is expected to increase by $2.5 million in 2025 and $1.4 million in 2024 with a 100 basis point increase in interest rates[605] Market Sensitivity - A 10% decline in market values of investments held in the company's funds would result in an approximate decrease to annual management fees of $11.2 million in 2025 and $5.8 million in 2024[601] - A 10% decline in fair value of investments in funds would result in a decrease in investment income of $18.4 million in 2025 and $13.5 million in 2024[602] - The company’s carried interest allocation revenue is influenced by market factors, with varying impacts across different funds[602]

Revenue Performance - Total revenues for the three months ended April 30, 2025, were $2.24 billion, a 13% increase from $1.99 billion in the prior year period [120]. - Subscription services revenues were $2.06 billion for the three months ended April 30, 2025, representing a 13% increase from $1.82 billion in the prior year [133]. - The total subscription revenue backlog as of April 30, 2025, was $24.62 billion, up 19% from $20.68 billion a year earlier [136]. Customer Retention and Satisfaction - The gross revenue retention rate was approximately 98% as of April 30, 2025, indicating strong customer satisfaction and retention [134]. Operating Performance - Operating cash flows for the three months ended April 30, 2025, were $457 million, a 23% increase from $372 million in the prior year [120]. - Non-GAAP operating income increased by 32% to $677 million for the three months ended April 30, 2025, compared to $515 million in the prior year [120]. - GAAP operating income decreased to $39 million, or 1.8% of revenues, for the three months ended April 30, 2025, down from $64 million or 3.2% in the prior year [152]. - Non-GAAP operating income increased to $677 million, or 30.2% of revenues, for the three months ended April 30, 2025, compared to $515 million or 25.9% in the previous year [153]. Costs and Expenses - Total costs and expenses for the three months ended April 30, 2025, were $2.20 billion, a 14% increase from $1.93 billion in the prior year, including $166 million in restructuring expenses [138]. - Costs of subscription services increased by 21% to $350 million for the three months ended April 30, 2025, compared to $290 million in the prior year [139]. - Sales and marketing expenses increased to $623 million for the three months ended April 30, 2025, up $50 million or 9% from the prior year [145]. - General and administrative expenses rose to $212 million for the three months ended April 30, 2025, an increase of $11 million or 6% compared to the previous year [147]. - Restructuring expenses amounted to $166 million for the three months ended April 30, 2025, primarily related to employee transition and severance payments [149]. - Share-based compensation expense increased by $74 million to $459 million for the three months ended April 30, 2025, representing 20.5% of total revenues [150]. Cash Flow and Liquidity - Cash provided by operating activities was $457 million for the three months ended April 30, 2025, an increase from $372 million in the prior year [165]. - Free cash flows improved to $421 million for the three months ended April 30, 2025, compared to $291 million for the same period in 2024 [172]. - As of April 30, 2025, the company had cash, cash equivalents, and marketable securities totaling $8.0 billion [161]. - The company expects capital expenditures to be approximately $250 million in fiscal 2026, primarily for office facilities [168]. Market and Investment Risks - A hypothetical increase or decrease of 100 basis points in interest rates would have resulted in an approximately $111 million market value reduction or increase in the investment portfolio as of April 30, 2025 [194]. - The company has significant foreign currency exchange risk, with major exposures to the euro, British pound, Canadian dollar, and Australian dollar as of April 30, 2025 [190]. - The company’s investment portfolio is subject to market risk due to changes in interest rates, which may affect future investment income [193]. - The company does not enter into investments for trading or speculative purposes, focusing instead on preserving capital and meeting liquidity needs [192]. - The Senior Notes have fixed annual interest rates, thus the company does not have economic interest rate exposure on these debt obligations [195]. - The company’s borrowings under the 2022 Credit Agreement are exposed to market risk from changes in underlying index rates, affecting borrowing costs [196]. Strategic Initiatives - The company announced a restructuring plan in February 2025, resulting in a reduction of approximately 7.5% of its workforce [117]. - The company expects to continue investing in strategic growth areas, including innovative AI solutions and international expansion, to drive long-term subscription revenue growth [115]. Accounting Policies - There were no significant changes to the company's critical accounting policies and estimates during the three months ended April 30, 2025 [187]. - The company excludes share-based compensation expenses from non-GAAP financial measures, which are influenced by stock price and other factors beyond its control [182]. - Acquisition-related costs, including direct transaction costs and integration-related expenses, are excluded from non-GAAP financial measures due to their inconsistent nature [182].

Customer Dependence - Cirrus Logic's major customers represented approximately 96% of net sales in fiscal years 2025, 2024, and 2023, with Apple, Inc. accounting for about 89%, 87%, and 83% of total net sales respectively[28] - For the twelve-month periods ending March 29, 2025, March 30, 2024, and March 25, 2023, the company's ten largest end customers represented approximately 96%, 95%, and 92% of net sales, respectively[59] - Apple Inc. accounted for approximately 89%, 87%, and 83% of the company's total net sales for the same periods[59] - The company faces risks related to dependence on a limited number of customers, with significant pricing pressure expected on certain products[61] Business Strategy - The company maintains a three-pronged strategy focusing on leadership in smartphone audio, increasing high-performance mixed-signal content in smartphones, and expanding into additional applications and markets[18] - Cirrus Logic's product lines are categorized into Audio and High-Performance Mixed-Signal (HPMS), with HPMS expected to drive significant growth opportunities in the coming years[21] - The company is exploring acquisitions to enhance market position and technological capabilities, which involves risks such as integration challenges and unexpected costs[122][126] Manufacturing and Supply Chain - The company utilizes a fabless manufacturing model, relying on third-party foundries for wafer fabrication and assembly, primarily using GLOBALFOUNDRIES and TSMC[29] - A long-term supply agreement with GlobalFoundries requires the company to purchase a certain number of wafers through 2026, which could lead to excess inventory if actual requirements differ[81][82] - The company relies on third-party manufacturing and supply chain relationships, which poses risks such as increased costs and delays in meeting customer demand[73] - The company has experienced industry-wide manufacturing capacity constraints, impacting its ability to meet demand and potentially leading to increased prices and lower revenues[75] - The company may need to invest in geographically diversified manufacturing to meet customer demands for supply chain resilience[71] Research and Development - Research and development efforts are concentrated on designing and developing new products, with a focus on timely market introduction and integration support for customers[36] - The company is investing in research and development for new markets, but faces risks related to technology adoption and market growth[140] Workforce and Talent - The company had a voluntary turnover rate of 8% in fiscal year 2025, which is below the technology industry benchmarks[48] - As of March 29, 2025, the company employed 1,660 individuals, with 71% engaged in research and product development activities[49] - The global workforce was composed of 81% male and 19% female as of March 29, 2025[50] - Competition for qualified personnel is intense, with increased recruiting and employee costs impacting operational results[100][102] - Changes in immigration laws may impair the ability to attract and retain qualified engineering personnel, particularly in the U.S.[101] Financial Performance and Risks - Global economic conditions, including inflation, could adversely impact the company's financial results and market price of shares[90][92] - The company faces risks of significant fluctuations in inventory and operating results due to shifts in industry-wide capacity and customer order cancellations[157] - The company may incur future inventory write-downs and charges to gross margin due to imbalances between product inventories and demand[158] - The company is exposed to foreign currency exchange rate fluctuations, particularly with the British Pound Sterling, which could adversely impact financial results[161] - The company has a $300 million senior secured revolving credit facility that matures on July 8, 2026, with no outstanding balance as of March 29, 2025[163] Regulatory and Compliance - The company is subject to export controls and trade sanctions, which may limit its ability to conduct business with certain customers[45] - The company is subject to fluctuations in consumer electronics and smartphone markets, which could affect demand and sales[80] - The company is subject to increased operational and reporting requirements related to environmental, social, and governance (ESG) matters, which may impose additional costs[181] - Changes in environmental regulations may increase manufacturing costs and impact future operating results[142][145] Cybersecurity - Cybersecurity threats pose risks to the company's operations and could result in significant costs and liabilities[87][88] - The company conducts regular risk assessments to identify cybersecurity threats and evaluate the effectiveness of its internal controls[187] - The Board of Directors oversees the company's cybersecurity risks, with the Audit Committee responsible for periodic reporting[190] - The company employs a dedicated Information Security team to manage its cybersecurity strategy and conducts regular training for personnel[186] Market Competition - The semiconductor market is highly competitive, with significant risks from competitors that may have greater resources and capabilities[94][96] - The company expects increasing competition in its markets, which will depend on recruiting engineering talent and executing new product developments[37] - Average selling prices in the semiconductor industry have historically declined, and the company may struggle to maintain or increase prices for existing products[113][114] Intellectual Property - The company held approximately 4,130 pending and issued patents worldwide as of March 29, 2025, including about 1,570 granted U.S. patents[31] - The company may face significant liability for damages due to potential intellectual property claims and litigation, which could divert management's attention[171] Environmental and Social Responsibility - The company has maintained compliance with applicable environmental and health regulations, despite the inherent risks associated with hazardous materials in its laboratories[44] - The company may need to modify its supply chain practices and incur capital investments to meet customer requests for carbon emission reductions and renewable energy commitments[179]

Revenue and Income - Revenue for the three months ended April 30, 2025, was $1,174.7 million, representing a period-over-period growth of 2.9% compared to $1,141.2 million in 2024[88] - Net income for the same period was $254.6 million, up from $216.3 million in 2024[88] - Revenue for the three months ended April 30, 2025, was $1,174,715, an increase of $33.5 million or 2.9% compared to $1,141,234 in 2024, driven by a 5.9% increase in revenue from Enterprise customers[118] - Gross profit for the same period was $896,313, reflecting a gross margin of 76.3%, up from 76.1% in 2024[120] - Net income for the three months ended April 30, 2025, was $254,603, compared to $216,308 in 2024, representing an increase of 17.7%[117] Customer Segmentation - Revenue from Enterprise customers accounted for 60.0% of total revenue for the three months ended April 30, 2025, compared to 58.3% in 2024[94] - Revenue from Online customers represented 40.0% of total revenue for the three months ended April 30, 2025, compared to 41.7% in 2024[96] - The net dollar expansion rate for Enterprise customers was 98% for the trailing 12 months as of April 30, 2025, down from 99% in 2024[95] - Customers contributing more than $100,000 of trailing 12 months revenue represented 31.9% of total revenue in 2025, up from 29.9% in 2024[105] Cash Flow and Investments - Free cash flow (non-GAAP) for the three months ended April 30, 2025, was $463.4 million, down from $569.7 million in 2024[108] - Cash, cash equivalents, and marketable securities totaled $7.8 billion as of April 30, 2025, available for working capital and growth opportunities[128] - Net cash provided by operating activities was $489,261 for the three months ended April 30, 2025, down from $588,191 in 2024, primarily due to estimated tax payments[134] - The company invested $125.1 million in net cash used in investing activities, including $99.2 million for marketable securities and $25.9 million for property and equipment[135] - Net cash used in investing activities for the three months ended April 30, 2024 was $107.8 million, primarily due to net purchases of marketable securities of $91.0 million[136] - Net cash used in financing activities for the three months ended April 30, 2025 was $490.5 million, mainly due to cash paid for repurchases of common stock of $418.0 million[137] - During the three months ended April 30, 2025, the company repurchased and retired 5,561,920 shares of Class A common stock for an aggregate amount of $418.0 million[141] Operating Expenses - Total operating expenses decreased to $654,721, down from $664,910 in 2024, with a notable reduction in general and administrative expenses by 8.1%[124] Foreign Currency and Risk Management - For the three months ended April 30, 2025, 19.3% of revenue was denominated in currencies other than the U.S. dollar, compared to 19.4% for the same period in 2024[144] - The company has not entered into derivative or hedging transactions for foreign currency exchange rates, but may do so in the future if exposure increases[144] - A hypothetical 10% change in foreign currency exchange rates would not have had a material impact on historical financial statements for the three months ended April 30, 2025 and 2024[144] - The company has not been exposed to material risks due to changes in interest rates, and a hypothetical 10% change would not have had a material impact on historical financial statements[146] Strategic Investments and AI - The company continues to invest in AI and recently launched several new products, including Zoom Tasks and Zoom Workplace for Frontline Workers[99] - Other income, net increased by $16.2 million or 22.6%, reaching $87,792, primarily due to changes in foreign currency exchange rates[126] - Losses on strategic investments, net were $(13,619) for the three months ended April 30, 2025, a decline of 178.5% compared to gains of $17,354 in 2024[125] Taxation - Provision for income taxes decreased by $14.5 million or 19.2%, totaling $61,162 for the three months ended April 30, 2025[127] Stock Repurchase Program - The Board of Directors authorized a stock repurchase program of up to $1.5 billion in February 2024, followed by an additional $1.2 billion in November 2024[139] - As of April 30, 2025, the company had cash and cash equivalents of $1,228.8 million and marketable securities of $6,564.0 million[145]

Exhibit 99.1 CDN.$235,000,000 CREDIT FACILITIES AMENDED AND RESTATED CREDIT AGREEMENT BETWEEN OBSIDIAN ENERGY LTD. as Borrower AND ROYAL BANK OF CANADA, BANK OF MONTREAL, ICBC STANDARD BANK PLC, and such other persons as become parties hereto as lenders, as Lenders AND ROYAL BANK OF CANADA as Agent of the Lenders MADE AS OF APRIL 4, 2025 RBC Capital Markets and Bank of Montreal as Co-Lead Arrangers and Joint Bookrunners v TABLE OF CONTENTS CREDIT AGREEMENT | ARTICLE 1 INTERPRETATION | | 1 | | --- | --- | -- ...