Skillsoft Corp

(1) Description of Business and Basis of Presentation

Description of Business

Skillsoft Corp. (together with its consolidated subsidiaries, “Skillsoft”, “we”, “us”, “our” and the “Company”) has been listed on the New York Stock Exchange under the ticker symbol “SKIL” since* June 14, 2021.*Through a portfolio of high-quality content, an AI-enabled platform that is personalized and connected to customer needs, and a broad ecosystem of partners, Skillsoft drives continuous growth and performance for employees and their organizations by overcoming critical skills gaps, unlocking human potential, and developing the workforce.

With more than150,000 expert-led skills-building courses in modalities ranging from video and audio to instructor-led training, coaching, practice labs, and a GenAI-powered conversation simulator, Skillsoft offers transformative learning experiences for leaders to frontline workers, readers to hands-on learners.

References in the accompanying footnotes to the Company’s fiscal year refer to the fiscal year ended* January**31* of that year (e.g., fiscal2024 is the fiscal year ended* January 31, 2024).*

Successor and Predecessor Periods

On* June 11, 2021 (“acquisition date”), Churchill Capital Corp II, a Delaware corporation (“Churchill”) completed its acquisition of Software Luxembourg Holding S.A. (“Software Luxembourg” or “Predecessor”, and such acquisition, the "Skillsoft Merger"), and changed its corporate name from Churchill to Skillsoft Corp. (“Skillsoft”). In addition, the Company changed its fiscal year end from December 31to January 31.Also on June 11, 2021,the Company completed the acquisition of Albert DE Holdings Inc. (“Global Knowledge” or “GK” and such acquisition, the “Global Knowledge Merger”), a worldwide leader in IT and professional skills development. The Skillsoft Merger was considered a business combination under Accounting Standards Codification ("ASC")805, Business Combinations, and is accounted for using the acquisition method of accounting, whereby Churchill was determined to be the accounting acquirer and Software Luxembourg Holding was determined to be the predecessor for financial reporting purposes. References to “Successor” or “Successor Company” relate to the condensed consolidated financial position and results of operations of Skillsoft subsequent to June 11, 2021,the date when the acquisitions of Predecessor and Global Knowledge were completed. References to “Predecessor” relate to the condensed consolidated financial position and results of operations of Software Luxembourg Holding S.A. between August 28, 2020,and June 11, 2021 (its last date of operations prior to the merger). Operating results for the acquired business on June 11, 2021,were credited to the Predecessor in the accompanying condensed consolidated statement of operations. The funds received from the PIPE investments and transferred for the business combinations closing on June 11, 2021,*were recorded in the Successor period of the condensed consolidated statement of cash flows.

In the accompanying footnotes references to “the Company” relate to Successor and Predecessor for the same periods.

Reverse Stock Split

On* September 29, 2023,we effected a1*-for-20 reverse stock split of our common stock and proportionately decreased the number of authorized shares of common stock. All shares, outstanding options, warrants, restricted stock unit ("RSU"), and per share information throughout this Annual Report on Form10-K has been retroactively adjusted to reflect the reverse stock split. The shares of common stock retain a par value of $0.0001 per share. Accordingly, an amount equal to the par value of the decreased shares resulting from the reverse stock split was reclassified from "Common stock" to "Additional paid-in capital".

Basis of Financial Statement Preparation

The accompanying consolidated financial statements include the accounts of Skillsoft (Successor) and Software Luxembourg (Predecessor) and its wholly owned subsidiaries. We prepared the accompanying consolidated financial statements in accordance with the instructions for Form10‑K and Article10 of Regulation S-X and, therefore, include all information and footnotes necessary for a complete presentation of operations, comprehensive income (loss), financial position, changes in shareholders’ equity (deficit) and cash flows in conformity with accounting principles generally accepted in the United States of America ("GAAP").

Certain amounts reported in prior years have been reclassified to conform to the presentation in the current year. These reclassifications hadno effect on total assets, total liabilities, total stockholders’ equity, or net income (loss) for the prior years.

The Company is an “emerging growth company,” as defined in Section2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of2012 (the “JOBS” Act”), and has and* mayin the future take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that arenot* emerging growth companies including, butnot limited to,not being required to comply with the independent registered public accounting firm attestation requirements of Section404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute paymentsnot previously approved.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from our estimates.

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(2) Summary of Significant Accounting Policies

Revenue Recognition

The Company enters into contracts that provide customers access to a broad spectrum of learning options including cloud-based learning content, talent management solutions, virtual, on-demand and classroom training, and individualized coaching. The Company recognizes revenue that reflects the consideration that we expect to be entitled to receive in exchange for these services. We apply judgment in determining our customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience, credit, or financial information. The Company isnot required to exercise significant judgment in determining the timing for the satisfaction of performance obligations or the transaction price.

The Company’s cloud-based solutions generally donot provide customers with the right to take possession of the software supporting the platform or to download course content without continuing to incur fees for hosting services and, as a result, are accounted for as service arrangements. Access to the platform and course content represents a series of distinct services as the Company continually provides access to, and fulfills its obligation to, the end customer over the subscription term. The series of distinct services represents a single performance obligation that is satisfied over time. Accordingly, the fixed consideration related to subscription revenue is generally recognized on a straight-line basis over the contract term, beginning on the date the service is made available to the customer. The Company’s subscription contracts typically vary fromone year tothree years. The Company’s cloud-based solutions arrangements are generally non-cancellable and non-refundable.

Revenue from virtual, on-demand and classroom training, and individualized coaching is recognized in the period in which the services are rendered.

The Company also sells professional services related to its cloud solutions which are typically considered distinct performance obligations and are recognized over time as services are performed. For fixed-price contracts, revenue is recognized over time based on a measure of progress that reasonably reflects our progress toward satisfying the performance obligation.

While the Company’s revenue primarily relates to software as a service* ("SaaS") subscription services where the entire arrangement fee is recognized on a ratable basis over the contractual term, the Company sometimes enters into contractual arrangements that have multiple distinct performance obligations,one or more of which have different periods over which the services or products are delivered. These arrangements may*include a combination of subscriptions and non-subscription products such as professional services. The Company allocates the transaction price of the arrangement based on the relative estimated standalone selling price, or SSP, of each distinct performance obligation.

Reimbursements received from customers for out-of-pocket expenses are recorded as revenues, with related costs recorded as cost of revenues. The Company presents revenues net of any taxes collected from customers and remitted to government authorities.

As the Company’s contractual agreements predominately call for advanced billing, contract assets are rarely generated.

Deferred Revenue

The Company records as deferred revenue amounts that have been billed in advance for products or services to be provided. Deferred revenue includes the unrecognized portion of revenue associated with service fees for which the Company has received payment or for which amounts have been billed and are due for payment.

Deferred Contract Acquisition Costs

The Company defers sales commissions, and associated fringe costs, such as payroll taxes, paid to direct sales personnel and other incremental costs of obtaining contracts with customers, provided the Company expects to recover those costs. The Company determines whether costs should be deferred based on its sales compensation plans if the commissions are in fact incremental and wouldnot have occurred absent the customer contract.

Sales commissions for renewal of a subscription contract arenot considered commensurate with the commissions paid for the acquisition of the initial subscription contract given the substantive difference in commission rates between new and renewal contracts. Commissions paid upon the initial acquisition of a contract are amortized over an estimated period of benefit, which assumes a level of renewals and typically exceeds the original contract term, while commissions paid related to renewal contracts are amortized over the contractual term of the renewal. Amortization is recognized on a straight-line basis upon commencement of the transfer of control of the services, commensurate with the pattern of revenue recognition.

The period of benefit for commissions paid for the acquisition of initial subscription contracts is determined by taking into consideration the initial estimated customer life and the technological life of the Company’s platform and related significant features. The Company determines the period of benefit for renewal subscription contracts by considering the average contractual term for renewal contracts. Amortization of deferred contract acquisition costs is included within sales and marketing expense in the consolidated statements of operations.

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Foreign Currency Translation

Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are recorded to other comprehensive income (loss). Foreign currency gains or losses on transactions denominated in a currency other than an entity’s functional currency are recorded in other income/(expenses) in the accompanying statements of operations. For the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor), and the period from February 1, 2021through June 11, 2021 (*Predecessor), gains (losses) arising from transactions denominated in foreign currencies other than an entity’s functional currency were approximately $1.5 million, $3.8 million, ($2.4) million, and ($0.1) million, respectively.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with original maturities of90 days or less at the time of purchase to be cash equivalents. Cash equivalents also include amounts in transit from certain payment processors for credit and debit card transactions, which typically settle withinfive business days. As of* January 31, 2024* and* January 31, 2023*, the Company didnot have any available-for-sale investments.

At* January 31, 2024* and* January 31, 2023*, the Company had approximately $136.3 million and $170.4 million of cash and cash equivalents, respectively and $10.2 million and $7.2 million of restricted cash, respectively, primarily related to the accounts receivable facility. Under the terms of the accounts receivable facility, the Company hasthree accounts considered restricted, an interest reserve account, a foreign exchange reserve account and a concentration account. The interest reserve account requires three months interest on the greater of the facility balance or facility balance floor (the facility balance floor was$10.0 million as of* January 31, 2024*). The foreign exchange reserve account requires the Company to restrict cash for an amount equivalent to the change in the translated value of our foreign receivables included in the borrowing base from the datefirst utilized. The concentration account requires the Company to deposit receipts from the receivables used in the borrowing base until the Company submits a monthly reconciliation report. At that time, the funds* may*be returned if they are replaced with new receivables.

Acquisition and Integration Related Costs

The Company expenses acquisition and integration related costs as incurred, which consist of professional fees for legal, investment banking and other advisor costs incurred in connection with the business combinations completed in* April 2022and June**2021* and the subsequent integration-related activities.

Risks and Uncertainties

The Company is subject to a number of risks and uncertainties common to companies in similar industries and stages of development, including, butnot limited to, the uncertainty of economic, political and market conditions; data security and privacy risk; regulatory risks; management of growth; dependence on key individuals; management of international operations; intellectual property risks; competition from substitute products and services of larger companies; product development risk; ability to keep pace with technological developments; and customer adoption of new products. We record a loss contingency when it is deemed probable and reasonably estimable, based on our best estimate.

Property and Equipment

The Company records property and equipment at cost. Depreciation and amortization are charged to operations based on the cost of property and equipment over their respective estimated useful lives on a straight-line basis, as follows:

Expenditures for maintenance and repairs are expensed as incurred, while expenditures for renewals or betterments are capitalized. The Company evaluates the carrying amount of our property and equipment whenever events or circumstances indicate that the carrying value of such assets* may**not* be recoverable. As of* January 31, 2024*, the Company believes the carrying amounts of its property and equipment are recoverable andno impairment exists.

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Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make payments arising from the agreement. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the term. As most of our leases donot provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the obligation at commencement date. The ROU asset excludes incentives. When it is reasonably certain we will exercise options to extend or terminate contained in the lease agreements, we reflect it in our ROU assets and lease liabilities. Lease expense is recognized on a straight-line basis over the contractual term. If the Company has agreements with both lease and non-lease components, generally we account for them separately.

Content and Software Development Expenses

Content and software development expenses consist primarily of personnel and contractor related expenditures to develop the Company’s content, platform and other product offerings and the Company’s policy is to expense costs as incurred. The Company outsources certain aspects of content production tothird parties who produce original content on behalf of Skillsoft. Third party costs incurred in these development efforts with external resources* may*include prepayments and are recognized as expense in proportion to the level of services completed.

Software development costs are expensed as incurred, except for costs attributable to upgrades and enhancements that qualify for capitalization. See the “Capitalized Software Development Costs” section below for further discussion on this matter.

For the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor) and the period from February 1, 2021through June 11, 2021 (*Predecessor), the Company incurred $26.3 million, $32.1 million, $15.5 million, and $7.8 million, respectively of proprietary content development expenses.

Capitalized Software Development Costs

The Company capitalizes certain internal use software development costs related to its SaaS platform incurred during the application development stage when management with the relevant authority authorizes and commits to the funding of the project, it is probable that the project will be completed, and the software will be used as intended. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditures will result in additional functionality. Costs related to preliminary project activities and to post-implementation activities are expensed as incurred. Internal use software is amortized on a straight-line basis over its estimated useful life, which is generally 3 to 5 years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of the assets. Capitalized costs are recorded as intangible assets in the accompanying balance sheets. For the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor) and the period from February 1, 2021through June 11, 2021 (*Predecessor), the Company capitalized $13.7 million, $7.3 million, $2.9 million, and $1.7 million, respectively, and recognized amortization of$4.9 million, $1.2 million, $0.2 million, and $0.2 million, respectively.

Content Partner****Expenses

For the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor), and the period from February 1, 2021through June 11, 2021 (Predecessor), the Company recognized $30.9 million, $30.9 million, $25.7 million, and $6.2 million, respectively of royalty and course material expenses forthird* party content used or provisioned in the Company’s content library.

Derivative Instruments

We account for debt and equity issuances as either equity-classified or liability-classified instruments based on an assessment of each instrument's specific terms and applicable authoritative guidance in the Financial Accounting Standards Board (“FASB”) ASC480, Distinguishing Liabilities from Equity (“ASC480”) and ASC815, Derivatives and Hedging(“ASC815”). The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC480, meet the definition of a liability pursuant to ASC480, and whether the instruments meet all of the requirements for equity classification under ASC815, including whether the instruments are indexed to our own common stock and whether the holders could potentially require “net cash settlement” in a circumstance outside of our control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the instruments and as of each subsequent quarterly period end date while the instruments are outstanding.

For issued or modified instruments that meet all of the criteria for equity classification, the instruments are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified instruments that donot meet all the criteria for equity classification, the instruments are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the instruments are recognized as a non-cash gain or loss on the statements of operations.

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Fair Value of Financial Instruments

Financial instruments consist mainly of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, debt interest rate cap derivatives and warrants. The carrying amount of accounts receivable is net of an allowance for doubtful accounts, which is based on historical collections and known credit risks. See Note20 for a discussion related to the fair value of the Company’s borrowing agreements.

Short-Term and Long-Term Debt

Short-term debt has contractual or expected maturities ofone year or less. Long-term debt has contractual or expected maturities greater thanone year. The Company amortizes deferred debt financing costs (including issuance costs and creditor fees) and original issuance discounts, both recorded as a reduction to the carrying amount of the related debt liability, as interest expense over the terms of the underlying obligations using the effective interest method.

Financial Instruments

The Company accounts for debt and equity issuances as either equity-classified or liability-classified instruments based on an assessment of each instrument's specific terms and applicable accounting guidance. The assessment considers whether the instruments are freestanding financial instruments that meet the definition of a liability, whether the instruments meet all of the requirements for equity classification, including whether an instrument is indexed to the Company’s own common stock and whether the holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the instrument and as of each subsequent quarterly period end date while the instrument is outstanding.

For issued or modified instruments that meet all of the criteria for equity classification, the instruments are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified instruments that donot meet all the criteria for equity classification (which includes 790,000 of private placement warrants held by the sponsors for Churchill), the instruments are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the instruments are recognized as a non-cash gain or loss on the statements of operations.

The Company has elected tonot designate their derivatives as hedging relationships. As such, the changes in the fair value of the derivatives are recorded directly in the statement of operations.

Concentrations of Credit Risk and Off-Balance-Sheet Risk

For the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor) and the period from February 1, 2021through June 11, 2021 (Predecessor), no customer individually comprised greater than10%* of revenue. As of* January 31, 2024* (Successor) and2023 (Successor), no customer individually comprised more than10% of accounts receivable.

The Company considers its customers’ financial condition and generally doesnot require collateral. The Company maintains a reserve for doubtful accounts and sales credits that is the Company’s best estimate of potentially uncollectible trade receivables. Provisions are made based upon a specific review of all significant outstanding invoices that are considered potentially uncollectible in whole or in part. For those invoicesnot specifically reviewed or considered uncollectible, reserves are recorded utilizing different rates, based upon the age of the receivable, historical experience, and other currently available evidence. The allowances are adjusted as additional information becomes known or payments are made.

The Company hasno off-balance-sheet arrangements nor concentration of credit risks such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

Intangible Assets, Goodwill and Indefinite‑Lived Intangible Impairment Assessments

We recognize the excess of the purchase price, plus the fair value of any noncontrolling interest in an acquiree, over the fair value of identifiable net assets acquired, which includes the fair value of specifically identifiable intangible assets, as goodwill.

The Company amortizes its finite-lived intangible assets, including customer contracts and internally developed software, over their estimated useful life. The Company reviews the carrying values of intangible assets subject to amortization at least annually to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in remaining useful life. Conditions that would indicate impairment and trigger a more frequent impairment assessment include, but arenot limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, or an adverse action or assessment by a regulator.

In addition, the Company reviews the carrying values of its indefinite-lived intangible assets, including goodwill and certain trademarks, during thefourth fiscal quarter of each year for impairment, or more frequently if certain indicators are present or changes in circumstances suggest that impairment* mayexist and reassesses their classification as indefinite-lived assets. See Note5* for a discussion of impairment charges recognized for the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor).

Restructuring Charges

Liabilities for restructuring costs include, but arenot limited to,one-time involuntary termination benefits provided to employees under the terms of a benefit arrangement that, in substance, arenot an ongoing benefit arrangement or a deferred compensation contract, which are recognized on the communication date and certain contract termination costs, including operating lease termination costs which are recognized on the termination date or cease-use date for ongoing lease payments.

In addition, the Company accounts for certain employee-related restructuring charges as an ongoing benefit arrangement, based on its prior practices and policies for the calculation and payment of severance benefits. The Company recognizes employee-related restructuring charges when the likelihood of future payment is probable, and the amount of the severance benefits is reasonably estimable.

ASC842 amended ASC420 to exclude costs to terminate a contract that is a lease from the scope of ASC420. The Company evaluates right-of-use ("ROU") assets abandonment and impairment in accordance with ASC360, Property, Plant, and Equipment and recognizes ROU assets abandonment related amortization and write-offs as restructuring charges in its statements of operations.

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Stock-Based Compensation Expense

We recognize compensation expense for stock options and time-based restricted stock units granted to employees on a straight-line basis over the service period that awards are expected to vest, based on the estimated fair value of the awards on the date of the grant. For restricted-stock units that have market conditions, we recognize compensation expense using an accelerated attribution method. We recognize forfeitures as they occur. We estimate the fair value of options utilizing the Black-Scholes model, which is dependent on several subjective variables, such as the expected option term and expected volatility over the expected option term. We determine the expected term using the simplified method. The simplified method sets the term to the average of the time to vesting and the contractual life of the options. Since we donot have sufficient trading history of our common stock, the expected volatility is estimated by considering (i) the average historical stock volatilities of a peer group of public companies within our industry over a period equivalent to the expected term of the stock option grants and (ii) the implied volatility of warrants to purchase our common stock that are actively traded in public markets. The fair value of restricted stock units that vest based on market conditions are estimated using the Monte Carlo valuation method. These fair value estimates of stock related awards and assumptions inherent therein are estimates and, as a result,* may**not* be reflective of future results or amounts ultimately realized by recipients of the grants.

Advertising Costs

Costs incurred for production and communication of advertising initiatives are expensed when incurred. Advertising expenses amounted to approximately $15.4 million, $15.8 million, $8.2 million, and $2.8 million for the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor), and the period from February 1, 2021through June 11, 2021 (*Predecessor), respectively.

Income Taxes

The Company provides for deferred income taxes resulting from temporary differences between the basis of its assets and liabilities for financial reporting purposes as compared to tax purposes, using rates expected to be in effect when such differences reverse. The Company records valuation allowances to reduce deferred tax assets to the amount that is more likely thannot to be realized.

The Company follows the authoritative guidance on accounting for and disclosure of uncertainty in tax positions which requires the Company to determine whether a tax position of the Company is more likely thannot to be sustained upon examination, including resolution of any related appeals of litigation processes, based on the technical merits of the position. For tax positions meeting the more likely thannot threshold, the tax amount recognized in the financial statements is reduced to the largest benefit that has a greater thanfifty percent likelihood of being realized upon the ultimate settlement with the relevant taxing authority.

Interest and penalties related to uncertain tax positions is included in the provision for income taxes in the consolidated statements of operations.

Recently Adopted Accounting Guidance

In* June 2016,the FASB issued Accounting Standards Update ("ASU")2016-13, Financial Instruments-Credit Losses (“ASU2016*-13”), which provided updated authoritative guidance with respect to the measurement of credit losses on financial instruments. This update changed the impairment model for most financial assets and certain other instruments by introducing a current expected credit loss (“CECL”) model. The CECL model is a more forward-looking approach based on expected losses rather than incurred losses, requiring entities to estimate and record losses expected over the remaining contractual life of an asset. We adopted ASU2016-13 effective* February 1, 2023,and the adoption of the standard didnot* have a material impact on our consolidated financial statements. Related to ASU2016-13, there is risk and judgment involved in determining estimates of our allowances for credit losses, which reduce the carrying value of an asset to produce an estimate of the net amount that will be collected over the asset's life. We evaluate the expected credit loss of an asset on an individual basis, except in cases when assets collectively share similar risk characteristics in which case, we pool them together. We evaluate and estimate our allowances for credit loss by considering reasonable, relevant, and supportable available information. The Company maintains an allowance based upon expected credit losses of outstanding accounts receivable. Management derives its estimate using a variety of factors, including historical collection and loss patterns; the current aging of receivables; customer specific credit risk factors (when warranted); and probable future economic conditions which inform adjustments to historical loss patterns. The provision for expected credit losses is recorded in general and administrative in the accompanying consolidated statements of operations. Accounts receivable deemed to be uncollectible are written off, net of expected or actual recoveries.

Changes in the allowance for credit loss on accounts receivable for the fiscal year ended* January 31, 2024*were as follows (in thousands):

Recently Issued Accounting Guidance

In* December 2023,the FASB issued ASU2023*-07, *Improvements to Reportable Segment Disclosures,which will require disclosure of significant segment expenses and other segment items. The Company will adopt this guidance effective February 1, 2025.*We are currently evaluating the impact of this amended disclosure guidance.

In* December 2023,the FASB also issued ASU2023*-09, Improvements to Income Tax Disclosures,which will require additional information in the rate reconciliation table and additional disclosures about income taxes paid. The Company will adopt this guidance effective February 1, 2025as well. We are currently evaluating the impact of this amended disclosure guidance.

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(3) Business Combinations

(a) Software Luxembourg Holding S.A. (“Predecessor”** or**“Skillsoft Legacy”)

On* June**11,* 2021, Software Luxembourg Holding S.A. merged with and into Churchill Capital Corp II (Churchill) which subsequently changed its name to Skillsoft Corp.

The Skillsoft Merger was considered a business combination under ASC805, Business Combinations and was accounted for using the acquisition method of accounting, whereby Churchill was determined to be the accounting acquirer based on their rights to nominatesix members of the initial Board of Directors, the size of their voting interest and their rights to appoint the Chief Executive Officer of Skillsoft Corp. and other members of management of the combined company prior to closing.

Under the acquisition method, the acquisition date fair value of the consideration paid by the Company was allocated to the assets acquired and the liabilities assumed based on their estimated fair values.

The following summarizes the purchase consideration (in thousands):

The final values allocated to identifiable intangible assets and their estimated useful lives are as follows (in thousands):

Values and useful lives assigned to intangible assets were based on estimated value and use of these assets by a market participant. The customer relationships and backlog were valued using the income approach. The trade names were valued using the relief from royalty method. The content and software were valued using the replacement cost approach.

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Goodwill represents the excess of the purchase price over the net identifiable tangible and intangible assets acquired. The Company determined that the acquisition of the Predecessor resulted in the recognition of goodwill primarily because the acquisition was expected to help the Company meet its long-term operating profitability objectives through achievement of synergies. The majority of goodwill isnot deductible for tax purposes.

The acquired intangible assets and goodwill are subject to review for impairment if indicators of impairment develop and, in the case of goodwill and indefinite-lived intangible assets, at least annually.

The Company incurred $9.8 million in acquisition-related costs, which primarily consisted of transaction fees and legal, accounting and other professional services. Approximately $4.3 million was reported in the period from* February 1, 2021through June 11, 2021 (Predecessor) and $5.5 million was reported in the period from June 12, 2021through January 31, 2022 (*Successor). These costs are included in the "acquisition and integration related costs" in the accompanying consolidated statements of operations.

(b) Albert DE Holdings, Inc. (“GK”)

On* June**11,* 2021, GK and its subsidiaries were acquired by Skillsoft, in conjunction with, and just subsequent to, its merger with Churchill Capital Corp II (then becoming the merged Company).

The acquisition was accounted for as a business combination under ASC805, Business Combinations, utilizing the acquisition method. Under the acquisition method, the acquisition date fair value of the consideration paid by the Company was allocated to the assets acquired and the liabilities assumed based on their estimated fair values.

The following summarized the purchase consideration (in thousands):

The final values allocated to identifiable intangible assets and their estimated useful lives are as follows (in thousands):

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Values and useful lives assigned to intangible assets were based on estimated value and use of these assets by a market participant. The customer relationships and vendor relationships were valued using the income approach. The trade name was valued using the relief from royalty method. The courseware and proprietary delivery software were valued using the replacement cost approach.

Goodwill represents the excess of the purchase price over the net identifiable tangible and intangible assets acquired. The Company determined that the acquisition of GK resulted in the recognition of goodwill primarily because the acquisition was expected to help the Company meet its long-term operating profitability objectives through achievement of synergies. The majority of goodwill isnot deductible for tax purposes.

The acquired intangible assets and goodwill are subject to review for impairment if indicators of impairment develop and otherwise at least annually.

For the year ended* January 31, 2022,the Company incurred $1.0 million in acquisition-related costs, which primarily consisted of transaction fees and legal, accounting and other professional services, substantially all of which were reported in the period from June 12, 2021through January 31, 2022 (Successor). During the fiscal year ended January 31, 2023 (*Successor) the Company incurred an additional $3.0 million in acquisition-related costs in relation to the integration of GK. These costs are included in the "acquisition and integration related costs" in the accompanying consolidated statements of operations.

(c) Ryzac, Inc. (“Codecademy”)

On* April 4, 2022,*the Company acquired Codecademy, a learning platform providing high-demand technical skills to approximately 40 million registered learners in nearly every country worldwide. The platform offers interactive, self-paced courses and hands-on learning in 14 programming languages across multiple domains such as application development, data science, cloud and cybersecurity.

The acquisition was accounted for as a business combination under ASC805, Business Combinations, utilizing the acquisition method. Under the acquisition method, the acquisition date fair value of the consideration paid by the Company was allocated to the assets acquired and the liabilities assumed based on their estimated fair values.

The following summarizes the purchase consideration (in thousands):

The values allocated to identifiable intangible assets and their estimated useful lives are as follows (in thousands):

Values and useful lives assigned to intangible assets were based on estimated value and use of these assets by a market participant. The customer relationships were valued using the income approach. The trade name was valued using the relief from royalty method. The courseware and proprietary delivery software were valued using the replacement cost approach.

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Goodwill represents the excess of the purchase price over the net identifiable tangible and intangible assets acquired. The Company determined that the acquisition of Codecademy resulted in the recognition of goodwill primarily because the acquisition was expected to help the Company meet its long-term operating profitability objectives through achievement of synergies. The majority of goodwill isnot deductible for tax purposes.

The acquired intangible assets and goodwill are subject to review for impairment if indicators of impairment develop and otherwise at least annually.

In the fiscal year ended* January 31, 2023 (*Successor), the Company incurred $10.7 million in acquisition-related costs, which primarily consisted of transaction fees and legal, accounting, and other professional services. These costs are included in the "acquisition and integration related costs" in the accompanying consolidated statements of operations.

Other Acquisitions

On* June**30,* 2021, the Company acquired Pluma, Inc., the products and services of which subsequent to the acquisition are referred to as "Skillsoft Coaching". The acquisition enhanced the Company’s leadership development offerings, added a new modality to its blended learning model, and allowed the Company to offer a premium individualized coaching experience. Cash paid for Pluma in the Successor period was lower than the agreed upon purchase price of Pluma for $22 million due to a contractual holdback and working capital adjustment. The fair value of the net assets acquired included $17.8 million of goodwill and $8.7 million of identified intangible assets, which had a weighted average life of 7.4 years. The goodwill isnot deductible for tax purposes. Pro forma information and acquisition expenses havenot been presented below because such information isnot material to the financial statements.

Unaudited Pro Forma Financial Information

The unaudited pro forma financial information below is presented in accordance with Regulation S-X, Article11 to enhance comparability for all periods by including operating results for Skillsoft, Global Knowledge and Codecademy as if the transactions had closed on* February 1, 2021 (*in thousands):

The unaudited pro forma financial information doesnot assume any impacts from revenue, cost, or other operating synergies that could be generated as a result of the combinations. The unaudited pro forma financial information is for informational purposes only and isnot necessarily indicative of the results of operations that would have been achieved had the acquisitions been consummated on* February**1,* 2021. The pro forma financial information includes adjustments to reflect intangible asset amortization based on the economic values derived from definite-lived intangible assets and interest expense on the new debt financing. Other pro forma adjustments include the following:

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(4) Discontinued Operations

On* August 15, 2022,we completed a Stock Purchase Agreement (the “Purchase Agreement”), by and among Skillsoft, Skillsoft (US) Corporation (“Seller”), Amber Holding Inc. (“SumTotal”), and Cornerstone OnDemand, Inc. (“Buyer”), pursuant to which, subject to the certain terms and conditions contained therein, Seller sold, and Buyer purchased, all of Seller’s right, title and interest in and toone hundred* percent (100%) of the outstanding shares of capital stock of SumTotal. Net proceeds from the sale were $174.9 million, after final working capital adjustments in* April**2023.*

In connection with the sale, the parties to the Purchase Agreement entered into certain other agreements, including a transition services agreement pursuant to which each of Seller and Buyer agreed to provide the other party with certain transition services for a limited period following the closing.

The Company determined the sale of the SumTotal business met the criteria to be classified as discontinued operations, and its assets and liabilities held for sale, as of* June 12, 2022.*Accordingly, the Company classified the assets and liabilities of the discontinued operations as held for sale in its consolidated balance sheets at the lower of carrying amount or fair value less cost to sell. The presentation of the assets and liabilities in comparative periods retained their previous classification as current or long-term. No losses were recognized when the discontinued operations' assets and liabilities were transitioned to held for sale, and depreciation and amortization ceased on such assets. The operating results of SumTotal are reported as discontinued operations, for all periods presented, as the disposition reflected a strategic shift that had a major effect on the Company’s operations and financial results.

The financial results of SumTotal are presented as Income from discontinued operations, net of tax in our consolidated statements of operations. The following presents financial results of SumTotal for all periods presented in our condensed consolidated statements of operations (in thousands):

In addition, the amounts described in other footnotes within these consolidated financial statements have been updated to reflect the amounts applicable to continuing operations, unless otherwise noted.

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(5) Intangible Assets

Intangible assets consisted of the following (in thousands):

Amortization expense related to the existing finite-lived intangible assets is expected to be as follows (in thousands) for the fiscal years ended* January 31:*

Amortization expense related to intangible assets in the aggregate was $152.5 million for the fiscal year ended* January 31, 2024 (Successor), $170.3 million for the fiscal year ended January 31, 2023 (Successor), $89.0 million for the period from June 12, 2021through January 31, 2022 (Successor), and $46.5 million for the period from February 1, 2021through June 11, 2021 (*Predecessor).

Impairment Review Requirements and Assumption Uncertainty

The Company reviews intangible assets subject to amortization if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in remaining useful life. The Company reviews indefinite lived intangible assets, including goodwill, on the annual impairment test date (* January**1*) or more frequently if there are indicators of impairment.

In connection with the impairment evaluation, the Company* may**first* consider qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely thannot (i.e., a likelihood of more than50%) that the fair value of a reporting unit is less than its carrying amount. Performing a quantitative goodwill and indefinite lived intangible impairment test isnot necessary if an entity determines based on this assessment that it isnot more likely thannot that the fair value of a reporting unit is less than its carrying amount. If the Company fails or elects to bypass the qualitative assessment, the goodwill impairment test must be performed.

This test requires:

The fair value of our reporting units is determined using a weighted average valuation model of the income approach (discounted cash flow approach) and market approach. The income approach requires management to make certain assumptions based upon information available at the time the valuations are performed. Actual results could differ from these assumptions. Management takes care to ensure the assumptions used are reflective of what a market participant would have used in calculating fair value considering the then current economic conditions. This process was followed below both when triggering events for impairment occurred and during our annual impairment test as of* January 1*st.

In determining reporting units, the Companyfirst identifies its operating segments, and then assesses whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results.

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Impairment for the Fiscal Year Ended January 31, 2024**

During thefourth quarter of fiscal2024, we identified triggering events for impairment primarily attributable to the impact of the observed prolonged and substantial decline in the Company’s stock price and market capitalization, industry analysis and observable industry multiples, which increased our discount rate assumption. In addition, the estimated future cash flows for ourtwo reporting units declined. These declines when comparing fiscal2024 to fiscal2023 were due primarily to: (i) increased competition that drove down the growth experience and expectations for the industry in which the Content & Platform reporting unit operates; and (ii) our Instructor-Led Training reporting unit experiencing continued declines in bookings and GAAP revenues.

For the reasons discussed above, for our identifiable intangibles subject to amortization, management believed there were unfavorable changes to assumptions and factors that occurred during fiscal2024 that would indicate impairment or a change in the remaining useful life. Our estimated undiscounted future cash flows attributable to the amortizable intangibles are projected to be less than the carrying values for the Instructor-Led Training reporting unit. Therefore, we updated the fair values for identifiable intangibles, including the indefinite lived intangible in our Content & Platform reporting unit, that are fair valued using the income approach, as of* January 1, 2024.We compared the fair values to their carrying values, which resulted in aggregate impairment losses of $60.5 million during thefourth* quarter of fiscal2024.

Management next estimated the fair value of the Content & Platform and Instructor-Led Training reporting units using the weighted average valuation model discussed inImpairment Review Requirements and Assumption Uncertainty above. For the reasons discussed, the discount rate applied to the analysis increased from the prior year, which drove a lower fair value of our reporting units, resulting in goodwill being impaired for the Content & Platform and Instructor-Led Training reporting units as of* January 1, 2024,as the fair values fell below their respective carrying values. As such, the Company recorded goodwill impairment of $129.1 million for the Content & Platform segment and $12.6 million for the Instructor-Led Training segment during thefourth* quarter of fiscal2024.

Impairment for the Fiscal Year Ended January 31, 2023**

During thesecond quarter of fiscal2023, we identified triggering events for impairment in the Instructor-Led Training reporting unit due primarily to a significant decline in bookings and GAAP revenue. Management believed the poor performance was due to a variety of factors, including: (i) reduced corporate spending as customers braced for the potential of a recessionary environment; (ii) difficulty maintaining adequate sales capacity in a challenging labor market for employers; and (iii) evolving customer preferences with respect to training in a post COVID environment.

For the Instructor-Led Training reporting unit, as of* July 31, 2022,the estimated undiscounted future cash flows attributable to the amortizable intangibles were greater than the carrying values. In addition, the fair values for indefinite lived intangibles, were also greater than their carrying values. Therefore, during thesecond* quarter of fiscal2023, management concluded there wasno impairment of identifiable intangibles.

Management next estimated the fair value of the Instructor-Led Training reporting unit as of* July 31, 2022,using the weighted average valuation model discussed inImpairment Review* Requirements and Assumption Uncertainty above. For the reasons described, the estimated future cash flows declined, and when applied to the analysis drove a lower fair value of the Instructor-Led Training reporting unit. As a result, the Company recorded a $70.5 million goodwill impairment for thethree months ended* July 31, 2022.*

During thethird quarter of fiscal2023, we identified triggering events for impairment attributable primarily to deterioration in the equity markets evidenced by sustained declines in the Company’s stock price, those of its peers, and major market indices. In addition, interest rates had risen, which increased our discount rate assumption. Furthermore, the Company lowered its projected operating results primarily due to underperformance of Instructor-Led Training business and macroeconomic uncertainty.

As of* October 31, 2022,the estimated undiscounted future cash flows attributable to the amortizable intangibles were greater than the carrying values. In addition, the fair values for indefinite lived intangible, were also greater than the carrying values. Therefore, during thethird* quarter of fiscal2023 there wasno impairment of identifiable intangibles.

Management next estimated the fair value of the Content & Platform and Instructor-Led Training reporting units as of* October 31, 2022,using the weighted average valuation model discussed inImpairment Review* Requirements and Assumption Uncertainty above. For the reasons discussed, the valuation results indicated that for each of the Content & Platform and Instructor-Led Training reporting units, the fair value fell below their respective carrying values. Therefore, the Company recorded a $569.3 million goodwill impairment for the Content & Platform segment and an additional $1.6 million goodwill impairment for the Instructor-Led Training segment during thethree months ended* October 31, 2022.*

As of* January 1, 2023,the estimated undiscounted future cash flows attributable to the amortizable intangibles appeared to be greater than the carrying values. In addition, the fair values for indefinite lived intangibles, were also greater than the carrying values. We performed our annual quantitative goodwill impairment test for our reporting units as of January 1, 2023,using the weighted average valuation model discussed inImpairment Review* Requirements and Assumption Uncertainty above and, as of such date, the fair value was in excess of each reporting unit's carrying value. Therefore, no intangible or goodwill impairment was recognized during thefourth quarter of fiscal2023.

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A roll forward of goodwill is as follows (in thousands):

The following impairments of intangible assets have been reflected as decreases of gross carrying amounts within the table at the beginning of this note (in thousands):

(6) Property and Equipment

Property and equipment consists of the following (in thousands):

Construction in progress at* January 31, 2024* (Successor) and2023 (Successor) consisted primarily of costs related to the purchase of certain assets that havenot yet been put into service.

Depreciation expense related to property and equipment was $3.3 million, $5.0 million, $4.2 million, and $1.8 million for the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor), and the period from February 1, 2021through June 11, 2021 (*Predecessor), respectively.

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(7)Taxes

The following table presents the domestic and foreign components of income (loss) before income taxes (in thousands):

Significant components of the income tax provision (benefit) consist of the following (in thousands):

The Company’s effective tax rate differed from the statutory rate as follows:

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Deferred income taxes are provided for the effects of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of the periods presented were as follows (in thousands):

In assessing the realization of deferred tax assets, the Company considers whether it is more likely thannot that some portion or all of the deferred tax assets willnot be realized. The Company considers the scheduled reversal of deferred tax assets and liabilities in assessing the realization of deferred tax assets. As of* January 31, 2024and January 31, 2023the Company had established a valuation allowance of $157.2 million and $133.1 million, respectively, against its deferred tax assets due to uncertainty about whether the deferred tax assets will be realized. The change in total valuation allowance from January 31, 2023to January 31, 2024*was an increase of $24.1 million.

As of* January 31, 2024,the Company had U.S. federal, state and foreign net operating loss ("NOL") carryforwards of$225.3 million, $295.3 million, and $70.7 million, respectively. Ifnot* utilized, certain of the federal, state and foreign NOL carryforwards will expire at various dates beginning in2025 with the remainder of the NOL carryforwardsnot subject to an expiration date.

The United States enacted the Tax Cuts and Jobs Act in* December 2017,which requires companies to capitalize all their research and development costs for U.S. tax purposes, including software development costs, incurred in tax years beginning after December 31, 2021.Beginning in2022,* the Company began capitalizing and amortizing research and development costs over afive-year period for domestic research and afifteen-year period for international research rather than expensing these costs for tax purposes.

The utilization of the Company’s NOL, other attributes, and credit carryforwards* maybe subject to a limitation due to the “ownership change” provisions under Section382* of the Internal Revenue Code and similar state and foreign provisions. Such limitation* mayresult in the expiration of the NOL, other attributes, and credit carryforwards prior to their utilization. Certain attributes and carryforwards will be permanently disallowed due to historical Section382* ownership changes and have been removed from the Company’s deferred tax assets. As of* January 31, 2024,the Company has written off a cumulative $31.4 million of net operating loss, deferred interest, and credit carryforwards that will expire unused due to Section382* limitations along with the corresponding valuation allowance.

We provide for United States income taxes on the undistributed earnings and the other outside basis temporary differences of foreign subsidiaries unless they are considered indefinitely reinvested outside the United States. As of* January 31, 2024,the Company has accrued $3.3 million related to undistributed earnings from foreign subsidiaries as they arenot* considered indefinitely reinvested outside the United States. Any basis differencesnot related to undistributed earnings continues to be considered indefinitely reinvested outside the United States.

The Tax Cuts & Jobs Act of2017 created a new requirement that certain income earned by foreign subsidiaries, known as global intangible low-tax income ("GILTI"), must be included in the gross income of their U.S. shareholder. The FASB allows an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such taxes as a current-period expense when incurred. The Company has elected to treat the tax effect of GILTI as a current-period expense when incurred.

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Uncertain Tax Positions

As of* January 31, 2024,*the Company had$14.8 million of unrecognized tax benefits associated with uncertain tax positions and an additional$1.2 million of accrued interest and penalties, all of which, if recognized, would affect the Company’s effective tax rate.

A reconciliation of the beginning and ending balance of unrecognized tax benefit is as follows (in thousands):

The Company recognized $0.7 million, ($0.3) million, ($0.5) million and ($0.6) million of interest and penalties during the periods ending* January 31, 2024,** January 31, 2023,** January 31, 2022and June 11, 2021,respectively. The Company has accrued $1.2 million and $0.5 million for the payment of interest and penalties as of January 31, 2024,and January 31, 2023,respectively. We estimate that certain of our unrecognized tax benefits that we have accrued as of January 31, 2024,will be settled with the applicable foreign jurisdictions within the next12* months due to the completion and settlement of audits. We estimate that $2.1 million of tax and $0.2 million of interest and penalties will be paid or released due to these audits being settled.

The Company and its subsidiaries filed tax returns for the United States, multiple states and localities, and for various non-United States jurisdictions. The Company has identified the United States and Ireland as its major tax jurisdictions. The Company’s tax filings are subject to examination by U.S. federal, state, and various non-United States jurisdictions. The Company’s U.S. federal tax returns are open for years after* January 31, 2019.*

(8) Prepaid Expenses and Other Current Assets

Prepaid expense and other current assets in the accompanying consolidated balance sheets consist of the following (in thousands):

(9) Other Assets

Other assets in the accompanying consolidated balance sheets consist of the following (in thousands):

The Company’s deposits reflect security advances with ourthird-party providers, including the lessors for our leased facilities.

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(10) Accrued Expenses

Accrued expenses in the accompanying consolidated balance sheets consisted of the following (in thousands):

(11) Restructuring

In connection with strategic initiatives implemented during the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), and the periods ending* January31,* 2022 (Successor) and* June11,* 2021 (Predecessor), the Company’s management approved and initiated plans to reduce its cost structure and better align operating expenses with existing economic conditions and the Company’s operating model. The Company recorded restructuring charges of $14.0 million (by segment was $5.6 million for Content & Platform and $8.3 million for Instructor-Led Training) during the fiscal year ended* January 31, 2024 (Successor), $12.3 million (by segment was $7.1 million for Content & Platform and $5.2 million for Instructor-Led Training) during the fiscal year ended January 31, 2023 (Successor), $3.6 million (by segment was $1.8 million for Content & Platform and $1.8 million for Instructor-Led Training)during the period from June 12, 2021through January 31, 2022 (Successor), and a credit of $0.6 million (for Content & Platform) during the period from February 1, 2021through June 11, 2021 (Predecessor). These restructuring charges are presented separately in the accompanying Consolidated Statements of Operations and include primarily the severance costs of terminated employeesand lease termination and lease impairment charges. As of January 31, 2024and January 31, 2023,the Company had restructuring charge liabilities of $3.3 million and $2.7 million, respectively. Management has completed the majority of restructuring actions as of January 31, 2024;*however, the Company will continue to evaluate its cost structure to align operating expenses with existing economic conditions and its operating model which could result in further restructuring actions.

(12) Employee Benefit Plan

The Company has a401(k) plan covering all US-based employees of the Company who have met certain eligibility requirements. Under the terms of the plan, employees* mayelect to make tax-deferred contributions to the401*(k) plan. In addition, the Company* maymake discretionary contributions. Under this plan, contributions of approximately$2.6 million,$2.3 million,$1.6 million, and$0.9 million were made for the fiscal years ended January 31, 2024 (Successor) and2023* (Successor), theperiod from* June 12, 2021through January 31, 2022 (Successor), and theperiod from February 1, 2021through June 11, 2021 (*Predecessor), respectively.

In addition, the Company has various retirement and post-employment plans covering certain international employees. Certain of the plans allow the Company to match employee contributions up to a specified percentage as defined by the plans. Under these plans, contributions of approximately$3.5 million,$3.5 million,$2.7 million, and$0.4 million were made for the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), theperiod from* June 12, 2021through January 31, 2022 (Successor), and theperiod from February 1, 2021through June 11, 2021 (*Predecessor), respectively.

(13) Leases, Commitments and Contingencies

Leases

The Company’s lease portfolio includes office space, training centers, and vehicles to support its research and development activities, sales operations and other corporate and administrative functions in North America, Europe and Asia. The Company’s leases have remaining terms ofone year toten years. Some of the Company’s leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

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All of the Company's leases are classified as operating leases. Our right-of-use ("ROU") assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the expected lease term. As the Company’s operating leases generally donot provide an implicit rate, the Company uses an estimated incremental borrowing rate in determining the present value of future payments. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at the acquisition date to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular location and currency environment. The Company elected the package of practical expedients permitted under the transition guidance which were applied consistently to all of the Company’s leases that commenced before the acquisition date. The Company used a weighted average incremental borrowing rate of 6.12% as of* June**11,* 2021, the acquisition date, for its operating leases that commenced prior to that date. The weighted average incremental borrowing rate for its operating leases as of* January 31, 2024* was 5.7%. The Company also elected the short-term lease recognition exemption for all qualifying leases, where ROU assets and lease liabilities arenot recognized for leases with remaining terms of less thanone year.

The operating leases are included in the captions “Right of use assets”, “Lease liabilities”, and “Long-term lease liabilities” on the Company’s consolidated balance sheets. The weighted-average remaining lease term of the Company’s operating leases is 6.1 years as of* January 31, 2024*. Lease costs for minimum lease payments are recognized on a straight-line basis over the lease term. The lease costs were $5.0 million and related cash payments were $4.8 million for the fiscal year ended* January 31, 2024 (Successor). The lease costs were $5.8 million and related cash payments were $5.9 million for the fiscal year ended January 31, 2023 (Successor). Lease costs are included within the content and software development, selling and marketing, and general and administrative lines on the consolidated statements of operations, and the operating leases related cash payments were included in the operating cash flows on the consolidated statements of cash flows. Short-term lease costs and variable lease costs arenot* material.

See Note11 for a discussion related to restructuring charges associated with lease termination and lease impairment charges.

The below reconciles the undiscounted future minimum lease payments under non-cancellable leases to the total lease liabilities recognized on the consolidated balance sheets as of* January 31, 2024* (in thousands):

Litigation

On* November 21, 2023,the Company was named as a nominal defendant in a shareholder derivative action filed in the Delaware Court of Chancery captionedNorcross v. Prosus N.V., et al.* The plaintiff, a Company shareholder, alleges that the Company's directors and controlling shareholders breached their fiduciary duties to plaintiffs by causing the Company to acquire Codecademy at an above-market price. Plaintiff seeks monetary damages as compensation for the harm caused by the alleged breaches. We currently cannot estimate any possible loss that* may*result from this action.

In addition, the Company is, from time to time, party to general legal proceedings and claims, which arise in the ordinary course of business including those relating to commercial and contractual disputes, employment matters, intellectual property, and other business matters. When appropriate, management consults with legal counsel and other appropriate experts to assess claims. If, in management’s opinion, we have incurred a probable loss as determined in accordance with GAAP, an estimate is made of the loss and the appropriate accrual is reflected in our consolidated financial statements. Currently, there areno material amounts accrued. While it isnot possible to quantify the financial impact or predict the outcome of all pending claims and litigation, management doesnot anticipate that the outcome of any current proceedings or known claims, either individually or in aggregate, will materially affect the Company’s financial position, results of operations or cash flows.

Guarantees

The Company’s software license arrangements and hosting services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and substantially in accordance with the Company’s product documentation under normal use and circumstances. The Company’s arrangements also include certain provisions for indemnifying customers against liabilities if its products or services infringe athird party’s intellectual property right. The Company has entered into service level agreements with some of its hosted application customers warranting certain levels of uptime reliability and such agreements permit those customers to receive credits against monthly hosting fees or terminate their agreements in the event that the Company fails to meet those levels for an agreed upon period of time.

To date, the Company hasnot incurred any material costs as a result of such indemnifications or commitments and hasnot accrued any liabilities related to such obligations in the accompanying consolidated financial statements.

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(14) Long-Term Debt

Debt consisted of the following (in thousands):

Exit Credit Facility (Predecessor)

Upon emergence from Chapter11, the Company entered into the Exit Credit Facility of $520 million consisting of (i) a $110 million super senior term loan facility, the First Out Term Loan due in* December2024,* and (ii) a $410 millionfirst lien,second-out term loan facility, the Second Out Term Loan due in* April2025.* The Exit Credit Facility incurred interest at a rate equal to LIBOR plus 7.50% per annum, with a LIBOR floor of 1.00%. The Exit Credit Facility contained customary provisions and reporting requirements, including prepayment penalties and a maximum leverage covenant. Quarterly principal repayments of $1.3 million began for the quarter ended* April30,* 2021 and increased to $2.6 million for the quarter ended* April30,* 2022 until maturity.

Immediately following the effective time of the Skillsoft Merger on* June11,* 2021, each outstanding share of Churchill Class C common stock issued to the former holders of Skillsoft Class A Shares in connection with the Skillsoft Merger was redeemed for a redemption price of (i) $131.51 per share in cash and (ii) $5.208 per share in incremental indebtedness (the “Class A SO Incremental Loans”) under that certain Senior Secured Second Out Term Loan Credit Agreement (the “SO Credit Agreement”), dated as of* August27,* 2020, by and among Software Luxembourg Intermediate S.à r.l. (“Holdings”), as the parent borrower (the “Parent Borrower”), the other borrower party thereto, the lenders from time to time party thereto and Wilmington Savings Fund Society, FSB, as the administrative agent and collateral agent, as amended (the “SO Credit Agreement”) for a total aggregate increase of $20 million ofsecond out term loans under the SO Credit Agreement. In addition, upon the closing of the Global Knowledge Merger, (i) pursuant to a Joinder Agreement, dated as of* June11,* 2021, by and among certain lenders party thereto, Holdings, the Parent Borrower and the other borrower party thereto, such lenders were issued an aggregate principal amount of $50 million of incrementalfirst out term loans (the “GK FO Incremental Loans”) under that certain Senior Secured Term Loan Credit Agreement dated as of* August27,* 2020, by and among Holdings, the Parent Borrower, the other borrower party thereto, the several banks and other financial institutions from time to time party thereto, as lenders and Wilmington Savings Fund Society, FSB, as administrative agent and collateral agent, as amended (the “FO Credit Agreement”) and (ii) pursuant to a Joinder Agreement, dated as of* June**11,* 2021 by and among certain lenders party thereto, Holdings, the Parent Borrower and the other borrower party thereto, such lenders were issued an aggregate principal amount of $20 million of incrementalsecond out term loans under the SO Credit Agreement (the “GK SO Incremental Loans” and together with the GK FO Incremental Loans and the Class A SO Incremental Loans, the “Incremental Loans”).

Term Loan (Successor)

On* July16,* 2021, Skillsoft Finance II, Inc. (“Skillsoft Finance II”), a subsidiary of Skillsoft Corp., entered into a Credit Agreement (the “Credit Agreement”), by and among Skillsoft Finance II, as borrower, Skillsoft Finance I, Inc., as holdings (“Holdings”), the lenders party thereto and Citibank, N.A., as administrative agent and collateral agent, pursuant to which the lenders provided a $480 million term loan facility (the “Term Loan Facility”) to Skillsoft Finance II, the proceeds of which, together with cash on hand, were used to refinance existing debt. The Term Loan Facility is scheduled to mature on* July16,* 2028 (the “Maturity Date”).

In connection with the closing of the Codecademy acquisition, Skillsoft Finance II entered into AmendmentNo. 1 to the Credit Agreement, dated as of* April 4, 2022 (*the “First Amendment”), among Skillsoft Finance II, Holdings, certain subsidiaries of Skillsoft Finance II, as guarantors, Citibank N.A., as administrative agent, and the financial institutions party thereto as Term B-1 Lenders, which amended the Credit Agreement (as amended by the First Amendment, the “Amended Credit Agreement”).

The First Amendment provided for the incurrence of up to $160 million of Term B-1 Loans (the “Term B-1 Loans”) under the Amended Credit Agreement. In addition, the First Amendment, among other things, (a) provided for early opt-in to Secured Overnight Financing Rate ("SOFR") for the existing term loans under the Credit Agreement (such existing term loans together with the Term B-1 Loans, the “Initial Term Loans”) and (b) provided for the applicable margin for the Initial Term Loans at 4.25% with respect to base rate borrowings and 5.25% with respect to SOFR borrowings.

The Company received $153.2 million of net proceeds (net of $4.0 million of financing costs and $2.8 million of original issuance discounts) from the Term Loan Facility on* April 4, 2022.The Company used the net proceeds and cash on hand for the closing of the Codecademy acquisition on April 4, 2022.*

The refinancing was accounted for as a modification for certain lenders and an extinguishment for other lenders and debt issuance costs and lender fees were accounted for in proportion to whether the related principal balance was considered modified or extinguished. Accordingly, both newly incurred and deferred financing costs and original issuance discounts of $0.1 million and $2.8 million, respectively, will be amortized as additional interest expense over the term of the Initial Term Loans. Furthermore, $3.9 million ofthird-party costs incurred were recognized as interest expenses in the accompanying statement of operations for the fiscal year ended* January 31, 2023 (*Successor).

Prior to the maturity thereof, the Initial Term Loans will be subject to quarterly amortization payments of 0.25% of the principal amount.

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On* August 15, 2022,pursuant to the Purchase Agreement entered on June 12, 2022by and among Skillsoft, Skillsoft (US) Corporation (“Seller”), Amber Holding Inc. (“SumTotal”), and Cornerstone OnDemand, Inc. (“Buyer”), Seller completed the sale ofone hundred* percent (100%) of the outstanding shares of capital stock of SumTotal to Buyer. As a result of the asset sale, the Company made a mandatory prepayment of $31.4 million to the lenders in* August 2022.The remaining net cash proceeds attributable to the sale of SumTotal were subject to reinvestment provisions and couldnot* be used for general corporate purposes. As defined in the Amended Credit Agreement,no additional repayment was required.

All obligations under the Amended Credit Agreement, and the guarantees of those obligations (as well as certain cash management obligations and interest rate hedging or other swap agreements), are secured by substantially all of Skillsoft Finance II’s personal property as well as the assets of each subsidiary guarantor.

Amounts outstanding under the Term Loan Facility bear interest, at the option of Skillsoft Finance II, at a rate equal to (a) SOFR (subject to a floor of 0.75%) plus a credit premium based on the tenor of the interest period plus 5.25% for SOFR Loans or (b) the highest of (i) the Federal Funds Effective Rate plus 10.50%, (ii) the “prime rate” quoted by the administrative agent, (iii) Adjusted Term SOFR plus 1.00% and (iv)1.75%, plus 3.75% for alternative base rate loans. As of* January 31, 2024*, the balance of $594.6 million of Initial Term Loans bears interest at a rate equal to SOFR plus a credit premium of 0.11% plus a spread of 5.25%, per annum, with a SOFR floor of 0.75%, and quarterly principal repayments of $1.6 million until maturity.

Voluntary prepayment is permitted under the Term Loan Facility. Loan parties are subject to various affirmative and negative covenants and reporting obligations under the Amended Credit Agreement. These include, among other things, limitations on indebtedness, liens, sale and leaseback transactions, investments, fundamental changes, assets sales, restricted payments, affiliate transactions, and restricted debt payments. Events of default under the Term Loan Facility include non-payment of amounts due to the lenders, violation of covenants, materially incorrect representations, defaults under other material indebtedness, judgments and specified insolvency-related events, certain ERISA events, and invalidity of loan or collateral documents, subject to, in certain instances, specified thresholds, cure periods and exceptions. As of* January 31, 2024*, the Company is in compliance with all covenants.

The Company received $467.3 million of net proceeds (net of $5.4 million of financing costs and $7.2 million of original issuance discounts) from the Term Loan Facility on* July16,* 2021. The Company used the net proceeds and cash on hand to pay down $608.7 million of outstanding borrowings from the Exit Credit Facility and $5.0 million of interest on* July16,* 2021.

The refinancing was accounted for as a modification for certain lenders and an extinguishment for other lenders and debt issuance costs and lender fees were accounted for in proportion to whether the related principal balance was considered modified or extinguished. Accordingly, both newly incurred and deferred financing costs and original issuance discounts of $5.5 million and $7.2 million, respectively, will be amortized as additional interest expense over the term of the Term Loan. Furthermore, $3.1 million ofthird-party costs incurred in connection with the refinancing were expensed as incurred and recognized as interest expenses in the accompanying statement of operations for the period from* June 12, 2021through January 31, 2022 (*Successor).

The Company’s debt outstanding as of* January 31, 2024* matures as shown below (in thousands):

Accounts Receivable Facility (Successor)

On* December 20, 2018,the Company entered into a $75.0 million accounts receivable credit agreement. The maturity date for the facility is the earlier of (i) December 27, 2024or (ii)90 days prior to the maturity of any corporate debt. There arefour* classes of available receivables with advance rates between 50.0% and 85.0%. The minimum outstanding draw under the terms of the agreement is $10 million.

The lenders require the Company to deposit receipts from pledged receivables to a restricted concentration account withintwo business days of receipt by the Company. A reconciliation detailing collections against the prior month’s borrowing base and additional receivables to be pledged is submitted monthly. If additional pledged receivables exceed the prior month’s collections, funds from the concentration account are returned to the Company. The reserve balance was $7.7 million at* January 31, 2024* and is classified as restricted cash on the balance sheet.

The Company accounts for these transactions as borrowings since the assets pledged contain the right to future receivables. Under this agreement, the Company receives the net present value of the accounts receivable balances used to calculate the borrowing base. The interest rate on borrowings outstanding under the accounts receivable facility was 8.45% at* January 31, 2024*. Borrowings and repayments are presented as cash flows from financing activities in the accompanying consolidated statements of cash flows. As of* January 31, 2024*, $45.0 million was drawn under the accounts receivable facility and is classified as a current liability on the balance sheet.

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(15) Long-Term Liabilities

Other long-term liabilities in the accompanying consolidated balance sheets consist of the following (in thousands):

(16) Shareholders’** Equity**

Skillsoft Corp. (Successor)

Common Stock

As of* January 31, 2024*, the Company’s authorized share capital consisted of 18,750,000 shares of Class A common stock and 10,000,000 shares of preferred stock, with a par value $0.0001 each, and 8,380,436 shares of Class A common stock were issued and 8,080,659 shares were outstanding. As of* January 31, 2024*, the Company hadno shares of preferred stock or Class C common stock outstanding. Except as required by law, holders of shares of Class C common stock arenot entitled to vote any such shares.

Subject to applicable law, the Company* maydeclare dividends to be paid ratably to holders of Class A common stock out of the Company’s assets that are legally available to be distributed as dividends in the discretion of the Company’s board of directors. Holders of Class C common stock are generallynot* entitled to dividends.

Warrants

Refer to Note17, for information related to the equity classified warrants.

Share Repurchases and Repurchase Authorization

On* September 7, 2022,the Company's board of directors authorized Skillsoft to repurchase up to $30.0 million of its Class A common stock, which expired September 7, 2023.Under the program, the Company was authorized to purchase shares in the open market, in private negotiated transactions, or by other means from time to time. The share repurchase program didnot* obligate the Company to purchase any minimum number of shares. Under the program, the Company repurchased 218,263 of its shares for $8.0 million during the fiscal year ended* January 31, 2024 (Successor). From inception through April 19, 2023,*we repurchased 299,777 of our shares for $10.9 million.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss) associated with foreign currency translation adjustments consisted of the following (in thousands):

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(17) Warrants

In connection with the formation of the Company and subsequent acquisitions of Software Luxembourg Holding S.A. and Albert DE Holdings Inc., warrants to purchase common stock were issued to investors, sellers of Albert DE Holdings Inc. and an executive of the Company. Warrants that arenot subject to ASC718, Compensation - Stock Compensation and (i) contained features that could cause the warrant to be puttable to the Company for cash or (ii) had terms that prevented the conversion of the warrant from being fixed in all circumstances, are classified as a liability on the Company’s balance sheet and measured at fair value, with changes in fair value being recorded in the income statement, whereas all other warrants meet the equity scope exception and are classified as equity andnot remeasured.

A summary of liability-classified warrants is as follows (in thousands, except per share amounts):

Simultaneously with the closing of the initial public offering, Churchill Capital (the “Sponsor”) purchased an aggregate of 15,800,000 Private Placement Warrants. An additional 1,500,000 warrants were issued at the closing of the business combination with Software Luxembourg Holding S.A. on* June 11, 2021in connection with the repayment of a promissory note due to the Sponsor. One million of the Private Placement Warrants were transferred to the incoming CEO as described below. These warrants held by the Sponsor include conditions that provide for potential changes to the settlement amounts on redemptions and were dependent upon the characteristics of the holder of the warrant. As of January 31, 2024*,453,596 Private Placement Warrants had been transferred to public holders (included in "Public Warrants" in the table below). Because the holder of the instrument isnot an input into the pricing of a fixed-for-fixed option on equity shares, the warrants are precluded from being indexed to the entity’s stock and are classified as a liability measured at fair value, with changes in fair value each period reported in earnings.

A summary of equity classified warrants is as follows (in thousands, except per share amounts):

A description of each category of warrants issued and outstanding is as follows:

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Public Warrants and PIPE Private Placement Warrants (hereinafter referred to as “Redeemable Warrants”) are currently exercisable and* mayonly be exercised for 1/20th of a whole number of shares. The Company may*redeem these warrants:

If and when the Redeemable Warrants become redeemable by the Company, the Company* may*exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

If the Company calls the Redeemable Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants* maybe adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants willnot* be adjusted for issuance of Class A common stock at a price below their exercise price. Additionally, inno event will the Company be required to net cash settle the warrants.

The Sponsor and CEO Private Placement Warrants have the same terms as the Public Warrants, except they will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Sponsor Private Placement Warrants are transferred to someone other than the initial purchasers or their permitted transferees, they will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Global Knowledge Private Placement Warrants arenot redeemable, even upon a transfer in ownership.

(18) Stock-Based Compensation

Equity Incentive Plans

In* June2021,* Skillsoft adopted the2020 Omnibus Incentive Plan (“2020 Plan”). The2020 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other equity-based awards, and cash-based incentive awards to employees, directors, and consultants of the Company. Under the2020 Plan,655,295 shares were initially made available for issuance. The2020 Plan includes an annual increase on* January1* each year beginning on* January1,* 2022, in an amount equal to 5.0% of the total number of shares of common stock outstanding on* December31* of the preceding calendar year. The Compensation Committee* mayact prior to January1* of a given year to provide that there will beno * January1* increase for such year or that the increase for such year will be a lesser number of shares of common stock than provided for in the2020 Plan. As of* January 31, 2024*, a total of 575,619 shares of common stock were available for issuance under the2020 Plan.

Stock Options

Under the2020 Plan all employees are eligible to receive incentive share options and all employees, directors and consultants are eligible to receive non-statutory share options. The options generally vest over four years and have a term often years. Vested options under the plan generally expirenot later than 90 days following termination of employment or service ortwelve months following an optionee’s death or disability. The fair value of stock options is determined on the grant date and amortized over the vesting period on a straight-line basis.

The following summarizes the stock option activity for the fiscal year ended* January 31, 2024*:

The total unrecognized equity-based compensation costs related to the stock options was $2.0 million based on the $67.23 weighted average grant date fair value of the options, which is expected to be recognized over a weighted-average period of 1.4 years.

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Time-Based Restricted Stock Units

Restricted stock units (“RSUs”) represent a right to receiveone share of the Company’s common stock that is both non-transferable and forfeitable unless and until certain conditions are satisfied. Other than RSUs granted to our non-employee directors, which vest upon the earlier of the anniversary of the grant date and the Company’s next annual meeting of stockholders, RSUs generally vest ratably over athree orfour-year period, subject to continued employment through each anniversary. The fair value of RSUs is determined on the grant date and is amortized over the vesting period on a straight-line basis.

The following summarizes the time-based RSU activity for the fiscal year ended* January 31, 2024*:

(1) In* May 2023,*14,550 shares of time-based RSUs were granted to replace 19,400 shares of market-based RSUs. This modification resulted in stock-based compensation expense increasing by less than $0.1 million per quarter over atwo-year period.

The total unrecognized stock-based compensation costs related to time-based RSUs was $35.6 million, which is expected to be recognized over a weighted-average period of 2.6 years.

Market-Based Restricted Stock Units

Market-based restricted stock units (“MBRSUs”) vest over athree-year orfour-year performance period, subject to continued employment through each anniversary and achievement of market conditions, specifically the Company's stock price and an objective relative total shareholder return. The fair value of MBRSUs that include vesting based on market conditions are estimated using the Monte Carlo valuation method. Compensation cost for these awards is recognized based on the grant date fair value which is recognized over the vesting period using the accelerated attribution method.

The following summarizes the MBRSUs activity for the fiscal year ended* January 31, 2024*:

(1) In* May 2023,*19,400 shares of market-based RSUs were canceled and replaced with 14,550 shares of time-based RSUs. This modification resulted in stock-based compensation expense increasing by less than $0.1 million per quarter over atwo-year period.

The total unrecognized stock-based compensation costs related to MBRSUs was $4.2 million, which is expected to be recognized over a weighted-average period of 1.2 years.

Performance-based Restricted Stock Units

The Company issued 2,494 performance-based restricted stock units that have a grant-date fair value of $0.5 million during the period from* June 12, 2021through January 31, 2022 (Successor). The awards vest upon the achievement of specified corporate goals. Of the 2,494 performance-based restricted stock units,625 shares were vested and 625 shares were canceled on January 31, 2022.The remaining 1,244 shares were vested when the specified corporate goals were achieved in June 2022.In the fiscal year ended January 31, 2023 (*Successor), $0.3 million in stock-based compensation expense was recognized for these remaining shares.

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Stock-Based Compensation Expense

The following summarizes the classification of stock-based compensation expense in the consolidated statements of operations (in thousands):

The stock-based compensation for the fiscal year ended* January 31, 2023 (*Successor) includes $1.6 million of fair value adjustment for the cash consideration in excess of the fair value of the legacy Codecademy options, which is classified as a post-combination expense.

Stock-based compensation expense for the period from* June 12, 2021through January 31, 2022 (*Successor) includes $2.8 million attributable to 50,000 warrants issued to the chief executive officer that vested upon completion of the merger and his commencement of employment with the Company.

(19) Revenue

Revenue Components and Performance Obligations

Subscription Services

The Company offers subscriptions that provide customers access to a broad-based spectrum of learning options including access to cloud-based SaaS learning content and individualized coaching. The Company’s cloud-based subscription solutions normally donot provide customers with the right to take possession of the software supporting the platform or to download course content without continuing to incur fees for hosting services and, as a result, are accounted for as service arrangements. Access to the platform and course content represents a series of distinct services as the Company continually provides access to, and fulfills its obligation to, the end customer over the subscription term. The series of distinct services represents a single performance obligation that is satisfied over time. Accordingly, the fixed consideration related to subscription revenue is usually recognized on a straight-line basis over the contract term, beginning on the date that the service is made available to the customer. The Company’s subscription contracts typically vary fromone year tothree years. The Company’s cloud-based solutions arrangements are mostly non-cancellable, non-refundable, and are invoiced in advance of the subscription services being provided.

Virtual, On-Demand and Classroom

The Company’s virtual, on-demand and classroom training provides customers with technical training. Revenue is recognized in the period in which the services are performed. Billing is in advance of the services being provided or immediately after the services have been provided.

Professional Services

The Company also sells professional services related to its cloud solutions which are typically considered distinct performance obligations and are recognized over time as services are performed. For fixed-price contracts, revenue is recognized based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided (proportional performance method). These services usually consist of implementation, integration, and general consulting. Mostly, the Company’s professional service engagements are short in duration. Billing is commonly in advance of the services being provided.

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Disaggregated Revenue and Geography Information

The following is a summary of revenues by type for the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor), and the period from February 1, 2021through June 11, 2021 (*Predecessor), (in thousands):

Generally, SaaS and subscription services revenues are recognized over the service period, while virtual, on demand, classroom and professional services revenues are recognized at the point they are delivered.

The following table sets forth our revenues by geographic region for the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor), and the period from February 1, 2021through June 11, 2021 (*Predecessor), (in thousands):

Other than the United States, no single country accounted for more than10% of revenue for all periods presented.

Deferred Revenue

Deferred revenue activity for the fiscal year ended* January 31, 2024* was as follows (in thousands):

Deferred revenue performance obligations relate predominantly to time-based SaaS and subscription services that are billed in advance of services being rendered.

Deferred Contract Acquisition Costs

Deferred contract acquisition cost activity for the fiscal year ended* January 31, 2024* was as follows (in thousands):

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**(**20) Fair Value Measurements

ASC Topic820, Fair Value Measurements and Disclosures (“ASC820”) establishes a fair value hierarchy that prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are information that reflect the assumptions that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are variables that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Thethree levels of the fair value hierarchy established by ASC820 in order of priority are as follows:

The following summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis as of* January 31, 2024* and are categorized using the fair value hierarchy (in thousands):

Cash, Cash Equivalents and Restricted Cash

The cost of our cash, cash equivalents and restricted cash agreed to the estimated fair value as of* January 31, 2024.Refer to Note2* "Summary of Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash" for additional detail.

Interest Rate Swaps

On* June 17, 2022,the Company entered intotwo fixed-rate interest rate swap agreements to change the SOFR-based component of the interest rate on a portion of the Company’s variable rate debt to a fixed rate (the “Interest Rate Swaps”). The Interest Rate Swaps have a combined notional amount of $300.0 million and a maturity date of June 5, 2027.The objective of the Interest Rate Swaps is to eliminate the variability of cash flows in interest payments on $300.0 million of variable rate debt attributable to changes in benchmarkone*-month SOFR interest rates. The hedged risk is the interest rate risk exposure to changes in interest payments, attributable to changes in benchmark SOFR interest rates over the interest rate swap term. The changes in cash flows of the interest rate swap are expected to offset changes in cash flows of the variable rate debt. The Interest Rate Swaps arenot designated as a cash flow hedge and changes in the fair value of the interest rate swaps are recorded in earnings each period. For the fiscal year ended* January 31, 2024 (Successor), the Company recognized a non-cash gain of $2.8 million, attributable to the Interest Rate Swaps. For the fiscal year ended January 31, 2023 (*Successor), the Company recognized a loss of $1.6 million, attributable to the Interest Rate Swaps.

The inputs for determining fair value of the Interest Rate Swaps are classified as Level2 inputs. Level2 fair value is based on estimates using standard pricing models. These standard pricing models use inputs which are derived from or corroborated by observable market data such as interest rate yield curves, index forward curves, discount curves, and volatility surfaces. The counterparties to these derivative contracts are highly rated financial institutions which we believe carry only a minimal risk of nonperformance.

Warrants

A summary of liability-classified warrants is as follows (in thousands, except per share amounts):

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The Company classifies the Sponsor Private Placement Warrants as liabilities in accordance with ASC Topic815. See Note17 "Warrants" for more detail. The inputs for determining fair value of these warrants are classified as Level3 inputs. The Company estimates the fair value of the Sponsor Private Placement Warrants using a Black-Scholes option pricing model and the following assumptions:

At each relevant measurement date, the Predecessor warrants were valued using a probability-based approach that considered management’s estimate of the probability of (i) a sale of the company that met certain conditions that caused the warrants to be cancelled forno consideration, (ii) a sale of the company that didnot meet certain conditions that caused the warrants to be cancelled forno consideration and (iii) warrants being held to maturity, with the lasttwo scenarios utilizing a Black-Scholes model to estimate fair value. As a result of the Skillsoft Merger, the warrants were terminated forno consideration on* June11,* 2021 and, as a result, the Company recorded a gain of $0.9 million for the period from* February1,* 2021 to* June**11,* 2021.

The following tables reconcile Level3 instruments for which significant unobservable inputs were used to determine fair value (in thousands):

Other Fair Value Instruments

The Company currently invests excess cash balances primarily in money market funds invested in United States Treasury securities and United States Treasury securities repurchase agreements, as well as cash deposits held at major banks. The carrying amounts of cash and cash equivalents, trade receivables, trade payables and accrued liabilities, as reported on the consolidated balance sheet as of* January 31, 2024*, approximate their fair value because of the short maturity of those instruments.

Our long-term debt is a financial instrument, and the fair value of the Company’s outstanding principal as of* January 31, 2024*, was $558.3 million. This fair value is determined based on inputs that are classified as Level2 within the fair value hierarchy.

(21) Segment Information

ASC280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker ("CODM"), in determining how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company’s CODM evaluates results using the operating segment structure as the primary basis for which the allocation of resources and financial results are assessed.

The Company has organized its business intotwo segments: Content & Platform (formerly referred to as Skillsoft Content) and Instructor-Led Training (formerly referred to as Global Knowledge). All of the Company’s segments market and sell their offerings globally to businesses of many sizes, government agencies, educational institutions and resellers with a worldwide sales force positioned to offer the combinations that best meet customer needs. The CODM primarily uses revenues and operating income as measures to evaluate financial results and allocation of resources. The Company allocates certain operating expenses to the reportable segments, including general and administrative costs based on the usage and relative contribution provided to the segments. There areno intercompany revenue transactions reported between the Company’s reportable segments.

The Content & Platform business engages in the sale, marketing and delivery of its content learning solutions, in areas such as Leadership and Business, Technology and Developer and Compliance. This includes individualized coaching as well as technical skill areas assumed in the Codecademy acquisition. In addition, Content & Platform offers Percipio, an AI-driven online learning platform that delivers an immersive learning experience through SaaS solutions. It leverages its highly engaging content, curated into nearly 700 learning paths (channels) that are continuously updated to ensure customers always have access to the latest information.

The Instructor-Led Training business offers training solutions covering information technology and business skills for corporations and their employees. Instructor-Led Training guides its customers throughout their lifelong technology learning journey by offering relevant and up-to-date skills training through instructor-led (in-person “classroom” or online “virtual”) and self-paced (“on-demand”), vendor certified, and other proprietary offerings. Instructor-Led Training offers a wide breadth of training topics and delivery modalities both on a transactional and subscription basis.

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The following presents summary results for each of the segments for the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor), and the period from February 1, 2021through June 11, 2021 (*Predecessor), (in thousands):

Content & Platform segment depreciation for the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor), and the period from February 1, 2021through June 11, 2021 (*Predecessor) was $2.5 million, $3.0 million, $1.8 million and $1.8 million, respectively.

Instructor-Led Training segment depreciation for the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), and the period from* June 12, 2021through January 31, 2022*was $0.8 million, $1.8 million and $2.0 million, respectively.

The Company’s segment assets primarily consist of cash and cash equivalents, accounts receivable, prepaid expenses, deferred taxes, property and equipment, goodwill and intangible assets. The following sets forth the Company’s segment assets as of* January 31, 2024* and* January 31, 2023* (in thousands):

The following sets forth the Company’s long-lived tangible assets by geographic region as of* January 31, 2024* and* January 31, 2023* (in thousands):

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(22) Net Loss Per Share

Basic earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding restricted stock-based awards, stock options, and shares issuable under the employee stock purchase plan using the treasury stock method.

The following sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

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Warrants to purchase 35,294 common shares have been excluded from the Predecessor period since, for periods of losses, the impact would be anti-dilutive and, for periods of income,no shares would be added to diluted earnings per share under the treasury stock method as the strike price of these awards are above the fair market value of underlying shares for all periods presented.

During the fiscal years ended* January 31, 2024 (Successor) and2023* (Successor), the period from* June 12, 2021through January 31, 2022 (Successor), and the period from February 1, 2021through June 11, 2021 (*Predecessor), the Company incurred net losses and, therefore, the effect of the Company’s potentially dilutive securities wasnot included in the calculation of diluted loss per share as the effect would be anti-dilutive. The following contains share/unit totals with a potentially dilutive impact (in thousands):

(23) Related Party Transactions

Agreement with Largest Shareholder

On* January 31, 2022,*Skillsoft entered into a commercial agreement to provide off-the-shelf Skillsoft products to the Company’s largest shareholder, MIH Learning B.V., and its affiliates for $0.7 million over three years.

Codecademy Transaction

An affiliate of our largest shareholder, MIH Learning B.V. also owned approximately 23.8% of the outstanding equity of Codecademy which we acquired on* April 4, 2022,as discussed in Note3* and elsewhere.

Consulting Services

In* December 2021,Skillsoft engaged The Klein Group, LLC (the “Klein Group”) to act as an advisor to the Company regarding a potential transaction with Codecademy, to assist management in its evaluation of the business opportunity and structuring and negotiation of a potential transaction. Pursuant to this engagement, Skillsoft paid the Klein Group a fee equal to $2.0 million in connection with the Codecademy acquisition. Michael Klein, a member of our Board, is the Chief* **Executive Officer of the Klein Group, and the Klein Group is closely affiliated with oursecond largest shareholder.

(24) Subsequent Events

On* April 9, 2024,the Board of Directors of Skillsoft Corp. (the “Company”) appointed Ronald W. Hovsepian as the Company’s Executive Chair and principal executive officer, effective as of April 16, 2024.Mr. Hovsepian had recently been named to take over the Chair position from the Company’s prior Chair, Patrick Kolek. Mr. Hovsepian will succeed Jeffrey R. Tarr as principal executive officer, who will retire from the position of Chief Executive Officer effective as of April 16, 2024 (the “Transition Date”). Mr. Tarr has also resigned from his position as a member of the Company’s Board of Directors effective as of the Transition Date. Mr. Tarr will remain employed as an advisor to the Executive Chair of the Company following the Transition Date until May 9, 2024,*on which date his employment with the Company will terminate.

The Board has determined that Mr. Tarr will receive severance benefits in accordance with the terms, and subject to the conditions, of the Second Amended and Restated Executive Employment Agreement by and between Mr. Tarr and the Company, dated as of* December 3, 2023,a copy of which has been included in this Form10*-K filing as Exhibit10.7.

In addition to the above, the Company has completed an evaluation of all subsequent events after the balance sheet date of* January 31, 2024* through the date this Annual Report on Form10‑K was filed with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of* January 31, 2024*, and events which occurred subsequently but werenot recognized in the financial statements. The Company has concluded thatno subsequent events have occurred that require disclosure, except as disclosed within these financial statements.

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