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”) empowers organizations and learners to unlock their full potential by delivering personalized, interactive learning experiences and enterprise-ready solutions. Our Class A Common Stock, par value $0.0001 per share (“common stock”), has been listed on the New York Stock Exchange under the ticker symbol “SKIL” since* June 14, 2021.We havetwo operating and reportable segments: Talent Development Solutions (“TDS”) and Global Knowledge (“GK”). Information about our segments is described in Note20.*

References in the accompanying footnotes to the Company’s fiscal year refer to the fiscal year ended* January**31* of that year (e.g., fiscal2025 is the fiscal year ended* January 31, 2025).*

Principles of Consolidation and Basis of Financial Statement Preparation

The accompanying consolidated financial statements include the accounts of Skillsoft Corp. and its subsidiaries, all of which are wholly-owned. We prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"). 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 judgments, 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. We base our judgments, estimates and assumptions on current facts, historical experience and various other factors that we believe are reasonable under the circumstances. The economic environment also impacts certain estimates and discount rates necessary to prepare our consolidated financial statements, including significant estimates and discount rates applicable to the determination of the fair values used in the impairment testing of our nonfinancial assets. Our assessment of these factors forms the basis for our judgments on the carrying values of our assets and liabilities, and the accrual of our costs and expenses. Actual results could differ materially from our estimates. We review our estimates and underlying assumptions on an ongoing basis and make revisions as determined necessary by management. Revisions are recognized in the period in which the estimates are revised and* may*also impact future periods.

(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 software as a solution generally doesnot 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 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 classroom training and individual coaching is recognized in the period in which the services are rendered. Revenue from virtual and on-demand training for time-based access to unlimited sessions is recognized on a straight-line basis over the period these services are available to the customers.

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 advancement 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 straight-line 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 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 costs 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

Sales compensation costs are incurred upon the successful acquisition of a new customer, the extension of an existing customer contract, or the expansion of an existing customer relationship. The Company defers certain TDS sales compensation costs to align the recognition of customer contract acquisition costs with the associated revenue recognition period of the underlying customer licensing or service agreement. Deferred sales compensation costs are amortized on a straight-line basis over the estimated period of benefit. Sales compensation costs related to our GK products and services are expensed as incurred, which typically aligns with the delivery of those services. Sales compensation costs and amortization of deferred sales compensation costs are included within sales and marketing expenses 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 in the caption "other income (expenses), net" in the accompanying consolidated statements of operations. For the fiscal years ended* January 31, 2025,*2024 and2023, gains (losses) arising from transactions denominated in foreign currencies other than an entity’s functional currency were approximately $1.0 million, $1.5 million and $3.8 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, 2025* and* January 31, 2024*, the Company didnot have any available-for-sale investments.

As of* January 31, 2025* and* January 31, 2024*, the Company had approximately $100.8 million and $136.3 million of cash and cash equivalents, respectively.

As of* January 31, 2025and January 31, 2024,the Company had approximately $2.6 million and $10.2 million of restricted cash, respectively. As of January 31, 2025,our restricted cash primarily consisted of amounts held as reserves to facilitate timely customer collections. We also had restricted cash related to our A/R Facility (defined and described in note13*). Under the terms of our A/R Facility, the Company is required to maintain three restricted accounts: (i) an interest reserve account, (ii) a foreign exchange reserve account, and (iii) a concentration account. The interest reserve account requires us to maintain an amount equal tothree months interest on the greater of the facility balance or facility balance floor (the facility balance floor was$1.0 million as of* January 31, 2025*). The foreign exchange reserve account requires the Company to restrict cash in 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 accounts receivable included 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 business combinations 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.

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 on 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. 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 are expensed 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 fiscal2025, fiscal2024 and fiscal2023, the Company incurred $23.4 million, $26.3 million and $32.1 million, respectively of proprietary content development expenses.

Capitalized Software Development Costs

The Company capitalizes certain internal use software development costs related to its SaaS platforms 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 consolidated balance sheets. For fiscal2025, fiscal2024 and fiscal2023, the Company capitalized $16.8 million, $13.7 million and $10.4 million of internal use software and development costs, respectively, and recognized amortization of$8.6 million, $4.9 million and $1.2 million, respectively.

Content Partner****Expenses

For fiscal2025, fiscal2024 and fiscal2023, the Company recognized $24.8 million, $30.9 million and $30.9 million, respectively of royalty and course material expenses forthird party content used or provisioned in the Company’s content library. Content partner expenses are included within cost of revenues in the consolidated statements of operations.

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.

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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 credit losses, which is based on historical collections and known credit risks. See Note19 for a discussion related to the fair value of the Company’s borrowing agreements.

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, 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 consolidated 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 consolidated statement of operations.

Concentrations of Credit Risk and Off-Balance-Sheet Risk

For the fiscal2025, fiscal2024 and fiscal2023, no customer individually comprised greater than10% of revenue. As of* January 31, 2025* and2024, no customer individually comprised more than10% of accounts receivable.

The Company considers its customers’ financial condition and generally doesnot require collateral. The Company maintains an allowance for credit losses 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, an allowance for credit loss is 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 the Skillsoft trademark, during thefourth fiscal quarter of each year for impairment, or more frequently if certain indicators are present or changes in circumstances suggest that impairment* may*exist and reassesses their classification as indefinite-lived assets.

The fair value of our indefinite-lived trademark intangible is determined using an income approach referred to as the relief-from-royalty method. The relief-from-royalty method requires management to estimate the portion of our earnings attributable to this trademark based on a royalty rate we would have paid for the use of the asset if we didnot own it. The determination of fair value involves significant estimates and assumptions, including projected revenue growth rates, the royalty savings rate, and the discount rate applied to future cash flows, which are forward-looking and could be affected by future economic and market conditions. Changes in these key assumptions could materially affect the estimated fair value of the indefinite-lived trademark intangible asset and result in future impairment charges.

If current discount rates rise or if relevant market-based inputs for our impairment assessment worsen, subsequent reviews of goodwill and intangibles could result in impairment. Factors that could result in an impairment include, but arenot limited to, the following:

See Note5 for a discussion of impairment charges recognized for fiscal2024 and fiscal2023.

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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 operating ROU assets abandonment and impairment in accordance with ASC360, Property, Plant, and Equipment and recognizes operating ROU assets abandonment related amortization and write-offs as restructuring charges in its consolidated statements of operations.

Stock-Based Compensation Expense

We recognize compensation expense for 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 fair value of the awards on the date of the grant. For restricted-stock units subject to meeting specified market conditions, we recognize compensation expense using an accelerated attribution method. We recognize forfeitures as they occur. 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 $10.6 million, $15.4 million and $15.8 million for the fiscal2025, fiscal2024 and fiscal2023, respectively. Advertising expense is included in the caption "selling and marketing" on the consolidated statements of operations.

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* December 2023,the FASB issued ASU2023*-07, Improvements to Reportable Segment Disclosures,which requires disclosure of significant segment expenses and other segment items. The Company adopted this guidance effective January 31, 2025.Refer to Note20 "Segment Information" for addition detail.

Recently Issued Accounting Guidance

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

(3) Business Combinations

On* April 4, 2022,*the Company acquired Ryzac, Inc. ("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.

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The following summarizes the purchase consideration (in thousands):

The Company recorded the fair value of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed as follows (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.

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 fiscal2023, 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 "acquisition and integration related costs" in the accompanying consolidated statements of operations.

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 Codecademy as if the transactions had closed on* February 1, 2022 (*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 combination. 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,* 2022. The pro forma financial information includes adjustments to reflect intangible asset amortization based on the economic values derived from definite-lived intangible assets, interest expense on the new debt financing, and the exclusion of goodwill impairment of $641 million.

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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 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.

(5) Intangible Assets

Intangible assets consisted of the following (in thousands):

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The change in our goodwill balance is as follows (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 $127.2 million for fiscal2025, $152.5 million for fiscal2024, and $170.3 million for fiscal2023.

Impairment Review Requirements and Assumption Uncertainty

The Company monitors adverse events, conditions or changes in circumstances that would indicate impairment of intangible assets that are subject to amortization. When such events, conditions or changes in circumstances occur, we assess the recoverability of such assets by comparing the undiscounted future cash flows attributable to the intangible assets to their carrying amount. If the undiscounted future cash flows are less than the carrying amount, an impairment charge based on the excess of the carrying amount over the fair value of the assets is recorded.

The Company evaluates impairment for indefinite-lived intangible assets, including goodwill, on an annual impairment test date (* January 1)or more frequently if there are indicators of impairment. In connection with the goodwill and indefinite-lived intangible assets 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 or indefinite-lived intangible asset is less than its carrying amount. If the Company fails the qualitative assessment or elects to bypass it, a comparison of the carrying value of the reporting unit or indefinite-lived intangible asset to its fair value is completed. If the carrying value exceeds the fair value, an impairment loss equal to the difference (for goodwill,not to exceed the amount of goodwill allocated to the reporting unit) is recorded.

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 endeavors to ensure that 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 during our annual impairment test as of* January**1st* of each of fiscal2025, 2024 and2023.

The fair value of our indefinite-lived trademark intangible is determined using an income approach referred to as the relief-from-royalty method. The relief-from-royalty method requires management to estimate the portion of our earnings attributable to this trademark based on a royalty rate we would have paid for the use of the asset if we didnot own it. The determination of fair value involves significant estimates and assumptions, including projected revenue growth rates, the royalty savings rate, and the discount rate applied to future cash flows, which are forward-looking and could be affected by future economic and market conditions. This process was followed below during our annual impairment test as of* January**1st* of each of fiscal2025, 2024 and2023.

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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No Impairment for the Fiscal Year Ended January 31, 2025**

As of* January 1, 2025,we estimated the fair value of the TDS and GK reporting units 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 the carrying value for each reporting unit.

As of* January 1, 2025,we estimated the fair value of our indefinite-lived trademark intangible using relief-from-royalty method discussed inImpairment Review* Requirements and Assumption Uncertainty above and, as of such date, the fair value was in excess of the carrying value. However, the excess wasnot significant and changes in the key assumptions, discussed inImpairment Review Requirements and Assumption Uncertainty above, could materially affect the estimated fair value of the indefinite-lived trademark intangible asset and result in future impairment charges.

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 TDS reporting unit operates; and (ii) our GK 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 were projected to be less than the carrying values for the GK reporting unit. Therefore, we updated the fair values for all of our identifiable intangibles, including the indefinite-lived intangible in our TDS 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 TDS and GK 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 TDS and GK 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 TDS reporting unit and $12.6 million for the GK reporting unit 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 GK 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 GK 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 GK 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 GK 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 the GK reporting unit 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 value for indefinite-lived intangible, was also greater than the carrying value. Therefore, during thethird* quarter of fiscal2023 there wasno impairment of identifiable intangibles.

Management next estimated the fair value of the TDS and GK 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 TDS and GK reporting units, the fair value fell below their respective carrying values. Therefore, the Company recorded a $569.3 million goodwill impairment for the TDS reporting unit and an additional $1.6 million goodwill impairment for the GK reporting unit 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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(6)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 the periods presented, the Company had established a valuation allowance of $178.2 million and $157.2 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, 2024to January 31, 2025*was an increase of $21.0 million.

As of* January 31, 2025,the Company had U.S. federal, state and foreign net operating loss ("NOL") carryforwards of $229.0 million,$316.1 million and $62.5 million, respectively. Ifnot* utilized, certain of the federal, state and foreign NOL carryforwards will expire beginning in fiscal2026 with the remaindernot subject to an expiration.

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 in fiscal2022,* 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 NOLs, 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, 2025,the Company has written off a cumulative $31.2 million of NOLs, deferred interest, and credit carryforwards that will expire unused due to Section382* limitations along with the corresponding valuation allowance.

We provide for 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, 2025,the Company has accrued $6.0 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.

Uncertain Tax Positions

As of* January 31, 2025,*the Company had$12.6 million of unrecognized tax benefits associated with uncertain tax positions and an additional$1.8 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):

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The Company recognized $0.9 million, $0.7 million and ($0.3) million of interest and penalties during fiscal2025, fiscal2024, and fiscal2023, respectively. The Company has accrued $1.8 million and $1.2 million for the payment of interest and penalties as of* January 31, 2025,and January 31, 2024,respectively. We estimate that $6.1 million of our unrecognized tax benefits that we have accrued as of January 31, 2025,will be released within the next12* months due to expiration of the applicable statute of limitations.

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, 2021.*

(7) Prepaid Expenses and Other Current Assets

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

(8) Other Assets

Other assets on 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.

(9) Accrued Expenses

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

(10) Restructuring

In connection with strategic initiatives implemented during the fiscal2025, fiscal2024 and fiscal2023, 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. These strategic initiatives included the comprehensive resource reallocation plan announced on* July 11, 2024.*

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The following is a summary of restructuring charges by segment for the periods presented (in thousands):

These restructuring charges are presented separately in the accompanying consolidated statements of operations. Our restructuring charges recognized during fiscal 2025, fiscal2024 and fiscal2023 included $11.9 million, $8.7 million, and $4.2 million for severance costs of terminated employees, as well as $1.4 million, $3.6 million, and $3.6 million for lease termination and lease impairment charges, respectively.

The restructuring charge liability activity consisted of the following for the periods presented (in thousands):

Management has completed the majority of planned restructuring actions as of* January 31, 2025;*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.

(11) 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, Company contributions of approximately$2.6 million,$2.6 million and$2.3 million were made for the fiscal years ended January 31, 2025,*2024, and2023, 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, Company contributions of approximately$3.3 million,$3.5 million and$3.5 million were made for the fiscal years ended* January 31, 2025,*2024, and2023, respectively.

(12) 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.

All of the Company's leases are classified as operating leases. Our 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 weighted average incremental borrowing rate for its operating leases as of* January 31, 2025* was 6.0%.

The operating leases are included in the captions “operating right-of-use assets”, “operating lease liabilities”, and “operating long-term lease liabilities” on the Company’s consolidated balance sheets. The weighted-average remaining lease term of the Company’s operating leases is 6.3 years as of* January 31, 2025*. Lease costs for minimum lease payments are recognized on a straight-line basis over the lease term. The lease costs were $2.2 million and related cash payments were $4.3 million for the fiscal year ended* January 31, 2025*. The lease costs were $5.0 million and related cash payments were $4.8 million for the fiscal year ended* January 31, 2024*. 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 Note10 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, 2025* (in thousands):

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Litigation

On* November 21, 2023,a Company stockholder (Jonathon Norcross) filed a derivative lawsuit in the Delaware Court of Chancery captionedIn re Skillsoft Corp. Stockholders Litigation*, C.A.No. 2023-1179-JTL (Del. Ch.), challenging the Company’s acquisition of Codecademy in* April 2022.The plaintiff claimed that certain of the Company’s directors, together with Company stockholder MIH Learning B.V., breached their fiduciary duties in connection with the merger. On February 7, 2025,the Court dismissed all claims against all defendants. On February 14, 2025,the plaintiff filed a motion for reargument of the Court’s decision, which the defendants opposed on February 21, 2025.On March 25, 2025,the Court denied the plaintiff's motion for reargument. 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 these pending claims and litigation, management doesnot anticipate that the outcome of any such current proceedings or known claims, either individually or in aggregate, will materially affect the Company’s financial position, results of operations or cash flows.

There areno material proceedings to which any director, officer or affiliate of the Company, any owner of record or beneficially of more thanfive percent of our common stock, or any associate of any of the foregoing is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

Warranties and Indemnities

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.

(13) Long-Term Debt

Debt consisted of the following (in thousands):

Term Loans

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, another subsidiary - Skillsoft Finance I, Inc. (“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”). Term loans under the Term Loan Facility ("Original Term Loans") were drawn in full on the closing date thereof, and are 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 an additional $160 million of Term B-1 Loans (the “Term B-1 Loans”) under the Term Loan Facility, which were drawn in full on the closing date thereof, and are scheduled to mature on the Maturity Date. In addition, the First Amendment, among other things, (a) provided for early opt-in to the Secured Overnight Financing Rate ("SOFR") for the Original Term Loans (the Original 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 B-1 Loans 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 via the First Amendment was accounted for as a loan modification for certain lenders and a loan 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, are being 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 consolidated statement of operations for the fiscal year ended* January 31, 2023.*

Prior to the maturity thereof, the Initial Term Loans are subject to quarterly principal re-payments of $1.6 million.

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 under the Amended Credit Agreement 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.

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.

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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, 2025*, the outstanding principal 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 margin of 5.25%, per annum, with a SOFR floor of 0.75%, and quarterly principal repayments of $1.6 million until maturity.

Voluntary prepayment of the Initial Term Loans is permitted under the Term Loan Facility. We are also required to make annual prepayments of outstanding obligations under the Amended Credit Facility of specified excess cash flow for the prior fiscal year. In addition, prepayments of outstanding obligations under the Amended Credit Facility* mayalso be required in the amount of specified net cash proceeds received above a specified annual threshold. 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, 2025*, the Company is in compliance with all covenants.

The Amended Credit Agreement contains customary events of default. In the event of a payment or other specified defaults, outstanding obligations accrue interest at a default rate of 2%. If an event of default occurs and is continuing (and isnot waived), the administrative agent* may*declare all amounts outstanding thereunder to be immediately due and payable.

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, are being amortized as additional interest expense over the term of the Initial Term Loans.

The Company’s debt outstanding under the Amended Credit Agreement as of* January 31, 2025* matures as shown below (in thousands):

Accounts Receivable Facility

On* December 20, 2018,the Company entered into a $75.0 million accounts receivable credit agreement (the "A/R Agreement") with First Citizens Bank and Trust Company. Pursuant to this agreement, certain of our accounts receivable are pledged as security for loans made by participating lenders. In November 2024,the A/R agreement was amended to, among other things: (a) extend the maturity date from December 27, 2024to the earlier of (i) November 26, 2029or (ii)90 days prior to the maturity of any corporate debt, (b) reduce the fixed component of the interest rate to 2.61% per annum from 3.11% per annum, (c) increase the highest advance rate on certain eligible receivables from 85% to 90%, (d) reduce the minimum outstanding balance requirement from $10 million to $1 million, and (e) allow for ad hoc borrowings and repayments. Based on seasonality of billings and the characteristics of accounts receivable, some of which arenot* eligible for advances, we arenot always able to access the full $75.0 million available capacity.

Should the Company borrow in excess of the minimum outstanding balance requirement, 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. The Company is required to maintain a restricted concentration balance equal tothree months’ interest in a bank account classified as restricted cash on the consolidated balance sheet. The balance in this account was$0.2 million as of * January 31, 2025* and is classified as restricted cash on the consolidated 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 if the Company borrows more than the minimum outstanding balance requirement. The interest rate on borrowings outstanding under the A/R Agreement was 6.95% as of* January 31, 2025*. Borrowings and repayments are presented as cash flows from financing activities in the accompanying consolidated statements of cash flows. As of* January 31, 2025*, $1.0 million was drawn under the A/R Agreement and is classified as "borrowings under accounts receivable facility" on the consolidated balance sheet.

(14) Long-Term Liabilities

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

(15) Shareholders’** Equity**

Common Stock

As of* January 31, 2025*, the Company’s authorized share capital consisted of 18,750,000 shares of common stock and 10,000,000 shares of preferred stock, with a par value $0.0001 each, and 8,616,633 shares of common stock were issued, and 8,316,856 shares were outstanding. As of* January 31, 2025*, the Company hadno shares of preferred stock outstanding.

Subject to applicable law, the Company* may*declare dividends to be paid ratably to holders of 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.

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Warrants

Refer to Note16 “Warrants”, for information related to the equity and liability-classified warrants.

Share Repurchase Authorization

On* July 10, 2024,the Company’s Board of Directors authorized Skillsoft to repurchase up to $10 million of its common stock. The share repurchase authorization will terminate on July 11, 2028and doesnot* obligate the Company to purchase any minimum number of shares of Common Stock, and the authorization* maybe suspended, modified, or discontinued at any time without prior notice. As of January 31, 2025,*no common stock had been repurchased under the share repurchase authorization.

Accumulated Other Comprehensive Income (Loss)

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

(16) 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) contain 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 outstanding liability-classified warrants is as follows (in thousands, except per share amounts):

Simultaneously with the closing of the Company's initial public offering, Churchill Capital Corp II (the “Sponsor”) purchased an aggregate of 15,800,000 private placement warrants. An additional 1,500,000 of private placement warrants were issued to the Sponsor 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 held by the Sponsor were transferred to the then-incoming and now former CEO as described below. The private placement warrants issued to 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, 2025*,453,596 private placement warrants held by the Sponsor 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 outstanding 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 for each warrant. 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 former 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.

(17) 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, 2025*, a total of 1,170,720 shares of common stock were available for issuance under the2020 Plan.

In* May 2024,Skillsoft adopted the Skillsoft Corp.2024 Employment Inducement Incentive Award Plan (the “Inducement Plan”). The Inducement Plan provides for the inducement grants of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other equity-based awards, and cash-based incentive awards to new hires, or individuals being rehired following a bona fide period of non-employment with the Company, in compliance with Section303A.08* of the New York Stock Exchange Listed Company Manual. As of* January 31, 2025,*a total of 100,000 shares of common stock were available for issuance under the Inducement 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, 2025*:

The total unrecognized equity-based compensation costs related to the stock options was $0.2 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 0.4 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, 2025*:

(1) Includes 19,806 shares, which are vested, but have been elected to be deferred by the recipients.

The total unrecognized stock-based compensation costs related to time-based RSUs was $24.4 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 MBRSU activity for the fiscal year ended* January 31, 2025*:

The total unrecognized stock-based compensation costs related to MBRSUs was $0.7 million, which is expected to be recognized over a weighted-average period of 0.8 years.

Performance-Based Restricted Stock Units

Performance-based restricted stock units (“PBRSUs”) vest over atwo-year period, subject to continued employment through each anniversary and achievement of specified corporate goals during a less thanone-year performance-period. The expense and shares for our PBRSU awards depends on achievement of specified results and the ultimate expense and shares can range from 0% to 200% of a target amount granted.

The following summarizes the PBRSU activity for the fiscal year ended* January 31, 2025*:

(1) Reflects the number of shares that would vest based on achieving the "Target" level of performance.

The total unrecognized stock-based compensation costs related to PBRSUs was $0.6 million, which is expected to be recognized over a weighted-average period of 1.1 years.

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Liability-Classified Market-Based Awards

In thethird quarter of fiscal2025, the Company granted market-based awards, intended to be settled in cash upon vesting. These awards are classified as liabilities and remeasured at fair value using a Monte Carlo simulation at each reporting date and included in the caption "accrued compensation" on the consolidated balance sheets. Expense is recognized using an accelerated attribution method over the requisite service period. The market-based awards potentially vest overtwo-year tofour-year service periods, subject to continued employment and from a specified appreciation of the Company's share price.

The following summarizes the liability-classified performance award balances as of* January 31, 2025 (*in thousands):

(1) Included in the caption "accrued compensation" on the consolidated balance sheets

(2) Expected to be recognized over a weighted-average period of 3.0 years.

Stock-Based Compensation Expense

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

(1) Stock-based compensation expense for fiscal2025 was reduced by $6.0 million due to forfeitures of share-based payments, including unvested equity-based awards associated with the former Chief Executive Officer whose employment with the Company ended on* May 9, 2024.*

The stock-based compensation for fiscal2023 includes a $1.6 million 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.

(18) 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 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

Revenue from classroom training and individual coaching is recognized in the period in which the services are rendered. Revenue from virtual and on-demand training for time-based access to unlimited sessions is recognized on a straight-line basis over the period these services are available to the customers. 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. The Company’s professional service engagements are mostly 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 segment and type for the periods presented (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 periods presented, (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, 2025* 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, 2025* was as follows (in thousands):

(19**)** 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.

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

The following summarizes the Company’s assets (liabilities) that are measured at fair value on a recurring basis as of* January 31, 2025* 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 was consistent with the estimated fair value as of* January 31, 2025*. 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 Swaps 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, 2025*, the Company recognized a non-cash gain of $1.3 million, attributable to the Interest Rate Swaps. For the fiscal year ended* January 31, 2024*, the Company recognized a non-cash gain of $2.8 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.

Depending on whether the Interest Rate Swaps are in an asset or liability position at the end of the reporting period, they are included in either the captions “other assets” or “other long-term liabilities” on the Company's consolidated balance sheets.

Liability-Classified Market-Based Awards

The fair value of the liability-classified market-based awards are determined using a Monte Carlo simulation, weighted for the service period completed, at each reporting date. The most significant inputs for determining the fair value either originate from the grant agreement (e.g., stock price hurdles, vesting amounts, and service dates) or are derived from or corroborated by observable market data (e.g., interest rates, stock prices, equity risk, market betas, size premiums, average stock volatility); therefore we have classified the fair value measurement as Level2. Refer to Note17 "Stock-Based Compensation" above for additional information related to the liability-classified market-based awards.

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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, 2025*, 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 amounts as of* January 31, 2025*, was $518.3 million. This fair value is determined based on inputs that are classified as Level2 within the fair value hierarchy.

(20) 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.No operating segments have been aggregated to determine our reportable segments.

The Company has organized its business intotwo operating and reportable segments: Talent Development Solutions ("TDS" formerly known as Content & Platform) and Global Knowledge ("GK" formerly known as Instructor-Led Training). Thesetwo businesses are highly complementary and give Skillsoft a differentiated value proposition. The CODM primarily uses revenues, segment ("business unit") contribution profits and business unit contribution margin as measures to evaluate financial results and allocation of resources. There areno intercompany revenue transactions reported between the Company’s reportable segments. When our segments enter into transactions to provide products and services tothird-parties, revenue is generally allocated to our segments based on relative value. The Company allocates certain operating expenses to the reportable segments based on the usage and relative contribution provided to the segments.

The TDS segment brings a strong foundation of products and customers. TDS enterprise-grade solution serves customers and employees worldwide. TDS Learner is a world-renowned consumer scale and experience learner platform that serves learners worldwide. Together, we deliver AI-led, interactive, and multi-modal experiences, a premium technology learning brand, outcome-based learning through benchmarks, enterprise grade security and integrations, and extensive coverage of topics across business, technology, and compliance skills.

The GK segment is centered around instructor-led training, or live learning, with face-to-face delivery by experienced trainers, both in-person and virtually. GK is a live learning partner for corporations with a large, but focused, schedule of vendor-authored and certified courses utilizing certified instructors. The quality and consistency of trainers, the access to quality content and interactive labs from the world’s largest vendors, and a market-leading blended proposition with TDS define GK's uniqueness in the market. Additionally, a key attribute to the success of GK continues to be our strong partnerships with the world’s leading technology companies and certification authorities.

In thefourth quarter of fiscal2025, the Company made changes to the components of segment results to increase transparency and improve segment comparability to peers. These changes didnot impact the Company's consolidated financial statements. For this new structure we track the non-GAAP financial measures and key performance metrics that we believe are key financial indicators of our success. Non-GAAP measures and key performance metrics are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures and key performance metrics when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of U.S. GAAP financial disclosures. For example, a company with higher U.S. GAAP net income* maynot* be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, excluding the effects of interest income and expense moderates the impact of a company’s capital structure on its performance. However, non-GAAP measures and key performance metrics have limitations as analytical tools. Becausenot all companies use identical calculations, our presentation of non-GAAP financial measures and key performance metrics* maynot* be comparable to other similarly titled measures of other companies. They arenot presentations made in accordance with U.S. GAAP, arenot measures of financial condition or liquidity, and shouldnot be considered as an alternative to profit or loss for the period determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. As a result, these performance measures shouldnot be considered in isolation from, or as a substitute analysis for, results of operations as determined in accordance with U.S. GAAP.

Segment ("business unit") contribution profit and business unit contribution margin are internal measures used by our CODM to evaluate and assess the results of our segments. We disclose these non-GAAP segment results because we believe they provide meaningful supplemental information. Business unit contribution profit is defined as business unit revenue, less business unit cost of revenue, business unit content and software development expenses, and business unit product research and management expenses. We have excluded the following items in our determination of business unit cost of revenue, business unit content and software development expenses, and business unit product research and management expenses as our Chief Executive Officer doesnot include them in the measurement of the performance of the segment:

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The following reconciles our segment measures of performance to the GAAP measures presented in the consolidated statements of operations, which have been recast for the prior-year periods to reflect, the Company's segments under the new structure, for the periods presented, (in thousands):

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 the periods presented (in thousands):

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The following sets forth the Company’s long-lived tangible assets by geographic region as of the periods presented (in thousands):

(21) Net Income (Loss) Per Share

Basic earnings (loss) 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 (loss) 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 (loss) per share (in thousands, except for the number of shares and per share data):

During the fiscal2025, fiscal2024 and fiscal2023, 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, which excludes the effect of the treasury stock method (in thousands):

(22) Related Party Transactions

Agreement with Largest Shareholder

During fiscal2025, Skillsoft extended commercial agreements to provide off-the-shelf Skillsoft products to the Company’s largest shareholder, MIH Learning B.V., and its affiliates for $0.9 million over three years.

(23) Subsequent Events

The Company has completed an evaluation of all subsequent events after the balance sheet date of* January 31, 2025* 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, 2025*, 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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